G.R. No.

L-4089
January 12, 1909
ARTURO PELAYO, plaintiff-appellant,
vs.
MARCELO LAURON, ET AL., defendants-appellees.
J.H. Junquera, for appellant.Filemon Sotto, for appellee.
TORRES, J.:
On the 23rd of November, 1906, Arturo Pelayo, a physician residing in Cebu,
filed a complaint against Marcelo Lauron and Juana Abella setting forth that on
or about the 13th of October of said year, at night, the plaintiff was called to the
house of the defendants, situated in San Nicolas, and that upon arrival he was
requested by them to render medical assistance to their daughter-in-law who
was about to give birth to a child; that therefore, and after consultation with the
attending physician, Dr. Escao, it was found necessary, on account of the
difficult birth, to remove the fetus by means of forceps which operation was
performed by the plaintiff, who also had to remove the afterbirth, in which
services he was occupied until the following morning, and that afterwards, on
the same day, he visited the patient several times; that the just and equitable
value of the services rendered by him was P500, which the defendants refuse to
pay without alleging any good reason therefor; that for said reason he prayed
that the judgment be entered in his favor as against the defendants, or any of
them, for the sum of P500 and costs, together with any other relief that might be
deemed proper.
In answer to the complaint counsel for the defendants denied all of the
allegation therein contained and alleged as a special defense, that their
daughter-in-law had died in consequence of the said childbirth, and that when
she was alive she lived with her husband independently and in a separate
house without any relation whatever with them, and that, if on the day when she
gave birth she was in the house of the defendants, her stay their was accidental
and due to fortuitous circumstances; therefore, he prayed that the defendants be
absolved of the complaint with costs against the plaintiff.
The plaintiff demurred to the above answer, and the court below sustained the
demurrer, directing the defendants, on the 23rd of January, 1907, to amend their
answer. In compliance with this order the defendants presented, on the same
date, their amended answer, denying each and every one of the allegations
contained in the complaint, and requesting that the same be dismissed with
costs.
As a result of the evidence adduced by both parties, judgment was entered by
the court below on the 5th of April, 1907, whereby the defendants were absolved

from the former complaint, on account of the lack of sufficient evidence to

establish a right of action against the defendants, with costs against the plaintiff,
who excepted to the said judgment and in addition moved for a new trial on the
ground that the judgment was contrary to law; the motion was overruled and the
plaintiff excepted and in due course presented the corresponding bill of
exceptions. The motion of the defendants requesting that the declaration
contained in the judgment that the defendants had demanded therefrom, for the
reason that, according to the evidence, no such request had been made, was
also denied, and to the decision the defendants excepted.
Assuming that it is a real fact of knowledge by the defendants that the plaintiff,
by virtue of having been sent for by the former, attended a physician and
rendered professional services to a daughter-in-law of the said defendants
during a difficult and laborious childbirth, in order to decide the claim of the said
physician regarding the recovery of his fees, it becomes necessary to decide
who is bound to pay the bill, whether the father and mother-in-law of the patient,
or the husband of the latter.
According to article 1089 of the Civil Code, obligations are created by law, by
contracts, by quasi-contracts, and by illicit acts and omissions or by those in
which any kind of fault or negligence occurs.
Obligations arising from law are not presumed. Those expressly determined in
the code or in special laws, etc., are the only demandable ones. Obligations
arising from contracts have legal force between the contracting parties and must
be fulfilled in accordance with their stipulations. (Arts. 1090 and 1091.)
The rendering of medical assistance in case of illness is comprised among the
mutual obligations to which the spouses are bound by way of mutual support.
(Arts. 142 and 143.)
If every obligation consists in giving, doing or not doing something (art. 1088),
and spouses are mutually bound to support each other, there can be no
question but that, when either of them by reason of illness should be in need of
medical assistance, the other is under the unavoidable obligation to furnish the
necessary services of a physician in order that health may be restored, and he
or she may be freed from the sickness by which life is jeopardized; the party
bound to furnish such support is therefore liable for all expenses, including the
fees of the medical expert for his professional services. This liability originates
from the above-cited mutual obligation which the law has expressly established
between the married couple.
In the face of the above legal precepts it is unquestionable that the person

bound to pay the fees due to the plaintiff for the professional services that he
rendered to the daughter-in-law of the defendants during her childbirth, is the
husband of the patient and not her father and mother- in-law, the defendants
herein. The fact that it was not the husband who called the plaintiff and
requested his assistance for his wife is no bar to the fulfillment of the said
obligation, as the defendants, in view of the imminent danger, to which the life of
the patient was at that moment exposed, considered that medical assistance
was urgently needed, and the obligation of the husband to furnish his wife in the
indispensable services of a physician at such critical moments is specially
established by the law, as has been seen, and compliance therewith is
unavoidable; therefore, the plaintiff, who believes that he is entitled to recover
his fees, must direct his action against the husband who is under obligation to
furnish medical assistance to his lawful wife in such an emergency.
From the foregoing it may readily be understood that it was improper to have
brought an action against the defendants simply because they were the parties
who called the plaintiff and requested him to assist the patient during her difficult
confinement, and also, possibly, because they were her father and mother-inlaw and the sickness occurred in their house. The defendants were not, nor are
they now, under any obligation by virtue of any legal provision, to pay the fees
claimed, nor in consequence of any contract entered into between them and the
plaintiff from which such obligation might have arisen.
In applying the provisions of the Civil Code in an action for support, the supreme
court of Spain, while recognizing the validity and efficiency of a contract to
furnish support wherein a person bound himself to support another who was not
his relative, established the rule that the law does impose the obligation to pay
for the support of a stranger, but as the liability arose out of a contract, the
stipulations of the agreement must be held. (Decision of May 11, 1897.)
Within the meaning of the law, the father and mother-in-law are strangers with
respect to the obligation that devolves upon the husband to provide support,
among which is the furnishing of medical assistance to his wife at the time of her
confinement; and, on the other hand, it does not appear that a contract existed
between the defendants and the plaintiff physician, for which reason it is obvious
that the former can not be compelled to pay fees which they are under no
liability to pay because it does not appear that they consented to bind
themselves.
The foregoing suffices to demonstrate that the first and second errors assigned
to the judgment below are unfounded, because, if the plaintiff has no right of
action against the defendants, it is needless to declare whether or not the use of
forceps is a surgical operation.

Therefore, in view of the consideration hereinbefore set forth, it is our opinion

that the judgment appealed from should be affirmed with the costs against the
appellant. So ordered.
G.R. No. L-13602
April 6, 1918
LEUNG BEN, plaintiff,
vs.
P. J. O'BRIEN, JAMES A OSTRAND and GEO. R. HARVEY, judges of First
Instance of city of Manila, defendants.
Thos. D. Aitken and W. A. Armstrong for plaintiff.Kincaid & Perkins for
defendants.
STREET, J.:
This is an application for a writ of certiorari, the purpose of which is to quash an
attachment issued from the Court of First Instance of the City of Manila under
circumstances hereinbelow stated.
Upon December 12, 1917, an action was instituted in the Court of First Instance
of the city of Manila by P. J. O'Brien to recover of Leung Ben the sum of P15,000
alleged to have been lost by the plaintiff to the defendant in a series of gambling,
banking and percentage games conducted ruing the two or three months prior to
the institution of the suit. In his verified complaint the plaintiff asked for an
attachment, under section 424, and 412 (1) of the Code of Civil Procedure,
against the property of the defendant, on the ground that the latter was about to
depart from the Philippine islands with intent to defraud his creditors. This
attachment was issued; and acting under the authority thereof, the sheriff
attached the sum of P15,000 which had been deposited by the defendant with
the International Banking Corporation.
The defendant thereupon appeared by his attorney and moved the court to
quash the attachment. Said motion having dismissed in the Court of First
Instance, the petitioner, Leung Ben, the defendant in that action, presented to
this court, upon January 8, 1918 his petition for the writ of certiorari directed
against P. J. O'Brien and the judges of the Court of First Instance of the city of
Manila whose names are mentioned in the caption hereof. The prayer is that the
Honorable James A. Ostrand, as the judge having cognizance of the action in
said court be required to certify the record to this court for review and that the
order of attachment which had been issued should be revoked and discharged.
with costs. Upon the filing of said petition in this court the usual order was
entered requiring the defendants to show cause why the writ should not issue.
The response of the defendants, in the nature of a demurrer, was filed upon
January 21, 1918; and the matter is now heard upon the pleadings thus
presented.

The provision of law under which this attachment was issued requires that there
should be accuse of action arising upon contract, express or implied. The
contention of the petitioner is that the statutory action to recover money lost at
gaming is that the statutory action to recover money lost at gaming is no such
an action as is contemplated in this provision, and he therefore insists that the
original complaint shows on its face that the remedy of attachment is not
available in aid thereof; that the Court of First Instance acted in excess of its
jurisdiction in granting the writ of attachment; that the petitioner has no plain,
speedy, and adequate remedy by appeal or otherwise; and that consequently
the writ of certiorari supplies the appropriate remedy for his relief.
The case presents the two following questions of law, either of which, if decided
unfavorably to the petitioner, will be fatal to his application:
(1)Supposing that the Court of First Instance has granted an attachment for
which there is no statutory authority, can this court entertain the present
petition and grant the desired relief?
(2)Is the statutory obligation to restore money won at gaming an obligation
arising from "contract, express or implied?"
We are of the opinion that the answer to the first question should be in the
affirmative. Under section 514 of the Code of Civil Procedure the Supreme Court
has original jurisdiction by the writ of certiorari over the proceedings of Courts of
First Instance, wherever said courts have exceeded their jurisdiction and there is
no plaint, speedy, and adequate remedy. In the same section, it is further
declared that the proceedings in the Supreme Court in such cases hall be as
prescribed for Courts of First Instance in section 217-221, inclusive, of said
Code. This Supreme Court, so far as applicable, the provisions contained in
those section to the same extent as if they had been reproduced verbatim
immediately after section 514. Turning to section 217, we find that, in defining
the conditions under which certiorari can be maintained in a Court of First
Instance substantially the same language is used as is the same remedy can be
maintained in the Supreme Court of First Instance, substantially the same
language is used as is found in section 514 relative to the conditions under
which the same remedy can be maintained in the Supreme Court, namely, when
the inferior tribunal has exceeded its jurisdiction and there is no appeal, nor any
plain, speedy and adequate remedy. In using these expressions the author of
the Code of Civil Procedure merely adopted the language which, in American
jurisdictions at least, had long ago reached the stage of stereotyped formula.
In section 220 of the same Code, we have a provision relative to the final

