G.R. No. 48006, Barredo v. Garcia and Almario, 73 Phil.

607
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
July 8, 1942
G.R. No. 48006
FAUSTO BARREDO, petitioner,
vs.
SEVERINO GARCIA and TIMOTEA ALMARIO, respondents.
Celedonio P. Gloria and Antonio Barredo for petitioner.
Jose G. Advincula for respondents.
BOCOBO, J.:
This case comes up from the Court of Appeals which held the petitioner herein, Fausto Barredo, liable in damages
for the death of Faustino Garcia caused by the negligence of Pedro Fontanilla, a taxi driver employed by said
Fausto Barredo.
At about half past one in the morning of May 3, 1936, on the road between Malabon and Navotas, Province of
Rizal, there was a head-on collision between a taxi of the Malate Taxicab driven by Pedro Fontanilla and a
carretela guided by Pedro Dimapalis. The carretela was overturned, and one of its passengers, 16-year-old boy
Faustino Garcia, suffered injuries from which he died two days later. A criminal action was filed against Fontanilla
in the Court of First Instance of Rizal, and he was convicted and sentenced to an indeterminate sentence of one
year and one day to two years of prision correccional. The court in the criminal case granted the petition that the
right to bring a separate civil action be reserved. The Court of Appeals affirmed the sentence of the lower court in
the criminal case. Severino Garcia and Timotea Almario, parents of the deceased on March 7, 1939, brought an
action in the Court of First Instance of Manila against Fausto Barredo as the sole proprietor of the Malate Taxicab
and employer of Pedro Fontanilla. On July 8, 1939, the Court of First Instance of Manila awarded damages in favor
of the plaintiffs for P2,000 plus legal interest from the date of the complaint. This decision was modified by the
Court of Appeals by reducing the damages to P1,000 with legal interest from the time the action was instituted. It
is undisputed that Fontanilla 's negligence was the cause of the mishap, as he was driving on the wrong side of
the road, and at high speed. As to Barredo's responsibility, the Court of Appeals found:
... It is admitted that defendant is Fontanilla's employer. There is proof that he exercised the diligence of a good
father of a family to prevent damage. (See p. 22, appellant's brief.) In fact it is shown he was careless in
employing Fontanilla who had been caught several times for violation of the Automobile Law and speeding
(Exhibit A) violation which appeared in the records of the Bureau of Public Works available to be public and to
himself. Therefore, he must indemnify plaintiffs under the provisions of article 1903 of the Civil Code.
The main theory of the defense is that the liability of Fausto Barredo is governed by the Revised Penal Code;
hence, his liability is only subsidiary, and as there has been no civil action against Pedro Fontanilla, the person
criminally liable, Barredo cannot be held responsible in the case. The petitioner's brief states on page 10:
... The Court of Appeals holds that the petitioner is being sued for his failure to exercise all the diligence of a good
father of a family in the selection and supervision of Pedro Fontanilla to prevent damages suffered by the
respondents. In other words, The Court of Appeals insists on applying in the case article 1903 of the Civil Code.
Article 1903 of the Civil Code is found in Chapter II, Title 16, Book IV of the Civil Code. This fact makes said article
to a civil liability arising from a crime as in the case at bar simply because Chapter II of Title 16 of Book IV of the
Civil Code, in the precise words of article 1903 of the Civil Code itself, is applicable only to "those (obligations)
arising from wrongful or negligent acts or commission not punishable by law.
The gist of the decision of the Court of Appeals is expressed thus:
... We cannot agree to the defendant's contention. The liability sought to be imposed upon him in this action is not
a civil obligation arising from a felony or a misdemeanor (the crime of Pedro Fontanilla,), but an obligation
imposed in article 1903 of the Civil Code by reason of his negligence in the selection or supervision of his servant
or employee.

The pivotal question in this case is whether the plaintiffs may bring this separate civil action against Fausto
Barredo, thus making him primarily and directly, responsible under article 1903 of the Civil Code as an employer
of Pedro Fontanilla. The defendant maintains that Fontanilla's negligence being punishable by the Penal Code, his
(defendant's) liability as an employer is only subsidiary, according to said Penal code, but Fontanilla has not been
sued in a civil action and his property has not been exhausted. To decide the main issue, we must cut through the
tangle that has, in the minds of many confused and jumbled together delitos and cuasi delitos, or crimes under
the Penal Code and fault or negligence under articles 1902-1910 of the Civil Code. This should be done, because
justice may be lost in a labyrinth, unless principles and remedies are distinctly envisaged. Fortunately, we are
aided in our inquiry by the luminous presentation of the perplexing subject by renown jurists and we are likewise
guided by the decisions of this Court in previous cases as well as by the solemn clarity of the consideration in
several sentences of the Supreme Tribunal of Spain.
Authorities support the proposition that a quasi-delict or "culpa aquiliana " is a separate legal institution under the
Civil Code with a substantivity all its own, and individuality that is entirely apart and independent from delict or
crime. Upon this principle and on the wording and spirit article 1903 of the Civil Code, the primary and direct
responsibility of employers may be safely anchored.
The pertinent provisions of the Civil Code and Revised Penal Code are as follows:
CIVIL CODE
ART. 1089 Obligations arise from law, from contracts and quasi-contracts, and from acts and omissions which are
unlawful or in which any kind of fault or negligence intervenes.
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ART. 1092. Civil obligations arising from felonies or misdemeanors shall be governed by the provisions of the Penal
Code.
ART. 1093. Those which are derived from acts or omissions in which fault or negligence, not punishable by law,
intervenes shall be subject to the provisions of Chapter II, Title XVI of this book.
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ART 1902. Any person who by an act or omission causes damage to another by his fault or negligence shall be
liable for the damage so done.
ART. 1903. The obligation imposed by the next preceding article is enforcible, not only for personal acts and
omissions, but also for those of persons for whom another is responsible.
The father and in, case of his death or incapacity, the mother, are liable for any damages caused by the minor
children who live with them.
Guardians are liable for damages done by minors or incapacitated persons subject to their authority and living
with them.
Owners or directors of an establishment or business are equally liable for any damages caused by their
employees while engaged in the branch of the service in which employed, or on occasion of the performance of
their duties.
The State is subject to the same liability when it acts through a special agent, but not if the damage shall have
been caused by the official upon whom properly devolved the duty of doing the act performed, in which case the
provisions of the next preceding article shall be applicable.
Finally, teachers or directors of arts trades are liable for any damages caused by their pupils or apprentices while
they are under their custody.
The liability imposed by this article shall cease in case the persons mentioned therein prove that they are
exercised all the diligence of a good father of a family to prevent the damage.
ART. 1904. Any person who pays for damage caused by his employees may recover from the latter what he may
have paid.
REVISED PENAL CODE

ART. 100. Civil liability of a person guilty of felony. Every person criminally liable for a felony is also civilly liable.
ART. 101. Rules regarding civil liability in certain cases. The exemption from criminal liability established in
subdivisions 1, 2, 3, 5, and 6 of article 12 and in subdivision 4 of article 11 of this Code does not include
exemption from civil liability, which shall be enforced to the following rules:
First. In cases of subdivision, 1, 2 and 3 of article 12 the civil liability for acts committed by any imbecile or insane
person, and by a person under nine years of age, or by one over nine but under fifteen years of age, who has
acted without discernment shall devolve upon those having such person under their legal authority or control,
unless it appears that there was no fault or negligence on their part.
Should there be no person having such insane, imbecile or minor under his authority, legal guardianship, or
control, or if such person be insolvent, said insane, imbecile, or minor shall respond with their own property,
excepting property exempt from execution, in accordance with the civil law.
Second. In cases falling within subdivision 4 of article 11, the person for whose benefit the harm has been
prevented shall be civilly liable in proportion to the benefit which they may have received.
The courts shall determine, in their sound discretion, the proportionate amount for which each one shall be liable.
When the respective shares can not be equitably determined, even approximately, or when the liability also
attaches to the Government, or to the majority of the inhabitants of the town, and, in all events, whenever the
damage has been caused with the consent of the authorities or their agents, indemnification shall be made in the
manner prescribed by special laws or regulations.
Third. In cases falling within subdivisions 5 and 6 of article 12, the persons using violence or causing the fear shall
be primarily liable and secondarily, or, if there be no such persons, those doing the act shall be liable, saving
always to the latter that part of their property exempt from execution.
ART. 102. Subsidiary civil liability of innkeepers, tavern keepers and proprietors of establishment. In default of
persons criminally liable, innkeepers, tavern keepers, and any other persons or corporation shall be civilly liable
for crimes committed in their establishments, in all cases where a violation of municipal ordinances or some
general or special police regulation shall have been committed by them or their employees.
Innkeepers are also subsidiarily liable for the restitution of goods taken by robbery or theft within their houses
lodging therein, or the person, or for the payment of the value thereof, provided that such guests shall have
notified in advance the innkeeper himself, or the person representing him, of the deposit of such goods within the
inn; and shall furthermore have followed the directions which such innkeeper or his representative may have
given them with respect to the care of and vigilance over such goods. No liability shall attach in case of robbery
with violence against or intimidation against or intimidation of persons unless committed by the innkeeper's
employees.
ART. 103. Subsidiary civil liability of other persons. The subsidiary liability established in the next preceding
article shall also apply to employers, teachers, persons, and corporations engaged in any kind of industry for
felonies committed by their servants, pupils, workmen, apprentices, or employees in the discharge of their duties.
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ART. 365. Imprudence and negligence. Any person who, by reckless imprudence, shall commit any act which,
had it been intentional, would constitute a grave felony, shall suffer the penalty of arresto mayor in its maximum
period to prision correccional in its minimum period; if it would have constituted a less grave felony, the penalty of
arresto mayor in its minimum and medium periods shall be imposed.
Any person who, by simple imprudence or negligence, shall commit an act which would otherwise constitute a
grave felony, shall suffer the penalty of arresto mayor in its medium and maximum periods; if it would have
constituted a less serious felony, the penalty of arresto mayor in its minimum period shall be imposed."
It will thus be seen that while the terms of articles 1902 of the Civil Code seem to be broad enough to cover the
driver's negligence in the instant case, nevertheless article 1093 limits cuasi-delitos to acts or omissions "not
punishable by law." But inasmuch as article 365 of the Revised Penal Code punishes not only reckless but even
simple imprudence or negligence, the fault or negligence under article 1902 of the Civil Code has apparently been
crowded out. It is this overlapping that makes the "confusion worse confounded." However, a closer study shows
that such a concurrence of scope in regard to negligent acts does not destroy the distinction between the civil

liability arising from a crime and the responsibility for cuasi-delitos or culpa extra-contractual. The same negligent
act causing damages may produce civil liability arising from a crime under article 100 of the Revised Penal Code,
or create an action for cuasi-delito or culpa extra-contractual under articles 1902-1910 of the Civil Code.
The individuality of cuasi-delito or culpa extra-contractual looms clear and unmistakable. This legal institution is of
ancient lineage, one of its early ancestors being the Lex Aquilia in the Roman Law. In fact, in Spanish legal
terminology, this responsibility is often referred to as culpa aquiliana. The Partidas also contributed to the
genealogy of the present fault or negligence under the Civil Code; for instance, Law 6, Title 15, of Partida 7, says:
"Tenudo es de fazer emienda, porque, como quier que el non fizo a sabiendas en dao al otro, pero acaescio por
su culpa."
The distinctive nature of cuasi-delitos survives in the Civil Code. According to article 1089, one of the five sources
of obligations is this legal institution of cuasi-delito or culpa extra-contractual: "los actos . . . en que intervenga
cualquier genero de culpa o negligencia." Then article 1093 provides that this kind of obligation shall be governed
by Chapter II of Title XVI of Book IV, meaning articles 1902-0910. This portion of the Civil Code is exclusively
devoted to the legal institution of culpa aquiliana.
Some of the differences between crimes under the Penal Code and the culpa aquiliana or cuasi-delito under the
Civil Code are:
1. That crimes affect the public interest, while cuasi-delitos are only of private concern.
2. That, consequently, the Penal Code punishes or corrects the criminal act, while the Civil Code, by means of
indemnification, merely repairs the damage.
3. That delicts are not as broad as quasi-delicts, because the former are punished only if there is a penal law
clearly covering them, while the latter, cuasi-delitos, include all acts in which "any king of fault or negligence
intervenes." However, it should be noted that not all violations of the penal law produce civil responsibility, such
as begging in contravention of ordinances, violation of the game laws, infraction of the rules of traffic when
nobody is hurt. (See Colin and Capitant, "Curso Elemental de Derecho Civil," Vol. 3, p. 728.)
Let us now ascertain what some jurists say on the separate existence of quasi-delicts and the employer's primary
and direct liability under article 1903 of the Civil Code.
Dorado Montero in his essay on "Responsibilidad" in the "Enciclopedia Juridica Espaola" (Vol. XXVII, p. 414) says:
El concepto juridico de la responsabilidad civil abarca diversos aspectos y comprende a diferentes personas. Asi,
existe una responsabilidad civil propiamente dicha, que en ningun casl lleva aparejada responsabilidad criminal
alguna, y otra que es consecuencia indeclinable de la penal que nace de todo delito o falta."
The juridical concept of civil responsibility has various aspects and comprises different persons. Thus, there is a
civil responsibility, properly speaking, which in no case carries with it any criminal responsibility, and another
which is a necessary consequence of the penal liability as a result of every felony or misdemeanor."
Maura, an outstanding authority, was consulted on the following case: There had been a collision between two
trains belonging respectively to the Ferrocarril Cantabrico and the Ferrocarril del Norte. An employee of the latter
had been prosecuted in a criminal case, in which the company had been made a party as subsidiarily responsible
in civil damages. The employee had been acquitted in the criminal case, and the employer, the Ferrocarril del
Norte, had also been exonerated. The question asked was whether the Ferrocarril Cantabrico could still bring a
civil action for damages against the Ferrocarril del Norte. Maura's opinion was in the affirmative, stating in part
(Maura, Dictamenes, Vol. 6, pp. 511-513):
Quedando las cosas asi, a proposito de la realidad pura y neta de los hechos, todavia menos parece sostenible
que exista cosa juzgada acerca de la obligacion civil de indemnizar los quebrantos y menoscabos inferidos por el
choque de los trenes. El titulo en que se funda la accion para demandar el resarcimiento, no puede confundirse
con las responsabilidades civiles nacidas de delito, siquiera exista en este, sea el cual sea, una culpa rodeada de
notas agravatorias que motivan sanciones penales, mas o menos severas. La lesion causada por delito o falta en
los derechos civiles, requiere restituciones, reparaciones o indemnizaciones, que cual la pena misma ataen al
orden publico; por tal motivo vienen encomendadas, de ordinario, al Ministerio Fiscal; y claro es que si por esta
via se enmiendan los quebrantos y menoscabos, el agraviado excusa procurar el ya conseguido desagravio; pero
esta eventual coincidencia de los efectos, no borra la diversidad originaria de las acciones civiles para pedir
indemnizacion.

Estas, para el caso actual (prescindiendo de culpas contractuales, que no vendrian a cuento y que tiene otro
regimen), dimanan, segun el articulo 1902 del Codigo Civil, de toda accion u omision, causante de daos o
perjuicios, en que intervenga culpa o negligencia. Es trivial que acciones semejantes son ejercitadas ante los
Tribunales de lo civil cotidianamente, sin que la Justicia punitiva tenga que mezclarse en los asuntos. Los articulos
18 al 21 y 121 al 128 del Codigo Penal, atentos al espiritu y a los fines sociales y politicos del mismo,
desenvuelven y ordenan la materia de responsabilidades civiles nacidas de delito, en terminos separados del
regimen por ley comun de la culpa que se denomina aquiliana, por alusion a precedentes legislativos del Corpus
Juris. Seria intempestivo un paralelo entre aquellas ordenaciones, y la de la obligacion de indemnizar a titulo de
culpa civil; pero viene al caso y es necesaria una de las diferenciaciones que en el tal paralelo se notarian.
Los articulos 20 y 21 del Codigo Penal, despues de distribuir a su modo las responsabilidades civiles, entre los que
sean por diversos conceptos culpables del delito o falta, las hacen extensivas a las empresas y los
establecimientos al servicio de los cuales estan los delincuentes; pero con caracter subsidiario, o sea, segun el
texto literal, en defecto de los que sean responsables criminalmente. No coincide en ello el Codigo Civil, cuyo
articulo 1903, dice; La obligacion que impone el articulo anterior es exigible, no solo por los actos y omisiones
propios, sino por los de aquellas personas de quienes se debe responder; personas en la enumeracion de las
cuales figuran los dependientes y empleados de los establecimientos o empresas, sea por actos del servicio, sea
con ocasion de sus funciones. Por esto acontece, y se observa en la jurisprudencia, que las empresas, despues de
intervenir en las causas criminales con el caracter subsidiario de su responsabilidad civil por razon del delito, son
demandadas y condenadas directa y aisladamente, cuando se trata de la obligacion, ante los tribunales civiles.
Siendo como se ve, diverso el titulo de esta obligacion, y formando verdadero postulado de nuestro regimen
judicial la separacion entre justicia punitiva y tribunales de lo civil, de suerte que tienen unos y otros normas de
fondo en distintos cuerpos legales, y diferentes modos de proceder, habiendose, por aadidura, abstenido de
asistir al juicio criminal la Compaia del Ferrocarril Cantabrico, que se reservo ejercitar sus acciones, parece
innegable que la de indemnizacion por los daos y perjuicios que le irrogo el choque, no estuvo sub judice ante el
Tribunal del Jurado, ni fue sentenciada, sino que permanecio intacta, al pronunciarse el fallo de 21 de marzo. Aun
cuando el veredicto no hubiese sido de inculpabilidad, mostrose mas arriba, que tal accion quedaba
legitimamente reservada para despues del proceso; pero al declararse que no existio delito, ni responsabilidad
dimanada de delito, materia unica sobre que tenian jurisdiccion aquellos juzgadores, se redobla el motivo para la
obligacion civil ex lege, y se patentiza mas y mas que la accion para pedir su cumplimiento permanece incolume,
extraa a la cosa juzgada.
As things are, apropos of the reality pure and simple of the facts, it seems less tenable that there should be res
judicata with regard to the civil obligation for damages on account of the losses caused by the collision of the
trains. The title upon which the action for reparation is based cannot be confused with the civil responsibilities
born of a crime, because there exists in the latter, whatever each nature, a culpa surrounded with aggravating
aspects which give rise to penal measures that are more or less severe. The injury caused by a felony or
misdemeanor upon civil rights requires restitutions, reparations, or indemnifications which, like the penalty itself,
affect public order; for this reason, they are ordinarily entrusted to the office of the prosecuting attorney; and it is
clear that if by this means the losses and damages are repaired, the injured party no longer desires to seek
another relief; but this coincidence of effects does not eliminate the peculiar nature of civil actions to ask for
indemnity.
Such civil actions in the present case (without referring to contractual faults which are not pertinent and belong to
another scope) are derived, according to article 1902 of the Civil Code, from every act or omission causing losses
and damages in which culpa or negligence intervenes. It is unimportant that such actions are every day filed
before the civil courts without the criminal courts interfering therewith. Articles 18 to 21 and 121 to 128 of the
Penal Code, bearing in mind the spirit and the social and political purposes of that Code, develop and regulate the
matter of civil responsibilities arising from a crime, separately from the regime under common law, of culpa which
is known as aquiliana, in accordance with legislative precedent of the Corpus Juris. It would be unwarranted to
make a detailed comparison between the former provisions and that regarding the obligation to indemnify on
account of civil culpa; but it is pertinent and necessary to point out to one of such differences.
Articles 20 and 21 of the Penal Code, after distriburing in their own way the civil responsibilities among those who,
for different reasons, are guilty of felony or misdemeanor, make such civil responsibilities applicable to
enterprises and establishments for which the guilty parties render service, but with subsidiary character, that is to
say, according to the wording of the Penal Code, in default of those who are criminally responsible. In this regard,
the Civil Code does not coincide because article 1903 says: "The obligation imposed by the next preceding article
is demandable, not only for personal acts and omissions, but also for those of persons for whom another is
responsible." Among the persons enumerated are the subordinates and employees of establishments or
enterprises, either for acts during their service or on the occasion of their functions. It is for this reason that it
happens, and it is so observed in judicial decisions, that the companies or enterprises, after taking part in the

criminal cases because of their subsidiary civil responsibility by reason of the crime, are sued and sentenced
directly and separately with regard to the obligation, before the civil courts.
Seeing that the title of this obligation is different, and the separation between punitive justice and the civil courts
being a true postulate of our judicial system, so that they have different fundamental norms in different codes, as
well as different modes of procedure, and inasmuch as the Compaa del Ferrocarril Cantabrico has abstained from
taking part in the criminal case and has reserved the right to exercise its actions, it seems undeniable that the
action for indemnification for the losses and damages caused to it by the collision was not sub judice before the
Tribunal del Jurado, nor was it the subject of a sentence, but it remained intact when the decision of March 21 was
rendered. Even if the verdict had not been that of acquittal, it has already been shown that such action had been
legitimately reserved till after the criminal prosecution; but because of the declaration of the non-existence of the
felony and the non-existence of the responsibility arising from the crime, which was the sole subject matter upon
which the Tribunal del Jurado had jurisdiction, there is greater reason for the civil obligation ex lege, and it
becomes clearer that the action for its enforcement remain intact and is not res judicata.
Laurent, a jurist who has written a monumental work on the French Civil Code, on which the Spanish Civil Code is
largely based and whose provisions on cuasi-delito or culpa extra-contractual are similar to those of the Spanish
Civil Code, says, referring to article 1384 of the French Civil Code which corresponds to article 1903, Spanish Civil
Code:
The action can be brought directly against the person responsible (for another), without including the author of
the act. The action against the principal is accessory in the sense that it implies the existence of a prejudicial act
committed by the employee, but it is not subsidiary in the sense that it can not be instituted till after the
judgment against the author of the act or at least, that it is subsidiary to the principal action; the action for
responsibility (of the employer) is in itself a principal action. (Laurent, Principles of French Civil Law, Spanish
translation, Vol. 20, pp. 734-735.)
Amandi, in his "Cuestionario del Codigo Civil Reformado" (Vol. 4, pp. 429, 430), declares that the responsibility of
the employer is principal and not subsidiary. He writes:
Cuestion 1. La responsabilidad declarada en el articulo 1903 por las acciones u omisiones de aquellas personas
por las que se debe responder, es subsidiaria? es principal? Para contestar a esta pregunta es necesario saber, en
primer lugar, en que se funda el precepto legal. Es que realmente se impone una responsabilidad por una falta
ajena? Asi parece a primera vista; pero semejante afirmacion seria contraria a la justicia y a la maxima universal,
segun la que las faltas son personales, y cada uno responde de aquellas que le son imputables. La
responsabilidad de que tratamos se impone con ocasion de un delito o culpa, pero no por causa de ellos, sino por
causa del causi delito, esto es, de la imprudencia o de la negligencia del padre, del tutor, del dueo o director del
establecimiento, del maestro, etc. Cuando cualquiera de las personas que enumera el articulo citado (menores de
edad, incapacitados, dependientes, aprendices) causan un dao, la ley presume que el padre, el tutor, el maestro,
etc., han cometido una falta de negligencia para prevenir o evitar el dao. Esta falta es la que la ley castiga. No
hay, pues, responsabilidad por un hecho ajeno, sino en la apariencia; en realidad la responsabilidad se exige por
un hecho propio. La idea de que esa responsabilidad sea subsidiaria es, por lo tanto, completamente inadmisible.
Question No. 1. Is the responsibility declared in article 1903 for the acts or omissions of those persons for who one
is responsible, subsidiary or principal? In order to answer this question it is necessary to know, in the first place,
on what the legal provision is based. Is it true that there is a responsibility for the fault of another person? It
seems so at first sight; but such assertion would be contrary to justice and to the universal maxim that all faults
are personal, and that everyone is liable for those faults that can be imputed to him. The responsibility in question
is imposed on the occasion of a crime or fault, but not because of the same, but because of the cuasi-delito, that
is to say, the imprudence or negligence of the father, guardian, proprietor or manager of the establishment, of the
teacher, etc. Whenever anyone of the persons enumerated in the article referred to (minors, incapacitated
persons, employees, apprentices) causes any damage, the law presumes that the father, guardian, teacher, etc.
have committed an act of negligence in not preventing or avoiding the damage. It is this fault that is condemned
by the law. It is, therefore, only apparent that there is a responsibility for the act of another; in reality the
responsibility exacted is for one's own act. The idea that such responsibility is subsidiary is, therefore, completely
inadmissible.
Oyuelos, in his "Digesto: Principios, Doctrina y Jurisprudencia, Referentes al Codigo Civil Espaol," says in Vol. VII,
p. 743:
Es decir, no responde de hechos ajenos, porque se responde solo de su propia culpa, doctrina del articulo 1902;
mas por excepcion, se responde de la ajena respecto de aquellas personas con las que media algun nexo o
vinculo, que motiva o razona la responsabilidad. Esta responsabilidad, es directa o es subsidiaria? En el orden
penal, el Codigo de esta clase distingue entre menores e incapacitados y los demas, declarando directa la primera

