Professional Documents
Culture Documents
Art 3 NCC
Art 3 NCC
SUPREME COURT
Manila
EN BANC
PANGANIBAN, J.:p
Ignorance of the law on the part of a judge is not only most ignominous, it is also prejudicial to litigants and the
administration of justice as a whole. Magistrates are well-advised to keep abreast of the latest in legislation and
jurisprudence, and avoid dealing out injustice and reaping embarrassment for themselves.
These are two (2) administrative cases1 filed by complainants Quirino Sabio and Modesto Ualat against respondent
Judge Jose O. Ramos of the Municipal Trial Court (MTC) of Echague, Isabela, for "knowingly rendering (an) unjust
judgment, ignorance of the law and serious misconduct" relative to his taking cognizance of an action docketed as Civil
Case No. 827 and entitled "Leonardo Coma vs. Quirino Sabio and Modesto Ualat", which according to complainants is an
agrarian dispute and therefore beyond the jurisdiction of the MTC.
The Facts
Complainant Sabio claims that he is an agricultural lessee of an agricultural land consisting of 4.7 hectares owned by
Leonardo Coma. Complainant Ualat, on the other hand, alleges that he is Sabio's caretaker. It appears from the two
complaints that on August 6, 1990, complainant Sabio filed with the Department of Agrarian Reform Adjudication Board
(DARAB) a complaint for Recovery of Possession 2 against the landowner and Raymundo Sabio, brother of complainant
Sabio. On August 30, 1990, the landowner filed against herein complainants a case for Illegal Detainer with respondent's
sala. On July 23, 1990, 3 the DARAB ruled in favor of complainant Sabio declaring that the right of the complainant as the
tenant-tiller to peaceful possession and cultivation should not be disturbed. On November 5, 1990, however,
respondent Judge rendered a decision 4 in favor of the landowner ordering the complainants, among others, to vacate
the property.
Complainants now contend that, notwithstanding knowledge of the Department Agrarian Reform (DAR) resolution, and
the fact that Civil Case No. 827 falls within the exclusive jurisdiction of the DAR, respondent Judge, using his "power and
authority," took cognizance of the case because of personal interest and motive. They claim that during the pendency of
the case, respondent Judge, thru his son and brother, cultivated a portion of the land subject matter of the case.
Complainant Ualat, on the other hand, alleges that as the result of the unjust decision, his residential house which is not
the subject of the lease was levied upon by the sheriff, and argued that as mere caretaker, he could not be held "jointly
and severally" liable to pay the obligations of Quirino Sabio as agricultural tenant.
Respondent Judge submitted his Comments dated May 2, 1992 5 and March 7, 1992 6 to the aforesaid complaints. In
denying the charges, respondent Judge alleged that he was without knowledge or information about the complaint with
the DAR, nor was he made aware of the DAR resolution because nothing of this sort was stated by the parties in their
pleadings, nor were these brought out during the proceedings. Thus, on the basis of the evidence presented, he ruled
that the relationship between the landowner and herein complainants is that of "civil lease."
Respondent judge denied that he had any personal interest in the agricultural land subject matter of the case, arguing
that he did not have a hand in the "civil lease" contract entered into by his son and the land-owner and that if he had
prior knowledge of it, he could have dissuaded his son from entering into the lease contract to avoid any suspicions. His
brother and his son allegedly entered the land in dispute with the consent of the owner.
Respondent Judge explained that complainant Ualat was held jointly and severally liable to pay the rentals in arrears
because he was a co-defendant in the "civil lease", and that execution of the decision had long been implemented but
this complaint is being filed only to harass him because of the contempt proceedings instituted by the landowner against
herein complainants. Complainant Ualat, if he was not satisfied with the ruling of the respondent, could have timely filed
an appeal, but he decided to appeal only when the judgment had already been executed.
The Court en banc in its resolution 7 dated August 13, 1992 resolved to refer the case to the Executive Judge, Regional
Trial Court, Echague, Isabela, for investigation, report and recommendation. In his Joint Report and
Recommendation 8 dated April 19, 1996, Judge Henedino P. Eduarte made the following findings, the pertinent portions
of which are hereby quoted as follows, to wit: 9
1. The complainants claim that the respondent Judge rendered his decision in the illegal (should be "unlawful") detainer
case inspite of his awareness of the complaint of Quirino Sabio against Leonardo Coma and Modesto Ualat filed with the
DAR and the latter's resolution dated July 23, 1990.
The undersigned read carefully the record of the case particularly the answer of Quirino Sabio and Modesto Ualat, the
position paper of Quirino Sabio, the affidavit of Modesto Ualat and the affidavit of their witnesses. The undersigned
found no allegation in said pleadings and affidavits about the DAR case. Hence, respondent was not then aware of the
DAR case when he rendered the decision.
2. The complainants claim that respondent Judge decided the case inspite of the fact that the Court has no jurisdiction
to try the same, as the issues are agrarian in nature.
Jurisdiction is determined by law and in determining whether a court has jurisdiction over a case, the allegation of the
complaint, not the answer, must be examined.
In this case, there is no allegation of the complaint that the case is one of agrarian dispute. There is no allegation that
Leonardo Coma instituted defendants Quirino Sabio and Modesto Ualat as his tenants on the land. What the
complainant alleges is that on December 1, 1988, Leonardo Coma entered into a civil lease contract with defendant
Quirino Sabio whereby for a consideration of P11,178.00, Leonardo Coma leased his 4.7 hectares of land to Quirino
Sabio for one (1) cropping only which will terminate on April 1, 1989; that this lease contract was renewed by the parties
on May 3, 1989 where the land was again leased for one (1) cropping season only to terminate on or before September
30, 1989 for a consideration of 81 cavans of palay; that Leonardo Coma and Quirino Sabio renewed their lease contract
on January 24, 1990 for a period of one (1) cropping only to terminate on or before March 1990 for a consideration of 71
cavans of palay; that defendant Quirino Sabio violated the lease contract by subleasing a portion of the land to
defendant Modesto Ualat and by his failure to pay the full rental of the land, that the duration of the lease contract had
already expired.
There is nothing in the lease contract agreement dated December 1, 1988, May 3, 1989 and January 24, 1990 that it is
the intention of the parties to enter into a contract of tenancy. On the other hand, it is apparent from the provisions of
the lease contracts stipulating that it is for one (1) cropping only that the parties never agreed to enter into a tenancy
contract.
It is in the answer of the defendants Quirino Sabio and Modesto Ualat that they alleged that Leonardo Coma instituted
defendant Quirino Sabio as his tenant over the land in 1984; that Quirino Sabio took possession and cultivation of the
land up to 1987 when Leonardo Coma gave the possession and cultivation of the land to his nephew for one year and
thereafter, defendant Quirino Sabio re-entered and cultivated the land again; that on the other hand, defendant
Modesto Ualat entered and cultivated a portion of 4,000 square meters and cultivated it believing that it is not a part of
the land in question.
Thus, from all the foregoing facts, respondent Judge may not be faulted when he said that he had jurisdiction over the
case and then proceeded to decide it on its merits. However, respondent Judge should have exercised prudence and
caution considering the allegation of tenancy by the defendant Quirino Ualat and his insistence that the Court has no
jurisdiction over the case, by setting the case for hearing and asking clarificatory questions. This would have elicited the
DAR case and the resolution dated July 23, 1990. Respondent Judge did not do this He proceeded to decide the case
ordering the ejectment of defendants Quirino Sabio and Modesto Ualat.
3. Complainant Modesto Ualat faults the respondent Judge for ordering him and Quirino Sabio to pay jointly and
severally to the plaintiff Leonardo Coma "the current rentals at the rate of P18,000.00 per cropping season until plaintiff
is restored in the possession of the land leased premises; and to pay attorney's fees in the amount of P3,000.00".
The decision of respondent Judge does not state the reason for ordering Modesto Ualat to pay jointly and severally with
defendant Quirino Sabio P18,000.00 to the plaintiff Leonardo Coma as rentals of the land until possession is restored to
the plaintiff.
From the record of the case, the available evidence on this point is the affidavit of Leonardo Coma that Quirino Sabio
sublet a portion of 1.4 hectares of the land to Modesto Ualat.
On the other hand, Quirino Sabio and Modesto Ualat alleged in their answer that Modesto Ualat entered and cultivated
a portion of 4,000 square meters thinking that it is not part of the land in question. This is reiterated in the affidavit of
Modesto Ualat.
In his testimony, respondent Judge declared that he ordered Modesto Ualat to pay jointly and severally with Quirino
Sabio the P18,000.00 to the plaintiff Leonardo Coma because they conspired to deprive the plaintiff of the rentals of his
land. This is not supported by the evidence available from the record of the case and this is not stated in the decision of
respondent Judge.
Obviously, respondent Judge gave credence to the evidence of plaintiff that Quirino Sabio subleased a portion of 1.4
hectares of the land to Modesto Ualat. However, it is not correct to hold Modesto Ualat jointly and severally liable to the
lessor Leonardo Coma for the current rentals of the land because a sublessee is only subsidiarily liable for rentals to the
lessor.
Art. 1652. The sublessee is subsidiarily liable to the lessor for any rent due from the lessee. However, the sub-lessee
shall not be responsible beyond the amount of rent due from him in accordance with the terms of the sublease, at the
time of the extra-judicial demand by the lessor. (Civil Code)
4. The claim of complainant Quirino Sabio that he appealed the decision of respondent Judge to the RTC is not correct.
The record of the case does not show that he appealed said decision. He admitted later in his testimony that it is only
defendant Modesto Ualat who appealed the decision of respondent Judge.
5. Complainant Modesto Ualat faults respondent Judge for denying his appeal. The denial however, is correct. Atty.
Marcelo C. Cabalbag, counsel of defendants, received copy of the decision on November 23, 1990 per Registry Return
Card found on page 47 of the record of the case. He filed his notice of appeal dated January 17, 1991 for defendant
Modesto Ualat which was received by the Court on January 21, 1991. Even if it is conceded that the notice of appeal was
filed on January 17, 1991, it was clearly filed out of time.
After the denial of his notice of appeal and the disqualification of his counsel, Modesto Ualat filed his own notice of
appeal on April 27, 1991 which the Court received on January 17, 1991 (sic), it is obvious that the notice of appeal was
filed late. Thus, the respondent Judge is also correct in denying this appeal of defendant Modesto Ualat.
6. The complainants alleged that respondent Judge has personal interest and motive on the land in dispute because
thereafter, they discovered that the brother and son of respondent Judge intruded and cultivated portion of the land.
Respondent Judge, admitted that his brother Rey Ramos took possession of and cultivated the land because he entered
into a contract of lease with the landowner Leonardo Coma after the case was decided. After the termination of the
lease with Rey Ramos, Leonardo Coma also entered into a lease contract with respondent's son, Joscar Ramos, an
accountant and a part-time farmer who does not live with the respondent Judge. According to respondent Judge, he had
no hand in the contract between his son and Leonardo Coma as he has his own life to live.
Considering the fact that there is no evidence that respondent Judge bent the facts and the law in order to decide the
case in favor of the plaintiff, that his brother and son entered into a contract of lease after the case was already decided
and the decision became final, and that as admitted by the complainants the respondent Judge has big hectares of land,
the conclusion that respondent Judge has interest and personal motive on the land in dispute is not warranted.
All told, of the several charges leveled against the respondent Judge, only one which charges him of committing an error
in ordering Modesto Ualat jointly and severally liable with Quirino Sabio for the payment of the current rentals of the
land is substantiated and found correct. This is, however, a mistake of judgment or law which every judge commits every
now and then inspite of his earnest study of the law and honest application thereof to the facts of the case. Most
probably, since the lease contract had already expired, the respondent Judge considered the act of Quirino Sabio in
subleasing the portion of the land to Modesto Ualat and the latter's cultivation thereof, as quasi-delict intended, as
respondent Judge declared in his testimony, to deprive the landowner of the rental of his land. This is, however,
inconsistent with his holding that Modesto Ualat is a sublessee.