proceedings in certiorari, and herein it is stated that the court shall determine
whether the inferior tribunal has regularly pursued its authority it shall give
judgment either affirming annulling, or modifying the proceedings below, as the
law requires. The expression, has not regularly pursued its authority as here
used, is suggestive, and we think it should be construed in connection with the
other expressions have exceeded their jurisdiction, as used in section 514, and
has exceeded their jurisdiction as used in section 217. Taking the three together,
it results in our opinion that any irregular exercise of juridical power by a Court of
First Instance, in excess of its lawful jurisdiction, is remediable by the writ of
certiorari, provided there is no other plain, speedy, and adequate remedy; and in
order to make out a case for the granting of the writ it is not necessary that the
court should have acted in the matter without any jurisdiction whatever. Indeed
the repeated use of expression excess of jurisdiction shows that the lawmaker
contemplated the situation where a court, having jurisdiction should irregularly
transcend its authority as well as the situation where the court is totally devoid of
lawful power.
It may be observed in this connection that the word jurisdiction as used in
attachment cases, has reference not only to the authority of the court to
entertain the principal action but also to its authority to issue the attachment, as
dependent upon the existence of the statutory ground. (6 C. J., 89.) This
distinction between jurisdiction to issue the attachment as an ancillary remedy
incident to the principal litigation is of importance; as a court's jurisdiction over
the main action may be complete, and yet it may lack authority to grant an
attachment as ancillary to such action. This distinction between jurisdiction over
the ancillary has been recognized by this court in connection with actions
involving the appointment of a receiver. Thus in Rocha & Co. vs. Crossfield and
Figueras (6 Phil. Rep., 355), a receiver had been appointed without legal
justification. It was held that the order making the appointment was beyond the
jurisdiction of the court; and though the court admittedly had jurisdiction of the
main cause, the order was vacated by this court upon application a writ of
certiorari. (See Blanco vs. Ambler, 3 Phil. Rep., 358, Blanco vs. Ambler and
McMicking 3 Phil. Rep., 735, Yangco vs. Rohde, 1 Phil. Rep., 404.)
By parity of reasoning it must follow that when a court issues a writ of
attachment for which there is no statutory authority, it is acting irregularly and in
excess of its jurisdiction, in the sense necessary to justify the Supreme Court in
granting relief by the writ of certiorari. In applying this proposition it is of course
necessary to take account of the difference between a ground of attachment
based on the nature of the action and a ground of attachment based on the acts
or the conditions of the defendant. Every complaint must show a cause of action
some sort; and when the statue declares that the attachment may issue in an

action arising upon contract, the express or implied, it announces a criterion

which may be determined from an inspection of the language of the complaint.
The determination of this question is purely a matter of law. On the other hand,
when the stature declares that an attachment may be issued when the
defendant is about to depart from the Islands, a criterion is announced which is
wholly foreign to the cause of action; and the determination of it may involve a
disputed question of fact which must be decided by the court. In making this
determination, the court obviously acts within its powers; and it would be idle to
suppose that the writ of certiorari would be available to reverse the action of a
Court of First Instance in determining the sufficiency of the proof on such a
disputed point, and in granting or refusing the attachment accordingly.
We should not be understood, in anything that has been said, as intending to
infringe the doctrine enunciated by this court in Herrera vs. Barretto and Joaquin
(25 Phil. Rep., 245), when properly applied. It was there held that we would not,
upon application for a writ of certiorari, dissolve an interlocutory mandatory
injunction that had been issued in a Court of First Instance as an incident in an
action of mandamus. The issuance of an interlocutory injunction depends upon
conditions essentially different from those involved in the issuance of an
attachment. The injunction is designed primarily for the prevention of irreparable
injury and the use of the remedy is in a great measure dependent upon the
exercise of discretion. Generally, it may be said that the exercise of the
injunctive powers is inherent in judicial authority; and ordinarily it would be
impossible to distinguish between the jurisdiction of the court in the main
litigation and its jurisdiction to grant an interlocutory injunction, for the latter is
involved in the former. That the writ of certiorari can not be used to reverse an
order denying a motion for a preliminary injunction is of course not to cavil.
(Somes vs. Crossfield and Molina, 8 Phil. Rep., 284.)
But it will be said that the writ of certiorari is not available in this cae, because
the petitioner is protected by the attachment bond, and that he has a plain,
speedy, and adequate remedy appeal. This suggestion seems to be sufficiently
answered in the case of Rocha & Co vs. Crossfield and Figueras (6 Phil. Rep.,
355), already referred to, and the earlier case there cited. The remedy by appeal
is not sufficiently speedy to meet the exigencies of the case. An attachment is
extremely violent, and its abuse may often result in infliction of damage which
could never be repaired by any pecuniary award at the final hearing. To
postpone the granting of the writ in such a case until the final hearing and to
compel the petitioner to bring the case here upon appeal merely in order to
correct the action of the trial court in the matter of allowing the attachment would
seem both unjust and unnecessary.

Passing to the problem propounded in the second question it may be observed

that, upon general principles,. recognize both the civil and common law, money
lost in gaming and voluntarily paid by the loser to the winner can not in the
absence of statue, be recovered in a civil action. But Act No. 1757 of the
Philippine Commission, which defines and penalizes several forms of gambling,
contains numerous provisions recognizing the right to recover money lost in
gambling or in the playing of certain games (secs. 6, 7, 8, 9, 11). The original
complaint in the action in the Court of First Instance is not clear as to the
particular section of Act No. 1757 under which the action is brought, but it is
alleged that the money was lost at gambling, banking, and percentage game in
which the defendant was banker. It must therefore be assumed that the action is
based upon the right of recovery given in Section 7 of said Act, which declares
that an action may be brought against the banker by any person losing money at
a banking or percentage game.
Is this a cause arising upon contract, express or implied, as this term is used in
section 412 of the Code of Civil Procedure? To begin the discussion, the English
version of the Code of Civil Procedure is controlling (sec. 15, Admin. Code, ed.
of 1917). Furthermore it is universally admitted to be proper in the interpretation
of any statute, to consider its historical antecedents and its juris prudential
sources. The Code of Civil Procedure, as is well known, is an American
contribution to Philippine legislation. It therefore speaks the language of the
common-law and for the most part reflects its ideas. When the draftsman of this
Code used the expression contract, express or implied, he used a phrase that
has been long current among writers on American and English law; and it is
therefore appropriate to resort to that system of law to discover the appropriate
to resort to that system of law to discover the meaning which the legislator
intended to convey by those meaning which the legislator intended to convey by
those terms. We remark in passing that the expression contrato tracito, used in
the official translation of the Code of Civil Procedure as the Spanish equivalent
of implied contract, does not appear to render the full sense of the English
expression.
The English contract law, so far as relates to simple contracts is planted upon
two foundations, which are supplied by two very different conceptions of legal
liability. These two conceptions are revealed in the ideas respectively underlying
(1) the common- law debt and (2) the assumptual promise. In the early and
formative stages of the common-law the only simple contract of which the courts
took account was the real contract or contract re, in which the contractual duty
imposed by law arises upon the delivery of a chattle, as in the mutuum,
commodatum, depositum, and the like; and the purely consensual agreements
of the Roman Law found no congenial place in the early common law system.

In course of time the idea underlying the contract re was extended so as to

include from one person to another under such circumstances as to constitute a
justa cuas debendi. The obligation thereby created was a debt. The constitutive
element in this litigation is found in the fact that the debtor has received
something from the creditor, which he is bound by the obligation of law to return
or pay for. From an early day this element was denominated the quid pro quo,
an ungainly phrase coined by Mediaeval Latinity. The quid pro quo was primarily
a materials or physical object, and its constituted the recompense or equivalent
acquired by the debtor. Upon the passage of the quid pro quo from one party to
the other, the law imposed that real contractual duty peculiar to the debt. No one
conversant with the early history of English law would ever conceive of the debt
as an obligation created by promise. It is the legal duty to pay or deliver a sum
certain of money or an ascertainable quantity of ponderable or measurable
chattles.
The ordinary debt, as already stated, originates in a contract in which a quid pro
quo passes to the debtor at the time of the creation of the debt, but the term is
equally applicable to duties imposed by custom or statute, or by judgment of a
court.
The existence of a debt supposes one person to have possession of thing (res)
which he owes and hence ought to turn over the owner. This obligation is the
oldest conception of contract with which the common law is familiar; and
notwithstanding the centuries that have rolled over Westminster Hall that
conception remains as one of the fundamental bases of the common-law
contract.
Near the end of the fifteenth century there was evolved in England a new
conception of contractual liability, which embodied the idea of obligation
resulting from promise and which found expression in the common law
assumpsit, or parol promise supported by a consideration. The application of
this novel conception had the effect of greatly extending the filed of contractual
liability and by this means rights of action came to be recognized which had
been unknown before. The action of assumpsit which was the instrument for
giving effect to this obligation was found to be a useful remedy; and presently
this action came to be used for the enforcement of common-law debts. The
result was to give to our contract law the superficial appearance of being based
more or less exclusively upon the notion of the obligation of promise.
An idea is widely entertained to the effect that all simple contracts recognized in
the common-law system are referable to a singly category. They all have their
roots, so many of us imagine, in one general notion of obligation; and of course

the obligation of promise is supposed to supply this general notion, being

considered a sort of menstruum in which all other forms of contractual obligation
have been dissolved. This a mistake. The idea of contractual duty embodied in
the debt which was the first conception of contract liability revealed in the
common law, has remained, although it was detained to be in a measure
obscured by the more modern conception of obligation resulting from promise.
What has been said is intended to exhibit the fact that the duty to pay or deliver
a sum certain of money or an ascertainable quantity of ponderable or
measurable chattles which is indicated by them debt has ever been
recognized, in the common-law system, as a true contract, regardless, of the
source of the duty or the manner in which it is create whether derived from
custom, statue or some consensual transaction depending upon the voluntary
acts of the parties. the form of contract known as the debt is of the most ancient
lineage; and when reference is had to historical antecedents, the right of the
debt to be classed as a contract cannot be questioned. Indeed when the new
form of engagement consisting of the parol promise supported by a
consideration first appeared, it was looked upon as an upstart and its right to be
considered a true contract was questioned. It was long customary to refer to it
exclusively as an assumpsit, agreement, undertaking, or parol promise, in fact
anything but a contract. Only in time did the new form of engagement attain the
dignity of being classed among true contract.
The term implied takers us into shadowy domain of those obligations the
theoretical classification of which has engaged the attention of scholars from the
time of Gaius until our own day and has been a source of as much difficulty to
the civilian as to the common-law jurist. There we are concerned with those acts
which make one person debtor to another without there having intervened
between them any true agreement tending to produce a legal bond (vinculum
juris). Of late years some American and English writers have adopted the term
quasi-contract as descriptive of these obligations or some of them; but the
expression more commonly used is implied contract.
Upon examination of these obligations, from the view point of the common-law
jurisprudence, it will be found that they fall readily into two divisions according as
they bear an analogy to the common-law debt or to the common law assumpsit.
To exhibit the scope of these different classes of obligations is here
impracticable. It is only necessary in this connection to observe that the most
conspicuous division is that which comprises duties in the nature of debt. The
characteristic feature of these obligations is that upon certain states of fact the
law imposes an obligation to pay a sum certain of money; and it is characteristic
of this obligation that the money in respect to which the duty is raised is

