Oblicon Cases Part II

THIRD DIVISION

[G.R. No. 177056. September 18, 2009.]

THE OFFICE OF THE SOLICITOR GENERAL, petitioner, vs.

AYALA LAND INCORPORATED, ROBINSON'S LAND
CORPORATION, SHANGRI-LA PLAZA CORPORATION and SM
PRIME HOLDINGS, INC., respondents.
DECISION
CHICO-NAZARIO, J : p
Before this Court is a Petition for Review on Certiorari, 1 under Rule 45

of the Revised Rules of Court, filed by petitioner Office of the Solicitor
General (OSG), seeking the reversal and setting aside of the Decision 2 dated
25 January 2007 of the Court of Appeals in CA-G.R. CV No. 76298, which
affirmed in toto the Joint Decision 3 dated 29 May 2002 of the Regional Trial
Court (RTC) of Makati City, Branch 138, in Civil Cases No. 00-1208 and No.
00-1210; and (2) the Resolution 4 dated 14 March 2007 of the appellate
court in the same case which denied the Motion for Reconsideration of the
OSG. The RTC adjudged that respondents Ayala Land Incorporated (Ayala
Land), Robinsons Land Corporation (Robinsons), Shangri-la Plaza Corporation
(Shangri-la), and SM Prime Holdings, Inc. (SM Prime) could not be obliged to
provide free parking spaces in their malls to their patrons and the general
public.
Respondents Ayala Land, Robinsons, and Shangri-la maintain and
operate shopping malls in various locations in Metro Manila. Respondent SM
Prime constructs, operates, and leases out commercial buildings and other
structures, among which, are SM City, Manila; SM Centerpoint, Sta. Mesa,
Manila; SM City, North Avenue, Quezon City; and SM Southmall, Las Piñas.
The shopping malls operated or leased out by respondents have
parking facilities for all kinds of motor vehicles, either by way of parking
spaces inside the mall buildings or in separate buildings and/or adjacent lots
that are solely devoted for use as parking spaces. Respondents Ayala Land,
Robinsons, and SM Prime spent for the construction of their own parking
facilities. Respondent Shangri-la is renting its parking facilities, consisting of
land and building specifically used as parking spaces, which were
constructed for the lessor's account.
Respondents expend for the maintenance and administration of their
respective parking facilities. They provide security personnel to protect the
vehicles parked in their parking facilities and maintain order within the area.
In turn, they collect the following parking fees from the persons making use
of their parking facilities, regardless of whether said persons are mall
patrons or not:
CD Technologies Asia, Inc. © 2021 cdasiaonline.com
Page 1 of 18
Respondent Parking Fees
On weekdays, P25.00 for the first

Ayala Land
four
hours and P10.00 for every
succeeding
hour; on weekends, flat rate of
P25.00 per
day
P20.00 for the first three hours and

Robinsons
P10.00
for every succeeding hour
Shangri-la Flat rate of P30.00 per day

P10.00 to P20.00 (depending on
SM Prime
whether
the parking space is outdoors or
indoors)
for the first three hours and 59
minutes,
and P10.00 for every succeeding
hour or
fraction thereof
The parking tickets or cards issued by respondents to vehicle owners contain

the stipulation that respondents shall not be responsible for any loss or
damage to the vehicles parked in respondents' parking facilities.
In 1999, the Senate Committees on Trade and Commerce and on
Justice and Human Rights conducted a joint investigation for the following
purposes: (1) to inquire into the legality of the prevalent practice of shopping
malls of charging parking fees; (2) assuming arguendo that the collection of
parking fees was legally authorized, to find out the basis and reasonableness
of the parking rates charged by shopping malls; and (3) to determine the
legality of the policy of shopping malls of denying liability in cases of theft,
robbery, or carnapping, by invoking the waiver clause at the back of the
parking tickets. Said Senate Committees invited the top executives of
respondents, who operate the major malls in the country; the officials from
the Department of Trade and Industry (DTI), Department of Public Works and
Highways (DPWH), Metro Manila Development Authority (MMDA), and other
local government officials; and the Philippine Motorists Association (PMA) as
representative of the consumers' group.
After three public hearings held on 30 September, 3 November, and 1
December 1999, the afore-mentioned Senate Committees jointly issued
Senate Committee Report No. 225 5 on 2 May 2000, in which they
concluded:
In view of the foregoing, the Committees find that the collection
of parking fees by shopping malls is contrary to the National Building
Code and is therefor [sic ] illegal. While it is true that the Code merely
Page 2 of 18
requires malls to provide parking spaces, without specifying whether it
is free or not, both Committees believe that the reasonable and logical
interpretation of the Code is that the parking spaces are for free. This
interpretation is not only reasonable and logical but finds support in
the actual practice in other countries like the United States of America
where parking spaces owned and operated by mall owners are free of
charge.
Figuratively speaking, the Code has "expropriated" the land for

parking — something similar to the subdivision law which require
developers to devote so much of the land area for parks.
Moreover, Article II of R.A. No. 9734 (Consumer Act of the
Philippines) provides that "it is the policy of the State to protect the
interest of the consumers, promote the general welfare and establish
standards of conduct for business and industry". Obviously, a contrary
interpretation (i.e., justifying the collection of parking fees) would be
going against the declared policy of R.A. 7394.
Section 201 of the National Building Code gives the responsibility

for the administration and enforcement of the provisions of the Code,
including the imposition of penalties for administrative violations
thereof to the Secretary of Public Works. This set up, however, is not
being carried out in reality.
In the position paper submitted by the Metropolitan Manila

Development Authority (MMDA), its chairman, Jejomar C. Binay,
accurately pointed out that the Secretary of the DPWH is responsible
for the implementation/enforcement of the National Building Code.
After the enactment of the Local Government Code of 1991, the local
government units (LGU's) were tasked to discharge the regulatory
powers of the DPWH. Hence, in the local level, the Building Officials
enforce all rules/regulations formulated by the DPWH relative to all
building plans, specifications and designs including parking space
requirements. There is, however, no single national department or
agency directly tasked to supervise the enforcement of the provisions
of the Code on parking, notwithstanding the national character of the
law. 6
Senate Committee Report No. 225, thus, contained the following

recommendations:
In light of the foregoing, the Committees on Trade and
Commerce and Justice and Human Rights hereby recommend the
following:
1. The Office of the Solicitor General should institute the necessary

action to enjoin the collection of parking fees as well as to
enforce the penal sanction provisions of the National Building
Code. The Office of the Solicitor General should likewise study
how refund can be exacted from mall owners who continue to
collect parking fees.
2. The Department of Trade and Industry pursuant to the provisions
of R.A. No. 7394, otherwise known as the Consumer Act of the
Philippines should enforce the provisions of the Code relative to
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parking. Towards this end, the DTI should formulate the
necessary implementing rules and regulations on parking in
shopping malls, with prior consultations with the local
government units where these are located. Furthermore, the DTI,
in coordination with the DPWH, should be empowered to regulate
and supervise the construction and maintenance of parking
establishments.
3. Finally, Congress should amend and update the National Building
Code to expressly prohibit shopping malls from collecting parking
fees by at the same time, prohibit them from invoking the waiver
of liability. 7
Respondent SM Prime thereafter received information that, pursuant to

Senate Committee Report No. 225, the DPWH Secretary and the local
building officials of Manila, Quezon City, and Las Piñas intended to institute,
through the OSG, an action to enjoin respondent SM Prime and similar
establishments from collecting parking fees, and to impose upon said
establishments penal sanctions under Presidential Decree No. 1096,
otherwise known as the National Building Code of the Philippines (National
Building Code), and its Implementing Rules and Regulations (IRR). With the
threatened action against it, respondent SM Prime filed, on 3 October 2000,
a Petition for Declaratory Relief 8 under Rule 63 of the Revised Rules of
Court, against the DPWH Secretary and local building officials of Manila,
Quezon City, and Las Piñas. Said Petition was docketed as Civil Case No. 00-
1208 and assigned to the RTC of Makati City, Branch 138, presided over by
Judge Sixto Marella, Jr. (Judge Marella). In its Petition, respondent SM Prime
prayed for judgment:
a) Declaring Rule XIX of the Implementing Rules an d
Regulations of the National Building Code as ultra vires, hence,
unconstitutional and void;
b) Declaring [herein respondent SM Prime]'s clear legal right
to lease parking spaces appurtenant to its department stores, malls,
shopping centers and other commercial establishments; and
c) Declaring the National Building Code of the Philippines
Implementing Rules and Regulations as ineffective, not having been
published once a week for three (3) consecutive weeks in a newspaper
of general circulation, as prescribed by Section 211 of Presidential
Decree No. 1096.
[Respondent SM Prime] further prays for such other reliefs as

may be deemed just and equitable under the premises. 9
The very next day, 4 October 2000, the OSG filed a Petition for
Declaratory Relief and Injunction (with Prayer for Temporary Restraining
Order and Writ of Preliminary Injunction) 10 against respondents. This
Petition was docketed as Civil Case No. 00-1210 and raffled to the RTC of
Makati, Branch 135, presided over by Judge Francisco B. Ibay (Judge Ibay).
Petitioner prayed that the RTC:
1. After summary hearing, a temporary restraining order and
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a writ of preliminary injunction be issued restraining respondents from
collecting parking fees from their customers; and
2. After hearing, judgment be rendered declaring that the
practice of respondents in charging parking fees is violative of the
National Building Code and its Implementing Rules and Regulations
and is therefore invalid, and making permanent any injunctive writ
issued in this case.
Other reliefs just and equitable under the premises are likewise
prayed for. 11
On 23 October 2000, Judge Ibay of the RTC of Makati City, Branch 135,
issued an Order consolidating Civil Case No. 00-1210 with Civil Case No. 00-
1208 pending before Judge Marella of RTC of Makati, Branch 138.
As a result of the pre-trial conference held on the morning of 8 August
2001, the RTC issued a Pre-Trial Order 12 of even date which limited the
issues to be resolved in Civil Cases No. 00-1208 and No. 00-1210 to the
following:
1. Capacity of the plaintiff [OSG] in Civil Case No. 00-1210 to
institute the present proceedings and relative thereto whether the
controversy in the collection of parking fees by mall owners is a matter
of public welfare.
2. Whether declaratory relief is proper.
3. Whether respondent Ayala Land, Robinsons, Shangri-La
and SM Prime are obligated to provide parking spaces in their malls for
the use of their patrons or the public in general, free of charge.
4. Entitlement of the parties of [sic ] award of damages. 13
On 29 May 2002, the RTC rendered its Joint Decision in Civil Cases No.
00-1208 and No. 00-1210.
The RTC resolved the first two issues affirmatively. It ruled that the
OSG can initiate Civil Case No. 00-1210 under Presidential Decree No. 478
and the Administrative Code of 1987. 14 It also found that all the requisites
for an action for declaratory relief were present, to wit:
The requisites for an action for declaratory relief are: (a) there is
a justiciable controversy; (b) the controversy is between persons
whose interests are adverse; (c) the party seeking the relief has a legal
interest in the controversy; and (d) the issue involved is ripe for judicial
determination.
SM, the petitioner in Civil Case No. 001-1208 [sic ] is a mall

operator who stands to be affected directly by the position taken by
the government officials sued namely the Secretary of Public Highways
and the Building Officials of the local government units where it
operates shopping malls. The OSG on the other hand acts on a matter
of public interest and has taken a position adverse to that of the mall
owners whom it sued. The construction of new and bigger malls has
been announced, a matter which the Court can take judicial notice and
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the unsettled issue of whether mall operators should provide parking
facilities, free of charge needs to be resolved. 15
As to the third and most contentious issue, the RTC pronounced that:
The Building Code, which is the enabling law and the
Implementing Rules and Regulations do not impose that parking
spaces shall be provided by the mall owners free of charge. Absent
such directive[,] Ayala Land, Robinsons, Shangri-la and SM [Prime] are
under no obligation to provide them for free. Article 1158 of the Civil
Code is clear:
"Obligations derived from law are not presumed. Only

those expressly determined in this Code or in special laws are
demandable and shall be regulated by the precepts of the law
which establishes them; and as to what has not been foreseen,
by the provisions of this Book (1090).["]
xxx xxx xxx

The provision on ratios of parking slots to several variables, like
shopping floor area or customer area found in Rule XIX of the
Implementing Rules and Regulations cannot be construed as a
directive to provide free parking spaces, because the enabling law, the
Building Code does not so provide. . . . .
To compel Ayala Land, Robinsons, Shangri-La and SM [Prime] to
provide parking spaces for free can be considered as an unlawful
taking of property right without just compensation.
Parking spaces in shopping malls are privately owned and for

their use, the mall operators collect fees. The legal relationship could
be either lease or deposit. In either case[,] the mall owners have the
right to collect money which translates into income. Should parking
spaces be made free, this right of mall owners shall be gone. This,
without just compensation. Further, loss of effective control over their
property will ensue which is frowned upon by law.
The presence of parking spaces can be viewed in another light.
They can be looked at as necessary facilities to entice the public to
increase patronage of their malls because without parking spaces,
going to their malls will be inconvenient. These are[,] however[,]
business considerations which mall operators will have to decide for
themselves. They are not sufficient to justify a legal conclusion, as the
OSG would like the Court to adopt that it is the obligation of the mall
owners to provide parking spaces for free. 16
The RTC then held that there was no sufficient evidence to justify any
award for damages.
The RTC finally decreed in its 29 May 2002 Joint Decision in Civil Cases
No. 00-1208 and No. 00-1210 that:
FOR THE REASONS GIVEN, the Court declares that Ayala Land[,]
Inc., Robinsons Land Corporation, Shangri-la Plaza Corporation and SM
Prime Holdings[,] Inc. are not obligated to provide parking spaces in
their malls for the use of their patrons or public in general, free of
Page 6 of 18
charge.
All counterclaims in Civil Case No. 00-1210 are dismissed.

No pronouncement as to costs. 17
CA-G.R. CV No. 76298 involved the separate appeals of the OSG18 and
respondent SM Prime 19 filed with the Court of Appeals. The sole assignment
of error of the OSG in its Appellant's Brief was:
THE TRIAL COURT ERRED IN HOLDING THAT THE NATI ONAL
BUILDING CODE DID NOT INTEND MALL PARKING SPACES TO BE FREE
OF CHARGE[;]20
while the four errors assigned by respondent SM Prime in its Appellant's Brief
were:
I
THE TRIAL COURT ERRED IN FAILING TO DECLARE RULE XIX OF THE
IMPLEMENTING RULES AS HAVING BEEN ENACTED ULTRA VIRES,
HENCE, UNCONSTITUTIONAL AND VOID.
II
THE TRIAL COURT ERRED IN FAILING TO DECLARE THE IMPLEMENTING
RULES INEFFECTIVE FOR NOT HAVING BEEN PUBLISHED AS REQUIRED
BY LAW.
III
THE TRIAL COURT ERRED IN FAILING TO DISMISS THE OSG'S PETITION

FOR DECLARATORY RELIEF AND INJUNCTION FOR FAILURE TO EXHAUST
ADMINISTRATIVE REMEDIES.
IV
THE TRIAL COURT ERRED IN FAILING TO DECLARE THAT THE OSG HAS
NO LEGAL CAPACITY TO SUE AND/OR THAT IT IS NOT A REAL PARTY-IN-
INTEREST IN THE INSTANT CASE. 21
Respondent Robinsons filed a Motion to Dismiss Appeal of the OSG on

the ground that the lone issue raised therein involved a pure question of law,
not reviewable by the Court of Appeals.
The Court of Appeals promulgated its Decision in CA-G.R. CV No. 76298
on 25 January 2007. The appellate court agreed with respondent Robinsons
that the appeal of the OSG should suffer the fate of dismissal, since "the
issue on whether or not the National Building Code and its implementing
rules require shopping mall operators to provide parking facilities to the
public for free" was evidently a question of law. Even so, since CA-G.R. CV
No. 76298 also included the appeal of respondent SM Prime, which raised
issues worthy of consideration, and in order to satisfy the demands of
substantial justice, the Court of Appeals proceeded to rule on the merits of
the case.
In its Decision, the Court of Appeals affirmed the capacity of the OSG to
Page 7 of 18
initiate Civil Case No. 00-1210 before the RTC as the legal representative of
the government, 22 and as the one deputized by the Senate of the Republic
of the Philippines through Senate Committee Report No. 225.
The Court of Appeals rejected the contention of respondent SM Prime
that the OSG failed to exhaust administrative remedies. The appellate court
explained that an administrative review is not a condition precedent to
judicial relief where the question in dispute is purely a legal one, and nothing
of an administrative nature is to be or can be done.
The Court of Appeals likewise refused to rule on the validity of the IRR
of the National Building Code, as such issue was not among those the parties
had agreed to be resolved by the RTC during the pre-trial conference for Civil
Cases No. 00-1208 and No. 00-1210. Issues cannot be raised for the first
time on appeal. Furthermore, the appellate court found that the controversy
could be settled on other grounds, without touching on the issue of the
validity of the IRR. It referred to the settled rule that courts should refrain
from passing upon the constitutionality of a law or implementing rules,
because of the principle that bars judicial inquiry into a constitutional
question, unless the resolution thereof is indispensable to the determination
of the case.
Lastly, the Court of Appeals declared that Section 803 of the National
Building Code and Rule XIX of the IRR were clear and needed no further
construction. Said provisions were only intended to control the occupancy or
congestion of areas and structures. In the absence of any express and clear
provision of law, respondents could not be obliged and expected to provide
parking slots free of charge.
The fallo of the 25 January 2007 Decision of the Court of Appeals
reads:
WHEREFORE, premises considered, the instant appeals are
DENIED. Accordingly, appealed Decision is hereby AFFIRMED in
toto. 23
In its Resolution issued on 14 March 2007, the Court of Appeals denied
the Motion for Reconsideration of the OSG, finding that the grounds relied
upon by the latter had already been carefully considered, evaluated, and
passed upon by the appellate court, and there was no strong and cogent
reason to modify much less reverse the assailed judgment.
The OSG now comes before this Court, via the instant Petition for
Review, with a single assignment of error:
THE COURT OF APPEALS SERIOUSLY ERRED IN AFFIRMING THE RULING
OF THE LOWER COURT THAT RESPONDENTS ARE NOT OBLIGED TO
PROVIDE FREE PARKING SPACES TO THEIR CUSTOMERS OR THE
PUBLIC. 24
The OSG argues that respondents are mandated to provide free

parking by Section 803 of the National Building Code and Rule XIX of the IRR.
According to Section 803 of the National Building Code:
Page 8 of 18
SECTION 803. Percentage of Site Occupancy. —
(a) Maximum site occupancy shall be governed by the use,
type of construction, and height of the building and the use, area,
nature, and location of the site; and subject to the provisions of the
local zoning requirements and in accordance with the rules and
regulations promulgated by the Secretary.
In connection therewith, Rule XIX of the old IRR, 25 provides:

RULE XIX — PARKING AND LOADING SPACE
REQUIREMENTS
Pursuant to Section 803 of the National Building Code (PD 1096)

providing for maximum site occupancy, the following provisions on
parking and loading space requirements shall be observed:
1. The parking space ratings listed below are minimum off-
street requirements for specific uses/occupancies for
buildings/structures:
1.1 The size of an average automobile parking slot shall
be computed as 2.4 meters by 5.00 meters for
perpendicular or diagonal parking, 2.00 meters by
6.00 meters for parallel parking. A truck or bus
parking/loading slot shall be computed at a minimum
of 3.60 meters by 12.00 meters. The parking slot
shall be drawn to scale and the total number of which
shall be indicated on the plans and specified whether
or not parking accommodations, are attendant-
managed. (See Section 2 for computation of parking
requirements).
xxx xxx xxx
1.7 Neighborhood shopping center — 1 slot/100 sq. m.
of shopping floor area
The OSG avers that the aforequoted provisions should be read

together with Section 102 of the National Building Code, which declares:
SECTION 102. Declaration of Policy. —
It is hereby declared to be the policy of the State to safeguard

life, health, property, and public welfare, consistent with the principles
of sound environmental management and control; and to this end,
make it the purpose of this Code to provide for all buildings and
structures, a framework of minimum standards and requirements to
regulate and control their location, site, design, quality of materials,
construction, use, occupancy, and maintenance.
The requirement of free-of-charge parking, the OSG argues, greatly

contributes to the aim of safeguarding "life, health, property, and public
welfare, consistent with the principles of sound environmental management
and control". Adequate parking spaces would contribute greatly to
alleviating traffic congestion when complemented by quick and easy access
Page 9 of 18
thereto because of free-charge parking. Moreover, the power to regulate and
control the use, occupancy, and maintenance of buildings and structures
carries with it the power to impose fees and, conversely, to control —
partially or, as in this case, absolutely — the imposition of such fees.
The Court finds no merit in the present Petition.
The explicit directive of the afore-quoted statutory and regulatory
provisions, garnered from a plain reading thereof, is that respondents, as
operators/lessors of neighborhood shopping centers, should provide parking
and loading spaces, in accordance with the minimum ratio of one slot per
100 square meters of shopping floor area. There is nothing therein pertaining
to the collection (or non-collection) of parking fees by respondents. In fact,
the term "parking fees" cannot even be found at all in the entire National
Building Code and its IRR.
Statutory construction has it that if a statute is clear and unequivocal,
it must be given its literal meaning and applied without any attempt at
interpretation. 26 Since Section 803 of the National Building Code and Rule
XIX of its IRR do not mention parking fees, then simply, said provisions do
not regulate the collection of the same. The RTC and the Court of Appeals
correctly applied Article 1158 of the New Civil Code, which states:
Art. 1158. Obligations derived from law are not presumed.
Only those expressly determined in this Code or in special laws are
demandable, and shall be regulated by the precepts of the law which
establishes them; and as to what has not been foreseen, by the
provisions of this Book. (Emphasis ours.)
Hence, in order to bring the matter of parking fees within the ambit of
the National Building Code and its IRR, the OSG had to resort to specious and
feeble argumentation, in which the Court cannot concur.
The OSG cannot rely on Section 102 of the National Building Code to
expand the coverage of Section 803 of the same Code and Rule XIX of the
IRR, so as to include the regulation of parking fees. The OSG limits its
citation to the first part of Section 102 of the National Building Code
declaring the policy of the State "to safeguard life, health, property, and
public welfare, consistent with the principles of sound environmental
management and control"; but totally ignores the second part of said
provision, which reads, "and to this end, make it the purpose of this Code to
provide for all buildings and structures, a framework of minimum
standards and requirements to regulate and control their location, site,
design, quality of materials, construction, use, occupancy, and
maintenance". While the first part of Section 102 of the National Building
Code lays down the State policy, it is the second part thereof that explains
how said policy shall be carried out in the Code. Section 102 of the National
Building Code is not an all-encompassing grant of regulatory power to the
DPWH Secretary and local building officials in the name of life, health,
property, and public welfare. On the contrary, it limits the regulatory power
of said officials to ensuring that the minimum standards and requirements
for all buildings and structures, as set forth in the National Building Code, are
Page 10 of 18
complied with.
Consequently, the OSG cannot claim that in addition to fixing the
minimum requirements for parking spaces for buildings, Rule XIX of the IRR
also mandates that such parking spaces be provided by building owners free
of charge. If Rule XIX is not covered by the enabling law, then it cannot be
added to or included in the implementing rules. The rule-making power of
administrative agencies must be confined to details for regulating the mode
or proceedings to carry into effect the law as it has been enacted, and it
cannot be extended to amend or expand the statutory requirements or to
embrace matters not covered by the statute. Administrative regulations
must always be in harmony with the provisions of the law because any
resulting discrepancy between the two will always be resolved in favor of the
basic law. 27
From the RTC all the way to this Court, the OSG repeatedly referred to
Republic v. Gonzales 28 and City of Ozamis v. Lumapas 29 to support its
position that the State has the power to regulate parking spaces to promote
the health, safety, and welfare of the public; and it is by virtue of said power
that respondents may be required to provide free parking facilities. The OSG,
though, failed to consider the substantial differences in the factual and legal
backgrounds of these two cases from those of the Petition at bar.
In Republic, the Municipality of Malabon sought to eject the occupants
of two parcels of land of the public domain to give way to a road-widening
project. It was in this context that the Court pronounced:
Indiscriminate parking along F. Sevilla Boulevard and other main
thoroughfares was prevalent; this, of course, caused the build up of
traffic in the surrounding area to the great discomfort and
inconvenience of the public who use the streets. Traffic congestion
constitutes a threat to the health, welfare, safety and convenience of
the people and it can only be substantially relieved by widening streets
and providing adequate parking areas.
The Court, in City of Ozamis, declared that the City had been clothed
with full power to control and regulate its streets for the purpose of
promoting public health, safety and welfare. The City can regulate the time,
place, and manner of parking in the streets and public places; and charge
minimal fees for the street parking to cover the expenses for supervision,
inspection and control, to ensure the smooth flow of traffic in the environs of
the public market, and for the safety and convenience of the public.
Republic and City of Ozamis involved parking in the local streets; in
contrast, the present case deals with privately owned parking facilities
available for use by the general public. In Republic and City of Ozamis, the
concerned local governments regulated parking pursuant to their power to
control and regulate their streets; in the instant case, the DPWH Secretary
and local building officials regulate parking pursuant to their authority to
ensure compliance with the minimum standards and requirements under the
National Building Code and its IRR. With the difference in subject matters
and the bases for the regulatory powers being invoked, Republic and City of
Page 11 of 18
Ozamis do not constitute precedents for this case.
Indeed, Republic and City of Ozamis both contain pronouncements that
weaken the position of the OSG in the case at bar. In Republic, the Court,
instead of placing the burden on private persons to provide parking facilities
to the general public, mentioned the trend in other jurisdictions wherein the
municipal governments themselves took the initiative to make more parking
spaces available so as to alleviate the traffic problems, thus:
Under the Land Transportation and Traffic Code, parking in
designated areas along public streets or highways is allowed which
clearly indicates that provision for parking spaces serves a useful
purpose. In other jurisdictions where traffic is at least as voluminous as
here, the provision by municipal governments of parking space is not
limited to parking along public streets or highways. There has been a
marked trend to build off-street parking facilities with the view to
removing parked cars from the streets. While the provision of off-street
parking facilities or carparks has been commonly undertaken by
private enterprise, municipal governments have been constrained to
put up carparks in response to public necessity where private
enterprise had failed to keep up with the growing public demand.
American courts have upheld the right of municipal governments to
construct off-street parking facilities as clearly redounding to the public
benefit. 30
I n City of Ozamis, the Court authorized the collection by the City of

minimal fees for the parking of vehicles along the streets: so why then
should the Court now preclude respondents from collecting from the public a
fee for the use of the mall parking facilities? Undoubtedly, respondents also
incur expenses in the maintenance and operation of the mall parking
facilities, such as electric consumption, compensation for parking attendants
and security, and upkeep of the physical structures.
It is not sufficient for the OSG to claim that "the power to regulate and
control the use, occupancy, and maintenance of buildings and structures
carries with it the power to impose fees and, conversely, to control, partially
or, as in this case, absolutely, the imposition of such fees". Firstly, the fees
within the power of regulatory agencies to impose are regulatory fees. It
has been settled law in this jurisdiction that this broad and all-compassing
governmental competence to restrict rights of liberty and property carries
with it the undeniable power to collect a regulatory fee. It looks to the
enactment of specific measures that govern the relations not only as
between individuals but also as between private parties and the political
society. 31 True, if the regulatory agencies have the power to impose
regulatory fees, then conversely, they also have the power to remove the
same. Even so, it is worthy to note that the present case does not involve
the imposition by the DPWH Secretary and local building officials of
regulatory fees upon respondents; but the collection by respondents of
parking fees from persons who use the mall parking facilities. Secondly,
assuming arguendo that the DPWH Secretary and local building officials do
have regulatory powers over the collection of parking fees for the use of
privately owned parking facilities, they cannot allow or prohibit such
Page 12 of 18
collection arbitrarily or whimsically. Whether allowing or prohibiting the
collection of such parking fees, the action of the DPWH Secretary and local
building officials must pass the test of classic reasonableness and propriety
of the measures or means in the promotion of the ends sought to be
accomplished. 32
Keeping in mind the aforementioned test of reasonableness and
propriety of measures or means, the Court notes that Section 803 of the
National Building Code falls under Chapter 8 on Light and Ventilation .
Evidently, the Code deems it necessary to regulate site occupancy to ensure
that there is proper lighting and ventilation in every building. Pursuant
thereto, Rule XIX of the IRR requires that a building, depending on its
specific use and/or floor area, should provide a minimum number of parking
spaces. The Court, however, fails to see the connection between regulating
site occupancy to ensure proper light and ventilation in every building vis-à-
vis regulating the collection by building owners of fees for the use of their
parking spaces. Contrary to the averment of the OSG, the former does not
necessarily include or imply the latter. It totally escapes this Court how
lighting and ventilation conditions at the malls could be affected by the fact
that parking facilities thereat are free or paid for.
The OSG attempts to provide the missing link by arguing that:
Under Section 803 of the National Building Code, complimentary
parking spaces are required to enhance light and ventilation, that is, to
avoid traffic congestion in areas surrounding the building, which
certainly affects the ventilation within the building itself, which
otherwise, the annexed parking spaces would have served. Free-of-
charge parking avoids traffic congestion by ensuring quick and easy
access of legitimate shoppers to off-street parking spaces annexed to
the malls, and thereby removing the vehicles of these legitimate
shoppers off the busy streets near the commercial establishments. 33
The Court is unconvinced. The National Building Code regulates