In the same report, the Investigating Judge, among other things, recommended the dismissal of the complaint against
respondent judge with a stern warning, however, that he should be more careful especially in those cases where a
defendant claims to be the tenant of the land in question, and that he should conduct a preliminary hearing to
determine whether or not the Court has jurisdiction over the case.
In a Resolution dated June 25, 1996, this Court referred the aforesaid joint report and recommendation to the Office of
the Court Administrator for evaluation, report and recommendation.
In a Memorandum 10 addressed to the Chief Justice dated July 19, 1996, the Court Administrator disagreed with Judge
Eduarte's recommendation to dismiss the case, reasoning that "(t)he mere fact that respondent lacks prior knowledge or
notice of the previous case before the Department of Agrarian Reform Adjudication Board and its resolution of July 23,
1990 does not entirely absolved (sic) him of any administrative liability. It should be noted that in the civil case for Illegal
Detainer with Damages pending before him, the separate affidavits of herein complainants contained allegation of
landlord-tenant relationship and this information could have cautioned respondent in taking cognizance of the case at
once. Prudence dictate (sic) that the proper thing to do under the circumstances is to refer first the case to the DAR for
certification to determine the existence of the agricultural tenancy relationship in accordance with existing agrarian
laws. His act of precipitately acting on the case without coursing the latter to the DAR has put into question his real
motive especially so that his personal interest on the lot is what is concerned in this case."
Additionally, the Court Administrator cited P.D. 316 11 and P.D. 1038 12 which enjoin a fiscal or judge of any tribunal from
taking cognizance of an ejectment case or any other case designed to harass or remove a tenant of an agricultural land
primarily devoted to rice and/or corn unless the Secretary of Agrarian Reform certifies that the case is one proper for
such tribunal to hear and decide.
To support his recommendations, the Court Administrator cited the case of Puertollano vs. Intermediate Appellate
Court, 13 where this Court ruled that "(i)t is mandatory for the trial court to refer the case to the Secretary of Agrarian
Reform or his authorized representative for a preliminary determination of the relationship between the contending
parties if it is a case of ejectment or attempt to harass or remove a tenant in agricultural land primarily devoted to rice
and corn. Even without a motion, the trial court may motu propio order such referral." ( Emphasis supplied).
The Court Administrator recommended that a fine of twenty thousand pesos (P20,000.00) be imposed upon respondent
Judge with a warning of graver penalty for similar acts in the future.
The Investigating Judge may have been technically correct in averring that jurisdiction is determined by the allegations in
the complaint. 14 However, this is an administrative case where the issue is not whether a motion to dismiss the
complaint could prosper. The issue is whether respondent judge properly comported himself in the face of the obvious
matters brought before him. As can be readily seen from the answer filed by complainants Sabio and Ualat in the civil
case, they alleged the existence of an agrarian tenancy relationship between themselves and the landowner.
Additionally, in the proceedings before respondent judge, complainants were even represented by a lawyer from the
DAR. These matters should have been sufficient to put respondent Judge on notice that complainants were claiming
protection under our agrarian laws. At that point, he ought to have realized that there existed a genuine issue involving
agricultural tenancy among the parties with respect to the subject property. Knowledge of existing agrarian legislation
and prevailing jurisprudence on the subject, together with an ordinary degree of prudence, would have prompted
respondent Judge to refer the case to the DAR for preliminary determination of the real nature of the parties'
relationship, as required by law. At the very least, as suggested by the Investigating Judge, respondent could have
himself conducted a clarificatory hearing to determine such relationship. The last thing he should have done was to
proceed to take cognizance of the case in the absence of such referral. In the face of these established facts, he could
not hide behind the ostrich-inspired defense of his jurisdiction being determined by the allegations in the complaint.
Indeed, the complaint was prepared by Leonardo Coma, who found it to his interest to hide the possible existence of the
tenancy relationship, even while he knew of the earlier complaint filed against him before the DARAB.
In the case of Ocier vs. Court of Appeals, 15 we reiterated the ruling we made in Puertollano in this wise:
Private respondent, in her original complaint before the lower court, alleged that petitioner violated the Land Reform
Code and could be ejected under P.D. 816. Petitioner answered that he was a tenant of private respondent. There was,
at that point in time, no need for referral to the Department of Agrarian Reform as the landowner-tenant relationship
was admitted.
However, when private respondent's amended complaint — where she alleged violation of a civil law lease agreement
— was admitted, the issue of actual tenancy — raised by petitioner in both his Answer and Amended Answer — had to
be referred to the Department of Agrarian Reform for determination as this was now a genuine issue.
His failure to refer the case to the DAR upon receipt of the answer of complainants, despite the clear mandate of the
two agrarian laws aforementioned and our ruling in Puertollano, can in no wise be justified by respondent Judge. What
is even more embarrassing is his seeming lack of awareness of the Civil Code provision making a sub-lessee merely
subsidiarily liable for unpaid rentals, to the extent of the rentals due from him under the sub-lease, at the time of the
lessor's extrajudicial demand.
It is a pressing responsibility of judges to keep abreast with the law and changes therein, as well as with the latest
decisions of this Court. One cannot seek refuge in having a mere cursory acquaintance with statutes and procedural
rules. Ignorance of the law, which everyone is bound to know, excuses no one — certainly not judges. IGNORANTIA
JURIS QUOD QUISQUE SCIRE TENETUR NON EXCUSAT . 16 When the law is elementary, so elementary, not to know it
constitutes gross ignorance of the law.17
Finally, we note that respondent judge had previously been held liable 18 for gross ignorance of the law and dereliction
of duty, and imposed a "reasonable" fine of P10,000.00, it being his first infraction in his 35 years in the government
service, 27 of which were in the judiciary. This case being thus his second infraction, he is meted the maximum penalty
of P20,000.00 fine, with a warning that a repetition will be dealt with more severely.
WHEREFORE, in view of the foregoing, respondent judge is hereby FOUND LIABLE for gross ignorance of the law and is
hereby imposed a fine in the sum of Twenty Thousand Pesos (P20,000.00).
Respondent is further ADMONISHED that commission of the same or similar act in the future will be dealt with more
severely.
SO ORDERED.
Narvasa, C.J., Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Francisco,
Hermosisima, Jr. and Torres, Jr., JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
IMPERIAL, J.:
This is an appeal taken by the defendant-petitioner from the decision of the Court of Appeals which modified that
rendered by the court of First Instance of Bataan in civil case No. 1504 of said court and held: that the contract Exhibit
"1" is entirely null and void and without effect; that the plaintiffs-respondents, then appellants, are the owners of the
disputed land, with its improvements, in common ownership with their brother Gavino Rodriguez, hence, they are
entitled to the possession thereof; that the defendant-petitioner should yield possession of the land in their favor, with
all the improvements thereon and free from any lien; that the plaintiffs-respondents jointly and severally pay to the
defendant-petitioner the sum of P1,000 with interest at 6 percent per annum from the date of the decision; and
absolved the plaintiffs-respondents from the cross-complaint relative to the value of the improvements claimed by the
defendant-petitioner. The appealed decision also ordered the registrar of deeds of Bataan to cancel certificate of title
No. 325, in the name of the deceased Emiliana Ambrosio and to issue in lieu thereof another certificate of title in favor
of the plaintiffs-respondents and their brother Gavino Rodriguez, as undivided owners in equal parts, free of all liens and
incumbrances except those expressly provided by law, without special pronouncement as to the costs.
The respondents, children and heirs of the deceased Emiliana Ambrosio, commenced the aforesaid civil case to the end
that they recover from the petitioner the possession of the land and its improvements granted by way of homestead to
Emiliana Ambrosio under patent No. 16074 issued on January 11, 1931, with certificate of title No. 325 issued by the
registrar of deeds of Bataan on June 27, 1931 in her favor, under section 122 of Act No. 496, which land was surveyed
and identified in the cadastre of the municipality of Limay, Province of Bataan, as lot No. 285; that the petitioner pay to
them the sum of P650 being the approximate value of the fruits which he received from the land; that the petitioner
sign all the necessary documents to transfer the land and its possession to the respondents; that he petitioner be
restrained, during the pendency of the case, from conveying or encumbering the land and its improvements; that the
registrar of deeds of Bataan cancel certificate of title No. 325 and issue in lieu thereof another in favor of the
respondents, and that the petitioner pay the costs of suit.
The petitioner denied in his answer all the material allegations of the complaint and by way of special defense alleged
that he was in possession of the land and that he was receiving the fruits thereof by virtue of a mortgage contract,
entered into between him and the deceased Emiliana Ambrosio on May 16, 1932, which was duly ratified by a notary
public; and in counterclaim asked that the respondents pay him the sum of P1,000 with 12 per cent interest per annum
which the deceased owed him and that, should the respondents be declared to have a better right to the possession of
the land, that they be sentenced to pay him the sum of P5,000 as value of all the improvements which he introduced
upon the land.lawphil.net
On May 16, 1932 Emiliana Ambrosio, in life, and the petitioner executed the following public deed:
"This agreement, made and entered into this 16th day of May, 1932, by and between Emiliana Ambrosio, Filipino, of
legal age, widow and resident of Limay, Bataan, P.L., hereinafter called the party of the first part, and Marcial Kasilag,
Filipino, of legal age, married to Asuncion Roces, and resident at 312 Perdigon Street, Manila, P.L., hereinafter called
party of the second part.
WITNESSETH: That the parties hereto hereby covenant and agree to and with each other as follows:
ARTICLE I. That the party of the first part is the absolute registered owner of a parcel of land in the barrio of Alngan,
municipality of Limay, Province of Bataan, her title thereto being evidenced by homestead certificate of title No. 325
issued by the Bureau of Lands on June 11, 1931, said land being lot No. 285 of the Limay Cadastre, General Land
Registration Office Cadastral Record No. 1054, bounded and described as follows:
Beginning at point marked 1 on plan E-57394, N. 84º 32' W. 614.82 m. from B.B.M. No. 3, thence N. 66º 35' E. 307.15 m.
to point "2"; S. 5º 07' W. to point "5"; S.6º 10' E. 104.26 m. to point "4"; S. 82º 17' W. to point "5"; S. 28º 53' W. 72.26 m.
to point "6"; N. 71º 09' W. to point "7"; N. 1º 42' E. 173.72 m. to point 1, point of beginning, "Containing an area of
6.7540 hectares. "Points 1,2,6 and 7, B.L.; points 3,4 and 5, stakes; points 4, 5 and 6 on bank of Alangan River. "Bounded
on the North, by property claimed by Maria Ambrosio; on the East, by Road; on the South, by Alangan River and
property claimed by Maxima de la Cruz; and on the West, by property claimed by Jose del Rosario. "Bearing true.
Declination 0º 51' E. "Surveyed under authority of sections 12-22, Act No. 2874 and in accordance with existing
regulations of the Bureau of Lands, by Mamerto Jacinto, public land surveyor, on July 8, 1927 and approved on February
25, 1931.
ARTICLE II. That the improvements on the above described land consist of the following:
Four (4) mango trees, fruit bearing: one hundred ten (110) hills of bamboo trees; one (1) tamarind and six (6) boñga
trees.
ARTICLE III. That the assessed value of the land is P940 and the assessed value of the improvements is P860, as
evidenced by tax declaration No. 3531 of the municipality of Limay, Bataan.
ARTICLE IV. That for and in consideration of the sum of one thousand pesos (P1,000) Philippine currency, paid by the
party of second part to the party of the first part, receipt whereof is hereby acknowledged, the party of the first part
hereby encumbers and hypothecates, by way of mortgage, only the improvements described in Articles II and III hereof,
of which improvements the party of the first part is the absolute owner.