conceived as being equivalent of something taken or detained under

circumstances giving rise to the duty to return or compensate therefore. The
proposition that no one shall be allowed to enrich himself unduly at the expense
of another embodies the general principle here lying at the basis of obligation.
The right to recover money improperly paid (repeticion de lo indebido) is also
recognized as belong to this class of duties.
It will observed that according to the Civil Code obligations are supposed to be
derived either from (1) the law, (2) contracts and quasi-contracts, (3) illicit acts
and omission, or (4) acts in which some sort ob lame or negligence is present.
This enumeration of sources of obligations and the obligation imposed by law
are different types. The learned Italian jurist, Jorge Giorgi, criticises this
assumption and says that the classification embodied in the code is theoretically
erroneous. His conclusion is that one or the other of these categories should
have been suppressed and merged in the other. (Giorgi, Teoria de las
Obligaciones, Spanish ed., vol. 5 arts. 5, 7, 9.) The validity of this criticism is, we
thin, self-evident; and it is of interest to note that the common law makes no
distinction between the two sources of liability. The obligations which in the
Code are indicated as quasi-contracts, as well as those arising ex lege, are in
the common la system, merged into the category of obligations imposed by law,
and all are denominated implied contracts.
Many refinements, more or less illusory, have been attempted by various writers
in distinguishing different sorts of implied contracts, as for example, the contract
implied as of fact and the contract implied as of law. No explanation of these
distinctions will be here attempted. Suffice it to say that the term contract,
express or implied, is used to by common-law jurists to include all purely
personal obligations other than those which have their source in delict, or tort.
As to these it may be said that, generally speaking, the law does not impose a
contractual duty upon a wrongdoer to compensate for injury done. It is true that
in certain situations where a wrongdoer unjustly acquired something at the
expense of another, the law imposes on him a duty to surrender his unjust
acquisitions, and the injured party may here elect to sue upon this contractual
duty instead of suing upon the tort; but even here the distinction between the
two liabilities, in contract and in tort, is never lost to sight; and it is always
recognized that the liability arising out of the tort is delictual and not of a
contractual or quasi-contractual nature.
In the case now under consideration the duty of the defendant to refund the
money which he won from the plaintiff at gaming is a duty imposed by statute. It
therefore arises ex lege. Furthermore, it is a duty to return a certain sum which
had passed from the plaintiff to the defendant. By all the criteria which the

common law supplies, this a duty in the nature of debt and is properly classified
as an implied contract. It is well- settled by the English authorities that money
lost in gambling or by lottery, if recoverable at all, can be recovered by the loser
in an action of indebitatus assumpsit for money had and received. (Clarke vs.
Johnson. Lofft, 759; Mason vs. Waite, 17 Mass., 560; Burnham vs. Fisher, 25
Vt., 514.) This means that in the common law the duty to return money won in
this way is an implied contract, or quasi-contract.
It is no argument to say in reply to this that the obligation here recognized is
called an implied contract merely because the remedy commonly used in suing
upon ordinary contract can be here used, or that the law adopted the fiction of
promise in order to bring the obligation within the scope of the action of
assumpsit. Such statements fail to express the true import of the phenomenon.
Before the remedy was the idea; and the use of the remedy could not have been
approved if it had not been for historical antecedents which made the
recognition of this remedy at one logical and proper. Furthermore, it should not
be forgotten that the question is not how this duty but what sort of obligation did
the author of the Code of Civil Procedure intend to describe when he sued the
term implied contract in section 412.
In what has been said we have assumed that the obligation which is at the
foundation of the original action in the court below is not a quasi-contract, when
judge by the principles of the civil law. A few observations will show that this
assumption is not by any means free from doubt. The obligation in question
certainly does not fall under the definition of either of the two-quasi- contracts
which are made the subject of special treatment in the Civil Code, for its does
not arise from a licit act as contemplated in article 1895. The obligation is clearly
a creation of the positive law a circumstance which brings it within the
purview of article 1090, in relation with article, 1089; and it is also derived from
an illicit act, namely, the playing of a prohibited game. It is thus seen that the
provisions of the Civil Code which might be consulted with a view to the correct
theoretical classification of this obligation are unsatisfactory and confusing.
The two obligations treated in the chapter devoted to quasi-contracts in the Civil
Code are (1) the obligation incident to the officious management of the affairs of
other person (gestion de negocios ajenos) and (2) the recovery of what has
been improperly paid (cabro de lo indebido). That the authors of the Civil Code
selected these two obligations for special treatment does not signify an intention
to deny the possibility of the existence of other quasi-contractual obligations. As
is well said by the commentator Manresa.
The number of the quasi-contracts may be indefinite as may be the number of

lawful facts, the generations of the said obligations; but the Code, just as we
shall see further on, in the impracticableness of enumerating or including them
all in a methodical and orderly classification, has concerned itself with two only
namely, the management of the affairs of other person and the recovery of
things improperly paid without attempting by this to exclude the others.
(Manresa, 2d ed., vol. 12, p. 549.)
It would indeed have been surprising if the authors of the Code, in the light of
the jurisprudence of more than a thousand years, should have arbitrarily
assumed to limit the quasi-contract to two obligations. The author from whom we
have just quoted further observes that the two obligations in question were
selected for special treatment in the Code not only because they were the most
conspicuous of the quasi-contracts, but because they had not been the subject
of consideration in other parts of the Code. (Opus citat., 550.)
It is well recognized among civilian jurists that the quasi- contractual obligations
cover a wide range. The Italian jurist, Jorge Giorgi, to whom we have already
referred, considers under this head, among other obligations, the following:
payments made upon a future consideration which is not realized or upon an
existing consideration which fails; payments wrongfully made upon a
consideration which is contrary to law, or opposed to public policy; and
payments made upon a vicious consideration or obtained by illicit means
(Giorgi, Teoria de las Obligaciones, vol. 5, art. 130.)
Im permitting the recovery of money lost at play, Act No. 1757 has introduced
modifications in the application of articles 1798, 180`, and 1305 of the Civil
Code. The first two of these articles relate to gambling contracts, while article
1305 treats of the nullity of contracts proceeding from a vicious or illicit
consideration. Taking all these provisions together, it must be apparent that the
obligation to return money lost at play has a decided affinity to contractual
obligations; and we believe that it could, without violence to the doctrines of the
civil law, be held that such obligations is an innominate quasi-contract. It is,
however, unnecessary to place the decision on this ground.
From what has been said it follows that in our opinion the cause of action stated
in the complaints in the court below is based on a contract, express or implied
and is therefore of such nature that the court had authority to issue writ of
attachment. The application for the writ of certiorari must therefore be denied
and the proceedings dismissed. So ordered.
G.R. No. 13228
September 13, 1918
WILLIAM OLLENDORFF, plaintiff-appellee,

vs.
IRA ABRAHAMSON, defendant-appellant.
Lawrence & Ross for appellant.Wolfson & Wolfson for appellee.
FISHER, J.:
This is an appeal by defendant from a judgment of the Court of First Instance of
Manila by which he was enjoined for a term of five years, from September 10,
1915, from engaging in the Philippine Islands in any business similar to or
competitive with that of plaintiff.
The record discloses that plaintiff is and for a long time past has been engaged
in the city of Manila and elsewhere in the Philippine Islands in the business of
manufacturing ladies embroidered underwear for export. Plaintiff imports the
material from which this underwear is made and adopts decorative designs
which are embroidered upon it by Filipino needle workers from patterns selected
and supplied by him. Most of the embroidery work is done in the homes of the
workers. The embroidered material is then returned to plaintiff's factory in Manila
where it is made into finished garments and prepared for export. The
embroiderers employed by plaintiff are under contract to work for plaintiff
exclusively. Some fifteen thousand home workers and eight hundred factory
workers are engaged in this work for plaintiff, and some two and a half million
pesos are invested in his business.
On September 10, 1915, plaintiff and defendant entered into a contract in the
following terms:
Contract of agreement made and entered into this date by and between William
Ollendorff, of Manila, Philippine Islands, party of the first part, and Ira
Abrahamson, of Manila, Philippine Islands, party of the second part:
The party of first part hereby agrees to employ the party of the second part, and
the party of the second part hereby obligates and binds himself to work for the
party of the first part for a term of two years from date commencing from the
sixth of September, one thousand nine hundred and fifteen and ending on the
fifth day of September, one thousand nine hundred seventeen, at a salary of fifty
peso (50) per week payable at the end of each week.
The party of the second part hereby obligates and binds himself to devote his
entire time, attention, energies and industry to the promotion of the furtherance
of the business and interest of the party of the first part and to perform during
the term of this contract such duties as may be assigned to him by the party of
the first part, and failure by the said party of the second part to comply with

these conditions to the satisfaction of the party of the first shall entitle the party
of the first part to discharge and dismiss the said party of the second part from
the employ of the party of the first part.
It is mutually understood and agreed by the parties hereto that this contract,
upon its termination, may be extended for a like for a longer or a shorter period
by the mutual consent of both contracting parties.
The said party of the second part hereby further binds and obligates himself, his
heirs, successors and assigns, that he will not enter into or engage himself
directly or indirectly, nor permit any other person under his control to enter in or
engage in a similar or competitive business to that of the said party of the first
part anywhere within the Philippine Islands for a period of five years from this
date.
Under the terms of this agreement defendant entered the employ of plaintiff and
worked for him until April, 1916, when defendant, on account of ill health, left
plaintiff's employ and went to the United States. While in plaintiff's
establishment, and had full opportunity to acquaint himself with plaintiff's
business method and business connection. The duties performed by him were
such as to make it necessary that he should have this knowledge of plaintiff's
business. Defendant had a general knowledge of the Philippine embroidery
business before his employment by plaintiff, having been engaged in similar
work for several years.
Some months after his departure for the United States, defendant returned to
Manila as the manager of the Philippine Underwear Company, a corporation.
This corporation does not maintain a factory in the Philippine Islands, but send
material and embroidery designs from New York to its local representative here
who employs Filipino needle workers to embroider the designs and make up the
garments in their homes. The only difference between plaintiff's business and
that of the firm by which the defendant is employed, is the method of doing the
finishing work -- the manufacture of the embroidered material into finished
garments. Defendant admits that both firms turn out the same class of goods
and that they are exported to the same market. It also clearly appears from the
evidence that defendant has employed to work his form some of the same
workers employed by the plaintiff.
Shortly after defendant's return to Manila and the commencement by him of the
discharge of the duties of his position as local manager of the Philippine
Embroidery Company, as local manager of the Philippine Embroidery Company,
plaintiff commenced this action, the principal purpose of which is to prevent by

injunction, any further breach of that part of defendant's contract of employment

