EN BANC [G.R. No. L-26002. October 31, 1969.] ABELARDO BAUTISTA and ROBERTO TAN TING, petitionersappellees, vs.

FEDERICO O. BORROMEO, INC., HONORABLE CESAR C. CRUZ, Judge of the Municipal Court of Mandaluyong, Rizal and JESUS BAUTISTA, Deputy Sheriff of Manila as Special Sheriff, respondent-appellants. Dante O. Tinga and Leopoldo V. Repotente, Jr. for petitionersappellees. Modesto S. Mendoza for respondents-appellants. SYLLABUS 1.REMEDIAL LAW; PETITION FOR RELIEF; UNAVAILABILITY WHEN THERE IS ANOTHER REMEDY OPEN TO PARTY. A basic precept is that when another remedy at law is open to a party, he cannot sue out a petition for relief under Rule 38. Thus, a petition for relief is not a substitute for appeal. It has been held that where a defendant could have appealed but did not appeal from the decision of the inferior court to the CFI but instead filed a petition for relief, his petition was inappropriate as it "would amount to reviving his right to appeal which he had irretrievably lost through the gross inaction of his counsel." 2.ID.; ID.; ID.; INSTANT CASE. Petitioners learned of the municipal court judgment on August 6, 15, when they received a copy of its decision. They moved to set aside that judgment on August 13, 1965. On September 2, 1965, petitioners learned of the court's order of August 14, 1965 denying their motion to set aside. They could have appealed but did not perfect their appeal to the CFI on time they paid the appellate docket fee and deposited their appeal bond only on September 28, eleven (11) days late. Clearly, their own fault to

seasonably appeal was through their own fault. Then they filed a petition for relief on October 26, 1965, it was way beyond the 60-day period from August 6, 1965, the time they first learned of the judgment to be set aside, as required by Section 3, Rule 38 of the Rules of Court. The petition for relief must therefore fail. 3.ID.; ID.; GROUNDS; EXCUSABLE NEGLIGENCE NOT AVAILABLE IN INSTANT CASE. Counsel of petitioners attributes his failure to attend the hearing upon his reliance on the assurance of his associate in substituting for him to said hearing due to the fact that he had another case before the City Court of Quezon City. His associate, in turn, was unable to attend the hearing because the "records of the case had been misplaced." Considering that counsel of petitioners had consulted his calendar before the hearing was scheduled, it can be safely presumed that his other case was not yet calendared for hearing hence he could not have agreed in good faith to set the hearing on a day on which he had another previously scheduled. He even failed to notify his clients of the hearing set for July 23, 1965, thus, they also failed to appear thereat. The excuse that the record of the case had been misplaced is a stereotyped excuse resorted by lawyers in order to win a new trial. Granting the same to be true, counsel's associate could have appeared at the hearing and inform the court of such fact on the ground of which a postponement could have been asked. There is no excusable negligence upon which petitioners could cling. 4.LABOR AND SOCIAL LEGISLATION; WORKMEN'S COMPENSATION ACT; RIGHT TO COMPENSATION AND SUBROGATION; SECTIONS 2 and 6. The compensation and funeral expenses paid to the widow of the deceased by Borromeo was an obligation arising from law Sec. 2 of the Workmen's Compensation Act and Section 6 of the same Act. 5.ID.; ID.; ID.; NO NEED TO ESTABLISH CONTRACTUAL RELATIONSHIP. There is no need to establish contractual relationship between Quintin Delgado, the deceased employee and

petitioners, owner and driver of the Ford Truck that hit the panel truck driven by Delgado thereby causing his death. The cause of action recovery from petitioners, the compensation and funeral expenses it paid the widow of said deceased employee, is one which does not spring from a creditor-debtor relationship. It arises by virtue of its subrogation to the right of Quintin Delgado to sue the guilty party. Such subrogation is sanctioned by the Workmen's Compensation Law. DECISION SANCHEZ, J p: Respondents-appellants seek to overturn the decision of the Court of First Instance of Rizal of January 6, 1966 granting petitionersappellees' petition for relief from judgment, setting aside the July 23, 1965 decision of the Municipal Court of Mandaluyong, Rizal, in Civil Case 1365 and ordering a new trial. The background facts are as follows: On September 15, 1964, the Ford truck of petitioner Roberto Tan Ting driven by Abelardo Bautista, the other petitioner, and the Volkswagen delivery panel truck owned by respondent Federico O. Borromeo, Inc. (hereinafter called Borromeo) were involved in a traffic accident along Epifanio de los Santos Avenue. In said traffic accident, Quintin Delgado, a helper in Borromeo's delivery panel truck, sustained injuries which resulted in his instantaneous death. Borromeo had to pay Delgado's widow the sum of P4,444 representing the compensation (death benefit) and funeral expenses due Delgado under the Workmen's Compensation Act. On June 17, 1965, upon the averment that the said vehicular accident was caused by petitioners' negligence, Borromeo started suit in the Municipal Court of Mandaluyong, Rizal to recover from

petitioners the compensation and funeral expenses it paid to the widow of Quintin Delgado. 1 At the scheduled hearing of the case on July 23, 1965, neither petitioners nor their counsel appeared. Borromeo was thus allowed to present its evidence ex parte. On the same day, July 23, 1965, the municipal court rendered judgment in favor of Borromeo and against the petitioners in the principal sum of P4,444, and P500 attorney's fees, and costs. Respondents aver that this judgment has been executed and satisfied. On August 6, 1965, petitioners received copy of the municipal court's decision. On August 13, 1965, petitioners moved to set aside the decision. On August 14, 1965, this motion was denied. On August 16, 1965, copy of this order of denial was sent by registered mail to counsel of petitioners. Said counsel did not receive this registered mail and the mail matter was returned to the court unclaimed. However, said counsel learned of this denial on September 2, 1965 allegedly "in the course of his investigation." Petitioners filed a notice of appeal dated September 2, 1965. They, however, paid the appellate docket fee and deposited their cash appeal bond only on September 28, 1965. Their appeal was consequently turned down by the municipal court, for the reason that the deposit of the bond and the payment of the docket fee were done after the lapse of the reglementary period. Nothing was done by petitioners until October 26, 1965, when they lodged a petition for relief from the inferior court's judgment in the Court of First Instance of Rizal. 2 They there claimed excusable negligence for the failure of petitioners' counsel to appear in the July 23, 1965 hearing at the municipal court and asserted that they had a good and substantial defense in that "there was no contractual

relationship between the parties, whether express or implied." They sought preliminary injunction, prayed for trial de novo on the merits. A restraining order was at first issued by the court; but the prayer for preliminary injunction was eventually denied. Respondents' answer contended that the petition for relief was filed out of time; that petitioners' counsel's failure to attend the hearing of July 23, 1965 does not constitute excusable negligence; and that the affidavits attached to the petition do not show good and substantial defense. Petitioners thereafter moved for judgment on the pleadings. No objection thereto was interposed by respondents. The lower court then rendered the judgment mentioned in the first part of this opinion. A move to reconsider failed. Hence, this appeal. We vote to reverse the lower court's judgment for the following reasons: 1.The petition for relief from judgment under Rule 38 of the Rules of Court is unavailable to petitioners. A basic precept is that when another remedy at law is open to a party, he cannot sue out a petition for relief under Rule 38. 3 Thus, a petition for relief is not a substitute for appeal. It has been held that where a defendant could have appealed but did not appeal from the decision of the inferior court to the Court of First Instance but instead filed a petition for relief, his petition was inappropriate as it "would amount to reviving his right to appeal which he had irretrievably lost through the gross inaction of his counsel." 4 Here, petitioners learned of the municipal court judgment on August 6, 1965, when they received a copy of its decision. They moved to set aside that judgment on August 13, 1965. At that time, a petition for

relief could not be availed of because the judgment of the municipal court had not yet become final. 5 But, on September 2, 1965, petitioners learned of the court's order of August 14, 1965 denying their motion to set aside. They could have appealed. Because, nothing in the record suggests that the notices to petitioners to take delivery of the registered envelope containing the inferior court's resolution denying petitioners' motion to set aside the decision were ever served on said petitioners. On the contrary, Teresita Roxas, secretary of petitioners' counsel, in her affidavit dated October 23, 1965, Annex E of the petition for relief, categorically denied receipt of any such notice, thus: "That I have not received any registry notice corresponding to a registered mail at the Manila Post Office containing an order by the Municipal Court of Mandaluyong, Rizal, dated August 14, 1965." 6 But petitioners did not perfect their appeal to the Court of First Instance on time they paid the appellate docket fee and deposited their appeal bond only on September 28, eleven (11) days late. Clearly, their failure to seasonably appeal was through their own fault.

And, when they did file a petition for relief on October 26, 1965, it was way beyond the sixty-day period from August 6, 1965, the time they first learned of the judgment to be set aside, as required by Section 3, Rule 38 of the Rules of Court. We accordingly, rule that petitioners' petition for relief must fail. 2.Petitioners failed to make out a case of excusable negligence for counsel's non-attendance at the July 23, 1965 hearing. Their counsel, Atty. Leopoldo V. Repotente, Jr., explains his failure to attend the hearing in this wise "he relied on the assurance of his associate, Atty. Lucenito N. Tagle, that the latter will attend to the

case for him since on that same date he (Atty. Repotente) had another case before the City Court of Quezon City." In his sworn statement, Atty. Tagle in turn stated that he was unable to attend the hearing despite his promise to do so because, in his own words, "when I transferred to my new office at A & T Building, Escolta, Manila, the record of this case was misplaced, mislaid or otherwise lost by my helpers and was not among those turned over to my possession" and "it was only a few days after the date of hearing on July 23, 1965, that I found the record of this case in one of the drawers of my table in my former office and it was only then that I realized my failure to attend the hearing on July 23, 1965, . . ." We cannot view such negligence of petitioners' two attorneys as excusable. There was no plausible reason for Repotente to entrust the hearing of the case to another lawyer. His lame excuse was that he requested Tagle to attend the hearing of said case for him because he had another hearing at the City Court of Quezon City. This is unworthy of serious consideration. For, as respondents aver and this is not denied by petitioners the hearing of July 23, 1965 before the municipal court was set in open court during the initial date of hearing held on July 1, 1965 after Atty. Repotente consulted his calendar. When Repotente agreed in open court to set the trial of the case for July 23, 1965, it may very well be presumed that his other case in Quezon City was not yet calendared for hearing. He could not have, in good faith, agreed to set the case for hearing on the day on which he had another previously scheduled trial. Further, he failed to notify his clients of the hearing set for July 23, 1965; they also failed to appear thereat. Certainly, Repotentes' inadvertence cannot be labeled as excusable. Nor may Atty. Tagle offer as excuse the fact that the record of the case "was misplaced, mislaid or otherwise lost." This is a stereotyped excuse. It is resorted to by lawyers in order to win new trial of the case and thereby move farther away the day of reckoning. To be remembered is that the life of each case is in its record. If the record of the case was misplaced, mislaid or lost, he should have

nevertheless attended the scheduled hearing and requested for a postponement by reason thereof. But he did not. Appropriate it is to recall here that a prudent lawyer keeps a separate record or diary of hearings of cases he handles and of his professional engagements. A lawyer's schedules of hearings intended as reminder are not noted by the lawyer in his record of the case. That would be useless for the purpose. There is then no excusable negligence to which the petition for relief can cling. 3.Even on the merits, petitioners' case must fall. Borromeo paid the widow of its employee, Quintin Delgado, compensation (death benefit) and funeral expenses for the latter's death while in the course of employment. This obligation arises from law Section 2 of the Workmen's Compensation Act. 7 The same law in its Section 6 also provides that "[i]n case an employee suffers an injury for which compensation is due under this Act by any other person besides his employer, it shall be optional with such injured employee either to claim compensation from his employer, under this Act, or sue such other person for damages, in accordance with law; and in case compensation is claimed and allowed in accordance with this Act, the employer who paid such compensation or was found liable to pay the same, shall succeed the injured employee to the right of recovering from such person what he paid: . . ." 8 It is evident from the foregoing that "if compensation is claimed and awarded, and the employer pays it, the employer becomes subrogated to and acquires, by operation of law, the worker's rights against the tortfeasor." 9 No need then there is to establish any contractual relationship between Quintin Delgado and herein petitioners. Indeed, there is none. The cause of action of respondent corporation is one which does not spring from a creditor-debtor relationship. It arises by virtue

of its subrogation to the right of Quintin Delgado to sue the guilty party. Such subrogation is sanctioned by the Workmen's Compensation Law aforesaid. It is as a subrogee to the rights of its deceased employee, Quintin Delgado, that Borromeo filed a suit against petitioners in the Municipal Court of Mandaluyong, Rizal. 10 FOR THE REASONS GIVEN, the appealed decision of January 6, 1966 under review is hereby reversed and the petition for relief is hereby dismissed. Costs against petitioners-appellees. So ordered. Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee and Barredo, JJ., concur.

EN BANC [G.R. No. 4089. January 12, 1909.] ARTURO PELAYO, plaintiff-appellant, vs. MARCELO LAURON, ET AL., defendants-appellees. J. H. Junquera, for appellant. Filemon Sotto, for appellees.

SYLLABUS 1.RECIPROCAL OBLIGATION OF HUSBAND AND WIFE; SUPPORT. Among the reciprocal obligations existing between a husband and wife is that of support, which obligation is established by law. 2.ID.; SUPPORT OF STRANGERS. The law does not compel any person to support a stranger unless such person bound himself to do so by an express contract. 3.ID.; SUPPORT OF WIFE. Where a husband whom the law compels to support his wife in living, the father and mother-in-law of the latter are under no liability to provide for her. DECISION TORRES, J p: On the 23d of November, 1906, Arturo Pelayo, a physician-residing in Cebu, filed a complaint against Marcelo Lauron and Juana Abella setting forth that on or about the 13th of October of said year, at night, the plaintiff was called to the house of the defendants, situated in San Nicolas, and that upon arrival he was requested by them to

render medical assistance to their daughter-in-law who was about to give birth to a child; that therefore, and after consultation with the attending physician, Dr. Escano, it was found necessary, on account of the difficult birth, to remove the fetus by means of forceps which operation was performed by the plaintiff, who also had to remove the after birth, in which service he was occupied until the following morning, and that afterwards, on the same day, he visited the patient several times; that the just and equitable value of the services rendered by him was P500, which the defendants refuse to pay without alleging any good reason there for; that for said reason he prayed that judgment be entered in his favor as against the defendants, or any of them, for the sum of P500 and costs, together with any other relief that might be deemed proper. In answer to the complaint counsel for the defendants denied all of the allegations therein contained and alleged as a special defense, that their daughter-in-law had died in consequence of the said childbirth, and that when she was alive she lived with her husband independently and in a separate house without any relation whatever with them, and that, if on the day when she gave birth she was in the house of the defendants, her stay there was accidental and due to fortuitous circumstances; therefore, he prayed that the defendants be absolved of the complaint with costs against the plaintiff. The plaintiff demurred to the above answer, and the court below sustained the demurrer, directing the defendants, on the 23d of January, 1907, to amend their answer. In compliance with this order the defendants presented, on the same date, their amended answer, denying each and every one of the allegations contained in the complaint, and requesting that the same be dismissed with costs. As a result of the evidence adduced by both parties, judgment was entered by the court below on the 5th of April, 1907, whereby the defendants were absolved from the former complaint, on account of the lack of sufficient evidence to establish a right of action against the defendants, with costs against the plaintiff, who excepted to the said

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

illness should be in need of medical assistance, the other is under the unavoidable obligation to furnish the necessary services of a physician in order that health may be restored, and he or she may be freed from the sickness by which life is jeopardized; the party bound to furnish such support is therefore liable for all expenses, including the fees of the medical expert for his professional services. This liability originates from the above-cited mutual obligation which the law has expressly established between the married couple. In the face of the above legal precepts it is unquestionable that the person bound to pay the fees due to the plaintiff for the professional services that he rendered to the daughter-in-law of the defendants during her childbirth is the husband of the patient and not her father and mother- in-law, the defendants herein. The fact that it was not the husband who called the plaintiff and requested his assistance for his wife is no bar to the fulfillment of the said obligation, as the defendants, in view of the imminent danger to which the life of the patient was at that moment exposed, considered that medical assistance was urgently needed, and the obligation of the husband to furnish his wife with the indispensable services of a physician at such critical moments is specially established by the law, as has been seen, and compliance therewith is unavoidable; therefore, the plaintiff, who believes that he is entitled to recover his fees, must direct his action against the husband who is under obligation to furnish medical assistance to his lawful wife in such an emergency. From the foregoing it, may readily be understood that it was improper to have brought an action against the defendants simply because they were the parties who called the plaintiff and requested him to assist the patient during her difficult confinement, and also, possibly, because they were her father and mother-in-law and the sickness occurred in their house. The defendants were not, nor are they now, under any obligation by virtue of any legal provision, to pay the fees claimed, nor in consequence of any contract entered into between them and the plaintiff from which such obligation might have arisen.