ARTICLE V. That the condition of said mortgage is such that if the party of the first part shall well and truly pay, or cause
to paid to the party of the second part, his heirs, assigns, or executors, on or before the 16th day of November, 1936, or
four and one-half (4½) years after date of the execution of this instrument, the aforesaid sum of one thousand pesos
(P1,000) with interest at 12 per cent per annum, then said mortgage shall be and become null and void; otherwise the
same shall be and shall remain in full force and effect, and subject to foreclosure in the manner and form provided by
law for the amount due thereunder, with costs and also attorney's fees in the event of such foreclosure.lawphil.net
ARTICLE VI. That the party of the first part shall pay all taxes and assessments which are or may become due on the
above described land and improvements during the term of this agreement.
ARTICLE VII. That within thirty (30) days after date of execution of this agreement, the party of the first part shall file a
motion before the Court of First Instance at Balanga, Bataan, P. I., requesting cancellation of Homestead Certificate of
Title No. 325 referred to in Article I hereof and the issuance, in lieu thereof, of a certificate of title under the provisions
of Land Registration Act No. 496, as amended by Act 3901.
ARTICLE III. It if further agreed that if upon the expiration of the period of time (4½) years stipulated in this mortgage,
the mortgagor should fail to redeem this mortgage, she would execute a deed of absolute sale of the property herein
described for the same amount as this mortgage, including all unpaid interests at the rate of 12 per cent per annum, in
favor of the mortgagee.
ARTICLE IX. That in the event the contemplated motion under Article VII hereof is not approved by the Court, the
foregoing contract of sale shall automatically become null and void, and the mortgage stipulated under Article IV and V
shall remain in full force and effect.
In testimony whereof, the parties hereto have hereunto set their hands the day and year first herein before written.
(Sgd.) ILLEGIBLE
Before me this day personally appeared Emiliana Ambrosio without cedula by reason of her sex, to me known and
known to me to be the person who signed the foregoing instrument, and acknowledged to me that she executed the
same as her free and voluntary act and deed.
I hereby certify that this instrument consists of three (3) pages including this page of the acknowledgment and that each
page thereof is signed by the parties to the instrument and the witnesses in their presence and in the presence of each
other, and that the land treated in this instrument consists of only one parcel.
In witness whereof I have hereunto set my hand and affixed my notarial seal, this 16th day of May, 1932.
(Sgd.) NICOLAS NAVARRO
Notary Public
One year after the execution of the aforequoted deed, that is, in 1933, it came to pass that Emiliana Ambrosio was
unable to pay the stipulated interests as well as the tax on the land and its improvements. For this reason, she and the
petitioner entered into another verbal contract whereby she conveyed to the latter the possession of the land on
condition that the latter would not collect the interest on the loan, would attend to the payment of the land tax, would
benefit by the fruits of the land, and would introduce improvements thereon. By virtue of this verbal contract, the
petitioner entered upon the possession of the land, gathered the products thereof, did not collect the interest on the
loan, introduced improvements upon the land valued at P5,000, according to him and on May 22, 1934 the tax
declaration was transferred in his name and on March 6, 1936 the assessed value of the land was increased from P1,020
to P2,180.
After an analysis of the conditions of Exhibit "1" the Court of Appeals came to the conclusion and so held that the
contract entered into by and between the parties, set out in the said public deed, was one of absolute purchase and sale
of the land and its improvements. And upon this ruling it held null and void and without legal effect the entire Exhibit 1
as well as the subsequent verbal contract entered into between the parties, ordering, however, the respondents to pay
to the petitioner, jointly and severally, the loan of P1,000 with legal interest at 6 per cent per annum from the date of
the decision. In this first assignment of error the petitioner contends that the Court of Appeals violated the law in
holding that Exhibit 1 is an absolute deed of sale of the land and its improvements and that it is void and without any
legal effect.
The cardinal rule in the interpretation of contracts is to the effect that the intention of the contracting parties should
always prevail because their will has the force of law between them. Article 1281 of the Civil Code consecrates this rule
and provides, that if the terms of a contract are clear and leave no doubt as to the intention of the contracting parties,
the literal sense of its stipulations shall be followed; and if the words appear to be contrary to the evident intention of
the contracting parties, the intention shall prevail. The contract set out in Exhibit 1 should be interpreted in accordance
with these rules. As the terms thereof are clear and leave no room for doubt, it should be interpreted according to the
literal meaning of its clauses. The words used by the contracting parties in Exhibit 1 clearly show that they intended to
enter into the principal contract of loan in the amount of P1,000, with interest at 12 per cent per annum, and into the
accessory contract of mortgage of the improvements on the land acquired as homestead, the parties having moreover,
agreed upon the pacts and conditions stated in the deed. In other words, the parties entered into a contract of
mortgage of the improvements on the land acquired as homestead, to secure the payment of the indebtedness for
P1,000 and the stipulated interest thereon. In clause V the parties stipulated that Emiliana Ambrosio was to pay, within
four and a half years, or until November 16, 1936, the debt with interest thereon, in which event the mortgage would
not have any effect; in clause VI the parties agreed that the tax on the land and its improvements, during the existence
of the mortgage, should be paid by the owner of the land; in clause VII it was covenanted that within thirty days from
the date of the contract, the owner of the land would file a motion in the Court of First Instance of Bataan asking that
certificate of title No. 325 be cancelled and that in lieu thereof another be issued under the provisions of the Land
Registration Act No. 496, as amended by Act No. 3901; in clause VIII the parties agreed that should Emiliana Ambrosio
fail to redeem the mortgage within the stipulated period of four years and a half, she would execute an absolute deed of
sale of the land in favor of the mortgagee, the petitioner, for the same amount of the loan of P1,000 including unpaid
interest; and in clause IX it was stipulated that in case the motion to be presented under clause VII should be
disapproved by the Court of First Instance of Bataan, the contract of sale would automatically become void and the
mortgage would subsist in all its force.
Another fundamental rule in the interpretation of contracts, not less important than those indicated, is to the effect that
the terms, clauses and conditions contrary to law, morals and public order should be separated from the valid and legal
contract and when such separation can be made because they are independent of the valid contract which expresses
the will of the contracting parties. Manresa, commenting on article 1255 of the Civil Code and stating the rule of
separation just mentioned, gives his views as follows:
On the supposition that the various pacts, clauses or conditions are valid, no difficulty is presented; but should they be
void, the question is as to what extent they may produce the nullity of the principal obligation. Under the view that such
features of the obligation are added to it and do not go to its essence, a criterion based upon the stability of juridical
relations should tend to consider the nullity as confined to the clause or pact suffering therefrom, except in case where
the latter, by an established connection or by manifest intention of the parties, is inseparable from the principal
obligation, and is a condition, juridically speaking, of that the nullity of which it would also occasion. (Manresa,
Commentaries on the Civil Code, Volume 8, p. 575.)
The same view prevails in the Anglo-American law, as condensed in the following words:
Where an agreement founded on a legal consideration contains several promises, or a promise to do several things, and
a part only of the things to be done are illegal, the promises which can be separated, or the promise, so far as it can be
separated, from the illegality, may be valid. The rule is that a lawful promise made for a lawful consideration is not
invalid merely because an unlawful promise was made at the same time and for the same consideration, and this rule
applies, although the invalidity is due to violation of a statutory provision, unless the statute expressly or by necessary
implication declares the entire contract void. . . . (13 C. J., par. 470, p. 512; New York Cent. etc. R. Co. v. Gray, 239 U.S.,
583; 60 Law ed., 451; U.S. v. Mora, 97 U.S., 413, 24 Law. ed., 1017; U.S. v. Hodson, 10 Wall, 395; 19 Law ed. 937; Gelpcke
v. Dubuque, 1 Wall. 175, 17 Law ed., 520; U.S. v. Bradly, 10 Pet. 343, 9 Law. ed., 448; Borland v. Prindle, 144 Fed 713;
Western Union Tel. Co. v. Kansas Pac. R. Co., 4 Fed., 284; Northern Pac. R. Co. v. U.S., 15 Ct. Cl., 428.)
Addressing ourselves now to the contract entered into by the parties, set out in Exhibit 1, we stated that the principal
contract is that of loan and the accessory that of mortgage of the improvements upon the land acquired as a
homestead. There is no question that the first of these contract is valid as it is not against the law. The second, or the
mortgage of the improvements, is expressly authorized by section 116 of Act No. 2874, as amended by section 23 of Act
No. 3517, reading:
SEC. 116. Except in favor of the Government or any of its branches, units or institutions, or legally constituted banking
corporations, lands acquired under the free patent or homestead provisions shall not be subject to encumbrance or
alienation from the date of the approval of the application and for a term of five years from and after the date of
issuance of the patent or grant, nor shall they become liable to the satisfaction of any debt contracted prior to the
expiration of said period; but the improvements or crops on the land may be mortgaged or pledged to qualified persons,
associations, or corporations.
It will be recalled that by clause VIII of Exhibit 1 the parties agreed that should Emiliana Ambrosio fail to redeem the
mortgage within the stipulated period of four and a half years, by paying the loan together with interest, she would
execute in favor of the petitioner an absolute deed of sale of the land for P1,000, including the interest stipulated and
owing. The stipulation was verbally modified by the same parties after the expiration of one year, in the sense that the
petitioner would take possession of the land and would benefit by the fruits thereof on condition that he would
condone the payment of interest upon the loan and he would attend to the payment of the land tax. These pacts made
by the parties independently were calculated to alter the mortgage a contract clearly entered into, converting the latter
into a contract of antichresis. (Article 1881 of the Civil Code.) The contract of antichresis, being a real encumbrance
burdening the land, is illegal and void because it is legal and valid.
The foregoing considerations bring us to the conclusion that the first assignment of error is well-founded and that error
was committed in holding that the contract entered into between the parties was one of absolute sale of the land and
its improvements and that Exhibit 1 is null and void. In the second assignment of error the petitioner contends that the
Court of Appeals erred in holding that he is guilty of violating the Public Land Act because he entered into the contract,
Exhibit 1. The assigned error is vague and not specific. If it attempts to show that the said document is valid in its
entirety, it is not well-founded because we have already said that certain pacts thereof are illegal because they are
prohibited by section 116 of Act No. 2874, as amended.
In the third assignment of error the petitioner insists that his testimony, as to the verbal agreement entered into
between him and Emiliana Ambrosio, should have been accepted by the Court of Appeals; and in the fourth and last
assignment of error the same petitioner contends that the Court of Appeals erred in holding that he acted in bad faith in
taking possession of the land and in taking advantage of the fruits thereof, resulting in the denial of his right to be
reimbursed for the value of the improvements introduced by him.
We have seen that subsequent to the execution of the contract, Exhibit 1, the parties entered into another verbal
contract whereby the petitioner was authorized to take possession of the land, to receive the fruits thereof and to
introduce improvements thereon, provided that he would renounce the payment of stipulated interest and he would
assume payment of the land tax. The possession by the petitioner and his receipt of the fruits of the land, considered as
integral elements of the contract of antichresis, are illegal and void agreements because, as already stated, the contract
of antichresis is a lien and such is expressly prohibited by section 116 of Act No. 2874, as amended. The Court of Appeals
held that the petitioner acted in bad faith in taking possession of the land because he knew that the contract he made
with Emiliana Ambrosio was an absolute deed of sale and, further, that the latter could not sell the land because it is
prohibited by section 116. The Civil Code does not expressly define what is meant by bad faith, but section 433 provides
that "Every person who is unaware of any flaw in his title, or in the manner of its acquisition, by which it is invalidated,
shall be deemed a possessor in good faith"; and provides further, that "Possessors aware of such flaw are deemed
possessors in bad faith". Article 1950 of the same Code, covered by Chapter II relative to prescription of ownership and
other real rights, provides, in turn, that "Good faith on the part of the possessor consists in his belief that the person
from whom he received the thing was the owner of the same, and could transmit the title thereto." We do not have
before us a case of prescription of ownership, hence, the last article is not squarely in point. In resume, it may be stated
that a person is deemed a possessor in bad faith when he knows that there is a flaw in his title or in the manner of its
acquisition, by which it is invalidated.