by plaintiff, by which he agreed that he would not "enter into or engage himself
directly or indirectly . . . in a similar or competitive business to that of (plaintiff)
anywhere within the Philippine Islands for a period of five years . . ." from the
date of the agreement. The lower court granted a preliminary injunction, and
upon trial the injunction was made perpetual.
Defendant, as appellant, argues that plaintiff failed to substantiate the averments
of his complaints to the effect that the business in which the defendant is
employed is competitive with that of plaintiff. The court below found from the
evidence that the business was "very similar." We have examined the evidence
and rare of the opinion that the business in which defendant is engaged is not
only very similar to that of plaintiff, but that it is conducted in open competition
with that business within the meaning of the contract in question. Defendant
himself expressly admitted, on cross-examination, that the firm by which he is
now employed puts out the same class of foods as that which plaintiff is
engaged in producing. When two concerns operate in the same field, produce
the same class of goods and dispose them in the same market, their businesses
are of necessity competitive. Defendant having engaged in the Philippine
Islands in a business directly competitive with that of plaintiff, within five years
from the date of his contract of employment by plaintiff, under the terms of which
he expressly agreed that he would refrain form doing that very thing, his conduct
constitutes a breach of that agreement.
Defendant argues that even assuming that there has been a breach of the
agreement, the judgment of the court below is nevertheless erroneous,
contending that (1) the contract is void for lack of mutuality; (2) that the contract
is void as constituting an unreasonable restraint of trade; (3) that plaintiff has
failed to show that he has suffered any estimable pecuniary damage; and (4)
that even assuming that such damage as to warrant the court in restraining by
injunction its continuance.
The contention that the contract is void for lack of mutuality is based upon that
part of the agreement which authorizes plaintiff to discharge the defendant
before the expiration of the stipulated term, should defendant fail to comply with
its conditions to plaintiff's satisfaction. It is argued that by this contracts it was
sought to impose upon defendant the absolute obligation of rendering service,
while reserving to plaintiff the right to rescind it at will. We are of the opinion that
this question is largely academic. It is admitted that defendant left plaintiff's
employ at his own request before the expiration of the stipulated terms of the
contract. Had plaintiff sought to discharge defendant without just cause, before
the expiration of the term of the employment, it might have been a serious

question whether he could lawfully do so, notwithstanding the terms in which the
contract was drawn. (Civil Code, art. 1256.) But even assuming this particular
clause of the contract to be invalid, this would not necessarily affect the rest of
the agreement. The inclusion is an agreement of one or more pacts which are
invalid does not of necessity invalidate the whole contract.
We are of the opinion that the contract was not void as constituting an
unreasonable restraint of trade. We have been cited to no statutory expression
of the legislative will to which such an agreement is directly obnoxious. The rule
in this jurisdiction is that the obligations created by contracts have the force of
law between the contracting parties and must be enforce in accordance with
their tenor. (Civil Code, art 1091.) The only limitation upon the freedom of
contractual agreement is that the pacts established shall not be contrary to "law,
morals or public order." (Civil Code, Art. 1255.) The industry of counsel has
failed to discover any direct expression of the legislative will which prohibits
such a contract as that before us. It certainly is not contrary to any recognized
moral precept, and it therefore only remains to consider whether it is contrary to
"public order." This term, as correctly stated by Manresa (Commentaries, vol. 8,
p. 606) "does not mean, as here used, the actual keeping of the public peace,
but signifies the public weal . . . that which is permanent, and essential in
institutions . . . ." It is the equivalent, as here used and as defined by Manresa,
of the term "public policy" as used in the law of the United States. Public policy
has been defined as being that principle under which freedom of contract or
private dealing is restricted for the freedom of contract or private dealing is
restricted for the good of the community. (People's Bank vs. Dalton, 2 Okla.,
476.) It is upon this theory that contracts between private individuals which
result in an unreasonable restraint of trade have frequently being recognized by
article 1255 of our Civil Code, the court of these Islands are vested with like
authority.
In the nature of things, it is impossible to frame a general rule by which to
determine in advance the precise point at which the right of freedom of contract
must yield to the superior interest of community in keeping trade and commerce
free from unreasonable restrictions. Originally the English courts adopted the
view that any agreement which imposed restrictions upon a man's right to
exercise his trade or calling was void as against public policy. (Cyc. vol. 9, p.
525.) In the course of time this opinion was abandoned and the American and
English courts adopted the doctrine that where the restraint was unlimited as to
space but unlimited as to time were valid. In recent years there has been a
tendency on the part of the courts of England and America to discard these fixed
rules and to decide each case according to its peculiar circumstances, and
make the validity of the restraint depend upon its reasonableness. If the restraint

is no greater than is reasonably necessary for the protection of the party in

whose favor it is imposed it is upheld, but if it goes beyond this is declared void.
This is the principle followed in such cases by the Supreme Court of the United
States. In the case of Gibbs vs. Consolidated Gas Co. of Baltimore (130 U.S.,
396) the court said:
The decision in Mitchel vs. Reynolds (1P. Wms. 181 [Smith's Leading Cases,
Vol. 1, Pt. II, 508]), is the foundation of rule in relation to the invalidity of
contracts in restraint of trade; but as it was made under a condition of things,
and a state of society, different from those which now prevail, the rule laid down
is not regarded as inflexible, and has been considerably modified. Public welfare
is first considered, and if it be not involved, and the restraint upon one party is
not greater than protection to the other party requires, the contract may be
sustained. The question is, whether, under the particular circumstances of the
case and the nature of the particular contract involved in it, the contract is, or is
not, unreasonable. (Rousillon vs. Rousillon, L. R. 14 Ch. Div., 351; Leather Cloth
Co. vs. Lorsont, L. R. 9 Eq., 345.)
Following this opinion, we adopt the modern rule that the validity of restraints
upon trade or employment is to be determined by the intrinsinc reasonableness
of restriction in each case, rather than by any fixed rule, and that such
restrictions may be upheld when not contrary to afford a fair and reasonable
protection to the party in whose favor it is imposed.
Examining the contract here in question from this stand point, it does not seem
so with respect to an employee whose duties are such as of necessity to give
him an insight into the general scope and details of his employers business. A
business enterprise may and often does depend for its success upon the
owner's relations with other dealers, his skill in establishing favorable
connections, his methods of buying and selling -- a multitude of details, none
vital if considered alone, but which in the aggregate constitute the sum total of
the advantages which the result of the experience or individual aptitude and
ability of the man or men by whom the business has been built up. Failure or
success may depend upon the possession of these intangible but all important
assets, and it is natural that their possessor should seek to keep them from
falling into the hands of his competitors. It is with this object in view that such
restrictions as that now under consideration are written into contracts of
employment. Their purpose is the protection of the employer, and if they do not
go beyond what is reasonably necessary to effectuate this purpose they should
be upheld. We are of the opinion, and so hold, that in the light of the established
facts the restraint imposed upon defendant by his contract is not unreasonable.
As was well said in the case of Underwood vs. Barker (68 Law J. Ch., 201). "If

there is one thing more than another which is essential to the trade and
commerce of this country, it is the inviolability of contract deliberately entered
into; and to allow a person of mature age, and not imposed upon, to enter into a
contract, to obtain the benefit of it, and then to repudiate it and the obligation
which he has undertaken, is prima facie, at all events, contrary to the interest of
any and every country . . . . The public policy which allows a person to obtain
employment on certain terms understood by and agreed to by him, and to
repudiate his contract, conflicts with, and must, to avail the defendant, for some
sufficient reason, prevail over, the manifest public policy, which, as a rule holds
him to his bond . . . .
Having held that the contract is valid, we pass to a consideration of defendant's
objections to its enforcement by injunction.
It is contended that plaintiff has not proved that he has suffered any estimable
pecuniary damage by reason of defendant's breach of the contract, and that for
that reason his action must fail. It is further contended that in no event is it
proper to enforce such a contract as this by injunction, because it has not been
alleged and proved that the continuance of the acts complained of will cause
plaintiff "irreparable damage." These objections can conveniently be considered
together.
The obligation imposed upon defendant by the particular clause of his contract
now under consideration is negative in character. Unless defendant voluntarily
complies with his undertaking there is no way by which the contract can be
enforced except by the injunctive power of judicial process. Such negative
obligations have long been enforced by the courts in this manner. As stated by
High in his well-known work on Injunctions (vol. 2, pp. 877-878):
The remedy by injunction to prevent the violation of negative agreements, or
contracts not to do a particular thing, is closely akin to the remedy by way of
specific performance of agreements of an affirmative nature. In both cases the
object sought is substantially one and the same, and by enjoining the violation of
a negative agreement the court of equity in effect decrees its specific
performance. (Lumley vs. Wagner, 1 DeGex, M. & G., 604.)
Where by the terms of a contract imposing a positive obligation the obligor is
entitled to a specific performance, it will not avail the defendant to show that
plaintiff will suffer no pecuniary damage if the contract is not performed. Upon
like reasons, when the undertaking is negative in character and defendant is
violating the obligation imposed upon him the court may interfere without
requiring proof of actual damage. (High on Injunctions, par. 1135, citing

Dickenson vs. Grand Junction Canal Co., 15 Beav., 270.)

The admitted fact that plaintiff has failed to establish proof of pecuniary damage
by reason of the breach of the contract by defendant by the acts committed prior
to the issuance of the preliminary injunction is, of course, a bar or nay money
judgment for damages for the breach of the contract, but will not justify us in
permitting defendant to continue to break his contract over plaintiff's objection.
The injury is a continuous one. The fact that the court may not be able to give
damages for that part of the breach of the contract which had already taken
place when its aid was invoked is no reason why it should countenance a
continuance of such disregard of plaintiff's rights.
With respect to the contention that an injunction may only be granted to prevent
irreparable injury, the answer is that any continuing breach of a valid negative
covenant is irreparable by the ordinary process of courts of law. As stated by
High, (vol. 2, p. 906) injunctive relief is granted in cases like this "upon the
ground that the parties cannot be placed in statu quo, and that damages at law
can afford no adequate compensation, the injury being a continuous one
irreparable by the ordinary process of courts of law."
In the case of Gilchrist vs. Cuddy (29 Phil. rep., 542), at page 552, this court
said, citing with approval the case of Wahle vs. Reinbach (76 Ill., 322):
By "irreparable injury" is not meant such injury as is beyond the possibility of
repair, or beyond possible compensation in damages, nor necessarily great
injury or great damage, but that species of injury, whether great or small, that
ought not be submitted to on the one hand or inflicted on the other; and,
because it is so large on the one hand, or so small on the other, is of such
constant and frequent recurrence that no fair or reasonable redress can be had
therefor in a court of law.
This definition was quoted with approval by the Supreme Court of the United
States in the case of Donovan vs. Pennsylvania Co., (199 U.S., 279), in which
the injury complained of was continuous in its nature.
It is true, as held in the case of Liongson vs. Martinez (36 Phil. Rep., 948) that
"an injunction should never issue when an action for damages would adequately
compensate the injuries caused" But it frequently happens that the acts of the
defendant, while constituting a very substantial invasion of plaintiff's rights are of
such a character that the damages which result therefrom "cannot be measured
by any certain pecuniary standard." (Eau Claire Water Co. vs. City of Eau Claire,
127 Wis., 154.) The Civil Code (art. 1908) casts upon real estate owners liability

in damages for the emission, upon their premises, of excessive smoke, which
may be noxious to person or property. The injury caused by such a nuisance
might bring about a depreciation in the value of adjoining properties, but there is
no "certain pecuniary standard" by which such damages can be measured, and
in that sense the threatened injury is "irreparable" and may appropriately be
restrained by injunction.
. . . If the nuisance is a continuing one, invading substantial rights of the
complainant in such a manner that he would thereby lose such rights entirely but
for the assistance of a court of equity he will entitled but for the assistance of a
court of equity he will be entitled to an injunction upon a proper showing,
notwithstanding the fact the he might recover some damages in an action at law.
(Tise vs. Whitaker-Harvey Co., 144 N. C., 507.)
The injury done the business of a merchant by illegal or unfair competition is
exceedingly difficult to measure. A diminution of the volume of a business may
be due to so many different causes that it is often impossible to demonstrate
that it has in fact been caused by the illegal competition of the defendant. This is
frequently the case in suit for the infringement of trademark rights, in which the
courts may enjoin the continued use of the infringing mark, although unable to
assess damages for the past injury.
The judgment of the trial court is affirmed with costs. So ordered.
G.R. No. 142971