buildings, by setting the minimum specifications and requirements for the
same. It does not concern itself with traffic congestion in areas
surrounding the building. It is already a stretch to say that the National
Building Code and its IRR also intend to solve the problem of traffic
congestion around the buildings so as to ensure that the said buildings shall
have adequate lighting and ventilation. Moreover, the Court cannot simply
assume, as the OSG has apparently done, that the traffic congestion in areas
around the malls is due to the fact that respondents charge for their parking
facilities, thus, forcing vehicle owners to just park in the streets. The Court
notes that despite the fees charged by respondents, vehicle owners still use
the mall parking facilities, which are even fully occupied on some days.
Vehicle owners may be parking in the streets only because there are not
enough parking spaces in the malls, and not because they are deterred by
the parking fees charged by respondents. Free parking spaces at the malls
may even have the opposite effect from what the OSG envisioned: more
people may be encouraged by the free parking to bring their own vehicles,
instead of taking public transport, to the malls; as a result, the parking
Page 13 of 18
facilities would become full sooner, leaving more vehicles without parking
spaces in the malls and parked in the streets instead, causing even more
traffic congestion.
Without using the term outright, the OSG is actually invoking police
power to justify the regulation by the State, through the DPWH Secretary
and local building officials, of privately owned parking facilities, including the
collection by the owners/operators of such facilities of parking fees from the
public for the use thereof. The Court finds, however, that in totally
prohibiting respondents from collecting parking fees from the public for the
use of the mall parking facilities, the State would be acting beyond the
bounds of police power.
Police power is the power of promoting the public welfare by
restraining and regulating the use of liberty and property. It is usually
exerted in order to merely regulate the use and enjoyment of the property of
the owner. The power to regulate, however, does not include the power to
prohibit. A fortiori, the power to regulate does not include the power to
confiscate. Police power does not involve the taking or confiscation of
property, with the exception of a few cases where there is a necessity to
confiscate private property in order to destroy it for the purpose of
protecting peace and order and of promoting the general welfare; for
instance, the confiscation of an illegally possessed article, such as opium
and firearms. 34
When there is a taking or confiscation of private property for public
use, the State is no longer exercising police power, but another of its
inherent powers, namely, eminent domain. Eminent domain enables the
State to forcibly acquire private lands intended for public use upon payment
of just compensation to the owner. 35
Normally, of course, the power of eminent domain results in the taking
or appropriation of title to, and possession of, the expropriated property; but
no cogent reason appears why the said power may not be availed of only to
impose a burden upon the owner of condemned property, without loss of
title and possession. 36 It is a settled rule that neither acquisition of title nor
total destruction of value is essential to taking. It is usually in cases where
title remains with the private owner that inquiry should be made to
determine whether the impairment of a property is merely regulated or
amounts to a compensable taking. A regulation that deprives any person of
the profitable use of his property constitutes a taking and entitles him to
compensation, unless the invasion of rights is so slight as to permit the
regulation to be justified under the police power. Similarly, a police
regulation that unreasonably restricts the right to use business property for
business purposes amounts to a taking of private property, and the owner
may recover therefor. 37
Although in the present case, title to and/or possession of the parking
facilities remain/s with respondents, the prohibition against their collection
of parking fees from the public, for the use of said facilities, is already
tantamount to a taking or confiscation of their properties. The State is not
Page 14 of 18
only requiring that respondents devote a portion of the latter's properties for
use as parking spaces, but is also mandating that they give the public
access to said parking spaces for free. Such is already an excessive intrusion
into the property rights of respondents. Not only are they being deprived of
the right to use a portion of their properties as they wish, they are further
prohibited from profiting from its use or even just recovering therefrom the
expenses for the maintenance and operation of the required parking
facilities.
The ruling of this Court in City Government of Quezon City v. Judge
Ericta 38 is edifying. Therein, the City Government of Quezon City passed an
ordinance obliging private cemeteries within its jurisdiction to set aside at
least six percent of their total area for charity, that is, for burial grounds of
deceased paupers. According to the Court, the ordinance in question was
null and void, for it authorized the taking of private property without just
compensation:
There is no reasonable relation between the setting aside of at
least six (6) percent of the total area of all private cemeteries for
charity burial grounds of deceased paupers and the promotion of
health, morals, good order, safety, or the general welfare of the people.
The ordinance is actually a taking without compensation of a certain
area from a private cemetery to benefit paupers who are charges of
the municipal corporation. Instead of building or maintaining a public
cemetery for this purpose, the city passes the burden to private
cemeteries.
'The expropriation without compensation of a portion of private
cemeteries is not covered by Section 12(t) of Republic Act 537, the
Revised Charter of Quezon City which empowers the city council to
prohibit the burial of the dead within the center of population of the
city and to provide for their burial in a proper place subject to the
provisions of general law regulating burial grounds and cemeteries.
When the Local Government Code, Batas Pambansa Blg. 337 provides
in Section 177(q) that a sangguniang panlungsod may "provide for the
burial of the dead in such place and in such manner as prescribed by
law or ordinance" it simply authorizes the city to provide its own city
owned land or to buy or expropriate private properties to construct
public cemeteries. This has been the law, and practise in the past. It
continues to the present. Expropriation, however, requires payment of
just compensation. The questioned ordinance is different from laws
and regulations requiring owners of subdivisions to set aside certain
areas for streets, parks, playgrounds, and other public facilities from
the land they sell to buyers of subdivision lots. The necessities of public
safety, health, and convenience are very clear from said requirements
which are intended to insure the development of communities with
salubrious and wholesome environments. The beneficiaries of the
regulation, in turn, are made to pay by the subdivision developer when
individual lots are sold to homeowners.
In conclusion, the total prohibition against the collection by

respondents of parking fees from persons who use the mall parking facilities
has no basis in the National Building Code or its IRR. The State also cannot
Page 15 of 18
impose the same prohibition by generally invoking police power, since said
prohibition amounts to a taking of respondents' property without payment of
just compensation.
Given the foregoing, the Court finds no more need to address the issue
persistently raised by respondent SM Prime concerning the
unconstitutionality of Rule XIX of the IRR. In addition, the said issue was not
among those that the parties, during the pre-trial conference for Civil Cases
No. 12-08 and No. 00-1210, agreed to submit for resolution of the RTC. It is
likewise axiomatic that the constitutionality of a law, a regulation, an
ordinance or an act will not be resolved by courts if the controversy can be,
as in this case it has been, settled on other grounds. 39
WHEREFORE, the instant Petition for Review on Certiorari is hereby
DENIED. The Decision dated 25 January 2007 and Resolution dated 14
March 2007 of the Court of Appeals in CA-G.R. CV No. 76298, affirming in
toto the Joint Decision dated 29 May 2002 of the Regional Trial Court of
Makati City, Branch 138, in Civil Cases No. 00-1208 and No. 00-1210 are
hereby AFFIRMED. No costs.
SO ORDERED.
Ynares-Santiago, Velasco, Jr., Nachura and Peralta, JJ., concur.
Footnotes
1. Rollo, pp. 26-43.

2. Penned by Associate Justice Myrna Dimaranan Vidal with Associate Justices
Jose L. Sabio, Jr. and Jose C. Reyes, concurring; rollo, pp. 45-58.
3. Penned by Judge Sixto Marella, Jr.; rollo, pp. 250-260.
4. Rollo , pp. 59-60.

5. Id. at 410-431.
6. Id. at 420-421.
7. Id. at 421-422.
8. Id. at 64-89.
9. Id. at 86-87.
10. Id. at 90-95.
11. Id. at 93-94.
12. Penned by Judge Sixto Marella, Jr., id. at 61-63.
13. Id. at 62-63.
14. Section 1 of Presidential Decree No. 478 and Section 35, Chapter 12, Title
III of the Administrative Code of 1987, enumerate the powers and functions
of the OSG.
Page 16 of 18
15. Rollo , p. 252.
16. Id. at 258-260.
17. Id. at 260.
18. Id. at 263-272.
19. Id. at 461-516.
20. Id. at 263.
21. Id. at 462.
22. Citing Section 35, Chapter XII, Title III, Book IV of Executive Order No. 292,
otherwise known as the Administrative Code of 1987, which provide:
SECTION 35. Powers and Functions. — The Office of the Solicitor General shall
represent the Government of the Philippines, its agencies and
instrumentalities and its officials and agents in any litigation, proceeding,
investigation or matter requiring the services of a lawyer. When authorized
by the President or head of the office concerned, it shall also represent
government-owned or controlled corporations. The Office of the Solicitor
General shall constitute the law office of the Government and, as such, shall
discharge duties requiring the services of a lawyer. It shall have the following
specific powers and functions:
xxx xxx xxx
(3) Appear in any court in any action involving the validity of any treaty, law,
executive order or proclamation, rule or regulation when in his judgment his
intervention is necessary or when requested by the Court.
xxx xxx xxx
(11) Act and represent the Republic and/or the people before any court,
tribunal, body or commission in any matter, action or proceeding which, in
his opinion, affects the welfare of the people as the ends of justice may
require; . . . .
23. Rollo , p. 57.
24. Id. at 33.
25. A Revised IRR took effect on 30 April 2005. Rule XIX of the old IRR was
reproduced in Table VII.4 (Minimum Required Off-Street (Off-RROW)-cum-On-
Site Parking Slot, Parking Area and Loading/Unloading Space Requirements
by Allowed Use or Occupancy) of the Revised IRR.
26. Soria v. Desierto, 490 Phil. 749, 754 (2005).

27. Land Bank of the Philippines v. Court of Appeals, 327 Phil. 1048, 1052
(1996).
28. G.R. No. 45338-39, 31 July 1991, 199 SCRA 788, 793.
29. 160 Phil. 33 (1975).
30. Republic v. Gonzales, supra note 28 at 793.

Page 17 of 18
31. Republic v. Philippine Rabbit Bus Lines, 143 Phil. 158, 163 (1970).
32. Acebedo Optical Company, Inc. v. Court of Appeals, 385 Phil. 956, 969
(2000).
33. Rollo, pp. 36-37.

34. See City Government of Quezon City v. Judge Ericta, 207 Phil. 648, 654
(1983).
35. Acuña v. Arroyo, G.R. No. 79310, 14 July 1989, 175 SCRA 343, 370.
36. Republic of the Philippines v. Philippine Long Distance Telephone Company,
136 Phil. 20, 29 (1969).
37. See J. Romero's Dissenting Opinion in Telecommunications and Broadcast

Attorneys of the Philippines v. Commission on Elections, 352 Phil. 153, 191
(1998). See also People v. Fajardo, 104 Phil. 443, 447-448 (1958).
38. Supra note 34 at 656-657.
39. Ty v. Trampe, G.R. No. 117577, 1 December 1995, 250 SCRA 500, 520.

Page 18 of 18
EN BANC
[G.R. No. 204835. September 22, 2015.]
MOVERTRADE CORPORATION , petitioner, vs. THE

COMMISSION ON AUDIT AND THE DEPARTMENT OF PUBLIC
WORKS AND HIGHWAYS, respondents.
DECISION
DEL CASTILLO, J : p
Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith. 1
This Petition for Certiorari 2 under Rule 65, in relation to Rule 64, of the
Rules of Court assails the December 29, 2011 Decision 3 of respondent
Commission on Audit (COA), which denied petitioner Movertrade
Corporation's claim for payment for dredging works with side dumping of
spoils in Pampanga Bay and the primary Pasac-Guagua-San Fernando
Waterways in Pampanga amounting to P7,354,897.10. Likewise assailed is
the November 5, 2012 Resolution 4 of respondent COA denying petitioner's
Motion for Reconsideration.
Factual Antecedents
On February 7, 1996, petitioner and respondent Department of Public
Works and Highways (DPWH) entered into a Contract Agreement 5 for
dredging and other related works in Pampanga Bay and the primary Pasac-
Guagua-San Fernando Waterways in Pampanga, which were affected by the
Mt. Pinatubo eruptions and mudflows, in the total amount of
P188,698,000.00, broken down as follows:
Particulars Volume Amount
3.35 million cu.

Dredging Works P148,698,000.00
m.
Distance Pumping provisional sum 20,000,000.00
Spoil Site Development provisional sum 20,000,000.00
––––––––––––––
Total P188,698,000.00 6
The Mount Pinatubo Emergency-Project Management Office of

respondent DPWH, headed by Director Florante Soriquez (Director Soriquez),
implemented and supervised the project. 7
On August 13, 1997, due to the alleged absence of spoil sites,
petitioner requested permission from Director Soriquez to allow it to
undertake side dumping (dumping within the river) chargeable against the
Page 1 of 11
dredging works. 8
On August 18, 1997, Director Soriquez issued a letter 9 denying the

request. He reminded petitioner that side dumping was not allowed and that
as per the report of Engr. Marcelino P. Bustos (Engr. Bustos), the Area
Engineer of respondent DPWH, petitioner could still pump the dredge spoils
to the following spoil sites: Pascual "A," Pascual "B," and the Regala
fishpond.
On September 29, 1997, Engr. Bustos issued a letter 10 requiring
petitioner to provide additional pipelines for distance pumping. Engr. Bustos
also reiterated in his letter that "Pascual spoil site can still accommodate
more materials" and that "[respondent DPWH] is not allowing or giving any
instruction to use side dumping process for whatsoever reason." 11
However, despite the denial and the prohibition issued by Director
Soriquez and Engr. Bustos, petitioner continued to side dump. 12 Thus, on
October 1, 1997, Director Soriquez issued another letter, 13 which reads:
We were informed by our field personnel that in spite of the
field memo dated 29 September 1997 . . . issued to your Engineer at
the 28" [diameter] dredger and followed by a letter dated 30
September 1997 by Jose C. Gabriel, Engineer IV of this office, your
28" [diameter] dredger presently operating near the town proper of
Sasmuan, is still dredging through side dumping. ITAaHc
Please be informed that side dumping activities in the area is

not allowed which this office has previously informed your end thru
our letter of 18 August 1997. There is still an available spoil site
where spoils could be dumped thru distance pumping and the other
one is the Regala spoil site, which has to be developed as previously
instructed based on our previous letters. 14
Still, petitioner ignored the prohibition and continued to side dump. 15
When the project was in its final phase of completion, petitioner,
through its President, Mr. Wenceslao Zingapan, wrote a letter 16 dated
October 15, 1997 to then DPWH Secretary Gregorio Vigilar (Secretary Vigilar)
asking for payment for the dredging work it rendered. In the letter, petitioner
explained that it was forced to side dump the dredge spoils along the project
waterway for the following reasons:
1.0) The strong and heavy siltation if not avoided will ground our 28"
Dredge and the grounding will render the equipment inutile for a
considerable time beyond the contract despite the application of
extraneous salvaging measures, and
2.0) Even if the extraordinary effort of the Project Implementing Office
shall be factored in the provision and making available to us the
needed spoil site, the Regala Property which was presented to us
for development of a dike thereon, is a mere 2-hectare size and
in our long experience in shallow river dredging, is
uneconomical, unsafe and inoperable for utilization as an
effective dumping site. If the development of the Regala property
is pursued, the disproportionate heavy pressure pumping
induced by our huge deep sea 28" Dredge will cause a
Page 2 of 11
dangerous spillage back to the middle of the waterway. The
resultant volume equivalent to the containment capacity of the
2-hectare size Regala property will create a dike-like [blockade]
transversal to the length of the waterway. Navigation and
commerce along the waterway then will be put to standstill. 17
On October 24, 1997, Director Soriquez issued a letter 18 informing
petitioner of the denial of its request for payment. He said:
Please be informed that side dumping of your [dredge] spoils
between Sta. 15+000 to Sta. 14+000 was not allowed by this Office
thru our letters of August 18, 1997 and October 1, 1997 to your end.
The strong and heavy siltations you are mentioning at the vicinity of
Sta. 14+000 (mouth of San Pedro Creek) was not too alarming, since
the flow of the floodwaters and siltations coming from the confluence
of Pasig-Potrero River is . . . going downstream through San Francisco
River at Minalin, as a result of the heavy rains caused by typhoon
Ibiang and not at Guagua River and San Pedro Creek. The siltations at
the subject section were already there since the breaching of the
transverse dike.
Furthermore, with respect to spoil site availability, you have two
(2) alternatives: a] Utilize Pascual "A" spoil site, thru distance
pumping wherein the volume of 50,000 cu. m. of silt materials could
still be accommodated, and b] Utilize Regala fishpond, even with only
two (2) hectares in area, can contain at least 60,000 cu. m. of dredge
spoils, the same area as the spoil site at Malusac portion (S3-1) that
you have used previously using your 25" dia. Dredger.
In view of the above, we cannot recommend any compensation
for the volume of silt materials side dumped based on your letter of
October 15, 1997. 19
When the project was completed, respondent DPWH paid petitioner the
total amount of P180,029,910.15, covered by various disbursement
vouchers. 20 The amount of P7,354,897.10, representing the 165,576.27
cubic meters dredging work rendered by petitioner, however, was not paid.
21
On June 18, 1998, the Director III of the Legal Service of DPWH, Mr.
Cesar D. Mejia, issued a Memorandum 22 to Director Soriquez expressing his
position that petitioner should be paid for work accomplished as shown in
the As-Built Plans and the Statement of Work Accomplished without the
necessity of issuing a variation order.
On January 4, 2000, then DPWH Secretary Vigilar wrote a letter stating
that the agency will no longer entertain any request for reconsideration on
the subject matter. 23 Petitioner, however, continued to demand payment for
the said dredging works.
On February 24, 2005, former DPWH Acting Secretary Hermogenes E.
Ebdane, Jr. (Secretary Ebdane Jr.) issued Department Order No. 51, creating
an Ad Hoc Committee to further evaluate the payment claim of petitioner. 24
On October 5, 2005, the Committee rendered a Resolution 25
recommending payment of the claim in the amount of P7,354,897.91
provided petitioner restores to its original grade elevation the section where
Page 3 of 11
dredge spoils were dumped. One of the members of the Committee,
Regional Director Ramon P. Aquino (Regional Director Aquino), DPWH-Region
III, San Fernando City, Pampanga, however, did not agree with the
recommendation and maintained that petitioner is not entitled to payment
for breach of contract. 26 And since Secretary Ebdane Jr. likewise did not
agree with the Resolution, he resolved to return the same to the Committee
for re-evaluation. 27 CHTAIc
On December 8, 2006, the DPWH Ad Hoc Committee rendered an

amended Resolution, 28 to wit:
WHEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED
THAT PAYMENT FOR THE CLAIM OF MOVERTRADE CORPORATION FOR
WORK PERFORMED UNDER THE DUTCH-FUNDED MT. PINATUBO
AFFECTED WATERWAYS PROJECT SHALL BE GRANTED PROVIDED
THAT THE IMPLEMENTING OFFICE SHALL DETERMINE THE AMOUNT OF
PAYMENT DUE TO THE CONTRACTOR. 29
Regional Director Aquino and Secretary Ebdane Jr., however, did not
sign the amended Resolution as they did not agree with the
recommendation. 30
On July 14, 2009, petitioner offered a reduction of P300,000.00 on its
claim if payment is made within a month. 31
On January 22, 2010, Assistant Secretary Dimas S. Soguilon, the
Chairman of the Extraordinary Claims and Review Committee, DPWH, issued
a Memorandum finding petitioner's claim for payment to be a money claim,
which is under the jurisdiction of respondent COA. 32
Accordingly, on February 19, 2010, petitioner filed with respondent
COA a money claim against respondent DPWH for payment of dredging
works with side dumping of spoils in Pampanga Bay and the primary Pasac-
Guagua-San Fernando Waterways in Pampanga amounting to
P7,354,897.10. 33
Ruling of the Commission on Audit
On December 29, 2011, respondent COA rendered Decision No. 2011-
106 denying the money claim 34 of petitioner for lack of merit. 35
Respondent COA ruled that petitioner is not entitled to payment for the
dredging works for breach of contract. 36 Paragraph 11 of the Contract
Agreement prohibits side dumping as it specifically requires that dredge
spoils should be dumped at pre-designated areas to prevent them from
spilling back into the channel. 37 It also noted that petitioner's claim for
payment was never approved by respondent DPWH as the Resolution and
amended Resolution issued by the DPWH Ad Hoc Committee were not signed
by Secretary Ebdane Jr. 38
Aggrieved, petitioner moved for reconsideration 39 insisting that there
was no breach of contract and that even if there was a breach, it is still
entitled to payment under the principle of quantum meruit.
On November 5, 2012, respondent COA issued a Resolution denying
the motion for reconsideration for lack of merit. 40 It stood pat on its finding
Page 4 of 11
that there was a breach of contract as the side dumping employed by
petitioner was never authorized, verbally or in writing. 41 As to the principle
of quantum meruit, respondent COA explained that the principle applies only
when there is no written contract between the parties. 42 In this case, since
there is a written contract entered into by the parties, the principle of
quantum meruit cannot be applied. 43 Thus, petitioner should bear the loss
for breaching the contract. 44
Issue
Hence, petitioner filed the instant Petition raising the core issue of
whether petitioner is entitled to the payment of P7,354,897.10 for dredging
works.
Petitioner's Arguments
Petitioner ascribes grave abuse of discretion on the part of respondent
COA in denying its money claim. 45 It insists that it did not violate paragraph
11 of the Contract Agreement and alleges it was respondent DPWH who
failed to provide adequate spoil sites. 46 To substantiate its allegation,
petitioner cites Director Soriquez's letter 47 dated June 6, 1997 addressed to
the Executive Director of the Mt. Pinatubo Commission, where Director
Soriquez mentioned that "[petitioner's] equipment can no longer continue
the dredging works due to non-availability of spoil sites [as] the spoil sites
being used in the area have already been utilized to full capacity." 48 This
statement allegedly proves that respondent DPWH knew that there were no
available spoil sites left, which justifies petitioner's noncompliance with
paragraph 11 of the Contract Agreement. 49
Petitioner likewise denies side dumping the dredge spoil and claims
that what it did was actually "free dumping," wherein the spoils during
dredging were exposed to strong current of the water and were carried away
by it towards the mouth of Manila Bay. 50 Although it admits that it used the
term "side dumping" in its letters, it claims that it was used to refer to a
situation where the spoils are not being dumped at the spoil sites. 51 In any
case, petitioner claims that despite the method of disposal used, the
waterways remained navigable except for minimal siltation when the DPWH
engineers inspected the subject waterways. 52 And since the dredging works
benefited the public and the government, petitioner asserts that it is entitled
to its money claim in the highest interest of justice and equity. 53
Respondents' Arguments
Respondents, through the Office of the Solicitor General (OSG),
contend that respondent COA committed no grave abuse of discretion in
denying the money claim because petitioner in disposing the dredge spoils
through side dumping violated paragraph 11 of the Contract Agreement. 54
They maintain that respondent DPWH provided adequate spoil sites and that
assuming that these were insufficient, petitioner should have ceased
dredging operation in the meantime instead of breaching the terms and
conditions of the Contract Agreement. 55 Also, petitioner is not entitled to its
money claim as "a breach of contract cannot be the source of rights or the
basis of a cause of action." 56 Moreover, the dredging work did not benefit
Page 5 of 11
the government as side dumping, which entails dumping of dredge spoils
back into the river, goes against the very purpose for which the dredging
works were done. 57
Our Ruling
The Petition must fail.
Paragraph 11 of the Contract Agreement reads:
11. The disposal of dredge spoils shall be made at pre-designated
areas to be provided by the OWNER, including land access as
appropriate, to the CONTRACTOR as follows:
In case of cutter suction dredge or other similar type with
pipeline discharge, the disposal area shall be within a maximum
distance of 500 meters beyond which the CONTRACTOR shall be
entitled to additional payment at [the] rate of P3.00 per cu. m.
per 500 meters increment, but the total discharge distance shall
not exceed 2,000 meters.
The CONTRACTOR shall develop and maintain the disposal areas
during use and, together with the OWNER'S representative shall
monitor and evaluate their effectiveness, to ensure that
discharges thereof, into the primary waterway, are minimized. 58
Under the said provision, petitioner should dispose of the dredge spoils
by dumping them at the pre-designated areas provided by respondent
DPWH. Petitioner should also develop and maintain the designated disposal
areas during use. Petitioner, however, failed to comply with the said
provision as it opted to side dump 165,576.27 cubic meters of dredge spoils
back to the river. To justify its action, petitioner claims that respondent
DPWH failed to provide adequate spoil sites. EATCcI
We do not agree.
It is evident from the records that respondent DPWH provided spoil
sites to petitioner. Director Soriquez, in his letters dated August 18, 1997
and October 1, 1997, specifically mentioned Pascual "A," Pascual "B," and
the Regala fishpond as designated spoil sites. Engr. Bustos, in his letter
dated September 29, 1997, also reminded petitioner of the available spoil
sites. These letters clearly show that contrary to the claim of petitioner,
respondent DPWH complied with its obligation to provide spoil sites.
Petitioner, however, contends that these letters contradict Director
Soriquez's earlier letter dated June 6, 1997 addressed to the Executive
Director of the Mt. Pinatubo Commission. In the said letter, Director Soriquez
was requesting the Mt. Pinatubo Commission to issue a certification to the
OSG to confirm the availability of funds for the expropriation of certain
properties as "the spoil sites being used have already been utilized to full
capacity." 59
At first glance, the letter dated June 6, 1997 issued by Director
Soriquez seems to contradict his subsequent letters. But a careful review of
the records leads us to believe otherwise. First of all, when Director Soriquez
informed petitioner that there were still available spoil sites, he cited the
Page 6 of 11
report of Engr. Bustos as basis. Thus, it is possible that at the time Director
Soriquez issued the letter dated June 6, 1997, he was not aware that there
were still available spoil sites in some other areas and that it was only after
he received the report of Engr. Bustos that he became aware of the
availability of said spoil sites. And considering that petitioner's request for
side dumping was made on August 13, 1997 or more than two months after
Director Soriquez wrote to Executive Director Fernando, it is also possible
that during that span of time, respondent DPWH was able to look for other
possible spoil sites. In fact, in the Memorandum dated December 17, 1999
addressed to then DPWH Secretary Vigilar, Director Soriquez explained that:
A. The spoil sites referred to in the subject communications of
the contractor with a total of 30.2 hectares, such as the 10 hectares
of Mrs. Olivia Pascual, 7.7. hectares of P. Santos, et al., and the 12.5
hectares of F. Gutierrez, did not materialize due to funding constraint.
However, a written instruction was issued to the contractor to utilize
further the existing 5.0 hectares of Mrs. Olivia Pascual adjacent to the
10.0 hectares owned also by Mrs. Pascual, the 2 hectares owned by
Mr. Regala and the Mangalindan/Manansala property with an area of 3
hectares. The combined total area of 10 hectares for the 3 spoil sites
could accommodate 168,517 cu. m. The total side dumping volume is
165,000 cu. m. The contractor was given ample time to develop
these spoil sites to contain the [dredge] volume but unfortunately
they insisted on side dumping because they lack sufficient pipelines
for distance pumping with an allocation of P20 Million in the Contract
Agreement. Such provision was purposely provided in the contract in
the event distance pumping would be required but the contractor
never availed of this provision and undertook side dumping activities
without first obtaining the approval of the DPWH. 60
In view of the foregoing, we find petitioner's contention untenable as the
letter dated June 6, 1997 does not necessarily contradict the subsequent
letters issued by Director Soriquez.
Neither can petitioner justify the breach by merely alleging that the
spoil sites provided by respondent DPWH were inadequate, uneconomical,
unsafe, and inoperable. 61 To begin with, no evidence was presented to
support these allegations. And even if true, petitioner failed to inform
respondent DPWH of these problems. In fact, after receiving Director
Soriquez's letter dated August 18, 1997 denying its request to side dump the
dredge spoils, petitioner did not ask for a reconsideration nor did it issue any
letter questioning the capacity of the designated spoil sites. Instead, it was
only after the dredge spoils were side dumped or when petitioner was
already following-up its claim for payment that it explained in writing its
reasons for side dumping. 62
Respondent DPWH, on the other hand, consistently prohibited side
dumping as reiterated in the letters dated September 29, 1997 and October
1, 1997 issued by Engr. Bustos and Director Soriquez, respectively. However,
notwithstanding the prohibition, petitioner continued with its side dumping
activities without any explanation. Petitioner's blatant defiance of the
prohibition on side dumping is a violation of the contract that should not be
Page 7 of 11
ignored just because petitioner was able to complete the project.
It is a basic principle in law that contracts have the force of law
between the parties and should be complied with in good faith. 63 In this
case, the contract specifically provides the manner of disposing dredge
spoils. Thus, petitioner cannot unilaterally change the manner of disposal
without first amending the contract or obtaining the express consent or
approval of respondent DPWH. Otherwise, petitioner would be guilty of
breaching the contract. "[A] breach occurs where the contractor inexcusably
fails to perform substantially in accordance with the terms of the contract."
64 Without a doubt, petitioner's failure to dump the dredge spoils at the
designated spoil sites constitutes a breach. DHITCc
As a last-ditch effort, petitioner for the first time claims that the dredge
spoils were not side dumped but were "freely" dumped. Petitioner's attempt
to split hairs between "side dumping" and "free dumping" is unavailing as
both are not allowed under paragraph 11 of the Contract Agreement. It
makes no difference whether petitioner performed side dumping or free
dumping activities considering that in both instances, dredge spoils are not
dumped at spoil sites. What is crucial is the admission of petitioner that it did
not dump the dredge spoils at the designated spoil sites but dumped them
back into the river. 65 The act of dumping dredge spoils back into the river
clearly violates paragraph 11 of the Contract Agreement. And as aptly
explained by respondent COA:
Furthermore, in the engineering point of view, for purposes of
improving the discharge capacity of the channel, dredging through
side dumping is not a sound engineering practice. The purpose of
pre-designated spoil sites is to provide containment of the
[dredge] spoils to ensure that the same will not flow back
into the channel, otherwise government funds would be
wasted because of faulty dredging procedure. (Memorandum
dated October 23, 2001 of OIC-Project Director Amando R. Ramirez,
MPE-PMO, DPWH) 66 (Emphasis supplied)
Considering that the dredge spoils were dumped back into the river,
we cannot be certain, as pointed out by the OSG, that the government
benefited from petitioner's 165,576.27 cubic meters dredging work. And it
would be unfair to allow petitioner to benefit from its breach. Besides,
petitioner cannot claim that it was not duly compensated for the services it
rendered as the amount of P7,354,897.10 is only a part of the
P188,698,000.00 contract. In fact, petitioner admits that it was already paid
the amount of P180,029,910.15. 67 Thus, we agree with respondent COA that
petitioner is not entitled to its money claim for the 165,576.27 cubic meters
dredging work as it was done in contravention of paragraph 11 of the
Contract Agreement.
All told, we find no grave abuse of discretion on the part of respondent
COA in denying petitioner's money claim as the evidence on record
undoubtedly supports the factual findings of respondent COA. We need not
belabor that in the absence of grave abuse of discretion, the decisions and
resolutions of respondent COA are accorded not only with respect but also
Page 8 of 11
with finality, not only on the basis of the doctrine of separation of powers,
but also of its presumed expertise in the laws it is entrusted to enforce. 68
WHEREFORE, the Petition is hereby DISMISSED for lack of merit. The
assailed December 29, 2011 Decision and the November 5, 2012 Resolution
of respondent Commission on Audit are hereby AFFIRMED.
SO ORDERED. cEaSHC
Sereno, C.J., Carpio, Velasco, Jr., Leonardo-de Castro, Bersamin,