(articulo 19) y subsidiaria la segunda (articulos 20 y 21); pero en el orden civil, en el caso del articulo 1903, ha de
entenderse directa, por el tenor del articulo que impone la responsabilidad precisamente "por los actos de
aquellas personas de quienes se deba responder."
That is to say, one is not responsible for the acts of others, because one is liable only for his own faults, this being
the doctrine of article 1902; but, by exception, one is liable for the acts of those persons with whom there is a
bond or tie which gives rise to the responsibility. Is this responsibility direct or subsidiary? In the order of the penal
law, the Penal Code distinguishes between minors and incapacitated persons on the one hand, and other persons
on the other, declaring that the responsibility for the former is direct (article 19), and for the latter, subsidiary
(articles 20 and 21); but in the scheme of the civil law, in the case of article 1903, the responsibility should be
understood as direct, according to the tenor of that articles, for precisely it imposes responsibility "for the acts of
those persons for whom one should be responsible."
Coming now to the sentences of the Supreme Tribunal of Spain, that court has upheld the principles above set
forth: that a quasi-delict or culpa extra-contractual is a separate and distinct legal institution, independent from
the civil responsibility arising from criminal liability, and that an employer is, under article 1903 of the Civil Code,
primarily and directly responsible for the negligent acts of his employee.
One of the most important of those Spanish decisions is that of October 21, 1910. In that case, Ramon Lafuente
died as the result of having been run over by a street car owned by the "compaia Electric Madrilea de Traccion."
The conductor was prosecuted in a criminal case but he was acquitted. Thereupon, the widow filed a civil action
against the street car company, paying for damages in the amount of 15,000 pesetas. The lower court awarded
damages; so the company appealed to the Supreme Tribunal, alleging violation of articles 1902 and 1903 of the
Civil Code because by final judgment the non-existence of fault or negligence had been declared. The Supreme
Court of Spain dismissed the appeal, saying:
Considerando que el primer motivo del recurso se funda en el equivocado supuesto de que el Tribunal a quo, al
condonar a la compaia Electrica Madrilea al pago del dao causado con la muerte de Ramon La fuente
Izquierdo, desconoce el valor y efectos juridicos de la sentencia absolutoria deictada en la causa criminal que se
siguio por el mismo hecho, cuando es lo cierto que de este han conocido las dos jurisdicciones bajo diferentes as
pectos, y como la de lo criminal declrao dentro de los limites de su competencia que el hecho de que se trata no
era constitutivo de delito por no haber mediado descuido o negligencia graves, lo que no excluye, siendo este el
unico fundamento del fallo absolutorio, el concurso de la culpa o negligencia no califacadas, fuente de
obligaciones civiles segun el articulo 1902 del Codigo, y que alcanzan, segun el 1903, netre otras perosnas, a los
Directores de establecimientos o empresas por los daos causados por sus dependientes en determinadas
condiciones, es manifesto que la de lo civil, al conocer del mismo hehco baho este ultimo aspecto y al condenar a
la compaia recurrente a la indemnizacion del dao causado por uno de sus empleados, lejos de infringer los
mencionados textos, en relacion con el articulo 116 de la Ley de Enjuciamiento Criminal, se ha atenido
estrictamente a ellos, sin invadir atribuciones ajenas a su jurisdiccion propia, ni contrariar en lo mas minimo el
fallo recaido en la causa.
Considering that the first ground of the appeal is based on the mistaken supposition that the trial court, in
sentencing the Compaia Madrilea to the payment of the damage caused by the death of Ramon Lafuente
Izquierdo, disregards the value and juridical effects of the sentence of acquittal rendered in the criminal case
instituted on account of the same act, when it is a fact that the two jurisdictions had taken cognizance of the
same act in its different aspects, and as the criminal jurisdiction declared within the limits of its authority that the
act in question did not constitute a felony because there was no grave carelessness or negligence, and this being
the only basis of acquittal, it does no exclude the co-existence of fault or negligence which is not qualified, and is
a source of civil obligations according to article 1902 of the Civil Code, affecting, in accordance with article 1903,
among other persons, the managers of establishments or enterprises by reason of the damages caused by
employees under certain conditions, it is manifest that the civil jurisdiccion in taking cognizance of the same act
in this latter aspect and in ordering the company, appellant herein, to pay an indemnity for the damage caused by
one of its employees, far from violating said legal provisions, in relation with article 116 of the Law of Criminal
Procedure, strictly followed the same, without invading attributes which are beyond its own jurisdiction, and
without in any way contradicting the decision in that cause. (Emphasis supplied.)
It will be noted, as to the case just cited:
First. That the conductor was not sued in a civil case, either separately or with the street car company. This is
precisely what happens in the present case: the driver, Fontanilla, has not been sued in a civil action, either alone
or with his employer.
Second. That the conductor had been acquitted of grave criminal negligence, but the Supreme Tribunal of Spain
said that this did not exclude the co-existence of fault or negligence, which is not qualified, on the part of the

conductor, under article 1902 of the Civil Code. In the present case, the taxi driver was found guilty of criminal
negligence, so that if he had even sued for his civil responsibility arising from the crime, he would have been held
primarily liable for civil damages, and Barredo would have been held subsidiarily liable for the same. But the
plaintiffs are directly suing Barredo, on his primary responsibility because of his own presumed negligence
which he did not overcome under article 1903. Thus, there were two liabilities of Barredo: first, the subsidiary
one because of the civil liability of the taxi driver arising from the latter's criminal negligence; and, second,
Barredo's primary liability as an employer under article 1903. The plaintiffs were free to choose which course to
take, and they preferred the second remedy. In so doing, they were acting within their rights. It might be observed
in passing, that the plaintiff choose the more expeditious and effective method of relief, because Fontanilla was
either in prison, or had just been released, and besides, he was probably without property which might be seized
in enforcing any judgment against him for damages.
Third. That inasmuch as in the above sentence of October 21, 1910, the employer was held liable civilly,
notwithstanding the acquittal of the employee (the conductor) in a previous criminal case, with greater reason
should Barredo, the employer in the case at bar, be held liable for damages in a civil suit filed against him
because his taxi driver had been convicted. The degree of negligence of the conductor in the Spanish case cited
was less than that of the taxi driver, Fontanilla, because the former was acquitted in the previous criminal case
while the latter was found guilty of criminal negligence and was sentenced to an indeterminate sentence of one
year and one day to two years of prision correccional.
(See also Sentence of February 19, 1902, which is similar to the one above quoted.)
In the Sentence of the Supreme Court of Spain, dated February 14, 1919, an action was brought against a railroad
company for damages because the station agent, employed by the company, had unjustly and fraudulently,
refused to deliver certain articles consigned to the plaintiff. The Supreme Court of Spain held that this action was
properly under article 1902 of the Civil Code, the court saying:
Considerando que la sentencia discutida reconoce, en virtud de los hechos que consigna con relacion a las
pruebas del pleito: 1., que las expediciones facturadas por la compaia ferroviaria a la consignacion del actor de
las vasijas vacias que en su demanda relacionan tenian como fin el que este las devolviera a sus remitentes con
vinos y alcoholes; 2., que llegadas a su destino tales mercanias no se quisieron entregar a dicho consignatario
por el jefe de la estacion sin motivo justificado y con intencion dolosa, y 3., que la falta de entrega de estas
expediciones al tiempo de reclamarlas el demandante le originaron daos y perjuicios en cantidad de bastante
importancia como expendedor al por mayor que era de vinos y alcoholes por las ganancias que dejo de obtener al
verse privado de servir los pedidos que se le habian hecho por los remitentes en los envases:
Considerando que sobre esta base hay necesidad de estimar los cuatro motivos que integran este recurso, porque
la demanda inicial del pleito a que se contrae no contiene accion que nazca del incumplimiento del contrato de
transporte, toda vez que no se funda en el retraso de la llegada de las mercancias ni de ningun otro vinculo
contractual entre las partes contendientes, careciendo, por tanto, de aplicacion el articulo 371 del Codigo de
Comercio, en que principalmente descansa el fallo recurrido, sino que se limita a pedir la reparaction de los daos
y perjuicios producidos en el patrimonio del actor por la injustificada y dolosa negativa del porteador a la entrega
de las mercancias a su nombre consignadas, segun lo reconoce la sentencia, y cuya responsabilidad esta
claramente sancionada en el articulo 1902 del Codigo Civil, que obliga por el siguiente a la Compaia demandada
como ligada con el causante de aquellos por relaciones de caracter economico y de jurarquia administrativa.
Considering that the sentence, in question recognizes, in virtue of the facts which it declares, in relation to the
evidence in the case: (1) that the invoice issued by the railroad company in favor of the plaintiff contemplated
that the empty receptacles referred to in the complaint should be returned to the consignors with wines and
liquors; (2) that when the said merchandise reached their destination, their delivery to the consignee was refused
by the station agent without justification and with fraudulent intent, and (3) that the lack of delivery of these
goods when they were demanded by the plaintiff caused him losses and damages of considerable importance, as
he was a wholesale vendor of wines and liquors and he failed to realize the profits when he was unable to fill the
orders sent to him by the consignors of the receptacles:
Considering that upon this basis there is need of upholding the four assignments of error, as the original
complaint did not contain any cause of action arising from non-fulfillment of a contract of transportation, because
the action was not based on the delay of the goods nor on any contractual relation between the parties litigant
and, therefore, article 371 of the Code of Commerce, on which the decision appealed from is based, is not
applicable; but it limits to asking for reparation for losses and damages produced on the patrimony of the plaintiff
on account of the unjustified and fraudulent refusal of the carrier to deliver the goods consigned to the plaintiff as
stated by the sentence, and the carrier's responsibility is clearly laid down in article 1902 of the Civil Code which
binds, in virtue of the next article, the defendant company, because the latter is connected with the person who
caused the damage by relations of economic character and by administrative hierarchy. (Emphasis supplied.)

The above case is pertinent because it shows that the same act may come under both the Penal Code and the
Civil Code. In that case, the action of the agent was unjustified and fraudulent and therefore could have been the
subject of a criminal action. And yet, it was held to be also a proper subject of a civil action under article 1902 of
the Civil Code. It is also to be noted that it was the employer and not the employee who was being sued.
Let us now examine the cases previously decided by this Court.
In the leading case of Rakes vs. Atlantic Gulf and Pacific Co. (7 Phil., 359, 362-365 [year 1907]), the trial court
awarded damages to the plaintiff, a laborer of the defendant, because the latter had negligently failed to repair a
tramway in consequence of which the rails slid off while iron was being transported, and caught the plaintiff
whose leg was broken. This Court held:
It is contended by the defendant, as its first defense to the action that the necessary conclusion from these
collated laws is that the remedy for injuries through negligence lies only in a criminal action in which the official
criminally responsible must be made primarily liable and his employer held only subsidiarily to him. According to
this theory the plaintiff should have procured the arrest of the representative of the company accountable for not
repairing the track, and on his prosecution a suitable fine should have been imposed, payable primarily by him
and secondarily by his employer.
This reasoning misconceived the plan of the Spanish codes upon this subject. Article 1093 of the Civil Code makes
obligations arising from faults or negligence not punished by the law, subject to the provisions of Chapter II of
Title XVI. Section 1902 of that chapter reads:
"A person who by an act or omission causes damage to another when there is fault or negligence shall be obliged
to repair the damage so done.
"SEC. 1903. The obligation imposed by the preceeding article is demandable, not only for personal acts and
omissions, but also for those of the persons for whom they should be responsible.
"The father, and on his death or incapacity, the mother, is liable for the damages caused by the minors who live
with them.
xxxxxxxxx
"Owners or directors of an establishment or enterprise are equally liable for the damages caused by their
employees in the service of the branches in which the latter may be employed or in the performance of their
duties.
xxxxxxxxx
"The liability referred to in this article shall cease when the persons mentioned therein prove that they employed
all the diligence of a good father of a family to avoid the damage."
As an answer to the argument urged in this particular action it may be sufficient to point out that nowhere in our
general statutes is the employer penalized for failure to provide or maintain safe appliances for his workmen. His
obligation therefore is one 'not punished by the laws' and falls under civil rather than criminal jurisprudence. But
the answer may be a broader one. We should be reluctant, under any conditions, to adopt a forced construction of
these scientific codes, such as is proposed by the defendant, that would rob some of these articles of effect,
would shut out litigants against their will from the civil courts, would make the assertion of their rights dependent
upon the selection for prosecution of the proper criminal offender, and render recovery doubtful by reason of the
strict rules of proof prevailing in criminal actions. Even if these articles had always stood alone, such a
construction would be unnecessary, but clear light is thrown upon their meaning by the provisions of the Law of
Criminal Procedure of Spain (Ley de Enjuiciamiento Criminal), which, though never in actual force in these Islands,
was formerly given a suppletory or explanatory effect. Under article 111 of this law, both classes of action, civil
and criminal, might be prosecuted jointly or separately, but while the penal action was pending the civil was
suspended. According to article 112, the penal action once started, the civil remedy should be sought therewith,
unless it had been waived by the party injured or been expressly reserved by him for civil proceedings for the
future. If the civil action alone was prosecuted, arising out of a crime that could be enforced only on private
complaint, the penal action thereunder should be extinguished. These provisions are in harmony with those of
articles 23 and 133 of our Penal Code on the same subject.
An examination of this topic might be carried much further, but the citation of these articles suffices to show that
the civil liability was not intended to be merged in the criminal nor even to be suspended thereby, except as

expressly provided in the law. Where an individual is civilly liable for a negligent act or omission, it is not required
that the injured party should seek out a third person criminally liable whose prosecution must be a condition
precedent to the enforcement of the civil right.
Under article 20 of the Penal Code the responsibility of an employer may be regarded as subsidiary in respect of
criminal actions against his employees only while they are in process of prosecution, or in so far as they
determine the existence of the criminal act from which liability arises, and his obligation under the civil law and its
enforcement in the civil courts is not barred thereby unless by the election of the injured person. Inasmuch as no
criminal proceeding had been instituted, growing our of the accident in question, the provisions of the Penal Code
can not affect this action. This construction renders it unnecessary to finally determine here whether this
subsidiary civil liability in penal actions has survived the laws that fully regulated it or has been abrogated by the
American civil and criminal procedure now in force in the Philippines.
The difficulty in construing the articles of the code above cited in this case appears from the briefs before us to
have arisen from the interpretation of the words of article 1093, "fault or negligence not punished by law," as
applied to the comprehensive definition of offenses in articles 568 and 590 of the Penal Code. It has been shown
that the liability of an employer arising out of his relation to his employee who is the offender is not to be
regarded as derived from negligence punished by the law, within the meaning of articles 1902 and 1093. More
than this, however, it cannot be said to fall within the class of acts unpunished by the law, the consequence of
which are regulated by articles 1902 and 1903 of the Civil Code. The acts to which these articles 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 articles 1101, 1103, and 1104 of the same code. A typical application of this distinction
may be found in the consequences of a railway accident due to defective machinery supplied by the employer. His
liability to his employee would arise out of the contract of employment, that to the passengers out of the contract
for passage, while that to the injured bystander would originate in the negligent act itself.
In Manzanares vs. Moreta, 38 Phil., 821 (year 1918), the mother of the 8 of 9-year-old child Salvador Bona brought
a civil action against Moreta to recover damages resulting from the death of the child, who had been run over by
an automobile driven and managed by the defendant. The trial court rendered judgment requiring the defendant
to pay the plaintiff the sum of P1,000 as indemnity: This Court in affirming the judgment, said in part:
If it were true that the defendant, in coming from the southern part of Solana Street, had to stop his auto before
crossing Real Street, because he had met vehicles which were going along the latter street or were coming from
the opposite direction along Solana Street, it is to be believed that, when he again started to run his auto across
said Real Street and to continue its way along Solana Street northward, he should have adjusted the speed of the
auto which he was operating until he had fully crossed Real Street and had completely reached a clear way on
Solana Street. But, as the child was run over by the auto precisely at the entrance of Solana Street, this accident
could not have occurred if the auto had been running at a slow speed, aside from the fact that the defendant, at
the moment of crossing Real Street and entering Solana Street, in a northward direction, could have seen the
child in the act of crossing the latter street from the sidewalk on the right to that on the left, and if the accident
had occurred in such a way that after the automobile had run over the body of the child, and the child's body had
already been stretched out on the ground, the automobile still moved along a distance of about 2 meters, this
circumstance shows the fact that the automobile entered Solana Street from Real Street, at a high speed without
the defendant having blown the horn. If these precautions had been taken by the defendant, the deplorable
accident which caused the death of the child would not have occurred.
It will be noticed that the defendant in the above case could have been prosecuted in a criminal case because his
negligence causing the death of the child was punishable by the Penal Code. Here is therefore a clear instance of
the same act of negligence being a proper subject-matter either of a criminal action with its consequent civil
liability arising from a crime or of an entirely separate and independent civil action for fault or negligence under
article 1902 of the Civil Code. Thus, in this jurisdiction, the separate individually of a cuasi-delito or culpa
aquiliana under the Civil Code has been fully and clearly recognized, even with regard to a negligent act for which
the wrongdoer could have been prosecuted and convicted in a criminal case and for which, after such a
conviction, he could have been sued for this civil liability arising from his crime.
Years later (in 1930) this Court had another occasion to apply the same doctrine. In Bernal and Enverso vs. House
and Tacloban Electric & Ice Plant, Ltd., 54 Phil., 327, the parents of the five-year-old child, Purificacion Bernal,
brought a civil action to recover damages for the child's death as a result of burns caused by the fault and
negligence of the defendants. On the evening of April 10, 1925, the Good Friday procession was held in Tacloban,
Leyte. Fortunata Enverso with her daughter Purificacion Bernal had come from another municipality to attend the
same. After the procession the mother and the daughter with two others were passing along Gran Capitan Street
in front of the offices of the Tacloban Electric & Ice Plant, Ltd., owned by defendants J. V. House, when an
automobile appeared from the opposite direction. The little girl, who was slightly ahead of the rest, was so

frightened by the automobile that she turned to run, but unfortunately she fell into the street gutter where hot
water from the electric plant was flowing. The child died that same night from the burns. The trial courts
dismissed the action because of the contributory negligence of the plaintiffs. But this Court held, on appeal, that
there was no contributory negligence, and allowed the parents P1,000 in damages from J. V. House who at the
time of the tragic occurrence was the holder of the franchise for the electric plant. This Court said in part:
Although the trial judge made the findings of fact hereinbefore outlined, he nevertheless was led to order the
dismissal of the action because of the contributory negligence of the plaintiffs. It is from this point that a majority
of the court depart from the stand taken by the trial judge. The mother and her child had a perfect right to be on
the principal street of Tacloban, Leyte, on the evening when the religious procession was held. There was nothing
abnormal in allowing the child to run along a few paces in advance of the mother. No one could foresee the
coincidence of an automobile appearing and of a frightened child running and falling into a ditch filled with hot
water. The doctrine announced in the much debated case of Rakes vs. Atlantic Gulf and Pacific Co. ([1907]), 7
Phil., 359), still rule. Article 1902 of the Civil Code must again be enforced. The contributory negligence of the
child and her mother, if any, does not operate as a bar to recovery, but in its strictest sense could only result in
reduction of the damages.
It is most significant that in the case just cited, this Court specifically applied article 1902 of the Civil Code. It is
thus that although J. V. House could have been criminally prosecuted for reckless or simple negligence and not
only punished but also made civilly liable because of his criminal negligence, nevertheless this Court awarded
damages in an independent civil action for fault or negligence under article 1902 of the Civil Code.
In Bahia vs. Litonjua and Leynes (30 Phil., 624 [year 1915), the action was for damages for the death of the
plaintiff's daughter alleged to have been caused by the negligence of the servant in driving an automobile over
the child. It appeared that the cause of the mishap was a defect in the steering gear. The defendant Leynes had
rented the automobile from the International Garage of Manila, to be used by him in carrying passengers during
the fiesta of Tuy, Batangas. Leynes was ordered by the lower court to pay P1,000 as damages to the plaintiff. On
appeal this Court reversed the judgment as to Leynes on the ground that he had shown that the exercised the
care of a good father of a family, thus overcoming the presumption of negligence under article 1903. This Court
said:
As to selection, the defendant has clearly shown that he exercised the care and diligence of a good father of a
family. He obtained the machine from a reputable garage and it was, so far as appeared, in good condition. The
workmen were likewise selected from a standard garage, were duly licensed by the Government in their particular
calling, and apparently thoroughly competent. The machine had been used but a few hours when the accident
occurred and it is clear from the evidence that the defendant had no notice, either actual or constructive, of the
defective condition of the steering gear.
The legal aspect of the case was discussed by this Court thus:
Article 1903 of the Civil Code not only establishes liability in cases of negligence, but also provides when the
liability shall cease. It says:
"The liability referred to in this article shall cease when the persons mentioned therein prove that they employed
all the diligence of a good father of a family to avoid the damage."
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 matter or
employer either in the selection of the servant or employee, or in supervision over him after the selection, or
both; and (2) 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 relieve
from liability.
This theory bases the responsibility of the master ultimately on his own negligence and not on that of his servant.
The doctrine of the case just cited was followed by this Court in Cerf vs. Medel (33 Phil., 37 [year 1915]). In the
latter case, the complaint alleged that the defendant's servant had so negligently driven an automobile, which
was operated by defendant as a public vehicle, that said automobile struck and damaged the plaintiff's
motorcycle. This Court, applying article 1903 and following the rule in Bahia vs. Litonjua and Leynes, said in part
(p. 41) that:

The master is liable for the negligent acts of his servant where he is the owner or director of a business or
enterprise and the negligent acts are committed while the servant is engaged in his master's employment as such
owner.
Another case which followed the decision in Bahia vs. Litonjua and Leynes was Cuison vs. Norton & Harrison Co.,
55 Phil., 18 (year 1930). The latter case was an action for damages brought by Cuison for the death of his sevenyear-old son Moises. The little boy was on his way to school with his sister Marciana. Some large pieces of lumber
fell from a truck and pinned the boy underneath, instantly killing him. Two youths, Telesforo Binoya and Francisco
Bautista, who were working for Ora, an employee of defendant Norton & Harrison Co., pleaded guilty to the crime
of homicide through reckless negligence and were sentenced accordingly. This Court, applying articles 1902 and
1903, held:
The basis of civil law liability is not respondent superior but the relationship of pater familias. This theory bases
the liability of the master ultimately on his own negligence and not on that of his servant. (Bahia vs. Litonjua and
Leynes [1915], 30 Phil., 624; Cangco vs. Manila Railroad Co. [1918], 38 Phil., 768.)
In Walter A. Smith & Co. vs. Cadwallader Gibson Lumber Co., 55 Phil., 517 (year 1930) the plaintiff brought an
action for damages for the demolition of its wharf, which had been struck by the steamer Helen C belonging to
the defendant. This Court held (p. 526):
The evidence shows that Captain Lasa at the time the plaintiff's wharf collapsed was a duly licensed captain,
authorized to navigate and direct a vessel of any tonnage, and that the appellee contracted his services because
of his reputation as a captain, according to F. C. Cadwallader. This being so, we are of the opinion that the
presumption of liability against the defendant has been overcome by the exercise of the care and diligence of a
good father of a family in selecting Captain Lasa, in accordance with the doctrines laid down by this court in the
cases cited above, and the defendant is therefore absolved from all liability.
It is, therefore, seen that the defendant's theory about his secondary liability is negatived by the six cases above
set forth. He is, on the authority of these cases, primarily and directly responsible in damages under article 1903,
in relation to article 1902, of the Civil Code.
Let us now take up the Philippine decisions relied upon by the defendant. We study first, City of Manila vs. Manila
Electric Co., 52 Phil., 586 (year 1928). A collision between a truck of the City of Manila and a street car of the
Manila Electric Co. took place on June 8, 1925. The truck was damaged in the amount of P1,788.27. Sixto
Eustaquio, the motorman, was prosecuted for the crime of damage to property and slight injuries through reckless
imprudence. He was found guilty and sentenced to pay a fine of P900, to indemnify the City of Manila for
P1,788.27, with subsidiary imprisonment in case of insolvency. Unable to collect the indemnity from Eustaquio,
the City of Manila filed an action against the Manila Electric Company to obtain payment, claiming that the
defendant was subsidiarily liable. The main defense was that the defendant had exercised the diligence of a good
father of a family to prevent the damage. The lower court rendered judgment in favor of the plaintiff. This Court
held, in part, that this case was governed by the Penal Code, saying:
With this preliminary point out of the way, there is no escaping the conclusion that the provisions of the Penal
Code govern. The Penal Code in easily understandable language authorizes the determination of subsidiary
liability. The Civil Code negatives its application by providing that civil obligations arising from crimes or
misdemeanors shall be governed by the provisions of the Penal Code. The conviction of the motorman was a
misdemeanor falling under article 604 of the Penal Code. The act of the motorman was not a wrongful or
negligent act or omission not punishable by law. Accordingly, the civil obligation connected up with the Penal
Code and not with article 1903 of the Civil Code. In other words, the Penal Code affirms its jurisdiction while the
Civil Code negatives its jurisdiction. This is a case of criminal negligence out of which civil liability arises and not a
case of civil negligence.
xxxxxxxxx
Our deduction, therefore, is that the case relates to the Penal Code and not to the Civil Code. Indeed, as pointed
out by the trial judge, any different ruling would permit the master to escape scot-free by simply alleging and
proving that the master had exercised all diligence in the selection and training of its servants to prevent the
damage. That would be a good defense to a strictly civil action, but might or might not be to a civil action either
as a part of or predicated on conviction for a crime or misdemeanor. (By way of parenthesis, it may be said further
that the statements here made are offered to meet the argument advanced during our deliberations to the effect
that article 0902 of the Civil Code should be disregarded and codal articles 1093 and 1903 applied.)
It is not clear how the above case could support the defendant's proposition, because the Court of Appeals based
its decision in the present case on the defendant's primary responsibility under article 1903 of the Civil Code and