Borrowing the language of Article 433, the question to be answered is whether the petitioner should be deemed a
possessor in good faith because he was unaware of any flaw in his title or in the manner of its acquisition by which it is
invalidated. It will be noted that ignorance of the flaw is the keynote of the rule. From the facts found established by the
Court of Appeals we can neither deduce nor presume that the petitioner was aware of a flaw in his title or in the manner
of its acquisition, aside from the prohibition contained in section 116. This being the case, the question is whether good
faith may be premised upon ignorance of the laws. Manresa, commenting on article 434 in connection with the
preceding article, sustains the affirmative. He says:
"We do not believe that in real life there are not many cases of good faith founded upon an error of law. When the
acquisition appears in a public document, the capacity of the parties has already been passed upon by competent
authority, and even established by appeals taken from final judgments and administrative remedies against the
qualification of registrars, and the possibility of error is remote under such circumstances; but, unfortunately, private
documents and even verbal agreements far exceed public documents in number, and while no one should be ignorant of
the law, the truth is that even we who are called upon to know and apply it fall into error not infrequently. However, a
clear, manifest, and truly unexcusable ignorance is one thing, to which undoubtedly refers article 2, and another and
different thing is possible and excusable error arising from complex legal principles and from the interpretation of
conflicting doctrines.
But even ignorance of the law may be based upon an error of fact, or better still, ignorance of a fact is possible as to the
capacity to transmit and as to the intervention of certain persons, compliance with certain formalities and appreciation
of certain acts, and an error of law is possible in the interpretation of doubtful doctrines. (Manresa, Commentaries on
the Spanish Civil Code. Volume IV, pp. 100, 101 and 102.)
According to this author, gross and inexcusable ignorance of law may not be the basis of good faith, but possible,
excusable ignorance may be such basis. It is a fact that the petitioner is not conversant with the laws because he is not a
lawyer. In accepting the mortgage of the improvements he proceeded on the well-grounded belief that he was not
violating the prohibition regarding the alienation of the land. In taking possession thereof and in consenting to receive
its fruits, he did not know, as clearly as a jurist does, that the possession and enjoyment of the fruits are attributes of the
contract of antichresis and that the latter, as a lien, was prohibited by section 116. These considerations again bring us
to the conclusion that, as to the petitioner, his ignorance of the provisions of section 116 is excusable and may,
therefore, be the basis of his good faith. We do not give much importance to the change of the tax declaration, which
consisted in making the petitioner appear as the owner of the land, because such an act may only be considered as a
sequel to the change of possession and enjoyment of the fruits by the petitioner, to about which we have stated that
the petitioner's ignorance of the law is possible and excusable. We, therefore, hold that the petitioner acted in good
faith in taking possession of the land and enjoying its fruits.
The petitioner being a possessor in good faith within the meaning of article 433 of the Civil Code and having introduced
the improvements upon the land as such, the provisions of article 361 of the same Code are applicable; wherefore, the
respondents are entitled to have the improvements and plants upon indemnifying the petitioner the value thereof
which we fix at P3,000, as appraised by the trial court; or the respondents may elect to compel the petitioner to have
the land by paying its market value to be fixed by the court of origin.
The respondents also prayed in their complaint that the petitioner be compelled to pay them the sum of P650, being the
approximate value of the fruits obtained by the petitioner from the land. The Court of Appeals affirmed the judgment of
the trial court denying the claim or indemnity for damages, being of the same opinion as the trial court that the
respondents may elect to compel the petitioner to have the land. The Court of Appeals affirmed the judgment of the
trial court that the respondents have not established such damages. Under the verbal contract between the petitioner
and the deceased Emiliana Ambrosio, during the latter's lifetime, the former would take possession of the land and
would receive the fruits of the mortgaged improvements on condition that he would no longer collect the stipulated
interest and that he would attend to the payment of the land tax. This agreement, at bottom, is tantamount to the
stipulation that the petitioner should apply the value of the fruits of the land to the payment of stipulated interest on
the loan of P1,000 which is, in turn, another of the elements characterizing the contract of antichresis under article 1881
of the Civil Code. It was not possible for the parties to stipulate further that the value of the fruits be also applied to the
payment of the capital, because the truth was that nothing remained after paying the interest at 12% per annum. This
interest, at the rate fixed, amounted to P120 per annum, whereas the market value of the fruits obtainable from the
land hardly reached said amount in view of the fact that the assessed value of said improvements was, according to the
decision, P860. To this should be added the fact that, under the verbal agreement, from the value of the fruits had to be
taken a certain amount to pay the annual land tax. We mention these data here to show that the petitioner is also not
bound to render an accounting of the value of the fruits of the mortgaged improvements for the reason stated that said
value hardly covers the interest earned by the secured indebtednes.
For all the foregoing considerations, the appealed decision is reversed, and we hereby adjudge: (1) that the contract of
mortgage of the improvements, set out in Exhibit 1, is valid and binding; (2) that the contract of antichresis agreed upon
verbally by the parties is a real incumbrance which burdens the land and, as such, is a null and without effect; (3) that
the petitioner is a possessor in good faith; (4) that the respondents may elect to have the improvements introduced by
the petitioner by paying the latter the value thereof, P3,000, or to compel the petitioner to buy and have the land where
the improvements or plants are found, by paying them its market value to be filed by the court of origin, upon hearing
the parties; (5) that the respondents have a right to the possession of the land and to enjoy the mortgaged
improvements; and (6) that the respondents may redeem the mortgage of the improvements by paying to the petitioner
within three months the amount of P1,000, without interest, as that stipulated is set off by the value of the fruits of the
mortgaged improvements which petitioner received, and in default thereof the petitioner may ask for the public sale of
said improvements for the purpose of applying the proceeds thereof to the payment of his said credit. Without special
pronouncement as to the costs in all instances. So ordered.
FIRST DIVISION
ILDEFONSO O. ELEGADO, as Ancillary Administrator of the Testate Estate of the late WARREN TAYLOR
GRAHAM, petitioner
vs.
HON. COURT OF TAX APPEALS and COMMISSIONER OF INTERNAL REVENUE respondents.
CRUZ, J.:
What the petitioner presents as a rather complicated problem is in reality a very simple question from the viewpoint of
the Solicitor General. We agree with the latter. There is actually only one issue to be resolved in this action. That issue is
whether or not the respondent Court of Tax Appeals erred in dismissing the petitioner's appeal on grounds of
jurisdiction and lack of a cause of action.
On March 14, 1976, Warren Taylor Graham, an American national formerly resident in the Philippines, died in Oregon,
U.S.A. 1 As he left certain shares of stock in the Philippines, his son, Ward Graham, filed an estate tax return on
September 16, 1976, with the Philippine Revenue Representative in San Francisco, U.S.A. 2
On the basis of this return, the respondent Commissioner of Internal Revenue assessed the decedent's estate an estate
tax in the amount of P96,509.35 on February 9, 1978.3 This assessment was protested on March 7, 1978, by the law firm
of Bump, Young and Walker on behalf of the estate . 4 The protest was denied by the Commissioner on July 7, 1978.5 No
further action was taken by the estate in pursuit of that protest.
Meanwhile, on January 18, 1977, the decedent's will had been admitted to probate in the Circuit Court of Oregon 6 Ward
Graham, the designated executor, then appointed Ildefonso Elegado, the herein petitioner, as his attorney-in-fact for
the allowance of the will in the Philippines.7
Pursuant to such authority, the petitioner commenced probate proceedings in the Court of First Instance of Rizal. 8 The
will was allowed on December 18, 1978, with the petitioner as ancillary administrator. 9 As such, he filed a second estate
tax return with the Bureau of Internal Revenue on June 4, 1980.10
On the basis of this second return, the Commissioner imposed an assessment on the estate in the amount of
P72,948.87.11 This was protested on behalf of the estate by the Agrava, Lucero and Gineta Law Office on August 13,
1980.12
While this protest was pending, the Commissioner filed in the probate proceedings a motion for the allowance of the
basic estate tax of P96,509.35 as assessed on February 9, 1978.13 He said that this liability had not yet been paid
although the assessment had long become final and executory.
The petitioner regarded this motion as an implied denial of the protest filed on August 13, 1980, against the second
assessment of P72,948.87.14 On this understanding, he filed on September 15, 1981, a petition for review with the Court
of Tax Appeals challenging the said assessment. 15
The Commissioner did not immediately answer (in fact, as the petitioner stressed, no answer was filed during a delay of
195 days) and in the end instead cancelled the protested assessment in a letter to the decedent's estate dated March
31, 1982.16 This cancellation was notified to the Court of Tax Appeals in a motion to dismiss on the ground that the
protest had become moot and academic.17
The motion was granted and the petition dismissed on April 25, 1984.18 The petitioner then came to this Court
on certiorari under Rule 45 of the Rules of Court.
The petitioner raises three basic questions, to wit, (1) whether the shares of stocks left by the decedent should be
treated as his exclusive, and not conjugal, property; (2) whether the said stocks should be assessed as of the time of the
owner's death or six months thereafter; and (3) whether the appeal filed with the respondent court should be
considered moot and academic.
Estate of WARREN T. GRAHAM c/o Mr. ILDEFENSO O. ELEGADO Ancillary Administrator Philex Building cor. Brixton &
Fairlane Sts. Pasig, Metro Manila
Sir:
This is with regard to the estate of the late WARREN TAYLOR GRAHAM, who died a resident of Oregon, U.S.A. on March
14, 1976. It appears that two (2) letters of demand were issued by this Bureau. One is for the amount of P96,509.35
based on the first return filed, and the other in the amount of P72,948.87, based on the second return filed.
It appears that the first assessment of P96,509.35 was issued on February 9, 1978 on the basis of the estate tax return
filed on September 16, 1976. The said assessment was, however, protested in a letter dated March 7, 1978 but was
denied on July 7, 1978. Since no appeal was made within the regulatory period, the same has become final.
In view thereof, it is requested that you settle the aforesaid assessment for P96,509.35 within fifteen (15) days upon
receipt hereof to the Receivable Accounts Division, this Bureau, BIR National Office Building, Diliman, Quezon City. The
assessment for P72,949.57 dated July 3, 1980, referred to above is hereby cancelled.
It is obvious from the express cancellation of the second assessment for P72,948.87 that the petitioner had been
deprived of a cause of action as it was precisely from this assessment that he was appealing.
In its decision, the Court of Tax Appeals said that the petition questioning the assessment of July 3, 1980, was
"premature" since the protest to the assessment had not yet been resolved.20 As a matter of fact it had: the said
assessment had been cancelled by virtue of the above-quoted letter. The respondent court was on surer ground,
however, when it followed with the finding that the said cancellation had rendered the petition moot and academic.
There was really no more assessment to review.
The petitioner argues that the issuance of the second assessment on July 3, 1980, had the effect of canceling the first
assessment of February 9, 1978, and that the subsequent cancellation of the second assessment did not have the effect
of automatically reviving the first. Moreover, the first assessment is not binding on him because it was based on a return
filed by foreign lawyers who had no knowledge of our tax laws or access to the Court of Tax Appeals.