Villarama, Jr., Perez and Leonen, JJ., concur.
Brion * and Reyes, * JJ., are on leave.
Peralta *** and Jardeleza,*** JJ., took no part.
Mendoza ** and Perlas-Bernabe, ** JJ., are on official leave.
Footnotes
*On leave.
**On official leave.
***No part.
1. CIVIL CODE, Art. 1159.
2. Rollo , pp. 13-41.
3. Id. at 55-61; penned by Chairperson Ma. Gracia M. Pulido Tan and
Commissioners Juanito G. Espino, Jr. and Heidi L. Mendoza.
4. Id. at 80-83.
5. Id. at 84-92. Since time was of the essence, respondent DPWH requested
authority from the President to undertake the dredging through negotiated
contract using simplified bidding (Id. at 56).
6. Id. at 55-56.
7. Id. at 56.
8. Id. at 56 and 95.
9. Id. at 96.
10. Id. at 97.
11. Id.
12. Id. at 56.
13. Id. at 98.

14. Id.
15. Id. at 56.
16. Id. at 99-100.

Page 9 of 11
17. Id. at 99.
18. Id. at 101.
19. Id.
20. Id. at 20.
21. Id. at 21.

22. Id. at 151.
23. Id. at 56.
24. Id. at 152.
25. Id. at 153-157.
26. Id. at 57.

27. Id.
28. Id. at 165-170.
29. Id. at 170.
30. Id. at 57.

31. Id.
32. Id.
33. Id. at 42-46.
34. It is worthy to note that the project was commenced almost fifteen (15) years
ago. For this reason, the funding for the project had been reverted to the
National Treasury as stated by the Chief, Cash Division, DPWH-Office of the
Secretary (OSEC), in a Certification dated August 8, 2010, that the
outstanding balance for the project amounting to P9,380,197.69 under
DPWH Account No. 2028-90025-3, as of December 29, 1999, had lapsed on
the first working day of FY-2000. A subsequent Certification dated August 19,
2010 was issued by the Cashier, DPWH, OSEC, that the said account was
already closed effective November 8, 2002. Thus, contrary to the assertion of
claimant, this petition falls under the concept of a money claim against the
government (Id. at 59).
35. Id. at 60.
36. Id. at 59-60.
37. Id.
38. Id. at 59.
39. Id. at 62-79.

40. Id. at 83.
41. Id. at 82.
42. Id.
Page 10 of 11
43. Id.
44. Id.
45. Id. at 30 and 284.
46. Id. at 30 and 280-292.
47. Id. at 93-94.
48. Id. at 34 and 282.

49. Id. at 30-35 and 284.
50. Id. at 30-32 and 290.
51. Id. at 32 and 291.
52. Id. at 31-32 and 290.
53. Id. at 36.

54. Id. at 361-363.
55. Id. at 363.
56. Id. at 363-364; citing Twin Towers Condominium Corp. v. Court of Appeals, 446
Phil. 280, 308 (2003).
57. Id. at 364-365.
58. Id. at 88.

59. Id. at 93.
60. Id. at 81-82.
61. Id. at 99.

62. Id.
63. Gonzales v. Phil. Commercial and International Bank, 659 Phil. 244, 261.
(2011).
64. J Plus Asia Development Corporation v. Utility Assurance Corporation , G.R. No.
199650, June 26, 2013, 700 SCRA 134, 156.
65. Rollo , p. 32.

66. Id. at 59-60.
67. Id. at 20.
68. Yap v. Commission on Audit , 633 Phil. 174, 195 (2010).

Page 11 of 11
THIRD DIVISION
[G.R. No. 200407. June 17, 2020.]
LAND BANK OF THE PHILIPPINES, petitioner, vs. GUALBERTO

CATADMAN, respondent.
DECISION
GAERLAN, J : p
Before this Court is a partial appeal by way of a Petition for Review on

Certiorari pursuant to Rule 45 of the 1997 Rules of Civil Procedure
questioning the March 18, 2011 Decision 1 and January 25, 2012 Resolution 2
of the Court of Appeals (CA) in CA-G.R. SP No. 00131-MIN. HTcADC
The factual background of the case is as follows:

On March 21, 1999, Land Bank of the Philippines (Land Bank) received
the following Development Bank of the Philippines (DBP) Checks: (1) No.
1731263 in the amount of P8,500.00 payable to GCNK Merchandising, owned
by respondent Gualberto Catadman (Catadman), to be credited to his Land
Bank Account No. 2562-0016-49; (2) No. 151837 in the amount of
P100,000.00 payable to National Economic Development Authority (NEDA)-
Regional Office XI and to be credited to its Land Bank Account No. 2562-001-
46; and (3) No. 358896 in the amount of P6,502.68 payable to Benjamin S.
Reyno (Reyno) and to be credited to his Land Bank Account No. 2561-0135-
70. These three checks were all drawn by DBP Mati Branch and endorsed to
Bajada Branch of Land Bank thru its Davao Branch. 3
On May 26, 1999, all three checks were cleared. Two days later,
however, NEDA's DBP Check No. 151837 and Reyno's DBP Check No. 358896
were erroneously credited to Catadman's account, while his DBP Check No.
1731263 was inadvertently credited twice to his account. Hence, the total
amount of P115,062.68 was credited to his account. 4
On June 25, 2001, Land Bank discovered the erroneous transactions,
which prompted it to send a formal demand letter to Catadman for the return
of the amount of P115,002.68 which represents the total amount credited to
his account less the P8,500.00 which rightfully belonged to him. Catadman,
however, did not heed Land Bank's letter. 5
On October 8, 2001, Land Bank sent another demand letter to
Catadman. Thereafter, there was an exchange of correspondence between
them. Finally, in his February 11, 2002 letter, Catadman acknowledged that
the amount was credited to his account and that he had already spent it. As
a way of settlement, he promised to pay the amount of P2,000.00 monthly
until the whole amount is returned. 6
Catadman did as he promised. However, after paying an accumulated
Page 1 of 7
amount of P15,000.00, he stopped and refused to make further payments.
The matter was referred to the legal counsel of Land Bank. Consequently,
the bank sent its letter dated January 21, 2003 to Catadman demanding
payment of the entire balance. Catadman failed to respond to the letter.
Land Bank was thus constrained to file a case for collection of sum of money
before the Municipal Trial Court in Cities (MTCC) of Davao City. 7
The MTCC Ruling
The MTCC ruled that the obligation of Catadman to reimburse Land
Bank the amount erroneously credited to his account was a natural
obligation and not a civil obligation. Accordingly, the bank had no right of
action to enforce such reimbursement against Catadman. It further ruled
that the full reimbursement of the amount sought to be recovered by Land
Bank depends upon the conscience of Catadman. It explained that if
Catadman would not hearken to his conscience that he had availed of the
money which did not rightfully and lawfully belong to him and would not
continue to pay the balance, Land Bank must suffer its loss caused by its
negligent employee. It advised Land Bank to pursue its employee for
reimbursement instead. 8
The MTCC dismissed the case in favor of Catadman in this wise:
Conformably with all the foregoing premises, the complaint of
the plaintiff is dismissed.
SO ORDERED. 9
The RTC Ruling

Land Bank appealed the Decision 10 of the MTCC before the Regional
Trial Court (RTC) which, in turn, reversed the same and ruled that Articles
19, 11 22, 12 and 1456 13 of the Civil Code of the Philippines (Civil Code) are
applicable to the case. It held that if Catadman had observed honesty and
good faith as required by the said provisions, he should have returned the
amount of P115,002.68 instead of keeping quiet about receiving the money.
It also ruled that since Catadman knew that the money was not his, Article
1456 obliges him as a trustee to take care of the money which through
mistake came into his hands. 14
The dispositive portion of the RTC Decision is as follows:
WHEREFORE, the April 2, 2004 decision of the first level court is
reversed. The appellee shall pay the appellant one hundred thousand
and two pesos and sixty eight centavos (P100,002.68) plus legal
interest to be computed from June 1, 2001 until fully paid and the
costs of suit.
SO ORDERED. 15
The CA Ruling
Not satisfied with the said judgment, Catadman filed a petition for
review before the CA assailing the decision of the RTC which reversed the
decision of the MTCC. CAIHTE
Primarily anchoring its decision on the negligence of the bank

Page 2 of 7
employee and the fiduciary nature of Land Bank's business, the CA ruled
that Land Bank must, as a consequence, bear its loss. In explaining its
decision, the CA quoted the ruling in the case of BPI Family Bank v. Franco 16
which cited the ruling in the landmark case of Simex International (Manila),
Inc. v. CA . 17 Particularly basing its decision on the role of the banks in the
economic life of every civilized nation, the CA held that "[t]o allow Land Bank
to secure a reimbursement of the subject amount would open the floodgates
of public distrust in the banking industry." 18
The appellate court also considered into account the bad faith on the
part of Catadman when he appropriated the amount subject of this case. 19
Taking into consideration both the negligence of Land Bank and the bad faith
of Catadman, the CA applied the ruling in a series of cases. 20 It adopted the
60-40 ratio and disposed of the case thus:
WHEREFORE, the petition is partially GRANTED. The appealed
Decision of the Regional Trial Court, Branch 15, Davao City is
AFFIRMED with the following MODIFICATIONS: [a] petitioner Gualberto
Nador Catadman shall pay the private respondent Land Bank of the
Philippines forty percent (40%) of the sum of P115,062.68, which
corresponds to the amount of DBP Check Nos. 1731263, 1513337 and
358896 erroneously credited to petitioner's Land Bank account, less
P15,000.00 which petitioner had already paid to private respondent,
with interest at 6% per annum from the time of the filing of the
complaint until its full payment before the finality of judgment.
Thereafter, if the amount adjudged remains unpaid, the interest rate
shall be 12% per annum computed from the time the judgment
became final and executory until fully satisfied; [b] the remaining
60% of P115,062.68 shall be borne by private respondent Land Bank
of the Philippines. Accordingly, the case is ordered remanded to the
RTC, Branch 15, Davao City only for the purpose of fixing the exact
computation of petitioner Gualberto Nador Catadman's liability.
SO ORDERED. 21
A motion for reconsideration of the CA Decision was filed by Catadman

seeking for its reversal. Land Bank filed its comment/opposition to the said
motion and its own motion for reconsideration.
Finding that all the parties' arguments were a mere rehash of the
arguments contained in their previous pleadings, the CA denied both
motions of reconsideration. 22
Issues
I.
The Honorable Court of Appeals erred in not affirming in toto the
January 26, 2005 Decision of the Regional Trial Court, Branch 15,
Davao City, which reversed and set aside the September 7, 2004
Decision of the Municipal Trial Court in Cities, Branch 6, Davao City.
II.
The Honorable Court of Appeals erred in not finding the petitioner
liable for the full amount mistakenly credited despite concluding that
the latter was unjustly enriched at the expense of Land Bank and
Page 3 of 7
acted in bad faith. 23
The Court's Ruling

Land Bank, in its petition before this Court, questions the application by
the CA of the pronouncement of this Court in the case of BPI Family Bank v.
Franco 24 which cited the case of Simex International (Manila), Inc. v. CA. 25
It avers that the doctrine in Simex and BPI Family Bank was erroneously
applied in favor of Catadman despite the dissimilarity between the factual
circumstances of the mentioned cases and that of the present case.
This Court agrees.
Based on the established facts of the case, Catadman, as a depositor,
did not suffer any financial loss or damage when his account was credited
with an additional P115,002.68. It was the bank which suffered the loss
albeit it was primarily caused by the negligent act of its employee. Truth be
told, however, that Catadman was unjustly enriched when he chose to not
return and just appropriated to himself the P115,002.68 knowing fully well
that the same does not belong to him.
Unlike Catadman, Franco, the depositor in the case of BPI Family Bank ,
directly suffered the financial loss when his bank froze his accounts and
dishonored his checks without any right to do so. It merely based its decision
on suspicion that the funds in Franco's account were proceeds of the multi-
million peso scam he was allegedly involved in. Similarly, Simex suffered
humiliation and financial loss due to Traders Royal Bank's negligence. The
checks issued by Simex were all dishonored by the bank despite having
sufficient funds in its account to clear the same.
Verily, this Court recognized that Franco and Simex suffered injury
because of their bank's negligence that caused the dishonor of the checks
they had respectively issued. Their banks' blunder caused them not just a
little embarrassment as depositors but also financial loss and perhaps even
civil and criminal litigation. 26 It must also be emphasized that Franco and
Simex were both not at fault in dealing with their banks.
Here, Land Bank had caused no loss or damage to Catadman. In truth,
Catadman is undeniably at fault when he appropriated the P115,002.68 even
knowing fully well that it did not belong to him.
Being so, the doctrine in the cases of Simex and BPI Family Bank
cannot be utilized by Catadman to protect himself as the cases are not on all
fours. He shall not be permitted to consciously twist the jurisprudence for his
protection, to unduly benefit therefrom, and to unjustly enrich himself at the
expense of Land Bank. As correctly stated by the CA, Catadman shall not be
allowed to hide behind the cloak of Land Bank's negligence in order to evade
his obligation to return the amount of the subject checks. To sustain
Catadman's argument would be to countenance a clear case of unjust
enrichment. 27 To agree with his arguments would result in an absurd
situation where a dishonest man is rewarded for keeping his silence about
receiving money he does not own and choosing to appropriate the same for
himself.
Page 4 of 7
Catadman, in his letter dated February 1, 2002, admitted that he had
spent the whole amount credited to his account and promised to pay the
amount of P2,000.00 monthly until the amount is fully settled. True to his
word, he paid monthly. However, for reasons only known to him, Catadman
stopped further payments. When the balance of the amount was demanded
from him, he refused to settle. These facts make the dishonesty and bad
faith on the part of Catadman more than evident. Further, the bank
employee's negligence will not change the fact that the money Catadman
received through his account does not belong to him.
Article 19 of the Civil Code requires that every person must, in the
exercise of his rights and in the performance of his duties, act with justice,
give everyone his due, and observe honesty and good faith. This provision of
law sets standards which must be observed in the exercise of one's rights as
well as in the performance of its duties, to wit: to act with justice; give
everyone his due; and observe honesty and good faith. 28
Moreover, under Article 22 of the Civil Code, "every 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." 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." 29
The principle of unjust enrichment has two conditions. First, a person
must have been benefited without a real or valid basis or justification.
Second, the benefit was derived at another person's expense or damage. 30
In this case, Catadman received the amount of P115,002.68 through
his bank account when the same was erroneously credited with the amount.
Notwithstanding the knowledge that the money was not his, he spent the
same and kept his silence about it at the expense of Land Bank.
Pursuant to Article 22 of the Civil Code, Catadman must unconditionally
return the P115,002.68 to Land Bank, less the P15,000.00 he has already
paid. Contrary to his claim, the doctrine on the fiduciary nature of banking
institutions in the cases of Simex and BPI Family Bank does not preclude
Land Bank from recovering the money from him. The ruling of this Court
would have been different if it were NEDA and Reyno who filed a complaint
against Land Bank. DETACa
Finally, this Court reprimands Land Bank for its negligence. This shall
serve as a reminder to Land Bank that the law imposes on banks high
standards in view of the fiduciary nature of banking. Section 2 of Republic
Act (R.A.) No. 8791, 31 declares that the State recognizes the "fiduciary
nature of banking that requires high standards of integrity and
performance." 32
The bank is under obligation to treat the accounts of all its depositors
with meticulous care, always having in mind the fiduciary nature of their
relationship. 33 This fiduciary relationship means that the bank's obligation
to observe "high standards of integrity and performance" is deemed written
Page 5 of 7
into every deposit agreement between a bank and its depositor. 34 The
fiduciary nature of banking requires banks to assume a degree of diligence
higher than that of a good father of a family. 35 Likewise, Section 2 of R.A.
No. 8791 prescribes the statutory diligence required from banks — that
banks must observe "high standards of integrity and performance" in
servicing their depositors. 36
WHEREFORE, the petition for review is GRANTED. The Court of
Appeals' Decision dated March 18, 2011 and Resolution dated January 25,
2012 in CA-G.R. SP No. 001131-MIN are hereby REVERSED and SET ASIDE.
Respondent Gualberto Catadman shall pay petitioner Land Bank of the
Philippines the amount of P100,002.68 in actual damages, with interest of
twelve percent (12%) interest per annum from the filing of the complaint
until June 30, 2013, and six percent (6%) interest per annum from July 1,
2013 until full payment. 37
SO ORDERED.
Leonen, Gesmundo, Carandang and Zalameda, JJ., concur.
Footnotes
1. Rollo , pp. 26-51; penned by Associate Justice Angelita A. Gacutan, with the
concurrence of Associate Justices Rodrigo F. Lim, Jr. and Nina G. Antonio-
Valenzuela.
2. Id. at 66-67.
3. Id. at 6, 63.
4. Id. at 28.
5. Id. at 8, 63.
6. Id. at 54.
7. Id. at 54-55.
8. Id. at 60-61.
9. Id. at 61.
10. Id. at 53-61; penned by Judge Antonio P. Laolao, Sr.
11. Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith.
12. Art. 22. Every 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.
13. Art. 1456. If property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an implied trust for the
benefit of the person from whom the property comes.
14. Rollo , p. 64.

Page 6 of 7
15. Id. at 65.
16. 563 Phil. 495, 508-509 (2007).

17. 262 Phil. 387 (1990).
18. Rollo , p. 44.
19. Id. at 49.
20. Id. at 49-50; c.f. Central Bank of the Philippines v. Citytrust Banking
Corporation, 597 Phil. 609 (2009); Bank of America NT and SA v. Philippine
Racing Club, 611 Phil. 687 (2009); The Consolidated Bank and Trust
Corporation v. Court of Appeals, 457 Phil. 688 (2003); Philippine Bank of
Commerce, now absorbed by Philippine Commercial International Bank v.
Court of Appeals, 336 Phil. 667 (1997).
21. Id.
22. Id. at 66-67.
23. Id. at 12.

24. Supra note 16.
25. Supra note 17.
26. 262 Phil. 396 (1990).
27. Rollo , p. 48.

28. Dr. Alano v. Magud-Logmao, 731 Phil. 407, 432 (2014).
29. Loria v. Muñoz , 745 Phil. 506, 517 (2014).
30. Id.; Locsin II v. Mekeni Food Corporation, 722 Phil. 886, 900 (2013).
31. THE GENERAL BANKING LAW OF 2000.
32. The Consolidated Bank and Trust Corporation v. CA, 457 Phil. 688, 705 (2003).
33. Id. at 706.
34. Id.
35. Id.
36. Id.
37. Nacar v. Gallery Frames, 716 Phil. 267, 278-280 (2013).

Page 7 of 7
EN BANC
[G.R. No. 13602. April 6, 1918.]
LEUNG BEN; plaintiff, vs. P. J. O'BRIEN; JAMES A. OSTRAND

and GEO. R. HARVEY, judges of First Instance of the city of
Manila, defendants.
Thos. D. Aitken and W. A. Armstrong, for plaintiff.

Kincaid & Perkins, for defendants.
SYLLABUS
1. CERTIORARI; ISSUANCE OF ATTACHMENT WITHOUT STATUTORY

AUTHORITY. — Where a Court of First Instance issues an 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
entertaining an application for a writ of certiorari and quashing the
attachment.
2. ID.; ID.; INADEQUATE REMEDY. — In such case the remedy on the
attachment bond or by appeal would not be sufficiently speedy to meet the
exigencies of the case. Attachment is an exceedingly violent measure and
its unauthorized issuance may result in the infliction of damage which could
never be repaired by any pecuniary award at the final hearing.
3. ID.; ID.; DISTINCTION BETWEEN JURISDICTION OVER PRINCIPAL
CAUSE AND OVER ANCILLARY REMEDY. — There is a clear distinction to be
noted between the jurisdiction of a Court of First Instance with respect to the
principal cause of action and its jurisdiction to grant an auxiliary remedy, like
attachment. A court, although it may have unquestioned jurisdiction over the
principal cause of action, may nevertheless act irregularly or in excess of its
jurisdiction in granting the auxiliary remedy. In such case the party
aggrieved may prosecute a proceeding by writ of certiorari in the Supreme
Court. ( Herrera vs. Barretto and Joaquin, 25 Phil. Rep., 245, distinguished.)
4. CONTRACT; IMPLIED CONTRACT. — The obligation imposed by
Act No. 1757 upon the winner in a prohibited game to return to the loser the
money or other thing of value won at play is an "implied contract," as this
term is used in subsection (1) of section 412 of the Code of Civil Procedure.
5. ATTACHMENT; CAUSE OF ACTION ARISING UPON CONTRACT,
EXPRESS OR IMPLIED. — In an action brought pursuant to the provisions of
Act No. 1757 to recover a sum of money lost at play, an attachment was
obtained in the Court of First Instance under section 424 in connection with
subsection 1 of section 412 of the Code of Civil Procedure. These provisions
authorize the issuance of an attachment in an action for the recovery of
money on a cause of action arising upon contract, express or implied, when
the defendant is about to depart from the Philippine Islands. Held: That the
Page 1 of 18
cause of action arose upon an implied contract and that the action of the
court in issuing the attachment would not be annulled by the Supreme Court
in a proceeding by writ of certiorari.
DECISION
STREET, J : p
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 during the
two or three months prior to the institution of the suit. In his verified
complaint the plaintiff asked for an attachment, under sections 424 and 412
(1) of the Code of Civil Procedure, against the property of the defendant, on
the ground that the latter was about to depart from the Philippine 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 been 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 (P. J O'Brien vs. Leung Ben) 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 a "cause 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 not 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
Page 2 of 18
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 plain, speedy, and adequate remedy." In the
same section, it is further declared that the proceedings in the Supreme
Court in such cases shall be as prescribed for Courts of First Instance in
sections 217-221, inclusive, of said Code. This has the effect of incorporating
into the practice of the Supreme Court, so far as applicable, the provisions
contained in those sections 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 found in section 614 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 a
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
and that if it finds that such inferior tribunal has not 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 the jurisdiction," as
used in section 217. Taking the three together, it results in our opinion that
any irregular exercise of judicial 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 the 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
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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 over the main cause and
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 principal proceeding and 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 for 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 condition of the defendant.
Every complaint must show a cause of action of some sort; and when the
statute declares that the attachment may issue in an action arising upon
contract, 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 statute 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 an 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
Page 4 of 18
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
speaking, it may be said that the exercise of the injunctive power 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 open 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 case,
because the petitioner is protected by the attachment bond, and that he has
a plain, speedy, and adequate remedy by 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 the 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, recognized both in the civil and
common law, money lost in gaming and voluntarily paid by the loser to the
winner can not, in the absence of statute, 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 of action 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 jurisprudential 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
Page 5 of 18
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 meaning which the legislator
intended to convey by those terms. We remark in passing that the
expression "contratotacito," 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 (i. e.
contracts not evidenced by a sealed instrument or a judicial record), 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 chattel, 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 all cases where there was something of value passing from one
person to another under such circumstance as to constitute a justa causa
debendi. The obligation thereby created was a debt. The constitutive
element in this obligation 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 material or physical object, and it 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 the 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 chattels.
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 a
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
Page 6 of 18
law assumpsit, or parol promise supported by a consideration. The
application of this novel conception had the effect of greatly extending the
field 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 refer- able to a single 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 is 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 destined 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 chattels — which is indicated by the term 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 created — whether
derived from custom, statute or some consensual transaction depending
upon the voluntary acts of the parties. The form of contract known as the
"debt" is of 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 contracts.
The term "implied contract" takes us into the 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. Here 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 legal 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
Page 7 of 18
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 the equivalent of
something taken or detained under circumstances giving rise to the duty to
return or compensate therefor. 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 belonging to
this class of duties.
It will be observed that according to the Civil Code (article 1089)
obligations are supposed to be derived either from (1) the law, (2) contracts
and quasi-contracts, (3) illicit acts and omissions, or (4) acts in which some
sort of blame or negligence is present. This enumeration of the sources of
obligations supposes that the quasi-contractual obligation and the obligation
imposed by law are of different types. The learned Italian jurist, Jorge Giorgi,
criticizes 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 think, 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 law 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
(or constructive contract). No explanation of these distinctions will be here
attempted. Suffice it to say that the term "contract, express or implied" is
used 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 acquires 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
Page 8 of 18
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 is 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 contracts can be here used, or that
the law adopted the fiction of a 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 once
logical and proper. Furthermore, it should not be forgotten that the question
is not how this duty came to be recognized in the common law as a
contractual duty but what sort of obligation did the author of the Code of
Civil Procedure intend to describe when he used 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 judged 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 it does not arise from a licit act as contemplated in article
1887 and the money was not paid under error 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 persons (gestion de negocios ajenos) and (2) the
recovery of what has been improperly paid (cobro 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
Page 9 of 18
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 persons 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-contracts 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., p. 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.)
In permitting the recovery of money lost at play, Act No. 1757 has
introduced modifications in the application of articles 179g, 1801, 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 complaint 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 the writ of attachment. The application for the writ of
certiorari must therefore be denied and the proceedings dismissed. So
ordered.
Arellano, C.J., Torres, Johnson and Carson, JJ., concur.
Separate Opinions
MALCOLM, J., concurring:
As I finished reading the learned and interesting decision of the