May 7, 2002

THE CITY OF CEBU, petitioner,

vs.
SPOUSES APOLONIO and BLASA DEDAMO, respondents.
DAVIDE, JR., C.J.:
In its petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, petitioner City of Cebu assails the decision of 11 October 1999 of the
Court of Appeals in CA-G.R. CV No. 59204 1 affirming the judgment of 7 May
1996 of the Regional Trial Court, Branch 13, Cebu City, in Civil Case No. CEB14632, a case for eminent domain, which fixed the valuation of the land subject
thereof on the basis of the recommendation of the commissioners appointed by
it.
The material operation facts are not disputed.
On 17 September 1993, petitioner City of Cebu filed in Civil Case No. CEB-

14632 a complaint for eminent domain against respondents spouses Apolonio

and Blasa Dedamo. The petitioner alleged therein that it needed the following
parcels of land of respondents, to wit:
Lot No. 1527
Area------------------------------------Tax
Declaration------------------------Title No. -------------------------------Market value--------------------------Assessed Value----------------------Lot No. 1528
Area-------------------------------------Area sought to be expropriated --Tax Declaration ----------------------Title No. --------------------------------Market value for the whole lot ----Market value of the Area to be
expropriated -Assessed Value ----------------------

1,146 square meters

03472
31833
P240,660.00
P72,200.00
793 square meters
478 square meters
03450
31832
P1,666,530.00
P100,380.00
P49,960.00

for a public purpose, i.e., for the construction of a public road which shall serve
as an access/relief road of Gorordo Avenue to extend to the General Maxilum
Avenue and the back of Magellan International Hotel Roads in Cebu City. The
lots are the most suitable site for the purpose. The total area sought to be
expropriated is 1,624 square meters with an assessed value of P1,786.400.
Petitioner deposited with the Philippine National Bank the amount of P51,156
representing 15% of the fair market value of the property to enable the petitioner
to take immediate possession of the property pursuant to Section 19 of R.A. No.
7160.2
Respondents, filed a motion to dismiss the complaint because the purpose for
which their property was to be expropriated was not for a public purpose but for
benefit of a single private entity, the Cebu Holdings, Inc. Petitioner could simply
buy directly from them the property at its fair market value if it wanted to, just like
what it did with the neighboring lots. Besides, the price offered was very low in
light of the consideration of P20,000 per square meter, more or less, which
petitioner paid to the neighboring lots. Finally, respondents alleged that they
have no other land in Cebu City.
A pre-trial was thereafter had.

On 23 August 1994, petitioner filed a motion for the issuance of a writ of

possession pursuant to Section 19 of R.A. No. 7160. The motion was granted by
the trial court on 21 September 1994.3
On 14 December 1994, the parties executed and submitted to the trial court an
Agreement4 wherein they declared that they have partially settled the case and
in consideration thereof they agreed:
1. That the SECOND PARTY hereby conforms to the intention to [sic] the

FIRST PARTY in expropriating their parcels of land in the above-cited

case as for public purpose and for the benefit of the general public;
2. That the SECOND PARTY agrees to part with the ownership of the subject
parcels of land in favor of the FIRST PARTY provided the latter will pay
just compensation for the same in the amount determined by the court
after due notice and hearing;
3. That in the meantime the SECOND PARTY agrees to receive the amount
of ONE MILLION SEVEN HUNDRED EIGHTY SIX THOUSAND FOUR
HUNDRED PESOS (1,786,400.00) as provisional payment for the subject
parcels of land, without prejudice to the final valuation as maybe
determined by the court;
4. That the FIRST PARTY in the light of the issuance of the Writ of
Possession Order dated September 21, 1994 issued by the Honorable
Court, agreed to take possession over that portion of the lot sought to be
expropriated where the house of the SECOND PARTY was located only
after fifteen (15) days upon the receipt of the SECOND PARTY of the
amount of P1,786,400.00;
5. That the SECOND PARTY upon receipt of the aforesaid provisional
amount, shall turn over to the FIRST PARTY the title of the lot and within
the lapse of the fifteen (15) days grace period will voluntarily demolish
their house and the other structure that may be located thereon at their
own expense;
6. That the FIRST PARTY and the SECOND PARTY jointly petition the
Honorable Court to render judgment in said Civil Case No. CEB-14632 in
accordance with this AGREEMENT;
7. That the judgment sought to be rendered under this agreement shall be

followed by a supplemental judgment fixing the just compensation for the

property of the SECOND PARTY after the Commissioners appointed by
this Honorable Court to determine the same shall have rendered their
report and approved by the court.
Pursuant to said agreement, the trial court appointed three commissioners to
determine the just compensation of the lots sought to be expropriated. The
commissioners were Palermo M. Lugo, who was nominated by petitioner and
who was designated as Chairman; Alfredo Cisneros, who was nominated by
respondents; and Herbert E. Buot, who was designated by the trial court. The
parties agreed to their appointment.
Thereafter, the commissioners submitted their report, which contained their
respective assessments of and recommendation as to the valuation of the
property.
1wphi1.nt

On the basis of the commissioners' report and after due deliberation thereon,
the trial court rendered its decision on 7 May 1996, 5 the decretal portion o which
reads:
WHEREFORE, in view of the foregoing, judgment is hereby rendered in
accordance with the report of the commissioners.
Plaintiff is directed to pay Spouses Apolonio S. Dedamo and Blasa Dedamo the
sum of pesos: TWENTY FOUR MILLION EIGHT HUNDRED SIXTY-FIVE
THOUSAND AND NINE HUNDRED THIRTY (P24,865.930.00) representing the
compensation mentioned in the Complaint.
Plaintiff and defendants are directed to pay the following commissioner's fee;
1. To Palermo Lugo
- P21,000.00
2. To Herbert Buot
- P19,000.00
3. To Alfredo Cisneros
- P19,000.00
Without pronouncement as to cost.
SO ORDERED.
Petitioner filed a motion for reconsideration on the ground that the
commissioners' report was inaccurate since it included an area which was not
subject to expropriation. More specifically, it contended that Lot No. 1528
contains 793 square meters but the actual area to be expropriated is only 478
square meters. The remaining 315 square meters is the subject of a separate

expropriation proceeding in Civil Case No. CEB-8348, then pending before

Branch 9 of the Regional Trial Court of Cebu City.
On 16 August 1996, the commissioners submitted an amended assessment for
the 478 square meters of Lot No. 1528 and fixed it at P12,824.10 per square
meter, or in the amount of P20,826,339.50. The assessment was approved as
the just compensation thereof by the trial court in its Order of 27 December
1996.6 Accordingly, the dispositive portion of the decision was amended to
reflect the new valuation.
Petitioner elevated the case to the Court of Appeals, which docketed the case
as CA-G.R. CV No. 59204. Petitioner alleged that the lower court erred in fixing
the amount of just compensation at P20,826,339.50. The just compensation
should be based on the prevailing market price of the property at the
commencement of the expropriation proceedings.
The petitioner did not convince the Court of Appeals. In its decision of 11
October 1999,7 the Court of Appeals affirmed in toto the decision of the trial
court.
Still unsatisfied, petitioner filed with us the petition for review in the case at bar.
It raises the sole issue of whether just compensation should be determined as of
the date of the filing of the complaint. It asserts that it should be, which in this
case should be 17 September 1993 and not at the time the property was
actually taken in 1994, pursuant to the decision in "National Power Corporation
vs. Court of Appeals."8
In their Comment, respondents maintain that the Court of Appeals did not err in
affirming the decision of the trial court because (1) the trial court decided the
case on the basis of the agreement of the parties that just compensation shall
be fixed by commissioners appointed by the court; (2) petitioner did not
interpose any serious objection to the commissioners' report of 12 August 1996
fixing the just compensation of the 1,624-square meter lot at P20,826,339.50;
hence, it was estopped from attacking the report on which the decision was
based; and (3) the determined just compensation fixed is even lower than the
actual value of the property at the time of the actual taking in 1994.
Eminent domain is a fundamental State power that is inseparable from
sovereignty. It is the Government's right to appropriate, in the nature of a
compulsory sale to the State, private property for public use or purpose. 9
However, the Government must pay the owner thereof just compensation as
consideration therefor.

In the case at bar, the applicable law as to the point of reckoning for the
determination of just compensation is Section 19 of R.A. No. 7160, which
expressly provides that just compensation shall be determined as of the time of
actual taking. The Section reads as follows:
SECTION 19. Eminent Domain. A local government unit may, through its chief
executive and acting pursuant to an ordinance, exercise the power of eminent
domain for public use, or purpose or welfare for the benefit of the poor and the
landless, upon payment of just compensation, pursuant to the provisions of the
Constitution and pertinent laws: Provided, however, That the power of eminent
domain may not be exercised unless a valid and definite offer has been
previously made to the owner, and such offer was not accepted: Provided,
further, That the local government unit may immediately take possession of the
property upon the filing of the expropriation proceedings and upon making a
deposit with the proper court of at least fifteen percent (15%) of the fair market
value of the property based on the current tax declaration of the property to be
expropriated: Provided finally, That, the amount to be paid for the expropriated
property shall be determined by the proper court, based on the fair market value
at the time of the taking of the property.
The petitioner has misread our ruling in The National Power Corp. vs. Court of
Appeals.10 We did not categorically rule in that case that just compensation
should be determined as of the filing of the complaint. We explicitly stated
therein that although the general rule in determining just compensation in
eminent domain is the value of the property as of the date of the filing of the
complaint, the rule "admits of an exception: where this Court fixed the value of
the property as of the date it was taken and not at the date of the
commencement of the expropriation proceedings."
Also, the trial court followed the then governing procedural law on the matter,
which was Section 5 of Rule 67 of the Rules of Court, which provided as follows:
SEC. 5. Ascertainment of compensation. Upon the entry of the order of
condemnation, the court shall appoint not more than three (3) competent and
disinterested persons as commissioners to ascertain and report to the court the
just compensation for the property sought to be taken. The order of appointment
shall designate the time and place of the first session of the hearing to be held
by the commissioners and specify the time within which their report is to be filed
with the court.
More than anything else, the parties, by a solemn document freely and
voluntarily agreed upon by them, agreed to be bound by the report of the

commission and approved by the trial court. The agreement is a contract

between the parties. It has the force of law between them and should be
complied with in good faith. Article 1159 and 1315 of the Civil Code explicitly
provides:
Art. 1159. Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.
Art. 1315. Contracts are perfected by mere consent, and from that moment the
parties are bound not only to the fulfillment of what has been expressly
stipulated but also to all the consequences which, according to their nature, may
be in keeping with good faith, usage and law.
Furthermore, during the hearing on 22 November 1996, petitioner did not
interpose a serious objection.11 It is therefore too late for petitioner to question
the valuation now without violating the principle of equitable estoppel. Estoppel
in pais arises when one, by his acts, representations or admissions, or by his
own silence when he ought to speak out, intentionally or through culpable
negligence, induces another to believe certain facts to exist and such other
rightfully relies and acts on such belief, so that he will be prejudiced if the former
is permitted to deny the existence of such facts. 12 Records show that petitioner
consented to conform with the valuation recommended by the commissioners. It
cannot detract from its agreement now and assail correctness of the
commissioners' assessment.
1wphi1.nt