It is noted that in the letter of July 3, 1980, imposing the second assessment of P72,948.87, the Commissioner made it
clear that "the aforesaid amount is considered provisional only based on the estate tax return filed subject to
investigation by this Office for final determination of the correct estate tax due from the estate. Any amount that may
be found due after said investigation will be assessed and collected later." 21 It is illogical to suggest that
a provisional assessment can supersede an earlier assessment which had clearly become final and executory.
The second contention is no less flimsy. The petitioner cannot be serious when he argues that the first assessment was
invalid because the foreign lawyers who filed the return on which it was based were not familiar with our tax laws and
procedure. Is the petitioner suggesting that they are excused from compliance therewith because of their ignorance?
If our own lawyers and taxpayers cannot claim a similar preference because they are not allowed to claim a like
ignorance, it stands to reason that foreigners cannot be any less bound by our own laws in our own country. A more
obvious and shallow discrimination than that suggested by the petitioner is indeed difficult to find.
But the most compelling consideration in this case is the fact that the first assessment is already final and executory and
can no longer be questioned at this late hour. The assessment was made on February 9, 1978. It was protested on
March 7, 1978. The protest was denied on July 7, 1978. As no further action was taken thereon by the decedent's estate,
there is no question that the assessment has become final and executory.
In fact, the law firm that had lodged the protest appears to have accepted its denial. In his motion with the probate
court, the respondent Commissioner stressed that "in a letter dated January 29, 1980, the Estate of Warren Taylor
Graham thru the aforesaid foreign law firm informed claimant that they have paid said tax liability thru the Agrava,
Velarde, Lucero and Puno, Philippine law firm of 313 Buendia Avenue Ext., Makati, Metro Manila that initiated the
instant ancillary proceedings" although he added that such payment had not yet been received.22 This letter was an
acknowledgment by the estate of the validity and finality of the first assessment. Significantly, it has not been denied by
the petitioner.
In view of the finality of the first assessment, the petitioner cannot now raise the question of its validity before this
Court any more than he could have done so before the Court of Tax Appeals. What the estate of the decedent should
have done earlier, following the denial of its protest on July 7, 1978, was to appeal to the Court of Tax Appeals within
the reglementary period of 30 days after it received notice of said denial. It was in such appeal that the petitioner could
then have raised the first two issues he now raises without basis in the present petition.
The question of whether or not the shares of stock left by the decedent should be considered conjugal property or
belonging to him alone is immaterial in these proceedings. So too is the time at which the assessment of these shares of
stock should have been made by the BIR. These questions were not resolved by the Court of Tax Appeals because it had
no jurisdiction to act on the petitioner's appeal from an assessment that had already been cancelled. The assessment
being no longer controversial or reviewable, there was no justification for the respondent court to rule on the petition
except to dismiss it.
If indeed the Commissioner of Internal Revenue committed an error in the computation of the estate tax, as the
petitioner insists, that error can no longer be rectified because the original assessment has long become final and
executory. If that assessment was not challenged on time and in accordance with the prescribed procedure, that error
— for error it was — was committed not by the respondents but by the decedent's estate itself which the petitioner
represents. So how can he now complain.
WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered,
DECISION
YNARES-SANTIAGO, J.:
The instant petition for review under Rule 45 of the Rules of Court raises pure questions of law involving the March 20,
19981 and June 1, 19982 Orders3 rendered by the Regional Trial Court of Pampanga, Branch 49, in Civil Case No. G-3272.
Petitioner, assisted by a private prosecutor, filed three cases of Violation of B.P. No. 22 and three cases of Estafa, against
respondent for allegedly issuing the following checks without sufficient funds, to wit: 1) Interbank Check No. 25001151
in the amount of P80,000.00; 2) Interbank Check No. 25001152 in the amount of P 80,000.00; and 3) Interbank Check
No. 25001157 in the amount of P30,000.00.4
The Office of the Provincial Prosecutor dismissed Criminal Case No. 13356, for Violation of B.P. No. 22 covering check no.
25001151 on the ground that the check was deposited with the drawee bank after 90 days from the date of the check.
The two other cases for Violation of B.P. No. 22 (Criminal Case No. 13359 and 13360) were filed with and subsequently
dismissed by the Municipal Trial Court of Guagua, Pampanga, Branch 1, on the ground of "failure to prosecute."5
Meanwhile, the three cases for Estafa were filed with the Regional Trial Court of Pampanga, Branch 49, and docketed as
Criminal Case Nos. G-3611 to G-3613. On October 21, 1997, after failing to present its second witness, the prosecution
moved to dismiss the estafa cases against respondent. The prosecution likewise reserved its right to file a separate civil
action arising from the said criminal cases. On the same date, the trial court granted the motions of the prosecution.
Thus-
Upon motion of the prosecution for the dismissal of these cases without prejudice to the refiling of the civil aspect
thereof and there being no comment from the defense, let these cases be dismissed without prejudice to the refiling of
the civil aspect of the cases.
SO ORDER[ED].6
On December 15, 1997, petitioner filed the instant case for collection of sum of money, seeking to recover the amount
of the checks subject of the estafa cases. On February 18, 1998, respondent filed a motion to dismiss the complaint
contending that petitioner’s action is barred by the doctrine of res judicata. Respondent further prayed that petitioner
should be held in contempt of court for forum-shopping.7
On March 20, 1998, the trial court found in favor of respondent and dismissed the complaint. The court held that the
dismissal of the criminal cases against respondent on the ground of lack of interest or failure to prosecute is an
adjudication on the merits which amounted to res judicata on the civil case for collection. It further held that the filing of
said civil case amounted to forum-shopping.
On June 1, 1998, the trial court denied petitioner’s motion for reconsideration.8 Hence, the instant petition.
The legal issues for resolution in the case at bar are: 1) whether the dismissal of the estafa cases against respondent bars
the institution of a civil action for collection of the value of the checks subject of the estafa cases; and 2) whether the
filing of said civil action violated the anti-forum-shopping rule.
An act or omission causing damage to another may give rise to two separate civil liabilities on the part of the offender,
i.e., (1) civil liability ex delicto, under Article 100 of the Revised Penal Code;9 and (2) independent civil liabilities, such as
those (a) not arising from an act or omission complained of as felony [e.g. culpa contractual or obligations arising from
law under Article 3110 of the Civil Code,11 intentional torts under Articles 3212 and 34,13 and culpa aquiliana under Article
217614 of the Civil Code]; or (b) where the injured party is granted a right to file an action independent and distinct from
the criminal action [Article 33,15 Civil Code].16 Either of these two possible liabilities may be enforced against the
offender subject, however, to the caveat under Article 2177 of the Civil Code that the offended party "cannot recover
damages twice for the same act or omission" or under both causes.17
The modes of enforcement of the foregoing civil liabilities are provided for in the Revised Rules of Criminal Procedure.
Though the assailed order of the trial court was issued on March 20, 1998, the said Rules, which took effect on
December 1, 2000, must be given retroactive effect in the instant case considering that statutes regulating the
procedure of the court are construed as applicable to actions pending and undetermined at the time of their passage.18
SECTION 1. Institution of criminal and civil actions. – (a) When a criminal action is instituted, the civil action for the
recovery of civil liability arising from the offense charged shall be deemed instituted with the criminal action unless the
offended party waives the civil action, reserves the right to institute it separately or institutes the civil action prior to the
criminal action.
The reservation of the right to institute separately the civil action shall be made before the prosecution starts presenting
its evidence and under circumstances affording the offended party a reasonable opportunity to make such reservation.
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Where the civil action has been filed separately and trial thereof has not yet commenced, it may be consolidated with
the criminal action upon application with the court trying the latter case. If the application is granted, the trial of both
actions shall proceed in accordance with section 2 of this Rule governing consolidation of the civil and criminal actions.
Under the 1985 Rules on Criminal Procedure, as amended in 1988 and under the present Rules, the civil liability ex-
delicto is deemed instituted with the criminal action, but the offended party is given the option to file a separate civil
action before the prosecution starts to present evidence.19
Anent the independent civil actions under Articles 31, 32, 33, 34 and 2176 of the Civil Code, the old rules considered
them impliedly instituted with the civil liability ex-delicto in the criminal action, unless the offended party waives the
civil action, reserves his right to institute it separately, or institutes the civil action prior to the criminal action. Under the
present Rules, however, the independent civil actions may be filed separately and prosecuted independently even
without any reservation in the criminal action. The failure to make a reservation in the criminal action is not a waiver of
the right to file a separate and independent civil action based on these articles of the Civil Code.20
In the case at bar, a reading of the complaint filed by petitioner show that his cause of action is based on culpa
contractual, an independent civil action. Pertinent portion of the complaint reads:
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2. That plaintiff is the owner/proprietor to CANCIO’S MONEY EXCHANGE with office address at Guagua, Pampanga;
3. That on several occasions, particularly on February 27, 1993 to April 17 1993, inclusive, defendant drew, issued and
made in favor of the plaintiff the following checks:
in exchange of cash with the assurance that the said checks will be honored for payment on their maturity dates, copy of
the aforementioned checks are hereto attached and marked.
4. That when the said checks were presented to the drawee bank for encashment, the same were all dishonored for
reason of DRAWN AGAINST INSUFFICIENT FUNDS (DAIF);
5. That several demands were made upon the defendant to make good the checks but she failed and refused and still
fails and refuses without justifiable reason to pay plaintiff;
6. That for failure of the defendant without any justifiable reason to pay plaintiff the value of the checks, the latter was
forced to hire the services of undersigned counsel and agreed to pay the amount of P30,000.00 as attorney’s fees and
P1,000.00 per appearance in court;
7. That for failure of the defendant without any justifiable reason to pay plaintiff and forcing the plaintiff to litigate, the
latter will incur litigation expenses in the amount of P20,000.00.
IN VIEW OF THE FOREGOING, it is prayed of this Court that after due notice and hearing a judgment be rendered
ordering defendant to pay plaintiff as follows:
PLAINTIFF prays for other reliefs just and equitable under the premises.
x x x x x x x x x.21
Evidently, petitioner sought to enforce respondent’s obligation to make good the value of the checks in exchange for the
cash he delivered to respondent. In other words, petitioner’s cause of action is the respondent’s breach of the
contractual obligation. It matters not that petitioner claims his cause of action to be one based on delict.22 The nature of
a cause of action is determined by the facts alleged in the complaint as constituting the cause of action. The purpose of
an action or suit and the law to govern it is to be determined not by the claim of the party filing the action, made in his
argument or brief, but rather by the complaint itself, its allegations and prayer for relief.23
Neither does it matter that the civil action reserved in the October 21, 1997 order of the trial court was the civil action
ex delicto. To reiterate, an independent civil action arising from contracts, as in the instant case, may be filed separately
and prosecuted independently even without any reservation in the criminal action. Under Article 31 of the Civil Code
"[w]hen the civil action is based on an obligation not arising from the act or omission complained of as a felony, [e.g.
culpa contractual] such civil action may proceed independently of the criminal proceedings and regardless of the result
of the latter." Thus, in Vitola, et al. v. Insular Bank of Asia and America,24 the Court, applying Article 31 of the Civil Code,
held that a civil case seeking to recover the value of the goods subject of a Letter of Credit-Trust Receipt is a civil action
ex contractu and not ex delicto. As such, it is distinct and independent from the estafa case filed against the offender
and may proceed regardless of the result of the criminal proceedings.
One of the elements of res judicata is identity of causes of action.25 In the instant case, it must be stressed that the
action filed by petitioner is an independent civil action, which remains separate and distinct from any criminal
prosecution based on the same act.26 Not being deemed instituted in the criminal action based on culpa criminal, a
ruling on the culpability of the offender will have no bearing on said independent civil action based on an entirely
different cause of action, i.e., culpa contractual.