majority, the impression which remained was that the court was enticed by
the nice and unusual points presented to make a hard case out of an easy
Page 10 of 18
one, and unfortunately to do violence to the principles of certiorari. The
simple questions are: Did the Court of First Instance of the city of Manila
exceed its jurisdiction in granting an attachment against the property of the
defendant, now plaintiff? Has this defendant, now become the plaintiff, any
other plain, speedy, and adequate remedy? The answers are found in the
decision of this court, in Herrera vs. Barretto and Joaquin ([1913], 25 Phil.,
245), from which I quote the following:
"It has been repeatedly held by this court that a writ of certiorari
will not be issued unless it clearly appears that the court to which it is
to be directed acted without or in excess of jurisdiction. It will not be
issued to cure errors in the proceedings or to correct erroneous
conclusions of law or of fact. If the court has jurisdiction of the subject
matter and of the person, decisions upon all questions pertaining to the
cause are decisions within its jurisdiction and, however irregular or
erroneous they may be, cannot be corrected by certiorari. The Code of
Civil Procedure giving Courts of First Instance general jurisdiction in
actions for mandamus, it goes without saying that the Court of First
Instance had jurisdiction in the present case to resolve every question
arising in such an action and to decide every question presented to it
which pertained to the cause. It has already been held by this court
that, while it is a power to be exercised only in extreme cases, a Court
of First Instance has power to issue a mandatory injunction to stand
until the final determination of the action in which it is issued. While
the issuance of the mandatory injunction in this particular case may
have been irregular and erroneous, a question concerning which we
express no opinion, nevertheless its issuance was within the
jurisdiction of the court and its action is not reviewable on certiorari. It
is not sufficient to say that it was issued wrongfully and without
sufficient grounds and in the absence of the other party. The question
is, Did the court act with jurisdiction?
"It has been urged that the court exceeded its jurisdiction in
requiring the municipal president to issue the license, for the reason
that he was not the proper person to issue it and that, if he was the
proper person, he had the right to exercise a discretion as to whom the
license should be issued. We do not believe that either of these
questions goes to the jurisdiction of the court to act. One of the
fundamental questions in a mandamus against a public officer is
whether or not that officer has the right to exercise discretion in the
performance of the act which the plaintiff asks him to perform. It is one
of the essential determinations of the cause. To claim that the
resolution of that question may deprive the court of jurisdiction is to
assert a novel proposition. It is equivalent to the contention that a
court has jurisdiction if he decides right but no jurisdiction if he decides
wrong. It may be stated generally that it is never necessary to decide
the fundamental questions of a cause to determine whether the court
has jurisdiction. The question of jurisdiction is preliminary and never
touches the merits of the case. The determination of the fundamental
questions of a cause are merely the exercise of a jurisdiction already
conceded. In the case at bar no one denies the power, authority, or
jurisdiction of the Court of First Instance to take cognizance of an action
for mandamus and to decide every question which arises in that cause
and pertains thereto. The contention that the decision of one of those
Page 11 of 18
questions, if wrong, destroys jurisdiction involves an evident
contradiction.
"Jurisdiction is the authority to hear and determine a cause — the
right to act in a case. Since it is the power to hear and determine, it
does not depend either upon the regularity of the exercise of that
power or upon the rightfulness of the decisions made. Jurisdiction
should therefore be distinguished from the exercise of jurisdiction. The
authority to decide a cause at all, and not the decision rendered
therein, is what makes up jurisdiction. Where there is jurisdiction of the
person and subject matter, as we have said before, the decision of all
other questions arising in the case is but an exercise of that
jurisdiction."
Then follows an elaborate citation and discussion of American
authorities, including a decision of the United States Supreme Court and of
the applicable Philippine cases. The decision continues:
"The reasons given in these cases last cited for the allowance of
the writ of prohibition are applicable only to the class of cases with
which the decisions deal and do not in any way militate against the
general proposition herein asserted. Those which relate to election
contests are based upon the principle that those proceedings are
special in their nature and must be strictly followed, a material
departure from the statute resulting in a loss, or in an excess, of
jurisdiction. The cases relating to receivers are based, in a measure,
upon the same principle, the appointment of a receiver being governed
by the statute; and in part upon the theory that the appointment of a
receiver in an improper case is in substance a bankruptcy proceeding,
the taking of which is expressly prohibited by law. The case relative to
the allowance of alimony pendente lite when the answer denies the
marriage is more difficult to distinguish. The reasons in support of the
doctrine laid down in that case are given in the opinion in full and they
seem to place the particular case to which they refer in a class by
itself.
"It is not a light thing that the lawmakers have abolished writs of
error and with them certiorari and prohibition, in so far as they were
methods by which the mere errors of an inferior court could be
corrected. As instruments to that end they no longer exist. Their place
is now taken by the appeal. So long as the inferior court retains
jurisdiction its errors can be corrected only by that method. The office
of the writ of certiorari has been reduced to the correction of defects of
jurisdiction solely and cannot legally be used for any other purpose. It
is truly an extra-ordinary remedy and, in this jurisdiction, its use is
restricted to truly extraordinary cases — cases in which the action of
the inferior court is wholly void; where any further steps in the case
would result in a waste of time and money and would produce no
result whatever; where the parties, or their privies, would be utterly
deceived; where a final judgment or decree would be nought but a
snare and a delusion, deciding nothing, protecting nobody, a judicial
pretension, a recorded falsehood, a standing menace. It is only to
avoid such results as these that a writ of certiorari is issuable; and
even here an appeal will lie if the aggrieved party prefers to prosecute
it.

Page 12 of 18
"A full and thorough examination of all the decided cases in this
court touching the question of certiorari and prohibition fully supports
the proposition already stated that, where a Court of First Instance has
jurisdiction of the subject matter and of the person, its decision of any
question pertaining to the cause, however erroneous, cannot be
reviewed by certiorari, but must be corrected by appeal."
I see no reason to override the decision in Herrera vs. Barretto and
Joaquin (supra). Accordingly, I can do no better than to make the language of
Justice Moreland my own. Applying these principles, it is self-evident that
this court should not entertain the present petition and should not grant the
desired relief.
FISHER, J., dissenting:
I am in full accord with the view that the remedy ofcertiorari may be
invoked in such cases as this, but I am constrained to dissent from the
opinion of the majority as regards the meaning of the term "implied
contract."
Section 412 of the Code of Civil Procedure, in connection with section
424, authorizes the preliminary attachment of the property of the defendant:
"(1) In an action for the recovery of money or damages on a cause of action
arising upon contract, express or implied, when the defendant is about to
depart from the Philippine Islands, with intent to defraud his creditors; (2) . .
.; (3) . . .; (4) . . .; (5) When the defendant has removed or disposed of his
property, or is about to do so, with intent to defraud his creditors."
It is evident that the terms of paragraph five of the article cited are
much broader than those of the first paragraph. The fifth paragraph is not
limited to actions arising from contract, but is by its terms applicable to
actions brought for the purpose of enforcing extra-contractual rights as well
as contractual rights. The limitation upon cases falling under paragraph five
is to be found, not in the character of the obligation for the enforcement for
which the action is brought, but in the terms of article 426, which requires
that the affidavit show that "the amount due the plaintiff . . . is as much as
the sum for which the order is granted."
That is to say, when an application is made for a preliminary
attachment upon the ground that the plaintiff is about to dispose of his
property with intent to defraud his creditors — thus bringing the case within
the terms of paragraph five of the section — it is not necessary to show that
the obligation in suit is contractual in its origin, but it is sufficient to show
that the breach of the obligation, as shown by the facts stated in the
complaint and affidavit, imposes upon the defendant the obligation to pay a
specific and definite sum. For example, if it is alleged in the complaint that
the defendant by his negligence, has caused the destruction by fire of a
building belonging to plaintiff, and that such building was worth a certain
sum of money, these facts would show a definite basis upon which to
authorize the granting of the writ. But if it were averred that the defendant
has published a libel concerning the plaintiff, to the injury of his feelings and
reputation, there is no definite basis upon which to grant an attachment,
Page 13 of 18
because the amount of the damage suffered, being necessarily uncertain
and indeterminate, cannot be ascertained definitely until the trial has been
completed.
But it appears that the legislature, although it has seen fit to authorize
a preliminary attachment in aid of actions of all kinds when the defendant is
concealing his property with intent to defraud his creditors, has provided
that when the ground of attachment is that the defendant is about to depart
from the country with intent to defraud his creditors, the writ will issue only
when the action in aid of which it is sought arises from a contract "express
or implied." If an attachment were permitted upon facts bringing the
application within the first paragraph of the section in support of actions of
any kind, whether the obligation sued upon is contractual or not, then
paragraph five would by construction be made absolutely identical with
paragraph one, and this would be in effect equivalent to the complete
elimination of the last two lines of the first paragraph. It is a rule of statutory
construction that effect should be given to all parts of the statute, if possible.
I can see no reason why the legislature should have limited cases falling
within the first paragraph to actions arising from contract and have refrained
from imposing this limitation with respect to cases falling within the terms of
the fifth paragraph, but this should have no effect upon us in applying the
law. Whether there be a good reason for it or not the distinction exists.
Had the phrase "express or implied" not been used to qualify
"contract," there would be no doubt whatever with regard to the meaning of
the word. In the Spanish civil law contracts are always consensual, and it
would be impossible to define as a contract the juridical relation existing
between a person who has lost money at gaming and the winner of such
money, simply because the law imposes upon the winner the obligation of
making restitution. An obligation of this kind, far from being consensual in its
origin, arises against the will of the debtor. To call such a relation a contract
is, from the standpoint of the civil law, a contradiction in terms.
But it is said that as the phrase "express or implied" has been used to
qualify the word "contract," and these words are found in a statute which
"speaks the language of the common law," this implies the introduction into
our law of the concept of the "implied contract" of the English common law,
a concept which embraces a certain class of obligations originating ex lege,
which have been arbitrarily classified- as contracts, so that they might be
enforced by one of the formal actions of the common law which legal
tradition and practice has reserved for the enforcement of contract. I cannot
concur in this reasoning. I believe that when a technical juridical term of
substantive law is used in the adjective law of these Islands, we should seek
its meaning in our own substantive law rather than in the law of America or
of England. The Code of Civil Procedure was not enacted to establish rules of
substantive law, but upon the assumption of the existence of these rules.
In the case of Cayce vs. Curtis (Dallam's Decisions, Texas Reports,
403), it appears that the legislature, at a time when that State still retained
to a large extent the Spanish substantive civil law, enacted a statute in
which the word "bond" is used. In litigation involving the construction of that
Page 14 of 18
statute, one of the parties contended that the word "bond" should be given
the technical meaning which it had in the English Common Law. The court
rejected this contention, saying —
"On the first point it is urged by counsel for the appellant that the
word 'bond,' used in the statute, being a common law term, we must
refer to the common law for its legal signification; and that by that law
no instrument is a bond which is not under seal. The truth of the
proposition that sealing is an absolute requisite to the validity of a
bond at common law is readily admitted; but the applicability of that
rule to the case under consideration is not perceived. This bond was
taken at a time when the common law afforded no rule of decision or
practice in this country, and consequently that law cannot be
legitimately resorted to, even for the purpose for which it is invoked by
the counsel for the appellant, unless it be shown that the civil law
(which under certain modifications was at that time the law of the land)
had no term of similar import; for we regard it as a correct rule of
construction, that where technical terms are used in a statute, they
are to be referred for their signification to terms of similar import in the
system of laws which prevails in the country where the statute is
passed, and not to another system which is entirely foreign to the
whole system of municipal regulations by which that country is
governed. (Martin's Reports, vol. 3, 185; 7 Martin [N. S.], 162.)"
Consequently, I believe that in the interpretation of the phrase
"contract, express or implied," we should apply the rules of our own
substantive law. The phrase in itself offers no difficulty. The concept of the
contract, under the Civil Code, as a legal relation of exclusively consensual
origin, offers no difficulty. Nor is any difficulty encountered in the
grammatical sense of the words "express" and "implied." "Express,"
according to the New International Dictionary is "that which is directly and
distinctly stated; expressed, not merely implied or left to inference."
Therefore, a contract entered into by means of letters, in which the offer and
the acceptance have been manifested by appropriate words, would be an
"express contract." The word "imply," according to the same dictionary, is
"to involve in substance or essence, or by fair inference, or by construction
of law, when not expressly stated in words or signs; to contain by
implication; to include virtually."
Therefore, if I enter a tailor shop and order a suit of clothes, although
nothing is said regarding payment, it is an inference, both logical and legal,
from my act that it is my intention to pay the reasonable value of the
garments. The contract is implied, but it is none the less purely consensual.
An implied contract, therefore, is that in which the consent of the parties is
implied.
Manresa, commenting upon article 1262 of the Civil Code, says:
"The essence of consent is the agreement of the parties
concerning that which is to constitute the contract . . . . The forms of
this agreement may vary according to whether it is expressed verbally
or in writing, by words or by acts. Leaving the other differences for
consideration hereafter, we will only refer now to those which exist
between express consent and implied consent . . .. It is unquestionable
Page 15 of 18
t h a t implied consent manifested by acts or conduct, produces a
contract . . . ."
If it were necessary to have recourse to the English common law for
the purpose of ascertaining the meaning of the phrase under consideration,
we could find many decisions which gave it the same meaning as that for
which I contend.
"An implied contract is where one party receives benefits from
another party, under such circumstances that the law presumes a
promise on the part of the party benefited to pay a reasonable price for
the same." (Jones vs. Tucker [Del.], 84 Atlantic, 1012.)
It is true that English courts have extended the concept of the term
"contract" to include certain obligations arising ex lege without consent,
express or implied. True contracts created by implied consent are
designated in the English common law as "contracts implied in fact," while
the so-called "contracts" in which the consent is a fiction of law are called
"contracts implied by law." But it is evident that the latter are not real
contracts. They have been called "contracts" arbitrarily by the courts of
England, and those of the United States in which the English common law is
in force, in order that certain actions arising ex lege may be enforced by the
action of assumpsit. In the rigid formulism of the English common law the
substantive right had to be accommodated to the form of action. As is stated
in the monograph on the action of assumpsit in Ruling Case Law (volume 2,
p. 743) —
"In theory it was an action to recover for the nonperformance of
simple contracts, and the formula and proceedings were constructed
and carried on accordingly. . . . From the reign of Elizabeth this action
has been extended to almost every case where an obligation arises
from natural reason, . . . and it is now maintained in many cases which
its principles do not comprehend and where fictions and intendments
are resorted to, to fit the actual cause of action to the theory of the
remedy. It is thus sanctioned where there has been no . . . real
contract, but where some duty is deemed sufficient to justify the court
i n imputing a promise to perform it, and hence in bending the
transaction to the form of action."
In the ancient English common law procedure the form of the action
was regarded as being much more important than the substantive right to
be enforced. If no form of action was found into which the facts would fit, so
much the worse for the facts! To avoid the injustices to which this condition
of affairs gave rise, the judges invented those fictions which permitted them
to preserve the appearance of conservatism and change the law without
expressly admitting that they were doing so. The indispensable averment,
without which the action of assumpsit would not lie, was that the defendant
promised to pay plaintiff the amount demanded. (Sector vs. Holmes, 17 Va.,
566.) In true contracts, whether express or implied, this promise in fact
exists. In obligations arising ex lege there is no such promise, and therefore
the action of assumpsit could not be maintained, although by reason of its
relative simplicity it was one of the most favored forms of action. In order to
permit the litigant to make use of this form of action for the enforcement of
Page 16 of 18
certain classes of obligations arising ex lege, the judges invented the fiction
of the promise of the defendant to pay the amount of the obligation, and as
this fictitious promise gives the appearance of consensuality to the legal
relations of the parties, the name of implied contract is given to that class of
extra-contractual obligations enforcible by the action of assumpsit.
Now, it is not to be supposed that it was the intention of the Legislature
in making use in the first paragraph of article 412 of the phrase "contract,
express or implied" to corrupt the logical simplicity of our concept of
obligations by importing into our law the antiquated fictions of the mediaeval
English common law. If one of the concepts of the term "implied contract" in
the English common law, namely, that in which consent is presumed from
the conduct of the debtor, harmonizes with the concept of the contract in our
law, why should we reject that meaning and hold that the Legislature
intended to use this phrase in the foreign and illogical sense of a "contract"
arising without consent? This is a civil law country. Why should we be
compelled to study the fictions of the ancient English common law, in order
to be informed as to the meaning of the word "contract" in the law of the
Philippine Islands ? Much more reasonable to my mind was the conclusion of
the Texas court, under similar circumstances, to the effect that "Where
technical terms are used in a statute they are to be referred for their
signification to terms of similar import in the system of laws which prevails in
the country where the statute is passed." (Cayce vs. Curtis, supra.)
My conclusion is that the phrase "contract, express or implied" should
be interpreted in the grammatical sense of the words and limited to true
contracts, consensual obligations arising from consent, whether expressed in
words, writing or signs, or presumed from conduct. As it is evident that the
defendant in the present case never promised, expressly or by implication,
to return the money won from him in the gambling game in question, his
obligation to restore the amount so won, imposed by the law, is not
contractual, but purely extra-contractual, and therefore the action brought
not being one arising upon "contract, express or implied," the plaintiff! is not
entitled to a preliminary attachment upon the averment that the defendant
is about to depart from the Philippine Islands with intent to defraud his
creditors, no averment being made in the complaint or in the affidavit that
the defendant has removed or disposed of his property, or is about to depart
with intent to defraud his creditors, so as to bring the case within the terms
of the fifth paragraph of section 412.
I am unable to agree with the contention of the applicant (brief, p. 39)
here that the phrase in question should be interpreted in such a way as to
include all obligations, whether arising from consent or ex lege, because that
is equivalent to eliminating all distinction between the first and the fifth
paragraphs by practically striking out the first two lines of paragraph one.
The Legislature has deliberately established this distinction, and while we
may be unable to see any reason why it should have been made, it is our
duty to apply and interpret the law, and we are not authorized under the
guise of interpretation to virtually repeal part of the statute.
Nor can it be said that the relations between the parties litigant
Page 17 of 18
constitute a quasi contract. In the first place, quasi contracts are "lawful and
purely voluntary acts by which the authors thereof become obligated in favor
of a third person . . . ." (Civil Code, article 1887.) The act which gave rise to
the obligation ex lege relied upon by the plaintiff in the court below is illicit
— an unlawful gambling game. In the second place, the first paragraph of
section 412 of the Code of Civil Procedure does not authorize an attachment
in actions arising out of quasi contracts, but only in actions arising out of
contracts, express or implied.
I am therefore of the opinion that the court below was without
jurisdiction to issue the writ of attachment, and that the writ should be
declared null and void.

Page 18 of 18
FIRST DIVISION
[G.R. No. L-49781-91. June 24, 1983.]
THE PEOPLE OF THE PHILIPPINES, petitioner, vs. HON. JUDGE

CATALINO CASTAÑEDA, JR. OF THE COURT OF FIRST
INSTANCE OF ILOILO; MANUEL DOCDOCIL; CIRIACO
ESTRELLA; ERLINDA FACUNDO; SONIA GONZALES; JUANITO
GOMELIA; FERMIN LEONOR; ESING PES; ROLANDO
PETINGLAY; DAMIANA SOILA; LYDIA VENCER AND VICTORIA
YAPSING, respondents.
The Solicitor General for petitioner.

Al A. Castro and Luis T . Tirol for respondents.
SYLLABUS
1. CRIMINAL LAW; PERSON CRIMINALLY LIABLE, ALSO CIVILLY LIABLE;

BUT EXEMPTION FROM CRIMINAL LIABILITY DOES NOT ALWAYS INCLUDE
EXEMPTION FROM CIVIL LIABILITY. — Every person criminally liable is also
civilly liable (Article 100, Revised Penal Code). However, it does not follow
that a person who is not criminally liable is also free from civil liability.
Exemption from criminal liability does not always include exemption from
civil liability (Article 101, Revised Penal Code).
2. ID.; ACQUITTAL BECAUSE GUILT HAS NOT BEEN PROVED BEYOND
REASONABLE DOUBT; SAME ACT OR OMISSION AS BASIS OF ACTION FOR
DAMAGES. — When the accused in a criminal prosecution is acquitted on the
ground that his guilt has not been proved beyond reasonable doubt, a civil
action for damages for the same act or omission may be instituted.
3. ID.; ACQUITTAL; GENERAL RULE; EXCEPTION. — While it is true, as a
general rule, that if the accused is acquitted his civil liability is extinguished,
there are exceptions, one of which is, if the acquittal is on the ground of
reasonable doubt (Article 29, Civil Code). The remedy of the complainant in
the case at bar is to file separate civil actions against the herein private
respondents for ejectment or recovery of possession.
DECISION
RELOVA, J : p
Private respondents were individually charged before the City Court of

Iloilo City for Violations of Presidential Decree No. 772 in eleven (11)
separate informations, docketed as Criminal Cases Nos. 57569 to 57579,
albeit identically worded as follows:
Page 1 of 3
"That on or about the period before May 1968 up to the present,
in the City of Iloilo, Philippines, and within the jurisdiction of this Court,
said accused, with deliberate intent and taking advantage of the
absence or tolerance of Trinidad Jason, who is the owner of Lot No.
1241, did then and there wilfully, unlawfully and criminally succeeds in
occupying said lot and construct therein a house against the will and
consent of said Trinidad Jason." (p. 1, Decision dated May 17, 1978 of
CFI, Iloilo.)
After trial on the merits, the City Court rendered a decision, dated June
27, 1977, acquitting the said private respondents on the ground that the
prosecution failed to prove their guilt beyond reasonable doubt.
Trinidad Jason, the complainant in said criminal cases, moved for a
reconsideration of the decision for the court to order the defendants "to
vacate Lot No. 1241 of the Cadastral Survey of Iloilo located along Timawa
Avenue, Molo, Iloilo City and to remove their constructions thereon and to
surrender possession thereof to the offended party, Trinidad Jason, and to
pay damages to the latter in whatever sum is adjudged equitable by the
Honorable Court plus attorneys' fees of not less than P5,000.00." (p. 2.
Decision of the CFI dated May 17, 1978) cdrep
Upon denial of the motion for reconsideration, Trinidad Jason appealed

to the then Court of First Instance of Iloilo contending that "the unlawful
detainer of her land by the accused was proved and conceded," and that
"the accused although acquitted should have been ordered to return the
land to her." Further, she argued that where no civil action was instituted,
waived or reserved it should be determined impliedly and jointly with the
criminal action.
On May 17, 1978, respondent Court of First Instance rendered a
decision dismissing the appeal. Thereafter, complainant filed a petition for
review with the Court of Appeals which referred the case to Us because "it
involves a pure question of law."
In this petition, the legal question raised is, whether, on the basis of
the findings of the trial court and despite the acquittal of the accused, the
latter should be ordered to surrender to the offended party the portion of the
land occupied by them.
Every person criminally liable is also civilly liable (Article 100, Revised
Penal Code). However, it does not follow that a person who is not criminally
liable is also free from civil liability. Exemption from criminal liability does
not always include exemption from civil liability (Article 101, Revised Penal
Code). When the accused in a criminal prosecution is acquitted on the
We agree with the trial court that the appeal of complainant Trinidad
Jason is without merit. While it is true, as a general rule, that if the accused
is acquitted his civil liability is extinguished, there are exceptions, one of
which is, if the acquittal is on the ground of reasonable doubt (Article 29,
Civil Code). The remedy of the complainant in the case at bar is to file
Page 2 of 3
separate civil actions against the herein private respondents for ejectment
or recovery of possession.
ACCORDINGLY, this appeal taken by complainant Trinidad Jason is
hereby DISMISSED, for lack of merit.
SO ORDERED.
Melencio-Herrera, Plana, Vazquez and Gutierrez, Jr., JJ ., concur.
Teehankee, J ., took no part.

Page 3 of 3
SECOND DIVISION
[G.R. No. 180440. December 5, 2012.]
DR. GENEVIEVE L. HUANG, petitioner, vs. PHILIPPINE

HOTELIERS, INC., DUSIT THANI PUBLIC CO., LTD. and FIRST
LEPANTO TAISHO INSURANCE CORPORATION, respondents.
DECISION
PEREZ, J : p
For this Court's resolution is a Petition for Review on Certiorari under Rule
45 of the Rules of Court, assailing the Decision 1 of the Court of Appeals in CA-
G.R. CV No. 87065 dated 9 August 2007, affirming the Decision 2 of Branch 56
of the Regional Trial Court (RTC) of Makati City in Civil Case No. 96-1367 dated
21 February 2006, dismissing for lack of merit herein petitioner Dr. Genevieve
L. Huang's Complaint for Damages. Assailed as well is the Court of Appeals'
Resolution 3 dated 5 November 2007 denying for lack of merit petitioner's
Motion for Reconsideration. prcd
This case stemmed from a Complaint for Damages filed on 28 August

1996 by petitioner Dr. Genevieve L. Huang 4 against herein respondents
Philippine Hoteliers, Inc. (PHI) 5 and Dusit Thani Public Co., Ltd. (DTPCI), 6 as
owners of Dusit Thani Hotel Manila (Dusit Hotel); 7 and co-respondent First
Lepanto Taisho Insurance Corporation (First Lepanto), 8 as insurer of the
aforesaid hotel. The said Complaint was premised on the alleged negligence of
respondents PHI and DTPCI's staff, in the untimely putting off all the lights
within the hotel's swimming pool area, as well as the locking of the main
entrance door of the area, prompting petitioner to grope for a way out. While
doing so, a folding wooden counter top fell on her head causing her serious
brain injury. The negligence was allegedly compounded by respondents PHI and
DTPCI's failure to render prompt and adequate medical assistance.
Petitioner's version of the antecedents of this case is as follows:

On 11 June 1995, Delia Goldberg (Delia), a registered guest of Dusit Hotel,
invited her friend, petitioner Dr. Genevieve L. Huang, for a swim at the hotel's
swimming pool facility. They started bathing at around 5:00 p.m. At around
7:00 p.m., the hotel's swimming pool attendant informed them that the
swimming pool area was about to be closed. The two subsequently proceeded
to the shower room adjacent to the swimming pool to take a shower and dress
up. However, when they came out of the bathroom, the entire swimming pool
area was already pitch black and there was no longer any person around but
the two of them. They carefully walked towards the main door leading to the
hotel but, to their surprise, the door was locked. 9
Petitioner and Delia waited for 10 more minutes near the door hoping
Page 1 of 27
someone would come to their rescue but they waited in vain. Delia became
anxious about their situation so petitioner began to walk around to look for a
house phone. Delia followed petitioner. After some time, petitioner saw a phone
behind the lifeguard's counter. While slowly walking towards the phone, a hard
and heavy object, which later turned out to be the folding wooden counter top,
fell on petitioner's head that knocked her down almost unconscious. 10
Delia immediately got hold of the house phone and notified the hotel
telephone operator of the incident. Not long after, the hotel staff arrived at the
main entrance door of the swimming pool area but it took them at least 20 to
30 minutes to get inside. When the door was finally opened, three hotel
chambermaids assisted petitioner by placing an ice pack and applying some
ointment on her head. After petitioner had slightly recovered, she requested to
be assisted to the hotel's coffee shop to have some rest. Petitioner demanded
the services of the hotel physician. 11
Dr. Violeta Dalumpines (Dr. Dalumpines) arrived. She approached
petitioner and introduced herself as the hotel physician. However, instead of
immediately providing the needed medical assistance, Dr. Dalumpines
presented a "Waiver" and demanded that it be signed by petitioner, otherwise,
the hotel management will not render her any assistance. Petitioner refused to
do so. 12 TCASIH
After eating her dinner and having rested for a while, petitioner left the
hotel's coffee shop and went home. Thereupon, petitioner started to feel
extraordinary dizziness accompanied by an uncomfortable feeling in her
stomach, which lasted until the following day. Petitioner was constrained to
stay at home, thus, missing all her important appointments with her patients.
She also began experiencing "on" and "off" severe headaches that caused her
three (3) sleepless nights. 13
Petitioner, thus, decided to consult a certain Dr. Perry Noble (Dr. Noble), a
neurologist from Makati Medical Center, who required her to have an X-ray and
a Magnetic Resonance Imaging (MRI) tests. 14 The MRI Report 15 dated 23
August 1995 revealed the following findings:
CONSULTATION REPORT:
MRI examination of the brain shows scattered areas of

intraparenchymal contusions and involving mainly the left middle
and posterior temporal and slightly the right anterior temporal
lobe.
Other small areas of contusions with suggestive pertechiae

are seen in the left fronto-parietal, left parieto-occipital and with
deep frontal periventricular subcortical and cortical regions.
There is no mass effect nor signs of localized hemorrhagic
extravasation.
The ventricles are not enlarged, quite symmetrical without

shifts or deformities; the peripheral sulci are within normal limits.
The C-P angles, petromastoids, sella, extrasellar and retro

Page 2 of 27
orbital areas appear normal.
The brainstem is unremarkable.