In applying the provisions of the Civil Code in an action for support, the supreme court of Spain, while recognizing the validity and efficiency of a contract to furnish support wherein a person bound himself to support another who was not his relative, established the rule that the law does impose the obligation to pay for the support of a stranger, but as the liability arose out of a contract, the stipulations of the agreement must be upheld. (Decision of May 11 1897.) Within the meaning of the law, the father and mother law are strangers with respect to the obligation that devolves upon the husband to provide support, among which is the furnishing of medical assistance to his wife at the time of her confinement; and, on the other hand, it does not appear that a contract existed between the defendants and the plaintiff physician, for which reason it is obvious that the former can not be compelled to pay fees which they are under no liability to pay because it does not appear that they consented to bind themselves. The foregoing suffices to demonstrate that the first and second errors assigned to the judgment below are unfounded, because, if the plaintiff has no right of action against the defendants, it is needless to declare whether or not the use of forceps is a surgical operation. Therefore, in view of the considerations hereinbefore set forth, it is our opinion that the judgment appealed from should be affirmed with the costs against the appellant. So ordered. Mapa and Tracey, JJ., concur. Arellano, C.J. and Carson. J., concur in the result. Willard, J., dissents.

FIRST DIVISION [G.R. No. 858 . January 23, 1903.] FRANCISCO MARTINEZ, plaintiff-appellee, vs. PEDRO MARTINEZ, defendant-appellant. Carlos Ledesma, for appellant. Felipe G. Calderon, for appellee. SYLLABUS 1.OWNERSHIP OF VESSELS; REGISTRY. The person in whose name a vessel is registered is presumed to have the legal title thereto. 2.ID; ID. The fact that a vessel registered in the name of one party was purchased with funds of another does not give the latter either a legal or an equitable title to the vessel, nor does it raise a resulting trust in his favor. 3.CIVIL PROCEDURE; FINDING OF FACT. Where the facts recited in the decision, together with those admitted in the pleadings, do not support the judgment it will be reversed. 4.ID.; ID. The statement that a person is the owner of a vessel is a conclusion of law and not a finding of fact. 5.OWNERSHIP OF VESSELS; REGISTRY. The exercise of acts of ownership over a vessel registered in another's name, by one with whose funds the vessel was purchased, does not overcome the presumption that the registered owner is the legal owner. Per COOPER, J ., dissenting:

6.CIVIL PROCEDURE; FINDINGS OF FACT. The finding that a person is the owner of a vessel is the finding of an ultimate fact and not of a conclusion of law DECISION WILLARD, J p: In the decision in this case it is found as a fact that the titles to the steamer Balayan and the coasting vessel Ogoo are registered in the name of the defendant. It must be assumed from this that the defendant has the legal title to the vessels, as without it they could not be so registered. These facts standing alone show that the defendant is the owner of the property. Two other facts, however, appear in the decision which the appellee claims warranted the court below in deciding that the defendant was not the owner. 1.The court found that the money with which the vessels were purchased was furnished by the plaintiff, the father of the defendant. Does this fact make him the owner of them, the title having been taken and registered in the son's name? The various ways in which the title to property may be acquired are stated in article 609 of the Civil Code. The plaintiff never acquired the title to these vessels in any one of the ways therein described. He did not acquire it by donation or succession. He did not acquire it by means of any contract. The court does not find that the father and son had between themselves any contract of any kind by virtue of the son agreed to transfer the title to the father or to hold it for his benefit.

There is an allegation in the complaint that the defendant acted as the agent of the plaintiff in the purchase. This is denied in the answer and there is no finding in the decision which supports this allegation of the complaint. There is only the bare fact that the price of property which was conveyed to the defendant by a third person was paid by the plaintiff. It can not be said that the law by reason of this fact transfers any title or interest in the thing itself to the plaintiff. Article 1090 of the Civil Code provides that "obligations derived from the law are not to be presumed. Only those expressly provided for in this Code or in special laws are enforceable." It is provided in Article 161 of the same Code, relating to minors, that "the ownership or enjoyment of property acquired by a minor child with funds of his parents, pertain to the latter." This article does not apply to the present case, for the son was of age. This is the only provision which we have found anywhere in the laws now in force that declares the property to belong to the person who paid the money. Nor can such general doctrine be found in the former law. Law 49, title 5, partida 5, the effect of which is incorrectly stated in the brief of the appellee, expressly provided that property bought with another's money should not belong to the owner of the money except in certain enumerated cases of which this is not one. Law 48, title 5, partida 5, also expressly provided that where one bought with his own money property the title to which he procured to be transferred to a third person, such third person had the right to keep it by reimbursing the other for his outlay.

It may be true that the laws in some of the United States would in this case raise a resulting trust in favor of the plaintiff. But such laws are not in force here; and whatever other right the plaintiff may have against the defendant, either for the recovery of the money paid or for damages, it is clear that such payment gave him no title either legal or equitable to these vessels. If there were evidence in the case which would have justified the court below in finding that the defendant acted as the agent of the plaintiff or that there was some other contract between them, he should have incorporated such findings in his decision. Article 133 of the Code of Civil Procedure requires the court to file a written decision. If the facts stated in that decision together with those admitted in the pleadings are not sufficient as a matter of law to support the judgment, it must be reversed, if excepted to. The record, however, contains all the evidence and an examination of it shows that no such findings would have been warranted. As to the Balayan, it appears that the son had nothing whatever to do with its purchase. It was bought by the father with the money of the conjugal partnership, and the title by his direction placed in the son's name. As to the Ogoo, the father's intervention in the purchase nowhere appears. He simply testified that it was bought with his money. It is said that the court below found as a fact that the father was the owner of the vessels and that we can not disturb this finding because there was no motion for a new trial. This contention can not be sustained. The ultimate question in the whose case was: Who owned this property? The resolution of that question depended upon the application of legal principles to the facts connected with its acquisition and subsequent management. Those facts were that the father bought and paid for it, and that the titles to it were taken and registered in the son's name. A statement that by reason of these

facts the father is the owner is a statement of law and not a finding of fact. 2.It was found as a fact the father had exercised acts of ownership over the vessel. That finding is entirely consistent with the legal ownership by the son. The exercise of such acts could not transfer such ownership from the son. 3.There is in the record a letter written by the defendant to the plaintiff in which the latter is asked if he desires to sell the Balayan. This letter is not incorporated into the findings and we have no right to consider it. But, if we had, it would not in our opinion change the result. Such a letter might well have been written by a son to a father, both of them recognizing the fact that the son was the owner of the property as to which the inquiry was made. 4.In conclusion we may say that even on the supposition that a written and recorded title to vessels may be overcome by parol evidence, that offered in this case was insufficient to accomplish such a result. As to the Balayan, there is nothing whatever to show why the father placed the title in his son's name. It may have been either as a gift or a loan. As to the Ogoo, there is the simple declaration of the father that he paid for it. This may have been either a gift or a loan. The judgment is reversed and a new trial is granted with costs against the appellee. Torres, Mapa and Ladd, JJ ., concur. Arellano, C .J ., did not sit in this case. Separate Opinions COOPER, J ., dissenting:

This action was brought by Don Francisco Martinez against Don Pedro Martinez, the appellant, for the recovery as owner of two certain vessels, the steamship Balayan and the schooner Ogoo. The plaintiff brings the suit for himself and in representation of his deceased wife, alleging that the ships were bought with funds belonging to the community estate. The defendant in his answer claims that he is the exclusive owner of the ships, basing his right to such ownership upon their registration in his name in the office of the Captain of the Port, and further, that the ships were purchased with his individual money. The first assignment of error is that "the court erred in adjudging the ownership of the property of the ships Balayan and Ogoo to Don Francisco Martinez, the latter not having presented written documents of the acquisition of said ships nor certificates of incsription in the registry." 1.This assignment of error raises the question of the sufficiency of the proof to sustain the judgment of the court below and requires an examination of the evidence taken in the court below and a trial of the questions of fact as to the ownership of the property. Section 497 of the Code of Civil Procedure provides that in the hearings upon bills of exceptions in civil actions and special proceedings, the Supreme Court shall not review the evidence taken in the court below nor retry the questions of fact except as in that section provided, which are in the following cases: (1)Where assessors have sat with the judge and both assessors are of the opinion that the findings of fact and judgment are wrong and have certified their dissent. (2)Upon the ground of the discovery of new and material evidence.

(3)Where the excepting party files a motion in the Court of First Instance for a new trial upon the grounds that the findings of fact are plainly and manifestly against the weight of evidence and the judge overrules the motion and die exception was taken to his overruling the same. There was no motion for a new trial in the Court of First Instance, not is it contended that this case falls within either of the other exceptions. It is insisted that while this court will not review or retry questions of fact, yet if it appears from the findings of fact as contained in the decision of the lower court that the facts do not justify the judgment or conclusions of law the case will be reversed for a new trial.

ships were bought with the funds by him furnished. With respect to the fact that the steamship and schooner may have been registered in the name of the defendant, Pedro Martinez, it is my opinion that this fact can not be considered as prejudicial to the true right of the plaintiff." An analysis of this finding will show that it consists of the finding of, first, an ultimate fact, that is, that the plaintiff D. Francisco Martinez is the actual and true owner of the steamship and schooner, the property in controversy; second, the probative fact that he has exercised over them acts of ownership and dominion and that these ships were bought with funds furnished by him, and, third, the probative fact that the ships were registered in the name of the defendant, Pedro Martinez. The majority of the court regard the first finding that is, that the plaintiff is the actual and true owner of the property in controversy as a statement of law and not a finding of fact, and have rejected it as a finding of fact. In reversing the case for a new trial the decision is based upon the finding that the vessels are registered in the name of the defendant, and it is said that it must be assumed that the defendant has a title to the vessels as without it they could not be so registered. The conclusion I reach is the reverse of that reached by the court. The finding of the plaintiff's ownership of the vessel and schooner is not a conclusion of law, but is the finding of an ultimate fact in the case, and was the proper and the only finding that could have been made. As stated in the opinion, the ultimate question in the whole case was, Who owned this property? The supreme court of Minnesota has passed upon the precise question in the case of Common vs. Grace (36 Minn., 276). The finding of the lower court in that case was that "John Grace was, at the time of his death, the owner in fee simple of the real estate." The appellant made a request in the court below for additional findings.

There was no exception taken to the judgment, the exception being only such as is inferred from the presentation and allowance of the bill of exceptions. This is not sufficient to justify this court in entertaining such objection; the rule is that were a judgment is entered not warranted by the findings the proper remedy is by application to the court in which it is entered to correct or vacate the judgment, and unless the action of the court has been thus invoked the petition will not be considered on appeal. (Scott vs. Minneapolis R. R. Co., 42 Minn., 179). But had the exception been properly taken an examination of the findings clearly shows that the judgment is sustained by them. The following findings of fact were made by the lower court and are contained in the judgment, to wit: "I am of the opinion that Don Francisco Martinez, for himself and in representation of his wife, is the actual and true owner of said steamship and schooner and has exercised over them acts of ownership and dominion, and that these

Upon the refusal of the lower court to make such additional findings it was assigned as error on appeal. Mitchell, J., says: "The facts required to be found are the ultimate facts forming the issued presented by the pleadings and which constitute the foundation of a judgment and not those which are simply evidentiary of them. The court is not required to find merely evidentiary facts or to set forth and explain the means or processes by which it arrived at such findings. Neither evidence, argument, nor comment has any legitimate place in the findings of fact. The test of the sufficiency of the findings of fact by a court, we apprehend, is, Would they answer if presented by a jury in the form of a special verdict, which is required to present the conclusions of fact as established by the evidence, and not the evidence to prove them, and to present those conclusions of fact so that nothing remains to the court but to draw from them conclusion of law? In the case at bar the finding of fact that John Grace was, at the time of his death, the owner in fee simple of the real estate in question was the ultimate fact upon which the decision of the case depended. It covered the only issue in the case, and was a sufficient foundation for a judgment in favor of defendants. It could only be arrived at upon the hypothesis that the deeds in dispute were duly executed, and the finding necessarily implied and included this." In the case of Daly vs. Socorro (80 Cal., 367) it is said: "The appellant further contends that the cause should be reversed because the court failed to find upon certain other issues presented. His right to maintain the action was based wholly upon his ownership and right of possession, and these being found against him it is immaterial to him whether the court found as to other facts or not, as the judgment must have been against him whatever the other finding might have been." The finding of the court that the ships were registered in the name of the defendant is the finding only of a probative or evidentiary fact, that is, it is the finding simply of evidence tending to prove the ultimate fact, to wit, the fact of ownership. The various means of proving this ultimate fact is the evidence. Thus, a bill of sale is

evidence of ownership. The possession of property is prima facie evidence of ownership, and so perhaps is the registry of ship evidence of the ownership of the person in whose name it is made; but while it is evidence tending to prove ownership, there may be other evidence in the case totally destroying its value, such as a sale and conveyance of the ship by the owner or person in whose name it is registered made subsequent to the date of the registration; title by prescription as against the party in whose name the ship is registered; by proof that the party in whose name the ship is registered held the title simply as agent of the party claiming ownership. For this reason the finding that the vessels are registered in the name of the defendant is inconclusive and is entirely insufficient as a finding of fact. The finding of fact must be such as includes the entire issue or the ultimate fact to be proven, and in this case, as is stated in the opinion, the ultimate question in the whole case was who owned this property. The lower court has responded to this issue by saying that "while the ships are registered in the name of the defendant that this fact can not be considered as prejudicial to the direct ownership of the plaintiff. That D. Francisco Martinez, the plaintiff, for himself and in representation of his wife, is the actual and true owner of said ships and has exercised over them acts of ownership and dominion." There is not conflict in the findings, for, as stated by the lower court, the ship may be registered in the name of the defendant and still be owned by the plaintiff. But, if any such conflict exists, then the finding of the ultimate fact that the ownership is with the plaintiff. When the ultimate fact is found no finding of probative facts which may tend to establish that the ultimate fact was found against the evidence can overcome the finding of the ultimate fact. (Smith vs. Acker, 52 Cal., 217; Perry vs. Quackenbush, 105 Cal., 299; Smith vs. Jones, 131 Ind.) Not only is the ultimate fact of ownership which is the paramount finding in the case allowed to be overthrown by the less important

and subsidiary finding of the evidentiary fact of registration of the ship, but the opinion wholly ignores the other finding of the probative fact, that is, that the plaintiff has exercised acts of ownership and dominion over the property and that the ships were purchased with funds furnished by him. II.It is said in the opinion in referring to defendant to the plaintiff that this letter is findings and we have no right to consider decision has gone into an examination improperly brought here. a letter written by the not incorporated in the it, yet the court in its of the evidence thus

Cash, August, 1892. Aug. 24. Francisco Martinez, received from him account of cost of one launch in Hongkong$18,843.65 Cash, September, 1892. Sept. 13. Francisco Martinez to Chartered Bank, remittance to Hongkong accounts of steam launch, $18,300 at 3/4 per cent discount16,881.75 Cost of message3.23 _______ TOTAL$16,884.98 Another letter is evidence from the same parties to the plaintiff dated October 13, 1892, in which they say that they had telegraphed the day before to Hongkong for the ship to sail "and we have written that the name Balayan be given it." Several other letters were introduced written by the same parties to the plaintiff concerning the ship Balayan, in which they say the deal was closed and by which they make arrangements for incidental expenses in the equipment of ship, insurance upon it, and its sailing from Hongkong to Manila.