In the same vein, the filing of the collection case after the dismissal of the estafa cases against respondent did not
amount to forum-shopping. The essence of forum-shopping is the filing of multiple suits involving the same parties for
the same cause of action, either simultaneously or successively, to secure a favorable judgment. Although the cases filed
by petitioner arose from the same act or omission of respondent, they are, however, based on different causes of
action. The criminal cases for estafa are based on culpa criminal while the civil action for collection is anchored on culpa
contractual. Moreover, there can be no forum-shopping in the instant case because the law expressly allows the filing of
a separate civil action which can proceed independently of the criminal action.27
Clearly, therefore, the trial court erred in dismissing petitioner’s complaint for collection of the value of the checks
issued by respondent. Being an independent civil action which is separate and distinct from any criminal prosecution
and which require no prior reservation for its institution, the doctrine of res judicata and forum-shopping will not
operate to bar the same.
WHEREFORE, in view of all the foregoing, the instant petition is GRANTED. The March 20, 1998 and June 1, 1998 Orders
of the Regional Trial Court of Pampanga, Branch 49, in Civil Case No. G-3272 are REVERSED and SET ASIDE. The instant
case is REMANDED to the trial court for further proceedings.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Vitug, Carpio, and Azcuna, JJ., concur.
THIRD DIVISION
CARPIO, J.:
The Case
This is a petition for review on certiorari to set aside the Resolution1 dated December 28, 1999 dismissing the petition
for certiorari and the Resolution2 dated August 24, 2000 denying the motion for reconsideration, both issued by the
Regional Trial Court of Capas, Tarlac, Branch 66, in Special Civil Action No. 17-C (99).
The Facts
Two vehicles, one driven by respondent Mario Llavore Laroya ("Laroya" for brevity) and the other owned by petitioner
Roberto Capitulo ("Capitulo" for brevity) and driven by petitioner Avelino Casupanan ("Casupanan" for brevity), figured
in an accident. As a result, two cases were filed with the Municipal Circuit Trial Court ("MCTC" for brevity) of Capas,
Tarlac. Laroya filed a criminal case against Casupanan for reckless imprudence resulting in damage to property, docketed
as Criminal Case No. 002-99. On the other hand, Casupanan and Capitulo filed a civil case against Laroya for quasi-delict,
docketed as Civil Case No. 2089.
When the civil case was filed, the criminal case was then at its preliminary investigation stage. Laroya, defendant in the
civil case, filed a motion to dismiss the civil case on the ground of forum-shopping considering the pendency of the
criminal case. The MCTC granted the motion in the Order of March 26, 1999 and dismissed the civil case.
On Motion for Reconsideration, Casupanan and Capitulo insisted that the civil case is a separate civil action which can
proceed independently of the criminal case. The MCTC denied the motion for reconsideration in the Order of May 7,
1999. Casupanan and Capitulo filed a petition for certiorari under Rule 65 before the Regional Trial Court ("Capas RTC"
for brevity) of Capas, Tarlac, Branch 66,3 assailing the MCTC’s Order of dismissal.
The Capas RTC rendered judgment on December 28, 1999 dismissing the petition for certiorari for lack of merit. The
Capas RTC ruled that the order of dismissal issued by the MCTC is a final order which disposes of the case and therefore
the proper remedy should have been an appeal. The Capas RTC further held that a special civil action for certiorari is not
a substitute for a lost appeal. Finally, the Capas RTC declared that even on the premise that the MCTC erred in
dismissing the civil case, such error is a pure error of judgment and not an abuse of discretion.
Casupanan and Capitulo filed a Motion for Reconsideration but the Capas RTC denied the same in the Resolution of
August 24, 2000.
The Issue
"In a certain vehicular accident involving two parties, each one of them may think and believe that the accident was
caused by the fault of the other. x x x [T]he first party, believing himself to be the aggrieved party, opted to file a criminal
case for reckless imprudence against the second party. On the other hand, the second party, together with his operator,
believing themselves to be the real aggrieved parties, opted in turn to file a civil case for quasi-delict against the first
party who is the very private complainant in the criminal case."4
Thus, the issue raised is whether an accused in a pending criminal case for reckless imprudence can validly file,
simultaneously and independently, a separate civil action for quasi-delict against the private complainant in the criminal
case.
Casupanan and Capitulo assert that Civil Case No. 2089, which the MCTC dismissed on the ground of forum-shopping,
constitutes a counterclaim in the criminal case. Casupanan and Capitulo argue that if the accused in a criminal case has a
counterclaim against the private complainant, he may file the counterclaim in a separate civil action at the proper time.
They contend that an action on quasi-delict is different from an action resulting from the crime of reckless imprudence,
and an accused in a criminal case can be an aggrieved party in a civil case arising from the same incident. They maintain
that under Articles 31 and 2176 of the Civil Code, the civil case can proceed independently of the criminal action. Finally,
they point out that Casupanan was not the only one who filed the independent civil action based on quasi-delict but also
Capitulo, the owner-operator of the vehicle, who was not a party in the criminal case.
In his Comment, Laroya claims that the petition is fatally defective as it does not state the real antecedents. Laroya
further alleges that Casupanan and Capitulo forfeited their right to question the order of dismissal when they failed to
avail of the proper remedy of appeal. Laroya argues that there is no question of law to be resolved as the order of
dismissal is already final and a petition for certiorari is not a substitute for a lapsed appeal.
In their Reply, Casupanan and Capitulo contend that the petition raises the legal question of whether there is forum-
shopping since they filed only one action - the independent civil action for quasi-delict against Laroya.
The MCTC dismissed the civil action for quasi-delict on the ground of forum-shopping under Supreme Court
Administrative Circular No. 04-94. The MCTC did not state in its order of dismissal5 that the dismissal was with prejudice.
Under the Administrative Circular, the order of dismissal is without prejudice to refiling the complaint, unless the order
of dismissal expressly states it is with prejudice.6 Absent a declaration that the dismissal is with prejudice, the same is
deemed without prejudice. Thus, the MCTC’s dismissal, being silent on the matter, is a dismissal without prejudice.
Section 1 of Rule 417 provides that an order dismissing an action without prejudice is not appealable. The remedy of the
aggrieved party is to file a special civil action under Rule 65. Section 1 of Rule 41 expressly states that "where the
judgment or final order is not appealable, the aggrieved party may file an appropriate special civil action under Rule 65."
Clearly, the Capas RTC’s order dismissing the petition for certiorari, on the ground that the proper remedy is an ordinary
appeal, is erroneous.
Forum-Shopping
The essence of forum-shopping is the filing of multiple suits involving the same parties for the same cause of action,
either simultaneously or successively, to secure a favorable judgment.8 Forum-shopping is present when in the two or
more cases pending, there is identity of parties, rights of action and reliefs sought.9 However, there is no forum-
shopping in the instant case because the law and the rules expressly allow the filing of a separate civil action which can
proceed independently of the criminal action.
Laroya filed the criminal case for reckless imprudence resulting in damage to property based on the Revised Penal Code
while Casupanan and Capitulo filed the civil action for damages based on Article 2176 of the Civil Code. Although these
two actions arose from the same act or omission, they have different causes of action. The criminal case is based on
culpa criminal punishable under the Revised Penal Code while the civil case is based on culpa aquiliana actionable under
Articles 2176 and 2177 of the Civil Code. These articles on culpa aquiliana read:
"Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for
the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a
quasi-delict and is governed by the provisions of this Chapter.
Art. 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the civil
liability arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the same act
or omission of the defendant."
Any aggrieved person can invoke these articles provided he proves, by preponderance of evidence, that he has suffered
damage because of the fault or negligence of another. Either the private complainant or the accused can file a separate
civil action under these articles. There is nothing in the law or rules that state only the private complainant in a criminal
case may invoke these articles.
Moreover, paragraph 6, Section 1, Rule 111 of the 2000 Rules on Criminal Procedure ("2000 Rules" for brevity) expressly
requires the accused to litigate his counterclaim in a separate civil action, to wit:
No counterclaim, cross-claim or third-party complaint may be filed by the accused in the criminal case, but any cause of
action which could have been the subject thereof may be litigated in a separate civil action." (Emphasis supplied)
Since the present Rules require the accused in a criminal action to file his counterclaim in a separate civil action, there
can be no forum-shopping if the accused files such separate civil action.
Thus, to file a separate and independent civil action for quasi-delict under the 1985 Rules, the offended party had to
reserve in the criminal action the right to bring such action. Otherwise, such civil action was deemed "impliedly
instituted" in the criminal action. Section 1, Rule 111 of the 1985 Rules provided as follows:
"Section 1. – Institution of criminal and civil actions. – When a criminal action is instituted, the civil action for the
recovery of civil liability is impliedly instituted with the criminal action, unless the offended party waives the action,
reserves his right to institute it separately, or institutes the civil action prior to the criminal action.
Such civil action includes recovery of indemnity under the Revised Penal Code, and damages under Articles 32, 33, 34
and 2176 of the Civil Code of the Philippines arising from the same act or omission of the accused.
A waiver of any of the civil actions extinguishes the others. The institution of, or the reservation of the right to file, any
of said civil actions separately waives the others.
The reservation of the right to institute the separate civil actions shall be made before the prosecution starts to present
its evidence and under circumstances affording the offended party a reasonable opportunity to make such reservation.
In no case may the offended party recover damages twice for the same act or omission of the accused.
Section 1, Rule 111 of the 1985 Rules was amended on December 1, 2000 and now provides as follows:
"SECTION 1. Institution of criminal and civil actions. – (a) When a criminal action is instituted, the civil action for the
recovery of civil liability arising from the offense charged shall be deemed instituted with the criminal action unless
the offended party waives the civil action, reserves the right to institute it separately or institutes the civil action prior to
the criminal action.
The reservation of the right to institute separately the civil action shall be made before the prosecution starts presenting
its evidence and under circumstances affording the offended party a reasonable opportunity to make such reservation.
xxx
(b) x x x
Where the civil action has been filed separately and trial thereof has not yet commenced, it may be consolidated with
the criminal action upon application with the court trying the latter case. If the application is granted, the trial of both
actions shall proceed in accordance with section 2 of this rule governing consolidation of the civil and criminal actions."
(Emphasis supplied)
Under Section 1 of the present Rule 111, what is "deemed instituted" with the criminal action is only the action to
recover civil liability arising from the crime or ex-delicto. All the other civil actions under Articles 32, 33, 34 and 2176 of
the Civil Code are no longer "deemed instituted," and may be filed separately and prosecuted independently even
without any reservation in the criminal action. The failure to make a reservation in the criminal action is not a waiver of
the right to file a separate and independent civil action based on these articles of the Civil Code. The prescriptive period
on the civil actions based on these articles of the Civil Code continues to run even with the filing of the criminal action.
Verily, the civil actions based on these articles of the Civil Code are separate, distinct and independent of the civil action
"deemed instituted" in the criminal action.10
Under the present Rule 111, the offended party is still given the option to file a separate civil action to recover civil
liability ex-delicto by reserving such right in the criminal action before the prosecution presents its evidence. Also, the
offended party is deemed to make such reservation if he files a separate civil action before filing the criminal action. If
the civil action to recover civil liability ex-delicto is filed separately but its trial has not yet commenced, the civil action
may be consolidated with the criminal action. The consolidation under this Rule does not apply to separate civil actions
arising from the same act or omission filed under Articles 32, 33, 34 and 2176 of the Civil Code.11
Under Section 2, Rule 111 of the amended 1985 Rules, a separate civil action, if reserved in the criminal action, could not
be filed until after final judgment was rendered in the criminal action. If the separate civil action was filed before the
commencement of the criminal action, the civil action, if still pending, was suspended upon the filing of the criminal
action until final judgment was rendered in the criminal action. This rule applied only to the separate civil action filed to
recover liability ex-delicto. The rule did not apply to independent civil actions based on Articles 32, 33, 34 and 2176 of
the Civil Code, which could proceed independently regardless of the filing of the criminal action.