IMPRESSION:Scattered small intraparenchymal contusions
mainly involving the left middle-posterior
temporal lobe and also right medial anterior
temporal, both deep frontal subcortical, left
parieto-occipital subcortical and cortical
regions.
Ischemic etiology not ruled out.
No localized intra — or extracerebral
hemorrhage. 16
Petitioner claimed that the aforesaid MRI result clearly showed that her
head was bruised. Based also on the same MRI result, Dr. Noble told her that
she has a very serious brain injury. In view thereof, Dr. Noble prescribed the
necessary medicine for her condition. 17
Petitioner likewise consulted a certain Dr. Ofelia Adapon, also a

neurologist from Makati Medical Center, who required her to undergo an
Electroencephalogram examination (EEG) to measure the electrostatic in her
brain. 18 Based on its result, 19 Dr. Ofelia Adapon informed her that she has a
serious condition — a permanent one. Dr. Ofelia Adapon similarly prescribed
medicines for her brain injury. 20
Petitioner's condition did not get better. Hence, sometime in September
1995, she consulted another neuro-surgeon by the name of Dr. Renato Sibayan
(Dr. Sibayan), who required her to have an X-ray test. 21 According to petitioner,
Dr. Sibayan's finding was the same as those of the previous doctors that she
had consulted — she has a serious brain injury. 22
By reason of the unfortunate 11 June 1995 incident inside the hotel's
swimming pool area, petitioner also started to feel losing her memory, which
greatly affected and disrupted the practice of her chosen profession. 23 Thus,
on 25 October 1995, petitioner, through counsel, sent a demand letter 24 to
respondents PHI and DTPCI seeking payment of an amount not less than
P100,000,000.00 representing loss of earnings on her remaining life span. But,
petitioner's demand was unheeded.
In November 1995, petitioner went to the United States of America (USA)
for further medical treatment. She consulted a certain Dr. Gerald Steinberg and
a certain Dr. Joel Dokson 25 from Mount Sinai Hospital who both found that she
has "post traumatic-post concussion/contusion cephalgias-vascular and
neuralgia." 26 She was then prescribed to take some medications for severe
pain and to undergo physical therapy. Her condition did not improve so she
returned to the Philippines. 27
Petitioner, once again, consulted Dr. Sibayan, who simply told her to just
relax and to continue taking her medicines. Petitioner also consulted other
neurologists, who all advised her to just continue her medications and to
undergo physical therapy for her neck pain. 28
Page 3 of 27
Sometime in 1996, petitioner consulted as well a certain Dr. Victor Lopez
(Dr. Lopez), an ophthalmologist from the Makati Medical Center, because of her
poor vision, which she has experienced for several months. 29 Petitioner's Eye
Report dated 5 March 1996 30 issued by Dr. Lopez stated: "IMPRESSION:
Posterior vitreous detachment, right eye of floaters." Dr. Lopez told petitioner
that her detached eye is permanent and very serious. Dr. Lopez then
prescribed an eye drop to petitioner. 31
For petitioner's frustration to dissipate and to regain her former strength
and physical well-being, she consulted another neuro-surgeon from Makati
Medical Center by the name of Dr. Leopoldo P. Pardo, Jr. (Dr. Pardo, Jr.). 32 She
disclosed to Dr. Pardo, Jr. that at the age of 18 she suffered a stroke due to
mitral valve disease and that she was given treatments, which also resulted in
thrombocytopenia. In Dr. Pardo, Jr.'s medical evaluation of petitioner dated 15
May 1996, 33 he made the following diagnosis and opinion: SAHaTc
DIAGNOSIS AND OPINION:
This patient sustained a severe head injury in (sic) [11 June 1995]
and as a result of which she developed the following injuries:
1. Cerebral Concussion and Contusion

2. Post-traumatic Epilepsy
3. Post-concussional Syndrome
4. Minimal Brain Dysfunction

5. Cervical Sprain, chronic recurrent
It is my opinion that the symptoms she complained of in the

foregoing history are all related to and a result of the injury sustained
on [11 June 1995].
It is further my opinion that the above diagnosis and complaints do
materially affect her duties and functions as a practi[c]ing physician
and dermatologist, and that she will require treatment for an
undetermined period of time.
The percentage of disability is not calculated at this time and will

require further evaluation and observation. 34
Dr. Pardo, Jr. then advised petitioner to continue her medications. 35

Petitioner likewise consulted a certain Dr. Tenchavez 36 for her follow-up
EEG. 37 He similarly prescribed medicine for petitioner's deep brain injury. He
also gave her pain killer for her headache and advised her to undergo physical
therapy. Her symptoms, however, persisted all the more. 38
In 1999, petitioner consulted another neurologist at the Makati Medical

Center by the name of Dr. Martesio Perez (Dr. Perez) because of severe fleeting
pains in her head, arms and legs; difficulty in concentration; and warm
sensation of the legs, which symptoms also occurred after the 11 June 1995
incident. Upon examination, Dr. Perez observed that petitioner has been
Page 4 of 27
experiencing severe pains and she has a slight difficulty in concentration. He
likewise noted that there was a slight spasm of petitioner's neck muscle but,
otherwise, there was no objective neurologic finding. The rest of petitioner's
neurologic examination was essentially normal. 39
Dr. Perez's neurologic evaluation 40 of petitioner reflected, among others:

(1) petitioner's past medical history, which includes, among others, mitral valve
stenosis; (2) an interpretation of petitioner's EEG results in October 1995 and in
January 1999, i.e., the first EEG showed sharp waves seen bilaterally more on
the left while the second one was normal; and (3) interpretation of petitioner's
second MRI result, i.e., petitioner has a permanent damage in the brain, which
can happen either after a head injury or after a stroke. Dr. Perez concluded that
petitioner has post-traumatic or post concussion syndrome. 41 HTDCAS
Respondents, on the other hand, denied all the material allegations of

petitioner and, in turn, countered the latter's statement of facts, thus:
According to respondents PHI and DTPCI, a sufficient notice had been

posted on the glass door of the hotel leading to the swimming pool area to
apprise the people, especially the hotel guests, that the swimming pool area is
open only from 7:00 a.m. to 7:00 p.m. 42 Though the hotel's swimming pool
area is open only between the aforestated time, the lights thereon are kept on
until 10:00 p.m. for, (1) security reasons; (2) housekeeping personnel to do the
cleaning of the swimming pool surroundings; and (3) people doing their
exercise routine at the Slimmer's World Gym adjacent to the swimming pool
area, which was then open until 10:00 p.m., to have a good view of the hotel's
swimming pool. Even granting that the lights in the hotel's swimming pool area
were turned off, it would not render the area completely dark as the Slimmer's
World Gym near it was well-illuminated. 43
Further, on 11 June 1995, at around 7:00 p.m., the hotel's swimming pool
attendant advised petitioner and Delia to take their showers as it was already
closing time. Afterwards, at around 7:40 p.m., Pearlie Benedicto-Lipana (Ms.
Pearlie), the hotel staff nurse, who was at the hotel clinic located at the
mezzanine floor, received a call from the hotel telephone operator informing
her that there was a guest requiring medical assistance at the hotel's
swimming pool area located one floor above the clinic. 44
Immediately, Ms. Pearlie got hold of her medical kit and hurriedly went to
the hotel's swimming pool area. There she saw Delia and petitioner, who told
her that she was hit on the head by a folding wooden counter top. Although
petitioner looked normal as there was no indication of any blood or bruise on
her head, Ms. Pearlie still asked her if she needed any medical attention to
which petitioner replied that she is a doctor, she was fine and she did not need
any medical attention. Petitioner, instead, requested for a hirudoid cream to
which Ms. Pearlie acceded. 45
At about 8:00 p.m., after attending to petitioner, Ms. Pearlie went back
to the hotel clinic to inform Dr. Dalumpines of the incident at the hotel's
swimming pool area. But before she could do that, Dr. Dalumpines had
Page 5 of 27
already chanced upon Delia and petitioner at the hotel's coffee shop and the
latter reported to Dr. Dalumpines that her head was hit by a folding wooden
counter top while she was inside the hotel's swimming pool area. When
asked by Dr. Dalumpines how she was, petitioner responded she is a doctor,
she was fine and she was already attended to by the hotel nurse, who went
at the hotel's swimming pool area right after the accident. Dr. Dalumpines
then called Ms. Pearlie to verify the same, which the latter confirmed. 46
Afterwards, Dr. Dalumpines went back to petitioner and checked the
latter's condition. Petitioner insisted that she was fine and that the hirudoid
cream was enough. Having been assured that everything was fine, Dr.
Dalumpines requested petitioner to execute a handwritten certification 47
regarding the incident that occurred that night. Dr. Dalumpines then suggested
to petitioner to have an X-ray test. Petitioner replied that it was not necessary.
Petitioner also refused further medical attention. 48
On 13 June 1995, petitioner called up Dr. Dalumpines. The call, however,

had nothing to do with the 11 June 1995 incident. Instead, petitioner merely
engaged in small talk with Dr. Dalumpines while having her daily massage. The
two talked about petitioner's personal matters, i.e., past medical history,
differences with siblings and family over inheritance and difficulty in practice.
Petitioner even disclosed to Dr. Dalumpines that she once fell from a horse; that
she had a stroke; had hysterectomy and is incapable of having children for her
uterus had already been removed; that she had blood disorder, particularly lack
of platelets, that can cause bleeding; and she had an "on" and "off" headaches.
Petitioner oftentimes called Dr. Dalumpines at the hotel clinic to discuss topics
similar to those discussed during their 13 June 1995 conversation. 49
Also, during one of their telephone conversations, petitioner requested for
a certification regarding the 11 June 1995 incident inside the hotel's swimming
pool area. Dr. Dalumpines accordingly issued Certification dated 7 September
1995, which states that: 50 ICAcaH
CERTIFICATION
This is to certify that as per Clinic records, duty nurse [Pearlie]
was called to attend to an accident at the poolside at 7:45PM on [11
June 1995].
Same records show that there, she saw [petitioner] who

claimed the folding countertop fell on her head when she lifted
it to enter the lifeguard's counter to use the phone . She asked
for Hirudoid.
The same evening [petitioner] met [Dr. Dalumpines] at the
Coffee Shop. After narrating the poolside incident and declining [Dr.
Dalumpines'] offer of assistance, she reiterated that the
Hirudoid cream was enough and that [petitioner] being a
doctor herself, knew her condition and she was all right.
This certification is given upon the request of [petitioner] for
whatever purpose it may serve, [7 September 1995] at Makati City. 51
(Emphasis supplied).
Page 6 of 27
Petitioner personally picked up the afore-quoted Certification at the hotel
clinic without any objection as to its contents. 52
From 11 June 1995 until 7 September 1995, the hotel clinic never
received any complaint from petitioner regarding the latter's condition. The
hotel itself neither received any written complaint from petitioner. 53
After trial, the court a quo in its Decision dated 21 February 2006
dismissed petitioner's Complaint for lack of merit.
The trial court found petitioner's testimony self-serving, thus, devoid of
credibility. Petitioner failed to present any evidence to substantiate her
allegation that the lights in the hotel's swimming pool area were shut off at the
time of the incident. She did not even present her friend, Delia, to corroborate
her testimony. More so, petitioner's testimony was contradicted by one of the
witnesses presented by the respondents who positively declared that it has
been a normal practice of the hotel management not to put off the lights until
10:00 p.m. to allow the housekeepers to do the cleaning of the swimming pool
surroundings, including the toilets and counters. Also, the lights were kept on
for security reasons and for the people in the nearby gym to have a good view
of the swimming pool while doing their exercise routine. Besides, there was a
remote possibility that the hotel's swimming pool area was in complete
darkness as the aforesaid gym was then open until 10:00 p.m., and the lights
radiate to the hotel's swimming pool area. As such, petitioner would not
have met the accident had she only acted with care and caution. 54
The trial court further struck down petitioner's contention that the hotel
management did not extend medical assistance to her in the aftermath of the
accident. Records showed that the hotel management immediately responded
after being notified of the accident. The hotel nurse and the two chambermaids
placed an ice pack on petitioner's head. They were willing to extend further
emergency assistance but petitioner refused and merely asked for a hirudoid
cream. Petitioner even told them she is a doctor and she was fine. Even the
medical services offered by the hotel physician were turned down by petitioner.
Emphatically, petitioner cannot fault the hotel for the injury she sustained as
she herself did not heed the warning that the swimming pool area is open only
from 7:00 a.m. to 7:00 p.m. As such, since petitioner's own negligence
was the immediate and proximate cause of her injury, she cannot
recovered damages. 55
The trial court similarly observed that the records revealed no indication
that the head injury complained of by petitioner was the result of the alleged 11
June 1995 accident. Firstly, petitioner had a past medical history which might
have been the cause of her recurring brain injury. Secondly, the findings of Dr.
Perez did not prove a causal relation between the 11 June 1995 accident and
the brain damage suffered by petitioner. Even Dr. Perez himself testified that
the symptoms being experienced by petitioner might have been due to factors
other than the head trauma she allegedly suffered. It bears stressing that
petitioner had been suffering from different kinds of brain problems since she
was 18 years old, which may have been the cause of the recurring symptoms of
Page 7 of 27
head injury she is experiencing at present. Absent, therefore, of any proof
establishing the causal relation between the injury she allegedly suffered on 11
June 1995 and the head pains she now suffers, her claim must fail. Thirdly, Dr.
Teresita Sanchez's (Dr. Sanchez) testimony cannot be relied upon since she
testified on the findings and conclusions of persons who were never presented
in court. Ergo, her testimony thereon was hearsay. Fourthly, the medical
reports/evaluations/certifications issued by myriads of doctors whom petitioner
sought for examination or treatment were neither identified nor testified to by
those who issued them. Being deemed as hearsay, they cannot be given
probative value. Even assuming that petitioner suffered head injury as a
consequence of the 11 June 1995 accident, she cannot blame anyone
but herself for staying at the hotel's swimming pool area beyond its
closing hours and for lifting the folding wooden counter top that
eventually hit her head. 56
For petitioner's failure to prove that her serious and permanent injury was
the result of the 11 June 1995 accident, thus, her claim for actual or
compensatory damages, loss of income, moral damages, exemplary damages
and attorney's fees, must all fail. 57 DcIHSa
With regard to respondent First Lepanto's liability, the trial court ruled
that under the contract of insurance, suffice it to state that absent any cause
for any liability against respondents PHI and DTPCI, respondent First Lepanto
cannot be made liable thereon.
Dissatisfied, petitioner elevated the matter to the Court of Appeals with
the following assignment of errors: (1) the trial court erred in finding that the
testimony of [petitioner] is self-serving and thus void of credibility; (2) the trial
court erred in applying the doctrine of proximate cause in cases of breach of
contract [and even] assuming arguendo that the doctrine is applicable,
[petitioner] was able to prove by sufficient evidence the causal connection
between her injuries and [respondents PHI and DTPCI's] negligent act; and (3)
the trial court erred in holding that [petitioner] is not entitled to damages. 58
On 9 August 2007, the Court of Appeals rendered a Decision affirming the
findings and conclusions of the trial court.
The Court of Appeals ratiocinated in this wise:
At the outset, it is necessary for our purpose to determine
whether to decide this case on the theory that [herein respondents PHI
and DTPCI] are liable for breach of contract or on the theory of quasi-
delict.
xxx xxx xxx
It cannot be gainsaid that [herein petitioner's] use of the hotel's
pool was only upon the invitation of [Delia], the hotel's registered
guest. As such, she cannot claim contractual relationship between her
and the hotel. Since the circumstances of the present case do
not evince a contractual relation between [petitioner] and
[respondents], the rules on quasi-delict, thus, govern.
Page 8 of 27
The pertinent provision of Art. 2176 of the Civil Code which
states: "Whoever by act or omission causes damage to another, there
being fault or negligence, is obliged to pay for the damage done. Such
fault or negligence, if there is no pre-existing contractual relation
between the parties, is called quasi-delict."
A perusal of Article 2176 shows that obligations arising from
quasi-delict or tort, also known as extra-contractual obligations, arise
only between parties not otherwise bound by contract, whether
express or implied. Thus, to sustain a claim liability under quasi-delict,
the following requisites must concur: (a) damages suffered by the
plaintiff; (b) fault or negligence of the defendant, or some other person
for whose acts he must respond; and (c) the connection of cause and
effect between the fault or negligence of the defendant and the
damages incurred by the plaintiff. cSCADE
Viewed from the foregoing, the question now is whether

[respondents PHI and DTPCI] and its employees were negligent? We do
not think so. Several factors militate against [petitioner's] contention.
One. [Petitioner] recognized the fact that the pool area's closing
time is [7:00 p.m.]. She, herself, admitted during her testimony that
she was well aware of the sign when she and [Delia] entered the pool
area. Hence, upon knowing, at the outset, of the pool's closing time,
she took the risk of overstaying when she decided to take shower and
leave the area beyond the closing hour. In fact, it was only upon the
advise of the pool attendants that she thereafter took her shower.
Two. She admitted, through her certification that she lifted the
wooden bar countertop, which then fell onto her head. The admission
in her certificate proves the circumstances surrounding the occurrence
that transpired on the night of [11 June 1995]. This is contrary to her
assertion in the complaint and testimony that, while she was passing
through the counter door, she was suddenly knocked out by a hard and
heavy object. In view of the fact that she admitted having lifted the
counter top, it was her own doing, therefore, that made the counter
top fell on to her head.
Three. We cannot likewise subscribe to [petitioner's] assertion
that the pool area was totally dark in that she herself admitted that she
saw a telephone at the counter after searching for one. It must be
noted that [petitioner] and [Delia] had walked around the pool area
with ease since they were able to proceed to the glass entrance door
from shower room, and back to the counter area where the telephone
was located without encountering any untoward incident. Otherwise,
she could have easily stumbled over, or slid, or bumped into something
while searching for the telephone. This negates her assertion that the
pool area was completely dark, thereby, totally impairing her vision.
xxx xxx xxx
The aforementioned circumstances lead us to no other
conclusion than that the proximate and immediate cause of the
injury of [petitioner] was due to her own negligence.
Moreover, [petitioner] failed to sufficiently substantiate that the
Page 9 of 27
medical symptoms she is currently experiencing are the direct result of
the head injury she sustained on [11 June 1995] as was aptly discussed
in the lower court's findings.
xxx xxx xxx
It bears stressing that in civil cases, the law requires that the
party who alleges a fact and substantially asserts the affirmative of the
issue has the burden of proving it. Hence, for [petitioner] to be entitled
to damages, she must show that she had suffered an actionable injury.
Regrettably, [petitioner] failed in this regard. 59 (Emphasis supplied).
Petitioner's Motion for Reconsideration was denied for lack of merit in a

Resolution dated 5 November 2007.
Hence, this Petition raising the following issues:
(1) Whether or not the findings of fact of the trial court and of
the Court of Appeals are conclusive in this case.
(2) Whether or not [herein respondents PHI and DTPCI are]
responsible by implied contract to exercise due care for the safety and
welfare of the petitioner.
(3) Whether or not the cause of action of the petitioner can

be based on both breach of contract and tort.
(4) Whether or not it is [respondents PHI and DTPCI] and its

employees who are liable to the petitioner for negligence, applying the
well-established doctrines of res ipsa loquitur and respondeat superior.
(5) Whether the petitioner's debilitating and permanent
injuries were a result of the accident she suffered at the hotel on [11
June 1995].
(6) Whether or not the petitioner is entitled to the payment of
damages, attorney's fees, interest, and the costs of suit.
(7) Whether or not the respondent insurance company is
liable, even directly, to the petitioner.
(8) Whether or not petitioner's motion for reconsideration of
the decision of the Court of Appeals is pro forma. 60
Petitioner argues that the rule that "findings of fact of the lower courts are
conclusive and must be respected on appeal" finds no application herein
because this case falls under the jurisprudentially established exceptions.
Moreover, since the rationale behind the afore-mentioned rule is that "the trial
judge is in a vantage point to appreciate the conduct and behavior of the
witnesses and has the unexcelled opportunity to evaluate their testimony," one
logical exception to the rule that can be deduced therefrom is when the judge
who decided the case is not the same judge who heard and tried the case.
Petitioner further faults the Court of Appeals in ruling that no contractual

relationship existed between her and respondents PHI and DTPCI since her use
of the hotel's swimming pool facility was only upon the invitation of the hotel's
Page 10 of 27
registered guest. On the contrary, petitioner maintains that an implied contract
existed between them in view of the fact that the hotel guest status extends to
all those who avail of its services — its patrons and invitees. It follows then that
all those who patronize the hotel and its facilities, including those who are
invited to partake of those facilities, like petitioner, are generally regarded as
guests of the hotel. As such, respondents PHI and DTPCI are responsible by
implied contract for the safety and welfare of petitioner while the latter was
inside their premises by exercising due care, which they failed to do.
Petitioner even asserts that the existence of a contract between the
parties does not bar any liability for tort since the act that breaks a contract
may also be a tort. Hence, the concept of change of theory of cause of action
pointed to by respondents is irrelevant. HCTEDa
Petitioner similarly avows that the doctrines of res ipsa loquitur and
respondeat superior are applicable in this case. She argues that a person who
goes in a hotel without a "bukol" or hematoma and comes out of it with a
"bukol" or hematoma is a clear case of res ipsa loquitur. It was an accident
caused by the fact that the hotel staff was not present to lift the heavy counter
top for petitioner as is normally expected of them because they negligently
locked the main entrance door of the hotel's swimming pool area. Following the
doctrine of res ipsa loquitur, respondents PHI and DTPCI's negligence is
presumed and it is incumbent upon them to prove otherwise but they failed to
do so. Further, respondents PHI and DTPCI failed to observe all the diligence of
a good father of a family in the selection and supervision of their employees,
hence, following the doctrine of respondeat superior, they were liable for the
negligent acts of their staff in not verifying if there were still people inside the
swimming pool area before turning off the lights and locking the door. Had
respondents PHI and DTPCI's employees done so, petitioner would not have
been injured. Since respondents PHI and DTPCI's negligence need not be
proved, the lower courts erred in shifting the burden to petitioner and,
thereafter, holding the hotel and its employees not negligent for petitioner's
failure to prove their negligence. Moreover, petitioner alleges that there was no
contributory negligence on her part for she did not do anything that could have
contributed to her injury. And, even if there was, the same does not bar
recovery.
Petitioner equally declares that the evidence on record, including the

objective medical findings, had firmly established that her permanent
debilitating injuries were the direct result of the 11 June 1995 accident inside
the hotel's swimming pool area. This fact has not been totally disputed by the
respondents. Further, the medical experts who had been consulted by
petitioner were in unison in their diagnoses of her condition. Petitioner was also
able to prove that the falling of the folding wooden counter top on her head
while she was at the hotel's swimming pool area was the cause of her head,
eye and neck injuries.
Petitioner reiterates her claim for an award of damages, to wit: actual,

including loss of income; moral, exemplary; as well as attorney's fees, interest
and costs of suit. She states that respondents PHI and DTPCI are liable for
Page 11 of 27
quasi-delict under Articles 19, 2176 and 2180 of the New Civil Code. At the
same time, they are liable under an implied contract for they have a public duty
to give due courtesy, to exercise reasonable care and to provide safety to hotel
guests, patrons and invitees. Respondent First Lepanto, on the other hand, is
directly liable under the express contract of insurance.
Lastly, petitioner contends that her Motion for Reconsideration before the
Court of Appeals was not pro forma for it specifically pointed out the alleged
errors in the Court of Appeals Decision.
The instant Petition is devoid of merit.
Primarily, only errors of law and not of facts are reviewable by this Court
in a Petition for Review on Certiorari under Rule 45 of the Rules of Court. 61 This
Court is not a trier of facts and it is beyond its function to re-examine and
weigh anew the respective evidence of the parties. 62 Besides, this Court
adheres to the long standing doctrine that the factual findings of the trial court,
especially when affirmed by the Court of Appeals, are conclusive on the parties
and this Court. 63 Nonetheless, this Court has, at times, allowed exceptions
thereto, to wit: EcAISC
(a) When the findings are grounded entirely on speculation,

surmises, or conjectures;
(b) When the inference made is manifestly mistaken, absurd, or

impossible;
(c) When there is grave abuse of discretion;
(d) When the judgment is based on a misapprehension of facts;
(e) When the findings of facts are conflicting;