This ambiguity in the opinion makes it necessary to refer briefly to the evidence. Such review will show that the evidence before the lower court was entirely sufficient to support the finding of ownership in the plaintiff. It consists of letters written to the plaintiff by his agents, Armstrong & Sloan, who acted for him in the purchase of the ship Balayan; the testimony of the plaintiff as to his purchase an payment of the price of the ship; proof of witnesses of the acts of ownership on the part of the plaintiff after the purchase of the ships by him; that the defendant resided with the plaintiff, who was his father, and that the defendant had no means with which to make such purchase; various acts of the defendant recognizing the plaintiff's ownership in the vessel; evidence introduced on the part of the plaintiff tending to show his ownership and tending to show that the defendant acted simply as plaintiff's agent in the control which he exercised over the ship. In one of the letters written by Armstrong & Sloan to the plaintiff dated August 22, 1892, they say: "We have credited to your account $18,843.65 which you left before your departure for the cost of the ship bought for you in Hongkong." Also the book entries in the mercantile office of Armstrong & Sloan, in which appear the following:

A letter is also contained in the record written by the defendant to the plaintiff on the 27th of October, 1899, which is as follows:

"Manila, October 27, 1899. Esteemed Father: With my kindest regards (beso a V. la mano). With respect to the steamship Balayan, Seor Sloan sends word to you that there is an American who wishes to purchase it for 24,000 pesos, and asks whether you desire to sell it or not that you reply because he awaits your answer . . ." It also appears in evidence that the ship Balayan had the initials of the plaintiff "F. M." on the smokestack, and that at some recent date the defendant had caused these initials to be erased and those of his own substituted. The defendant for a number of years managed the plaintiff's business under a general power of attorney, and was a member of his family, and such acts of ownership as he exercised over these ships may be properly referred to this authority. When the relationship of the parties that is, that of son and father is considered in connection with other proof in the case, the conclusion is irresistible that the ships are owned by the plaintiff and that there has been a most flagrant abuse on the part of the defendant of a father's confidence. For the reason above stated I dissent from the decision.

EN BANC [G.R. No. 1299. November 16, 1903.] VICENTE PEREZ, plaintiff-appellee, vs. EUGENIO POMAR, Agent of the Compania-General de Tabacos, defendant-appellant. Francisco Dominguez for appellant. Ledesma, Sumulong & Quintos for appellee. SYLLABUS 1.CONTRACTS; CONSENT. Contracts resulting from an implied consent of the parties are valid and enforceable. 2.ID.; ID.; HIRING. Where one has rendered services to another, and these services are accepted by the latter, in the absence of proof that the service was rendered gratuitously, an obligation results to pay the reasonable worth of the services rendered upon the implied contract of hiring. 3.ID.; ID.; ID. Although no fixed amount may have been determined as the consideration for the contract of hiring, the contract is nevertheless valid if the amount of the implied compensation can be determined by custom or frequent use in the place where the services were rendered. DECISION TORRES, J p: In a decision dated February 9, 1903, the judge of the Sixth Judicial District, deciding a case brought by the plaintiff against the defendant for the recovery of wages due and unpaid, gave judgment against the

latter for the sum of $600 and the costs of suit, less the sum of $50, Mexican. On August 27, 1902, Don Vicente Perez filed in the Court of First Instance of Laguna a complaint, which was amended on the 17th of January of this year, asking that the court determine the amount due the plaintiff, at the customary rate of compensation for interpreting in these Islands, for services rendered the Tabacalera Company, and that, in view of the circumstances of the case, judgment be rendered in his favor for such sum. The complaint also asked that the defendant be condemned to the payment of damages in the sum of $3,200, gold, together with the costs of suit. In this complaint it was alleged that Don Eugenio Pomar, as general agent of the Compania General de Tabacos in the said province, verbally requested the plaintiff on the 8th of December, 1901, to act as interpreter between himself and the military authorities, that after the date mentioned the plaintiff continued to render such services up to and including May 31, 1902; that he had accompanied the defendant, Pomar during that time at conferences between the latter and the colonel commanding the local garrison, and with various officers and doctors residing in the capital, and at conferences with Captain Lemen in the town of Pilar, and with the major in command at the town of Pagsanjan, concerning the shipment of goods from Manila, and with respect to goods shipped from the towns of Santa Cruz, Pilar, and Pagsanjan to this city; that the plaintiff during this period of time was at the disposal of the defendant, Pomar, and held himself in readiness to render services whenever required; that on this account his private business, and especially a soap factory established in the capital, was entirely abandoned; that to the end that such services might be punctually rendered, the agent, Pomar, assured him that the Tabacalera Company always generously repaid services rendered it, and that he therefore did not trouble himself about his inability to devote the necessary amount of time to his business, the defendant going so far as to make him flattering promises of employment with the company, which he did not accept; that these statements were made in the absence of witnesses and that therefore his only proof as

to the same was Mr. Pomar's word as a gentleman; that the employees of the company did not understand English, and by reason of the plaintiff's mediation between the agent and the military authorities large profits were obtained, as would appear from the account and letterpress books of the agency corresponding to those dates. In the amended complaint it was added that the defendant, on behalf of the company, offered to remunerate the plaintiff for the services rendered in the most advantageous manner in which such services are compensated, in view of the circumstances under which they were requested; and that the plaintiff, by rendering the company such services, was obliged to abandon his own business, the manufacture of soap, and thereby suffered damages in the sum of $3,200, United States currency. The defendant, on the 25th of September, 1902, filed an answer asking for the dismissal of the complaint, with costs to the plaintiff. In his answer the defendant denied the allegation in the first paragraph of the complaint, stating that it was wholly untrue that the company, and the defendant as its agent, had solicited the services of the plaintiff as interpreter before the military authorities for the period stated, or for any other period, or that the plaintiff had accompanied Pomar at the conferences mentioned, concerning shipments from Manila and exports from some of the towns of the province to this capital. He stated that he especially denied paragraph 2 of the complaint, as it was absolutely untrue that the plaintiff had been at the disposal of the defendant for the purpose of rendering such services; that he therefore had not been obliged to abandon his occupation or his soap factory, and that the statement that an offer of employment with the company had been made to him was false. The defendant also denied that through the mediation of the plaintiff the company and himself had obtained large profits. The statements in paragraphs 6, 7, 8, and 9 of the complaint were also denied. The defendant stated that, on account of the friendly relations which sprang up between the plaintiff and himself, the former borrowed from him from time to time money amounting to $175 for the purposes of his business, and that he had also delivered to the

plaintiff 36 arrobas of oil worth $106, and three packages of resin for use in coloring his soap; that the plaintiff accompanied the defendant to Pagsanjan, Pilar, and other towns when the latter made business trips to them for the purpose of extending his business and mercantile relations therein; that on these excursions, as well as on private and official visits which he had to make, the plaintiff occasionally accompanied him through motives of friendship, and especially because of the free transportation given him, and not on behalf of the company of which he was never interpreter and for which he rendered no services; that the plaintiff in these conferences acted as interpreter of his own free will, without being requested to do so by the defendant and without any offer of payment or compensation; that therefore there existed no legal relation whatever between the company and the plaintiff, and that the defendant, when accepting the spontaneous voluntary, and officious services of the plaintiff, did so in his private capacity and not as agent of the company, and that it was for this reason that he refused to enter into negotiations with the plaintiff, he being in no way indebted to the latter. The defendant concluded by saying that he answered in his individual capacity. A complaint having been filed against the Compania General de Tabacos and Don Eugenio Polmar, its agent in the Province of Laguna, the latter, having been duly summoned, replied to the complaint, which was subsequently amended, and stated that he made such reply in his individual capacity and not as agent of the company, with which the plaintiff had no legal relations. The suit was instituted between the plaintiff and Pomar, who, as such, accepted the issue and entered into the controversy without objection, opposed the claim of the plaintiff, and concluded by asking that the complaint be dismissed, with the costs to the plaintiff. Under these circumstances and construing the statutes liberally, we think it proper to decide the case pending between both parties in accordance with law and the strict principles of justice.

From the oral testimony introduced at the trial, it appears that the plaintiff, Perez, did on various occasions render Don Eugenio Pomar services as interpreter of English; and that he obtained passes and accompanied the defendant upon his journeys to some of the towns in the Province of Laguna. It does not appear from the evidence, however, that the plaintiff was constantly at the disposal of the defendant during the period of six months or that he rendered services as such interpreter continuously and daily during that period of time. It does not appear that any written contract was entered into between the parties for the employment of the plaintiff as interpreter, or that any other innominate contract was entered into; but whether the plaintiff's services were solicited or whether they were offered to the defendant for his assistance, inasmuch as these services were accepted and made use of by the latter, we must consider that there was a tacit and mutual consent as to the rendition of the services. This gives rise to the obligation upon the person benefited by the services to make compensation therefor, since the bilateral obligation to render service as interpreter, on the one hand, and on the other to pay for the services rendered, is thereby incurred. (Arts. 1088, 1089, and 1262 of the Civil Code). The supreme court of Spain in its decision of February 12, 1889, holds, among other things, "that not only is there an express and tacit consent which produces real contracts but there is also a presumptive consent which is the basis of quasi contracts, this giving rise to the multiple juridical relations which result in obligations for the delivery of a thing or the rendition of a service." Notwithstanding the denial of the defendant, it is unquestionable that it was with his consent that the plaintiff rendered him-services as interpreter, thus aiding him at a time when, owing to the existence of an insurrection in the province, the most disturbed conditions prevailed. It follows, hence, that there was consent on the part of both in the rendition of such services as interpreter. Such service not being contrary to law or to good custom, it was a perfectly licit object of

contract, and such a contract must necessarily have existed between the parties, as alleged by the plaintiff. (Art. 1271, Civil Code.)

price certain. The tacit agreement and consent of both parties with respect to the service rendered by the plaintiff, and the reciprocal benefits accruing to each, are the best evidence of the fact that there was an implied contract sufficient to create a legal bond, from which arose enforceable rights and obligations of a bilateral character. In contracts the will of the contracting parties is law, this being a legal doctrine based upon the provisions of articles 1254, 1258, 1262, 1278, 1281, 1282, and 1289 of the Civil Code. If it is a fact sufficiently proven that the defendant, Pomar, on various occasions consented to accept an interpreter's services, rendered in his behalf and not gratuitously, it is but just that he should pay a reasonable remuneration therefor, because it is a well-known principle of law that no one should be permitted to enrich himself to the damage of another. With respect to the value of the services rendered on different occasions, the most important of which was the first, as it does not appear that any salary was fixed upon by the parties at the time the services were accepted, it devolves upon the court to determine, upon the evidence presented, the value of such services, taking into consideration the few occasions on which they were rendered. The fact that no fixed or determined consideration for the rendition of the services was agreed upon does not necessarily involve a violation of the provisions of article 1544 of the Civil Code, because at the time of the agreement this consideration was capable of being made certain. The discretionary power of the court, conferred upon it by the law, is also supported by the decisions of the supreme court of Spain, among which may be cited that of October 18, 1899, which holds as follows: "That as stated in the article of the Code cited, which follows the provisions of law 1 title 8, of the fifth partida, the contract for lease of services is one in which one of the parties undertakes to make some thing or to render some service to the other for a certain price, the existence of such a price being understood, as this court has held not only when the price has been expressly agreed upon but also when it

The consideration for the contract is also evident, it being clear that a mutual benefit was derived in consequence of the service rendered. It is to be supposed that the defendant accepted these services and that the plaintiff in turn rendered them with the expectation that the benefit would be reciprocal. This shows the concurrence of the three elements necessary under article 1261 of the Civil Code to constitute a contract of lease of service, or other innominate contract, from which an obligation has arisen and whose fulfillment is now demanded. Article 1254 of the Civil Code provides that a contract exists the moment that one or more persons consent to be bound. With respect to another or others, to deliver some thing or to render some service. Article 1255 provides that the contracting parties may establish such covenants, terms, and conditions as they deem convenient, provided they are not contrary to law, morals, or public policy. Whether the service was solicited or offered, the fact remains that Perez rendered to Pomar services as interpreter. As it does not appear that he did this gratuitously, the duty is imposed upon the defendant, he having accepted the benefit of the service, to pay a just compensation therefor, by virtue of the innominate contract of facio ut des implicitly established. The obligations arising from this contract are reciprocal, and, apart from the general provisions with respect to contracts and obligations, the special provisions concerning contracts for lease of services are applicable by analogy. In this special contract, as determined by article 1544 of the Civil Code, one of the parties undertakes to render the other a service for a

may be determined by the custom and frequent use of the place in which such services were rendered." No exception was taken to the judgment below by the plaintiff on account of the rejection of his claim for damages. The decision upon this point is, furthermore, correct. Upon the supposition that the recovery of the plaintiff should not exceed 200 Mexican pesos, owing to the inconsiderable number of times he acted as interpreter, it is evident that the contract thus implicitly entered into was not required to be in writing and that therefore it does not fall within article 1280 of the Civil Code; nor is it included within the provisions of section 335 of the Code of Civil Procedure, as this innominate contract is not covered by that section. The contract of lease of services is not included in any of the cases expressly designated by that section of the procedural law, as affirmed by the appellant. The interpretation of the other articles of the Code alleged to have been infringed has also been stated fully in this opinion. For the reasons stated, we are of the opinion that judgment should be rendered against Don Eugenio Pomar for the payment to the plaintiff of the sum of 200 Mexican pesos, from which will be deducted the sum of 50 pesos due the defendant by the plaintiff. No special declaration is made as to the costs of this instance. The judgment below is accordingly affirmed in so far as it agrees with this opinion, and reversed in so far as it may be in conflict therewith. Judgment will be entered accordingly twenty days after this decision is filed. Arellano, C .J ., Willard and Mapa, JJ ., concur. Separate Opinions McDONOUGH, J ., with whom concurs COOPER, J ., dissenting:

I dissent from the opinion of the majority. In my opinion there is no legal evidence in the case from which the court may conclude that the recovery should be 200 Mexican pesos. I am therefore in favor of affirming the judgment. Johnson, J ., did not sit in this case.