not on his subsidiary liability arising from Fontanilla's criminal negligence. In other words, the case of City of
Manila vs. Manila Electric Co., supra, is predicated on an entirely different theory, which is the subsidiary liability
of an employer arising from a criminal act of his employee, whereas the foundation of the decision of the Court of
Appeals in the present case is the employer's primary liability under article 1903 of the Civil Code. We have
already seen that this is a proper and independent remedy.
Arambulo vs. Manila Electric Co. (55 Phil., 75), is another case invoked by the defendant. A motorman in the
employ of the Manila Electric Company had been convicted o homicide by simple negligence and sentenced,
among other things, to pay the heirs of the deceased the sum of P1,000. An action was then brought to enforce
the subsidiary liability of the defendant as employer under the Penal Code. The defendant attempted to show that
it had exercised the diligence of a good father of a family in selecting the motorman, and therefore claimed
exemption from civil liability. But this Court held:
In view of the foregoing considerations, we are of opinion and so hold, (1) that the exemption from civil liability
established in article 1903 of the Civil Code for all who have acted with the diligence of a good father of a family,
is not applicable to the subsidiary civil liability provided in article 20 of the Penal Code.
The above case is also extraneous to the theory of the defendant in the instant case, because the action there
had for its purpose the enforcement of the defendant's subsidiary liability under the Penal Code, while in the case
at bar, the plaintiff's cause of action is based on the defendant's primary and direct responsibility under article
1903 of the Civil Code. In fact, the above case destroys the defendant's contention because that decision
illustrates the principle that the employer's primary responsibility under article 1903 of the Civil Code is different
in character from his subsidiary liability under the Penal Code.
In trying to apply the two cases just referred to, counsel for the defendant has failed to recognize the distinction
between civil liability arising from a crime, which is governed by the Penal Code, and the responsibility for cuasidelito or culpa aquiliana under the Civil Code, and has likewise failed to give the importance to the latter type of
civil action.
The defendant-petitioner also cites Francisco vs. Onrubia (46 Phil., 327). That case need not be set forth. Suffice it
to say that the question involved was also civil liability arising from a crime. Hence, it is as inapplicable as the two
cases above discussed.
The foregoing authorities clearly demonstrate the separate individuality of cuasi-delitos or culpa aquiliana under
the Civil Code. Specifically they show that there is a distinction between civil liability arising from criminal
negligence (governed by the Penal Code) and responsibility for fault or negligence under articles 1902 to 1910 of
the Civil Code, and that the same negligent act may produce either a civil liability arising from a crime under the
Penal Code, or a separate responsibility for fault or negligence under articles 1902 to 1910 of the Civil Code. Still
more concretely, the authorities above cited render it inescapable to conclude that the employer in this case
the defendant-petitioner is primarily and directly liable under article 1903 of the Civil Code.
The legal provisions, authors, and cases already invoked should ordinarily be sufficient to dispose of this case. But
inasmuch as we are announcing doctrines that have been little understood in the past, it might not be
inappropriate to indicate their foundations.
Firstly, the Revised Penal Code in article 365 punishes not only reckless but also simple negligence. If we were to
hold that articles 1902 to 1910 of the Civil Code refer only to fault or negligence not punished by law, according to
the literal import of article 1093 of the Civil Code, the legal institution of culpa aquiliana would have very little
scope and application in actual life. Death or injury to persons and damage to property through any degree of
negligence even the slightest would have to be indemnified only through the principle of civil liability arising
from a crime. In such a state of affairs, what sphere would remain for cuasi-delito or culpa aquiliana? We are loath
to impute to the lawmaker any intention to bring about a situation so absurd and anomalous. Nor are we, in the
interpretation of the laws, disposed to uphold the letter that killeth rather than the spirit that giveth life. We will
not use the literal meaning of the law to smother and render almost lifeless a principle of such ancient origin and
such full-grown development as culpa aquiliana or cuasi-delito, which is conserved and made enduring in articles
1902 to 1910 of the Spanish Civil Code.
Secondly, to find the accused guilty in a criminal case, proof of guilt beyond reasonable doubt is required, while in
a civil case, preponderance of evidence is sufficient to make the defendant pay in damages. There are numerous
cases of criminal negligence which can not be shown beyond reasonable doubt, but can be proved by a
preponderance of evidence. In such cases, the defendant can and should be made responsible in a civil action
under articles 1902 to 1910 of the Civil Code. Otherwise, there would be many instances of unvindicated civil
wrongs. Ubi jus ibi remedium.

Thirdly, to hold that there is only one way to make defendant's liability effective, and that is, to sue the driver and
exhaust his (the latter's) property first, would be tantamount to compelling the plaintiff to follow a devious and
cumbersome method of obtaining relief. True, there is such a remedy under our laws, but there is also a more
expeditious way, which is based on the primary and direct responsibility of the defendant under article 1903 of
the Civil Code. Our view of the law is more likely to facilitate remedy for civil wrongs, because the procedure
indicated by the defendant is wasteful and productive of delay, it being a matter of common knowledge that
professional drivers of taxis and similar public conveyance usually do not have sufficient means with which to pay
damages. Why, then, should the plaintiff be required in all cases to go through this roundabout, unnecessary, and
probably useless procedure? In construing the laws, courts have endeavored to shorten and facilitate the
pathways of right and justice.
At this juncture, it should be said that the primary and direct responsibility of employers and their presumed
negligence are principles calculated to protect society. Workmen and employees should be carefully chosen and
supervised in order to avoid injury to the public. It is the masters or employers who principally reap the profits
resulting from the services of these servants and employees. It is but right that they should guarantee the latter's
careful conduct for the personnel and patrimonial safety of others. As Theilhard has said, "they should reproach
themselves, at least, some for their weakness, others for their poor selection and all for their negligence." And
according to Manresa, "It is much more equitable and just that such responsibility should fall upon the principal or
director who could have chosen a careful and prudent employee, and not upon the injured person who could not
exercise such selection and who used such employee because of his confidence in the principal or director." (Vol.
12, p. 622, 2nd Ed.) Many jurists also base this primary responsibility of the employer on the principle of
representation of the principal by the agent. Thus, Oyuelos says in the work already cited (Vol. 7, p. 747) that
before third persons the employer and employee "vienen a ser como una sola personalidad, por refundicion de la
del dependiente en la de quien le emplea y utiliza." ("become as one personality by the merging of the person of
the employee in that of him who employs and utilizes him.") All these observations acquire a peculiar force and
significance when it comes to motor accidents, and there is need of stressing and accentuating the responsibility
of owners of motor vehicles.
Fourthly, because of the broad sweep of the provisions of both the Penal Code and the Civil Code on this subject,
which has given rise to the overlapping or concurrence of spheres already discussed, and for lack of
understanding of the character and efficacy of the action for culpa aquiliana, there has grown up a common
practice to seek damages only by virtue of the civil responsibility arising from a crime, forgetting that there is
another remedy, which is by invoking articles 1902-1910 of the Civil Code. Although this habitual method is
allowed by our laws, it has nevertheless rendered practically useless and nugatory the more expeditious and
effective remedy based on culpa aquiliana or culpa extra-contractual. In the present case, we are asked to help
perpetuate this usual course. But we believe it is high time we pointed out to the harm done by such practice and
to restore the principle of responsibility for fault or negligence under articles 1902 et seq. of the Civil Code to its
full rigor. It is high time we caused the stream of quasi-delict or culpa aquiliana to flow on its own natural channel,
so that its waters may no longer be diverted into that of a crime under the Penal Code. This will, it is believed,
make for the better safeguarding of private rights because it re-establishes an ancient and additional remedy, and
for the further reason that an independent civil action, not depending on the issues, limitations and results of a
criminal prosecution, and entirely directed by the party wronged or his counsel, is more likely to secure adequate
and efficacious redress.
In view of the foregoing, the judgment of the Court of Appeals should be and is hereby affirmed, with costs
against the defendant-petitioner.
Yulo, C.J., Moran, Ozaeta and Paras, JJ., concur.
[G.R. No. L-32599. June 29, 1979.]
EDGARDO E. MENDOZA, Petitioner, v. HON. ABUNDIO Z. ARRIETA, Presiding Judge of Branch VIII, Court of First
Instance of Manila, FELINO TIMBOL, and RODOLFO SALAZAR, Respondents.
David G. Nitafan for Petitioner.
Arsenio R. Reyes for respondent Timbol.
Armando M. Pulgado for respondent Salazar.
DECISION

MELENCIO-HERRERA, J.:
Petitioner, Edgardo Mendoza, seeks a review on Certiorari of the Orders of respondent Judge in Civil Case No.
80803 dismissing his Complaint for Damages based on quasi-delict against respondents Felino Timbol and Rodolfo
Salazar.
The facts which spawned the present controversy may be summarized as follows:chanrob1es virtual 1aw library
On October 22, 1969, at about 4:00 oclock in the afternoon, a three-way vehicular accident occurred along MacArthur Highway, Marilao, Bulacan, involving a Mercedes Benz owned and driven by petitioner; a private jeep
owned and driven by respondent Rodolfo Salazar; and a gravel and sand truck owned by respondent Felipino
Timbol and driven by Freddie Montoya. As a consequence of said mishap, two separate Informations for Reckless
Imprudence Causing Damage to Property were filed against Rodolfo Salazar and Freddie Montoya with the Court of
First Instance of Bulacan. The case against truck-driver Montoya, docketed as Criminal Case No. SM-227, was for
causing damage to the jeep owned by Salazar, in the amount of P1,604.00, by hitting it at the right rear portion
thereby causing said jeep to hit and bump an oncoming car, which happened to be petitioners Mercedes Benz.
The case against jeep-owner-driver Salazar, docketed as Criminal Case No. SM-228, was for causing damage to
the Mercedes Benz of petitioner in the amount of P8,890.00.
At the joint trial of the above cases, petitioner testified that jeep-owner-driver Salazar overtook the truck driven by
Montoya, swerved to the left going towards the poblacion of Marilao, and hit his car which was bound for Manila.
Petitioner further testified that before the impact, Salazar had jumped from the jeep and that he was not aware
that Salazars jeep was bumped from behind by the truck driven by Montoya. Petitioners version of the accident
was adopted by truck-driver Montoya. Jeep-owner-driver Salazar, on the other hand, tried to show that, after
overtaking the truck driven by Montoya, he flashed a signal indicating his intention to turn left towards the
poblacion of Marilao but was stopped at the intersection by a policeman who was directing traffic; that while he
was at a stop position, his jeep was bumped at the rear by the truck driven by Montoya causing him to be thrown
out of the jeep, which then swerved to the left and hit petitioners car, which was coming from the opposite
direction.
On July 31, 1970, the Court of First Instance of Bulacan, Branch V, Sta. Maria, rendered judgment, stating in its
decretal portion:chanrobles law library : red
"IN VIEW OF THE FOREGOING, this Court finds the accused Freddie Montoya GUILTY beyond reasonable doubt of
the crime of damage to property thru reckless imprudence in Crim. Case No. SM-227, and hereby sentences him
to pay a fine of P972.50 and to indemnify Rodolfo Salazar in the same amount of P972.50 as actual damages, with
subsidiary imprisonment in case of insolvency, both as to fine and indemnity, with costs.
"Accused Rodolfo Salazar is hereby ACQUITTED from the offense charged in Crim. Case No. SM-228, with costs de
oficio, and his bond is ordered cancelled.
"SO ORDERED." 1
Thus, the trial Court absolved jeep-owner-driver Salazar of any liability, civil and criminal, in view of its findings
that the collision between Salazars jeep and petitioners car was the result of the former having been bumped
from behind by the truck driven by Montoya. Neither was petitioner awarded damages as he was not a
complainant against truck-driver Montoya but only against jeep-owner-driver Salazar.
On August 22, 1970, or after the termination of the criminal cases, petitioner filed Civil Case No. 80803 with the
Court of First Instance of Manila against respondents jeep-owner-driver Salazar and Felino Timbol, the latter being
the owner of the gravel and sand truck driven by Montoya, for indemnification for the damages sustained by his
car as a result of the collision involving their vehicles. Jeep-owner-driver Salazar and truck-owner Timbol were
joined as defendants, either in the alternative or in solidum, allegedly for the reason that petitioner was uncertain
as to whether he was entitled to relief against both on only one of them.
On September 9, 1970, truck-owner Timbol filed a Motion to Dismiss Civil Case No. 80803 on the grounds that the
Complaint is barred by a prior judgment in the criminal cases and that it fails to state a cause of action. An
Opposition thereto was filed by petitioner.
In an Order dated September 12, 1970, respondent Judge dismissed the Complaint against truck-owner Timbol for
reasons stated in the afore-mentioned Motion to Dismiss. On September 30, 1970, petitioner sought before this
Court the review of that dismissal, to which petition we gave due course.chanrobles.com : virtual law library

On January 30, 1971, upon motion of jeep-owner-driver Salazar, respondent Judge also dismissed the case as
against the former. Respondent Judge reasoned out that "while it is true that an independent civil action for
liability under Article 2177 of the Civil Code could be prosecuted independently of the criminal action for the
offense from which it arose, the New Rules of Court, which took effect on January 1, 1964, requires an express
reservation of the civil action to be made in the criminal action; otherwise, the same would be barred pursuant to
Section 2, Rule 111 . . ." 2 Petitioners Motion for Reconsideration thereof was denied in the order dated February
23, 1971, with respondent Judge suggesting that the issue be raised to a higher Court "for a more decisive
interpretation of the rule." 3
On March 25, 1971, petitioner then filed a Supplemental Petition before us, also to review the last two mentioned
Orders, to which we required jeep-owner-driver Salazar to file an Answer.
The Complaint against truck-owner Timbol
We shall first discuss the validity of the Order, dated September 12, 1970, dismissing petitioners Complaint
against truck-owner Timbol.
In dismissing the Complaint against the truck-owner, respondent Judge sustained Timbols allegations that the
civil suit is barred by the prior joint judgment in Criminal Cases Nos. SM-227 and SM-228, wherein no reservation
to file a separate civil case was made by petitioner and where the latter actively participated in the trial and tried
to prove damages against jeep-driver Salazar only; and that the Complaint does not state a cause of action
against truck-owner Timbol inasmuch as petitioner prosecuted jeep-owner-driver Salazar as the one solely
responsible for the damage suffered by his car.
Well-settled is the rule that for a prior judgment to constitute a bar to a subsequent case, the following requisites
must concur: (1) it must be a final judgment; (2) it must have been rendered by a Court having jurisdiction over
the subject matter and over the parties; (3) it must be a judgment on the merit; and (4) there must be, between
the first and second actions, identity of parties, identity of subject matter and identity of cause of action.
It is conceded that the first three requisites of res judicata are present. However, we agree with petitioner that
there is no identity of cause of action between Criminal Case No. SM-227 and Civil Case No. 80803. Obvious is the
fact that in said criminal case truck-driver Montoya was not prosecuted for damage to petitioners car but for
damage to the jeep. Neither was truck-owner Timbol a party in said case. In fact as the trial Court had put it "the
owner of the Mercedes Benz cannot recover any damages from the accused Freddie Montoya, he (Mendoza) being
a complainant only against Rodolfo Salazar in Criminal Case No. SM-228." 4 And more importantly, in the criminal
cases, the cause of action was the enforcement of the civil liability arising from criminal negligence under Article
100 of the Revised Penal Code, whereas Civil Case No. 80803 is based on quasi-delict under Article 2180, in
relation to Article 2176 of the Civil Code. As held in Barredo v. Garcia, Et. Al.: 5
"The foregoing authorities clearly demonstrate the separate individuality of cuasi-delitos or culpa aquiliana under
the Civil Code. Specifically they show that there is a distinction between civil liability arising from criminal
negligence (governed by the Penal Code) and responsibility for fault or negligence under articles 1902 to 1910 of
the Civil Code, and that the same negligent act may produce either a civil liability arising from a crime under the
Penal Code, or a separate responsibility for fault or negligence under articles 1902 to 1910 of the Civil Code. Still
more concretely, the authorities above cited render it inescapable to conclude that the employer in this case the
defendant petitioner is primarily and directly liable under article 1903 of the Civil Code."cralaw virtua1aw library
That petitioners cause of action against Timbol in the civil case is based on quasi-delict is evident from the
recitals in the complaint, to wit: that while petitioner was driving his car along MacArthur Highway at Marilao,
Bulacan, a jeep owned and driven by Salazar suddenly swerved to his (petitioners) lane and collided with his car;
That the sudden swerving of Salazars jeep was caused either by the negligence and lack of skill of Freddie
Montoya, Timbols employee, who was then driving a gravel and sand truck in the same direction as Salazars
jeep; and that as a consequence of the collision, petitioners car suffered extensive damage amounting to
P12,248.20 and that he likewise incurred actual and moral damages, litigation expenses and attorneys fees.
Clearly, therefore, the two factors that a cause of action must consist of, namely: (1) plaintiffs primary right, i.e.,
that he is the owner of a Mercedes Benz, and (2) defendants delict or wrongful act or omission which violated
plaintiffs primary right, i.e., the negligence or lack of skill either of jeep-owner Salazar or of Timbols employee,
Montoya, in driving the truck, causing Salazars jeep to swerve and collide with petitioners car, were alleged in
the Complaint. 6
Consequently, petitioners cause of action being based on quasi-delict, respondent Judge committed reversible
error when he dismissed the civil suit against the truck-owner, as said case may proceed independently of the
criminal proceedings and regardless of the result of the latter.chanrobles.com : virtual law library

"Art. 31.
When the civil action is based on an obligation not arising from the act or omission complained of
as a felony, such civil action may proceed independently of the criminal proceedings and regardless of the result
of the latter."cralaw virtua1aw library
But it is truck-owner Timbols submission (as well as that of jeep-owner-driver Salazar) that petitioners failure to
make a reservation in the criminal action of his right to file an independent civil action bars the institution of such
separate civil action, invoking section 2, Rule 111, Rules of Court, which says:jgc:chanrobles.com.ph
"Section 2. Independent civil action. In the cases provided for in Articles 31, 32, 33, 34 and 2177 of the Civil
Code of the Philippines, an independent civil action entirely separate and distinct from the criminal action, may be
brought by the injured party during the pendency of the criminal case, provided the right is reserved as required
in the preceding section. Such civil action shall proceed independently of the criminal prosecution, and shall
require only a preponderance of evidence."cralaw virtua1aw library
Interpreting the above provision, this Court, in Garcia v. Florido, 7 said:jgc:chanrobles.com.ph
"As we have stated at the outset, the same negligent act causing damages may produce a civil liability arising
from crime or create an action for quasi-delict or culpa extra-contractual. The former is a violation of the criminal
law, while the latter is a distinct and independent negligence, having always had its own foundation and
individuality. Some legal writers are of the view that in accordance with Article 31, the civil action based upon
quasi-delict may proceed independently of the criminal proceeding for criminal negligence and regardless of the
result of the latter. Hence, the proviso in Section 2 of Rule 111 with reference to . . . Articles 32, 33 and 34 of the
Civil Code is contrary to the letter and spirit of the said articles, for these articles were drafted . . . and are
intended to constitute as exceptions to the general rule stated in what is now Section 1 of Rule 111. The proviso,
which is procedural, may also be regarded as an unauthorized amendment of substantive law, Articles 32, 33 and
34 of the Civil Code, which do not provide for the reservation required in the proviso. . . ."cralaw virtua1aw library
In his concurring opinion in the above case, Mr. Justice Antonio Barredo further observed that inasmuch as Articles
2176 and 2177 of the Civil Code create a civil liability distinct and different from the civil action arising from the
offense of negligence under the Revised Penal Code, no reservation, therefore, need be made in the criminal case;
that Section 2 of Rule 111 is inoperative, "it being substantive in character and is not within the power of the
Supreme Court to promulgate; and even if it were not substantive but adjective, it cannot stand because of its
inconsistency with Article 2177, an enactment of the legislature superseding the Rules of 1940."cralaw virtua1aw
library
We declare, therefore, that in so far as truck-owner Timbol is concerned, Civil Case No. 80803 is not barred by the
fact that petitioner failed to reserve, in the criminal action, his right to file an independent civil action based on
quasi-delict.chanrobles.com:cralaw:red
The suit against jeep-owner-driver Salazar
The case as against jeep-owner-driver Salazar, who was acquitted in Criminal Case No. SM-228, presents a
different picture altogether.
At the outset it should be clarified that inasmuch as civil liability coexists with criminal responsibility in negligence
cases, the offended party has the option between an action for enforcement of civil liability based on culpa
criminal under Article 100 of the Revised Penal Code, and an action for recovery of damages based on culpa
aquiliana under Article 2177 of the Civil Code. The action for enforcement of civil liability based on culpa criminal
under section 1 of Rule 111 of the Rules of Court is deemed simultaneously instituted with the criminal action,
unless expressly waived or reserved for separate application by the offended party. 8
The circumstances attendant to the criminal case yields the conclusion that petitioner had opted to base his
cause of action against jeep-owner-driver Salazar on culpa criminal and not on culpa aquiliana, as evidenced by
his active participation and intervention in the prosecution of the criminal suit against said Salazar. The latters
civil liability continued to be involved in the criminal action until its termination. Such being the case, there was
no need for petitioner to have reserved his right to file a separate civil action as his action for civil liability was
deemed impliedly instituted in Criminal Case No. SM-228.
Neither would an independent civil action be. Noteworthy is the basis of the acquittal of jeep-owner-driver Salazar
in the criminal case, expounded by the trial Court in this wise:jgc:chanrobles.com.ph
"In view of what has been proven and established during the trial, Accused Freddie Montoya would be held liable
for having bumped and hit the rear portion of the jeep driven by the accused Rodolfo Salazar.

"Considering that the collision between the jeep driven by Rodolfo Salazar and the car owned and driven by
Edgardo Mendoza was the result of the hitting on the rear of the jeep by the truck driven by Freddie Montoya, this
Court believes that accused Rodolfo Salazar cannot be held liable for the damages sustained by Edgardo
Mendozas car." 9
Crystal clear is the trial Courts pronouncement that under the facts of the case, jeep-owner driver Salazar cannot
be held liable for the damages sustained by petitioners car. In other words, "the fact from which the civil might
arise did not exist." Accordingly, inasmuch as petitioners cause of action as against jeep-owner-driver Salazar is
ex-delictu, founded on Article 100 of the Revised Penal Code, the civil action must be held to have been
extinguished in consonance with Section 3(c), Rule 111 of t he Rules of Court 10 which
provides:jgc:chanrobles.com.ph
"Sec. 3.
Other civil actions arising from offenses. In all cases not included in the preceding section the
following rules shall be observed:chanrob1es virtual 1aw library
x

(c)
Extinction of the penal action does not carry with it extinction of the civil, unless the extinction proceeds
from a declaration in a final judgment that the fact from which the civil might arise did not exist. . . ."cralaw
virtua1aw library
And even if petitioners cause of action as against jeep-owner-driver Salazar were not ex-delictu, the end result
would be the same, it being clear from the judgment in the criminal case that Salazars acquittal was not based
upon reasonable doubt, consequently, a civil action for damages can no longer be instituted. This is explicitly
provided for in Article 29 of the Civil Code quoted hereunder:jgc:chanrobles.com.ph
"Art. 29.
When the accused in a criminal prosecution is acquitted on the ground that his guilt has not been
proved beyond reasonable doubt, a civil action for damages for the same act or omission may be instituted. Such
action requires only a preponderance of evidence. . . .
"If in a criminal case the judgment of acquittal is based upon reasonable doubt, the court shall so declare. In the
absence of any declaration to that effect, it may be inferred from the text of the decision whether or not the
acquittal is due to that ground."cralaw virtua1aw library
In so far as the suit against jeep-owner-driver Salazar is concerned, therefore, we sustain respondent Judges
Order dated January 30, 1971 dismissing the complaint, albeit on different grounds.chanrobles law library
WHEREFORE, 1) the Order dated September 12, 1970 dismissing Civil Case No. 80803 against private respondent
Felino Timbol is set aside, and respondent Judge, or his successor, hereby ordered to proceed with the hearing on
the merits; 2) but the Orders dated January 30, 1971 and February 23, 1971 dismissing the Complaint in Civil
Case No. 80803 against respondent Rodolfo Salazar are hereby upheld.
No costs.
SO ORDERED.
G.R. No. 84698 February 4, 1992
PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION, JUAN D. LIM, BENJAMIN P. PAULINO, ANTONIO M. MAGTALAS,
COL. PEDRO SACRO and LT. M. SORIANO, petitioners,
vs.
COURT OF APPEALS, HON. REGINA ORDOEZ-BENITEZ, in her capacity as Presiding Judge of Branch 47, Regional
Trial Court, Manila, SEGUNDA R. BAUTISTA and ARSENIA D. BAUTISTA, respondents.
Balgos and Perez for petitioners.
Collantes, Ramirez & Associates for private respondents.