The amended provision of Section 2, Rule 111 of the 2000 Rules continues this procedure, to wit:
"SEC. 2. When separate civil action is suspended. – After the criminal action has been commenced, the separate civil
action arising therefrom cannot be instituted until final judgment has been entered in the criminal action.
If the criminal action is filed after the said civil action has already been instituted, the latter shall be suspended in
whatever stage it may be found before judgment on the merits. The suspension shall last until final judgment is
rendered in the criminal action. Nevertheless, before judgment on the merits is rendered in the civil action, the same
may, upon motion of the offended party, be consolidated with the criminal action in the court trying the criminal action.
In case of consolidation, the evidence already adduced in the civil action shall be deemed automatically reproduced in
the criminal action without prejudice to the right of the prosecution to cross-examine the witnesses presented by the
offended party in the criminal case and of the parties to present additional evidence. The consolidated criminal and civil
actions shall be tried and decided jointly.
During the pendency of the criminal action, the running of the period of prescription of the civil action which cannot be
instituted separately or whose proceeding has been suspended shall be tolled.
Thus, Section 2, Rule 111 of the present Rules did not change the rule that the separate civil action, filed to recover
damages ex-delicto, is suspended upon the filing of the criminal action. Section 2 of the present Rule 111 also prohibits
the filing, after commencement of the criminal action, of a separate civil action to recover damages ex-delicto.
The crucial question now is whether Casupanan and Capitulo, who are not the offended parties in the criminal case, can
file a separate civil action against the offended party in the criminal case. Section 3, Rule 111 of the 2000 Rules provides
as follows:
"SEC 3. When civil action may proceed independently. - In the cases provided in Articles 32, 33, 34 and 2176 of the Civil
Code of the Philippines, the independent civil action may be brought by the offended party. It shall proceed
independently of the criminal action and shall require only a preponderance of evidence. In no case, however, may the
offended party recover damages twice for the same act or omission charged in the criminal action." (Emphasis supplied)
Section 3 of the present Rule 111, like its counterpart in the amended 1985 Rules, expressly allows the "offended party"
to bring an independent civil action under Articles 32, 33, 34 and 2176 of the Civil Code. As stated in Section 3 of the
present Rule 111, this civil action shall proceed independently of the criminal action and shall require only a
preponderance of evidence. In no case, however, may the "offended party recover damages twice for the same act or
omission charged in the criminal action."
There is no question that the offended party in the criminal action can file an independent civil action for quasi-delict
against the accused. Section 3 of the present Rule 111 expressly states that the "offended party" may bring such an
action but the "offended party" may not recover damages twice for the same act or omission charged in the criminal
action. Clearly, Section 3 of Rule 111 refers to the offended party in the criminal action, not to the accused.
Casupanan and Capitulo, however, invoke the ruling in Cabaero vs. Cantos12 where the Court held that the accused
therein could validly institute a separate civil action for quasi-delict against the private complainant in the criminal case.
In Cabaero, the accused in the criminal case filed his Answer with Counterclaim for malicious prosecution. At that time
the Court noted the "absence of clear-cut rules governing the prosecution on impliedly instituted civil actions and
the necessary consequences and implications thereof." Thus, the Court ruled that the trial court should confine itself to
the criminal aspect of the case and disregard any counterclaim for civil liability. The Court further ruled that the accused
may file a separate civil case against the offended party "after the criminal case is terminated and/or in accordance with
the new Rules which may be promulgated." The Court explained that a cross-claim, counterclaim or third-party
complaint on the civil aspect will only unnecessarily complicate the proceedings and delay the resolution of the criminal
case.
Paragraph 6, Section 1 of the present Rule 111 was incorporated in the 2000 Rules precisely to address
the lacuna mentioned in Cabaero. Under this provision, the accused is barred from filing a counterclaim, cross-claim or
third-party complaint in the criminal case. However, the same provision states that "any cause of action which could
have been the subject (of the counterclaim, cross-claim or third-party complaint) may be litigated in a separate civil
action." The present Rule 111 mandates the accused to file his counterclaim in a separate civil actiosn which shall
proceed independently of the criminal action, even as the civil action of the offended party is litigated in the criminal
action.
Conclusion
Under Section 1 of the present Rule 111, the independent civil action in Articles 32, 33, 34 and 2176 of the Civil Code is
not deemed instituted with the criminal action but may be filed separately by the offended party even without
reservation. The commencement of the criminal action does not suspend the prosecution of the independent civil action
under these articles of the Civil Code. The suspension in Section 2 of the present Rule 111 refers only to the civil action
arising from the crime, if such civil action is reserved or filed before the commencement of the criminal action.
Thus, the offended party can file two separate suits for the same act or omission. The first a criminal case where the civil
action to recover civil liability ex-delicto is deemed instituted, and the other a civil case for quasi-delict - without
violating the rule on non-forum shopping. The two cases can proceed simultaneously and independently of each other.
The commencement or prosecution of the criminal action will not suspend the civil action for quasi-delict. The only
limitation is that the offended party cannot recover damages twice for the same act or omission of the defendant. In
most cases, the offended party will have no reason to file a second civil action since he cannot recover damages twice
for the same act or omission of the accused. In some instances, the accused may be insolvent, necessitating the filing of
another case against his employer or guardians.
Similarly, the accused can file a civil action for quasi-delict for the same act or omission he is accused of in the criminal
case. This is expressly allowed in paragraph 6, Section 1 of the present Rule 111 which states that the counterclaim of
the accused "may be litigated in a separate civil action." This is only fair for two reasons. First, the accused is prohibited
from setting up any counterclaim in the civil aspect that is deemed instituted in the criminal case. The accused is
therefore forced to litigate separately his counterclaim against the offended party. If the accused does not file a
separate civil action for quasi-delict, the prescriptive period may set in since the period continues to run until the civil
action for quasi-delict is filed.
Second, the accused, who is presumed innocent, has a right to invoke Article 2177 of the Civil Code, in the same way
that the offended party can avail of this remedy which is independent of the criminal action. To disallow the accused
from filing a separate civil action for quasi-delict, while refusing to recognize his counterclaim in the criminal case, is to
deny him due process of law, access to the courts, and equal protection of the law.
Thus, the civil action based on quasi-delict filed separately by Casupanan and Capitulo is proper. The order of dismissal
by the MCTC of Civil Case No. 2089 on the ground of forum-shopping is erroneous.
We make this ruling aware of the possibility that the decision of the trial court in the criminal case may vary with the
decision of the trial court in the independent civil action. This possibility has always been recognized ever since the Civil
Code introduced in 1950 the concept of an independent civil action under Articles 32, 33, 34 and 2176 of the Code. But
the law itself, in Article 31 of the Code, expressly provides that the independent civil action "may proceed independently
of the criminal proceedings and regardless of the result of the latter." In Azucena vs. Potenciano,13 the Court declared:
"x x x. There can indeed be no other logical conclusion than this, for to subordinate the civil action contemplated in the
said articles to the result of the criminal prosecution — whether it be conviction or acquittal — would render
meaningless the independent character of the civil action and the clear injunction in Article 31 that this action 'may
proceed independently of the criminal proceedings and regardless of the result of the latter.’"
More than half a century has passed since the Civil Code introduced the concept of a civil action separate and
independent from the criminal action although arising from the same act or omission. The Court, however, has yet to
encounter a case of conflicting and irreconcilable decisions of trial courts, one hearing the criminal case and the other
the civil action for quasi-delict. The fear of conflicting and irreconcilable decisions may be more apparent than real. In
any event, there are sufficient remedies under the Rules of Court to deal with such remote possibilities.
One final point. The Revised Rules on Criminal Procedure took effect on December 1, 2000 while the MCTC issued the
order of dismissal on December 28, 1999 or before the amendment of the rules. The Revised Rules on Criminal
Procedure must be given retroactive effect considering the well-settled rule that -
"x x x statutes regulating the procedure of the court will be construed as applicable to actions pending and
undetermined at the time of their passage. Procedural laws are retroactive in that sense and to that extent."14
WHEREFORE, the petition for review on certiorari is hereby GRANTED. The Resolutions dated December 28, 1999 and
August 24, 2000 in Special Civil Action No. 17-C (99) are ANNULLED and Civil Case No. 2089 is REINSTATED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
PARAS, J.:
This is a petition for review on certiorari of the decision of the then First Civil Cases Division of the Intermediate
Appellate Court ** in AC-G.R. CV No. 04690, dated 13 March 1986, affirming in toto the decision of the then Court of
First Instance of Baguio and Benguet, Branch IV, sitting as a Land Registration Court, in Administrative Case No. 2091. It
is the contention of petitioner that:
THE HONORABLE APPELLATE COURT COMMITTED GRAVE AND REVERSIBLE ERROR IN UPHOLDING THAT LANDS WITHIN
THE BAGUIO TOWNSITE RESERVATION WHOSE TITLES HAVE BEEN ISSUED IN CIVIL RESERVATION CASE NO. 1, G.L.R.O.
RECORD NO. 211 PURSUANT TO REPUBLIC ACT 931, AS AMENDED, ARE NOT SUBJECT TO REALTY TAX. (Petition, p. 7,
Rollo)
The oppositor-appellee (now deceased and substituted by her only child Tomasa Domondon) was the registered owner
of the land in question, a two-hectare lot known as Lot 1-B subdivision plan (LRC) PSU-33174, Res. Sec. 2, Km. 3 Asin
Road, Baguio City and covered by TCT No. 8103. The said land was part of a bigger tract of public land but titled in a
judicial reopening proceeding pursuant to the provisions of RA 931, as amended, entitled "An act to authorize the filing
in the court, under certain conditions, of certain claims of titles to parcels of land that have been declared public land, by
virtue of judicial decisions rendered within the forty years next preceeding the approval of this act' (now inoperative).
Subsequently, in a case entitled Republic, et al. v. Hon. Pio R. Marcos, et al., 29 SCRA 517 (1969), We declared all titles
issued under RA 931 null and void since the said Act was applicable only to places that were covered by cadastral
proceedings, not to the City of Baguio which was covered by a townsite reservation under Civil Reservation Case No. 1,
G.L.R.O. Record No. 211 filed before the enactment of Cadastral Act No. 2259 on 11 February 1913. This was followed by
another case also entitled Republic v. Marcos, 52 SCRA 238 (1973), where We reiterated the above ruling. The ruling in
these case was subsequently enacted into law as incorporated in Presidential Decree No. 1271 which took effect on 22
December 1977 with the title "An act nullifying decrees of registration and certificates of title covering lands within the
Baguio Townsite Reservation Case No. 1, G.L.R.O. Record No. 211 pursuant to Republic Act No. 931, as amended, but
considering as valid certain titles of such lands that are alienable and disposable under certain conditions and for other
purposes." Hence, the lot in question was reverted to the public domain.
On 10 October 1977, certain real properties in Baguio City, which included two (2) properties of the oppositor-appellee,
one of which is the land involved in this appeal, were auctioned off. Allegedly, the real property taxes on the land in
question for the years 1971 to 1977 had not been paid. Having been previously informed of the scheduled auction sale
of tax delinquent properties in Baguio City, petitioner Puzon gained interest in the property in question. He examined
the title of said land and all other documents evidencing transactions over the same. At the auction sale petitioner
Puzon was declared winner in the bidding over the lot in question, being the lone bidder, and paid to the City Treasurer
a total sum of only P3,253.95 which included his bid and other petty sums.
One year after the tax sale, petitioner Puzon was given a certificate of sale over the parcel of land sold to him. He went
to the Registry of Deeds in order to register said certificate and to secure a new title in his name but was advised to first
go to court for an order confirming said sale. Hence, petitioner filed this suit to consolidate his ownership over the
property.
In the meantime, while trying to avail of the provisions of PD 1271 in oppositor-appellee's behalf, Tomasa Domondon
found out that the two lands of the former had been auctioned off for alleged tax deliquencies for the years 1971 to
1977, one of which is the land purchased by petitioner Puzon Domondon then arranged a meeting with the latter to
discuss the matter with him. But when the latter failed to appear at the appointed time and place. Domondon consigned
with the Court the amount of P4,780.00 after having verified that Puzon paid only P3,252.95 for a two-hectare land
which could have commanded a very much higher price. She then filed her opposition to petitioner Puzon's petition for
consolidation. The lower court ruled in favor of the then oppositor, declaring null and void the aforesaid auction sale and
illegal the assessment made. This ruling was affirmed by the then Intermediate Appellate Court (IAC), hence this present
petition. As stated by the lower court and adopted by the IAC, the issues are "whether the (property) involved herein
can be considered tax (delinquent) and, if, so, has there been a valid tax sale of the same as to place the Court under no
recourse but to confirm said (sale) and order the (title) thereof transferred in the name of petitioner Jose F. Puzon . ." (p.
23, Rollo).
In concluding that the assessments made for the years 1971 to 1977 were legal, petitioner contends that PD 1271 is
curative in nature. Section 1 of the said Decree states in part:
SECTION 1. All orders and decisions issued by the Court of First Instance of Baguio and Benguet in connection with the
proceedings for the reopening of Civil Reservation Case No. 1, GLRO Record No. 21 1, covering lands within the Baguio
Townsite Reservation, and decreeing such lands in favor of private individuals or entities, are hereby declared null and
void and without force and effect; PROVIDED, HOWEVER that all certificates of titles issued on or before July 31, 1973
shall be considered valid and the lands covered by them shall be deemed to have been conveyed in fee simple to the
registered owners upon a showing of, and compliance with, the following conditions.. . (74 O.G. No. 19, pp- 3583-3584).
The petitioner submits that: 'upon compliance with certain requirements the titles so issued are validated and deemed
to have been conveyed in fee simple.... The validation of the title retroacts to the very day the title was originally issued'
(pp. 45, Rollo). We agree with the petitioner. The intent of the law necessarily makes such titles valid from, the time they
were issued. The ninth "whereas" clause of PD 1271 states:
WHEREAS, there are holders of titles who, before the promulgation of the decision of the Supreme Court on July 31,
1973, had acted in good faith and relied, although mistakenly, on the indefeasibility of torrens certificates of titles and
who had introduced substantial improvements on the land covered by the certificates. (74 O.G. No. 19, p. 3583)
The foregoing necessarily implies that the intent of the law is to recognize the effects of certain acts of ownership done
in good faith by persons with torrens titles issued in their favor before the cut-off date stated, honestly believing that
they had validly acquired the lands. And such would be possible only by validating all the said titles issued before 31 July
1973, effective on their respective dates of issue. However, the validity of these titles would not become operative
unless and after the conditions stated in PD 1271 are met. Hence, the phrase "upon a showing, and compliance with, the
following conditions," (Sec. 1, PD 1271)
While it may be argued that Article 4 of the New Civil Code prohibits the retroactive application of laws unless expressly
provided therein, such rule allows some exceptions. As We have held in the case of Nilo v. Court of Appeals, 128 SCRA
519, "a statute operates prospectively only and never retroactively, unless the legislative intent to the contrary is made
manifest either by the express terms of the statute or by necessary implications." As pointed out above, PD 1271 falls
under one of the exceptions.
Considering, however, that during the years 1971-1977 the land in question was still part of the public domain, the
oppositor-appellee could not, in those years, obviously be held liable for real property taxes over the land in question.
Since the validity of her title would take effect retroactively only after having complied with the conditions set in PD
1271, only then could she be held liable for taxes for the period starting 1971 to 1977. It would be absurd then to hold
the oppositor-appellee liable for taxes over a piece of land which she did not own (it being public land) or use.
Consequently, the tax sale was prematurely conducted. The oppositor-appellee should have first been given the
opportunity to settle the taxes assessed for the years 1971-1977 after having complied with PD 1271.
As to the validity of the auction sale, We reiterate that it was prematurely held, hence, null and void for the above
reasons. But even on the evidence presented by the parties, assuming that the sale was properly and seasonably held, it
has been clearly shown by the trial court and the IAC that the oppositor-appellee was not properly notified. The holding
of the tax sale despite the absence of the requisite notice was tantamount to a violation of her substantial right to due
process. As held by the IAC,
. . . Under these provisions (referring to Secs. 59, 65, 73 and 76 of PD 464, the Real Property Tax Code) notice to the
delinquent owner is required as a prerequisite to a valid tax sale.
Failure to notify the registered owner shall vitiate the sale.' (Cabrera v. Prov. Treasurer, 75 Phil. 780)
Administrative proceedings established for the sale of private lands for non-payment of taxes being in personam
(Pantaleon v. Santos, L-10289, July 31, 1957), it is essential that there be actual notice to the delinquent, otherwise the
sale is null and void although preceded by proper advertisement or publication." (Vivencio v. Quintos, CA-G.R. No.
44697, Jan. 23, 1975, 72 O.G. No. 11, March 15, 1975.) (Decision of the IAC, 13 March 1986, pp. 27-28, Rollo)
We do not see the above findings of fact of the trial court, as adopted by the IAC, to be contrary to the evidence
presented nor tainted with partiality or indiscretion. Hence, We accord them great respect (Premier Insurance and
Surety Corporation v. IAC, 141 SCRA 432; Vda. de Roxas v. IAC, 143 SCRA 77; Republic v. IAC, 144 SCRA 705).
WHEREFORE, the appealed decisions is hereby MODIFIED accordingly, that is the land should really be considered
owned by the respondent and her title thereto must not be disturbed BUT she must pay the real property taxes thereon
for the years 1971-1977. As to the other matters raised, We find no reason to deviate from the findings of the lower
court and, thus, AFFIRM the same.
SO ORDERED.
Melencio-Herrera (Chairperson), Sarmiento and Regalado, JJ., concur. Padilla, J., no part, by reason of ownership of a lot
in the same Baguio townsite reservation.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
GRINO-AQUINO, J.:
The only issue in this petition for review on certiorari is whether the petitioners' appeal from the decision of the Court of
First Instance of Isabela in Civil Case No. 1201, may be dismissed for tardiness in submitting their record on appeal.
On January 8, 1962, the petitioners filed an accion publiciana (Civil Case No. 1201) in the Court of First Instance of
Isabela against the private respondent Bernardino Magday. After the defendant had filed his answer, the complaint was
amended on August 25, 1971, to implead the Department of Agriculture and Natural Resources and the Bureau of Lands
as additional defendants. Magday filed an amended answer. The Secretary of Agriculture and Natural Resources and the
Director of Lands filed separate answers to the amended complaint.
After the parties had submitted a stipulation of facts, the court, upon plaintiffs' motion for judgment on the pleadings
and/or summary judgment, which the defendant did not oppose, rendered judgment on October 3, 1975, dismissing the
complaint with costs against the plaintiffs (Annex F, pp. 35- 46, Rollo).
The plaintiffs filed a motion for reconsideration (Annex G, p. 47, Rollo) of the decision. It was denied by the respondent
Judge on December 12, 1975 (Annex H, p. 50, Rollo).
On December 22, 1975, they filed a motion for leave to appeal as paupers (Annex J, p. 52, Rollo) and on December 23,
1975, they filed a notice of appeal (Annex I, p. 51, Rollo). The trial court granted on January 19, 1976 their motion to
appeal as paupers (Annex K, p. 55, Rollo).
Believing that as pauper litigants they did not have to submit a record on appeal, they waited for the trial court to
elevate the entire records of the case to the Court of Appeals as provided in Section 16, Rule 41 of the Rules of Court. On
June 16, 1976, respondent Judge dismissed the appeal for failure to file a record on appeal (Annex L, p. 56, Rollo). A
motion for reconsideration (Annex M, p. 57, Rollo) of the dismissal order was filed by the appellants on July 26, 1976. On
August 10, 1976, they mailed their record on appeal to the Court. On August 23, 1976, the lower court denied their
motion for reconsideration (Annex 0, p. 60, Rollo). Hence, this petition for certiorari by the appellants raising the lone
legal question of whether for the perfection of an appeal by a pauper litigant, the timely submission of a record on
appeal is required.
Under the Rules of Court then in force, a record on appeal was indeed required to be filed by a pauper appellant
although it did not have to be printed. As argued by the Solicitor General in his brief.
Petitioners contend, however, that having been allowed by the lower court to appeal as paupers, they are not required
to file a record on appeal since the entire record of the case shall be transmitted to the appellate court and the case
shall be heard upon the original record so transmitted without printing the same.
Sec. 16. Appeal by pauper. — Where a party desiring to appeal shall establish to the satisfaction of the trial court that he
is a pauper and unable to pay the expenses of prosecuting the appeal, and that the case is of such importance, by reason
of the amount involved, or the nature of the questions raised, that it ought to be reviewed by the appellate court, the
trial judge may enter an order entitling the party to appeal as pauper. The clerk shall transmit to the appellate court the
entire record of the case, including the evidence taken on trial and the record on appeal, and the case shall be heard in
the appellate court upon the original record so transmitted without printing the same.' (Emphasis types supplied.)
'It is clear that even a pauper litigant is required to file a record on appeal. What is not required of him is the filing of
a printed record on appeal, and, of course, an appeal bond, since the cited Rule is designed to help the pauper litigant
who may not be able to pay the expenses of prosecuting the appeal. In contrast, Sec. 17 of the same Rule 41 which
refers to appeals in certiorari, prohibition, mandamus, quo warranto and employee's liability cases categorically
provides that 'the original record of the case shall be transmitted to the appellate court in lieu of the record on appeal.'
In other words, appeals in special civil actions do not require record on appeal; they are perfected by the mere filing of
the notice of appeal (Embroidery and Apparel Control and Inspection Board vs. Cloribel, 20 SCRA 517 [1967]).
'Indeed, records on appeal have been filed by pauper litigants as a matter of course (Tiozon vs. Court of Appeals, 70
SCRA 284 ,[1976]).' (pp. 7-9, Brief for the Respondents; p. 109, Rollo.)
However, under B.P. Blg. 129, which has overtaken this case before it could be decided, a record on appeal is no longer
required for the perfection of an appeal. This new rule was given retroactive effect in Alday vs. Camilon, 120 SCRA 521
where We Ruled:
The reorganization having been declared to have been completed, Batas Pambansa Blg. 129 is now in full force and
effect. A record on appeal is no longer necessary for taking an appeal. The same proviso appears in Section 18 of the
Interim Rules and Guidelines issued by this Court on January 11, 1983. Being procedural in nature, those provisions may
be applied retroactively for the benefit of petitioners, as appellants. 'Statutes regulating the procedure of the courts will
be construed as applicable to actions pending undetermined at the time of their passage. Procedural laws are
retrospective in that sense and to that extent.' (People vs. Sumilang, 77 Phil. 764).' (Cited in Palomo Building Tenants
Association, Inc. vs. Intermediate Appellate Court, 133 SCRA 168; De Guzman vs. Court of Appeals, 137 SCRA 731; and
Lagunzad vs. Court of Appeals, 154 SCRA 199.)
WHEREFORE, the decision dated October 3, 1975, of the trial court and its orders of June 16, 1976 and August 23, 1976
are hereby set aside. The trial court is hereby ordered to forward the entire records of Civil Case No. 1201 to the Court
of Appeals for the determination and disposition of the petitioners' appeal on the merits.
SO ORDERED.