EN BANC [G.R. No. L-29203. July 26, 1971.] MARITIME COMPANY OF THE PHILIPPINES, plaintiff-appellant, vs. REPARATIONS COMMISSION or REPARATIONS MISSION, defendantappellee. Rafael Dinglasan for plaintiff-appellant. Panfilo M. Manguera and Jober Ayura, for defendant-appellee. SYLLABUS 1.CIVIL LAW; OBLIGATIONS AND CONTRACTS; AUTONOMY OF CONTRACTS; PARTIES CAN STIPULATE TERMS NOT CONTRARY TO LAW; LIMIT. It is to be recognized that a large degree of autonomy is accorded contracting parties. Not that it is unfettered. They may, according to the Civil Code, "establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy."(Art. 1306) The law thus sets limits. It is a fundamental requirement that the contract entered into must be in accordance with, and not repugnant to, an applicable statute. Its terms are embodied therein. The contracting parties need not repeat them. They do not even have to be referred to. Every contract thus contains not only what has been explicitly stipulated, but the statutory provisions that have any bearing on the matter. 2.ID.; ID.; EXISTING LAW FORMS PART OF CONTRACT WITHOUT NEED OF EXPRESS REFERENCE. "(A)n existing law enters into and forms part of a valid contract without the need for the parties expressly making reference to it. Only thus could its validity insofar as some of its provisions are concerned be assured." (Lakas ng Manggagawang Makabayan (LMM) v. Abiera, L-29474, Dec. 19, 1970, 36 SCRA 437, 442) A fairly recent restatement of the principle, in the

language of Justice J.B.L. Reyes, speaking for the Court, appears in Liberation Steamship Co., Inc. v. Court of Industrial Relations. Thus: "The rule is that the law forms part of, and is read into, every contract, unless clearly excluded therefrom in those cases where such exclusion is allowed . . ." (L-25389-90, June 27, 1968, 23 SCRA 1105) 3.ID.; ID.; ID.; CASE AT BAR. What is the law that forms part of, and is to be read into, the contract between plaintiff-appellant and defendant-appellee? It is, to repeat, Section 11 of Republic Act No. 1789 as amended. More specifically: "The insurance, ocean freight and other expenses incident to importation shall be paid by the enduser in accordance with usual business practices." The last sentence is equally plain: "Nothing herein shall be construed as exempting the end-user from paying in full all the necessary costs, charges and expenses incident to the application for and the procurement, production, delivery and acquisition, of, the goods concerned." The above provisions, then, form part of and must be read into the shipping contracts between plaintiff-appellant and defendantappellee, unless they could be "clearly excluded therefrom," assuming "such exclusion is allowed." 4.STATUTORY CONSTRUCTION; CONSTRUCTION NOT REQUIRED WHERE STATUTORY PROVISION IS FREE FROM AMBIGUITY. This is one of those cases where a statutory provision free from any ambiguity, quite specific and definite, calls for application. Under such circumstances, there is not even any need for construction. The task of the judiciary is clear. It must consider the law as controlling. This is what the lower court did. Certainly, no error could justly be imputed to it. 5.REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF THE TRIAL COURT, GENERALLY UPHELD ON APPEAL. Clearly, then, this assignment of error is lacking in merit. Plaintiff-appellant, it must be stressed, cannot possibly be unaware of the controlling legal provisions, considering that it has been itself the beneficiary of the Reparation Act, not to mention the fact that it has previously

collected from end-users. Such was a finding of the lower court, which we are not at liberty to disturb, the appeal being purely on questions of law. DECISION FERNANDO, J p: Decisive of the crucial issue posed by this appeal from a decision of the lower court is the applicability of the well-settled principle that a statute should be considered as entering into and forming part of a contract. Plaintiff Maritime Company of the Philippines, now appellant, would deny that it is controlling in its suit to hold defendant Reparations Commission, now appellee, liable for the freight charges as the consignee of reparations goods, notwithstanding that under Section 11 of the Reparations Act, 1 ocean freight and other expenses incident to importation shall be paid by the end-user and not by such agency. That defendant is exempt from such obligation is further stressed by the concluding sentence thereof: "Nothing herein shall be construed as exempting the enduser from playing in full all the necessary costs, charges and expenses incident to the application for and the procurement, production, delivery and acquisition, of, the goods concerned." It could not have been entirely unexpected therefore for the lower court to reach the conclusion that it had no choice on the matter in view of the explicit character of such statutory language which must be read into the contract of shipment. So it held in dismissing plaintiff's complaint for the recovery of freight charges. As such decision is not vitiated by any infirmity, we affirm. In plaintiff's complaint of July 29, 1965, after setting forth its corporate character as well as that of the defendant Reparations Commission, which is vested by law with the power to enter into contracts and to sue and be sued, it alleged that shipments of reparations goods were loaded in three of its vessels consigned to defendant, with corresponding freight charges amounting to

P228,250.58. 2 Then came the allegation that said vessels arrived in Manila and discharged all such shipment of reparations goods, which were duly delivered to and received by defendant as consignee in good order and condition, but defendant failed and refused to pay, notwithstanding repeated demands, the total amount of the freight charges above-mentioned. 3 There was a claim for attorney's fees in the amount of P20,000.00, plaintiff, according to the complaint, being compelled to engage counsel. 4 The prayer was for a judgment against defendant in favor of plaintiff in the aforesaid sum of P228,250.58 as freight charges plus 6% interest thereon from the date of the filing of the complaint until fully paid, and the sum of P20,000.00 by way of attorney's fees. There was no denial in the answer of defendant filed on September 10, 1965 of the facts as alleged, but Section 11 of the Reparations Act was invoked to show that it was not liable at all for the freight charges, a matter which, according to defendant, was fully known to plaintiff as it had in several instances collected freight charges from the end-users concerned. 5 In its special affirmative defenses, defendant contended that plaintiff's claim was barred by a prior judgment under the principle of res adjudicata and that "as a carrier of reparations goods, [it] is not on]y presumed to know the law but is chargeable with knowledge of that law, and when it thus entered into a contract of carriage or affreightment of reparations goods, it rendered itself bound by the pertinent provision of Section 11 of the Reparations Law . . . on the question of who is liable for said freight charges; that as a matter of fact, plaintiff in its prior dealings with the defendant on this matter had so recognized and accepted the set-up as envisioned by Section 11 of the Reparations Law." 6 Its prayer was for the dismissal of the complaint with costs against plaintiff. As noted, defendant's contention was sustained by the lower court in its decision of March 29, 1968 dismissing the complaint. After referring to the language of Section 11 of the Reparations Act, mentioned at the opening of this opinion, it reached the above conclusion, there being "no doubt on the interpretation as to who will

pay for the freight charges." 7 It was likewise set forth therein that plaintiff in fact had been collecting freight charges from end-users and turning over a portion thereof, at least 50%, to defendant to pay its outstanding obligations, plaintiff having purchased several vessels through the Reparations Commission payable on installments. 8 There was no question then, to its mind, that plaintiff, considering such conduct, had no right to demand the payment of freight charges from defendant. 9 From the above decision, an appeal was taken to this Court on April 26, 1968. The brief for plaintiff-appellant was filed on September 7 of the same year. Defendant-appellee Reparations Commission, in turn submitted its brief on October 7, 1968. There was no reply brief on the part of the appellant. Notwithstanding the vigorous presentation of the alleged errors imputed to the lower court, there is no legal justification, as was already indicated, for a reversal. 1.It is to be recognized that a large degree of autonomy is accorded contracting parties. Not that it is unfettered. They may, according to the Civil Code, 10 "establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy." The law thus sets limits. It is a fundamental requirement that the contract entered into must be in accordance with, and not repugnant to, an applicable statute. Its terms are embodied therein. The contracting parties need not repeat them. They do not even have to be referred to. Every contract thus contains not only what has been explicitly stipulated, but the statutory provisions that have any bearing on the matter. So it has been invariably held from United States v. Constantino, 11 a 1919 decision, to Lakas Ng Manggagawang Makabayan (LMM) v. Abiera, 2 promulgated only a year ago. 13 According to Justice Malcolm, speaking for the Court in the former: "It is an elementary rule of contracts that the laws, in force at the time the contract was made, enter into and govern it." 14 This is how the matter is put in the Latest decision: "The principle is thus well-settled that an existing law enters into and forms part of a

valid contract without the need for the parties expressly making reference to it. Only thus could its validity insofar as some of its provisions are concerned are assured." 15

A fairly recent restatement of the principle, in the language of Justice J.B.L. Reyes, speaking for the Court, appears in Liberation Steamship Co., Inc. vs. Court of Industrial Relations. 16 Thus: "The rule is that the law forms part of, and is read into, every contract, unless clearly excluded therefrom in those cases where such exclusion is allowed . . ." 17 What is the law that forms part of, and is to be read into, the contract between plaintiff-appellant and defendant-appellee? It is, to repeat, Section 11 of Republic Act No. 1789 as amended. 18 More specifically: "The insurance, ocean freight and other expenses incident to importation shall be paid by the end-user in accordance with usual business practice." The last sentence is equally plain: "Nothing herein shall be construed as exempting the end-user from paying in full all the necessary costs, charges and expenses incident to the application for and the procurement, production, delivery and acquisition, of, the goods concerned." The above provisions, then, form part of and must be read into the shipping contracts between plaintiff-appellant and defendant appellee, unless they could be "clearly excluded therefrom", assuming "such exclusion is allowed." There is thus no persuasive force to the first error imputed to the lower court for their being applied to the contractual relationship between the parties. There is no showing that the shipping contracts between them are clearly excluded from the law, much less that such exclusion could be allowed. The lower court had no choice then. It yielded obedience to the law. What it did certainly cannot be stigmatized as error. It is in that sense that reliance by plaintiff-appellant on the force and effect to be given the usual contracts between shipper and carriers, while finding support in the applicable provisions both of the Civil

Code and the Code of Commerce, is far from persuasive. As was pointed out in the equally forceful brief of defendant-appellee, to so view the matter is to ignore what has been explicitly set forth in Section 11 of the Reparations Act which is controlling. Nor did the attempt by plaintiff-appellant to invoke equitable considerations strengthen an inherently weak case. It asserted that defendant-appellee was in a better position to collect the freight charges. This is the answer of the latter: "Contrary to appellant's contention, it is itself and not the appellee which is in a better position to collect the corresponding ocean freight. This is because under the Reparations Law and established reparations set-up, the incidental charges to reparations importations, including freight charges are to be paid by the end-user to the party concerned upon the arrival but before delivery of the goods to the end-user, and 'in accordance with usual business practices.' ( Sect. 11 R.A. 1789, as amended) Under this concept, before the carrier issues the 'Permit to deliver' the shipments, it could rightfully demand payment as a settlement of the freight charges. This is the stage more appropriate and commands a better facility in so far as the collection of the freight charges is concerned, and not after the goods shall have been released to the end-user by the carrier and the corresponding contract of Conditional Purchase and Sale executed by and between the Commission and the End-user concerned." 19 It cannot be said then that plaintiff-appellant's effort to thus collect would be futile. Moreover, there is always the remedy of a court action. Both in the answer of defendant-appellee 20 as well as in its brief, 21 reference was made to such a suit actually being filed by plaintiff-appellant against a reparations end-user, C. G. Nazario and Sons, Inc. as well as the Reparations Commission as far back as 1961. 22 It was therein decided that defendant-appellee was not liable for the freight charges, such obligation being incumbent on its co-defendant C. G. Nazario and Sons, Inc., the end-user. At bottom then, this is one of those cases where a statutory provision free from any ambiguity, quite specific and definite, calls for

application. Under such circumstances, there is not even any need for construction. The task of the judiciary is clear. 23 It must consider the law as controlling. This is what the lower court did. Certainly, no error could justly be imputed to it. 2.Nor is the second assignment of error deserving of a better fate. Plaintiff-appellant would find fault with the holding of the lower court that its having collected the freight charges on certain occasions from the end-users of reparations goods and applying portions thereof to the payment of its obligation to defendant-appellee for the purchase of several vessels indicated it had no right to demand payment thereof from the latter. On this point, the appealed decision reads: "The practice followed by the plaintiff in its dealings with the defendant establishes the fact that the plaintiff has been collecting the freight charges from the end-users and turning over a portion thereof (at least 50%) to the [defendant] in payment of the outstanding obligation of the plaintiff to the defendant, the plaintiff having purchased several vessels thru the Reparations Commission and paying the latter by installments . . . There is, therefore, no question that as far as the plaintiff in its relation with the defendant is concerned, said plaintiff has been collecting from the end-users the freight charges of reparations goods from the end-users and, therefore, it has no right to demand the same from the defendant." 24 On the face thereof, the imputation of error would be hard to justify. The conclusion reached proceeds from an accurate appraisal of plaintiff-appellant's conduct. Nor is it without support in the evidence. So it was made manifest in defendant-appellee's brief in these words: "To exemplify and bolster the foregoing view, attention is respectfully invited to the herein quoted contents of Exhs. 6, 7 and 8 of defendant-appellee: From Exh. '6' which is a letter of the plaintiffappellant to the defendant-appellee, dated August 7, 1963 containing the manifestation of plaintiff to turn over to the defendant 50% of freightage collected, we quote in part: 'Allowing some time for the collection of freights from the various end-users, we expect to remit to the Reparations Commission an approximate total of P60,000.00

within 60 days', (italics supplied) From Exh. '7' which is a letter dated October 3, 1963, of plaintiff-appellant to defendant-appellee we quote the following: 'As of August 28, 1963, the only remaining past due account, on this vessel was a delinquency interest of P4,600.46. On that date, however, we paid the Reparations Commission the sum of P37,629.80 representing 50% of the freights on reparations cargo . . .' (Italics supplied) And per Exh. '8' which is also a letter of plaintiffappellant to defendant-appellee, dated Feb. 6, 1964, and which requests authority to load reparations cargoes on non-reparations vessels, there is manifested therein: 'We undertake to apply 10% of whatever freights collected on reparations cargo loaded on the above vessels to the Reparations Commission for our reparations account with you.' (Italics supplied)" 25 All that plaintiff-appellant could say on the matter is the following: "It is respectfully submitted, that even assuming arguendo only that on certain occasions plaintiff-appellant would collect the freight charges from the end-users concerned; nevertheless, that practice does not at all affect the question of who is liable for the freight charges under the contracts of carriage, . . . Just because herein plaintiff-appellant would, on certain occasions, collect the freight charges from the endusers by virtue of an understanding with the consignee or owner of said reparations goods, it does not necessarily follow that under the said contracts of affreightment, the end-users are already liable for said freight charges which are collectible and demandable thereunder only from the consignee thereof." 26 This attempt by plaintiffappellant to erode its conduct of its legal significance is unavailing, considering that it is based on an assumption as to defendantappellee being liable for the payment of the freight charges, which, as had been made clear, is at war with the specific language of the controlling statutory provision. Clearly, then, this assignment of error is lacking in merit. Plaintiffappellant, it must be stressed, cannot possibly be unaware of the controlling legal provisions, considering that it has been itself the beneficiary of the Reparations Act, not to mention the fact that it has

previously collected from end-users. Such was a finding of the lower court, which we are not at liberty to disturb, the appeal being purely on questions of law. As the last two errors allegedly committed by the lower court were based on plaintiff-appellant's basic premise as to the non-applicability of Section 11 of the Reparations Act, no useful purpose would be served by any further discussion. It suffices to state that the appealed decision can thus stand the vigorous attack launched against it. 3.One last word. This opinion deals with a shipping contract governed by specific provisions of the Reparations Act. Nothing in the opinion is to be considered applicable to contracts of a similar nature where ordinarily what has been explicitly agreed upon in the bill of lading is the measure of the respective rights and obligations of the parties. WHEREFORE, the lower court decision of March 29, 1968 is affirmed. With costs against plaintiff-appellant. Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Teehankee, Barredo, Villamor and Makasiar, JJ., concur. Dizon, J., is on leave. Castro, J., did not take part.

FIRST DIVISION [G.R. No. 156437. March 1, 2004.] NATIONAL HOUSING AUTHORITY, petitioner, vs. GRACE BAPTIST CHURCH and the COURT OF APPEALS, respondents. DECISION YNARES-SANTIAGO, J p: This is a petition for review under Rule 45 of the Rules of Court, seeking to reverse the Decision of the Court of Appeals dated February 26, 2001, 1 and its Resolution dated November 8, 2002, 2 which modified the decision of the Regional Trial Court of Quezon City, Branch 90, dated February 25, 1997. 3 On June 13, 1986, respondent Grace Baptist Church (hereinafter, the Church) wrote a letter to petitioner National Housing Authority (NHA), manifesting its interest in acquiring Lots 4 and 17 of the General Mariano Alvarez Resettlement Project in Cavite. 4 In its letter-reply dated July 9, 1986, petitioner informed respondent: In reference to your request letter dated 13 June 1986, regarding your application for Lots 4 and 17, Block C-3-CL, we are glad to inform you that your request was granted and you may now visit our Project Office at General Mariano Alvarez for processing of your application to purchase said lots. We hereby advise you also that prior to approval of such application and in accordance with our existing policies and guidelines, your other accounts with us shall be maintained in good standing. 5 Respondent entered into possession of the lots and introduced improvements thereon. 6

On February 22, 1991, the NHA's Board of Directors passed Resolution No. 2126, approving the sale of the subject lots to respondent Church at the price of P700.00 per square meter, or a total price of P430,500.00. 7 The Church was duly informed of this Resolution through a letter sent by the NHA. 8 On April 8, 1991, the Church tendered to the NHA a managers check in the amount of P55,350.00, purportedly in full payment of the subject properties. 9 The Church insisted that this was the price quoted to them by the NHA Field Office, as shown by an unsigned piece of paper with a handwritten computation scribbled thereon. 10 Petitioner NHA returned the check, stating that the amount was insufficient considering that the price of the properties have changed. The Church made several demands on the NHA to accept their tender of payment, but the latter refused. Thus, the Church instituted a complaint for specific performance and damages against the NHA with the Regional Trial Court of Quezon City, 11 where it was docketed as Civil Case No. Q-91-9148. On February 25, 1997, the trial court rendered its decision, the dispositive portion of which reads: WHEREFORE, premises considered, judgment is hereby rendered as follows: 1.Ordering the defendant to reimburse to the plaintiff the amount of P4,290.00 representing the overpayment made for Lots 1, 2, 3, 18, 19 and 20; 2.Declaring that there was no perfected contract of sale with respect to Lots 4 and 17 and ordering the plaintiff to return possession of the property to the defendant and to pay the latter reasonable rental for the use of the property at P200.00 per month computed from the time it took possession thereof until finally vacated. Costs against defendant.