(f) When in making its findings the [Court of Appeals] went beyond
the issues of the case, or its findings are contrary to the
admissions of both the appellant and the appellee;
(g) When the [Court of Appeals'] findings are contrary to those by

the trial court;
(h) When the findings are conclusions without citation of specific

evidence on which they are based;
(i) When the facts set forth in the petition as well as in the
petitioner's main and reply briefs are not disputed by the
respondent;
(j) When the findings of fact are premised on the supposed absence
of evidence and contradicted by the evidence on record; or
(k) When the [Court of Appeals] manifestly overlooked certain
relevant facts not disputed by the parties, which, if properly
considered, would justify a different conclusion. 64
Upon meticulous perusal of the records, however, this Court finds that
none of these exceptions is obtaining in this case. No such justifiable or
Page 12 of 27
compelling reasons exist for this Court to depart from the general rule. This
Court will not disturb the factual findings of the trial court as affirmed by the
Court of Appeals and adequately supported by the evidence on record.
Also, this Court will not review the factual findings of the trial court simply
because the judge who heard and tried the case was not the same judge who
penned the decision. This fact alone does not diminish the veracity and
correctness of the factual findings of the trial court. 65 Indeed, "the efficacy of a
decision is not necessarily impaired by the fact that its writer only took over
from a colleague who had earlier presided at the trial, unless there is showing
of grave abuse of discretion in the factual findings reached by him." 66 In this
case, there was none.
It bears stressing that in this jurisdiction there is a disputable presumption
that the trial court's decision is rendered by the judge in the regular
performance of his official duties. While the said presumption is only
disputable, it is satisfactory unless contradicted or overcame by other
evidence. Encompassed in this presumption of regularity is the presumption
that the trial court judge, in resolving the case and drafting the decision,
reviewed, evaluated, and weighed all the evidence on record. That the said trial
court judge is not the same judge who heard the case and received the
evidence is of little consequence when the records and transcripts of
stenographic notes (TSNs) are complete and available for consideration by the
former, 67 just like in the present case.
Irrefragably, by reason alone that the judge who penned the trial court's
decision was not the same judge who heard the case and received the evidence
therein would not render the findings in the said decision erroneous and
unreliable. While the conduct and demeanor of witnesses may sway a trial
court judge in deciding a case, it is not, and should not be, his only
consideration. Even more vital for the trial court judge's decision are the
contents and substance of the witnesses' testimonies, as borne out by the
TSNs, as well as the object and documentary evidence submitted and made
part of the records of the case. 68SIcCTD
This Court examined the records, including the TSNs, and found no reason
to disturb the factual findings of both lower courts. This Court, thus, upholds
their conclusiveness.
In resolving the second and third issues, a determination of the cause of
action on which petitioner's Complaint for Damages was anchored upon is
called for.
Initially, petitioner was suing respondents PHI and DTPCI mainly on

account of their negligence but not on any breach of contract. Surprisingly,
when the case was elevated on appeal to the Court of Appeals, petitioner had a
change of heart and later claimed that an implied contract existed between her
and respondents PHI and DTPCI and that the latter were liable for breach of
their obligation to keep her safe and out of harm. This allegation was never an
issue before the trial court. It was not the cause of action relied upon by the
Page 13 of 27
petitioner not until the case was before the Court of Appeals. Presently,
petitioner claims that her cause of action can be based both on quasi-delict and
breach of contract.
A perusal of petitioner's Complaint evidently shows that her cause of

action was based solely on quasi-delict. Telling are the following allegations in
petitioner's Complaint:
6. THAT, in the evening of [11 June 1995] , between the hours
from 7:00 to 8:00 o'clock, after [herein petitioner] and her friend from
New York, [Delia], the latter being then a Hotel guest, were taking
their shower after having a dip in the hotel's swimming pool, without
any notice or warning, the Hotel's staff put off all the lights
within the pool area including the lights on the hallway and
also locked the main entrance door of the pool area, . . .;
7. THAT, Hotel guest [Delia] started to panic while [petitioner]

pacified her by telling her not to worry as they would both find their
way out. [Petitioner] knowing that within the area there is a house
phone, started to look around while [Delia] was following her,
eventually [petitioner] saw a phone behind the counter . . ., that while
slowly moving on towards the phone on a stooping manner due to
the darkness CAUSED BY UNTIMELY AND NEGLIGENTLY PUTTING
OFF WITH THE LIGHTS BY THE [HEREIN RESPONDENTS PHI AND
DTPCI'S] EMPLOYEE while passing through the open counter door with
its Folding Counter Top also opened, . . ., a hard and heavy object fell
onto the head of the [petitioner] that knocked her down almost
unconscious which hard and heavy object turned out to be the
Folding Counter Top;
8. THAT, [Delia] immediately got hold of the house phone and

notified the Hotel Telephone Operator about the incident,
immediately the hotel staffs (sic) arrived but they were
stranded behind the main door of the pool entrance and it too
(sic) them more than twenty (20) minutes to locate the hotel
maintenance employee who holds the key of the said main
entrance door;
9. THAT, when the door was opened, two Hotel Chamber Maids
assisted the [petitioner] to get out of the counter door. [Petitioner]
being a Physician tried to control her feelings although groggy and
requested for a HURIDOID, a medicine for HEMATOMA, as a huge
lump developed on her head while the two Chamber Maids
assisted [petitioner] by holding the bag of ice on her head
and applying the medicine on the huge lump;
10. THAT, [petitioner] after having recovered slightly from her
nightmare, though still feeling weak, asked to be assisted to the Hotel
Coffee Shop to take a rest but requested for the hotel's Physician.
Despite her insistent requests, the [Dusit Hotel] refused to
lift a finger to assists [petitioner] who was then in distress
until a lady approached and introduced herself as the Hotel's
house Doctor. Instead however of assisting [petitioner] by
asking her what kind of assistance the Hotel could render, in a
DISCOURTEOUS MANNER presented instead a paper and
Page 14 of 27
demanding [petitioner] to affix her signature telling her that
the Hotel Management would only assists and answer for all
expenses incurred if [petitioner] signs the paper presented,
but she refused and [petitioner] instead wrote a marginal
note on the said paper stating her reason therefore, said
paper later on turned out to be a WAIVER OF RIGHT or QUIT
CLAIM;
xxx xxx xxx
14. THAT, due to the unfortunate incident caused by

[respondents PHI and DTPCI's] gross negligence despite
medical assistance, [petitioner] started to feel losing her memory
that greatly affected and disrupted the practice of her chosen
profession . . . .
xxx xxx xxx

19. THAT, due to [respondents PHI and DTPCI's] gross negligence
as being narrated which caused [petitioner] to suffer sleepless nights,
depression, mental anguish, serious anxiety, wounded feelings, and
embarrassment with her Diplomate friends in the profession and
industry, her social standing in the community was greatly affected
and hence, [respondents PHI and DTPCI] must be imposed the
hereunder damages, prayed for . . . and Artile (sic) 2176 and 2199
of the New Civil Code of the Philippines . . . .
xxx xxx xxx
22. THAT, as to Moral, Exemplary and Actual Damages, as well as

[petitioner's] Loss of Income, the amounts are stated in its prayer
hereunder. 69
It is clear from petitioner's allegations that her Complaint for Damages

was predicated on the alleged negligence of respondents PHI and DTPCI's staff
in the untimely putting off of all the lights within the hotel's swimming pool
area, as well as the locking of its main door, prompting her to look for a way
out leading to the fall of the folding wooden counter top on her head causing
her serious brain injury. The said negligence was allegedly compounded by
respondents PHI and DTPCI's failure to render prompt and adequate medical
assistance. These allegations in petitioner's Complaint constitute a cause of
action for quasi-delict, which under the New Civil Code is defined as an act, or
omission which causes damage to another, there being fault or negligence. 70
It is evident from petitioner's Complaint and from her open court
testimony that the reliance was on the alleged tortious acts committed against
her by respondents PHI and DTPCI, through their management and staff. It is
now too late in the day to raise the said argument for the first time before this
Court. 71 DcCEHI
Petitioner's belated reliance on breach of contract as her cause of action

cannot be sanctioned by this Court. Well-settled is the rule that a party is not
allowed to change the theory of the case or the cause of action on appeal.
Matters, theories or arguments not submitted before the trial court
Page 15 of 27
cannot be considered for the first time on appeal or certiorari. 72 When
a party adopts a certain theory in the court below, he will not be permitted to
change his theory on appeal for to permit him to do so would not only be unfair
to the other party but it would also be offensive to the basic rules of fair play,
justice and due process. 73 Hence, a party is bound by the theory he adopts and
by the cause of action he stands on and cannot be permitted after having lost
thereon to repudiate his theory and cause of action and adopt another and seek
to re-litigate the matter a new either in the same forum or on appeal. 74
In that regard, this Court finds it significant to take note of the following
differences between quasi-delict (culpa aquilina) and breach of contract (culpa
contractual). In quasi-delict, negligence is direct, substantive and independent,
while in breach of contract, negligence is merely incidental to the performance
of the contractual obligation; there is a pre-existing contract or obligation. 75 In
quasi-delict, the defense of "good father of a family" is a complete and proper
defense insofar as parents, guardians and employers are concerned, while in
breach of contract, such is not a complete and proper defense in the selection
and supervision of employees. 76 I n quasi-delict, there is no presumption
of negligence and it is incumbent upon the injured party to prove the
negligence of the defendant, otherwise, the former's complaint will be
dismissed, while in breach of contract, negligence is presumed so long
as it can be proved that there was breach of the contract and the
burden is on the defendant to prove that there was no negligence in the
carrying out of the terms of the contract; the rule of respondeat superior is
followed. 77
Viewed from the foregoing, petitioner's change of theory or cause of
action from quasi-delict to breach of contract only on appeal would necessarily
cause injustice to respondents PHI and DTPCI. First, the latter will have no more
opportunity to present evidence to contradict petitioner's new argument.
Second, the burden of proof will be shifted from petitioner to respondents PHI
and DTPCI. Petitioner's change of theory from quasi-delict to breach of contract
must be repudiated.
As petitioner's cause of action is based on quasi-delict, it is incumbent
upon her to prove the presence of the following requisites before respondents
PHI and DTPCI can be held liable, to wit: (a) damages suffered by the plaintiff;
( b ) fault or negligence of the defendant, or some other person for
whose acts he must respond; and (c) the connection of cause and effect
between the fault or negligence of the defendant and the damages incurred by
the plaintiff. 78 Further, since petitioner's case is for quasi-delict, the
negligence or fault should be clearly established as it is the basis of
her action. 79 The burden of proof is upon petitioner. Section 1, Rule 131 of
the Rules of Court provides that "burden of proof is the duty of a party to
present evidence on the facts in issue necessary to establish his claim or
defense by the amount of evidence required by law." It is then up for the
plaintiff to establish his cause of action or the defendant to establish his
defense. Therefore, if the plaintiff alleged in his complaint that he was
damaged because of the negligent acts of the defendant, he has the
Page 16 of 27
burden of proving such negligence. It is even presumed that a person takes
ordinary care of his concerns. The quantum of proof required is preponderance
of evidence. 80
In this case, as found by the trial court and affirmed by the Court of
Appeals, petitioner utterly failed to prove the alleged negligence of respondents
PHI and DTPCI. Other than petitioner's self-serving testimony that all the lights
in the hotel's swimming pool area were shut off and the door was locked, which
allegedly prompted her to find a way out and in doing so a folding wooden
counter top fell on her head causing her injury, no other evidence was
presented to substantiate the same. Even her own companion during the night
of the accident inside the hotel's swimming pool area was never presented to
corroborate her allegations. Moreover, petitioner's aforesaid allegations were
successfully rebutted by respondents PHI and DTPCI. Here, we quote with
conformity the observation of the trial court, thus:
. . . Besides not being backed up by other supporting evidence,
said statement is being contradicted by the testimony of Engineer
Dante L. Costas, 81 who positively declared that it has been a normal
practice of the Hotel management not to put off the lights until
10:00P.M. in order to allow the housekeepers to do the cleaning of the
pool's surrounding, the toilets and the counters. It was also confirmed
that the lights were kept on for security reasons and so that the people
exercising in the nearby gym may be able to have a good view of the
swimming pool. This Court also takes note that the nearby gymnasium
was normally open until 10:00 P.M. so that there was a remote
possibility the pool area was in complete darkness as was alleged by
[herein petitioner], considering that the illumination which reflected
from the gym. Ergo, considering that the area were sufficient (sic)
illuminated when the alleged incident occurred, there could have been
no reason for the [petitioner] to have met said accident, much less to
have been injured as a consequence thereof, if she only acted with
care and caution, which every ordinary person is expected to do. 82
More telling is the ratiocination of the Court of Appeals, to wit:

Viewed from the foregoing, the question now is whether
[respondents PHI and DTPCI] and its employees were negligent? We do
not think so. Several factors militate against [petitioner's] contention.
One. [Petitioner] recognized the fact that the pool area's closing
time is [7:00 p.m.]. She, herself, admitted during her testimony that
she was well aware of the sign when she and [Delia] entered the pool
area. Hence, upon knowing, at the outset, of the pool's closing time,
she took the risk of overstaying when she decided to take shower and
leave the area beyond the closing hour. In fact, it was only upon the
advise of the pool attendants that she thereafter took her shower.
Two. She admitted, through her certification, that she lifted the
wooden bar countertop, which then fell on to her head. The admission
in her certificate proves the circumstances surrounding the occurrence
that transpired on the night of [11 June 1995]. This is contrary to her
assertion in the complaint and testimony that, while she was passing
through the counter door, she was suddenly knocked out by a hard and
Page 17 of 27
heavy object. In view of the fact that she admitted having lifted the
countertop, it was her own doing, therefore, that made the counter top
fell on to her head.
Three. We cannot likewise subscribe to [petitioner's] assertion

that the pool area was totally dark in that she herself admitted that she
saw a telephone at the counter after searching for one. It must be
noted that [petitioner] and [Delia] had walked around the pool area
with ease since they were able to proceed to the glass entrance door
from the shower room, and back to the counter area where the
telephone was located without encountering any untoward incident.
Otherwise, she could have easily stumbled over, or slid, or bumped into
something while searching for the telephone. This negates her
assertion that the pool area was completely dark, thereby, totally
impairing her vision.
xxx xxx xxx
The aforementioned circumstances lead us to no other

conclusion than that the proximate and immediate cause of the
injury of [petitioner] was due to her own negligence. 83
Even petitioner's assertion of negligence on the part of respondents PHI

and DTPCI in not rendering medical assistance to her is preposterous. Her own
Complaint affirmed that respondents PHI and DTPCI afforded medical
assistance to her after she met the unfortunate accident inside the hotel's
swimming pool facility. Below is the portion of petitioner's Complaint that would
contradict her very own statement, thus:
14. THAT, due to the unfortunate incident caused by [respondents
PHI and DTPCI's] gross negligence despite medical assistance,
[petitioner] started to feel losing her memory that greatly affected
and disrupted the practice of her chosen profession. . . . . 84
Also, as observed by the trial court, respondents PHI and DTPCI, indeed,
extended medical assistance to petitioner but it was petitioner who refused the
same. The trial court stated, thus:
Further, [herein petitioner's] asseverations that the Hotel
Management did not extend medical assistance to her in the aftermath
of the alleged accident is not true. Again, this statement was not
supported by any evidence other that the sole and self-serving
testimony of [petitioner]. Thus, this Court cannot take [petitioner's]
statement as a gospel truth. It bears stressing that the Hotel
Management immediately responded after it received notice of the
incident. As a matter of fact, [Ms. Pearlie], the Hotel nurse, with two
chambermaids holding an ice bag placed on [petitioner's] head came
to the [petitioner] to extend emergency assistance when she was
notified of the incident, but [petitioner] merely asked for Hirudoid,
saying she was fine, and that she was a doctor and know how to take
care of herself. Also, the Hotel, through its in-house physician, [Dr.
Dalumpines] offered its medical services to [petitioner] when they met
at the Hotel's coffee shop, but again [petitioner] declined the offer.
Page 18 of 27
Moreover, the Hotel as a show of concern for the [petitioner's] welfare,
shouldered the expenses for the MRI services performed on [petitioner]
at the Makati Medical Center. Emphatically, [petitioner] herself cannot
fault the Hotel for the injury she allegedly suffered because she herself
did not heed the warning at the pool to the effect that it was only open
from 7:00 to 7:00 P.M. Thus, when the [petitioner's] own negligence
was the immediate and proximate cause of his injury, [she] cannot
recover damages . . . . 85
DSIaAE
With the foregoing, the following were clearly established, to wit: (1)
petitioner stayed in the hotel's swimming pool facility beyond its closing hours;
(2) she lifted the folding wooden counter top that eventually hit her head; and
(3) respondents PHI and DTPCI extended medical assistance to her. As such, no
negligence can be attributed either to respondents PHI and DTPCI or to their
staff and/or management. Since the question of negligence is one of fact, this
Court is bound by the said factual findings made by the lower courts. It has
been repeatedly held that the trial court's factual findings, when affirmed by
the Court of Appeals, are conclusive and binding upon this Court, if they are not
tainted with arbitrariness or oversight of some fact or circumstance of
significance and influence. Petitioner has not presented sufficient ground to
warrant a deviation from this rule. 86
With regard to petitioner's contention that the principles of res ipsa

loquitur and respondeat superior are applicable in this case, this Court holds
otherwise.
Res ipsa loquitur is a Latin phrase which literally means "the thing or the
transaction speaks for itself." It relates to the fact of an injury that sets out an
inference to the cause thereof or establishes the plaintiff's prima facie case. The
doctrine rests on inference and not on presumption. The facts of the occurrence
warrant the supposition of negligence and they furnish circumstantial evidence
of negligence when direct evidence is lacking. 87 Simply stated, this doctrine
finds no application if there is direct proof of absence or presence of
negligence. If there is sufficient proof showing the conditions and
circumstances under which the injury occurred, then the creative
reason for the said doctrine disappears. 88
Further, the doctrine of res ipsa loquitur applies where, (1) the accident
was of such character as to warrant an inference that it would not have
happened except for the defendant's negligence; (2) the accident must have
been caused by an agency or instrumentality within the exclusive management
or control of the person charged with the negligence complained of; and (3) the
accident must not have been due to any voluntary action or contribution on the
part of the person injured. 89
In the case at bench, even granting that respondents PHI and DTPCI's staff
negligently turned off the lights and locked the door, the folding wooden
counter top would still not fall on petitioner's head had she not lifted the same.
Although the folding wooden counter top is within the exclusive management
or control of respondents PHI and DTPCI, the falling of the same and hitting the
head of petitioner was not due to the negligence of the former. As found by
Page 19 of 27
both lower courts, the folding wooden counter top did not fall on petitioner's
head without any human intervention. Records showed that petitioner lifted
the said folding wooden counter top that eventually fell and hit her
head. The same was evidenced by the, (1) 11 June 1995 handwritten
certification of petitioner herself; (2) her Letter dated 30 August 1995
addressed to Mr. Yoshikazu Masuda (Mr. Masuda), General Manager of Dusit
Hotel; and, (3) Certification dated 7 September 1995 issued to her by Dr.
Dalumpines upon her request, which contents she never questioned.
Here, we, respectively, quote the 11 June 1995 handwritten certification

of petitioner; her letter to Mr. Masuda dated 30 August 1995; and Dr.
Dalumpines' Certification dated 7 September 1995, to wit:
Petitioner's 11 June 1995 Handwritten Certification:
I was requested by [Dr.] Dalumpines to write that I was assured
of assistance should it be necessary with regard an accident at the
pool. . . . The phone was in an enclosed area on a chair — I lifted the
wooden bar counter top which then fell on my head producing
a large hematoma . . . . 90 SaICcT
Petitioner's Letter addressed to Mr. Masuda dated 30 August

1995:
Dear Mr. Masuda,
xxx xxx xxx

. . . We searched and saw a phone on a chair behind a towel
counter. However[,] in order to get behind the counter I had to
lift a hinged massive wooden section of the counter which
subsequently fell and knocked me on my head . . . . 91
Dr. Dalumpines' Certification dated 7 September 1995:

CERTIFICATION
This is to certify that as per Clinic records, duty nurse [Pearlie]

was called to attend to an accident at the poolside at 7:45PM on [11
June 1995].
Same records show that there, she saw [petitioner] who

claimed the folding counter top fell on her head when she
lifted it to enter the lifeguard's counter to use the phone . She
asked for Hirudoid.
The same evening [petitioner] met [Dr. Dalumpines] at the
Coffee Shop. After narrating the poolside incident and declining [Dr.
Dalumpines'] offer of assistance, she reiterated that the
Hirudoid cream was enough and that [petitioner] being a
doctor herself, knew her condition and she was all right.
This certification is given upon the request of [petitioner] for
whatever purpose it may serve, [7 September 1995] at Makati City. 92

Page 20 of 27
This Court is not unaware that in petitioner's Complaint and in her open
court testimony, her assertion was, "while she was passing through the counter
door, she was suddenly knocked out by a hard and heavy object, which turned
out to be the folding wooden counter top." However, in her open court
testimony, particularly during cross-examination, petitioner confirmed that she
made such statement that "she lifted the hinge massive wooden section of the
counter near the swimming pool." 93 In view thereof, this Court cannot
acquiesce petitioner's theory that her case is one of res ipsa loquitur as it was
sufficiently established how petitioner obtained that "bukol" or "hematoma."
The doctrine of respondeat superior finds no application in the absence of

any showing that the employees of respondents PHI and DTPCI were negligent.
Since in this case, the trial court and the appellate court found no negligence
on the part of the employees of respondents PHI and DTPCI, thus, the latter
cannot also be held liable for negligence and be made to pay the millions of
pesos damages prayed for by petitioner. TcHCDI
The issue on whether petitioner's debilitating and permanent injuries were

the result of the accident she suffered at the hotel's swimming pool area on 11
June 1995 is another question of fact, which is beyond the function of this Court
to resolve. More so, this issue has already been properly passed upon by the
trial court and the Court of Appeals. To repeat, this Court is bound by the
factual findings of the lower courts and there is no cogent reason to depart
from the said rule.
The following observations of the trial court are controlling on this matter:
Firstly, petitioner had a past medical history which might have been the
cause of her recurring brain injury.
Secondly, the findings of Dr. Perez did not prove a causal relation
between the 11 June 1995 accident and the brain damage suffered by
petitioner. Dr. Perez himself testified that the symptoms being
experienced by petitioner might have been due to factors other than
the head trauma she allegedly suffered. Emphasis must be given to the
fact that petitioner had been suffering from different kinds of brain problems
since she was 18 years old, which may have been the cause of the recurring
symptoms of head injury she is experiencing at present.
Thirdly, Dr. Sanchez's testimony cannot be relied upon since she testified
on the findings and conclusions of persons who were never presented in court.
Ergo, her testimony thereon was hearsay. A witness can testify only with regard
to facts of which they have personal knowledge. Testimonial or documentary
evidence is hearsay if it is based, not on the personal knowledge of the witness,
but on the knowledge of some other person not on the witness stand.
Consequently, hearsay evidence — whether objected to or not — has no
probative value. 94
Fourthly, the medical reports/evaluations/certifications issued by myriads

of doctors whom petitioner sought for examination or treatment were neither
identified nor testified to by those who issued them. Being deemed as hearsay,
Page 21 of 27
they cannot be given probative value.
The aforesaid medical reports/evaluations/certifications of different

doctors in favor of petitioner cannot be given probative value and their
contents cannot be deemed to constitute proof of the facts stated therein. It
must be stressed that a document or writing which is admitted not as
independent evidence but merely as part of the testimony of a witness does
not constitute proof of the facts related therein. 95 In the same vein, the
medical certificate which was identified and interpreted in court by another
doctor was not accorded probative value because the doctor who prepared it
was not presented for its identification. Similarly, in this case, since the doctors
who examined petitioner were not presented to testify on their findings, the
medical certificates issued on their behalf and identified by another doctor
cannot be admitted as evidence. Since a medical certificate involves an opinion
of one who must first be established as an expert witness, it cannot be given
weight or credit unless the doctor who issued it is presented in court to show
his qualifications. 96 Thus, an unverified and unidentified private document
cannot be accorded probative value. It is precluded because the party against
whom it is presented is deprived of the right and opportunity to cross-examine
the person to whom the statements or writings are attributed. Its executor or
author should be presented as a witness to provide the other party to the
litigation the opportunity to question its contents. Being mere hearsay
evidence, failure to present the author of the letter renders its contents suspect
and of no probative value. 97
All told, in the absence of negligence on the part of respondents PHI and
DTPCI, as well as their management and staff, they cannot be made liable to
pay for the millions of damages prayed for by the petitioner. Since respondents
PHI and DTPCI are not liable, it necessarily follows that respondent First Lepanto
cannot also be made liable under the contract of insurance.
WHEREFORE, premises considered, the Decision and Resolution of the

Court of Appeals in CA-G.R. CV No. 87065 dated 9 August 2007 and 5
November 2007, respectively, are hereby AFFIRMED. Costs against petitioner.
SO ORDERED.
Brion, Velasco, Jr., * Villarama, Jr. ** and Perlas-Bernabe, JJ., concur.
Footnotes
*Per raffle dated 8 March 2010.
**Per raffle dated 5 December 2012.
1.Penned by Associate Justice Jose L. Sabio, Jr. with Associate Justices Jose C.
Reyes, Jr. and Myrna Dimaranan Vidal, concurring. Rollo, pp. 200-215.
2.Penned by Pairing Judge Reinato G. Quilala. Id. at 76-109.
3.Id. at 296-297.

Page 22 of 27
4.A dermatologist by profession at the time the incident inside the swimming pool
area of Dusit Thani Hotel, Manila happened where she allegedly sustained
head injury (Testimony of Dr. Genevieve L. Huang. TSN, 27 November 1998,
p. 4).
5.A corporation duly organized and existing under the laws of the Philippines.
6.A corporation duly organized and existing under the laws of Thailand.
7.Formerly known as "Hotel Nikko Manila Garden" and then "Dusit Hotel Nikko."
8.A corporation duly organized and existing under the laws of the Philippines.
Formerly known as "Metro Taisho Insurance Corporation."
9.Testimony of Dr. Genevieve L. Huang. TSN, 27 November 1998, pp. 24-28; CA

Decision dated 9 August 2007, rollo, p. 201.
10.Id. at 29-34; Id. at 202; Complaint dated 8 August 1996, rollo, p. 769.
11.Id. at 36-42; Testimony of Dr. Genevieve L. Huang. TSN, 10 April 2000, pp. 5-6;
CA Decision dated 9 August 2007, rollo, p. 202; Complaint dated 8 August
1996, rollo, pp. 769-770.
12.Id. at 42-45; Id. at 8-9; Id. at 202-203; Id. at 770.
13.Id. at 47; Testimony of Dr. Genevieve L. Huang. TSN, 8 September 1999, pp. 45-
51; CA Decision dated 9 August 2007, rollo, p. 203; Complaint dated 8 August
1996, rollo, p. 771.
14.Testimony of Dr. Genevieve L. Huang. TSN, 1 February 1999, pp. 5-6.

15.Records, Volume I, p. 345.
16.Id.

18.Id. at 8-13.
19.TECHNICAL SUMMARY OF EEG TRACING
Background activity is fairly well organized at 6-8 Hz. Medium to high voltage
sharp activities are seen bilaterally bisynchronously. No focal slowing is seen.
EEG INTERPRETATION:
ABNORMAL EEG COMPATIBLE WITH A SEIZURE DISORDER (EEG Report dated 5
September 1995. Records, Volume I, p. 346).
21.CERVICAL VERTEBRAE
The visualized vertebrae appear intact. There is straightening of the cervical
curvature most likely due to muscular spasm. Alignment and intervertebral
disc spaces are well maintained. The neural foramenae are well formed.
IMPRESSION
Straightened cervical curvature most likely due to muscular spasm otherwise
normal cervical vertebrae (Diagnostic X-Ray Report dated 14 September
Page 23 of 27
1995. Records, p. 347).
22.Testimony of Dr. Genevieve L. Huang. TSN, 1 February 1999, p. 16.

23.Complaint. Rollo, p. 771.
24.Records, Volume I, pp. 16-18.

26.Document dated 11 December 1995 under the letterhead of Dr. Gerald
Steinberg and Dr. Joel Dokson. Records, Volume I, p. 350.
28.Id. at 32-36.
29.Id. at 47-50.
32.Id. at 57-60.
33.Rollo, pp. 1232-1234.
34.Id. at 1234.

36.Id. at 5.
37.INTERPRETATION:
The EEG is abnormal showing:

1. Mild intermittent generalized slowing consistent with a diffuse cerebral
dysfunction.
2. Fairly frequent intermittent arrhythmic theta/delta slow waves occasionally
rhythm theta slow waves seen anteriorly, but more on the left frontal region
compatible with irritative or deep focal pathology.
3. Occasional focal epileptiform activity arising from both region, but maximally
and frequently on the Left, with phase reversal at F3 (EEG Report dated 11
July 1996. Records, Volume I, p. 351).
39.Testimony of Dr. Martesio Perez. TSN, 7 February 2001, pp. 9-10.

41.Testimony of Dr. Martesio Perez. TSN, 7 February 2001, pp. 9-15.
42.Respondents' Answer with Compulsory Counterclaims and Cross-claims.

Records, Volume I, p. 70.
43.Testimony of Engineer Dante L. Cotaz. TSN, 23 July 2003, pp. 27, 44-49 and 62;
Respondents PHI and DTPCI's Answer with Compulsory Counterclaims and
Cross-claims. Records, Volume I, p. 71.
Page 24 of 27
44.Testimony of Pearlie Benedicto-Lipana. TSN, 14 April 2003, pp. 13-15; CA
Decision dated 9 August 2007, rollo, pp. 203-204.
45.Id. at 16-20; Id. at 204.
46.Id. at 20-22; Testimony of Dr. Violeta Dalumpines. TSN, 11 November 2000, pp.
12-16; CA Decision dated 9 August 2007, rollo, p. 204.
48.Testimony of Dr. Violeta Dalumpines. TSN, 11 November 2000, pp. 17-22.

49.Id. at 22-28.
50.Id. at 31-34.