Finally, while Section 4, Rule 67 of the Rules of Court provides that just
compensation shall be determined at the time of the filing of the complaint for
expropriation,13 such law cannot prevail over R.A. 7160, which is a substantive
law.14
WHEREFORE, finding no reversible error in the assailed judgment on the Court
of Appeals in CA-G.R. CV No. 59204, the petition in this case is hereby
DENIED.
No pronouncement as to costs.
SO ORDERED.
G.R. NO. 192105
December 9, 2013
ANTONIO LOCSIN, II, Petitioner,
vs.
MEKENI FOOD CORPORATION, Respondent.
DECISION

DEL CASTILLO, J.:

In the absence of specific terms and conditions governing a car plan agreement
between the employer and employe former may not retain the installment
payments made by the latter on the car plan and treat them as rents for the use
of the service vehicle, in the event that the employee ceases his employment
and is unable to complete the installment payments on the vehicle. The
underlying reason is that the service vehicle was precisely used in the former' s
business; any personal benefit obtained by the employee from its use is merely
incidental. This Petition for Review on Certiorari assails the January 27, 2010
Decision of the Court of Appeals (CA) in CA-G.R. SP No. 109550, as well as its
April 23, 2010 Resolution denying petitioners Motion for Partial
Reconsideration.
1

Factual Antecedents
In February 2004, respondent Mekeni Food Corporation(Mekeni)a Philippine
company engaged in food manufacturing and meat processing offered
petitioner Antonio Locsin II the position of Regional Sales Manager to over see
Mekenis National Capital Region Supermarket/Food Service and South Luzon
operations. In addition to a compensation and benefit package, Mekeni offered
petitioner a car plan, under which one-half of the cost of the vehicle is to be paid
by the company and the other half to be deducted from petitioners salary.
Mekenis offer was contained in an Offer Sheet which was presented to
petitioner.
5

Petitioner began his stint as Mekeni Regional Sales Manager on March 17,
2004. To be able to effectively cover his appointed sales territory, Mekeni
furnished petitioner with a used Honda Civic car valued at P280,000.00, which
used to be the service vehicle of petitioners immediate supervisor. Petitioner
paid for his 50% share through salary deductions of P5,000.00 each month.
Subsequently, Locsin resigned effective February 25, 2006. By then, a total of
P112,500.00 had been deducted from his monthly salary and applied as part of
the employees share in the car plan. Mekeni supposedly put in an equivalent
amount as its share under the car plan. In his resignation letter, petitioner made
an offer to purchase his service vehicle by paying the outstanding balance
thereon. The parties negotiated, but could not agree on the terms of the
proposed purchase. Petitioner thus returned the vehicle to Mekeni on May 2,
2006.
Petitioner made personal and written follow-ups regarding his unpaid salaries,
commissions, benefits, and offer to purchase his service vehicle. Mekeni replied
that the company car plan benefit applied only to employees who have been
with the company for five years; for this reason, the balance that petitioner

should pay on his service vehicle stood at P116,380.00 if he opts to purchase

the same.
On May 3, 2007, petitioner filed against Mekeni and/or its President, Prudencio
S. Garcia, a Complaint6for the recovery of monetary claims consisting of unpaid
salaries, commissions, sick/vacation leave benefits, and recovery of monthly
salary deductions which were earmarked for his cost-sharing in the car plan.
The case was docketed in the National Labor Relations Commission(NLRC),
National Capital Region(NCR), Quezon City as NLRC NCR CASE NO. 00-0504139-07.
On October 30, 2007, Labor Arbiter Cresencio G. Ramos rendered a Decision,
decreeing as follows: WHEREFORE, in the light of the foregoing premises,
judgment is hereby rendered directing respondents to turn-over to complainant x
x x the subject vehicle upon the said complainants payment to them of the sum
of P100,435.84.SO ORDERED. Ruling of the National Labor Relations
Commission On appeal, the Labor Arbiters Decision was reversed in a
February 27, 2009 Decision of the NLRC, thus: WHEREFORE, premises
considered, the appeal is hereby Granted. The assailed Decision dated October
30, 2007 is hereby REVERSED and SET ASIDE and a new one entered
ordering respondent-appellee Mekeni Food Corporation to pay complainantappellee the following:
7

10

1.Unpaid Salary in the amount of P12,511.45;

2.Unpaid sick leave/vacation leave pay in the amount of P14,789.15;
3.Unpaid commission in the amount of P9,780.00; and
4.Reimbursement of complainants payment under the car plan agreement in the
amount of P112,500.00; and
5.The equivalent share of the company as part of the complainants benefit
under the car plan 50/50 sharing amounting to P112,500.00.
Respondent-Appellee Mekeni Food Corporation is hereby authorized to deduct
the sum of P4,736.50 representing complainant-appellants cash advance from
his total monetary award.
All other claims are dismissed for lack of merit.
SO ORDERED. The NLRC held that petitioners amortization payments on his
service vehicle amounting to P112,500.00 should be reimbursed; if not, unjust
enrichment would result, as the vehicle remained in the possession and
ownership of Mekeni.
11

On October 30, 2007, Labor Arbiter Cresencio G. Ramos rendered a Decision,

decreeing as follows:

WHEREFORE, in the light of the foregoing premises, judgment is hereby

rendered directing respondents to turn-over to complainant x x xthe subject
vehicle upon the said complainants payment to them of the sum of
P100,435.84.
SO ORDERED.
8

Ruling of the National Labor Relations Commission

On appeal, the Labor Arbiters Decision was reversedin a February 27, 2009
Decision10of the NLRC, thus:
9

WHEREFORE, premises considered, the appeal is hereby Granted. The

assailed Decision dated October 30, 2007 is hereby REVERSED and SET
ASIDE and a new one entered ordering respondent-appellee Mekeni Food
Corporation to pay complainant-appellee the following:
1.Unpaid Salary in the amount of P12,511.45;
2.Unpaid sick leave/vacation leave pay in the amount of P14,789.15;
3.Unpaid commission in the amount of P9,780.00; and
4.Reimbursement of complainants payment under the car plan agreement in the
amount of P112,500.00; and
5.The equivalent share of the company as part of the complainants benefit
under the car plan 50/50 sharing amounting to P112,500.00.
Respondent-Appellee Mekeni Food Corporation is hereby authorized to deduct
the sum of P4,736.50 representing complainant-appellants cash advance from
his total monetary award.
All other claims are dismissed for lack of merit.
SO ORDERED.
11

The NLRC held that petitioners amortization payments on his service vehicle
amounting to P112,500.00 should be reimbursed; if not, unjust enrichment would
result, as the vehicle remained in the possession and ownership of Mekeni.
In addition, the employers share in the monthly car plan payments should
likewise be awarded to petitioner because it forms part of the latters benefits
under the car plan. It held further that Mekenis claim that the company car plan
benefit applied only to employees who have been with the company for five
years has not been substantiated by its evidence, in which case the car plan
agreement should be construed in petitioners favor. Mekeni moved to
reconsider, but in an April 30, 2009 Resolution, the NLRC sustained its original
12

findings.
Ruling of the Court of Appeals
Mekeni filed a Petition for Certiorari with the CA assailing the NLRCs February
27, 2009 Decision, saying that the NLRC committed grave abuse of discretion in
holding it liable to petitioner as it had no jurisdiction to resolve petitioners
claims, which are civil in nature.
13

On January 27, 2010, the CA issued the assailed Decision, decreeing as

follows:
WHEREFORE, the petition for certiorari is GRANTED. The Decision of the
National Labor Relations Commission dated 27 February 2009, in NLRC NCR
Case No. 00-05-04139-07, and its Resolution dated 30 April 2009 denying
reconsideration thereof, are MODIFIED in that the reimbursement of Locsins
payment under the car plan in the amount of P112,500.00, and the payment to
him of Mekenis 50% share in the amount of P112,500.00 are DELETED. The
rest of the decision is AFFIRMED.
SO ORDERED.
14

In arriving at the above conclusion, the CA held that the NLRC possessed
jurisdiction over petitioners claims, including the amounts he paid under the car
plan, since his Complaint against Mekeni is one for the payment of salaries and
employee benefits. With regard to the car plan arrangement, the CA applied the
ruling in Elisco Tool Manufacturing Corporation v. Court of Appeals, where it
was held that
15

First. Petitioner does not deny that private respondent Rolando Lantan acquired
the vehicle in question under a car plan for executives of the Elizalde group of
companies. Under a typical car plan, the company advances the purchase price
of a car to be paid back by the employee through monthly deductions from his
salary. The company retains ownership of the motor vehicle until it shall have
been fully paid for. However, retention of registration of the car in the companys
name is only a form of a lien on the vehicle in the event that the employee would
abscond before he has fully paid for it. There are also stipulations in car plan
agreements to the effect that should the employment of the employee
concerned be terminated before all installments are fully paid, the vehicle will be
taken by the employer and all installments paid shall be considered rentals per
agreement.
16

In the absence of evidence as to the stipulations of the car plan arrangement

between Mekeni and petitioner, the CA treated petitioners monthly contributions

in the total amount of P112,500.00 as rentals for the use of his service vehicle
for the duration of his employment with Mekeni. The appellate court applied
Articles 1484-1486 of the Civil Code, and added that the installments paid by
petitioner should not be returned to him inasmuch as the amounts are not
unconscionable. It made the following pronouncement:
17

Having used the car in question for the duration of his employment, it is but fair
that all of Locsins payments be considered as rentals therefor which may be
forfeited by Mekeni. Therefore, Mekeni has no obligation to return these
payments to Locsin. Conversely, Mekeni has no right to demand the payment of
the balance of the purchase price from Locsin since the latter has already
surrendered possession of the vehicle.
18

Moreover, the CA held that petitioner cannot recover Mekenis corresponding

share in the purchase price of the service vehicle, as this would constitute unjust
enrichment on the part of petitioner at Mekenis expense.
The CA affirmed the NLRC judgment in all other respects. Petitioner filed his
Motion for Partial Reconsideration, but the CA denied the same in its April 23,
2010 Resolution.
19

Thus, petitioner filed the instant Petition; Mekeni, on the other hand, took no
further action.
Issue
Petitioner raises the following solitary issue:
WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS ERRED
IN NOT CONSIDERING THE CAR PLAN PRIVILEGE AS PART OF THE
COMPENSATION PACKAGE OFFERED TO PETITIONER AT THE INCEPTION
OF HIS EMPLOYMENT AND INSTEAD LIKENED IT TO A CAR LOAN ON
INSTALLMENT, IN SPITE OF THE ABSENCE OF EVIDENCE ONRECORD.
Petitioners Arguments
20

In his Petition and Reply, petitioner mainly argues that the CA erred in treating
his monthly contributions to the car plan, totaling P112,500.00, as rentals for the
use of his service vehicle during his employment; the car plan which he availed
ofwasa benefit and it formed part of the package of economic benefits granted
to him when he was hired as Regional Sales Manager. Petitioner submits that
this is shown by the Offer Sheet which was shown to him and which became the
basis for his decision to accept the offer and work for Mekeni.
21

Petitioner adds that the absence of documentary or other evidence showing the
terms and conditions of the Mekeni company car plan cannot justify a reliance
on Mekenis self-serving claimsthat the full terms thereof applied only to
employees who have been with the company for at least five years; in the
absence of evidence, doubts should be resolved in his favor pursuant to the
policy of the law that affords protection to labor, as well asthe principle that all
doubts shouldbe construed to its benefit.
Finally, petitioner submits that the ruling in the Elisco Tool casecannot apply to
his case because the car plan subject of the said case involved a car loan,
which his car plan benefit was not; it was part of his compensation package, and
the vehicle was an important component of his work which required constant
and uninterrupted mobility. Petitioner claims that the car plan was in fact more
beneficial to Mekeni than to him; besides, he did not choose to avail of it, as it
was simply imposed upon him. He concludes that it is only just that his
payments should be refunded and returned to him.
Petitioner thus prays for the reversal of the assailed CA Decision and
Resolution, and that the Court reinstate the NLRCs February 27, 2009 Decision.
Respondents Arguments
In its Comment, Mekeni argues that the Petition does not raise questions of
law, but merely of fact, which thus requires the Court to review anew issues
already passed upon by the CA an unauthorized exercise given that the
Supreme Court is not a trier of facts, nor is it its function to analyze or weigh the
evidence of the parties all over again. It adds that the issue regarding the car
plan and the conclusions of the CA drawn from the evidence on record are
questions of fact.
22

23

Mekeni asserts further that the service vehicle was merely a loan which had to
be paid through the monthly salary deductions.If it is not allowed to recover on
the loan, this would constitute unjust enrichment on the part of petitioner.
Our Ruling
The Petition is partially granted.
To begin with, the Court notes that Mekeni did not file a similar petition
questioning the CA Decision; thus, it is deemed to have accepted what was
decreed. The only issue that must be resolved in this Petition, then, is whether
petitioner is entitled to a refund of all the amounts applied to the cost of the

service vehicle under the car plan.

When the conclusions of the CA are grounded entirely on speculation, surmises
and conjectures, or when the inferences made by it are manifestly mistaken or
absurd, its findings are subject to review by this Court.
24

From the evidence on record, it is seen that the Mekeni car plan offered to
petitioner was subject to no other term or condition than that Mekeni shall cover
one-half of its value, and petitioner shall in turn pay the other half through
deductions from his monthly salary.Mekeni has not shown, by documentary
evidence or otherwise, that there are other terms and conditions governing its
car plan agreement with petitioner. There is no evidence to suggest that if
petitioner failed to completely cover one-half of the cost of the vehicle, then all
the deductions from his salary going to the cost of the vehicle will be treated as
rentals for his use thereof while working with Mekeni, and shall not be refunded.
Indeed, there is no such stipulation or arrangement between them. Thus, the
CAs reliance on Elisco Tool is without basis, and its conclusions arrived at in the
questioned decision are manifestly mistaken. To repeat what was said in Elisco
Tool
First. Petitioner does not deny that private respondent Rolando Lantan acquired
the vehicle in question under a car plan for executives of the Elizalde group of
companies. Under a typical car plan, the company advances the purchase price
of a car to be paid back by the employee through monthly deductions from his
salary. The company retains ownership of the motor vehicle until it shall have
been fully paid for. However, retention of registration of the car in the companys
name is only a form of a lien on the vehicle in the event that the employee would
abscond before he has fully paid for it. There are also stipulations in car plan
agreements to the effect that should the employment of the employee
concerned be terminated before all installments are fully paid, the vehicle will be
taken by the employer and all installments paid shall be considered rentals per
agreement. (Emphasis supplied)
25

It was made clear in the above pronouncement that installments made on the
car plan may be treated as rentals only when there is an express stipulation in
the car plan agreement to such effect. It was therefore patent error for the
appellate court to assume that, even in the absence of express stipulation,
petitioners payments on the car plan may be considered as rentals which need
not be returned.
Indeed, the Court cannot allow that payments made on the car plan should be
forfeited by Mekeni and treated simply as rentals for petitioners use of the

company service vehicle. Nor may they be retained by it as purported loan

payments, as it would have this Court believe. In the first place, there is
precisely no stipulation to such effect in their agreement. Secondly, it may not be
said that the car plan arrangement between the parties was a benefit that the
petitioner enjoyed; on the contrary, it wasan absolute necessity in Mekenis
business operations, which benefit edit to the fullest extent: without the service
vehicle, petitioner would have been unable to rapidly cover the vast sales
territory assigned to him, and sales or marketing of Mekenis products could not
have been booked or made fast enough to move Mekenis inventory. Poor sales,
inability to market Mekenis products, a high rate of product spoil age resulting
from stagnant inventory, and poor monitoring of the sales territory are the
necessary consequences of lack of mobility. Without a service vehicle, petitioner
would have been placed at the mercy of inefficient and unreliable public
transportation; his official schedule would have been dependent on the arrival
and departure times of buses or jeeps, not to mention the availability of seats in
them. Clearly, without a service vehicle, Mekenis business could only prosper at
a snails pace, if not completely paralyzed. Its cost of doing business would be
higher as well. The Court expressed just such a view in the past. Thus
In the case at bar, the disallowance of the subject car plan benefits would
hamper the officials in the performance of their functions to promote and
develop trade which requires mobility in the performance of official business.
Indeed, the car plan benefits are supportive of the implementation of the
objectives and mission of the agency relative to the nature of its operation and
responsive to the exigencies of the service. (Emphasis supplied) Any benefit or
privilege enjoyed by petitioner from using the service vehicle was merely
incidental and insignificant, because for the most part the vehicle was under
Mekenis control and supervision. Free and complete disposal is given to the
petitioner only after the vehicles cost is covered or paid in full. Until then, the
vehicle remains at the beck and call of Mekeni. Given the vast territory petitioner
had to cover to be able to perform his work effectively and generate business for
his employer, the service vehicle was an absolute necessity, or else Mekenis
business would suffer adversely. Thus, it is clear that while petitioner was paying
for half of the vehicles value, Mekeni was reaping the full benefits from the use
thereof.
26

In light of the foregoing, it is unfair to deny petitioner a refund of all his

contributions to the car plan. Under Article 22 of the Civil Code, "[e]very person
who through an act of performance by another, or any other means, acquires or
comes into possession of something at the expense of the latter without just or
legal ground, shall return the same to him." Article 214227of the same Code
likewise clarifies that there are certain lawful, voluntary and unilateral acts which

give rise to the juridical relation of quasi-contract, to the end that no one shall be
unjustly enriched or benefited at the expense of another. In the absence of
specific terms and conditions governing the car plan arrangement between the
petitioner and Mekeni, a quasi-contractual relation was created between them.
Consequently, Mekeni may not enrich itself by charging petitioner for the use of
its vehicle which is otherwise absolutely necessaryto the full and effective
promotion of its business. It may not, under the claim that petitioners payments
constitute rents for the use of the company vehicle, refuse to refund what
petitioner had paid, for the reasons that the car plan did not carry such a
condition; the subject vehicle is an old car that is substantially, if not fully,
depreciated; the car plan arrangement benefited Mekeni for the most part; and
any personal benefit obtained by petitioner from using the vehicle was merely
incidental.
Conversely, petitioner cannot recover the monetary value of Mekenis
counterpart contribution to the cost of the vehicle; that is not property or money
that belongs to him, nor was it intended to be given to him in lieu of the car plan.
In other words, Mekenis share of the vehicles cost was not part of petitioners
compensation package. To start with, the vehicle is an asset that belonged to
Mekeni. Just as Mekeni is unjustly enriched by failing to refund petitioners
payments, so should petitioner not be awarded the value of Mekenis counter
part contribution to the car plan, as this would unjustly enrich him at Mekenis
expense.
There is unjust enrichment ''when a person unjustly retains a benefit to the loss
of another, or when a person retains money or property of another against the
fundamental principles of justice, equity and good conscience." The principle of
unjust enrichment requires two conditions: (1) that a person is benefited without
a valid basis or justification, and (2) that such benefit is derived at the expense
of another. The main objective of the principle against unjust enrichment is to
prevent one from enriching himself at the expense of another without just cause
or consideration. x x x
28

WHEREFORE, the Petition is GRANTED IN PART. The assailed January 27,

2010 Decision and April 23, 2010 Resolution of the Court of Appeals in CA-G.R.
SP No. 109550 are MODIFIED, in that respondent Mekeni Food Corporation is
hereby ordered to REFUND petitioner Antonio Locsin II's payments under the
car plan agreement in the total amount ofP112,500.00.
Thus, except for the counterpart or equivalent share of Mekeni Food
Corporation in the car plan agreement amounting to P112,500.00, which is
DELETED, the February 27, 2009 Decision of the National Labor Relations
Commission is affirmed in all respects.

SO ORDERED.
G.R. No. 178031
August 28, 2013
VIRGINIA M. VENZON, Petitioner,
vs.
RURAL BANK OF BUENAVISTA (AGUSAN DEL NORTE), INC., represented
by LOURDESITA E. PARAJES, Respondent.
DECISION
DEL CASTILLO, J.:
Before us is a Petition for Review on Certiorari1 questioning the December 14,
2006 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 01341-MIN
which dismissed the Petition in said case, as well as its May 7, 2007 Resolution 3
denying reconsideration thereof.
Factual Antecedents
On January 28, 2005, petitioner Virginia M. Venzon filed a Petition 4 to nullify
foreclosure proceedings and Tax Declaration Nos. 96-GR-06-003-7002-R and
96-GR-06-7003-R issued in the name of respondent Rural Bank of Buenavista
(Agusan del Norte), Inc. The case5 was docketed as Civil Case No. 5535 and
raffled to Branch 5 of the Regional Trial Court (RTC) of Butuan City. Petitioner
alleged that in 1983 she and her late spouse, George F. Venzon, Sr., obtained a
P5,000.00 loan from respondent against a mortgage on their house and lot in
Libertad, Butuan City, covered by Tax Declaration Nos. 28289 and 42710 issued
in their names, which were later on replaced with Tax Declaration Nos. 96 GR06-003-2884-R and 96 GR-06-003-2885-R; that she was able to pay P2,300.00,
thus leaving an outstanding balance of only P2,370.00; that sometime in March
1987, she offered to pay the said balance in full, but the latter refused to accept
payment, and instead shoved petitioner away from the bank premises; that in
March 1987, respondent foreclosed on the mortgage, and the property was sold
at auction for P6,472.76 to respondent, being the highest bidder; that the
foreclosure proceedings are null and void for lack of notice and publication of
the sale, lack of sheriffs final deed of sale and notice of redemption period; and
that she paid respondent P6,000.00 on October 9, 1995, as evidenced by
respondents Official Receipt No. 4108486 issued on October 9, 1995.
In its Answer with Counterclaims,7 respondent claimed that petitioner did not
make any payment on the loan; that petitioner never went to the bank in March
1987 to settle her obligations in full; that petitioner was not shoved and driven
away from its premises; that the foreclosure proceedings were regularly done
and all requirements were complied with; that a certificate of sale was issued by
the sheriff and duly recorded in the Registry of Deeds; that petitioners claim that

she paid P6,000.00 on October 9, 1995 is utterly false; that petitioners cause of
action has long prescribed as the case was filed only in 2005 or 18 years after
the foreclosure sale; and that petitioner is guilty of laches. Respondent
interposed its counterclaim for damages and attorneys fees as well.
In her Reply,8 petitioner insisted that the foreclosure proceedings were irregular
and that prescription and laches do not apply as the foreclosure proceedings are
null and void to begin with.
Ruling of the Regional Trial Court
On July 13, 2006, the trial court issued a Resolution 9 dismissing Civil Case No.
5535. It held that
The plaintiff, however, may have erroneously relied the [sic] mandatorily [sic]
requirement of the aforestated provision of law upon failure to consider that the
other party is a Rural Bank. Under the R.A. No. 720 as amended, (Rural Bank
Act) property worth exceeding P100,000.00 [sic] is exempt from the requirement
of publication. This may have been the reason why the foreclosure prosper [sic]
without the observance of the required publication. Moreover, neither in the said
applicable laws provide [sic] for the impairment of the extrajudicial foreclosure
and the subsequent sale to the public. The Court ruled in Bonnevie, et al. vs.
CA, et al. that Act No. 3135 as amended does not require personal notice to the
mortgagor. In the same view, lack of final demand or notice of redemption are
[sic] not considered indispensable requirements and failure to observe the same
does not render the extrajudicial foreclosure sale a nullity.10
In other words, the trial court meant that under the Rural Banks Act, the
foreclosure of mortgages covering loans granted by rural banks and executions
of judgments thereon involving real properties levied upon by a sheriff shall be
exempt from publication where the total amount of the loan, including interests
due and unpaid, does not exceed P10,000.00.11 Since petitioners outstanding
obligation amounted to just over P6,000.00 publication was not necessary.
Petitioner moved for reconsideration,12 but in the September 6, 2006
Resolution,13 the trial court denied the same.
Ruling of the Court of Appeals
Petitioner went up to the CA via an original Petition for Certiorari. 14 On
December 14, 2006, the CA issued the first assailed Resolution 15 dismissing the
Petition. It held that petitioners remedy should have been an appeal under Rule
41 of the Rules of Court since the July 13, 2006 Resolution is a final order of
dismissal. Petitioner received the Resolution denying her Motion for
Reconsideration on September 18, 2006;16 but she filed the Petition for Certiorari

on October 25, 2006 when she should have interposed an appeal on or before
October 3, 2006. Having done so, her Petition may not even be treated as an
appeal for the same was belatedly filed.
The CA added that the Petition does not provide a sufficient factual background
of the case as it merely alleges a chronology of the legal remedies she took
before the trial court which does not comply with the requirement under Section
3 of Rule 46.17
Petitioner moved for reconsideration18 by submitting a rewritten Petition.
However, in a Resolution dated May 7, 2007, the CA denied the same, hence
the present Petition.
Issues
Petitioner submits the following assignment of errors:
I
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS
REVERSIBLY ERRED IN DISMISSING THE PETITION FOR CERTIORARI
THEREBY PREVENTING THE COURT FROM FINDING OUT THAT ACTUALLY
NO EXTRAJUDICIAL FORECLOSURE WAS CONDUCTED BY THE OFFICE
OF THE PROVINCIAL SHERIFF ON PETITIONERS PROPERTY AT THE
INSTANCE OF THE PRIVATE RESPONDENT.
II
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS
REVERSIBLY ERRED IN NOT DISREGARDING TECHNICALITIES IN ORDER
TO ADMINISTER SUBSTANTIAL JUSTICE TO THE PETITIONER.19
Petitioners Arguments
Petitioner claims that no extrajudicial foreclosure proceedings ever took place,
citing a February 2, 2005 Certification issued by the Office of the Clerk of Court
of Butuan City stating that the record pertaining to the foreclosure proceedings
covering her property "could not be found in spite of diligent efforts to find the
same."20 And because no foreclosure proceedings took place, there could not
have been notice and publication of the sale, and no sheriffs certificate of sale.
For this reason, she claims that the CA erred in dismissing her case.
Petitioner adds that, technicalities aside, a Petition for Certiorari is available to
her in order to prevent the denial of her substantial rights. She also argues that
her payment to respondent of the amount of P6,000.00 in 1995 should be
considered as a valid redemption of her property.

Respondents Arguments
For its part, respondent merely validates the pronouncements of the CA by citing
and echoing the same, and holding petitioner to a strict observance of the rules
for perfecting an appeal within the reglementary period, as it claims they are
necessary for the orderly administration of justice, 21 as well as that which
requires that only questions of law may be raised in a Petition for Review on
Certiorari.
Our Ruling
The Court denies the Petition.
The Court finds no error in the CAs treatment of the Petition for Certiorari. The
trial courts July 13, 2006 Resolution dismissing the case was indeed to be
treated as a final order, disposing of the issue of publication and notice of the
foreclosure sale which is the very core of petitioners cause of action in Civil
Case No. 5535 and declaring the same to be unnecessary pursuant to the
Rural Banks Act, as petitioners outstanding obligation did not exceed
P10,000.00, and thus leaving petitioner without basis to maintain her case. This
constitutes a dismissal with the character of finality. As such, petitioner should
have availed of the remedy under Rule 41, and not Rule 65.
The Court is not prepared to be lenient in petitioners case, either. Civil Case No.
5535 was instituted only in 2005, while the questioned foreclosure proceedings
took place way back in 1987. Petitioners long inaction and commission of a
procedural faux pas certainly cannot earn the sympathy of the Court.
Nor can the Court grant the Petition on the mere allegation that no foreclosure
proceedings ever took place. The February 2, 2005 Certification issued by the
Office of the Clerk of Court of Butuan City to the effect that the record of the
foreclosure proceedings could not be found is not sufficient ground to invalidate
the proceedings taken. Petitioner herself attached the Sheriffs Certificate of
Sale22 as Annex "A" of her Petition in Civil Case No. 5535; this should belie the
claim that no record exists covering the foreclosure proceedings. Besides, if
petitioner insists that no foreclosure proceedings took place, then she should not
have filed an action to annul the same since there was no foreclosure to begin
with. She should have filed a different action.
However, petitioner is entitled to a return of the P6,000.00 she paid to
respondent in 1995. While this may not be validly considered as a redemption of
her property as the payment was made long after the redemption period
expired, respondent had no right to receive the amount. In its Answer with
Counterclaims in Civil Case No. 5535, respondent simply alleged therein that

10.
Defendant DENIES the allegations under paragraph 10 of the
petition for being utterly false, highly self-serving and patently speculative,
the truth being -- Assumption cannot be had that there was an alleged foreclosure of the then
property of the petitioner for the truth of the matter is that a foreclosure
proceeding was duly conducted, which fact remains undisputable for so many
years now.
Without necessarily admitting that payment of P6,000.00 was made, the same
however could hardly and could never be considered as redemption price for the
following reasons -- The redemption period had long lapsed when the payment of P6,000.00 was
allegedly made. Thus, there is no point talking about redemption price when the
redemption period had long been gone at the time the alleged payment was
made.
Even x x x granting, without conceding, that the amount of P6,000.00 was a
redemption price, said amount, however, could not constitute as a legal
redemption price since the same was not enough to cover the entire redemption
price as mandated by the rules and laws. 23 (Emphases supplied)
Interestingly, respondent did not deny being the issuer of Official Receipt No.
410848. Instead, it averred that petitioners payment to it of P6,000.00 was false
and self-serving, but in the same breath argued that, without necessarily
admitting that payment of P6,000.00 was made, the same cannot be considered
as redemption price.
By making such an ambiguous allegation in its Answer with Counterclaims,
respondent is deemed to have admitted receiving the amount of P6,000.00 from
petitioner as evidenced by Official Receipt No. 410848, which amount under the
circumstances it had no right to receive. "If an allegation is not specifically
denied or the denial is a negative pregnant, the allegation is deemed admitted." 24
"Where a fact is alleged with some qualifying or modifying language, and the
denial is conjunctive, a negative pregnant exists, and only the qualification or
modification is denied, while the fact itself is admitted." 25 "A denial in the form of
a negative pregnant is an ambiguous pleading, since it cannot be ascertained
whether it is the fact or only the qualification that is intended to be denied." 26
"Profession of ignorance about a fact which is patently and necessarily within
the pleader's knowledge, or means of knowing as ineffectual, is no denial at
all."27 In fine, respondent failed to refute petitioners claim of having paid the

amount of P6,000.00.
Since respondent was not entitled to receive the said amount, as it is deemed
fully paid from the foreclosure of petitioners property since its bid price at the
auction sale covered all that petitioner owed it by way of principal, interest,
attorneys fees and charges,28 it must return the same to petitioner. "If something
is received when there is no right to demand it, and it was unduly delivered
through mistake, the obligation to return it arises." 29 Moreover, pursuant to
Circular No. 799, series of 2013 of the Bangko Sentral ng Pilipinas which took
effect July 1, 2013, the amount of P6,000.00 shall earn interest at the rate of 6%
per annum computed from the filing of the Petition in Civil Case No. 5535 up to
its full satisfaction.
WHEREFORE, premises considered, the Petition is DENIED. The December
14, 2006 and May 7, 2007 Resolutions of the Court of Appeals in CA-G.R. SP
No. 01341-MIN are AFFIRMED.
However, respondent Rural Bank of Buenavista (Agusan del Norte), Inc. is
ORDERED to return to petitioner Virginia M. Venzon or her assigns the amount
of P6,000.00, with interest at the rate of 6% per annum computed from the filing
of the Petition in Civil Case No. 5535 up to its full satisfaction.
SO ORDERED.