SO ORDERED. 12 On appeal, the Court of Appeals, affirmed the trial courts finding that there was indeed no contract of sale between the parties. However, petitioner was ordered to execute the sale of the lots to Grace Baptist Church at the price of P700.00 per square meter, with 6% interest per annum from March 1991. The dispositive portion of the Court of Appeals decision, dated February 26, 2001, reads: WHEREFORE, the appealed Decision is hereby AFFIRMED with the MODIFICATION that defendant-appellee NHA is hereby ordered to sell to plaintiff-appellant Grace Baptist Church Lots 4 and 17 at the price of P700.00 per square meter, or a total cost P430,000.00 with 6% interest per annum from March, 1991 until full payment in cash. SO ORDERED. 13 The appellate court ruled that the NHA's Resolution No. 2126, which earlier approved the sale of the subject lots to Grace Baptist Church at the price of P700.00 per square meter, has not been revoked at any time and was therefore still in effect. As a result, the NHA was estopped from fixing a different price for the subject properties. Considering further that the Church had been occupying the subject lots and even introduced improvements thereon, the Court of Appeals ruled that, in the interest of equity, it should be allowed to purchase the subject properties. 14 Petitioner NHA filed a Motion for Reconsideration which was denied in a Resolution dated November 8, 2002. Hence, the instant petition for review on the sole issue of: Can the NHA be compelled to sell the subject lots to Grace Baptist Church in the absence of any perfected contract of sale between the parties? Petitioner submits that the Court cannot compel it to sell the subject property to Grace Baptist Church without violating its freedom to contract. 15 Moreover, it contends that equity should be applied only

in the absence of any law governing the relationship between the parties, and that the law on sales and the law on contracts in general apply to the present case. 16 We find merit in petitioners submission. Petitioner NHA is not estopped from selling the subject lots at a price equal to their fair market value, even if it failed to expressly revoke Resolution No. 2126. It is, after all, hornbook law that the principle of estoppel does not operate against the Government for the act of its agents, 17 or, as in this case, their inaction. HTcDEa On the application of equity, it appears that the crux of the controversy involves the characterization of equity in the context of contract law. Preliminarily, we reiterate that this Court, while aware of its equity jurisdiction, is first and foremost, a court of law. While equity might tilt on the side of one party, the same cannot be enforced so as to overrule positive provisions of law in favor of the other. 18 Thus, before we can pass upon the propriety of an application of equitable principles in the case at bar, we must first determine whether or not positive provisions of law govern. It is a fundamental rule that contracts, once perfected, bind both contracting parties, and obligations arising therefrom have the force of law between the parties and should be complied with in good faith. 19 However, it must be understood that contracts are not the only source of law that govern the rights and obligations between the parties. More specifically, no contractual stipulation may contradict law, morals, good customs, public order or public policy. 20 Verily, the mere inexistence of a contract, which would ordinarily serve as the law between the parties, does not automatically authorize disposing of a controversy based on equitable principles alone. Notwithstanding the absence of a perfected contract between the parties, their relationship may be governed by other existing laws which provide for their reciprocal rights and obligations.

It must be remembered that contracts in which the Government is a party are subject to the same rules of contract law which govern the validity and sufficiency of contract between individuals. All the essential elements and characteristics of a contract in general must be present in order to create a binding and enforceable Government contract. 21 It appearing that there is no dispute that this case involves an unperfected contract, the Civil Law principles governing contracts should apply. In Vda. de Urbano v. Government Service Insurance System, 22 it was ruled that a qualified acceptance constitutes a counter-offer as expressly stated by Article 1319 of the Civil Code. In said case, petitioners offered to redeem mortgaged property and requested for an extension of the period of redemption. However, the offer was not accepted by the GSIS. Instead, it made a counter-offer, which petitioners did not accept. Petitioners again offer to pay the redemption price on staggered basis. In deciding said case, it was held that when there is absolutely no acceptance of an offer or if the offer is expressly rejected, there is no meeting of the minds. Since petitioners offer was denied twice by GSIS, it was held that there was clearly no meeting of the minds and, thus, no perfected contract. All that is established was a counter-offer. 23 In the case at bar, the offer of the NHA to sell the subject property, as embodied in Resolution No. 2126, was similarly not accepted by the respondent. 24 Thus, the alleged contract involved in this case should be more accurately denominated as inexistent. There being no concurrence of the offer and acceptance, it did not pass the stage of generation to the point of perfection. 25 As such, it is without force and effect from the very beginning or from its incipiency, as if it had never been entered into, and hence, cannot be validated either by lapse of time or ratification. 26 Equity can not give validity to a void contract, 27 and this rule should apply with equal force to inexistent contracts.

We note from the records, however, that the Church, despite knowledge that its intended contract of sale with the NHA had not been perfected, proceeded to introduce improvements on the disputed land. On the other hand, the NHA knowingly granted the Church temporary use of the subject properties and did not prevent the Church from making improvements thereon. Thus, the Church and the NHA, who both acted in bad faith, shall be treated as if they were both in good faith. 28 In this connection, Article 448 of the Civil Code provides: The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land and if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof.

Pursuant to our ruling in Depra v. Dumlao, 29 there is a need to remand this case to the trial court, which shall conduct the appropriate proceedings to assess the respective values of the improvements and of the land, as well as the amounts of reasonable rentals and indemnity, fix the terms of the lease if the parties so agree, and to determine other matters necessary for the proper application of Article 448, in relation to Articles 546 and 548, of the Civil Code. WHEREFORE, in view of the foregoing, the petition is GRANTED. The Court of Appeals' Decision dated February 26, 2001 and Resolution dated November 8, 2002 are REVERSED and SET ASIDE. The

Decision of the Regional Trial Court of Quezon City-Branch 90, dated February 25, 1997, is REINSTATED. This case is REMANDED to the Regional Trial Court of Quezon City, Branch 90, for further proceedings consistent with Articles 448 and 546 of the Civil Code. No costs. SO ORDERED. Davide, Jr., C J., Carpio and Azcuna, JJ., concur. Panganiban, J., is on official leave.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-23749 April 29, 1977

FAUSTINO CRUZ, plaintiff-appellant, vs. J. M. TUASON & COMPANY, INC., and GREGORIO ARANETA, INC., defendants-appellees.

BARREDO, J.: Appeal from the order dated August 13, 1964 of the Court of First Instance of Quezon City in Civil Case No. Q-7751, Faustino Cruz vs. J.M. Tuason & Co., Inc., and Gregorio Araneta, Inc., dismissing the complaint of appellant Cruz for the recovery of improvements he has made on appellees' land and to compel appellees to convey to him 3,000 square meters of land on three grounds: (1) failure of the complaint to state a cause of action; (2) the cause of action of plaintiff is unenforceable under the Statute of Frauds; and (3) the action of the plaintiff has already prescribed. Actually, a perusal of plaintiff-appellant's complaint below shows that he alleged two separate causes of action, namely: (1) that upon request of the Deudors (the family of Telesforo Deudor who laid claim on the land in question on the strength of an "informacion posesoria" ) plaintiff made permanent improvements valued at P30,400.00 on said land having an area of more or less 20 quinones and for which he also incurred expenses in the amount of P7,781.74, and since defendants-appellees are being benefited by said improvements, he is entitled to reimbursement from them of said amounts and (2) that in

1952, defendants availed of plaintiff's services as an intermediary with the Deudors to work for the amicable settlement of Civil Case No. Q-135, then pending also in the Court of First Instance of Quezon City, and involving 50 quinones of land, of Which the 20 quinones aforementioned form part, and notwithstanding his having performed his services, as in fact, a compromise agreement entered into on March 16, 1963 between the Deudors and the defendants was approved by the court, the latter have refused to convey to him the 3,000 square meters of land occupied by him, (a part of the 20 quinones above) which said defendants had promised to do "within ten years from and after date of signing of the compromise agreement", as consideration for his services. Within the Period allowed by the rules, the defendants filed separate motions to dismiss alleging three Identical grounds: (1) As regards that improvements made by plaintiff, that the complaint states no cause of action, the agreement regarding the same having been made by plaintiff with the Deudors and not with the defendants, hence the theory of plaintiff based on Article 2142 of the Code on unjust enrichment is untenable; and (2) anent the alleged agreement about plaintiffs services as intermediary in consideration of which, defendants promised to convey to him 3,000 square meters of land, that the same is unenforceable under the Statute of Frauds, there being nothing in writing about it, and, in any event, (3) that the action of plaintiff to compel such conveyance has already prescribed. Plaintiff opposed the motion, insisting that Article 2142 of the applicable to his case; that the Statute of Frauds cannot be invoked by defendants, not only because Article 1403 of the Civil Code refers only to "sale of real property or of an interest therein" and not to promises to convey real property like the one supposedly promised by defendants to him, but also because, he, the plaintiff has already performed his part of the agreement, hence the agreement has already been partly executed and not merely executory within the contemplation of the Statute; and that his action has not prescribed for the reason that defendants had ten years to comply and only after

the said ten years did his cause of action accrue, that is, ten years after March 16, 1963, the date of the approval of the compromise agreement, and his complaint was filed on January 24, 1964. Ruling on the motion to dismiss, the trial court issued the herein impugned order of August 13, 1964: In the motion, dated January 31, 1964, defendant Gregorio Araneta, Inc. prayed that the complaint against it be dismissed on the ground that (1) the claim on which the action is founded is unenforceable under the provision of the Statute of Frauds; and (2) the plaintiff's action, if any has already prescribed. In the other motion of February 11, 1964, defendant J. M. Tuason & Co., Inc. sought the dismissal of the plaintiffs complaint on the ground that it states no cause of action and on the Identical grounds stated in the motion to dismiss of defendant Gregorio Araneta, Inc. The said motions are duly opposed by the plaintiff. From the allegations of the complaint, it appears that, by virtue of an agreement arrived at in 1948 by the plaintiff and the Deudors, the former assisted the latter in clearing, improving, subdividing and selling the large tract of land consisting of 50 quinones covered by the informacion posesoria in the name of the late Telesforo Deudor and incurred expenses, which are valued approximately at P38,400.00 and P7,781.74, respectively; and, for the reasons that said improvements are being used and enjoyed by the defendants, the plaintiff is seeking the reimbursement for the services and expenses stated above from the defendants. Defendant J. M. Tuason & Co., Inc. claimed that, insofar as the plaintiffs claim for the reimbursement of the amounts of P38,400.00 and P7,781.74 is concerned, it is not a privy to the plaintiff's agreement to assist the Deudors n improving the 50 quinones. On the other hand, the plaintiff countered that, by holding and utilizing the improvements introduced by him, the defendants are unjustly

enriching and benefiting at the expense of the plaintiff; and that said improvements constitute a lien or charge of the property itself On the issue that the complaint insofar as it claims the reimbursement for the services rendered and expenses incurred by the plaintiff, states no cause of action, the Court is of the opinion that the same is well-founded. It is found that the defendants are not parties to the supposed express contract entered into by and between the plaintiff and the Deudors for the clearing and improvement of the 50 quinones. Furthermore in order that the alleged improvement may be considered a lien or charge on the property, the same should have been made in good faith and under the mistake as to the title. The Court can take judicial notice of the fact that the tract of land supposedly improved by the plaintiff had been registered way back in 1914 in the name of the predecessors-in-interest of defendant J. M. Tuason & Co., Inc. This fact is confirmed in the decision rendered by the Supreme Court on July 31, 1956 in Case G. R. No. L-5079 entitled J.M. Tuason & Co. Inc. vs. Geronimo Santiago, et al., Such being the case, the plaintiff cannot claim good faith and mistake as to the title of the land. On the issue of statute of fraud, the Court believes that same is applicable to the instant case. The allegation in par. 12 of the complaint states that the defendants promised and agreed to cede, transfer and convey unto the plaintiff the 3,000 square meters of land in consideration of certain services to be rendered then. it is clear that the alleged agreement involves an interest in real property. Under the provisions of See. 2(e) of Article 1403 of the Civil Code, such agreement is not enforceable as it is not in writing and subscribed by the party charged. On the issue of statute of limitations, the Court holds that the plaintiff's action has prescribed. It is alleged in par. 11 of the complaint that, sometime in 1952, the defendants approached the plaintiff to prevail upon the Deudors to enter to a compromise agreement in Civil Case No. Q-135 and allied cases. Furthermore,

par. 13 and 14 of the complaint alleged that the plaintiff acted as emissary of both parties in conveying their respective proposals and couter-proposals until the final settlement was effected on March 16, 1953 and approved by Court on April 11, 1953. In the present action, which was instituted on January 24, 1964, the plaintiff is seeking to enforce the supposed agreement entered into between him and the defendants in 1952, which was already prescribed. WHEREFORE, the plaintiffs complaint is hereby ordered DISMISSED without pronouncement as to costs. SO ORDERED. (Pp. 65-69, Rec. on Appeal,) On August 22, 1964, plaintiff's counsel filed reconsideration dated August 20, 1964 as follows: a motion for

Plaintiff through undersigned counsel and to this Honorable Court, respectfully moves to reconsider its Order bearing date of 13 August 1964, on the following grounds: 1. THAT THE COMPLAINT STATES A SUFFICIENT CAUSE OF ACTION AGAINST DEFENDANTS IN SO FAR AS PLAINTIFF'S CLAIM PAYMENT OF SERVICES AND REIMBURSEMENT OF HIS EXPENSES, IS CONCERNED; II. THAT REGARDING PLAINTIFF'S CLAIM OVER THE 3,000 SQ. MS., THE SAME HAS NOT PRESCRIBED AND THE STATUTE OF FRAUDS IS NOT APPLICABLE THERETO; ARGUMENT Plaintiff's complaint contains two (2) causes of action the first being an action for sum of money in the amount of P7,781.74 representing actual expenses and P38,400.00 as reasonable compensation for services in improving the 50 quinones now in the possession of defendants. The second cause of action deals with the

3,000 sq. ms. which defendants have agreed to transfer into Plaintiff for services rendered in effecting the compromise between the Deudors and defendants; Under its order of August 3, 1964, this Honorable Court dismissed the claim for sum of money on the ground that the complaint does not state a cause of action against defendants. We respectfully submit: 1. THAT THE COMPLAINT STATES A SUFFICIENT CAUSE OF ACTION AGAINST DEFENDANTS IN SO FAR AS PLAINTIFF'S CLAIM FOR PAYMENT OF SERVICES AND REIMBURSEMENT OF HIS EXPENSES IS CONCERNED. Said this Honorable Court (at p. 2, Order): ORDER xxx xxx xxx

case, the plaintiff cannot claim good faith and mistake as to the title of the land. The position of this Honorable Court (supra) is that the complaint does not state a cause of action in so far as the claim for services and expenses is concerned because the contract for the improvement of the properties was solely between the Deudors and plaintiff, and defendants are not privies to it. Now, plaintiff's theory is that defendants are nonetheless liable since they are utilizing and enjoying the benefit's of said improvements. Thus under paragraph 16 of "he complaint, it is alleged: (16) That the services and personal expenses of plaintiff mentioned in paragraph 7 hereof were rendered and in fact paid by him to improve, as they in fact resulted in considerable improvement of the 50 quinones, and defendants being now in possession of and utilizing said improvements should reimburse and pay plaintiff for such services and expenses. Plaintiff's cause of action is premised inter alia, on the theory of unjust enrichment under Article 2142 of the civil Code: ART. 2142. Certain lawful voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shill be unjustly enriched or benefited at the expense of another. In like vein, Article 19 of the same Code enjoins that: ART. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give every-one his due and observe honesty and good faith. We respectfully draw the attention of this Honorable Court to the fact that ARTICLE 2142 (SUPRA) DEALS WITH QUASI-CONTRACTS or situations WHERE THERE IS NO CONTRACT BETWEEN THE PARTIES TO THE ACTION. Further, as we can readily see from the