PADILLA, J.:

A stabbing incident on 30 August 1985 which caused the death of Carlitos Bautista while on the second-floor
premises of the Philippine School of Business Administration (PSBA) prompted the parents of the deceased to file
suit in the Regional Trial Court of Manila (Branch 47) presided over by Judge (now Court of Appeals justice) Regina
Ordoez-Benitez, for damages against the said PSBA and its corporate officers. At the time of his death, Carlitos
was enrolled in the third year commerce course at the PSBA. It was established that his assailants were not
members of the school's academic community but were elements from outside the school.
Specifically, the suit impleaded the PSBA and the following school authorities: Juan D. Lim (President), Benjamin P.
Paulino (Vice-President), Antonio M. Magtalas (Treasurer/Cashier), Col. Pedro Sacro (Chief of Security) and a Lt. M.
Soriano (Assistant Chief of Security). Substantially, the plaintiffs (now private respondents) sought to adjudge
them liable for the victim's untimely demise due to their alleged negligence, recklessness and lack of security
precautions, means and methods before, during and after the attack on the victim. During the proceedings a quo,
Lt. M. Soriano terminated his relationship with the other petitioners by resigning from his position in the school.
Defendants a quo (now petitioners) sought to have the suit dismissed, alleging that since they are presumably
sued under Article 2180 of the Civil Code, the complaint states no cause of action against them, as jurisprudence
on the subject is to the effect that academic institutions, such as the PSBA, are beyond the ambit of the rule in the
afore-stated article.
The respondent trial court, however, overruled petitioners' contention and thru an order dated 8 December 1987,
denied their motion to dismiss. A subsequent motion for reconsideration was similarly dealt with by an order
dated 25 January 1988. Petitioners then assailed the trial court's disposition before the respondent appellate court
which, in a decision * promulgated on 10 June 1988, affirmed the trial court's orders. On 22 August 1988, the
respondent appellate court resolved to deny the petitioners' motion for reconsideration. Hence, this petition.
At the outset, it is to be observed that the respondent appellate court primarily anchored its decision on the law of
quasi-delicts, as enunciated in Articles 2176 and 2180 of the Civil Code. 1 Pertinent portions of the appellate
court's now assailed ruling state:
Article 2180 (formerly Article 1903) of the Civil Code is an adoption from the old Spanish Civil Code. The
comments of Manresa and learned authorities on its meaning should give way to present day changes. The law is
not fixed and flexible (sic); it must be dynamic. In fact, the greatest value and significance of law as a rule of
conduct in (sic) its flexibility to adopt to changing social conditions and its capacity to meet the new challenges of
progress.
Construed in the light of modern day educational system, Article 2180 cannot be construed in its narrow concept
as held in the old case of Exconde vs. Capuno 2 and Mercado vs. Court of Appeals; 3 hence, the ruling in the
Palisoc 4 case that it should apply to all kinds of educational institutions, academic or vocational.
At any rate, the law holds the teachers and heads of the school staff liable unless they relieve themselves of such
liability pursuant to the last paragraph of Article 2180 by "proving that they observed all the diligence to prevent
damage." This can only be done at a trial on the merits of the case. 5
While we agree with the respondent appellate court that the motion to dismiss the complaint was correctly denied
and the complaint should be tried on the merits, we do not however agree with the premises of the appellate
court's ruling.
Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule of in loco parentis. This Court
discussed this doctrine in the afore-cited cases of Exconde, Mendoza, Palisoc and, more recently, in Amadora vs.
Court of Appeals. 6 In all such cases, it had been stressed that the law (Article 2180) plainly provides that the
damage should have been caused or inflicted by pupils or students of he educational institution sought to be held
liable for the acts of its pupils or students while in its custody. However, this material situation does not exist in
the present case for, as earlier indicated, the assailants of Carlitos were not students of the PSBA, for whose acts
the school could be made liable.
However, does the appellate court's failure to consider such material facts mean the exculpation of the petitioners
from liability? It does not necessarily follow.
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. 7 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.
Because the circumstances of the present case evince a contractual relation between the PSBA and Carlitos
Bautista, the rules on quasi-delict do not really govern. 8 A perusal of Article 2176 shows that obligations arising
from quasi-delicts or tort, also known as extra-contractual obligations, arise only between parties not otherwise
bound by contract, whether express or implied. However, this impression has not prevented this Court from
determining the existence of a tort even when there obtains a contract. In Air France vs. Carrascoso (124 Phil.
722), the private respondent was awarded damages for his unwarranted expulsion from a first-class seat aboard
the petitioner airline. It is noted, however, that the Court referred to the petitioner-airline's liability as one arising
from tort, not one arising from a contract of carriage. In effect, Air France is authority for the view that liability
from tort may exist even if there is a contract, for the act that breaks the contract may be also a tort. (AustroAmerica S.S. Co. vs. Thomas, 248 Fed. 231).
This view was not all that revolutionary, for even as early as 1918, this Court was already of a similar mind. In
Cangco vs. Manila Railroad (38 Phil. 780), Mr. Justice Fisher elucidated thus:
The field of non-contractual obligation is much broader than that of contractual obligation, 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 a breach of the contract would have constituted the source of an extracontractual obligation had no contract existed between the parties.
Immediately what comes to mind is the chapter of the Civil Code on Human Relations, particularly Article 21,
which provides:
Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good custom or
public policy shall compensate the latter for the damage. (emphasis supplied).
Air France penalized the racist policy of the airline which emboldened the petitioner's employee to forcibly oust
the private respondent to cater to the comfort of a white man who allegedly "had a better right to the seat." In
Austro-American, supra, the public embarrassment caused to the passenger was the justification for the Circuit
Court of Appeals, (Second Circuit), to award damages to the latter. From the foregoing, it can be concluded that
should the act which breaches a contract be done in bad faith and be violative of Article 21, then there is a cause
to view the act as constituting a quasi-delict.
In the circumstances obtaining in the case at bar, however, there is, as yet, no finding that the contract between
the school and Bautista had been breached thru the former's negligence in providing proper security measures.
This would be for the trial court to determine. And, even if there be a finding of negligence, the same could give
rise generally to a breach of contractual obligation only. Using the test of Cangco, supra, the negligence of the
school would not be relevant absent a contract. In fact, that negligence becomes material only because of the
contractual relation between PSBA and Bautista. In other words, a contractual relation is a condition sine qua non
to the school's liability. The negligence of the school cannot exist independently of the contract, unless the
negligence occurs under the circumstances set out in Article 21 of the Civil Code.
This Court is not unmindful of the attendant difficulties posed by the obligation of schools, above-mentioned, for
conceptually a school, like a common carrier, cannot be an insurer of its students against all risks. This is specially
true in the populous student communities of the so-called "university belt" in Manila where there have been
reported several incidents ranging from gang wars to other forms of hooliganism. It would not be equitable to
expect of schools to anticipate all types of violent trespass upon their premises, for notwithstanding the security
measures installed, the same may still fail against an individual or group determined to carry out a nefarious deed
inside school premises and environs. Should this be the case, the school may still avoid liability by proving that
the breach of its contractual obligation to the students was not due to its negligence, here statutorily defined to
be the omission of that degree of diligence which is required by the nature of the obligation and corresponding to
the circumstances of persons, time and place. 9
As the proceedings a quo have yet to commence on the substance of the private respondents' complaint, the
record is bereft of all the material facts. Obviously, at this stage, only the trial court can make such a
determination from the evidence still to unfold.

WHEREFORE, the foregoing premises considered, the petition is DENIED. The court of origin (RTC, Manila, Br. 47) is
hereby ordered to continue proceedings consistent with this ruling of the Court. Costs against the petitioners.
SO ORDERED
G.R. No. L-47745

April 15, 1988

JOSE S. AMADORA, LORETA A. AMADORA, JOSE A. AMADORA JR., NORMA A. YLAYA PANTALEON A. AMADORA, JOSE
A. AMADORA III, LUCY A. AMADORA, ROSALINDA A. AMADORA, PERFECTO A. AMADORA, SERREC A. AMADORA,
VICENTE A. AMADORA and MARIA TISCALINA A. AMADORA, petitioners
vs.
HONORABLE COURT OF APPEALS, COLEGIO DE SAN JOSE-RECOLETOS, VICTOR LLUCH SERGIO P. DLMASO JR.,
CELESTINO DICON, ANIANO ABELLANA, PABLITO DAFFON thru his parents and natural guardians, MR. and MRS.
NICANOR GUMBAN, and ROLANDO VALENCIA, thru his guardian, A. FRANCISCO ALONSO, respondents.
Jose S. Amadora & Associates for petitioners.
Padilla Law Office for respondents.

CRUZ, J.:
Like any prospective graduate, Alfredo Amadora was looking forward to the commencement exercises where he
would ascend the stage and in the presence of his relatives and friends receive his high school diploma. These
ceremonies were scheduled on April 16, 1972. As it turned out, though, fate would intervene and deny him that
awaited experience. On April 13, 1972, while they were in the auditorium of their school, the Colegio de San JoseRecoletos, a classmate, Pablito Damon, fired a gun that mortally hit Alfredo, ending all his expectations and his
life as well. The victim was only seventeen years old. 1
Daffon was convicted of homicide thru reckless imprudence . 2 Additionally, the herein petitioners, as the victim's
parents, filed a civil action for damages under Article 2180 of the Civil Code against the Colegio de San JoseRecoletos, its rector the high school principal, the dean of boys, and the physics teacher, together with Daffon and
two other students, through their respective parents. The complaint against the students was later dropped. After
trial, the Court of First Instance of Cebu held the remaining defendants liable to the plaintiffs in the sum of
P294,984.00, representing death compensation, loss of earning capacity, costs of litigation, funeral expenses,
moral damages, exemplary damages, and attorney's fees . 3 On appeal to the respondent court, however, the
decision was reversed and all the defendants were completely absolved . 4
In its decision, which is now the subject of this petition for certiorari under Rule 45 of the Rules of Court, the
respondent court found that Article 2180 was not applicable as the Colegio de San Jose-Recoletos was not a
school of arts and trades but an academic institution of learning. It also held that the students were not in the
custody of the school at the time of the incident as the semester had already ended, that there was no clear
identification of the fatal gun and that in any event the defendant, had exercised the necessary diligence in
preventing the injury. 5
The basic undisputed facts are that Alfredo Amadora went to the San Jose-Recoletos on April 13, 1972, and while
in its auditorium was shot to death by Pablito Daffon, a classmate. On the implications and consequences of these
facts, the parties sharply disagree.
The petitioners contend that their son was in the school to show his physics experiment as a prerequisite to his
graduation; hence, he was then under the custody of the private respondents. The private respondents submit
that Alfredo Amadora had gone to the school only for the purpose of submitting his physics report and that he was
no longer in their custody because the semester had already ended.
There is also the question of the identity of the gun used which the petitioners consider important because of an
earlier incident which they claim underscores the negligence of the school and at least one of the private
respondents. It is not denied by the respondents that on April 7, 1972, Sergio Damaso, Jr., the dean of boys,
confiscated from Jose Gumban an unlicensed pistol but later returned it to him without making a report to the
principal or taking any further action . 6 As Gumban was one of the companions of Daffon when the latter fired
the gun that killed Alfredo, the petitioners contend that this was the same pistol that had been confiscated from
Gumban and that their son would not have been killed if it had not been returned by Damaso. The respondents
say, however, that there is no proof that the gun was the same firearm that killed Alfredo.

Resolution of all these disagreements will depend on the interpretation of Article 2180 which, as it happens, is
invoked by both parties in support of their conflicting positions. The pertinent part of this article reads as follows:
Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils
and students or apprentices so long as they remain in their custody.
Three cases have so far been decided by the Court in connection with the above-quoted provision, to wit: Exconde
v. Capuno 7 Mercado v. Court of Appeals, 8 and Palisoc v. Brillantes. 9 These will be briefly reviewed in this opinion
for a better resolution of the case at bar.
In the Exconde Case, Dante Capuno, a student of the Balintawak Elementary School and a Boy Scout, attended a
Rizal Day parade on instructions of the city school supervisor. After the parade, the boy boarded a jeep, took over
its wheel and drove it so recklessly that it turned turtle, resulting in the death of two of its passengers. Dante was
found guilty of double homicide with reckless imprudence. In the separate civil action flied against them, his
father was held solidarily liable with him in damages under Article 1903 (now Article 2180) of the Civil Code for
the tort committed by the 15-year old boy.
This decision, which was penned by Justice Bautista Angelo on June 29,1957, exculpated the school in an obiter
dictum (as it was not a party to the case) on the ground that it was riot a school of arts and trades. Justice J.B.L.
Reyes, with whom Justices Sabino Padilla and Alex Reyes concurred, dissented, arguing that it was the school
authorities who should be held liable Liability under this rule, he said, was imposed on (1) teachers in general; and
(2) heads of schools of arts and trades in particular. The modifying clause "of establishments of arts and trades"
should apply only to "heads" and not "teachers."
Exconde was reiterated in the Mercado Case, and with an elaboration. A student cut a classmate with a razor
blade during recess time at the Lourdes Catholic School in Quezon City, and the parents of the victim sued the
culprits parents for damages. Through Justice Labrador, the Court declared in another obiter (as the school itself
had also not been sued that the school was not liable because it was not an establishment of arts and trades.
Moreover, the custody requirement had not been proved as this "contemplates a situation where the student lives
and boards with the teacher, such that the control, direction and influences on the pupil supersede those of the
parents." Justice J.B.L. Reyes did not take part but the other members of the court concurred in this decision
promulgated on May 30, 1960.
In Palisoc vs. Brillantes, decided on October 4, 1971, a 16-year old student was killed by a classmate with fist
blows in the laboratory of the Manila Technical Institute. Although the wrongdoer who was already of age was
not boarding in the school, the head thereof and the teacher in charge were held solidarily liable with him. The
Court declared through Justice Teehankee:
The phrase used in the cited article "so long as (the students) remain in their custody" means the protective
and supervisory custody that the school and its heads and teachers exercise over the pupils and students for as
long as they are at attendance in the school, including recess time. There is nothing in the law that requires that
for such liability to attach, the pupil or student who commits the tortious act must live and board in the school, as
erroneously held by the lower court, and the dicta in Mercado (as well as in Exconde) on which it relied, must now
be deemed to have been set aside by the present decision.
This decision was concurred in by five other members, 10 including Justice J.B.L. Reyes, who stressed, in answer to
the dissenting opinion, that even students already of age were covered by the provision since they were equally in
the custody of the school and subject to its discipline. Dissenting with three others, 11 Justice Makalintal was for
retaining the custody interpretation in Mercado and submitted that the rule should apply only to torts committed
by students not yet of age as the school would be acting only in loco parentis.
In a footnote, Justice Teehankee said he agreed with Justice Reyes' dissent in the Exconde Case but added that
"since the school involved at bar is a non-academic school, the question as to the applicability of the cited codal
provision to academic institutions will have to await another case wherein it may properly be raised."
This is the case.
Unlike in Exconde and Mercado, the Colegio de San Jose-Recoletos has been directly impleaded and is sought to
be held liable under Article 2180; and unlike in Palisoc, it is not a school of arts and trades but an academic
institution of learning. The parties herein have also directly raised the question of whether or not Article 2180
covers even establishments which are technically not schools of arts and trades, and, if so, when the offending
student is supposed to be "in its custody."

After an exhaustive examination of the problem, the Court has come to the conclusion that the provision in
question should apply to all schools, academic as well as non-academic. Where the school is academic rather than
technical or vocational in nature, responsibility for the tort committed by the student will attach to the teacher in
charge of such student, following the first part of the provision. This is the general rule. In the case of
establishments of arts and trades, it is the head thereof, and only he, who shall be held liable as an exception to
the general rule. In other words, teachers in general shall be liable for the acts of their students except where the
school is technical in nature, in which case it is the head thereof who shall be answerable. Following the canon of
reddendo singula singulis "teachers" should apply to the words "pupils and students" and "heads of
establishments of arts and trades" to the word "apprentices."
The Court thus conforms to the dissenting opinion expressed by Justice J.B.L. Reyes in Exconde where he said in
part:
I can see no sound reason for limiting Art. 1903 of the Old Civil Code to teachers of arts and trades and not to
academic ones. What substantial difference is there between them insofar as concerns the proper supervision and
vice over their pupils? It cannot be seriously contended that an academic teacher is exempt from the duty of
watching that his pupils do not commit a tort to the detriment of third Persons, so long as they are in a position to
exercise authority and Supervision over the pupil. In my opinion, in the phrase "teachers or heads of
establishments of arts and trades" used in Art. 1903 of the old Civil Code, the words "arts and trades" does not
qualify "teachers" but only "heads of establishments." The phrase is only an updated version of the equivalent
terms "preceptores y artesanos" used in the Italian and French Civil Codes.
If, as conceded by all commentators, the basis of the presumption of negligence of Art. 1903 in some culpa in
vigilando that the parents, teachers, etc. are supposed to have incurred in the exercise of their authority, it would
seem clear that where the parent places the child under the effective authority of the teacher, the latter, and not
the parent, should be the one answerable for the torts committed while under his custody, for the very
reason/that the parent is not supposed to interfere with the discipline of the school nor with the authority and
supervision of the teacher while the child is under instruction. And if there is no authority, there can be no
responsibility.
There is really no substantial distinction between the academic and the non-academic schools insofar as torts
committed by their students are concerned. The same vigilance is expected from the teacher over the students
under his control and supervision, whatever the nature of the school where he is teaching. The suggestion in the
Exconde and Mercado Cases is that the provision would make the teacher or even the head of the school of arts
and trades liable for an injury caused by any student in its custody but if that same tort were committed in an
academic school, no liability would attach to the teacher or the school head. All other circumstances being the
same, the teacher or the head of the academic school would be absolved whereas the teacher and the head of
the non-academic school would be held liable, and simply because the latter is a school of arts and trades.
The Court cannot see why different degrees of vigilance should be exercised by the school authorities on the basis
only of the nature of their respective schools. There does not seem to be any plausible reason for relaxing that
vigilance simply because the school is academic in nature and for increasing such vigilance where the school is
non-academic. Notably, the injury subject of liability is caused by the student and not by the school itself nor is it
a result of the operations of the school or its equipment. The injury contemplated may be caused by any student
regardless of the school where he is registered. The teacher certainly should not be able to excuse himself by
simply showing that he is teaching in an academic school where, on the other hand, the head would be held liable
if the school were non-academic.
These questions, though, may be asked: If the teacher of the academic school is to be held answerable for the
torts committed by his students, why is it the head of the school only who is held liable where the injury is caused
in a school of arts and trades? And in the case of the academic or non- technical school, why not apply the rule
also to the head thereof instead of imposing the liability only on the teacher?
The reason for the disparity can be traced to the fact that historically the head of the school of arts and trades
exercised a closer tutelage over his pupils than the head of the academic school. The old schools of arts and
trades were engaged in the training of artisans apprenticed to their master who personally and directly instructed
them on the technique and secrets of their craft. The head of the school of arts and trades was such a master and
so was personally involved in the task of teaching his students, who usually even boarded with him and so came
under his constant control, supervision and influence. By contrast, the head of the academic school was not as
involved with his students and exercised only administrative duties over the teachers who were the persons
directly dealing with the students. The head of the academic school had then (as now) only a vicarious
relationship with the students. Consequently, while he could not be directly faulted for the acts of the students,
the head of the school of arts and trades, because of his closer ties with them, could be so blamed.

It is conceded that the distinction no longer obtains at present in view of the expansion of the schools of arts and
trades, the consequent increase in their enrollment, and the corresponding diminution of the direct and personal
contract of their heads with the students. Article 2180, however, remains unchanged. In its present state, the
provision must be interpreted by the Court according to its clear and original mandate until the legislature, taking
into account the charges in the situation subject to be regulated, sees fit to enact the necessary amendment.
The other matter to be resolved is the duration of the responsibility of the teacher or the head of the school of
arts and trades over the students. Is such responsibility co-extensive with the period when the student is actually
undergoing studies during the school term, as contended by the respondents and impliedly admitted by the
petitioners themselves?
From a reading of the provision under examination, it is clear that while the custody requirement, to repeat Palisoc
v. Brillantes, does not mean that the student must be boarding with the school authorities, it does signify that the
student should be within the control and under the influence of the school authorities at the time of the
occurrence of the injury. This does not necessarily mean that such, custody be co-terminous with the semester,
beginning with the start of classes and ending upon the close thereof, and excluding the time before or after such
period, such as the period of registration, and in the case of graduating students, the period before the
commencement exercises. In the view of the Court, the student is in the custody of the school authorities as long
as he is under the control and influence of the school and within its premises, whether the semester has not yet
begun or has already ended.
It is too tenuous to argue that the student comes under the discipline of the school only upon the start of classes
notwithstanding that before that day he has already registered and thus placed himself under its rules. Neither
should such discipline be deemed ended upon the last day of classes notwithstanding that there may still be
certain requisites to be satisfied for completion of the course, such as submission of reports, term papers,
clearances and the like. During such periods, the student is still subject to the disciplinary authority of the school
and cannot consider himself released altogether from observance of its rules.
As long as it can be shown that the student is in the school premises in pursuance of a legitimate student
objective, in the exercise of a legitimate student right, and even in the enjoyment of a legitimate student right,
and even in the enjoyment of a legitimate student privilege, the responsibility of the school authorities over the
student continues. Indeed, even if the student should be doing nothing more than relaxing in the campus in the
company of his classmates and friends and enjoying the ambience and atmosphere of the school, he is still within
the custody and subject to the discipline of the school authorities under the provisions of Article 2180.
During all these occasions, it is obviously the teacher-in-charge who must answer for his students' torts, in
practically the same way that the parents are responsible for the child when he is in their custody. The teacher-incharge is the one designated by the dean, principal, or other administrative superior to exercise supervision over
the pupils in the specific classes or sections to which they are assigned. It is not necessary that at the time of the
injury, the teacher be physically present and in a position to prevent it. Custody does not connote immediate and
actual physical control but refers more to the influence exerted on the child and the discipline instilled in him as a
result of such influence. Thus, for the injuries caused by the student, the teacher and not the parent shag be held
responsible if the tort was committed within the premises of the school at any time when its authority could be
validly exercised over him.
In any event, it should be noted that the liability imposed by this article is supposed to fall directly on the teacher
or the head of the school of arts and trades and not on the school itself. If at all, the school, whatever its nature,
may be held to answer for the acts of its teachers or even of the head thereof under the general principle of
respondeat superior, but then it may exculpate itself from liability by proof that it had exercised the diligence of a
bonus paterfamilias.
Such defense is, of course, also available to the teacher or the head of the school of arts and trades directly held
to answer for the tort committed by the student. As long as the defendant can show that he had taken the
necessary precautions to prevent the injury complained of, he can exonerate himself from the liability imposed by
Article 2180, which also states that:
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 damages.
In this connection, it should be observed that the teacher will be held liable not only when he is acting in loco
parentis for the law does not require that the offending student be of minority age. Unlike the parent, who wig be
liable only if his child is still a minor, the teacher is held answerable by the law for the act of the student under
him regardless of the student's age. Thus, in the Palisoc Case, liability attached to the teacher and the head of the

technical school although the wrongdoer was already of age. In this sense, Article 2180 treats the parent more
favorably than the teacher.
The Court is not unmindful of the apprehensions expressed by Justice Makalintal in his dissenting opinion in
Palisoc that the school may be unduly exposed to liability under this article in view of the increasing activism
among the students that is likely to cause violence and resulting injuries in the school premises. That is a valid
fear, to be sure. Nevertheless, it should be repeated that, under the present ruling, it is not the school that will be
held directly liable. Moreover, the defense of due diligence is available to it in case it is sought to be held
answerable as principal for the acts or omission of its head or the teacher in its employ.
The school can show that it exercised proper measures in selecting the head or its teachers and the appropriate
supervision over them in the custody and instruction of the pupils pursuant to its rules and regulations for the
maintenance of discipline among them. In almost all cases now, in fact, these measures are effected through the
assistance of an adequate security force to help the teacher physically enforce those rules upon the students. Ms
should bolster the claim of the school that it has taken adequate steps to prevent any injury that may be
committed by its students.
A fortiori, the teacher himself may invoke this defense as it would otherwise be unfair to hold him directly
answerable for the damage caused by his students as long as they are in the school premises and presumably
under his influence. In this respect, the Court is disposed not to expect from the teacher the same measure of
responsibility imposed on the parent for their influence over the child is not equal in degree. Obviously, the parent
can expect more obedience from the child because the latter's dependence on him is greater than on the teacher.
It need not be stressed that such dependence includes the child's support and sustenance whereas submission to
the teacher's influence, besides being coterminous with the period of custody is usually enforced only because of
the students' desire to pass the course. The parent can instill more las discipline on the child than the teacher and
so should be held to a greater accountability than the teacher for the tort committed by the child.
And if it is also considered that under the article in question, the teacher or the head of the school of arts and
trades is responsible for the damage caused by the student or apprentice even if he is already of age and
therefore less tractable than the minor then there should all the more be justification to require from the school
authorities less accountability as long as they can prove reasonable diligence in preventing the injury. After all, if
the parent himself is no longer liable for the student's acts because he has reached majority age and so is no
longer under the former's control, there is then all the more reason for leniency in assessing the teacher's
responsibility for the acts of the student.
Applying the foregoing considerations, the Court has arrived at the following conclusions:
1.
At the time Alfredo Amadora was fatally shot, he was still in the custody of the authorities of Colegio de
San Jose-Recoletos notwithstanding that the fourth year classes had formally ended. It was immaterial if he was in
the school auditorium to finish his physics experiment or merely to submit his physics report for what is important
is that he was there for a legitimate purpose. As previously observed, even the mere savoring of the company of
his friends in the premises of the school is a legitimate purpose that would have also brought him in the custody
of the school authorities.
2.
The rector, the high school principal and the dean of boys cannot be held liable because none of them was
the teacher-in-charge as previously defined. Each of them was exercising only a general authority over the
student body and not the direct control and influence exerted by the teacher placed in charge of particular classes
or sections and thus immediately involved in its discipline. The evidence of the parties does not disclose who the
teacher-in-charge of the offending student was. The mere fact that Alfredo Amadora had gone to school that day
in connection with his physics report did not necessarily make the physics teacher, respondent Celestino Dicon,
the teacher-in-charge of Alfredo's killer.
3.
At any rate, assuming that he was the teacher-in-charge, there is no showing that Dicon was negligent in
enforcing discipline upon Daffon or that he had waived observance of the rules and regulations of the school or
condoned their non-observance. His absence when the tragedy happened cannot be considered against him
because he was not supposed or required to report to school on that day. And while it is true that the offending
student was still in the custody of the teacher-in-charge even if the latter was physically absent when the tort was
committed, it has not been established that it was caused by his laxness in enforcing discipline upon the student.
On the contrary, the private respondents have proved that they had exercised due diligence, through the
enforcement of the school regulations, in maintaining that discipline.
4.
In the absence of a teacher-in-charge, it is probably the dean of boys who should be held liable especially
in view of the unrefuted evidence that he had earlier confiscated an unlicensed gun from one of the students and
returned the same later to him without taking disciplinary action or reporting the matter to higher authorities.