52.Testimony of Dr. Violeta Dalumpines. TSN, 11 November 2000, p. 33.
53.Testimony of Dr. Violeta Dalumpines. TSN, 27 November 2002, p. 12.
54.RTC Decision dated 21 February 2006, rollo, pp. 102-103.

55.Id. at 103.
56.Id. at 103-107.
57.Id. at 106-108.
58.CA Decision dated 9 August 2007, id. at 205; Appellant's Brief dated 6
November 2006, id. at 118.
59.Id. at 209-213.
60.Id. at 26.
61.Blanco v. Quasha, 376 Phil. 480, 491 (1999).

62.Manila Electric Company v. South Pacific Plastic Manufacturing Corporation, 526
Phil. 105, 111 (2006).
63.Tuazon v. Heirs of Bartolome Ramos, 501 Phil. 695, 701 (2005).
64.Abalos v. Heirs of Vicente Torio, G.R. No. 175444, 14 December 2011, 662 SCRA
450, 456-457.
65.Ditche v. Court of Appeals, 384 Phil. 35, 45 (2000).

66.People v. Sansaet, 426 Phil. 826, 833 (2002).
67.Citibank, N.A. v. Sabeniano, 535 Phil. 384, 413-414 (2006).
68.Id. at 415.
69.Rollo, pp. 769-775.
70.Article 2176 of the New Civil Code provides:
Art. 2176. Whoever by act or omission causes damage to another, there being
fault or negligence, is obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual relation between the
Page 25 of 27
parties, is called a quasi-delict and is governed by the provisions of this
Chapter. ( Navida v. Dizon, Jr. , G.R. Nos. 125078, 125598, 126654, 127856 &
128398, 30 May 2011, 649 SCRA 33, 79).
71.Tokuda v. Gonzales, 523 Phil. 213, 220 (2006).
72.Id.
73.Drilon v. Court of Appeals, G.R. No. 107019, 20 March 1997, 270 SCRA 211,
219.
74.Sta. Ana, Jr. v. Court of Appeals, G.R. No. 115284, 13 November 1997, 281 SCRA
624, 629.
75.Pineda, Tort and Damages Annotated, 2004 Edition, p. 17 citing Rakes v.
Atlantic, Gulf and Pacific Co., 7 Phil. 359, 369-374 (1907).
76.Id. citing Article 2180 of the Civil Code (last paragraph) and Cangco v. Manila
Railroad Company, 38 Phil. 768, 774 (1918); De Leon, Comments and Cases
on Torts and Damages, Third Edition (2012), p. 188.
77.Id. citing Cangco v. Manila Railroad Company, id.; De Leon, Comments and
Cases on Torts and Damages, Third Edition (2012), id.
78.Philippine National Construction Corporation v. Honorable Court of Appeals, 505
Phil. 87, 97-98 (2005).
79.Pineda, Torts and Damages, Annotated, 2004 Edition, p. 9 citing Calalas v. Court
of Appeals, 388 Phil. 146, 151 (2000).
80.Aquino, Torts and Damages, First Edition (2001), p. 154 citing Taylor v. Manila
Electric Railroad and Light Company, 16 Phil. 8, 10 (1910) which further cited
Scaevola, Jurisprudencia del Codigo Civil, Vol. 6, pp. 551-552.
81.In the Transcript of Stenographic Notes dated 23 July 2003, Engineer Dante's
surname is "Cotaz" and not "Costas."
82.RTC Decision dated 21 February 2006. Rollo, pp. 102-103.

83.Id. at 209-212.
84.CA Decision dated 9 August 2007. Id. at 771.
85.RTC Decision dated 21 February 2006. Id. at 103.

86.Pantranco North Express, Inc. v. Standard Insurance Company, Inc., 493 Phil.
616, 624 (2005).
87.Perla Compaña de Seguros, Inc. v. Sps. Sarangaya III, 510 Phil. 676, 686 (2005).
88.Aquino, Torts and Damages, First Edition (2001), p. 164 citing S.D. Martinez v.
William Van Buskirk, 18 Phil. 79, 85 (1910).
89.Capili v. Spouses Cardaña, 537 Phil. 60, 67 (2006).
91.Rollo, p. 761.
92.Id. at 757.
Page 26 of 27
93.Testimony of Dr. Genevieve Huang. TSN, 8 September 1999, p. 23.
94.Mallari v. People, 487 Phil. 299, 320-321 (2004).
95.Delfin v. Billones, 519 Phil. 720, 736-737 (2006).

96.People v. Ugang, 431 Phil. 552, 565 (2002) citing People v. Aliviano, 390 Phil.
692, 705 (2000).
97.Mallari v. People, supra note 94 at 322.

Page 27 of 27
FIRST DIVISION
[G.R. No. L-49781-91. June 24, 1983.]
THE PEOPLE OF THE PHILIPPINES, petitioner, vs. HON. JUDGE

CATALINO CASTAÑEDA, JR. OF THE COURT OF FIRST
INSTANCE OF ILOILO; MANUEL DOCDOCIL; CIRIACO
ESTRELLA; ERLINDA FACUNDO; SONIA GONZALES; JUANITO
GOMELIA; FERMIN LEONOR; ESING PES; ROLANDO
PETINGLAY; DAMIANA SOILA; LYDIA VENCER AND VICTORIA
YAPSING, respondents.
The Solicitor General for petitioner.

Al A. Castro and Luis T . Tirol for respondents.
SYLLABUS
1. CRIMINAL LAW; PERSON CRIMINALLY LIABLE, ALSO CIVILLY LIABLE;

BUT EXEMPTION FROM CRIMINAL LIABILITY DOES NOT ALWAYS INCLUDE
EXEMPTION FROM CIVIL LIABILITY. — Every person criminally liable is also
civilly liable (Article 100, Revised Penal Code). However, it does not follow
that a person who is not criminally liable is also free from civil liability.
Exemption from criminal liability does not always include exemption from
civil liability (Article 101, Revised Penal Code).
2. ID.; ACQUITTAL BECAUSE GUILT HAS NOT BEEN PROVED BEYOND
REASONABLE DOUBT; SAME ACT OR OMISSION AS BASIS OF ACTION FOR
DAMAGES. — When the accused in a criminal prosecution is acquitted on the
3. ID.; ACQUITTAL; GENERAL RULE; EXCEPTION. — While it is true, as a
general rule, that if the accused is acquitted his civil liability is extinguished,
there are exceptions, one of which is, if the acquittal is on the ground of
reasonable doubt (Article 29, Civil Code). The remedy of the complainant in
the case at bar is to file separate civil actions against the herein private
respondents for ejectment or recovery of possession.
DECISION
RELOVA, J : p
Private respondents were individually charged before the City Court of

Iloilo City for Violations of Presidential Decree No. 772 in eleven (11)
separate informations, docketed as Criminal Cases Nos. 57569 to 57579,
albeit identically worded as follows:
Page 1 of 3
"That on or about the period before May 1968 up to the present,
in the City of Iloilo, Philippines, and within the jurisdiction of this Court,
said accused, with deliberate intent and taking advantage of the
absence or tolerance of Trinidad Jason, who is the owner of Lot No.
1241, did then and there wilfully, unlawfully and criminally succeeds in
occupying said lot and construct therein a house against the will and
consent of said Trinidad Jason." (p. 1, Decision dated May 17, 1978 of
CFI, Iloilo.)
After trial on the merits, the City Court rendered a decision, dated June
27, 1977, acquitting the said private respondents on the ground that the
prosecution failed to prove their guilt beyond reasonable doubt.
Trinidad Jason, the complainant in said criminal cases, moved for a
reconsideration of the decision for the court to order the defendants "to
vacate Lot No. 1241 of the Cadastral Survey of Iloilo located along Timawa
Avenue, Molo, Iloilo City and to remove their constructions thereon and to
surrender possession thereof to the offended party, Trinidad Jason, and to
pay damages to the latter in whatever sum is adjudged equitable by the
Honorable Court plus attorneys' fees of not less than P5,000.00." (p. 2.
Decision of the CFI dated May 17, 1978) cdrep
Upon denial of the motion for reconsideration, Trinidad Jason appealed

to the then Court of First Instance of Iloilo contending that "the unlawful
detainer of her land by the accused was proved and conceded," and that
"the accused although acquitted should have been ordered to return the
land to her." Further, she argued that where no civil action was instituted,
waived or reserved it should be determined impliedly and jointly with the
criminal action.
On May 17, 1978, respondent Court of First Instance rendered a
decision dismissing the appeal. Thereafter, complainant filed a petition for
review with the Court of Appeals which referred the case to Us because "it
involves a pure question of law."
In this petition, the legal question raised is, whether, on the basis of
the findings of the trial court and despite the acquittal of the accused, the
latter should be ordered to surrender to the offended party the portion of the
land occupied by them.
Every person criminally liable is also civilly liable (Article 100, Revised
Penal Code). However, it does not follow that a person who is not criminally
liable is also free from civil liability. Exemption from criminal liability does
not always include exemption from civil liability (Article 101, Revised Penal
Code). When the accused in a criminal prosecution is acquitted on the
We agree with the trial court that the appeal of complainant Trinidad
Jason is without merit. While it is true, as a general rule, that if the accused
is acquitted his civil liability is extinguished, there are exceptions, one of
which is, if the acquittal is on the ground of reasonable doubt (Article 29,
Civil Code). The remedy of the complainant in the case at bar is to file
Page 2 of 3
separate civil actions against the herein private respondents for ejectment
or recovery of possession.
ACCORDINGLY, this appeal taken by complainant Trinidad Jason is
hereby DISMISSED, for lack of merit.
SO ORDERED.
Melencio-Herrera, Plana, Vazquez and Gutierrez, Jr., JJ ., concur.
Teehankee, J ., took no part.

Page 3 of 3
FIRST DIVISION
[G.R. No. L-60151. June 24, 1983.]
SALVADOR L. BUDLONG, in his capacity as Acting Third

Assistant City Fiscal, City of Tagbilaran, petitioner, vs.
HONORABLE AQUILES T. APALISOK, in his capacity as Acting
City Judge, City Court, Branch II, City of Tagbilaran, and
CAMILO PUYO Y GALAGAR, respondents.
Salvador Budlong for petitioner.

Alexander Lim for respondents.
SYLLABUS
1. CRIMINAL LAW; PROBATION LAW; PROBATION DEFINITION. —

Probation is defined by Section 3 of Presidential Decree No. 968, the
Probation Law, as "a disposition under which a defendant, after conviction
and sentence, is released subject to conditions imposed by the court and to
the supervision of a probation officer."
2. ID.; ID.; ID.; AFFECTS ONLY THE CRIMINAL ASPECT OF THE CASE.
— The "conviction and sentence" clause of the statutory definition of
probation clearly signifies that probation affects only the criminal aspect of
the case.
3. ID.; OFFENSES; TWO CLASSES OF INJURIES CAUSED BY AN
OFFENSE. — "An offense as a general rule causes two (2) classes of injuries
— the first is the social injury produced by the criminal act which is sought to
be repaired thru the imposition of the corresponding penalty and the second
is the personal injury caused to the victim of the crime which injury is sought
to be compensated thru indemnity which is civil in nature." (Ramos vs.
Gonong, 72 SCRA 559)
4. ID.; CIVIL LIABILITY RESULTING FROM CRIME; AN OBLIGATION OF
THE OFFENDER WHICH DOES NOT FORM PART OF PENALTY. — Under Article
113 of the Revised Penal Code the obligation to satisfy civil liability by the
offender continues notwithstanding service of sentence or non-service due to
amnesty, pardon, commutation of sentence or any other reason. As early as
1913, the Supreme Court in U.S. vs. Heery (25 Phil. 600) made it clear that
the civil liability of the accused is not part of the penalty for the crime
committed. It is personal, to the victim.
5. REMEDIAL LAW; CRIMINAL PROCEDURE; CIVIL ACTION FOR CIVIL
LIABILITY IMPLIEDLY INSTITUTED WITH THE CRIMINAL ACTION; CASE AT BAR.
— The general rule is that "when a criminal action is instituted. the civil
action for the civil liability arising from the offense is impliedly instituted with
the criminal action, unless the offended party expressly waives the civil
action or reserves his right to institute it separately." (Article 100, Revised
Page 1 of 9
Penal Code and Section 1, Rule 111, Rules of Court). In the instant case, the
civil action was more than impliedly instituted because the information
specifically alleged that there were physical injuries inflicted on the victim
which would require medical attendance for a period of forty (40) days and
would incapacitate the victim from performing his customary labor for the
same period of time to the damage and prejudice of the latter and that the
same would be "in the amount to be proved during the trial of the case."
6. CRIMINAL LAW; PROBATION LAW; PROBATION; EFFECT OF
APPLICATION THEREFOR; SUSPENSION OF SENTENCE. — Section 4 of
Presidential Decree No. 968 (Probation Law of 1976), as amended by
Presidential Decree No. 1257, provides only for the suspension of the
sentence imposed on the accused by virtue of his application for probation.
It has absolutely no bearing on civil liability. There is therefore no legal basis
for the respondent court's conclusion that a hearing to prove the civil liability
of the accused under the circumstance of the case would in effect nullify the
order of suspension of the sentence and would defeat the very purpose of
the Probation Law.
DECISION
GUTIERREZ, JR., J : p
This petition for certiorari asks for the setting aside of the orders dated
February 11, 1982 and February 19, 1982 issued by the respondent City
Court of Tagbilaran City in Criminal Case no. 1838.
In his capacity as Acting Third Assistant City Fiscal of Tagbilaran, the
petitioner filed an information before the respondent court charging private
respondent Camilo Puyon y Galagar with the crime of serious physical
injuries through reckless imprudence. The case was docketed as Criminal
Case No. 1838.
During the scheduled arraignment, on February 4, 1982, the accused
pleaded guilty to the crime charged. Immediately after the plea the
respondent judge rendered judgment in open court and sentenced the
accused to suffer thirty (30) days of imprisonment and to pay the costs. No
civil liability was imposed. At this same hearing, the accused manifested his
intention to avail of the provisions of Presidential Decree No. 968, the
Probation Law, as amended. Acting on the manifestation, the respondent
court gave the counsel of the accused five (5) days within which to file the
petition for probation. In the meantime, the accused by recognizance was
entrusted to the custody of a police officer of the Tagbilaran City Integrated
National Police. LLphil
On February 5, 1982, the petitioner filed an Ex-Parte Motion To Set

Case for Hearing for the reception of evidence to prove the civil liability of
the accused. (Rollo. Annex "C", Petition, p. 10)
On February 11, 1982, the respondent court issued an order denying
Page 2 of 9
the aforesaid motion. The order stated:
"An ex-parte motion to set the above entitled case for hearing
having been filed by Acting Asst. City Fiscal Salvador Budlong, and the
Court finding said motion to be filed out of time considering that the
accused has already filed an application for Probation, the Court
hereby denies said motion and considers the case as closed and
terminated. Rollo, p. 11)
On February 18, 1982, the petitioner filed a motion for reconsideration

of the February 11, 1982 order.
On February 19, 1982, the respondent court issued an order denying
the aforesaid motion for reconsideration. The order stated:
"A motion for reconsideration of the Court's Order dated 11
February 1982 having been filed by Asst. City Fiscal Salvador Budlong,
the Court hereby denies said motion on the ground that under Sec. 4 of
P.D. No. 1257, amending P.D. No. 968, the Court after it shall have
convicted and sentenced a defendant and upon his application for
probation suspend (sic) the execution of said sentence and place the
defendant on probation. The prosecution should have asked leave to
prove the civil liability of the defendant right before it rendered its
judgment not after for by doing so, would in effect nullify the Order of
suspension of the sentence and would defeat the very purpose of the
Probation Law." (Rollo, p. 16)
The Acting 'Third Assistant City Fiscal decided to file this petition.
On April 14, 1982, we issued a resolution which reads:
"G.R. no. 60151 [Formerly UDK-5358] (Salvador L. Budlong, etc.
vs. Hon. Aquiles T. Apalisok, etc., et al.). — Let this case be DOCKETED
in this Court. After deliberating on the petition filed in this case by the
petitioner fiscal, the Court Resolved: (a) to CONSIDER the People of the
Philippines as impleaded in this case; and (b) without giving due course
thereto to require the private respondent and the Solicitor General to
COMMENT thereon (not to file a motion to dismiss) within ten (10) days
from notice thereof."
The Solicitor General filed his comment as directed. The private

respondent, however, decided not to file any comment. In a manifestation
dated October 8, 1982, the counsel for accused Camilo Puyo Y Galagar
stated that the private respondent was submitting the matter to the sound
discretion of this Court without any comments. In the light of this
manifestation, we have given due course to the petition. LLpr
The petitioner contends:

"a. THAT, RESPONDENT JUDGE, GRAVELY ERRED IN HOLDING
THAT THE EX-PARTE MOTION TO SET CASE FOR HEARING WAS FILED
OUT OF TIME CONSIDERING THAT THE ACCUSED HAS ALREADY FILED
AN APPLICATION FOR PROBATION.
"b. THAT, RESPONDENT JUDGE AGAIN GRAVELY ERRED IN
DENYING THE MOTION FOR RECONSIDERATION ON THE GROUND THAT
Page 3 of 9
UNDER SECTION 1 OF PRESIDENTIAL DECREE NO. 1257, AMENDING
SECTION 4 OF PRESIDENTIAL DECREE NO. 968, THE COURT AFTER IT
SHALL HAVE CONVICTED AND SENTENCED A DEFENDANT AND UPON
HIS APPLICATION FOR PROBATION SUSPENDS THE EXECUTION OF SAID
SENTENCE AND PLACE THE DEFENDANT ON PROBATION.
"c. THAT, RESPONDENT JUDGE LIKEWISE ERRED AND
GRAVELY ABUSED HIS DISCRETION WHEN IN THE SAME ORDER (Annex
'F') DENYING THE MOTION FOR RECONSIDERATION HE OPINED AND
HELD THAT 'THE PROSECUTION SHOULD HAVE ASKED LEAVE TO PROVE
THE CIVIL LIABILITY OF THE DEFENDANT BEFORE IT RENDERED ITS
JUDGMENT NOT AFTER FOR BY DOING SO WOULD IN EFFECT NULLIFY
THE ORDER OF SUSPENSION OF THE SENTENCE AND WOULD DEFEAT
THE VERY PURPOSE OF THE PROBATION LAW."
The petition is meritorious.

Considering the circumstances of the instant case, the February 11,
1982 order of the respondent court denying the motion for hearing on the
civil liability of the accused was improper.
Probation is defined by Section 3 of Presidential Decree No. 968, the
Probation Law as "a disposition under which a defendant, after conviction
and sentence, is released subject to conditions imposed by the court and to
the supervision of a probation officer."
The "conviction and sentence" clause of the statutory definition clearly
signifies that probation affects only the criminal aspect of the case.
During the regional seminars on the Probation Law conducted for
judges, fiscals, and leaders of the bar, one of the lecturers stated:
". . . The court convicts and sentences the defendant but the
execution of the sentence, whether it imposes a term of
imprisonment or a fine only, (Sec. 4, PD 968) is suspended (Sec. 4,
PD 968) and the defendant is released on probation. Probation
implies that during a period of time fixed by the court the
defendant is provided with individualized community-based
treatment including conditions he is required by the court to fulfill
for his correction and rehabilitation which might be less probable if
he were to serve a prison sentence, and for this purpose is placed
under the actual supervision and visitation of a probation officer.
(Preamble, Secs. 2, 4, 10, 13 and 14, PD 968) If the defendant
violates any of the conditions of his probation, the court may
revoke his probation and order him to serve the sentence
originally imposed. (Sec. 15, PD 968) Upon the other hand, if he
fulfills the terms and conditions of his probation, he shall be
discharged by the court after the period of probation, whereupon
the case against him shall be deemed terminated. His final
discharge shall operate to restore to him all civil rights lost or
suspended as a result of his conviction and to fully discharge his
liability for any fine imposed as to the offense for which probation
was granted. (Sec. 16, PD 968) However, he shall continue to be
obliged to satisfy the civil liability resulting from the crime
committed by him. [Art. 113, Revised Penal Code]. (Cecilio C. Pe
"Petition, Investigation, and Grant or Denial of Probation: Their
Page 4 of 9
Legal Effects" published in 5 Journal of the Integrated Bar of the
Philippines No. 5, pp. 372-376.)
The extinction and survival of civil liability are governed by Chapter

Three, Title Five, Book One of the Revised Penal Code as follows: LLjur
"ART. 112. Extinction of civil liability. — Civil Liability

established in articles 100, 101, 102, and 103 of this Code shall be
extinguished in the same manner as other obligations, in accordance
with the provisions of the Civil Law.
"ART. 113. Obligation to satisfy civil liability. — Except in case

of extinction of his civil liability as provided in the next preceding
article, the offender shall continue to be obliged to satisfy the civil
liability resulting from the crime committed by him, notwithstanding
the fact that he has served his sentence consisting of deprivation of
liberty or other rights, or has not been required to serve the same by
reason of amnesty, pardon, commutation of sentence, or any other
reason.
I n Veloso v. Carmona(77 SCRA 450) we had a situation similar to the

present case where the accused pleaded guilty during the arraignment. The
judge rendered a decision in open court and convicted the accused of slight
physical injuries, sentencing him to pay a fine of P25.00 and to suffer public
censure but with no adjudication regarding civil liability. We stated:
xxx xxx xxx
"It may further be observed that respondent Judge should have

made a finding as to the civil liability of the accused considering the
allegation in the complaint that the offended party suffered 'contusion
with abrasions on the left cheek and left axillary fold, which injuries will
require medical treatment from 7 to 9 days barring complication."
and warned and admonished the Judge to be more careful in the

performance of his duties in the future.
I n Morta Sr. v. Alvizo, Jr. (101 SCRA 221) another judge was similarly
admonished for the following error:
"We hold that Judge Alvizo overlooked the elementary rule that
every person criminally liable for a felony is also civilly liable. When a
criminal action is instituted, the civil action for the civil liability arising
from the offense is impliedly instituted with the criminal action, unless
the offended party expressly waives the civil action or reserves his
right to institute it separately (Art. 100, Revised Penal Code and sec. 1,
Rule 111, Rules of Court).
"After Magayones had pleaded guilty, Judge Alvizo should have
set the case for hearing for the reception of the offended party's
evidence on the civil liability (Veloso vs. Carmona, Adm. Matter No.
502-MJ, June 30, 1977, 77 SCRA 450).
"It was alleged in the criminal complaint that the victim suffered
injuries which would require medical attendance for a period of seven
Page 5 of 9
to ten days and incapacitate him for performing his customary labor for
the same period. According to Fidel Morta, Sr., his son, the aggrieved
party, had to be hospitalized for the treatment of his injuries.
"The civil liability may be claimed in the criminal action even if
there is no specific allegation of damages in the complaint or
information (Roa vs. de la Cruz, 107 Phil. 8; People and Manuel vs.
Coloma, 105 Phil. 1287; People vs. Celorico, 67 Phil. 185; People vs.
Ursua, 60 Phil. 252)
If under Article 113 of the Revised Penal Code, the obligation to satisfy
civil liability continues notwithstanding service of sentence or non-service
due to amnesty, pardon, commutation of sentence, or any other reason we
fail to see what led the respondent judge to rule that an application for
probation should have an opposite effect insofar as determination of civil
liability is concerned. It could not have been delay because the motion was
filed on the day after the judgment of conviction was rendered in open court
right after the plea of guilty and the manifestation that the accused was
applying for probation. cdrep
It bears repeating that "an offense as a general rule causes two (2)
classes of injuries — the first is the social injury produced by the criminal act
which is sought to be repaired thru the imposition of the corresponding
penalty and the second is the personal injury caused to the victim of the
crime which injury is sought to be compensated thru indemnity, which is civil
in nature." (Ramos v. Gonong, 72 SCRA 559). As early as 1913, this Court in
U.S. u. Heery (25 Phil. 600) made it clear that the civil liability of the accused
is not part of the penalty for the crime committed. It is personal to the
victim. Hence, extinguishing such civil liability in the manner followed by the
respondent judge who summarily denied the motion and declared the case
"closed and terminated" constitutes a violation of the victim's basic
constitutional guaranty of due process.
The general rule is that "when a criminal action is instituted, the civil
action for the civil liability arising from the offense is impliedly instituted with
the criminal action, unless the offended party expressly waives the civil
action or reserves his right to institute it separately." (Article 100, Revised
Penal Code and Section 1, Rule 111, Rules of Court) In the instant case, the
civil action was more than impliedly instituted because the information
specifically alleged that there were physical injuries inflicted on the victim
which would require medical attendance for a period of forty (40) days and
would incapacitate the victim from performing his customary labor for the
same period of time to the damage and prejudice of the latter and that the
same would be "in the amount to be proved during the trial of the case."
(Information, Annex "A" to petition, Rollo, p. 8).
Section 1 of Presidential Decree No. 1257 amending Section 4 of
Presidential Decree No. 968, the Probation Law of 1976, provides:
"SECTION 1. Section 4 of Presidential Decree No. 968,
otherwise known as the Probation Law of 1976, is hereby amended to
read as follows:
Page 6 of 9
" 'SEC. 4. Grant of probation. — Subject to the provisions of
this Decree, the court may, after it shall have convicted and sentenced
a defendant but before he begins to serve his sentence and upon his
application, suspend the execution of said sentence and place the
defendant on probation for such period and upon such terms and
conditions as it may deem best.
"The prosecuting officer concerned shall be notified by the court
of the filing of the application for probation and he may submit his
comment on such application within ten days from receipt of the
notification.
"Probation may be granted whether the sentence imposes a term

of imprisonment or a fine with subsidiary imprisonment in case of
insolvency. An application for probation shall be filed with the trial
court, with notice to the appellate court if an appeal has been taken
from the sentence of conviction. The filing of the application shall be
deemed a waiver of the right to appeal, or the automatic withdrawal of
a pending appeal. In the latter case, however, if the application is filed
on or after the date of the judgment of the appellate court, said
application shall be acted upon by the trial court on the basis of the
judgment of the appellate court.
"An order granting or denying probation shall not be
appealable.'"
The above provision of the Probation Law clearly provides only for the
suspension of the sentence imposed on the accused by virtue of his
application for probation. It has absolutely no bearing on civil liability. There
is no legal basis for the respondent court's conclusion that a hearing to prove
the civil liability of the accused under the circumstances of the case, ". . .
would in effect nullify the order of suspension of the sentence and would
defeat the very purpose of the Probation Law." The civil action for the civil
liability is separate and distinct from the criminal action. (People and Manuel
vs. Coloma, 105 Phil. 1287; Roa vs. De la Cruz, 107 Phil. 8; People vs.
Sendaydiego, 81 SCRA 120). prcd
As for the respondent court's conclusion that the motion to set for
hearing the civil liability of the accused, if granted ". . . would defeat the
very purpose of the Probation Law," we agree with the Solicitor General's
observation:
"As regards the trial court's pronouncement that said motion, if
granted, would defeat the very purpose of the Probation Law, suffice it
to state that this reasoning is both spacious and devoid of merit.
Nowhere in the Probation Law may the respondent judge's conclusion
find source. To be specific, Section 2 of PD 968 bears restating.
"'Sec. 2. Purpose — This Decree shall be interpreted so as to:
"(a) promote the correction and rehabilitation of an
offender by providing him with individualized treatment.
"(b) provide an opportunity for the reformation of a
penitent offender which might be less probable if he were to
Page 7 of 9
serve a prison sentence; and
"(c) prevent the commission of offenses.'
"The admission of evidence on civil liability, in this case, will not

certainly defeat the end and purpose of the probation law. Its denial
would on the other hand, violate the complainant's right to due
process." (Rollo, pp. 42-43)
In his keynote, address during the 1977 Regional Seminars on

Probation delivered at the Philippine International Convention Center,
President Ferdinand E. Marcos stated:
"A year ago, on July 24, 1976, we restored human dignity to
those who may have lost it by legal prescription, by enacting the
privilege of probation to adult offenders. This is the decree that we are
now studying, "The Probation Law of 1976.' So by these steps, we
placed ourselves on the side of the liberal thinkers in penology and in
law, as well as the humanists in their compassionate attitude not only
to prisoners and offenders but to man at large.
"We broke away from the archaic institutional corrections system
founded on the blind concepts of retribution and punishment. In their
place, we introduced humanitarian concern for the first offender, to
distinguish the crime from the offender, and to save him from the
corrosive effects of imprisonment and the stigma of incarceration.
"All of us subscribe to the philosophy of probation of
rehabilitation, and of compassion. We go along to a certain extent with
the philosophy which is embodied in all of these steps that the
community to a certain extent is responsible for crime and its
causation, that individuals can change and deserve a second chance,
and that it is for the greater good of society that offenders not be
summarily eliminated from productive life but brought back to its fold
in the quickest and least traumatic way possible."
At the same time, the President warned against the multiple probation
system or the "revolving door process" whereby repeaters or recidivists and
dangerous offenders manage to enter the probation system. The President
added:
". . . Another weakness is the indiscriminate grant of
probation whatever be the crime, whatever be the past criminal
record of the offender, and whatever be the penalty, short of life
term and capital sentence. This non-selectivity of offense, penalty
and disregard of prior record permit undue risks which we in the
Philippines cannot afford to take in favor of the rehabilitation of
the offender without tilting the balance against the community at
the other end of the probation continuum."
xxx xxx xxx

". . . The common cause of misunderstanding and lack of
coordination among the five pillars of the criminal justice system in
other countries is their failure to involve the judges, the
prosecutors, and the practitioners in the orientation seminars and
Page 8 of 9
conferences on probation as a law and as a system."
The instant case provides another weakness - continued
incomprehension by some of its implementors.
Probation has been with us for six (6) years but the statutory concept
and objectives, the selection criteria, and its many other aspects, and the
prescription for its success appear to elude some judges charged with its
implementation. LLjur
WHEREFORE, the instant petition is GRANTED. The respondent court's

orders dated February 11, 1982 and February 19, 1982 respectively are
hereby SET ASIDE. The respondent court is ordered to set hearings on the
civil liability of the accused.
SO ORDERED.
Teehankee (Chairman), Melencio-Herrera, Plana, Vasquez and Relova,
JJ., concur.