On the issue that the complaint, in so far as it claims the reimbursement for the services rendered and expenses incurred by the plaintiff, states no cause of action, the Court is of the opinion that the same is well-founded. It is found that the defendants are not parties to the supposed express contract entered into by and between the plaintiff and the Deudors for the clearing and improvement of the 50 quinones. Furthermore, in order that the alleged improvement may he considered a lien or charge on the property, the same should have been made in good faith and under the mistake as to title. The Court can take judicial notice of the fact that the tract of land supposedly improved by the plaintiff had been registered way back in 1914 in the name of the predecessors-in-interest of defendant J. M. Tuason & Co., Inc. This fact is confirmed in the decision rendered by the Supreme Court on July 31, 1956 in case G. R. No. L-5079 entitled 'J M. Tuason & Co., Inc. vs, Geronimo Santiago, et al.' Such being the

title thereof (Title XVII), that the Same bears the designation 'EXTRA CONTRACTUAL OBLIGATIONS' or obligations which do not arise from contracts. While it is true that there was no agreement between plaintiff and defendants herein for the improvement of the 50 quinones since the latter are presently enjoying and utilizing the benefits brought about through plaintiff's labor and expenses, defendants should pay and reimburse him therefor under the principle that 'no one may enrich himself at the expense of another.' In this posture, the complaint states a cause of action against the defendants. II. THAT REGARDING PLAINTIFF'S CLAIM OVER THE 3,000 SQ. MS. THE SAME HAS NOT PRESCRIBED AND THE STATUTE OF FRAUDS IS NOT APPLICABLE THERETO. The Statute of Frauds is CLEARLY inapplicable to this case: At page 2 of this Honorable Court's order dated 13 August 1964, the Court ruled as follows: ORDER xxx xxx xxx

To bring this issue in sharper focus, shall reproduce not only paragraph 12 of the complaint but also the other pertinent paragraphs therein contained. Paragraph 12 states thus: COMPLAINT xxx xxx xxx

12). That plaintiff conferred with the aforesaid representatives of defendants several times and on these occasions, the latter promised and agreed to cede, transfer and convey unto plaintiff the 3,000 sq. ms. (now known as Lots 16-B, 17 and 18) which plaintiff was then occupying and continues to occupy as of this writing, for and in consideration of the following conditions: (a) That plaintiff succeed in convincing the DEUDORS to enter into a compromise agreement and that such agreement be actually entered into by and between the DEUDORS and defendant companies; (b) That as of date of signing the compromise agreement, plaintiff shall be the owner of the 3,000 sq. ms. but the documents evidencing his title over this property shall be executed and delivered by defendants to plaintiff within ten (10) years from and after date of signing of the compromise agreement; (c) That plaintiff shall, without any monetary expense of his part, assist in clearing the 20 quinones of its occupants; 13). That in order to effect a compromise between the parties. plaintiff not only as well acted as emissary of both parties in conveying their respective proposals and counter- proposals until succeeded in convinzing the DEUDORS to settle with defendants amicably. Thus, on March 16, 1953, a Compromise Agreement was entered into by and between the DEUDORS and the defendant companies; and on April 11, 1953, this agreement was approved by this Honorable Court;

On the issue of statute of fraud, the Court believes that same is applicable to the instant Case, The allegation in par. 12 of the complaint states that the defendants promised and agree to cede, transfer and convey unto the plaintiff, 3,000 square meters of land in consideration of certain services to be rendered then. It is clear that the alleged agreement involves an interest in real property. Under the provisions of Sec. 2(e) of Article 1403 of the Civil Code, such agreement is not enforceable as it is not in writing and subscribed by the party charged.

14). That in order to comply with his other obligations under his agreement with defendant companies, plaintiff had to confer with the occupants of the property, exposing himself to physical harm, convincing said occupants to leave the premises and to refrain from resorting to physical violence in resisting defendants' demands to vacate; That plaintiff further assisted defendants' employees in the actual demolition and transfer of all the houses within the perimeter of the 20 quinones until the end of 1955, when said area was totally cleared and the houses transferred to another area designated by the defendants as 'Capt. Cruz Block' in Masambong, Quezon City. (Pars. 12, 13 and 14, Complaint; Emphasis supplied) From the foregoing, it is clear then the agreement between the parties mentioned in paragraph 12 (supra) of the complaint has already been fully EXECUTED ON ONE PART, namely by the plaintiff. Regarding the applicability of the statute of frauds (Art. 1403, Civil Code), it has been uniformly held that the statute of frauds IS APPLICABLE ONLY TO EXECUTORY CONTRACTS BUT NOT WHERE THE CONTRACT HAS BEEN PARTLY EXECUTED: SAME ACTION TO ENFORCE. The statute of frauds has been uniformly interpreted to be applicable to executory and not to completed or contracts. Performance of the contracts takes it out of the operation of the statute. ... The statute of the frauds is not applicable to contracts which are either totally or partially performed, on the theory that there is a wide field for the commission of frauds in executory contracts which can only be prevented by requiring them to be in writing, a facts which is reduced to a minimum in executed contracts because the intention of the parties becomes apparent buy their execution and execution, in mots cases, concluded the right the parties. ... The partial performance may be proved by either documentary or oral evidence.

(At pp. 564-565, Tolentino's Civil Code of the Philippines, Vol. IV, 1962 Ed.; Emphasis supplied). Authorities in support of the foregoing rule are legion. Thus Mr. Justice Moran in his 'Comments on the Rules of Court', Vol. III, 1974 Ed., at p. 167, states: 2 THE STATUTE OF FRAUDS IS APPLICABLE ONLY TO EXECUTORY CONTRACTS: CONTRACTS WHICH ARE EITHER TOTALLY OR PARTIALLY PERFORMED ARE WITHOUT THE STATUE. The statute of frauds is applicable only to executory contracts. It is neither applicable to executed contracts nor to contracts partially performed. The reason is simple. In executory contracts there is a wide field for fraud because unless they be in writing there is no palpable evidence of the intention of the contracting parties. The statute has been enacted to prevent fraud. On the other hand the commission of fraud in executed contracts is reduced to minimum in executed contracts because (1) the intention of the parties is made apparent by the execution and (2) execution concludes, in most cases, the rights of the parties. (Emphasis supplied) Under paragraphs 13 and 14 of the complaint (supra) one can readily see that the plaintiff has fulfilled ALL his obligation under the agreement between him defendants concerning the 3,000 sq. ms. over which the latter had agreed to execute the proper documents of transfer. This fact is further projected in paragraph 15 of the complaint where plaintiff states; 15). That in or about the middle of 1963, after all the conditions stated in paragraph 12 hereof had been fulfilled and fully complied with, plaintiff demanded of said defendants that they execute the Deed of Conveyance in his favor and deliver the title certificate in his name, over the 3,000 sq. ms. but defendants failed and refused and continue to fail and refuse to heed his demands. (par. 15, complaint; Emphasis supplied).

In view of the foregoing, we respectfully submit that this Honorable court erred in holding that the statute of frauds is applicable to plaintiff's claim over the 3,000 sq. ms. There having been full performance of the contract on plaintiff's part, the same takes this case out of the context of said statute. Plaintiff's Cause of Action had NOT Prescribed: With all due respect to this Honorable court, we also submit that the Court committed error in holding that this action has prescribed: ORDER xxx xxx xxx

conditions of the contract between the parties are spelled out. Paragraph 12 (b) of the complaint states: (b) That as of date of signing the compromise agreement, plaintiff shall be the owner of the 3,000 sq. ms. but the documents evidencing his title over this property shall be executed and delivered by defendants to plaintiff within ten (10) years from and after date of signing of the compromise agreement. (Emphasis supplied). The compromise agreement between defendants and the Deudors which was conclude through the efforts of plaintiff, was signed on 16 March 1953. Therefore, the defendants had ten (10) years signed on 16 March 1953. Therefore, the defendants had ten (10) years from said date within which to execute the deed of conveyance in favor of plaintiff over the 3,000 sq. ms. As long as the 10 years period has not expired, plaintiff had no right to compel defendants to execute the document and the latter were under no obligation to do so. Now, this 10-year period elapsed on March 16, 1963. THEN and ONLY THEN does plaintiff's cause of action plaintiff on March 17, 1963. Thus, under paragraph 15, of the complaint (supra) plaintiff made demands upon defendants for the execution of the deed 'in or about the middle of 1963. Since the contract now sought to be enforced was not reduced to writing, plaintiff's cause of action expires on March 16, 1969 or six years from March 16, 1963 WHEN THE CAUSE OF ACTION ACCRUED (Art. 1145, Civil Code). In this posture, we gain respectfully submit that this Honorable Court erred in holding that plaintiff's action has prescribed. PRAYER WHEREFORE, it is respectfully prayed that " Honorable Court reconsider its Order dated August 13, 1964; and issue another order

On the issue of the statute of limitations, the Court holds that the plaintiff's action has prescribed. It is alleged in par. III of the complaint that, sometime in 1952, the defendants approached the plaintiff to prevail upon the Deudors to enter into a compromise agreement in Civil Case No. Q-135 and allied cases. Furthermore, pars. 13 and 14 of the complaint alleged that plaintiff acted as emissary of both parties in conveying their respective proposals and counter-proposals until the final settlement was affected on March 16, 1953 and approved by the Court on April 11, 1953. In the present actin, which was instituted on January 24, 1964, the plaintiff is seeking to enforce the supposed agreement entered into between him and the defendants in 1952, which has already proscribed. (at p. 3, Order). The present action has not prescribed, especially when we consider carefully the terms of the agreement between plaintiff and the defendants. First, we must draw the attention of this Honorable Court to the fact that this is an action to compel defendants to execute a Deed of Conveyance over the 3,000 sq. ms. subject of their agreement. In paragraph 12 of the complaint, the terms and

denying the motions to dismiss of defendants G. Araneta, Inc. and J. M. Tuason Co. Inc. for lack of merit. (Pp. 70-85, Record on Appeal.) Defendants filed an opposition on the main ground that "the arguments adduced by the plaintiff are merely reiterations of his arguments contained in his Rejoinder to Reply and Opposition, which have not only been refuted in herein defendant's Motion to Dismiss and Reply but already passed upon by this Honorable Court." On September 7, 1964, the trial court denied the motion for reconsiderations thus: After considering the plaintiff's Motion for Reconsideration of August 20, 1964 and it appearing that the grounds relied upon in said motion are mere repetition of those already resolved and discussed by this Court in the order of August 13, 1964, the instant motion is hereby denied and the findings and conclusions arrived at by the Court in its order of August 13, 1964 are hereby reiterated and affirmed. SO ORDERED. (Page 90, Rec. on Appeal.) Under date of September 24, 1964, plaintiff filed his record on appeal. In his brief, appellant poses and discusses the following assignments of error: I. THAT THE LOWER COURT ERRED IN DISMISSING THE COMPLAINT ON THE GROUND THAT APPELLANT'S CLAIM OVER THE 3,000 SQ. MS. IS ALLEGEDLY UNENFORCEABLE UNDER THE STATUTE OF FRAUDS; II. THAT THE COURT A QUO FURTHER COMMITTED ERROR IN DISMISSING APPELLANT'S COMPLAINT ON THE GROUND THAT HIS CLAIM OVER THE 3,000 SQ. MS. IS ALLEGEDLY BARRED BY THE STATUTE OF LIMITATIONS; and

III. THAT THE LOWER COURT ERRED IN DISMISSING THE COMPLAINT FOR FAILURE TO STATE A CAUSE OF ACTION IN SO FAR AS APPELLANT'S CLAIM FOR REIMBURSEMENT OF EXPENSES AND FOR SERVICES RENDERED IN THE IMPROVEMENT OF THE FIFTY (50) QUINONES IS CONCERNED. We agree with appellant that the Statute of Frauds was erroneously applied by the trial court. It is elementary that the Statute refers to specific kinds of transactions and that it cannot apply to any that is not enumerated therein. And the only agreements or contracts covered thereby are the following: (1) Those entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers; (2) Those do not comply with the Statute of Frauds as set forth in this number, In the following cases an agreement hereafter made shall be unenforceable by action, unless the same, or some note or memorandum thereof, be in writing, and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or a secondary evidence of its contents: (a) An agreement that by its terms is not to be performed within a year from the making thereof; (b) A special promise to answer for the debt, default, or miscarriage of another; (c) An agreement made in consideration of marriage, other than a mutual promise to marry; (d) An agreement for the sale of goods, chattels or things in action, at a price not less than five hundred pesos, unless the buyer accept and

receive part of such goods and chattels, or the evidences, or some of them of such things in action, or pay at the time some part of the purchase money; but when a sale is made by auction and entry is made by the auctioneer in his sales book, at the time of the sale, of the amount and kind of property sold, terms of sale, price, names of the purchasers and person on whose account the sale is made, it is a sufficient memorandum: (e) An agreement for the leasing for a longer period than one year, or for the sale of real property or of an interest therein: (f) a representation as to the credit of a third person. (3) Those where both parties are incapable of giving consent to a contract. (Art. 1403, civil Code.) In the instant case, what appellant is trying to enforce is the delivery to him of 3,000 square meters of land which he claims defendants promised to do in consideration of his services as mediator or intermediary in effecting a compromise of the civil action, Civil Case No. 135, between the defendants and the Deudors. In no sense may such alleged contract be considered as being a "sale of real property or of any interest therein." Indeed, not all dealings involving interest in real property come under the Statute. Moreover, appellant's complaint clearly alleges that he has already fulfilled his part of the bargains to induce the Deudors to amicably settle their differences with defendants as, in fact, on March 16, 1963, through his efforts, a compromise agreement between these parties was approved by the court. In other words, the agreement in question has already been partially consummated, and is no longer merely executory. And it is likewise a fundamental principle governing the application of the Statute that the contract in dispute should be purely executory on the part of both parties thereto.