While this was clearly negligence on his part, for which he deserves sanctions from the school, it does not
necessarily link him to the shooting of Amador as it has not been shown that he confiscated and returned pistol
was the gun that killed the petitioners' son.
5.
Finally, as previously observed, the Colegio de San Jose-Recoletos cannot be held directly liable under the
article because only the teacher or the head of the school of arts and trades is made responsible for the damage
caused by the student or apprentice. Neither can it be held to answer for the tort committed by any of the other
private respondents for none of them has been found to have been charged with the custody of the offending
student or has been remiss in the discharge of his duties in connection with such custody.
In sum, the Court finds under the facts as disclosed by the record and in the light of the principles herein
announced that none of the respondents is liable for the injury inflicted by Pablito Damon on Alfredo Amadora that
resulted in the latter's death at the auditorium of the Colegio de San Jose-Recoletos on April 13, 1972. While we
deeply sympathize with the petitioners over the loss of their son under the tragic circumstances here related, we
nevertheless are unable to extend them the material relief they seek, as a balm to their grief, under the law they
have invoked.
WHEREFORE, the petition is DENIED, without any pronouncement as to costs. It is so ordered

G.R. No. 2684, Fidelity and Deposit Co. of Maryland v. Wilson et al., 8 Phil. 51
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
March 15, 1907
G.R. No. 2684
THE FIDELITY AND DEPOSIT COMPANY OF MARYLAND, plaintiff-appellant,
vs.
WILLIAM A. WILSON, ET AL., defendants-appellees.
Hartigan, Marple, Rohde & Gutierrez for appellant.
F.G. Waite and H.D. Terrell for appellees.
MAPA, J.:
The defendant Wilson was, on the 1st of October, 1902, an employee of the Government of the Philippine Islands,
as disbursing officer of the Bureau of Coast Guard and Transportation. For the security of the Government the
plaintiff company and another company. The American Surety Company of New York, became sureties on the
official bond of Wilson for the sum of $ 15,000, United State currency. Wilson defaulted in the sum of $ 8,931.80,
United States currency, and the said two surety companies, after demand duly made upon them by the
Government, were compelled to pay and, as a matter of fact, did pay to said Government, in accordance with said
bond, the sum of $ 4,465.90, United States currency, each.
Wilson, who had left the Philippine Islands, was captured in the city of Montreal, Canada, for the purpose of being
tried before the courts of the Philippine Islands for the defalcation of said sum. When apprehended Wilson had on
his person the sum of $ 785 in gold, consisting of the following:
1 bill of $5, No. 333,448, on the Bank of Montreal.
1 United States bill, silver certificate, $10, series of 1891.
3 United States $10 notes, series of 1882.
5 United States $10 notes, series of 1891.
24 United States $10 notes, series of 1880.
45 United States $10 notes, series of 1901.
This sum and amount was turned over to the custody of Mr. Branagan, the Insular Treasurer.
The facts of this case, among others, are the following: On October 17, 1904, the plaintiff filed a complaint against
Wilson and The American Surety Company asking, first, that judgment be rendered against Wilson for the sum of

$4,464.90, that amount having been paid by plaintiff to the Government under plaintiff's surety bond; second,
that there be applied to the payment of said judgment the said sum of $785 found in possession of Wilson and
that said plaintiff be preferred in its right to the said money and to receive the same; and third, that a depositary
be named by the court for the purpose of caring for and administering said amount during the pendency of the
case.
On the same date, October 17, a depositary was named, such depositary taking in charge the said $785 on that
date, the said sum of money being at this time in the possession of said depositary.
On October 26, 1904, H.D. Terrell filed a complaint as intervenor in the case, alleging that on September 3, of the
same year, the defendant Wilson had ceded and transferred to the said Terrell all of his, the said Wilson's rights in
and to the said $785 in payment on account of a larger sum then owed by said Wilson to the said H.D. Terrell for
professional services already rendered and to be rendered as attorney for said Wilson, under agreement with the
same; that Treasurer Branagan was duly notified on the 17th day of October, 1904, of this transfer, at which time
the Treasurer had said sum in his care, and this before the notifications of the appointment of said depositary in
the principal case. Basing his claim on these facts, Terrell claims the right of ownership in and to the said sum and
asks that the same be delivered to him as the legitimate owner to the exclusion of the other parties in the case.
In this case of intervention The Fidelity and Deposit Company of Maryland, the plaintiff in the principal cause, and
The American Surety Company of New York together in cooperation and against the claim of the intervenor Terrell,
both of them, alleging on their part, better right that the intervenor to receive the sum in question, asked that the
said sum be delivered to them in equal shares and portions as part payment and on account of the amounts
which they had paid respectively to the Government as sureties on the bond of Wilson. In this way the first
pretension or claim of preference as alleged by The Fidelity and Deposit Company in its complaint was modified
with respect to and as against The American Surety Company of New York. It is asserted by these companies, as a
basis of their right and claim, that the funds in question are a portion of the money taken from the Government by
Wilson and therefore the property of the said Government and that they became subrogated to rights of the
Government in and to the said sum by reason of the payment by them as sureties on the bond of Wilson.
Judgment was rendered against Wilson by default, the latter not having answered to the complaint of Terrell were
true, in this way coming into the case in cooperation with said Terrell in his pretension.
After due trial of the cause a judgment was rendered by the court declaring proven, among others, the facts as
stated in the first part of his decision and found as a conclusion of law that the said intervenor Terrell "became the
owner and with the right to the possession of said funds before the commencement of this action and still has the
right to the possession of the same."
In accordance with this conclusion and the facts as set out in the judgment, the following order was made by the
court: "Let judgment be entered in favor of the party plaintiff, The Fidelity and Deposit Company of Maryland, and
against the defendant Wilson, for the sum of $4,465.90, United States currency, the equivalent of P8,931.80,
Philippine currency, together with interest on the same at the rate of 6 per cent per annum from the 22nd day of
October, 1903, and for the costs of this action, and in favor of the intervenor H.D. Terrell and against all the other
parties of this action, plaintiff and defendant, for the possession of the funds now in the hands of the depositary
appointed by this court, ... amounting in value to the sum of $785, United States currency, and in the event that
the identical money can not be delivered, then its equivalent of the total of the same that is to say, 1,570
pesos, Philippine currency without cost. . . ."
The plaintiff only in the principal suit that is to say, The Fidelity and Deposit Company filed its exception to
the judgment. The American Surety Company of New York failing to appeal, the judgment with respect to that
company became final, hence this court can not decide with regard to that. The same should be said with regard
to that part of the judgment against Wilson for the payment to The Fidelity and Deposit Company of the sum
$4,465.90, no appeal from said judgment having been made by Wilson.
There was no new trial asked for and the parties in this instance expressly admit, as proven, the facts as set out in
the decision rendered.
The only assignment of error alleged by the appellant in its brief, is in the following terms: "The court erred" its
says, "in rendering judgment in favor of the intervenor H.D. Terrell for the $785 in the hands of the depositary."
Therefore, that part of the judgment of the lower court that refers to this point is the only thing, in fact, submitted
to us for review.
According to our point of view, the only question here is to deduce and determine the true legal effects of the
transfer made by Wilson in favor of Terrell.

This transfer is made literally in the following terms:

MANILA, P.I., September 3, 1904.
To whom it concerns:
For value received, I hereby transfer and cede to Judge H. D. Terrell all my rights, title, and interest in the
following-described property belonging to me and now in the hands of Frank A. Branagan, Treasurer of the
Philippine Archipelago, under the attachment of the court of Manila. (Here appears the description of the bank
bills transferred, hereinabove described.)
(Signed) W.A. WILSON.
As is seen, this transfer was made before the filing of the complaint of the appellant, and in addition thereto, it is
said that the Insular Treasurer, Mr. Branagan, was also notified before the filing of said complaint. The last does
not appear to be clear in the record for the reason that the said notification served on Branagan was so served on
October 17, 1904, precisely the same date upon which the complaint was filed and appointment of the depositary
was made by the court in virtue of the same, and upon which said date the depositary took possession of the said
funds, the subject matter of this suit. There is no data at hand to show in a precise manner which of the said acts
took place before the other. It is true that the judgment of the lower court states that Terrell became the owner of
the funds before the commencement of the action, but we consider this rather as a conclusion of law than of fact;
that is to say, that fact that the notification of the said transfer had been served on Treasurer Branagan before the
filing of the complaint. However, it may be, this may be admitted as true and so taken into consideration in this
decision.
Terrell claims, and the court below so holds in its judgment, that in virtue of said transfer the ownership of Wilson
in and to the funds was transferred to Terrell in fact and in law. If this had been the case, the judgment would have
been just and legal and would, therefore, be affirmed herein.
But our opinion is contrary to that sustained by the trial court in regard to this point. We are of the opinion that
the transfer by itself, and afterwards the notification of the same of Treasurer Branagan, did not produce nor could
it produce the effect of transfer to Terrell of the ownership of the funds so transferred and which were then in the
possession of the said Treasurer. To have this effect, it would have been necessary that the delivery of the funds
had been made directly Terrell, which fact has not been proved at any time. There is no question as to this last
point. The funds were in the possession of Branagan and afterwards were transferred to the possession of the
depositary appointed, by the court where such funds now are, and this without their ever having been taken
possession of the intervenor Terrell. It is not alleged, nor it is claimed by Terrell, that the delivery of the funds was
ever made in any manner recognized by the law. He claims the right of ownership from the mere fact of having
derived the same, not from the fact of any delivery, but from the very fact of the transfer and of his subsequent
notification to Treasurer Branagan, it being, in addition, very clear that such notification does not constitute, in
any manner, the fact of delivery as established by articles 1462, 1463, and 1464 of the Civil Code, all of which
cover, in full this subject-matter.
Therefore, in our Civil Code it is a fundamental principle in all matters of contracts and a well-known doctrine of
law that "non mudis pactis, sed traditione dominia rerum transferuntur." In conformity with said doctrine as
established in paragraph 2 of article 609 of said code, that "the ownership and other property rights are acquired
and transmitted by law, by gift, by testate or intestate succession, and, in consequence of certain contracts, by
tradition." And as the logical application of this disposition article 1095 prescribes the following: "A creditor has
the rights to the fruits of a thing from the time the obligation to deliver it arises. However, he shall not acquire a
real right." (and the ownership is surely such) "until the property has been delivered to him."
In accordance with such disposition and provisions the delivery of a thing constitutes a necessary and
indispensable requisite for the purpose of acquiring the ownership of the same by virtue for a contract. As
Manresa states in his Commentaries on the Civil Code, volume 10, pages 339 and 340: "Our law does not admit
the doctrine of the transfer of property by mere consent but limits the effect of the agreement to the due
execution of the contract. ... The ownership, the property right, is only deprived from the delivery of a thing . . . ."
Applying this doctrine concretely to the contract of transfer set up by Terrell as the basis of his complaint in
intervention, the author says, at page 341 of the volume and work above cited: "The transfer of the ownership in
the contract of such transfer, does not produce the effect by the fact of the mere consent, but is acquired by
tradition and in the due observance of general precepts." Therefore, by reason of the non-delivery Terrell did not
acquire the ownership of the property transferred to him by Wilson. It is only the jus ad rem, and not the jus in re,
that was acquired by Terrell by virtue of the transfer, made by the consent of the transferor and the transferee but
not consummated by the delivery which never came to pass and which delivery was the object of such transfer.

But if Terrell could not be considered as the owner of said funds in question, it is undeniable that he had rights
with regard to the same as a creditor by virtue of that transfer. The same right, that of a creditor, and no other is
the right of the appellant in that it has not been contradicted that the rights of the Government, in its judicial
relation to Wilson, had not been subrogated to the appellant. The allegation of the appellant that the bank bills
taken from the person of Wilson are the property of the Government, in order to be taken into consideration, is to
conclude that they belong to the appellant as owner of the same by reason of said subrogation of right, as
aforesaid. This has no fundamental basis for the reason that such bank bills have never been duly identified.
Without any proof of identification it is not possible to know if said bank bills are really a part of the funds of the
Government appropriated by Wilson. The Government under such circumstances could not allege specifically the
right of ownership of said bank bills.
Now, the creditors, the appellant and the appellee are both claiming at the same time the delivery of the funds in
question for the payment of their respective credits and it becomes a question of preference of creditors, since
the sum, the object of the suit, is not sufficient to satisfy the claims of both parties.
According to our view, neither of the two creditors should enjoy preference with regard to the other. Preference is
determined by the nature of the credit in some cases and by the priority of date in others. The first, when it deals
with privileged credits, which different kinds of privileged credits are enumerated in articles 1922, 1923, and 1924
of the Civil Code; and the second, when such credits are without special privilege, but are set forth in a public
document or a final judgment. (Par. 3, article 1924.) In neither of these two classes do we find the credit of the
appellant or that of the appellee. The credit of the appellee is only shown in a private document, and the right, or
credit, of the appellant is that derived by reason of the payment made by appellant to the Government as a
surety on the bond of Wilson, and nothing more than this appears in the allegations and admissions of the parties
during the trial of the case. It does not appear by the bill of exceptions in this case that any document was ever
presented in justification of such payment. Neither does the decision refer to any document as showing, as
proven, said payment. These two credits not coming under any of the articles herein cited, the same pertain to a
general class, and therefore do not enjoy any preference, in accordance with provisions of article 1925 of the Civil
Code. This being so, the two creditors should be paid of pro rata from the funds in question and without
consideration of the dates. (Rule 3, of article 1929.)
The judgment appealed from is, therefore, reversed with respect to the order of the trial court ordering the
delivery of said funds, in their total amount, to the intervenor, H.D. Terrell, and in place of said order of said trial
court we order that the payment and delivery of said funds be made to said Terrell and to the appellant, The
Fidelity and Deposit Company of Maryland, pro rata, with respect to their respective credits, without special
provision as to days from the notification hereof let judgment be entered in accordance herewith, and ten days
thereafter let the case be remanded to the court from whence it came for proper action. So ordered.
Arellano, C.J., Torres, and Tracey, JJ., concur.
Johnson and Willard, JJ., dissent.
G.R. No. 10244, Cruzado v. Bustos and Escaler, 34 Phil. 17
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
February 29, 1916
G.R. No. 10244
SANTIAGO CRUZADO, plaintiff-appellant,
vs.
ESTEFANIA BUSTOS and MANUEL ESCALER, defendants-appellees.
Felix Ferrer for appellant.
Augusto Gonzalez for appellees.
TORRES, J.:
This appeal, by bill of exceptions, was taken from the judgment of June 17, 1914, in which the trial judge absolved
defendants from the complaint and plaintiff from the cross-complaint, without express finding as to costs. Counsel
for plaintiff appealed from this judgment and moved for a new trial. This motion was denied, exception was taken
by appellant, and, on the filing of the proper bill of exceptions, the same was approved, certified, and transmitted
to the clerk of this court, together with a transcript of the evidence introduced at the trial.

Counsel for the plaintiff Santiago Cruzado filed a written complaint on October 8, 1910, amended on September
25, 1913, in which he alleged that plaintiff was the owner of certain rural property situated in the barrio of
Dolores, formerly San Isidro, of the municipality of Bacolor, Pampanga, containing an area of 65 balitas and
bounded as set forth in the complaint; that Estafania Bustos, during her lifetime, and now the administrator of her
estate, together with the other defendant, Manuel Escaler, had, since the year 1906 up to the present, been
detaining the said parcel of land, and had refused to deliver the possession thereof to plaintiff and to recognize his
ownership of the same, notwithstanding the repeated demands made upon them; that by such detention, the
plaintiff had suffered losses and damages to the amount of P3,500. He therefore asked for judgment declaring
plaintiff to be the owner of the said parcel of land and ordering defendants to return it to plaintiff and to pay the
latter P3,500 for losses and damages, and the costs.
The demurrer filed by the defendant Bustos having been overruled, in her answer she made a general denial of
each and all of the allegations of the complaint, and of each and all of the paragraphs thereof, and, as a special
defense, alleged that the title to the said land, produced by the plaintiff, was not a lawful one, for the reason that
only a simulated sale of the land was made by the between herself and the deceased Agapito Geronimo Cruzado,
plaintiff's father, and that for more than thirty years preceding the present time she had been the sole, exclusive,
and lawful owner of the said parcel of land in question; that she had been holding it quietly, peaceably, publicly
and in good faith; that it formed an integral part of another larger parcel of land, both parcels aggregating a total
area of 100 balitas, 9 loanes, and 41 square brazas; that in September, 1891, with plaintiff's knowledge, the
defendant Bustos sold and conveyed all the said property to the other defendant Manuel Escaler who then
acquired the possession and ownership of the said parcel of land, and had retained such ownership and
possession up to the present time; that at no time and on no account whatever had plaintiff or any other person
except defendants acquired possession of the said parcel of land or any part thereof, nor any right or title therein.
She therefore prayed to be absolved from the complaint, with the costs against plaintiff.
The other defendant, Manuel Escaler, in an amended answer to the aforementioned complaint, denied each and
all of the allegations therein contained and each and all of its clauses, and, as a special defense, alleged that
plaintiff's title to the said land was illegal as only a simulated sale was made by and between Agapito Geronimo
Cruzado, plaintiff's predecessor in interest, and Bernardino Dizon; that defendants had been in possession of the
said parcel of land for more than thirty years; that the defendant Escaler in good faith purchased the land in
question from Estefania Bustos, widow of Dizon, without ever having had any notice of any defect in the vendor's
title; that plaintiff had knowledge of the contract of sale of the land in question yet did nothing to oppose its
purchase by the defendant Escaler, wherefore the latter, in acquiring the property, did so under the belief that the
plaintiff Santiago Cruzado had no right or interest therein. He therefore prayed that the complaint be dismissed,
with the costs against plaintiff, and that an injunction issue to restrain the latter from interfering with the
defendant Escaler in the enjoyment of his property and rights and from performing any act prejudicial to his
interests.
On the case coming to trial, both parties adduced evidence, among which was included the deposition of
Inocencio Rosete.
Counsel for defendants, in a cross-complaint set forth: that as shown by the evidence, the defendant Escaler
acquired in good faith from Estefania Bustos the land in question at a time when there was no record whatever in
the property registry to show that this land belonged to a third person or any other than the vendor; that, on
entering into possession of the property, Escaler spent P4,000 in-improvements and in the repair of a long dike to
prevent the erosion of the land by the frequent overflows of the adjoining estuary; that of this sum P2,000 was
paid by Escaler and the remaining P2,000 by Estafania Bustos, in her capacity as lessee of the land; and that in
case the judgment of the court should be adverse to defendants, these latter, as owners in good faith, were
entitled to be indemnified by plaintiff for the said expenses. He therefore asked that plaintiff be ordered to
reimburse half of the said P4,000 to each of the defendants in case judgment should be rendered favorable to
plaintiff.
The latter's counsel, in answer to the said cross-complaint, specifically denied each and all of the allegations
thereof and, in special defense, reproduced plaintiff's amended complaint in all its parts and alleged that the facts
set forth in the cross-complaint did not constitute a cause of action. He therefore prayed that plaintiff be absolved
from the cross-complaint and that judgment be rendered against defendants, in conformity with the prayer of his
complaint.
After the evidence was all in, counsel for the defendant Escaler moved that the deposition of the witness
Inocencio Espanol Rosete be admitted into the record, and in support of his motion stated that with the
authorization of the court the said deposition had been taken on November 21, 1913, in the municipality of Arayat
in the presence of plaintiff's attorney; that the said declaration of the deponent was duly forwarded to the clerk of
the court, and there attached to the record, but through an unintentional oversight of defendant's attorney, it was

not presented in evidence at the trial; that this deposition was very important for the defendants' defense; and
that the deponent was and continued to be unable to appear before the court on account of a threatened attack
of brain fever which might develop during the journey from Arayat to San Fernando.
Plaintiff's counsel asked that the foregoing motion be overruled and that the deposition of the witness Rosete be
stricken from the record, because defendants' motion was made out of time and was contrary to the rules of
procedure, and there was no reason for altering the order of procedure, as requested by defendants, for, when the
period for the reception of the evidence of both parties is closed, an alteration in the order of procedure such as
asked by defendants would be improper and illegal, counsel citing the decision of this court in the case of Garcia
vs. Reyes.[[1]] He alleged, moreover, that the said deposition necessarily affected the main issue in controversy
and that to allow the motion would be in contravention of the provisions of section 364 of the Code of Civil
Procedure . He therefore asked that the said motion be overruled. The court, however, ordered that the deposition
of the witness Inocencio Rosete be admitted in evidence, and that plaintiff's exception be noted. In view of the
foregoing, the judgment aforementioned was rendered.
The questions herein submitted for the decision of this court are:
1. Is it or is it not true that the deed of sale, Exhibit A, (p. 40 of the record) of 65 balitas of land situated in the
municipality of Bacolor, Pampanga, executed by Estefania Bustos, with the assistance of her husband Bernardino
Dizon, in favor of Agapito Geronimo Cruzado, for the sum of P2,200, was simulated, not with intent to defraud any
third person, but for the sole purpose of making it appear that the vendee, Cruzado, then a candidate for the
position of procurador on the date of the said deed, September 7,1875, possessed real estate to the value of
P2,200 with which to guarantee the faithful discharge of the duties of the office of procurador?
2. It is or is it not true that, notwithstanding such apparent alienation of the 65 balitas of land, the supposed
vendee continued in possession thereof, without the supposed purchaser having taken possession of the property
until September 10, 1891, when its owner Bustos sold to Escaler, not only the said 65 balitas of land, but also all
the remainder of a large tract of agricultural land of which the portion appearing as sold to Agapito G. Cruzado
formed and forms a part, and that Escaler was then and, until the date of plaintiff's claim, continued to be in
peaceable, uninterrupted possession of the said whole tract of land, including the aforementioned portion of 65
balitas?
3. Has the right of ownership prescribed which Manuel Escaler is and has been enjoying in the land which
Estefania Bustos had sold to him and which includes the parcel of 65 balitas claimed by plaintiff, Santiago
Cruzado, or has the right of any real or personal action he might exercise by reason of the sale to Cruzado
prescribed on account of the lapse of the respective periods fixed by law, between the 7th of September, 1875,
the date of said sale, and the 8th of October, 1910, that of the filing of the complaint?
To judge from the evidence adduced in this case, there is ample ground for holding that the said deed of sale of a
parcel of 65 balitas of land was simulated, not to defraud any creditor or other person interested in the land nor
for the purpose of eluding any lawful obligation on the part of its owner, Estafania Bustos, but for the sole purpose
of doing a favor, of rendering a special service to Agapito Geronimo Cruzado, father of the plaintiff Santiago
Cruzado.
During his lifetime Agapito G. Cruzado aspired to hold the office of procurador in the Court of First Instance of
Pampanga, but notwithstanding that he possessed the required ability for the discharge of the duties of that
position, he was unable to give the required bond, an indispensable condition for his appointment, as he was
possessed of no means or real property wherewith to guarantee the proper discharge of his duties in the manner
prescribed by the laws then in force.
In the certified copy of the record of the case tried in the Secretaria de Gobierno of the abolished Real Audiencia
de Manila, issued by the Assistant Executive Secretary and chief of the division of archives, there appears on page
178 a decree by the presidencia of this latter tribunal, issued by virtue of the resolution passed by the sala de
gobierno on November 24, 1875, whereby it was ordered that Agapito Geronimo Cruzado should be noticed that
within the period of 30 days he must show proof of having furnished a bond of P700 in cash or of P2,100 in real
property as security for the position of procurador to which he had been appointed, with the understanding that
should be fail to furnish such bond he would not be issued the certificate entitling him to practice the profession of
procurador.
After complying with the requirements of the said court and executing the mortgage deed of the land purchased
by the procurador elect Cruzado from Estefania Bustos, on March 18, 1876, the mortgage was recorded in the old
mortgage registry then kept in the office of the Ayuntamiento of Manila during the former sovereignty, and
thereafter Agapito G. Cruzado received his appointment and commenced to discharge the duties of his position.