Page 9 of 9
THIRD DIVISION
[G.R. No. 97995. January 21, 1993.]
PHILIPPINE NATIONAL BANK, petitioner, vs. COURT OF

APPEALS AND B.P. MATA AND CO., INC., respondents.
Roland A. Niedo for petitioner.

Benjamin C. Santos Law Office for respondent.
SYLLABUS
1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; TRUSTS; EXPRESS

TRUST DISTINGUISHED FROM IMPLIED TRUST. — Trusts are either express or
implied. While express trusts are created by the intention of the trustor or of
the parties, implied trusts come into being by operation of law. Implied trusts
are those which, without being expressed, are deducible from the nature of
the transaction as matters of the intent or which are superinduced on the
transaction by operation of law as matters of equity, independently of the
particular intention of the parties.
2. ID.; ID.; ID.; KINDS OF IMPLIED TRUSTS; RESULTING TRUST
DISTINGUISHED FROM CONSTRUCTIVE TRUST. — Implied trusts are
subdivided into resulting and constructive trusts. A resulting trust is a trust
raised by implication of law and presumed always to have been
contemplated by the parties, the intention of which is found in the nature of
the transaction, but not expressed in the deed or instrument of conveyance.
Examples of resulting trusts are found in Articles 1448 to 1455 of the Civil
Code. On the other hand, a constructive trust is one not created by words
either expressly or impliedly, but by construction of equity in order to satisfy
the demands of justice. An example of a constructive trust is Article 1456
quoted above.
3. ID.; ID.; ID.; ID.; CONSTRUCTIVE TRUST UNDER ARTICLE 1456 OF
THE NEW CIVIL CODE NOT A TRUST IN THE TECHNICAL SENSE; REASON
THEREFOR; CASE AT BAR. — A deeper analysis of Article 1456 reveals that it
is not a trust in the technical sense for in a typical trust, confidence is
reposed in one person who is named a trustee for the benefit of another who
is called the cestui que trust, respecting property which is held by the trustee
for the benefit of the cestui que trust. A constructive trust, unlike an express
trust, does not emanate from, or generate a fiduciary relation. While in an
express trust, a beneficiary and a trustee are linked by confidential or
fiduciary relations, in a constructive trust, there is neither a promise nor any
fiduciary relation to speak of and the so-called trustee neither accepts any
trust nor intends holding the property for the beneficiary. In the case at bar,
Page 1 of 10
Mata, in receiving the US$14,000 in its account through IBAA, had no intent
of holding the same for a supposed beneficiary or cestui que trust, namely
PNB. But under Article 1456, the law construes a trust, namely a constructive
trust, for the benefit of the person from whom the property comes, in this
case PNB, for reasons of justice and equity.
4. ID.; ID.; ID.; ID.; MISTAKE GIVING RISE TO CONSTRUCTIVE TRUST
MAY BE COMMITTED EITHER BY GRANTOR OR GRANTEE. — We agree with
petitioner's stand that under Article 1456, the law does not make any
distinction since mutual mistake is a possibility on either side — on the side
of either the grantor or the grantee. Thus, it was error to conclude that in a
constructive trust, only the person obtaining the property commits a
mistake. This is because it is also possible that a grantor, like PNB in the
case at hand, may commit the mistake.
5. ID.; ID.; ID.; ID.; RESULTING OR CONSTRUCTIVE TRUST MAY BE
BARRED BY PRESCRIPTION AND ALSO BY LACHES; LACHES DISTINGUISHED
FROM PRESCRIPTION; CASE AT BAR. — Proceeding now to the issue of
whether or not petitioner may still claim the US$14,000 it erroneously paid
private respondent under a constructive trust, we rule in the negative.
Although we are aware that only seven (7) years lapsed after petitioner
erroneously credited private respondent with the said amount and that
under Article 1144, petitioner is well within the prescriptive period for the
enforcement of a constructive or implied trust, we rule that petitioner's claim
cannot prosper since it is already barred by laches. It is a well-settled rule
now that an action to enforce an implied trust, whether resulting or
constructive, may be barred not only by prescription but also by laches.
While prescription is concerned with the fact of delay, laches deals with the
effect of unreasonable delay. It is amazing that it took petitioner almost
seven years before it discovered that it had erroneously paid private
respondent. Petitioner would attribute its mistake to the heavy volume of
international transactions handled by the Cable and Remittance Division of
the International Department of PNB. Such specious reasoning is not
persuasive. It is unbelievable for a bank, and a government bank at that,
which regularly publishes its balanced financial statements annually or more
frequently, by the quarter, to notice its error only seven years later. As a
universal bank with worldwide operations, PNB cannot afford to commit such
costly mistakes. Moreover, as between parties where negligence is
imputable to one and not to the other, the former must perforce bear the
consequences of its neglect. Hence, petitioner should bear the cost of its
own negligence.
6. ID.; QUASI-CONTRACTS; QUASI-CONTRACTUAL RELATIONS MAY BE
FORCED UPON PARTIES WHOSE CONSENT THERETO IS PRESUMED, TO AVOID
CASE OF UNJUST ENRICHMENT; SOLUTIO INDEBITI; REQUISITES; CASE AT
BAR. — the Civil Code does not confine itself exclusively to the quasi-
contracts enumerated from Articles 2144 to 2175 but is open to the
possibility that, absent a pre-existing relationship, there being neither crime
nor quasi-delict, a quasi-contractual relation may be forced upon the parties
to avoid a case of unjust enrichment. There being no express consent, in the
Page 2 of 10
sense of a meeting of minds between the parties, there is no contract to
speak of. However, in view of the peculiar circumstances or factual
environment, consent is presume to the end that a recipient of benefits or
favors resulting from lawful, voluntary and unilateral acts of another may not
be unjustly enriched at the expense of another. Undoubtedly, the instant
case fulfills the indispensable requisites of solutio indebiti as defined in
Article 2154: that something (in this case money) has been received when
there was no right to demand it and (2) the same was unduly delivered
through mistake. There is a presumption that there was a mistake in the
payment "if something which had never been due or had already been paid
was delivered; but he from whom the return is claimed may prove that the
delivery was made out of liberality or for any other just cause." In the case at
bar, a payment in the corrected amount of US$1,400 through Cashier's
Check No. 269522 had already been made by PNB for the account of Mata
on February 25, 1975. Strangely, however, fourteen days later, PNB effected
another payment through Cashier's Check No. 270271 in the amount of
US$14,000, this time purporting to be another transmittal of reimbursement
from Star Kist, private respondent's foreign principal.
7. ID.; AMERICAN JURISPRUDENCE ON CONSTRUCTIVE TRUST AND
QUASI-CONTRACTS. — Under American Law, a court of equity does not
consider a constructive trustee for all purposes as though he were in reality
a trustee; although it will force him to return the property, it will not impose
upon him the numerous fiduciary obligations ordinarily demanded from a
trustee of an express trust. It must be borne in mind that in an express trust,
the trustee has active duties of management while in a constructive trust,
the duty is merely to surrender the property. Still applying American case
law, quasi-contractual obligations give rise to a personal liability ordinarily
enforceable by an action at law, while constructive trusts are enforceable by
a proceeding in equity to compel the defendant to surrender specific
property. To be sure, the distinction is more procedural than substantive.
Further reflection on these concepts reveals that a constructive "trust" is as
much a misnomer as a "quasi-contract," so far removed are they from trusts
and contracts proper, respectively. In the case of a constructive trust, as in
the case of quasi-contract, a relationship is "forced" by operation of law upon
the parties, not because of any intention on their part but in order to prevent
unjust enrichment, thus giving rise to certain obligations not within the
contemplation of the parties. Although we are not quite in accord with the
opinion that "the trusts known to American and English equity jurisprudence
are derived from the fidei commissa of the Roman Law," it is safe to state
that their roots are firmly grounded on such Civil Law principles as expressed
in the Latin maxim, "Nemo cum alterius detrimento locupletari potest,"
particularly the concept of constructive trust.
DECISION
ROMERO, J : p

Page 3 of 10
Rarely is this Court confronted with a case calling for the delineation in
broad strokes of the distinctions between such closely allied concepts as the
quasi-contract called "solutio indebiti" under the venerable Spanish Civil
Code and the species of implied trust denominated "constructive trusts,"
commonly regarded as of Anglo-American origin. Such a case is the one
presented to us now which has highlighted more of the affinity and less of
the dissimilarity between the two concepts as to lead the legal scholar into
the error of interchanging the two. Presented below are the factual
circumstances that brought into juxtaposition the twin institutions of the Civil
Law quasi-contract and the Anglo-American trust.
Private Respondent B. P. Mata & Co. Inc. (Mata), is a private
corporation engaged in providing goods and services to shipping companies.
Since 1966, it has acted as a manning or crewing agent for several foreign
firms, one of which is Star Kist Foods, Inc., USA (Star Kist). As part of their
agreement, Mata makes advances for the crew's medical expenses, National
Seaman's Board fees, Seaman's Welfare fund, and standby fees and for the
crew's basic personal needs. Subsequently, Mata sends monthly billings to
its foreign principal Star Kist, which in turn reimburses Mata by sending a
telegraphic transfer through banks for credit to the latter's account.
Against this background, on February 21, 1975, Security Pacific

National Bank (SEPAC) of Los Angeles which had an agency arrangement
with Philippine National Bank (PNB), transmitted a cable message to the
International Department of PNB to pay the amount of US$14,000 to Mata by
crediting the latter's account with the Insular Bank of Asia and America
(IBAA), per order of Star Kist. Upon receipt of this cabled message on
February 24, 1975, PNB's International Department noticed an error and sent
a service message to SEPAC Bank. The latter replied with instructions that
the amount of US$14,000 should only be for US$1,400. cdll
On the basis of the cable message dated February 24, 1975, Cashier's
Check No. 269522 in the amount of US$1,400 (P9,772.96) representing
reimbursement from Star Kist, was issued by the Star Kist for the account of
Mata on February 25, 1975 through the Insular Bank of Asia and America
(IBAA).
However, fourteen days after or on March 11, 1975, PNB effected
another payment through Cashier's Check No. 270271 in the amount of
US$14,000 (P97,878.60) purporting to be another transmittal of
reimbursement from Star Kist, private respondent's foreign principal.
Six years later, or more specifically, on May 13, 1981, PNB requested
Mata for refund of US$14,000 (P97,878.60) after it discovered its error in
effecting the second payment. Cdpr
On February 4, 1982, PNB filed a civil case for collection and refund of
US$14,000 against Mata arguing that based on a constructive trust under
Article 1456 of the Civil Code, it has a right to recover the said amount it
erroneously credited to respondent Mata. 1
Page 4 of 10
After trial, the Regional Trial Court of Manila rendered judgment
dismissing the complaint ruling that the instant case falls squarely under
Article 2154 on solutio indebiti and not under Article 1456 on constructive
trust. The lower court rules out constructive trust, applying strictly the
technical definition of a trust as "a right of property, real or personal, held by
one party for the benefit of another; that there is a fiduciary relation
between a trustee and a cestui que trust as regards certain property, real,
personal, money or choses in action." 2
In affirming the lower court, the appellate court added in its opinion
that under Article 2154 on solutio indebiti, the person who makes the
payment is the one who commits the mistake vis-a-vis the recipient who is
unaware of such a mistake. 3 Consequently, recipient is duty bound to return
the amount paid by mistake. But the appellate court concluded that
petitioner's demand for the return of US$14,000 cannot prosper because its
cause of action had already prescribed under Article 1145, paragraph 2 of
the Civil Code which states:
"The following actions must be commenced within six years:
xxx xxx xxx
(2) Upon a quasi-contract."
This is because petitioner's complaint was filed only on February 4, 1982,

almost seven years after March 11, 1975 when petitioner mistakenly made
payment to private respondent.
Hence, the instant petition for certiorari proceeding seeking to annul
the decision of the appellate court on the basis that Mata's obligation to
return US$14,000 is governed, in the alternative, by either Article 1456 on
constructive trust or Article 2154 of the Civil Code on quasi-contract. 4
Article 1456 of the Civil Code provides:
"If property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an implied trust
for the benefit of the person from whom the property comes."
On the other hand, Article 2154 states:
"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."
Petitioner naturally opts for an interpretation under constructive trust
as its action filed on February 4, 1982 can still prosper, as it is well within
the prescriptive period of ten (10) years as provided by Article 1144,
paragraph 2 of the Civil Code. 5
If it is to be construed as a case of payment by mistake orsolutio
indebiti, then the prescriptive period for quasi-contracts of six years applies,
as provided by Article 1145. As pointed out by the appellate court,
petitioner's cause of action thereunder shall have prescribed, having been
brought almost seven years after the cause of action accrued. However,
even assuming that the instant case constitutes a constructive trust and
Page 5 of 10
prescription has not set in, the present action has already been barred by
laches. cdphil
To recall, trusts are either express or implied. While express trusts are
created by the intention of the trustor or of the parties, implied trusts come
into being by operation of law. 6 Implied trusts are those which, without
being expressed, are deducible from the nature of the transaction as matters
of the intent or which are superinduced on the transaction by operation of
law as matters of equity, independently of the particular intention of the
parties. 7
In turn, implied trusts are subdivided into resulting and constructive
trusts. 8 A resulting trust is a trust raised by implication of law and presumed
always to have been contemplated by the parties, the intention of which is
found in the nature of the transaction, but not expressed in the deed or
instrument of conveyance. 9 Examples of resulting trusts are found in
Articles 1448 to 1455 of the Civil Code. 10 On the other hand, a constructive
trust is one not created by words either expressly or impliedly, but by
construction of equity in order to satisfy the demands of justice. An example
of a constructive trust is Article 1456 quoted above. 11
A deeper analysis of Article 1456 reveals that it is not a trust in the
technical sense 12 for in a typical trust, confidence is reposed in one person
who is named a trustee for the benefit of another who is called the cestui
que trust, respecting property which is held by the trustee for the benefit of
the cestui que trust. 13 A constructive trust, unlike an express trust, does not
emanate from, or generate a fiduciary relation. While in an express trust, a
beneficiary and a trustee are linked by confidential or fiduciary relations, in a
constructive trust, there is neither a promise nor any fiduciary relation to
speak of and the so-called trustee neither accepts any trust nor intends
holding the property for the beneficiary. 14
In the case at bar, Mata, in receiving the US$14,000 in its account
through IBAA, had no intent of holding the same for a supposed beneficiary
or cestui que trust, namely PNB. But under Article 1456, the law construes a
trust, namely a constructive trust, for the benefit of the person from whom
the property comes, in this case PNB, for reasons of justice and equity.
At this juncture, a historical note on the codal provisions on trust and
quasi-contracts is in order.
Originally, under the Spanish Civil Code, there were only two kinds of
quasi contracts: negotiorum gestio and solutio indebiti. But the Code
Commission, mindful of the position of the eminent Spanish jurist, Manresa,
that "the number of quasi contracts may be indefinite," added Section 3
entitled "Other Quasi-Contracts." 15
Moreover, even as Article 2142 of the Civil Code defines a quasi-
contract, the succeeding article provides that: "The provisions for quasi-
contracts in this Chapter do not exclude other quasi-contracts which may
come within the purview of the preceding article." 16
Indubitably, the Civil Code does not confine itself exclusively to the
Page 6 of 10
quasi-contracts enumerated from Articles 2144 to 2175 but is open to the
possibility that, absent a pre-existing relationship, there being neither crime
nor quasi-delict, a quasi-contractual relation may be forced upon the parties
to avoid a case of unjust enrichment. 17 There being no express consent, in
the sense of a meeting of minds between the parties, there is no contract to
speak of. However, in view of the peculiar circumstances or factual
environment, consent is presume to the end that a recipient of benefits or
favors resulting from lawful, voluntary and unilateral acts of another may not
be unjustly enriched at the expense of another. LexLib
Undoubtedly, the instant case fulfills the indispensable requisites of

solutio indebiti as defined in Article 2154: that something (in this case
money) has been received when there was no right to demand it and (2) the
same was unduly delivered through mistake. There is a presumption that
there was a mistake in the payment "if something which had never been due
or had already been paid was delivered; but he from whom the return is
claimed may prove that the delivery was made out of liberality or for any
other just cause." 18
In the case at bar, a payment in the corrected amount of US$1,400
through Cashier's Check No. 269522 had already been made by PNB for the
account of Mata on February 25, 1975. Strangely, however, fourteen days
later, PNB effected another payment through Cashier's Check No. 270271 in
the amount of US$14,000, this time purporting to be another transmittal of
reimbursement from Star Kist, private respondent's foreign principal.
While the principle of undue enrichment or solutio indebiti, is not new,
having been incorporated in the subject on quasi-contracts in Title XVI of
Book IV of the Spanish Civil Code entitled "Obligations incurred without
contract," 19 the chapter on Trusts is fairly recent, having been introduced
by the Code Commission in 1949. Although the concept of trusts is nowhere
to be found in the Spanish Civil Code, the framers of our present Civil Code
incorporated implied trusts, which includes constructive trusts, on top of
quasi-contracts, both of which embody the principle of equity above strict
legalism. 20
In analyzing the law on trusts, it would be instructive to refer to Anglo-
American jurisprudence on the subject. Under American Law, a court of
equity does not consider a constructive trustee for all purposes as though he
were in reality a trustee; although it will force him to return the property, it
will not impose upon him the numerous fiduciary obligations ordinarily
demanded from a trustee of an express trust. 21 It must be borne in mind
that in an express trust, the trustee has active duties of management while
in a constructive trust, the duty is merely to surrender the property.
Still applying American case law, quasi-contractual obligations give rise
to a personal liability ordinarily enforceable by an action at law, while
constructive trusts are enforceable by a proceeding in equity to compel the
defendant to surrender specific property. To be sure, the distinction is more
procedural than substantive. 22
Further reflection on these concepts reveals that a constructive "trust"
Page 7 of 10
is as much a misnomer as a "quasi-contract," so far removed are they from
trusts and contracts proper, respectively. In the case of a constructive trust,
as in the case of quasi-contract, a relationship is "forced" by operation of law
upon the parties, not because of any intention on their part but in order to
prevent unjust enrichment, thus giving rise to certain obligations not within
the contemplation of the parties. 23
Although we are not quite in accord with the opinion that "the trusts
known to American and English equity jurisprudence are derived from the
fidei commissa of the Roman Law," 24 it is safe to state that their roots are
firmly grounded on such Civil Law principles as expressed in the Latin
maxim, "Nemo cum alterius detrimento locupletari potest," 25 particularly
the concept of constructive trust.
Returning to the instant case, while petitioner may indeed opt to avail
of an action to enforce a constructive trust or the quasi-contract of solutio
indebiti, it has been deprived of a choice, for prescription has effectively
blocked quasi-contract as an alternative, leaving only constructive trust as
the feasible option.
Petitioner argues that the lower and appellate courts cannot indulge in
semantics by holding that in Article 1456 the recipient commits the mistake
while in Article 2154, the recipient commits on mistake. 26 On the other
hand, private respondent, invoking the appellate court's reasoning, would
impress upon us that under Article 1456, there can be no mutual mistake.
Consequently, private respondent contends that the case at bar is one of
solutio indebiti and not a constructive trust.cdrep
We agree with petitioner's stand that under Article 1456, the law does
not make any distinction since mutual mistake is a possibility on either side
— on the side of either the grantor or the grantee. 27 Thus, it was error to
conclude that in a constructive trust, only the person obtaining the property
commits a mistake. This is because it is also possible that a grantor, like PNB
in the case at hand, may commit the mistake.
Proceeding now to the issue of whether or not petitioner may still claim
the US$14,000 it erroneously paid private respondent under a constructive
trust, we rule in the negative. Although we are aware that only seven (7)
years lapsed after petitioner erroneously credited private respondent with
the said amount and that under Article 1144, petitioner is well within the
prescriptive period for the enforcement of a constructive or implied trust, we
rule that petitioner's claim cannot prosper since it is already barred by
laches. It is a well-settled rule now that an action to enforce an implied trust,
whether resulting or constructive, may be barred not only by prescription
but also by laches. 28
While prescription is concerned with the fact of delay, laches deals with
the effect of unreasonable delay. 29 It is amazing that it took petitioner
almost seven years before it discovered that it had erroneously paid private
respondent. Petitioner would attribute its mistake to the heavy volume of
international transactions handled by the Cable and Remittance Division of
the International Department of PNB. Such specious reasoning is not
Page 8 of 10
persuasive. It is unbelievable for a bank, and a government bank at that,
which regularly publishes its balanced financial statements annually or more
frequently, by the quarter, to notice its error only seven years later. As a
universal bank with worldwide operations, PNB cannot afford to commit such
costly mistakes. Moreover, as between parties where negligence is
imputable to one and not to the other, the former must perforce bear the
consequences of its neglect. Hence, petitioner should bear the cost of its
own negligence.
WHEREFORE, the decision of the Court of Appeals dismissing
petitioner's claim against private respondent is AFFIRMED.
Costs against petitioner.
SO ORDERED.
Bidin, Davide, Jr. and Melo, JJ ., concur.
Gutierrez, Jr., J ., in the result.
Footnotes
1. Records, p. 122.
2. Salao v. Salao, G.R. No. L-26699, March 16, 1976, 70 SCRA 65.
3. Rollo, p. 41.
4. Rollo, p. 27.
5 . Article 1144. The following actions must be brought within ten years from the
time the right of action accrues:
"xxx xxx xxx
(2) Upon an obligation created by law:
xxx xxx xxx."

6. Article 1441, Civil Code.
7. 89 CJS 724.
8. 89 CJS 722.
9. 89 CJS 725.
10. Aquino, Civil Code, Vol. II, pp. 556-557; Ramos v. Ramos, G.R. No. L-19872,
December 3, 1974, 61 SCRA 284.
11. Salao v. Salao, G.R. No. L-26699, March 16, 1976, 70 SCRA 65.
12. Ramos v. Ramos, G.R. No. L-19872 December 3, 1974, 61 SCRA 284, citing
Gayondato v. Treasurer of the Philippine Islands, 49 Phil 244.
13. State ex Wirt v. Superior Court for Spokane Country, 10 Wash. 2d, 362, 116 P.
2d 752, 755, Article 1440 Civil Code.
14. Diaz v. Goricho, 103 Phil 261.
Page 9 of 10
15. Report of the Code Commission, p. 60.
17. Report of the Code Commission, pp. 159-160.
19. Lao Chit v. Security and Trust Co. and Consolidated Investment, Inc., 105 Phil
490.
20. Report of the Code Commission, p. 26.

21. Scott on Trusts, Volume 3, p. 2315.
22 Ibid, p. 2312.
23. Scott on Trusts, Volume 3, p. 2316.
24. Government v. Abadilla, 46 Phil 642 and Miguel et al v. Court of Appeals, L-
20274, October 30, 1969, 29 SCRA 760.
25. Translated as, "No one should be allowed to enrich himself unjustly at the
expense of another." (Jenk Cent. Cas. 4; 10 Barb. [N.Y.] 626, 633, "Cyclopedic
Law Dictionary," 2nd Edition, p. 688).
26. Rollo, p. 32.
27. Tolentino, Civil Code of the Philippines, Vol. IV, p. 685.
28. Villagonzalo v. IAC, G.R. No. 711110, November 22, 1988, 167 SCRA 535; Perez
v. Ong Chua, No. L-36850, September 23, 1982, 116 SCRA 732, 90 CJS 887-
889 and 54 Am Jur., pp. 449-450.
29. Mapa III v. Guanzon, G.R. No. L-25605, June 20, 1977, 77 SCRA 387.

Page 10 of 10

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THIRD DIVISION

[G.R. No. 177056. September 18, 2009.]

THE OFFICE OF THE SOLICITOR GENERAL, petitioner, vs.

Before this Court is a Petition for Review on Certiorari, 1 under Rule 45

On weekdays, P25.00 for the first

P20.00 for the first three hours and

Shangri-la Flat rate of P30.00 per day

The parking tickets or cards issued by respondents to vehicle owners contain

Figuratively speaking, the Code has "expropriated" the land for

Section 201 of the National Building Code gives the responsibility

In the position paper submitted by the Metropolitan Manila

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

1. The Oﬃce of the Solicitor General should institute the necessary

Respondent SM Prime thereafter received information that, pursuant to

[Respondent SM Prime] further prays for such other reliefs as

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

SM, the petitioner in Civil Case No. 001-1208 [sic ] is a mall

"Obligations derived from law are not presumed. Only

xxx xxx xxx

Parking spaces in shopping malls are privately owned and for

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

THE TRIAL COURT ERRED IN FAILING TO DISMISS THE OSG'S PETITION

Respondent Robinsons ﬁled a Motion to Dismiss Appeal of the OSG on

The OSG argues that respondents are mandated to provide free

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

Pursuant to Section 803 of the National Building Code (PD 1096)

The OSG avers that the aforequoted provisions should be read

It is hereby declared to be the policy of the State to safeguard

The requirement of free-of-charge parking, the OSG argues, greatly

I n City of Ozamis, the Court authorized the collection by the City of

The Court is unconvinced. The National Building Code regulates

In conclusion, the total prohibition against the collection by

1. Rollo, pp. 26-43.

4. Rollo , pp. 59-60.

26. Soria v. Desierto, 490 Phil. 749, 754 (2005).

30. Republic v. Gonzales, supra note 28 at 793.

33. Rollo, pp. 36-37.

37. See J. Romero's Dissenting Opinion in Telecommunications and Broadcast

CD Technologies Asia, Inc. © 2021 cdasiaonline.com

[G.R. No. 204835. September 22, 2015.]

MOVERTRADE CORPORATION , petitioner, vs. THE

3.35 million cu.

The Mount Pinatubo Emergency-Project Management Oﬃce of

On August 18, 1997, Director Soriquez issued a letter 9 denying the

Please be informed that side dumping activities in the area is

On December 8, 2006, the DPWH Ad Hoc Committee rendered an

Sereno, C.J., Carpio, Velasco, Jr., Leonardo-de Castro, Bersamin,

13. Id. at 98.

CD Technologies Asia, Inc. © 2021 cdasiaonline.com

21. Id. at 21.

26. Id. at 57.

30. Id. at 57.

39. Id. at 62-79.

48. Id. at 34 and 282.

53. Id. at 36.

58. Id. at 88.

60. Id. at 81-82.

61. Id. at 99.

65. Rollo , p. 32.

67. Id. at 20.