We cannot, however, escape taking judicial notice, in relation to the compromise agreement relied upon by appellant, that in several cases We have decided, We have declared the same rescinded and of no effect. In J. M. Tuason & Co., Inc. vs. Bienvenido Sanvictores, 4 SCRA 123, the Court held: It is also worthy of note that the compromise between Deudors and Tuason, upon which Sanvictores predicates his right to buy the lot he occupies, has been validly rescinded and set aside, as recognized by this Court in its decision in G.R. No. L-13768, Deudor vs. Tuason, promulgated on May 30, 1961. We repeated this observation in J.M. Tuason & Co., Inc. vs. Teodosio Macalindong, 6 SCRA 938. Thus, viewed from what would be the ultimate conclusion of appellant's case, We entertain grave doubts as to whether or not he can successfully maintain his alleged cause of action against defendants, considering that the compromise agreement that he invokes did not actually materialize and defendants have not benefited therefrom, not to mention the undisputed fact that, as pointed out by appellees, appellant's other attempt to secure the same 3,000 square meters via the judicial enforcement of the compromise agreement in which they were supposed to be reserved for him has already been repudiated by the courts. (pp. 5-7. Brief of Appellee Gregorio Araneta, Inc.) As regards appellant's third assignment of error, We hold that the allegations in his complaint do not sufficiently Appellants' reliance. on Article 2142 of Civil Code is misplaced. Said article provides: Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another. From the very language of this provision, it is obvious that a presumed qauasi-contract cannot emerge as against one party when the subject mater thereof is already covered by an existing contract

with another party. Predicated on the principle that no one should be allowed to unjustly enrich himself at the expense of another, Article 2124 creates the legal fiction of a quasi-contract precisely because of the absence of any actual agreement between the parties concerned. Corollarily, if the one who claims having enriched somebody has done so pursuant to a contract with a third party, his cause of action should be against the latter, who in turn may, if there is any ground therefor, seek relief against the party benefited. It is essential that the act by which the defendant is benefited must have been voluntary and unilateral on the part of the plaintiff. As one distinguished civilian puts it, "The act is voluntary. because the actor in quasicontracts is not bound by any pre-existing obligation to act. It is unilateral, because it arises from the sole will of the actor who is not previously bound by any reciprocal or bilateral agreement. The reason why the law creates a juridical relations and imposes certain obligation is to prevent a situation where a person is able to benefit or take advantage of such lawful, voluntary and unilateral acts at the expense of said actor." (Ambrosio Padilla, Civil Law, Vol. VI, p. 748, 1969 ed.) In the case at bar, since appellant has a clearer and more direct recourse against the Deudors with whom he had entered into an agreement regarding the improvements and expenditures made by him on the land of appellees. it Cannot be said, in the sense contemplated in Article 2142, that appellees have been enriched at the expense of appellant. In the ultimate. therefore, Our holding above that appellant's first two assignments of error are well taken cannot save the day for him. Aside from his having no cause of action against appellees, there is one plain error of omission. We have found in the order of the trial court which is as good a ground as any other for Us to terminate this case favorably to appellees. In said order Which We have quoted in full earlier in this opinion, the trial court ruled that "the grounds relied upon in said motion are mere repetitions of those already resolved and discussed by this Court in the order of August 13, 1964", an observation which We fully share. Virtually, therefore. appellant's motion for reconsideration was ruled to be pro-forma.

Indeed, a cursory reading of the record on appeal reveals that appellant's motion for reconsideration above-quoted contained exactly the same arguments and manner of discussion as his February 6, 1964 "Opposition to Motion to Dismiss" of defendant Gregorio Araneta, Inc. ((pp. 17-25, Rec. on Appeal) as well as his February 17, 1964 "Opposition to Motion to Dismiss of Defendant J. M. Tuason & Co." (pp. 33-45, Rec. on Appeal and his February 29, 1964 "Rejoinder to Reply Oil Defendant J. M. Tuason & Co." (pp. 52-64, Rec. on Appeal) We cannot see anything in said motion for reconsideration that is substantially different from the above oppositions and rejoinder he had previously submitted and which the trial court had already considered when it rendered its main order of dismissal. Consequently, appellant's motion for reconsideration did not suspend his period for appeal. (Estrada vs. Sto. Domingo, 28 SCRA 890, 9056.) And as this point was covered by appellees' "Opposition to Motion for Reconsideration" (pp. 8689), hence, within the frame of the issues below, it is within the ambit of Our authority as the Supreme Court to consider the same here even if it is not discussed in the briefs of the parties. (Insular Life Assurance Co., Ltd. Employees AssociationNATU vs. Insular Life Assurance Co., Ltd. [Resolution en banc of March 10, 1977 in G. R. No. L-25291). Now, the impugned main order was issued on August 13, 1964, while the appeal was made on September 24, 1964 or 42 days later. Clearly, this is beyond the 30-day reglementary period for appeal. Hence, the subject order of dismissal was already final and executory when appellant filed his appeal. WHEREFORE, the appeal of Faustino Cruz in this case is dismissed. No costs. Fernando (Chairman), Antonio, Aquino and Martin, .JJ., concur. Concepcion, Jr., JJ., took no part. Martin, J., was designated to sit in the Second Division.

On September 21, 1993, NCBSA filed a Manifestation pointing out that PBC's Motion for Reconsideration did not contain any notice of hearing.7 Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 124267 January 31, 2003 On September 27, 1993, NCBSA filed a Motion for Writ of Execution of the decision of the trial court.8 On even date, PBC filed a Motion to Set "Motion for Reconsideration" for Hearing9 alleging as follows: xxx xxx xxx

NATIONAL COMMERCIAL BANK OF SAUDI ARABIA, petitioner, vs. COURT OF APPEALS and PHILIPPINE BANKING CORPORATION, respondents. CARPIO MORALES, J.: May the unrippled doctrine that a motion filed without the requisite notice of hearing is a useless piece of paper with no legal effect1 be, under the facts of the case, relaxed? Petitioner National Commercial Bank of Saudi Arabia (NCBSA) filed a case against respondent Philippine Banking Corporation (PBC) in the Regional Trial Court (RTC) of Makati on December 4, 1985 to recover "the duplication in the payment of the proceeds of a letter of credit [NCBSA] has issued . . . brought about by the fact that both the head office and the Makati branch of [PBC, the negotiating bank,] collected the proceeds of the letter of credit."2 On August 24, 1993, the RTC of Makati rendered a decision in favor of NCBSA.3 PBC received a copy of the decision on September 3, 19934 and on the 12th day of the period of appeal or on September 15, 1993, it filed a Motion for Reconsideration.5 The motion, however, did not contain a notice of hearing.6

2. The Motion for Reconsideration raised both questions of facts and law arising from the erroneous findings made by the Honorable Court in the said Decision; 3. In order that defendant can fully amplify and expound on the issues raised on the said motions, there is a need to set the Motion for Hearing. xxx xxx xxx10

NCBSA opposed this motion vigorously, it praying that it be stricken off the records.11 By Order of February 1, 1994, the trial court struck from the records of the case PBC's Motion for Reconsideration of its decision and granted NCBSA's Motion for Writ of Execution.12 PBC filed a Motion for Reconsideration of said Order of February 1, 1994, this time alleging that PBC's failure to comply with the 3-day notice rule "was essentially an honest mistake or oversight of counsel."13 This motion was just as vigorously opposed by NCBSA.14 By Order of March 2, 1994, the trial court denied PBC's Motion for Reconsideration of its Order of February 1, 1994, finding that "[t]here are no compelling reasons to warrant a liberal construction of the rules on Motions."15

PBC assailed before the Court of Appeals via Petition for Certiorari the trial court's March 2, 1994 Order.16 By Decision of February 27, 1995, the Court of Appeals dismissed PBC's Petition for Certiorari.17 On PBC's Motion for Reconsideration, however, the Court of Appeals, by Amended Decision of March 8, 1996, set aside its February 27, 1995 Decision and granted PBC's Petition for Certiorari and directed the trial court to resolve PBC's Motion for Reconsideration (of the trial court's August 24, 1993 Decision).18 Justifying its setting aside of its February 27, 1995 Decision, the Court of Appeals held in its Amended Decision: . . . [T]o deny petitioner's motion for reconsideration on the ground of failure to contain a notice of hearing is too harsh an application of procedural rules especially so when petitioner has filed a motion to set the motion for reconsideration for hearing and had furnished private respondent a copy of the motion, a fact which is not denied by the latter.19 NCBSA thus comes to this Court assailing the Court of Appeals' Amended Decision. The petition is impressed with merit. The requirement of notice under Sections 4 and 5, Rule 15 in connection with Section 2, Rule 37 of the Revised Rules of Court20 is mandatory. The absence of a notice of hearing is fatal and, in cases of motions to reconsider a decision, the running of the period to appeal is not tolled by their filing or pendency.21 In the case at bar, it is not disputed that PBC's Motion for Reconsideration of the August 24, 1993 decision of the trial court did not contain the requisite notice of hearing.

In an attempt to cure the defect, PBC filed on Motion to Set the "Motion for Reconsideration" for Hearing on September 27, 1993, or 9 days after the period for filing the Notice of Appeal had expired. The motion for reconsideration, however, being fatally defective for lack of notice of hearing, cannot be cured by a belated filing of a notice of hearing.22 More so in the case at bar where the Motion to Set the "Motion for Reconsideration" was filed after the expiration of the period for filing an appeal. NCBSA thus calls for the strict application of our rules of procedure to avoid further delays in the disposition of the case,23 which has remained pending for more than 17 years. PBC, on the other hand, invokes a just and fair determination of the case.24 PBC's appeal for justice and fairness does not lie, however, there being nothing on record to show that it has been a victim of injustice or unfairness. On the contrary, as found by the Court of Appeals in its original decision, PBC had the opportunity to participate in the trial and present its defense and had actually made full use of the remedies under our rules of procedure.25 More importantly, there was no oppressive exercise of judicial authority that would call for the annulment of the trial court's resolutions.26 The finality of the decision of the trial court cannot be set aside purely on the basis of liberality for while it is true that a litigation is not a game of technicalities, this does not mean that the Rules of Court may be ignored at will and at random. Only for the most persuasive of reasons should the court allow a relaxation of its procedural rules.27 PBC, however, has not advanced any persuasive or exceptional reason in failing to set its Motion for Reconsideration of the trial court's decision for hearing. In fact, in its Motion to Set "Motion for Reconsideration" for Hearing, PBC was completely silent on why it did

not set the Motion for Reconsideration for hearing. It just alleged that, as earlier quoted, "[i]n order that defendant can fully amplify and expound on the issues raised on said motion, there is a need to set the Motion [for Reconsideration] for Hearing."28 This allegation conveys that, if there was no need for PBC to "fully amplify and expound on the issues raised" in the Motion for Reconsideration, no setting for hearing of said motion was needed. But as earlier stated, the requirement of notice in this kind of motion is mandatory. The Motion for Reconsideration thus remained a mere scrap of paper which deserved no consideration. But assuming that PBC had presented exceptional reason or excuse for its failure to comply with the notice requirement, the Motion for Reconsideration would be denied on the ground that it is pro forma. In its Rejoinder29 to NCBSA's Reply to Comment to the petition at bar, PBC alleged that it was, in its Motion for Reconsideration of the trial court's decision, raising "serious questions involving findings of fact and conclusions of law by the trial court," thus "questioning the decision as being contrary to law and the evidence on record."30 A reading of the records will show, however, that the same three issues raised by PBC during the trial prescription, laches and lack of double payment are what are being raised in its Motion for Reconsideration of the decision of the trial court. PBC's Motion for Reconsideration of the trial court's decision was thus "in substance . . . a reiteration of reasons and arguments"31 raised before the trial court for the dismissal of NCBSA's complaint, which reasons and arguments had already been considered and resolved against it on the merits by the trial court. The Motion for Reconsideration was thus merely pro forma. Technicality aside, en passant, on the merits of PBC's Motion for Reconsideration of the trial court's decision, the trial court did not err in brushing aside its main defense of prescription that NCBSA's complaint is "based on the quasi-contract of solutio indebiti,"32

hence, it prescribes in six years and, therefore, when NCBSA filed its complaint nine years after the cause of action arose, it had prescribed. Solutio indebiti applies where: (1) a payment is made when there exists no binding relation between the payor, who has no duty to pay, and the person who received the payment, and (2) the payment is made through mistake, and not through liberality or some other cause33 In the case at bar, PBC and NCBSA were bound by their contract, the letter of credit, under which NCBSA obliged itself to pay PBC, subject to compliance by the latter with certain conditions provided therein. As such, the cause of action was based on a contract, and the prescriptive period is ten,34 not six years. Even PBC's defense of laches is bereft of merit, the cause of action not having yet prescribed at the time NCBSA's complaint was filed. Courts should never apply the doctrine of laches earlier than the expiration of time limited for the commencement of actions at law.35 And as to PBC's allegation that the trial court erred in finding the existence of double payment, suffice it to state that PBC, while denying that there was double payment, itself admitted having received a second set of payment for the same amount covered by the letter of credit. Thus, in its petition for certiorari36 filed with the Court of Appeals, it alleged, quoted verbatim: The second set for the same amount, although it was received and credited to [PBC's] account with Chemical Bank New York, were to be and subsequently transmitted to the account of Labroco (International, Philippines) . . .37 (Emphasis supplied.) WHEREFORE, the instant petition for review on certiorari is GRANTED. The Amended Decision of the Court of Appeals dated March 8, 1996 is SET ASIDE and the Resolutions of the Regional

Trial Court declaring the Motion for Reconsideration filed by the Philippine Banking Corporation as pro forma is REINSTATED. SO ORDERED. Puno, Panganiban, Sandoval-Gutierrez, and Corona JJ., concur.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 173227 January 20, 2009

SEBASTIAN SIGA-AN, Petitioner, vs. ALICIA VILLANUEVA, Respondent. DECISION CHICO-NAZARIO, J.: Before Us is a Petition1 for Review on Certiorari under Rule 45 of the Rules of Court seeking to set aside the Decision,2 dated 16 December 2005, and Resolution,3 dated 19 June 2006 of the Court of Appeals in CA-G.R. CV No. 71814, which affirmed in toto the Decision,4 dated 26 January 2001, of the Las Pinas City Regional Trial Court, Branch 255, in Civil Case No. LP-98-0068. The facts gathered from the records are as follows: On 30 March 1998, respondent Alicia Villanueva filed a complaint5 for sum of money against petitioner Sebastian Siga-an before the Las Pinas City Regional Trial Court (RTC), Branch 255, docketed as Civil Case No. LP-98-0068. Respondent alleged that she was a businesswoman engaged in supplying office materials and equipments to the Philippine Navy Office (PNO) located at Fort Bonifacio, Taguig City, while petitioner was a military officer and comptroller of the PNO from 1991 to 1996. Respondent claimed that sometime in 1992, petitioner approached her inside the PNO and offered to loan her the amount of

P540,000.00. Since she needed capital for her business transactions with the PNO, she accepted petitioners proposal. The loan agreement was not reduced in writing. Also, there was no stipulation as to the payment of interest for the loan.6 On 31 August 1993, respondent issued a check worth P500,000.00 to petitioner as partial payment of the loan. On 31 October 1993, she issued another check in the amount of P200,000.00 to petitioner as payment of the remaining balance of the loan. Petitioner told her that since she paid a total amount of P700,000.00 for the P540,000.00 worth of loan, the excess amount of P160,000.00 would be applied as interest for the loan. Not satisfied with the amount applied as interest, petitioner pestered her to pay additional interest. Petitioner threatened to block or disapprove her transactions with the PNO if she would not comply with his demand. As all her transactions with the PNO were subject to the approval of petitioner as comptroller of the PNO, and fearing that petitioner might block or unduly influence the payment of her vouchers in the PNO, she conceded. Thus, she paid additional amounts in cash and checks as interests for the loan. She asked petitioner for receipt for the payments but petitioner told her that it was not necessary as there was mutual trust and confidence between them. According to her computation, the total amount she paid to petitioner for the loan and interest accumulated to P1,200,000.00.7 Thereafter, respondent consulted a lawyer regarding the propriety of paying interest on the loan despite absence of agreement to that effect. Her lawyer told her that petitioner could not validly collect interest on the loan because there was no agreement between her and petitioner regarding payment of interest. Since she paid petitioner a total amount of P1,200,000.00 for the P540,000.00 worth of loan, and upon being advised by her lawyer that she made overpayment to petitioner, she sent a demand letter to petitioner asking for the return of the excess amount of P660,000.00. Petitioner, despite receipt of the demand letter, ignored her claim for reimbursement.8