The above-related facts conclusively prove that Estefania Bustos executed the deed of sale Exhibit A in favor of
the deceased Cruzado in order to enable the latter, by showing that he was a property owner, to hold the office of
procurador. This position he held for many years, thanks to the liberality of the pretended vendor, who,
notwithstanding the statements contained in the deed of sale, does not appear to have been paid anything as a
result of the sham sale, a sale which was affected, not in prejudice or fraud of any person, nor those who were
entitled to hold Cruzado liable for the proper discharge of the duties of his office, because, had the need arisen,
any liability of his could have been covered by the value of the land, the sale of which was fictitiously set forth in
that deed as lawfully belonging to Cruzado, and then Estefania Bustos would have had no right either to object to
or escape the consequences of that alienation, although simulated.
The simulation of the said sale was effected by making a pretended contract which bore the appearance of truth,
when really and truly there was no contract, because the contracting parties did not in fact intend to execute one,
but only to formulate a sale in such a manner that, for the particular purposes sought by Bustos and Cruzado, it
would appear to have been celebrated solely that Cruzado might hold his office of procurador on the strength of
the security afforded by the value of the land feignedly sold.
The record does not show when the procurador Cruzado died, but it is unquestionable that he was still living
during the last months of 1882, judging from the certificate which he himself issued to Norberto Decena (Exhibit
3). He must have died sometime between the years 1882 and 1890, to judge from the contents of the letters
plaintiff addressed to Natalio Dizon, one of the children of Estefania Bustos, on July 7, 1891, and July 4, 1896, and
from the fact that in the said year 1890 Agapito G. Cruzado was no longer a practicing procurador in the Court of
First Instance of Pampanga..
It is true that even after the death of the aforesaid procurador, any liability he might have incurred in connection
with the exercise of his office could have been, upon presentation of the proper claim, collected out of the value of
the land apparently sold by Estafania Bustos and pledged as security for the proper discharge of the duties of his
office. On October 8, 1910, when his son Santiago Cruzado filed his complaint, already more than twenty years
had elapsed since 1889, if plaintiff's father died in 1889 and not between 1883 and 1889; therefore, any right of
action to foreclose the mortgage, or any personal action with regard to the value of the encumbered land, as the
result of any liability incurred in the performance of his duties as procurador, has more than prescribed. (Art.
1964, Civil Code, and secs. 38, 39 and 43, Act. No. 190.).
On the termination of the sovereignty of Spain over this Archipelago, the Spanish courts here established went out
of existence on January 31, 1899, the Pampanga court indeed being abolished about the middle of 1897 as a
result of the revolution against the former sovereignty. The personnel of those courts also ceased to render
service as such. It may therefore be affirmed that, if the said lien on the land in question has not terminated by its
no longer having any object, it is at least undeniable that prescription has already run with respect to any action
that might have been brought against the pledged land to recover for any liability which might have been
incurred by the procurador Cruzado during his lifetime in connection with his office, so that this real estate may
now be considered as free from that hypothecary encumbrance.
At the present time we have only to explain what rights Agapito G. Cruzado transmitted at his death to his son,
the herein plaintiff, by virtue of the deed of sale of the land in litigation, executed by its owner Estefania Bustos.
It is unquestionable that the contract of sale of the 65 balitas of land was perfect and binding upon both
contracting parties, since they both appear in that instrument to have agreed upon the thing sold, to wit, the 65
balitas of land, and upon the price, P2,200; but it is also undeniable that the said contract was not consummated,
inasmuch as, notwithstanding that the deed of sale Exhibit A was accomplished and this document was kept by
the pretended purchaser, it is positively certain that the latter did not pay the purchase price of P2,200, and never
took possession of the land apparently sold in the said deed. All that this vendee afterwards did was to pledge the
land on March 14, 1876, that is, six months and some days after the 7th of September, 1875, the date when he
purchased it as security for the faithful discharge of the duties of his office of procurador of the Court of First
Instance of Pampanga.
The plaintiff, Santiago Cruzado, a son of the vendee, claiming that the said land was being detained by the
vendor, or by the administrator of the latter's estate or her death after the commencement of these proceedings,
and by the other defendant Manuel Escaler, prayed the court to declare him to be the owner thereof, to order the
defendants to return it to him and to pay him for losses and damages, and the costs.
The action brought by the plaintiff is evidently one for recovery of possession, founded on the right transmitted to
him by his father at his death, a right arising from the said simulated deed of sale of the land in question. This
action is of course improper, not only because the sale was simulated, but also because it was not consummated.
The price of the land was not paid nor did the vendee take possession of the property from the 7th of September,

1875, when the said sale was feigned, until the time of his death; nor did any of his successors, nor the plaintiff
himself until the date of his claim, enter into possession of the land.
It is indeed true that it is not necessary that the thing sold or its price should have been delivered in order that
the contract of purchase and sale be deemed perfect on account of its being consensual, and from it reciprocal
obligations arise mutually to compel the parties to effect its fulfillment; but there is no transmission of ownership
until the thing, as in the case at bar, the land, has been delivered, and the moment such delivery is made the
contract of purchase and sale is regarded as consummated. Article 1450 of the Civil Code, relied upon in this
connection by the appellant, refers solely to the perfection of the contract and not to its consummation.
The purchaser is also a creditor with respect to the products of the thing sold, and article 1095 of the Civil Code
prescribes as follows:
A creditor has a right to the fruits of a thing from the time the obligation to deliver it arises. However, he shall not
acquire a property right thereto until it has been delivered to him.
The provisions of this article are in agreement with that of the second paragraph of article 609 of the same Code,
which is of the following tenor:
Ownership is acquired by retention.
Ownership and other property rights are required and transmitted by law, by gift, by testate or intestate
succession, and, in consequence of certain contracts, by tradition.
They can also be acquired by prescription.
The provisions of the said article 1095 are also in accord with those of article 1462 which reads:
A thing sold shall be considered as delivered, when it is placed in the hands and possession of the vendee.
When the sale should be made by means of a public instrument, the execution thereof shall be equivalent to the
delivery of the thing which is the object of the contract, if in said instrument the contrary does not appear or may
be clearly inferred.
It is true that the deed of sale Exhibit A remained in possession of the vendee Cruzado, but the sale is not to be
considered as consummated by this because the said vendee never entered into possession of the land and
neither did his son the plaintiff. The latter, moreover, was unable to prove that at any time as owner of the land
he collected the fruits harvested thereon, or that any other person cultivated the said land in the name and
representation of his deceased father or of the plaintiff himself. The fiction created by means of the execution and
delivery of a public instrument produces no effect if the person acquiring it never takes possession of the thing
sold or acquired, as happened in the case at bar.
If, as prescribed by the preinserted article 1095, the creditor, and in the present case the vendee, does not
acquire a property right in the land purchased until the property has been delivered to him or he has taken
possession of it, it is unquestionable that, as neither the plaintiff nor his predecessor in interest took possession of
the land in litigation, neither of them acquired any property right therein and, consequently, could not and cannot
now bring an action for recovery of possession which arises out of a property right in a thing which belongs to
them and not a mere right productive of a personal obligation. The plaintiff Santiago Cruzado could only, in a
proper case, exercise the personal right of action flowing from the right possessed by his father to compel the
vendor to fulfill the contract made in a public instrument to deliver the land sold or to give him possession of it, in
consequence of the said contract, though simulated and executed for the sole purpose that the deceased Cruzado
in default of P700 in cash might appear to own real estate with which to insure the proper performance of his
duties as procurador, an office he then desired to hold.
The supreme court of Spain in a decision of cassation of June 1, 1990, established the following doctrine:
That articles 1258 and 1450 of the Civil Code and the decisions of cassation of June 30, 1854, April 13 and
December 13, 1861, June 30, 1864, and April 19 and December 15, 1865, do not warrant the conclusion that
whoever purchases personal or real property may exercise with respect thereto all rights of action inherent in its
ownership, without it having, in some way or another, been placed at his disposal. On the contrary, the distinction
between the perfecting and the consummation of a contract marks the diversity of relations of the contracting
parties among themselves and of the owner with respect to what constitutes this property.

This principle is in harmony with those set up by the same high tribunal in its decision of January 19, 1898, and
March 8, 1901.
In this last decision, also rendered on an appeal in cassation, the doctrine enunciated in the excerpt copied here
below was established:
That the contract of purchase and sale, as consensual, is perfected by consent as to the price and the thing and is
consummated by the reciprocal delivery of the one and the other, the full ownership of the thing sold being
conveyed to the vendee, from which moment the rights of action derived from this right may be exercised.
It is, then, of the utmost importance to examine whether in the said sale the purchase price was paid and whether
the vendee took possession of the land supposed to have been sold.
The record discloses that Cruzado during his lifetime was, before he became a procurador, an official escribiente
or clerk charged with the duty of coursing records and proceedings in the Court of Pampanga; that his salary was
hardly sufficient to maintain him and his family; that on account of the insufficiency of his monthly stipend, he
was frequently obliged to borrow money from his friends, notwithstanding that he with his family lodged in the
house of Bernardino Dizon, the husband of the vendor Bustos, situated in the municipality of Bacolor, with whom
Cruzado maintained intimate relations of friendship, and on this account the said couple were content to live in a
country house they owned on one of their rice fields. Such was the testimony of several witnesses who lived in
that municipality, and who knew and had considerable dealings with the plaintiff's father for many years. It was
the opinion of these witnesses that the deceased Agapito G. Cruzado was a poor man, for the reason that his
monthly salary scarcely provided for the needs of himself and his family, and they therefore believed that he
could not have furnished the sum of P2,200 to purchase the land in question, and, furthermore, if the plaintiff's
father had possessed this sum, he would have made the deposit of the sum of P700, the amount of security
required by the Presidencia of the former Real Audiencia de Manila for his appointment as procurador, since,
having the means, he would have preferred to deposit this smaller sum rather than to have used P2,200 in
acquiring a piece of land from which he would derive no benefit whatever, as in fact he never did, as he must
have known that in spite of the simulated sale of the property its owner would continue in its possession and
would cultivate it, as she did do until her death. It is, therefore, unquestionable that the price of the sale was not
paid, an omission which would indicate that it was in effect simulated.
Aside from the fact that the spouses Estafania Bustos and Bernardino Dizon had no need to sell the said 65 balitas
of land, or of fencing or separating this parcel from the large tract of land that belonged to them and of which it
formed a part, for the reason that they were rich and at that time were not in need of money to cultivate their
extensive landholdings, it is also to be noted that the portion of land sold was worth very much more than the
P2,200 which, in the said instrument, purported to be its price.
In addition to the foregoing, the proceedings in the case at bar furnish ample proof that Agapito Geronimo
Cruzado during his lifetime stated to various persons that he succeeded in giving bond for his appointment as
procurador by means of the said instrument of simulated sale, executed in his favor by the spouses Dizon and
Bustos, as he did not have the money to make the deposit required for his appointment. So close were the
relations that then existed between the Cruzado family and that of Dizon and Bustos, that later on the plaintiff
married a daughter of these latter; hence, plaintiff, in the beginning of his letters Exhibits 8 and 9 addressed to
Natalio Dizon, a son of the vendor Estefania Bustos, calls his correspondent his "dear and esteemed brother-inlaw." It is therefore not stranger that these spouses should have wished to help plaintiff's predecessor in interest
by assisting him to obtain the office of procurador, even to the extent of making a feigned sale.
However, years afterwards, prompted by an intuition of possible future difficulties, Dizon and his wife Bustos went
to the office of Agapito G. Cruzado and required him to cancel the said deed of sale, in order to avoid any lawsuit
after their death. Cruzado promised to look for money wherewith to substitute the mortgage bond. This demand
had to be repeated several times, because Cruzado did not cancel the deed as he promised.
Furthermore, it is shown that the instrument Exhibit A is merely a second copy obtained by the plaintiff from the
chief of division of archives, without prior summons or notification of the vendor Estefania Bustos, who was still
living, in conformity with the provisions contained in article 18 of the Notarial Law of February 15, 1889, and
without the plaintiff's having explained what became of the first copy. Besides, the clerk and notary who certified
that instrument did not attest therein that in his presence the vendee Cruzado paid over the sum of P2,200, the
price of the land sold, and as the vendor denied having received this sum, the obligation devolved upon plaintiff
to prove that his deceased father had paid the price stated in that instrument. By this not having done so, his
omission constitutes additional proof that the sale of the land, the recovery of possession of which plaintiff now
seeks, was really simulated.

The supreme court of Spain, in a decision dated February 20, 1899, rendered on an appeal in cassation, laid down
the doctrine that, in accordance with the provisions of article 40 of the Mortgage Law, in the alienation of real
property it is understood that no price has been paid if the notary does not attest its delivery or the contracting
parties do not prove that it was previously paid.
The courts are allowed full latitude to accept the presumption that the purchase price has not been paid when the
notary before whom the instrument was executed does not attest the delivery of the money, and when, such
delivery being denied by one of the contracting parties, the other does not adduce proof of its payment,
especially when such presumption is corroborated by other circumstantial evidence which, all together,
undoubtedly prove that the sale was feigned and simulated for certain purposes sought to be attained by the
parties, though, as in the case at bar, the simulation was not effected in fraud of creditors.
Besides the failure to pay the purchase price, the record discloses another very important fact, to wit, that neither
the vendee nor his heirs, among these latter, the plaintiff, had at any time taken possession of the land which in
the said instrument Exhibit A appeared to have been sold, for, by the testimony of seven competent witnesses
examined at the trial it is decisively and conclusively proven that the alleged vendor, Estefania Bustos, and her
husband while he was living, notwithstanding the said alienation, continued to possess the said land supposedly
sold to plaintiff's father, and cultivated it, as she had done long before the sale of September, 1875, and
continued to do so up to the date of the complaint filed by Santiago Cruzado; in the first period, until September
10, 1891, as the owner of the land, and from this date, when the whole of the large tract of land of which the said
portion apparently sold forms a part was sold to the other defendant Manuel Escaler, the original owner Estefania
Bustos continued in the material possession of the land, but now as the lessee of the new owner, until 1908, when
she was substituted by Marcelo Rodriguez as the new lessee of the property. The plaintiff at no time after his
father's death occupied the land in litigation, notwithstanding his allegation that he has been collecting rentals
from Estefania Bustos, his mother-in-law, by reason of his having leased the land to her.
The plaintiff endeavored to prove that during the years 1882 and 1883 he personally took charge of and tilled the
disputed land on shares through his tenants named Florentino de los Reyes, Lino Cortes, Macario de los Reyes and
Regino de los Reyes, all of whom corroborated plaintiff's testimony in this regard. However, six of the defendants'
witnesses positively stated that they never were aware that the said tenants had worked on the land in question
during either the said two years or in any other, for these latter were working on the adjacent lands belonging to
other owners. Pablo Angeles, one of the defendants' witnesses, testified that Regino and Florentino de los Reyes
were his tenants on shares and were employed on his land adjoining that in question. He was positively certain
that they never worked on the disputed land during or about the years aforementioned, because the carabaos
used by his said two tenants belonged to him and he never would have permitted them to use these animals in
working land that did not belong to him. He added that Regino's children, Macario and Basilio, were at that time
so young, being about eight years of age, that they were not yet able to work in the fields.
The plaintiff must have been well convinced that he had no right whatever in the land supposedly purchased by
his father. The latter never demanded its possession from its owner Estefania Bustos and never thought of
declaring the property as belonging to him, for the purposes of the land tax, from the time this tax was
established in this country, notwithstanding that the plaintiff, knowing his obligation, filed a sworn declaration
relative to a lot he owned in the municipality of Bacolor. This procedure of plaintiff's proves that he did not believe
himself to be the owner of the land he claims and which its present owner Manuel Escaler has constantly declared
for the purpose of assessment.
Moreover, about the middle of the year 1891, the plaintiff Santiago Cruzado begged his brother-in-law Natalio
Dizon to tell the latter's mother, plaintiff's mother-in-law, that Cruzado desired the lease four balitas of the land in
question, and some days afterwards, possibly because he received no reply from his said brother-in-law, he
addressed a letter to Dizon (Exhibit 9, page 152 of the record, translated on page 154) in which he repeated his
request and asked for a reply; but notwithstanding that his brother-in-law Dizon told him that he could not dispose
of any part of the said land for the reason that his mother Estefania Bustos was negotiating for the sale of all the
land she possessed in the sitio of Sicat to Manuel Escaler, plaintiff went to Dizon's house on an occasion when
Paulino de la Cruz was there. Cruz was a representative of Escaler and had been charged to inform himself of the
situation, condition and quality of the land which Bustos was about to sell to his principal and was at the said
house for the purpose of being shown the land offered for sale. On this occasion plaintiff learned that negotiations
were being made for the sale of all the land owned by Estefania Bustos of which the 65 balitas in litigation formed
a part. Plaintiff did not then or afterwards make any statement or objection whatever in defense of his rights and
interest, if he really believed that he was entitled to the land shown in the instrument Exhibit A to have been
purchased by his father.
Plaintiff made no protest whatsoever, because he well knew that the said sale was simulated and that his father
had acquired no right whatever in the property; he was therefore anxious to lease fourbalitas of the same land, a
purpose in which he was unsuccessful because a deal was then already going forward for the sale of the said land

to its present owner, Manuel Escaler, who in fact did but it on September 10, 1891. If plaintiff were convinced that
he was the owner of the land, as he rashly asserted that he was in his complaint for recovery of possession, it is
not understood why about the middle of the year 1891 he wished to lease, not all the 65 balitas, but only four of
them, as stated in his said letter, Exhibit 9.
From that time the new owner Manuel Escaler took possession of all the land sold by Estefania Bustos, including
the 65 balitas in litigation, and continued in its possession as the owner thereof until October 8, 1910, when
plaintiff filed his claim. Thus, more than the ten years required by law for ordinary prescription had already
elapsed, as Escaler purchased the land and was holding it in good faith under a lawful title and was not disturbed
in his continuous and peaceable possession, one that was adverse to the whole world. It is therefore
unquestionable that he has absolutely acquired by prescription the ownership of the disputed land, and the action
brought by plaintiff, founded solely on a simulated sale executed by the original owner of the land, not to the
prejudice, but to the benefit, of the pretended vendee, cannot prevail against Escaler's rights.
The registration obtained by the plaintiff in the property registry of the second copy of the said instrument Exhibit
A, about two months before filing his action for recovery, to wit, on August 23, 1910, has not improved the deed
of sale nor made it more effective, nor could it affect the rights held by the original owner and the present
proprietor of the land in question, inasmuch as their predecessor in interest, by default of payment of the price of
the sale and on account of his never having taken possession of the land sold, was not the owner thereof, nor did
he acquire any property right whatever therein. Consequently at his death he could not have transmitted to the
plaintiff as his successor any greater right than a personal right to exact the fulfillment of a contract, and as
plaintiff was not the owner of the land, he could not validly register it.
Article 1473 of the Civil Code prescribes:
If the same thing should have been sold to different vendees, the ownership shall be transferred to the person
who may have first taken possession thereof in good faith, if it should be personal property.
Should it be real property, it shall belong to the person acquiring it who first recorded it in the registry.
Should there be no entry, the property shall belong to the person who first took possession of it in good faith, and,
in the absence thereof, to the person who presents the oldest title, provided there is good faith.
On the sale of the land to the defendant Escaler, neither he nor the plaintiff had had it entered in the property
registry, but the said new owner, Escaler, took possession of the land on the date of its acquisition, September
10,1891, and has retained possession thereof up to the present time. So that when plaintiff registered the land he
was not in possession thereof and no longer had any right whatever therein, because it already belonged to the
defendant Escaler, its lawful owner.
However, even though it were proper for plaintiff to bring the real action for recovery derived, though we do not
admit that it could be, from the simulated sale before mentioned, both this action as well as the personal action
the only one available in a proper case, as before demonstrated, pursuant to the provisions of article 1095 of the
Civil Code have both certainly prescribed, for the reason that the periods fixed by law for filing such actions
have much more than elapsed.
Article 1939 of the Civil Code says:
Prescription, which began to run before the publication of this code, shall be governed by the prior laws; but if,
after this code became operative, all the time required in the same for prescription has elapsed, it shall be
effectual, even if according to said prior laws a longer period of time may be required.
Personal actions prescribe after ten years; and the same with the writ of execution therein issued, after twenty
years; while real actions prescribe after thirty years: according to Law 5, Title 8, Book 1 of the Novisima
Recopilacion, and Law 21, Title 29, Partida 3, which were those in force on the date of the execution of the deed of
sale, Exhibit A.
From September 7, 1875, to October 8, 1910, when the complaint was filed, thirty-five years have elapsed.
Therefore, not only in accordance with the laws aforecited, but also pursuant to the provisions of articles 1963 and
1964 of the Civil Code, the periods fixed for the prescription of the personal action which could, in a proper case,
have been exercised, as well as for the real action for recovery of possession brought by the plaintiff without right
so to do, have more than prescribed.
For all the foregoing reasons, whereby the errors assigned to the judgment appealed from have been duly refuted,
the said judgment should be, as it is hereby, affirmed, with the costs against the appellant. So ordered.

Arellano, C. J., Johnson, Carson, Moreland, Trent, and Araullo, JJ., concur.
G.R. No. 3019, Compania General de Tabacos de Filipinas v. Araza, 7 Phil. 455
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
February 9, 1907
G.R. No. 3019
LA COMPAIA GENERAL DE TABACOS DE FILIPINAS, plaintiff-appellee,
vs.
VICENTE ARAZA, defendant-appellant.
T. L. McGirr for appellant.
Domingo Franco for appellee.
WILLARD, J.:
The plaintiff brought this action in the court below to foreclose a mortgage for 8,000 pesos upon certain land in
the Province of Leyte. A demurrer to the complaint was overruled, but to the order overruling it the defendant did
not except. The defendant answered, alleging that the document, the basis of the plaintiff's claim, was executed
through error on his part and through fraud on the part of the plaintiff. A trial was had and judgment was entered
for the plaintiff as prayed for in its complaint. The defendant moved for a new trial on the ground that the decision
was not justified by the evidence, this motion was denied, to its denial the defendant excepted, and he has
brought the case here for review.
Upon the questions of fact raised by the answer, the findings of the court below are sustained by the evidence, in
no event they can be said to be plainly and manifestly against the weight of the evidence. Those findings include
a finding that there was no fraud on the part of the plaintiff, no mistake on the part of the defendant, and that
there was a sufficient consideration for the contract, As has been said, there was in the case to support all of
these conclusions.
Upon one point, however, we think that the judgment was erroneous. The contract send upon was executed on
the 11th day of June, 1901. By terms thereof the defendant promised to pay the plaintiff 8,000 pesos as follows:
500 pesos on the 30th of June, 1901, and the remainder at the rate of 100 pesos a month, payable on the 30th
day of each month, until the entire 8,000 pesos was paid. The defendant paid 400 pesos and no more.
This suit was commenced on the 12th day of June, 1903. There was no provision in the contract by which, upon
failure to pay one installment of the debt, the whole debt should thereupon become at once payable. We are of
the opinion that the obligation can be enforced in this action for only the amount due and payable on the 12th
day of June, 1903.
The court below gave no credit for the payment of 400 pesos admitted by the complaint to have been received by
the plaintiff. It is allowed interest upon the entire debt from the 1st day of July, 1901. The contract does not
provide for the payment of any interest. There is no provision in it declaring expressly that the failure to pay when
due should put the debtor in default. There was therefore no default which would make him liable for interest until
a demand was made. (Civil Code, art. 1100; Manresa, Com. on Civil Code, vol 8, p. 56.) The transaction did not
constitute a mercantile loan and article 316 of the Code of Commerce is not applicable. There was no evidence
any demand prior to the presentation of the complaint. The plaintiff is therefore entitled to interest only from the
commencement of the action.
The judgment is set aside and the case is remanded to the court below with directions to determine the amount
due in accordance with the views hereinbefore expressed and to enter judgment for such amount. No costs will be
allowed to either party in this court. So ordered.
G.R. No. 2827, Lopez v. Tan Tioco, 8 Phil. 693
Republic of the Philippines
SUPREME COURT
Manila

EN BANC
October 3, 1907
G.R. No. 2827
MARIA LOPEZ Y VILLANUEVA, plaintiff-appellant,
vs.
TAN TIOCO, defendant-appellee.
Ruperto Montinola for appellant.
Smith & Hargis for appellee.

CARSON, J.:
This is an action to recover 22,684.94 pesos, Mexican currency, balance due on account. The only item of the
account in dispute is the price at which 7,718.99 piculs of sugar should be charged to the defendant and appellee,
and credited to the plaintiff and appellant.
Maria Lopez, the plaintiff, alleges that she entered into a verbal contract which the defendant to deliver to him
certain sugar, which he obligated himself to store in Iloilo until he received instructions from her to sell,
whereupon he was to credit her account with its market value in Iloilo on the day upon which such instructions
were communicated to him; that in accordance with the terms of the agreement she delivered to the defendant
7,713.99 piculs of sugar; that she gave instructions to sell on the 29th of September, 1904; that on the 29th day
of September, 1904, the market value of the sugar she thus delivered was as follows: 1,085.13 piculs of No. 1, at
5.35 pesos, Mexican currency; 1,741.56 piculs of No. 2, at 5.12 pesos, Mexican currency; 4,823.67 piculs of
No. 3. at 4.87 pesos, Mexican currency; 16.23 piculs of la clase humeda, at 3.37 at 3 pesos, Mexican
currency; and 47.40 piculs of coriente, at 3 pesos, Mexican currency; that had the sugar been sold on the 1st of
December, 1904, the date on which the complaint was filed, it would have brought a still higher price, and that
crediting her with the market value of the sugar on the 1st day of December, 1904, the balance due on account
would be 22,638.94 pesos, Mexican currency.
The defendant, Tan Tioco, admits the truth of the foregoing, allegations, but insists that he received authority to
sell the sugar on the 26th of March, 1904, when the market price in Iloilo was much lower than on the 29th of
September, 1904, or the 1st of December, 1904, and that crediting the plaintiff with the market value of the sugar
as of the 26th of March, 1904, the balance due the plaintiff would amount to but 1,082.95 pesos, Mexican
currency, which he admits he is indebted to her in accordance with the terms of their agreement.
The trial court was of opinion that the evidence sustained the contention of the defendant, and gave judgment in
favor of the plaintiff for 1,082.95 which the defendant admitted to be due on account. From this judgment the
plaintiff appeals and prays that the judgment of the trial court be served and that judgment be rendered in her
favor for the balance due, after crediting the plaintiff with the market value of the sugar of the day of the filing of
the complaint.
The plaintiff positively denies the defendant's allegation that she had given him authority to sell the sugar on the
26th of March, 1904. There is a direct conflict in the testimony as to this point. The defendant affirms, the plaintiff
denies, and, other than their contradictory, statements, there is no satisfactory evidence in the record upon which
to base a finding.
The defendant, in corroboration of his statements, called a witness who declared that on the 26th day of March,
1904, he was an employee of the firm of Smith, Bell & Co., in whose godown the sugar was stored; that he was
sent by his employer to tell Tan Tioco "to come to the office to fix up his account;" that Maria Lopez was in Tan
Tioco's office when he arrived; that he hears Tan Tioco tell her in Visayan that he, the witness, was an employee of
Smith, Bell & Co., who had come to hurry the defendant in the settlement of his accounts; that he waited for Tan
Tioco, and in their conversation heard Maria Lopez say, "Very well, I leave it to you;" that thereupon Tan Tioco said
to the witness, "Go back and tell them that I will come up today;" that this was the only part of the conversation
which he overheard. It is somewhat remarkable that this witness was able to overhear or understand no more that
half a dozen words, which the defendant, who called him, appears to imagine were the vital words necessary to
corroborate his statement; but granting that he did, in fact, overhear the plaintiff say what he says she said, it is
impossible for us to say that these words were used in reference to the sugar in question, that they conveyed
authority to the defendant to sell the sugar, unless we believe the statement of the defendant, whose veracity is
in question.

The defendant also called Silverio Hinojales, one of his employees, who stated that in the month of February,
1904, he "went to the house of Maria Lopez by order of Tan Tioco, and told her that Tan Tioco was asking for an
agreement of her accounts;" that late in the month informed her "the sugar to the house of Maria Lopez and had
been sold 5 to Smith, Bell & Co, at the rate of 4.375 pesos per picul for No. 1, and 4.12 pesos per picul for No.
2;" that when he informed her of that "she didn't say anything; she said she would go down to the office of Tan
Tioco." while it may be true, as claimed by the defendant, that he was anxious to have the sugar sold on the 26th
day of March, and that he requested the plaintiff on various occasions to authorize into to make such sale, and
that he pointed her that the sale had actually been made, these facts in no wise tend to prove that Maria Lopez
did, in fact, grant him to authorization which, as he alleges, he so urgently importuned.
The plaintiff, in support of her contention, produced the receipts issued by the defendant for the delivery of the
sugar, and her counsel insists that the mere fact that there receipt were in her hands at the time of the trial, and
had not been delivered to the defendant, was sufficient to establish her contention that she had never given the
defendant authority to sell. Since the defendant alleges that this authority was granted verbally, and that it was
understood that after the sale had been made there was to be a settlement of accounts which did not take place
because the plaintiff refused to come to the office for that purpose, we do not think that the possession of these
receipts casts very much light upon the disputed point.
As stated before, the relevant testimony in this case substantially amounts to the unsupported statement of the
defendant that authority was granted him to sell the sugar on the 26th day of March, 1904, and the unsupported
denial of the plaintiff. It becomes important, therefore, to ascertain upon whom rests the burden of proof as to this
point.
Section 297 of the Code of Civil Procedure is as follows:
Each party must prove his own affirmative allegations. Evidence need not be given in support of a negative
allegation except when such negative allegation is an essential part of the statement of the right or title on which
the cause of action or defense is founded, nor even in such case when the allegation is a denial of the existence
of a document the custody of which belongs to the opposite party.
This provision is partially the same as the rule embodied in the maximum semper necessitas probandi incumbit illi
qui agit.
Under the terms of the agreement the plaintiff would be entitled to a judgment upon proof of the allegations in
her complaint. The defendant practically admits the truth of these allegations, but in his defense sets up new
matter by way of an affirmative allegation, and it is therefore his duty to support this allegations by a
preponderance of evidence.
The reason that he who alleges to be the creditor of another is obliged to prove fact of agreement upon which his
claims founded, when it is contested; and that, on the other hand, when the obligation is proved, the debtor who
alleges that he has discharged it is obliged to prove the payment, is clearly one of those propositions in which
every system of jurisprudence must concur in general, whatever particular rules may be adopted, as to the mode
and form of the allegations by which the necessity of such proof is to be determined. (2 Evans' Pothier, 143, 144.)
We are of opinion that here is not a preponderance of proof in the record in support of the defendant's affirmative
allegation, and that the judgment of the trial court should be reversed.
Counsel for the plaintiff and appellant contend that the sugar in question should be credited, at its market value
on the day when the complaint in this action was filed, and not at this market value on the day when instructions
to sell were first communicated to the defendant.
This contention is not well founded. Article 1100 of the Civil Code, in which counsel appears to rely, prescribes
that:
Person obliged to deliver or to do something are in default from the moment when the creditor demands the
fulfillment of their obligation, judicially or extrajudicially.
Under the terms of the contract, when is the basis of the plaintiff's cause of action, her account was to be credited
with the market value of the sugar on the day when the authority to sell was first communicated to the defendant.
Neither the law for the contract imposed the obligation upon the plaintiff to make judicial rather than extrajudicial
demand for the sale of the sugar. She did, in fact, make an extrajudicial demand, and it is the defendant's default
in complying with this demand which entitles her to relief in this action.

The market value of the 7,713.99 piculs of sugar in question on the 29th day of September, 1904, estimated upon
the basis alleged in the complaint and proven at the trial, was 38,470.43 pesos, Mexican currency, and this,
together with the sum of 12,000 pesos, Mexican currency, on the credit side of the plaintiff's account, which is not
in controversy, amount to 50,470.43 pesos, Mexican currency; deducting therefrom 41,757.90 pesos, Mexican
currency; the amount of the advances made by the defendant to the plaintiff, the balance in favor of the plaintiff
and for which judgment should be given amounts to 8,712.53 pesos, Mexican currency.
After twenty days let judgment be entered reversing the judgment of the trial court, and ten days thereafter let
the record be turned to the trial court, where judgment will be entered in favor of the plaintiff for the equivalent in
Philippine currency of 8,712.53 pesos, Mexican currency, with interest at the legal rate from the date of the filing
of the complaint as prayed therein, and without special condemnation of costs in this instance. So ordered.
G.R. No. 43012, Queblar v. Garduo and Martinez, 62 Phil. 879
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
January 16, 1936
G.R. No. 43012
VENANCIO QUEBLAR, plaintiff-appellant,
vs.
LEONARDO GARDUO and ANICIA MARTINEZ, defendant-appellants.
Sotelo, Sotelo and Ugarte for plaintiff-appellant.
Francisco Alfonso for defendants-appellants.
VILLA-REAL, J.:
These are cross-appeals taken by the plaintiff Venancio Queblar and by the defendants Leonardo Garduo and
Anicia Martinez from the judgment of the Court of First Instance of Cavite, the dispositive part of which reads as
follows:
Wherefore, judgment is rendered ordering the defendant Leonardo Garduo to pay to the plaintiff the sum of
P7,750 with legal interest thereon from May 4, 1933, when the complaint in this case was filed, until fully paid,
with costs, and upon his failure to do so within one hundred twenty (120) days from this date, the court will order
the sale of the mortgaged estate so that the proceeds thereof may be applied to the payment of the amount of
this judgment.
The plaintiff is absolved from the cross-complaint, and so also is the cross-defendant Amalia Arcega.
In support of their appeal, the plaintiff assigns two alleged errors and the defendants ten as committed by the
court a quo in its said judgment, all of which will be discussed in the course of this decision.
The first question to be decided in this appeal, which is raised by the defendants in their brief, is whether or not
the true amount obtained by the defendants from Feliciano Basa and Amalia Arcega was P2,100 or P8,400.
The defendant Leonardo Garduo claims that, his brother-in-law Isidro Martinez having proposed to him the
purchase of a house on Marquez de Comillas Street, Manila, for the sum of P22,700, hoping that after six months
he could resell it for not less than P35,000, he negotiated and obtained a loan of P17,600 from the Postal Savings
Bank; that he had a savings of P3,000 and needed only P2,100 to complete the amount necessary to acquire said
estate; that he explained to the Basa spouses the prospective transaction and succeeded in obtaining the sum of
P2,100 from the latter; that the spouses Basa having known that he was to gain P12,600 in the resale, they asked
for one-half of the profits, or P6,300 instead of demanding interest; that as he needed their money, he agreed,
and sum of P8,400 was stated in the deed of loan Exhibit A, instead of P2,100; that he acquired the estate but he
failed to resell it under the aforesaid advantageous conditions by reason of the death of his brother-in-law Isidro
Martinez who was to negotiate the resale; that in view of this failure, Leonardo Garduo requested his creditors,
the spouses Feliciano Basa and Amalia Arcega, to reduce his indebtedness but said spouses refused to accede to
his request, and nothing more was done as he had to go to Capiz to take charge of the Court of First Instance of
said province.

Amalia Arcega denied all the testimony of the defendant Leonardo Garduo and stated that the amount loaned to
said defendant and his wife was P8,400 appearing in the deed of loan Exhibit A; that they charged him no interest
because the defendant and her husband were very good friends and the former used to take the latter from his
house for a drive in the defendant's automobile.
It is incomprehensible that the defendant Leonardo Garduo, who was then a Judge of the Court of First Instance,
should agree to assume a debt of P8,400 if he had really received only P2,100. With the expected profit of
P12,600 from a resale of the estate he wanted to purchase, he could pay even double the sum of P2,100, giving
his creditors one hundred per cent profit, without the necessity of paying forty-two monthly installments of P200
to settle his debt. The theory of the defendant-appellant is so strange and unbelievable even in ordinary cases
wherein the borrower is not a judge of first instance. Furthermore, if the P6,300 added to the P2,100 were really
one-half of the profit which Leonardo Garduo hoped to realize from the resale, and if he agreed to have the sum
of P8,400 stated in the deed of loan on condition that the estate could be sold and said profit realized, as said
resale and, consequently, the profit had not been realized, the condition disappeared and upon refusal of the
spouses Basa to reduce the loan to its true amount of P2,100, he could have resorted to the courts to ask for its
reduction to its true limit. As he did not do so, the presumption is that the P8,400 appearing in the deed of loan
Exhibit A is the true amount obtained by the defendant Leonardo Garduo from the Basa spouses.
Having arrived at this conclusion, we believe it unnecessary to pass upon the other assignments of alleged error
relied upon by the defendant-appellant Leonardo Garduo.
Turning our attention to the alleged errors assigned by the plaintiff-appellant who acquired the rights of the
spouses Feliciano Basa and Amalia Arcega to the loan contained in the deed Exhibit A, we have in the first place
the question whether the payment of interest by reason of default should begin from the month of March, 1926,
when the should begin from the month of March, 1926, when the defendant-appellant failed to pay the stipulated
installments, or from May 4, 1933, when the complaint in this case was filed.
Although it is really stipulated in the deed Exhibit A that failure to pay any of the monthly installments fixed
therein would mature the entire obligation, however, it is not stated herein that the mortgagors would thereafter
be in default, as required by paragraph 1 of article 1100 of the Civil Code. There being no such statement of
default, the herein defendant-appellant was in default only when judicially required to comply with the obligation
through the filing of the corresponding complaint on May 4, 1933. (Art. 1100, Civil Code; Compaia General de
Tabacos vs. Araza, 7 Phil., 455.)
The court a quo, therefore, did not err in adjudicating interest to the plaintiff from May 4, 1933.
With respect to the amount claimed for attorney's fees, it has been stated in the contract Exhibit A that the
mortgage constituted was "also to secure the payment of another reasonable amount as attorney's fees in case of
litigation and of the costs and the corresponding expenses." Therefore, there is a stipulation for the payment of
reasonable attorney's fees in case of litigation. Taking into consideration the amount involved in the litigation and
the nature of the latter, we are of the opinion that five per cent of the debts is a reasonable rate for the payment
of attorney's fees in the case at bar.
For the foregoing considerations, we are of the opinion and so hold that although a contract of loan stipulates that
failure to pay any of the installments therein stipulated would mature the entire obligation, without expressly
stating that the debtor shall thereafter be in default, there is no justification to so hold and to adjudicate interest
from the date of said non-fulfillment, but from the time a judicial or extrajudicial demand for payment is made of
him (art. 1100, Civil Code; Compaia General de Tabacos vs. Araza, supra).
Wherefore, with the sole modification that five per cent of the unpaid debt of P7,750 is also awarded to the
plaintiff-appellant, the appealed judgment is affirmed in all other respects, with costs to the defendant-appellant.
So ordered.
[G.R. No. L-16217. May 25, 1964.]
ALFONSO DE LOS REYES, ET AL., Plaintiffs-Appellees, v. LUIS DE LEON, Defendant-Appellant.
Alberto P. San Juan for Plaintiffs-Appellees.
Augusto de Leon, for Defendant-Appellant.
SYLLABUS

1. OBLIGATIONS AND CONTRACTS; PERFORMANCE; NO DELAY WHERE NO PREVIOUS DEMAND FOR FULFILLMENT
WAS MADE; CASE AT BAR. Appellees in the case at bar did not incur default in their obligation to pay the taxes,
vis-a-vis appellant, where there was no previous demand by the latter for such payment. And even assuming that
appellees failure to pay the taxes rendered the entire loan due and payable, they incurred no default in the
payment of said loan in the absence of a previous demand upon them.
2. ID.; ID.; ID.; EXCEPTION WHEN TIME IS OF THE ESSENCE OF THE OBLIGATION; MUST BE A MATERIAL BREACH.
Although it was stipulated in the contract of mortgage executed in 1944, that "Time is the paramount condition of
this agreement," nevertheless, referring specifically to the non-payment of taxes for 1951, 1952 and the first part
of 1953, it held that in the light of the principal stipulation of the contract concerning the time when the mortgage
debt was to be paid, i.e. not sooner or later than within the first 3 years after the Greater East Asia War, such nonpayment of taxes was not a material breach of the contract; and that in any event, when the taxes were actually
paid there was substantial compliance with the obligation in this particular aspect so as to arrest effectively the
foreclosure sale.
3. ID.; ID.; PERIOD FIXED FOR BENEFIT OF BOTH PARTIES; DELAY NOT IN THE CONSIDERATION FOR THE PERIOD.
Where the timely payment of the real estate taxes in the case at bar was not the consideration which moved the
parties to fix the period for the payment of the indebtedness, it is held that such delay will not cause the
appellees to lose their right to avail of the period.
4. ID.; ID.; DEBTORS MAY NOT BE PENALIZED FOR ACCELERATION OF PAYMENT NOT OF THEIR OWN CHOOSING.
The debtors in the case at bar may not be penalized for the acceleration of payment which was not of their own
choosing, but brought about by the extra-judicial foreclosure when no default had been incurred by
them.chanroblesvirtualawlibrary
DECISION
MAKALINTAL, J.:
This appeal was originally filed with the Court of Appeals. Subsequently, it was endorsed to and accepted by this
Court for the reason that the issues raised involve only question of law.
As security for a loan of P60,000, Japanese Currency, obtained from the herein appellant, the appellees executed
two mortgage agreements in favor of the former. The first, entitled "Real Estate Mortgage" and executed on July 4,
1944, so far as germane to this litigation, provided:jgc:chanrobles.com.ph
"That for and in consideration of the loan of Forty thousand pesos (P40,000.00), Philippine Currency, received
from the Mortgagee, the receipt of which is hereby acknowledged, and to secure the payment of the same as well
as interest thereon, and other advances of money that may hereinafter be obtained from the mortgagor as well as
for other valuable considerations received or that the latter may acquire, including interest and expenses of any
other obligations owing to the Mortgagee whether direct or indirect, principal or secondary, the Mortgagor does
hereby transfer and convey by way of Mortgage unto the Mortgagee, his assigns and successors, the parcel of
land hereinbelow described, their title thereto being evidenced by Transfer Certificate of Title No. 66955, of the
Register of Deeds of the City of Manila, which parcel of land is more particularly described as follows.
x

"This Mortgage is constituted under the following conditions:jgc:chanrobles.com.ph

"(1)
Time is the paramount condition of this Agreement, namely, that the said loan of Forty thousand pesos
(P40,000.00) shall not be paid sooner nor later than within the first Three years after the Greater East Asia War, to
be computed from the signing of the Treaty of Peace;
x

"(3)
The Mortgagor . . . shall pay in time the taxes and assessments of the mortgaged property, reporting to
the Mortgagee the fact of such payment on the dates in which they were effected;

"(4)
The Mortgagor shall not lease the mortgaged property under contract nor shall sell nor dispose of the
same in any manner, nor encumber the same with a second mortgage, without the written consent of the
Mortgagee;
x

"(6)
If at any time the Mortgagor shall fail or refuse to pay any of his obligations stipulated when due, or
whatever obligation herein secured, then all the entire loan of Forty thousand pesos (P40,000.00) including
accumulated interest, and other obligations of the Mortgagor of any nature, shall become due and payable, the
Mortgagee may immediately foreclose this mortgage judicially or extrajudicially, under Act No. 3135, as amended,
and in case of foreclosure, the Mortgagee, on filing the corresponding petition, shall be appointed receiver, . . .;"
The second agreement was denominated "Real Estate Additional Mortgage." Dated July 11, 1944 and constituted
upon the same property as the one offered in the first instrument, it stipulated, insofar as relevant to the issues in
this case, the following:jgc:chanrobles.com.ph
"That on July 4th 1944, the mortgagor obtained from the mortgagee the loan of Forty thousand (P40,000.00),
secured by a lien of first mortgage under real property situated at Nebraska, Malate, Manila, Philippines, more
particularly described under Transfer Certificate of Title No. 66955, in the Land Records of the City of Manila, as
follows:chanrob1es virtual 1aw library
x

"That the MORTGAGOR, desiring to obtain an additional loan of TWENTY THOUSAND PESOS (P20,000.00) from the
MORTGAGEE, has, by these presents, transferred, conveyed and assigned, in favor of the Mortgagee, his assigns,
heirs and successors in interest, the above described parcel of land, subject to the following
conditions:jgc:chanrobles.com.ph
"That all the terms and conditions in Deed of Mortgage, dated July 4, 1944, between the same parties, hereto,
executed before Notary Public for the City of Manila, Mr. Nicanor Sison, per Doc. No. 21, page 90, Book I, Series of
1944, in the notarial register of the above-mentioned notary public, were herein incorporated and made part of
this document, with the exception only of the terms which may be repugnant and contrary to the additional
conditions and supplementary agreements hereinafter stipulated, to wit.
"The conditions of this additional mortgage, are: (A) That the amount of FORTY THOUSAND PESOS (P40,000.00),
including the accrued interest above-mentioned as consideration in Doc. No. 21, Page No. 90, Book I, Series of
1944, executed before the Notary Public for the City of Manila, Mr. Nicanor Sison, between the parties hereto, shall
be paid not sooner nor later than within Three (3) years after the war, counted from the date of the signing of the
Treaty of Peace by the Belligerent Powers; and (B) That said payment must be made in Philippine Currency;
Provided, however, in the event that prior to the termination of the present war and the signing of the Treaty of
Peace and its proclamation by the corresponding powers, the Mortgagor does not redeem and pay the loan
obtained under the original mortgage as per document above-mentioned, then this additional loan and all its
consideration shall be automatically condoned, cancelled and annulled, including TEN THOUSAND PESOS
(P10,000.00) of the original loan together with the accrued interest up to the cessation of the war born the entire
amount of the original loan . . ."cralaw virtua1aw library
Subsequently, or on August 5, 1953, the appellees received the following communication from the appellants
lawyer:jgc:chanrobles.com.ph
"This is to inform you that by reason of your failure to pay the taxes due for the years 1951 and 1952 and 1953 on
the property covered by Transfer Certificate of Title No. 66955 of the City of Manila which was mortgaged by you
in favor of Luis de Leon to secure a loan of P60,000.00, your indebtedness in the latter amount together with the
accumulated interest thereon has become due and payable, and we are, therefore, taking the necessary
extrajudicial steps to foreclosure said property in accordance with the terms and conditions of the two real estate
mortgages executed by you in favor of Luis de Leon."cralaw virtua1aw library
Acting on the foregoing communication, the appellees paid the back taxes complained of on September 3, 1953.
The foreclosure sale was scheduled by the Sheriff on September 4, 1953. Before the sale could proceed, appellee
de los Reyes presented to the appellant and his counsel the receipts evidencing payment of the taxes for 1951
and 1952 (only the first installment of the tax for 1953 was then due). Nevertheless, appellant and his counsel

insisted on the foreclosure to collect the indebtedness allegedly in the amount of P60,000.00. However, the
extrajudicial sale was deferred until September 21, 1953.
At the auction, the appellant was the lone and sole bidder. He won the bid at P30,000.00 and for which he was,
therefore, issued the Sheriffs Certificate of Sale.
On August 21, 1954, appellees filed suit to annul the foreclosure sale, charging therefore three grounds, to wit: (1)
misrepresentation of the amount of the actual indebtedness, (2) absence of demand prior to foreclosure, and (3)
prematurity, because the foreclosure was effected long before the period stipulated in the contract.
The defendant-appellant filed a timely answer with a counterclaim for damages. In the same, only one ground was
invoked by him in justification of the act complained of, namely, "failure on the part of the plaintiffs to pay the real
estate taxes for 1951 to 1953, inclusive." chanroblesvirtual|awlibrary
Upon the issues thus joined as above, the trial court rendered judgment holding that "all the proceedings had in
the said sale and foreclosure" to be "null and void and of no effect," and condemning appellant to pay the sum of
P3,000.00 as attorneys fees.
On failing to have the aforesaid judgment reconsidered, the case was appealed.
The judgment should be affirmed for several reasons:chanrob1es virtual 1aw library
(1)
The ground for such foreclosure was the failure of appellees to pay the taxes on the mortgaged property
for 1951, 1952 and 1953. The pertinent stipulation of the mortgage contract reads as
follows:jgc:chanrobles.com.ph
"(6)
If at any time the Mortgagor shall fail or refuse to pay any of his obligations stipulated when due, or
whatever obligation herein secured, then all the entire loan of Forty Thousand Pesos (P40,000.00) including
accumulated interest, and other obligations of the Mortgagor of any nature, shall become due and payable, and
the Mortgagee may immediately foreclosure this mortgage judicially or extrajudicially, under Act No. 3135, as
amended, and in case of foreclosure, the Mortgagee, on filing the corresponding petition, shall be appointedreceiver, . . ."cralaw virtua1aw library
The issue on this point is: Did appellees incur in default in their obligation to pay the taxes, vis-a-vis appellant,
even without previous demand by the latter for such payment? And did appellees, assuming that their failure to
pay the taxes rendered the entire loan due and payable, incur in default in the payment of said loan in the
absence of a previous demand upon them? It should be remembered that no demand was made either in respect
of the taxes or of the loan itself, the only notice given to appellees being the letter received by them from
appellants lawyer on August 5, 1953, to the effect that he was taking the necessary steps to foreclose the
mortgage extrajudicially because the taxes had not been paid.
Article 1169 of the Civil Code provides that those obliged to deliver or to do something incur in delay from the
time the obligee judicially or extrajudicially demands from them the fulfillment of the obligation. Demand is
dispensed with only: (a) when the obligation or the law expressly so declares, that is, that the debtor shall be
considered in default without the need for such demand; (b) when time is of the essence of the obligation; and (c)
when demand would be useless.
Circumstances (a) and (c) were not present in the instant case. Circumstance (b) was stipulated, but in a sense
contrary to the pretension of appellant. Thus paragraph (1) of the original contract of mortgage states: "Time is
the paramount condition of this agreement, namely, that the said loan of P40,000.00 shall not be paid sooner nor
later than within the first three (3) years after the Greater East Asia War, to be computed from the signing of the
Treaty of Peace. In the subsequent mortgage of July 4, 1944, for an additional loan of P20,000.00, the time
element was emphasized and modified by the following clause: "Provided, however, in the event that prior to the
termination of the present war and the signing of the Treaty of Peace and its proclamation by the corresponding
powers, the Mortgagor does not redeem and pay the loan obtained under the original mortgage . . ., then this
additional mortgage shall be automatically condoned, cancelled and annulled, including ten thousand pesos
(P10,000.00) of the original loan together with accrued interest up to the cessation of the war." In other words,
provided appellees did not accelerate payment but waited instead until after the treaty of peace was signed and
proclaimed by the "corresponding powers," they were entitled to a reduction of their mortgage indebtedness to
only one-half, or P30,000.00. The treaty of peace was signed on September 8, 1951 and proclaimed by President
Magsaysay on November 5, 1956. From the date of signing appellees had until September 1954, and until
November 1959 from the date of proclamation. Consequently, under neither alternative had there been default in
the fulfillment of the principal obligation when the mortgage was foreclosed extrajudicially and the property sold
on September 4, 1953.

Referring specifically to the non-payment of the taxes for 1951, 1952 and the first part of 1953, we believe that in
the light of the principal stipulation of the contract concerning the time when the mortgage debt was to be paid,
such non payment of taxes was not a material breach of the contract; and that in any event, when the taxes were
actually paid there was substantial compliance with the obligation in this particular aspect so as to arrest
effectively the foreclosure sale.
(2)
The fixing of the period for payment was obviously to insure, for the benefit of appellant, that such
payment would be made in Philippine currency and not in Japanese fiat money; and for the benefit of appellees,
so that their indebtedness would be reduced from P60,000.00 to only P30,000.00. Appellees did not lose their
right to avail of the period of having violated "any undertaking in consideration of which the creditor agreed to the
period (Art. 1198 Civil Code). This is so because the timely payment of real estate taxes on the mortgaged
property was clearly not the consideration which moved the parties to fix, as they did, the term or period for the
payment of the indebtedness.
(3)
The extrajudicial foreclosure of the mortgage at the instance of appellant was for the sum of P60,000.00
instead of only P30,000.00, which was the amount appellees were bound to pay after the treaty of peace was
signed and/or proclaimed. Thus, after appellant had bought the mortgaged property of the sheriffs sale appellees
would still stand indebted to them for P30,000.00. This result is entirely against the import of the contract and the
intent of the parties thereunder. It is unjust, unfair and oppressive, for appellees in effect would be penalized for
the acceleration of payment which was not of their own choosing, but brought about by the extrajudicial
foreclosure made at the instance of appellant when no default had yet been incurred by
appellees.chanroblesvirtuallawlibrary:red
The judgment appealed from is affirmed, with costs.
G.R. No. L-23616

September 30, 1976

RODRIGO ENRIQUEZ, AUREA SORIANO DE DIZON and URBANO DIZON, JR., plaintiffs-appellants,
vs.
SOCORRO A. RAMOS, defendant-appellee.

CASTRO, C.J.:t.hqw
This case is a direct appeal from an order of the Court of First Instance of Rizal (Quezon City) dated December 3,
1963, reversing its decision dated October 8, 1963 in favor of the plaintiffs-appellants Rodrigo Enriquez, Aurea
Soriano de Dizon and Urbano Dizon, Jr., in civil case Q-7229, an action for foreclosure of real estate mortgage.
This is the second time that the herein party litigants have come to this Court on basically the same causes of
action affecting the same deed of sale with real estate mortgage covenanted between them.
In Rodrigo Enriquez, et al. vs. Socorro A. Ramos (G.R. No. L18077, September 29, 1962), the plaintiffs-appellants
averred that on November 24, 1958 they sold to the defendant-appellee Socorro A. Ramos 20 subdivision lots in
Quezon City for the sum of P235,056 of which only P35,056 had been paid 'The balance of P200,000 was to be
liquidated within two years from the date of the execution of the deed of sale, with interest at six percent for the
first year and twelve percent thereafter until fully paid. To secure the payment of that balance, the defendantappellee executed in the same document a deed of mortgage in favor of the vendors on several parcels of land
variously situated in Quezon City, Pampanga and Bulacan. The deed of mortgage embodies certain stipulations
which the plaintiffs-appellants invoked, thus: +.wph!1
During the term and existence of this mortgage, the Mortgagor shall duly pay and discharge, at her expense, and
on their maturity, all lawful taxes or assessments levied or assessed upon the mortgaged property: in default
thereof the Mortgagee may pay and discharge such taxes of assessments and insure the security of the property,
and any and all sums so paid by the Mortgagee shall be repayable on demand with interest at per annum and be
a lien or. the property herein mortgaged.
xxx

xxx

xxx

If for any reason the mortgage cannot be registered, then the whole obligation shall immediately become due and
demandable.

In the event that the Mortgagor should fail to pay the amount secured this mortgaged or any part thereof in
accordance in that terms an I conditions herein set forth, or should she fail to perform and of the conditions
stipulated herein, the Mortgage shall have the right ... to foreclose this mortgage extra-judicial and to that end
that Mortgagee is hereby appointed the attorney-in-fact of the Mortgagor with full power of substitution, to enter
upon and take possession of the mortgagee property without the order of any court or any `authority other than
that herein granted, and to sell and dislike of the same to the highest bidder at public auction after the publication
of notice, in accordance with the provisions of Act No. I5 of the Philippine Legislature, as amended.
According to the plaintiffs-appellants in L-18077, the defendant-appellee violated the terms of their agreement in
the following respects:
1. Inspite of repeated demands, the defendant-appellee refused to pay the sum of P200,000 within the stipulated
period;
2. The mortgage, on the Bulacan property was never registered and
3. The realty tax for 1959 on the lots mortgaged were not paid by the defendant-appellee.
This Court upheld the findings and conclusions of the trial court which ruled that the actual price of the lots sold to
the defendant-appellee was only P185,056 instead of P235,056, and that only if and when the roads shall have
been constructed pursuant to the ordinances of Quezon City "may the period of two years specified in the
contract begin to run." These conclusions arrived account of a private deed entitled "Explanation" in which the
plaintiffs- appellants certified that of the consideration of P235,056 appearing in the questioned deed of sale for
mortgage, P50,000 "represent contribution of his Socorro A. Ramos for the construction of roads, which we will
undertake in accordance with the provisions of the City Ordinances of Quezon City."
With reference to the non-payment of the 1959 realty tax and the non-registration of the mortgaged Bulacan
estate, this Court held that "aside from being minor matters, the appear sufficient, explained in the brief of
defendant- appellee." In her in L-18077, the defendant-appellee had stated that she applied her backpay
certificates to the payment of her realty and income taxes but as she had not yet received said certificates the
payment of the taxes was delayed. On the other hand the registration of the Bulacan property could not be Under
taken because it was then still registered in both her name in the name of co-owner. The defendant-appellee
promised that she would pay the taxes in due time and undertake the needed segregation and the annotation of
the lien of the mortgage on the Bulacan property as soon as the vendors proceeded with the construction of the
roads on the purchased lots.
Now returning to the case at bar, the plaintiffs-appellants charged on May 4, 1963 before the Court of First
Instance of Rizal (Quezon City) that the defendant-appellee has not yet paid the sum of P200,000 despite the fact
that the roads on the questioned lots were completed on May 9, 1960; that the mortgage on the Bulacan property
has not yet been registered; and that the realty taxes corresponding to the years 1959 to 1963 on the mortgaged
lots had not been paid.
The defendant-appellee admits that she has not paid the realty taxes and has not registered the mortgage on the
Bulacan property, but argues that in L-18077 these matters were considered minor ones and also sufficiently
explained by her, invoking the rule of res judicata. The defendant-appellee likewise does not dispute her nonpayment of the sum of P200,000; she contends, however, that the roads have not yet been completed in
accordance with Ordinance No. 2999 of Quezon Cities the pertinent portions of which state: +.wph!1
SEC. 10.
The following subdivision improvements shall be contracted or provided in accordance with the
plans and/pr specifications as adopted by the Administrative Agency.
(a)
Street paraments. All streets shall be paved. Waterbound macadam pavements on a suitable base shall
be considered the minimum standard or pavement that shall be used.
(b)

Curbs and gutters. All streets shall be provided with concrete curbs and gutters.

(c)

Filling. The subdivision shall be filled up to the grade as may be required by the Administrative Agency.

(d)
Drainage facilities. The subdivision shall be provided with adequate drainage facilities as approved by
the Administrative Agency.
(e)
Tree Plantings. The subdivider shall plant and grow shade trees, if none are yet existing for the purpose
of this requirement, on the side or sides of every lot adjacent to streets about three (3) meters from the street
line, with a maximum spacing of en (10) meters.

(f)

Water facilities. The subdivider shall provide the subdivision with adequate water facilities.

According to the defendant-appellee, the roads in question cannot be considered completed because the
plaintiffs-appellants have not yet planted trees nor put up water facilities as required by the foregoing ordinance.
Neither may said roads be considered completed in the legal sense until their construction has been accepted by
the Capital City Planning Commission which was designated to implement Ordinance 2969. Moreover, even if the
roads in question have already been constructed in accordance with the mentioned ordinance. still her obligation
to pay the sum of P200,000 has not yet arisen as no previous notice and demand for payment has been made on
her.
We find the posture of the defendant-appellee to be untenable.
1.
It is true that in L-18077 this Court held that the non-payment of the 1956 realty tax as well as the nonregistration of the mortgaged Bulacan estate by the defendant-appellee were minor matters aside from being
sufficiently explained by her. That pronouncement, however, should be taken in the light of the environmental,
however, should be taken in the light of the environmental, however, should be taken in the light of the
environmental milieu under which L-18077 was decided. The non-payment of the realty tax for a year and the
non-registration of the mortgaged property within a reasonable time after the execution of a contract may be
considered minor matters, particularly where, in addition, the failure to do so was sufficiently explained, and the
mortgagor promised this Court that positive remedial action would be taken. The opinion of this Court cannot
however be taken as a license for the continued non-fulfillment by the defendant-appellee of her contractual
obligations. It was far from the intention of this Court to allow or enable the litigants to utilized its decision as an
instrument whereby solemnly covenanted obligations could be avoided. In such situation, the continued
obligations could be avoided. In such situation, the continued violation by the defendant appelle of the express
terms of her contract can no longer be countenanced. As it is, not only has the defendant-appelle failed to
perform the mentioned obligations, but she has likewise entirely failed to deliver to the plaintiffs-appellants the
sum of P50,000 which she promised to contribute to the latter for the construction of the roads on her lots in
accordance with the ordinances of Quezon City. The deed of sale with mortgage makes it the express duty of the
defendant-appellee to pay the realty taxes on the mortgaged lots, to register the mortgaged estates, and to
contribute P50,000 for the construction of roads on the purchased lots. By its express terms, if the defendantappelle failed to fulfill these conditions her entire obligation was to become immediately due and demandable and
the mortgage would have the option to foreclosure the mortgage. These terms of the contract have the force of
law between the parties thereto. 1
2.
On the issue of whether the construction of the questioned roads has already been completed in
accordance with the ordinances of Quezon City, evidence adduced below sufficiently supports the plaintiffappellant's position.
At the trial below, the plaintiffs-appellants adduced the testimonies of two witnesses, Oscar Delfin and Atty.
Gelacio L. Dimaano (plaintiffs-appellants' counsel). Delfin testified that he was a construction superintendent of
Wendel Construction Co., Inc. which was contracted to open up roads on the lots in question; that his outfit
undertook the building of the said roads in accordance with the ordinances of Quezon City, having laid out "type B
gutters, concrete curbs, pavement made of Vituminous macadam asphalt;" that construction commenced on
November 2, 1959 and was completed on May 9, 1960 for the sum of P100,000 which has already been paid by
the plaintiffs-appellants; that while the construction was in progress, the defendant-appellee visited the worksite
two or three times and inspected the work being done; and that the certificate of turnover of the roads was given
by the president of his firm to the plaintiffs-appellants. Dimaano, in the main, corroborated Delfin's testimony, and
added that under the mentioned deed of sale with mortgage, the attorney's fees in case of litigation would be
10% of the amount due.
At the trial below, the defendant-appellee, pursuant to a partial stipulation of facts, presented a letter dated May
9, 1963 of the Acting City Engineer of Quezon City which states the following:+.wph!1
This is in reply to your letter dated May 3, 1969 requesting inspection of the Mindanao Avenue Subdivisions,
Quezon City, in which you have purchased thirty-one (31) lots.
In that connection, I wish to advise you that an ocular inspection has already been made by a representative of
this Office and his report points out that said subdivision is already provided with curbs and gutters together with
drainage facilities. The roads have already been asphalted but no final test, verification and approval have been
undertaken by this Office.
It was revealed also that water and lighting system have not yet been installed thereat.

In connection with the aforequoted letter, the parties stipulated that the "test, verification and approval
mentioned in Exhibit 1-A is required only when the roads of the subdivision and easements are to be donated to
the city Government, and there is no law as to when the roads of any subdivision are to be donated (to the) City
Government." This stipulation was arrived at after the counsel for the defendant-appelle had conferred with a
representative of the Quezon City Engineer's Office.
On the basis of the foregoing items of evidence, not contradicted by the defendant-appelle, the completion of the
roads in question must be regarded as having been sufficiently established.
3.
The defendant-appellee, however, argues that the said roads "are not yet completed in the technical, legal
sense. This is because the final say or acceptance by the Administrative Agency was not yet secured." This
posture is inordinately technical and also is devoid of merit. There is nothing at all in Ordinance 296!) of Quezon
City which makes the acceptance by the said agency a condition precedent before a street in Quezon City may be
considered constructed in accordance with Ordinance 2969.
4.
The planting of trees and the installation of water facilities required by section 10 of Ordinance 2969,
supra, which the defendant-appellee says must first be made before the roads in question may be considered
legally completed are matters which could not have been conceivably within the contemplation of the parties. In
the first place, these activities involve a substantial outlay of funds which, by its very nature, should have been
unavoidably referred to in the mentioned "Explanation." In the second place, the said requirements are imposed
on the subdivision owner, and it is obvious from this decision in L-18077 that it was the defendant-appellee who
intended to develop the purchased lots into a subdivision. this said in L-18077: +.wph!1
We find no error in the conclusion reached by the court a quo for indeed that is the condition to be expected by a
person who desire to purchase a big parcel of land for purposes of subdivision. In a subdivision the main
improvement to be undertaken before it could be sold to the public is feeder roads as otherwise it would be
inaccessible and valueless and would offer no attraction to the buying public. And so it is correct to presume, as
the court a quo did, that when the sale in question was being negotiated, the construction of roads in the
prospective subdivision must have been uppermost in the mind of defendant for her purpose in purchasing the
property was to develop it into a subdivision ...
In the third place, no evidence has been adduced which would show that the planting of trees and the putting up
to of water facilities were within the contemplation of the parties when they were negotiating for the purchase of
the lots in question. And in the fourth place, there is nothing in Ordinance 2969 which would indicate that a street
may be considered completed water facilities are built on the subdivision. These activities are definitely
segregable from the laying out and construction of roads and cannot be deemed included within the scope of the
latter.
5.
As to be alleged lack of previous notice completion and demand for payment, the filing of the case below is
sufficient notice to the defendant-appellee of the completion of the roads in question and of the plaintiffsappellee's desire to be paid the purchase price of the questioned lots. The effect of such demand retroacts to the
day of the constitution of the defendant-appellee's obligation. Thus, Article 1187 provides the "The effects of a
conditional obligation to give, once the condition has been fulfilled, shall retroact to the day of the constitution
obligation..." The contacted obligation of the defendant-appellee under the facts of the case at bar was to pay the
balance of P200,000 within two years from the date the roads in question are completed.
Accordingly the order of the court a quo dated December 3, 1963 is set aside, and judgment is hereby rendered
ordering the defendant- appellee to pay to the plaintiffs-appellants, within ninety (90) days from the finality of this
decision, the following :
1.

The sum of P200,000 representing the unpaid balance of her contractual obligation;

2.
Interest thereon, as stipulated in the deed of sale with mortgage, at the rate of 6% per annum from May 9,
1960 up to May 9, 1961, and, thereafter, 12% interest per annum until the principal amount shall have been fully
paid;
3.

An amount equivalent to 5% of the mortgage indebtedness of attorney's fees; and

4.

The costs.

Should the defendant-appellee fail to pay the aforementioned mortgage indebtedness within the period granted in
this decision, and the properties mortgaged shall be sold at public auction and the proceeds thereof shall be

applied to the satisfaction of this judgement and the costs of the auction sale. Costs against the defendantappellee. The motion of Guillermo N. Pablo "to join defendant-appellee as co-party" is denied.
G.R. No. 129018

November 15, 2001

CARMELITA LEAO, assisted by her husband GREGORIO CUACHON, petitioner,

vs.
COURT OF APPEALS and HERMOGENES FERNANDO, respondents.
PARDO, J.:
The Case
The case is a petition for review on certiorari of the decision1 of the Court of Appeals affirming that of the
Regional Trial Court, Malolos, Branch 72 ordering petitioner Leao to pay respondent Hermogenes Fernando the
sum of P183,687.70 corresponding to her outstanding obligations under the contract to sell, with interest and
surcharges due thereon, attorney's fees and costs.1wphi1.nt
The Facts
On November 13, 1985, Hermogenes Fernando, as vendor and Carmelita Leao, as vendee executed a contract to
sell involving a piece of land, Lot No. 876-B, with an area of 431 square meters, located at Sto. Cristo, Baliuag,
Bulacan.3
In the contract, Carmelita Leao bound herself to pay Hermogenes Fernando the sum of one hundred seven
thousand and seven hundred and fifty pesos (P107,750.00) as the total purchase price of the lot. The manner of
paying the total purchase price was as follows:
"The sum of TEN THOUSAND SEVEN HUNDRED SEVENTY FIVE (P10,775.00) PESOS, shall be paid at the signing of
this contract as DOWN PAYMENT, the balance of NINETY SIX THOUSAND NINE HUNDRED SEVENTY FIVE PESOS
(P96,975.00) shall be paid within a period of TEN (10) years at a monthly amortization of P1,747.30 to begin from
December 7, 1985 with interest at eighteen per cent (18%) per annum based on balances."4
The contract also provided for a grace period of one month within which to make payments, together with the one
corresponding to the month of grace. Should the month of grace expire without the installments for both months
having been satisfied, an interest of 18% per annum will be charged on the unpaid installments.5
Should a period of ninety (90) days elapse from the expiration of the grace period without the overdue and unpaid
installments having been paid with the corresponding interests up to that date, respondent Fernando, as vendor,
was authorized to declare the contract cancelled and to dispose of the parcel of land, as if the contract had not
been entered into. The payments made, together with all the improvements made on the premises, shall be
considered as rents paid for the use and occupation of the premises and as liquidated damages.6
After the execution of the contract, Carmelita Leao made several payments in lump sum.7 Thereafter, she
constructed a house on the lot valued at P800,000.00.8 The last payment that she made was on April 1, 1989.
On September 16, 1991, the trial court rendered a decision in an ejectment case9 earlier filed by respondent
Fernando ordering petitioner Leao to vacate the premises and to pay P250.00 per month by way of
compensation for the use and occupation of the property from May 27, 1991 until she vacated the premises,
attorney's fees and costs of the suit.10 On August 24, 1993, the trial court issued a writ of execution which was
duly served on petitioner Leao.
On September 27, 1993, petitioner Leao filed with the Regional Trial Court of Malolos, Bulacan a complaint for
specific performance with preliminary injunction.11 Petitioner Leao assailed the validity of the judgment of the
municipal trial court12 for being violative of her right to due process and for being contrary to the avowed
intentions of Republic Act No. 6552 regarding protection to buyers of lots on installments. Petitioner Leao
deposited P18,000.00 with the clerk of court, Regional Trial Court, Bulacan, to cover the balance of the total cost
of Lot 876-B.13
On November 4, 1993, after petitioner Leao posted a cash bond of P50,000.00,14 the trial court issued a writ of
preliminary injunction15 to stay the enforcement of the decision of the municipal trial court.16
On February 6, 1995, the trial court rendered a decision, the dispositive portion of which reads:

"WHEREFORE, judgment is hereby rendered as follows:

"1. The preliminary injunction issued by this court per its order dated November 4, 1993 is hereby made
permanent;
"2. Ordering the plaintiff to pay to the defendant the sum of P103,090.70 corresponding to her outstanding
obligations under the contract to sell (Exhibit "A" Exhibit "B") consisting of the principal of said obligation
together with the interest and surcharges due thereon as of February 28, 1994, plus interest thereon at the rate of
18% per annum in accordance with the provision of said contract to be computed from March 1, 1994, until the
same becomes fully paid;
"3. Ordering the defendant to pay to plaintiff the amount of P10,000 as and by way of attorney's fees;
"4. Ordering the defendant to pay to plaintiff the costs of the suit in Civil Case No. 1680 aforementioned.
"SO ORDERED.
"Malolos, Bulacan, February 6, 1995.
"(sgd.) DANILO A. MANALASTAS
Judge"17
On February 21, 1995, respondent Fernando filed a motion for reconsideration18 and the supplement19 thereto.
The trial court increased the amount of P103,090.70 to P183,687.00 and ordered petitioner Leao ordered to pay
attorney's fees.20
According to the trial court, the transaction between the parties was an absolute sale, making petitioner Leao
the owner of the lot upon actual and constructive delivery thereof. Respondent Fernando, the seller, was divested
of ownership and cannot recover the same unless the contract is rescinded pursuant to Article 1592 of the Civil
Code which requires a judicial or notarial demand. Since there had been no rescission, petitioner Leao, as the
owner in possession of the property, cannot be evicted.
On the issue of delay, the trial court held:
"While the said contract provides that the whole purchase price is payable within a ten-year period, yet the same
contract clearly specifies that the purchase price shall be payable in monthly installments for which the
corresponding penalty shall be imposed in case of default. The plaintiff certainly cannot ignore the binding effect
of such stipulation by merely asserting that the ten-year period for payment of the whole purchase price has not
yet lapsed. In other words, the plaintiff has clearly defaulted in the payment of the amortizations due under the
contract as recited in the statement of account (Exhibit "2") and she should be liable for the payment of interest
and penalties in accordance with the stipulations in the contract pertaining thereto."21
The trial court disregarded petitioner Leaos claim that she made a downpayment of P10,000.00, at the time of
the execution of the contract.
The trial court relied on the statement of account22 and the summary23 prepared by respondent Fernando to
determine petitioner Leao's liability for the payment of interests and penalties.
The trial court held that the consignation made by petitioner Leao in the amount of P18,000.00 did not produce
any legal effect as the same was not done in accordance with Articles 1176, 1177 and 1178 of the Civil Code.
In time, petitioner Leao appealed the decision to the Court of Appeals.24 On January 22, 1997, Court of Appeals
promulgated a decision affirming that of the Regional Trial Court in toto.25 On February 11, 1997, petitioner Leao
filed a motion for reconsideration.26 On April 18, 1997, the Court of Appeals denied the motion.27
Hence, this petition.28
The Issues
The issues to be resolved in this petition for review are (1) whether the transaction between the parties in an
absolute sale or a conditional sale; (2) whether there was a proper cancellation of the contract to sell; and (3)
whether petitioner was in delay in the payment of the monthly amortizations.

The Court's Ruling

Contrary to the findings of the trial court, the transaction between the parties was a conditional sale not an
absolute sale. The intention of the parties was to reserve the ownership of the land in the seller until the buyer
has paid the total purchase price.
Consider the following:
First, the contract to sell makes the sale, cession and conveyance "subject to conditions" set forth in the contract
to sell.29
Second, what was transferred was the possession of the property, not ownership. The possession is even limited
by the following: (1) that the vendee may continue therewith "as long as the VENDEE complies with all the terms
and conditions mentioned, and (2) that the buyer may not sell, cede, assign, transfer or mortgage or in any way
encumber any right, interest or equity that she may have or acquire in and to the said parcel of land nor to lease
or to sublease it or give possession to another person without the written consent of the seller.30
Finally, the ownership of the lot was not transferred to Carmelita Leao. As the land is covered by a torrens title,
the act of registration of the deed of sale was the operative act that could transfer ownership over the lot.31
There is not even a deed that could be registered since the contract provides that the seller will execute such a
deed "upon complete payment by the VENDEE of the total purchase price of the property" with the stipulated
interest.32
In a contract to sell real property on installments, the full payment of the purchase price is a positive suspensive
condition, the failure of which is not considered a breach, casual or serious, but simply an event that prevented
the obligation of the vendor to convey title from acquiring any obligatory force.33 The transfer of ownership and
title would occur after full payment of the price.34
In the case at bar, petitioner Leao's non-payment of the installments after April 1, 1989, prevented the obligation
of respondent Fernando to convey the property from arising. In fact, it brought into effect the provision of the
contract on cancellation.
Contrary to the findings of the trial court, Article 1592 of the Civil Code is inapplicable to the case at bar.35
However, any attempt to cancel the contract to sell would have to comply with the provisions of Republic Act No.
6552, the "Realty Installment Buyer Protection Act."
R.A. No. 6552 recognizes in conditional sales of all kinds of real estate (industrial, commercial, residential) the
right of the seller to cancel the contract upon non-payment of an installment by the buyer, which is simply an
event that prevents the obligation of the vendor to convey title from acquiring binding force.36 The law also
provides for the rights of the buyer in case of cancellation. Thus, Sec. 3 (b) of the law provides that:
"If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the
property equivalent to fifty percent of the total payments made and, after five years of installments, an additional
five percent every year but not to exceed ninety percent of the total payment made: Provided, That the actual
cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash
surrender value to the buyer." [Emphasis supplied]
The decision in the ejectment case37 operated as the notice of cancellation required by Sec. 3(b). As petitioner
Leao was not given then cash surrender value of the payments that she made, there was still no actual
cancellation of the contract. Consequently, petitioner Leao may still reinstate the contract by updating the
account during the grace period and before actual cancellation.38
Should petitioner Leao wish to reinstate the contract, she would have to update her accounts with respondent
Fernando in accordance with the statement of account39 which amount was P183,687.00.40
On the issue of whether petitioner Leao was in delay in paying the amortizations, we rule that while the contract
provided that the total purchase price was payable within a ten-year period, the same contract specified that the
purchase price shall be paid in monthly installments for which the corresponding penalty shall be imposed in case
of default. Petitioner Leao cannot ignore the provision on the payment of monthly installments by claiming that
the ten-year period within which to pay has not elapsed.

Article 1169 of the Civil Code provides that in reciprocal obligations, neither party incurs in delay if the other does
not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one
of the parties fulfills his obligation, delay by the other begins.1wphi1.nt
In the case at bar, respondent Fernando performed his part of the obligation by allowing petitioner Leao to
continue in possession and use of the property. Clearly, when petitioner Leao did not pay the monthly
amortizations in accordance with the terms of the contract, she was in delay and liable for damages.41 However,
we agree with the trial court that the default committed by petitioner Leao in respect of the obligation could be
compensated by the interest and surcharges imposed upon her under the contract in question.42
It is a cardinal rule in the interpretation of contracts that if the terms of a contract are clear and leave no doubt
upon the intention of the contracting parties, the literal meaning of its stipulation shall control.43 Thus, as there is
no ambiguity in the language of the contract, there is no room for construction, only compliance.
The Fallo
IN VIEW WHEREOF, we DENY the petition and AFFIRM the decision of the Court of Appeals44 in toto.
No costs.
SO ORDERED.