Respondent prayed that the RTC render judgment ordering petitioner to pay respondent (1) P660,000.00 plus legal interest from the time of demand; (2) P300,000.00 as moral damages; (3) P50,000.00 as exemplary damages; and (4) an amount equivalent to 25% of P660,000.00 as attorneys fees.9 In his answer10 to the complaint, petitioner denied that he offered a loan to respondent. He averred that in 1992, respondent approached and asked him if he could grant her a loan, as she needed money to finance her business venture with the PNO. At first, he was reluctant to deal with respondent, because the latter had a spotty record as a supplier of the PNO. However, since respondent was an acquaintance of his officemate, he agreed to grant her a loan. Respondent paid the loan in full.11 Subsequently, respondent again asked him to give her a loan. As respondent had been able to pay the previous loan in full, he agreed to grant her another loan. Later, respondent requested him to restructure the payment of the loan because she could not give full payment on the due date. He acceded to her request. Thereafter, respondent pleaded for another restructuring of the payment of the loan. This time he rejected her plea. Thus, respondent proposed to execute a promissory note wherein she would acknowledge her obligation to him, inclusive of interest, and that she would issue several postdated checks to guarantee the payment of her obligation. Upon his approval of respondents request for restructuring of the loan, respondent executed a promissory note dated 12 September 1994 wherein she admitted having borrowed an amount of P1,240,000.00, inclusive of interest, from petitioner and that she would pay said amount in March 1995. Respondent also issued to him six postdated checks amounting to P1,240,000.00 as guarantee of compliance with her obligation. Subsequently, he presented the six checks for encashment but only one check was honored. He demanded that respondent settle her obligation, but the latter failed to do so. Hence, he filed criminal cases for Violation of the Bouncing Checks Law (Batas Pambansa Blg. 22) against respondent. The cases

were assigned to the Metropolitan Trial Court of Makati City, Branch 65 (MeTC).12 Petitioner insisted that there was no overpayment because respondent admitted in the latters promissory note that her monetary obligation as of 12 September 1994 amounted to P1,240,000.00 inclusive of interests. He argued that respondent was already estopped from complaining that she should not have paid any interest, because she was given several times to settle her obligation but failed to do so. He maintained that to rule in favor of respondent is tantamount to concluding that the loan was given interest-free. Based on the foregoing averments, he asked the RTC to dismiss respondents complaint. After trial, the RTC rendered a Decision on 26 January 2001 holding that respondent made an overpayment of her loan obligation to petitioner and that the latter should refund the excess amount to the former. It ratiocinated that respondents obligation was only to pay the loaned amount of P540,000.00, and that the alleged interests due should not be included in the computation of respondents total monetary debt because there was no agreement between them regarding payment of interest. It concluded that since respondent made an excess payment to petitioner in the amount of P660,000.00 through mistake, petitioner should return the said amount to respondent pursuant to the principle of solutio indebiti.13 The RTC also ruled that petitioner should pay moral damages for the sleepless nights and wounded feelings experienced by respondent. Further, petitioner should pay exemplary damages by way of example or correction for the public good, plus attorneys fees and costs of suit. The dispositive portion of the RTC Decision reads: WHEREFORE, in view of the foregoing evidence and in the light of the provisions of law and jurisprudence on the matter, judgment is

hereby rendered in favor of the plaintiff and against the defendant as follows: (1) Ordering defendant to pay plaintiff the amount of P660,000.00 plus legal interest of 12% per annum computed from 3 March 1998 until the amount is paid in full; (2) Ordering defendant to pay plaintiff the amount of P300,000.00 as moral damages; (3) Ordering defendant to pay plaintiff the amount of P50,000.00 as exemplary damages; (4) Ordering defendant to pay plaintiff the amount equivalent to 25% of P660,000.00 as attorneys fees; and (5) Ordering defendant to pay the costs of suit.14 Petitioner appealed to the Court of Appeals. On 16 December 2005, the appellate court promulgated its Decision affirming in toto the RTC Decision, thus: WHEREFORE, the foregoing considered, the instant appeal is hereby DENIED and the assailed decision [is] AFFIRMED in toto.15 Petitioner filed a motion for reconsideration of the appellate courts decision but this was denied.16 Hence, petitioner lodged the instant petition before us assigning the following errors: I. THE RTC AND THE COURT OF APPEALS ERRED IN RULING THAT NO INTEREST WAS DUE TO PETITIONER; II.

THE RTC AND THE COURT OF APPEALS ERRED IN APPLYING THE PRINCIPLE OF SOLUTIO INDEBITI.17 Interest is a compensation fixed by the parties for the use or forbearance of money. This is referred to as monetary interest. Interest may also be imposed by law or by courts as penalty or indemnity for damages. This is called compensatory interest.18 The right to interest arises only by virtue of a contract or by virtue of damages for delay or failure to pay the principal loan on which interest is demanded.19 Article 1956 of the Civil Code, which refers to monetary interest,20 specifically mandates that no interest shall be due unless it has been expressly stipulated in writing. As can be gleaned from the foregoing provision, payment of monetary interest is allowed only if: (1) there was an express stipulation for the payment of interest; and (2) the agreement for the payment of interest was reduced in writing. The concurrence of the two conditions is required for the payment of monetary interest. Thus, we have held that collection of interest without any stipulation therefor in writing is prohibited by law.21 It appears that petitioner and respondent did not agree on the payment of interest for the loan. Neither was there convincing proof of written agreement between the two regarding the payment of interest. Respondent testified that although she accepted petitioners offer of loan amounting to P540,000.00, there was, nonetheless, no verbal or written agreement for her to pay interest on the loan.22 Petitioner presented a handwritten promissory note dated 12 September 199423 wherein respondent purportedly admitted owing petitioner "capital and interest." Respondent, however, explained that it was petitioner who made a promissory note and she was told to copy it in her own handwriting; that all her transactions with the PNO were subject to the approval of petitioner as comptroller of the PNO; that petitioner threatened to disapprove her transactions with the PNO if she would not pay interest; that being unaware of the law on

interest and fearing that petitioner would make good of his threats if she would not obey his instruction to copy the promissory note, she copied the promissory note in her own handwriting; and that such was the same promissory note presented by petitioner as alleged proof of their written agreement on interest.24 Petitioner did not rebut the foregoing testimony. It is evident that respondent did not really consent to the payment of interest for the loan and that she was merely tricked and coerced by petitioner to pay interest. Hence, it cannot be gainfully said that such promissory note pertains to an express stipulation of interest or written agreement of interest on the loan between petitioner and respondent. Petitioner, nevertheless, claims that both the RTC and the Court of Appeals found that he and respondent agreed on the payment of 7% rate of interest on the loan; that the agreed 7% rate of interest was duly admitted by respondent in her testimony in the Batas Pambansa Blg. 22 cases he filed against respondent; that despite such judicial admission by respondent, the RTC and the Court of Appeals, citing Article 1956 of the Civil Code, still held that no interest was due him since the agreement on interest was not reduced in writing; that the application of Article 1956 of the Civil Code should not be absolute, and an exception to the application of such provision should be made when the borrower admits that a specific rate of interest was agreed upon as in the present case; and that it would be unfair to allow respondent to pay only the loan when the latter very well knew and even admitted in the Batas Pambansa Blg. 22 cases that there was an agreed 7% rate of interest on the loan.25 We have carefully examined the RTC Decision and found that the RTC did not make a ruling therein that petitioner and respondent agreed on the payment of interest at the rate of 7% for the loan. The RTC clearly stated that although petitioner and respondent entered into a valid oral contract of loan amounting to P540,000.00, they, nonetheless, never intended the payment of interest thereon.26 While the Court of Appeals mentioned in its Decision that it concurred in the RTCs ruling that petitioner and respondent agreed on a certain

rate of interest as regards the loan, we consider this as merely an inadvertence because, as earlier elucidated, both the RTC and the Court of Appeals ruled that petitioner is not entitled to the payment of interest on the loan. The rule is that factual findings of the trial court deserve great weight and respect especially when affirmed by the appellate court.27 We found no compelling reason to disturb the ruling of both courts. Petitioners reliance on respondents alleged admission in the Batas Pambansa Blg. 22 cases that they had agreed on the payment of interest at the rate of 7% deserves scant consideration. In the said case, respondent merely testified that after paying the total amount of loan, petitioner ordered her to pay interest.28 Respondent did not categorically declare in the same case that she and respondent made an express stipulation in writing as regards payment of interest at the rate of 7%. As earlier discussed, monetary interest is due only if there was an express stipulation in writing for the payment of interest. There are instances in which an interest may be imposed even in the absence of express stipulation, verbal or written, regarding payment of interest. Article 2209 of the Civil Code states that if the obligation consists in the payment of a sum of money, and the debtor incurs delay, a legal interest of 12% per annum may be imposed as indemnity for damages if no stipulation on the payment of interest was agreed upon. Likewise, Article 2212 of the Civil Code provides that interest due shall earn legal interest from the time it is judicially demanded, although the obligation may be silent on this point. All the same, the interest under these two instances may be imposed only as a penalty or damages for breach of contractual obligations. It cannot be charged as a compensation for the use or forbearance of money. In other words, the two instances apply only to compensatory interest and not to monetary interest.29 The case at bar involves petitioners claim for monetary interest.

Further, said compensatory interest is not chargeable in the instant case because it was not duly proven that respondent defaulted in paying the loan. Also, as earlier found, no interest was due on the loan because there was no written agreement as regards payment of interest. Apropos the second assigned error, petitioner argues that the principle of solutio indebiti does not apply to the instant case. Thus, he cannot be compelled to return the alleged excess amount paid by respondent as interest.30 Under Article 1960 of the Civil Code, if the borrower of loan pays interest when there has been no stipulation therefor, the provisions of the Civil Code concerning solutio indebiti shall be applied. Article 2154 of the Civil Code explains the principle of solutio indebiti. Said provision provides that 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. In such a case, a creditor-debtor relationship is created under a quasi-contract whereby the payor becomes the creditor who then has the right to demand the return of payment made by mistake, and the person who has no right to receive such payment becomes obligated to return the same. The quasi-contract of solutio indebiti harks back to the ancient principle that no one shall enrich himself unjustly at the expense of another.31 The principle of solutio indebiti applies where (1) a payment is made when there exists no binding relation between the payor, who has no duty to pay, and the person who received the payment; and (2) the payment is made through mistake, and not through liberality or some other cause.32 We have held that the principle of solutio indebiti applies in case of erroneous payment of undue interest.33 It was duly established that respondent paid interest to petitioner. Respondent was under no duty to make such payment because there was no express stipulation in writing to that effect. There was no binding relation between petitioner and respondent as regards the payment of interest. The payment was clearly a mistake. Since

petitioner received something when there was no right to demand it, he has an obligation to return it. We shall now determine the propriety of the monetary award and damages imposed by the RTC and the Court of Appeals. Records show that respondent received a loan amounting to P540,000.00 from petitioner.34 Respondent issued two checks with a total worth of P700,000.00 in favor of petitioner as payment of the loan.35 These checks were subsequently encashed by petitioner.36 Obviously, there was an excess of P160,000.00 in the payment for the loan. Petitioner claims that the excess of P160,000.00 serves as interest on the loan to which he was entitled. Aside from issuing the said two checks, respondent also paid cash in the total amount of P175,000.00 to petitioner as interest.37 Although no receipts reflecting the same were presented because petitioner refused to issue such to respondent, petitioner, nonetheless, admitted in his ReplyAffidavit38 in the Batas Pambansa Blg. 22 cases that respondent paid him a total amount of P175,000.00 cash in addition to the two checks. Section 26 Rule 130 of the Rules of Evidence provides that the declaration of a party as to a relevant fact may be given in evidence against him. Aside from the amounts of P160,000.00 and P175,000.00 paid as interest, no other proof of additional payment as interest was presented by respondent. Since we have previously found that petitioner is not entitled to payment of interest and that the principle of solutio indebiti applies to the instant case, petitioner should return to respondent the excess amount of P160,000.00 and P175,000.00 or the total amount of P335,000.00. Accordingly, the reimbursable amount to respondent fixed by the RTC and the Court of Appeals should be reduced from P660,000.00 to P335,000.00. As earlier stated, petitioner filed five (5) criminal cases for violation of Batas Pambansa Blg. 22 against respondent. In the said cases, the MeTC found respondent guilty of violating Batas Pambansa Blg. 22 for issuing five dishonored checks to petitioner. Nonetheless, respondents conviction therein does not affect our ruling in the

instant case. The two checks, subject matter of this case, totaling P700,000.00 which respondent claimed as payment of the P540,000.00 worth of loan, were not among the five checks found to be dishonored or bounced in the five criminal cases. Further, the MeTC found that respondent made an overpayment of the loan by reason of the interest which the latter paid to petitioner.39 Article 2217 of the Civil Code provides that moral damages may be recovered if the party underwent physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury. Respondent testified that she experienced sleepless nights and wounded feelings when petitioner refused to return the amount paid as interest despite her repeated demands. Hence, the award of moral damages is justified. However, its corresponding amount of P300,000.00, as fixed by the RTC and the Court of Appeals, is exorbitant and should be equitably reduced. Article 2216 of the Civil Code instructs that assessment of damages is left to the discretion of the court according to the circumstances of each case. This discretion is limited by the principle that the amount awarded should not be palpably excessive as to indicate that it was the result of prejudice or corruption on the part of the trial court.40 To our mind, the amount of P150,000.00 as moral damages is fair, reasonable, and proportionate to the injury suffered by respondent. Article 2232 of the Civil Code states that in a quasi-contract, such as solutio indebiti, exemplary damages may be imposed if the defendant acted in an oppressive manner. Petitioner acted oppressively when he pestered respondent to pay interest and threatened to block her transactions with the PNO if she would not pay interest. This forced respondent to pay interest despite lack of agreement thereto. Thus, the award of exemplary damages is appropriate. The amount of P50,000.00 imposed as exemplary damages by the RTC and the Court is fitting so as to deter petitioner and other lenders from committing similar and other serious wrongdoings.41

Jurisprudence instructs that in awarding attorneys fees, the trial court must state the factual, legal or equitable justification for awarding the same.42 In the case under consideration, the RTC stated in its Decision that the award of attorneys fees equiv alent to 25% of the amount paid as interest by respondent to petitioner is reasonable and moderate considering the extent of work rendered by respondents lawyer in the instant case and the fact that it dragged on for several years.43 Further, respondent testified that she agreed to compensate her lawyer handling the instant case such amount.44 The award, therefore, of attorneys fees and its amount equivalent to 25% of the amount paid as interest by respondent to petitioner is proper. Finally, the RTC and the Court of Appeals imposed a 12% rate of legal interest on the amount refundable to respondent computed from 3 March 1998 until its full payment. This is erroneous. We held in Eastern Shipping Lines, Inc. v. Court of Appeals,45 that when an obligation, not constituting a loan or forbearance of money is breached, an interest on the amount of damages awarded may be imposed at the rate of 6% per annum. We further declared that when the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether it is a loan/forbearance of money or not, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed equivalent to a forbearance of credit. In the present case, petitioners obligation arose from a quasi-contract of solutio indebiti and not from a loan or forbearance of money. Thus, an interest of 6% per annum should be imposed on the amount to be refunded as well as on the damages awarded and on the attorneys fees, to be computed from the time of the extra-judicial demand on 3 March 1998,46 up to the finality of this Decision. In addition, the interest shall become 12% per annum from the finality of this Decision up to its satisfaction.

WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 71814, dated 16 December 2005, is hereby AFFIRMED with the following MODIFICATIONS: (1) the amount of P660,000.00 as refundable amount of interest is reduced to THREE HUNDRED THIRTY FIVE THOUSAND PESOS (P335,000.00); (2) the amount of P300,000.00 imposed as moral damages is reduced to ONE HUNDRED FIFTY THOUSAND PESOS (P150,000.00); (3) an interest of 6% per annum is imposed on the P335,000.00, on the damages awarded and on the attorneys fees to be computed from the time of the extra-judicial demand on 3 March 1998 up to the finality of this Decision; and (4) an interest of 12% per annum is also imposed from the finality of this Decision up to its satisfaction. Costs against petitioner. SO ORDERED. MINITA V. CHICO-NAZARIO Associate Justice WE CONCUR: CONSUELO YNARES-SANTIAGO Associate Justice Chairperson MA. ALICIA AUSTRIA-MARTINEZ Associate Justice ANTONIO EDUARDO B. NACHURA Associate Justice TERESITA J. LEONARDO-DE CASTRO* Associate Justice ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

CONSUELO YNARES-SANTIAGO Associate Justice Chairperson, Third Division CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice