TRUST DE SON TORT (constructive trust): G.R. No. L-27294 June 2 ! "9 # $L%REDO RO$! JR.!

LET&'&$ RO$ DE (ORJ$! RU(EN RO$! 'ORNEL&O RO$ )n* ELS&E RO$-'$'N&O ()s +eirs o, t+e -)te $-,re*o Ro)! Sr.). petitioners, vs. .ON. 'OURT O% $//E$LS )n* t+e s0ouses JO$1U&N '$S&2O )n* 'USTOD&$ 3$LDE.UES$! respondents. GUERRERO! J.: Appeal by way of certiorari from the Decision of the Court of Appeals " in CA-G.R. No. 3 ! "-R entitled #Alfredo Roa, $laintiff-Appellant, versus %oa&uin Casi'o et al., Defendants-Appellees,# and from the Resolution of the said Court 2 denyin( plaintiff-appellant)s motion for reconsideration of the said Decision. *n +eptember ,, ,-.., an action for recovery of possession of a parcel of land was filed before the Court of /irst 0nstance of 1isamis *riental by Alfredo Roa, +r. 2now deceased and subse&uently substituted by his heirs, the herein petitioners3 a(ainst respondent spouses, %oa&uin Casi'o and Custodia 4aldehuesa 2real name appears to be 5eodosia 4aldehuesa3, successors-in- interest of one $ablo 4aldehuesa, now deceased. 0n his complaint, Alfredo Roa, +r. alle(ed that the said land is a(ricultural6 that it is situated in 7u(o, formerly within the municipality of 5a(oloan, 1isamis *riental, now comprised within the limits of the City of Ca(ayan de *ro6 that it is re(istered in his name under *ri(inal Certificate of 5itle No. 5-8,D6 that he found the private respondents occupyin( said land. 9e prayed that possession of the same be returned to him and that he be awarded actual and moral dama(es in the sum of $,:,:::.::. 0n answer to the complaint, respondent spouses alle(ed that the land in &uestion formerly belon(ed to one $ablo 4aldehuesa, father of respondent Custodia 25eodosia3 4aldehuesa and now deceased6 that it was however titled in the name of Alfredo Roa, +r., 5rinidad Reyes Roa, ;speran<a Roa de *n(pin, Concepcion Roa and her husband =osimo Roa in >and Re(istration Case No. ,8, G.R.>.*. Record No. ,:::3 of the Court of /irst 0nstance of 1isamis *riental by virtue of an a(reement entered into between the Roas and said $ablo 4aldehuesa6 that the conditions of the said compromise a(reement were never complied with by the Roas notwithstandin( the death of $ablo 4aldehuesa in ,-8? and despite repeated demands for compliance thereof6 that the heirs of said $ablo 4aldehuesa sold the land in &uestion to them on April 3:, ,-3:, after rescindin( the aforementioned compromise a(reement6 and that they now en@oy the privile(es of absolute ownership over said land by reason of their continuous and adverse possession thereof since time immemorial. 7y way of counterclaim, the respondents prayed for the reconveyance of the said parcel of land contendin( that the compromise a(reement created an implied trust between the parties to it, and for dama(es in the amount of $,:,:::.::. 0n answer to private respondent)s counterclaim, Alfredo Roa, +r. maintained that the heirs of $ablo 4aldehuesa cannot rescind the compromise a(reement by their own act alone or without (oin( to court6 and that the alle(ed sale of the said heirs to private respondents was null and void, in view of the fact that respondent spouses Anew that the land was then titled in the name of the Roas under Act -". *n December 88, ,-.-, the parties submitted to the Court a quo an a(reed +tipulation of /acts, to witB +50$C>A50*N */ /AC5+ 5hat parties herein, assisted by their respective attorneys, have a(reed on the followin( factsB ,. 5hat the plaintiff and the defendants are all of a(e and with capacity to sue and be sued. 8. 5hat the plaintiff and his brothers and sisters 5rinidad Reyes Roa, ;speran<a Roa de *n(pin, Concepcion Roa and =osimo Roa, husband of the latter, were the owners pro-indiviso of a parcel of land located in 5a(oloan, 1isamis *riental, containin( an area of several hundred hectares, and sometime in ,-8., and for the purpose of re(isterin( their title to said parcel of land, the said coowners filed an application with the Court of /irst 0nstance of 1isamis *riental, and said application was docAeted in said Court as ;Dpediente No. ,8, G.>.R.*. Record No. ,:::3. 3. 5hat in the application as well as in the plans accompanyin( said application in ;Dpediente No. ,8, G.>.R.*. No. ,:::3, was included a parcel of land which is now the portion in liti(ation in this case. . 5hat one $ablo 4aldehuesa filed an opposition in said ;Dpediente No. ,8, G.>.R.*. Record No. ,:::3. claimin( absolute and eDclusive ownership over a portion which is now the property under liti(ation. .. 5hat sometime durin( the year ,-8., the co-owners, said Concepcion Roa, ;speran<a Roa de *n(pin and 5rinidad Reyes Roa and =osimo Roa entered into an a(reement with the said $ablo 4aldehuesa, and the terms of their a(reement are contained in the document hereto attached, made a part hereof, and marAed as ;Dhibit #,#. ". 5hat in compliance with his obli(ation under and by virtue of said ;Dhibit # ,# the said $ablo 4aldehuesa withdrew the opposition filed by him in said case ;Dpediente No. ,8, G.>.R.*. Record No. ,:::3, and as the result of said withdrawal, the plaintiff and his co-owners succeeded in re(isterin( their title to their property, includin( the portion owned by $ablo 4aldehuesa as claimed in his opposition. !. 5hat the said $ablo 4aldehuesa died in 1ay of ,-8?, and upon his death his estate passed to the ownership of his widow and le(itimate children includin( all his ri(hts under said ;Dhibit # , # to the property in &uestion. ?. 5hat since then the property in &uestion has been in the possession of the defendants, and their possession to(ether with the possession of their predecessors in said property has been open, continuous and uninterrupted to this date. -. 5hat sometime after the issuance of title in favor of the plaintiff 25ransfer Certificate of 5itle No. 8,-A3 and his aforementioned brothers and sisters coverin( the parcel of land sub@ect matter of the application filed by them in ;Dpediente No. ,8, G.>.R.*. Record No. ,:::3, the said plaintiff and his brothers and sisters partitioned amon( themselves said property, and plaintiff was ad@udicated a share in said property, of which the parcel of land covered by the opposition of $ablo 4aldehuesa withdrawn under the terms of ;Dhibit # ,# is a part or portion of said char(e, and covered by 5-8,-D 2copy attached as ;Dh. #A#3. ,:. 5hat the portion in liti(ation as correctly described in para(raph 3 of the complaint is covered by the certificate of title referred to above.

,,. 5hat in ,-.. the plaintiff had a surveyor relocate the corners and boundaries of his land as described in his title and that the portion of about 8 hectares on the eastern end of the land is in the possession and is actually occupied by the defendant. 5his is the portion in liti(ation described in par. 3 of the complaint . ,8. 5hat ;Dpediente No. ,8, G.>.R.*. Record No. ,:::3 have been totally destroyed durin( the last Eorld Ear, and the parties reserve the ri(ht to present additional evidence durin( the hearin( of this case. Ca(ayan de *ro City, December 88, ,-.-. 2+(d.3 A>/R;D* R*A $laintiff 2+(d.3 9;RNAND* $0N;DA 2Attorney for $laintiff3 2+(d.3 %*AFC0N CA+0G* 2+(d.3 CC+5*D0A 4A>D;9C;+A 2Defendants3 2+(d.3 1ANC;> C. /;RNAND;= 2+(d.3 C*NC*RD0* C. D0;> 2Attorney for defendants#3 5he aforesaid compromise a(reement mentioned in para(raph . of the a(reed +tipulation of /acts was thereafter ratified on 1ay ,,, ,-8! as shown in ;Dhibit # ,# as followsB +;$AN 5*D*+ >*+ FC; >A $R;+;N5; 40;R;N B Fue nosotros, los aba@o firmantes, mayores de edad hacemos constarB ,. Fue somos los due'os mancomunados de la propiedad conocida por 5errenos de 7u(u, en el municipio de 5a(oloan, provincia de 1isamis. 8. Fue en la tramitacion del ;Dp. No.,8,G.>.R.*.,Record No. ,:::3, para el re(istro de dicha propiedad, el +r. $ablo 4aldehuesa del municipio de 5a(oloan, &ue era uno de los opositores, consintio en retirar su oposicion contra nuestra citada solicitud de re(istro a condicion de &ue le recono<camos su dominio y propiedad sobre una parcela de terreno dentro de la comprension de 7u(u &ue el ocupaba, o se le compre, y de otro modo se le compense al reinte(rarnos dicha parcela en tiempo oportuno. >a descripcion del terreno referido cuya eDtension es de una hectares, cuarenta y nueve areas y cincuenta y nueve centiareas, aparece en el escrito de oposicion &ue obra en el referido ;Dp. ,8, y &ue lue(o fue retirado por convenio de partes. 3. $or tanto, en complimiento de dicho convenio y como consecuencia del mismo, ratificamos lo &ue tenemos prometido, para lo cual autori<amos al +r. =osimo Roa a &ue bus&ue y ad&uiera otro peda<o de terreno fuera de la comprension de 7u(u, de una hectarea, cuarenta y nueve areas y cincuenta y nueve centiareas, poco mas o menos, y &ue sea acceptable para el +r. $ablo 4aldehuesa, como can@e or permuta con la parcela &ue el ocupa6 en la inteli(encia de &ue el valor de compra no eDceda de $ ::.:: en su defecto, si no se encuentra un terreno &ue sea satisfactorio para el +r. $ablo 4aldehuesa, se le compensara el reinte(ro arriba citado en la mencionada cantidad de $ ::.::. . $or su parte, el +r. $ablo 4aldehuesa, acepta todo lo establecido en este documento, obli(andose a respetarlo y acatarlo. ;n testimonio de todo lo cual, firmamos el presente documento en Ca(ayan de 1isamis, hoy, ,, de 1ayo de ,-8!. 2+(d.3 5rinidad Roa de Reyes 2+(d.3 ;speran<a Roa de *n(pin 2+(d.3 Concepcion Roa 2+(d.3 =osimo Roa HHHHHHHHHHHHHHHHHHHHHHHHHH Alfredo Roa HHHHHHHHHHHHHHHHHHHHHHHHHHH $ablo 4aldehuesa $ursuant to said ;Dhibit #,#, Concepcion, ;speran<a, 5rinidad and =osimo, all surnamed Roa, a(reed to replace the land of $ablo 4aldehuesa with another parcel of land with an area of ,. -.- hectares to be (iven to $ablo 4aldehuesa in eDchan(e for the land occupied by him, or if said land was not acceptable to him, to pay him the amount of $ ::.::. Neither of these undertaAin(s was complied with by the Roas and $ablo 4aldehuesa continued in possession of the land occupied by him until the same was sold by the heirs of $ablo 4aldehuesa to the respondent spouses on April 3:, ,-3:. *n 1arch ", ,-" , the lower court rendered the decision orderin( the plaintiff Alfredo Roa to reconvey the land in dispute to the defendants, now the respondent spouses, on the (round that same could not have been re(istered in the name of the plaintiff and his brother and sisters if not for the compromise a(reement aforestated and further to pay said defendants the amount of $,,:::.:: as attorney)s fees plus costs. *n appeal taAen by Alfredo Roa, the appellate court affirmed the decision of the lower court and declared that 2a3 the compromise a(reement created an eDpress trust between the Roa brothers and sisters, includin( Alfredo, +r., 2b3 that the respondent spouses) action for reconveyance was imprescriptible on the authority of Mirabiles, et al. v. Quito, et al., >- , ::?, *ctober ,?, ,-."6 and 2c3 that Alfredo Roa cannot invoAe the indefeasibility and imprescriptibility of the 5orrens title issued in his name for the land in dispute since the said title was secured by him in breach of an eDpress trust, and thus, the Court ordered the reconveyance of the property within fifteen 2,.3 days from the finality of the decision. Alfredo Roa, now substituted by his heirs, the herein petitioners Alfredo Roa, %r., >eticia Roa de 7or@a, Ruben Roa, Cornelio Roa and ;lsie Roa-Cacnio, moved to reconsider the adverse decision. Actin( on this motion for reconsideration, the Court of Appeals in a ma@ority resolution denied the said motion, and while concedin( that #the creation of an eDpress trust leaves room for doubt,# the said Court ruled that the compromise a(reement, at the least (ave rise to an implied trust under Art. , ." of the New Civil Code. 9ence, petitioners filed this present petition on the followin( assi(nment of errorsB

0. 5he respondent Court of Appeals erred when it ruled that Alfredo Roa, the petitioners) predecessor-ininterest, was bound by the compromise a(reement 2;Dh. #0#3 in the eDecution of which, accordin( to the +tipulation of /acts, said Alfredo Roa neither participated nor si(ned. 00. *n the assumption that the aforementioned compromise a(reement was bindin( upon Alfredo Roa, the respondent Court of Appeals erred when it held the said a(reement, which stipulated the conveyance of the property in dispute for a consideration, as havin( established a trust relationship between the parties to it. 000. 5he respondent Court of Appeals erred when it held that the rulin( in the case of Gerona, et al. va. De Gu<man, G.R. No. >-,-:":, 1ay 8-, ,-" , is inapplicable to the case at bar. *n the first assi(ned error, Ee re@ect the contention of the petitioners that Alfredo Roa, +r. was not bound by the compromise a(reement for not bein( a participant or si(natory thereto. 0t may be true that Alfredo Roa, +r. did not si(n the compromise a(reement, ;Dh. # , #, for he was then in 1anila worAin( as a newspaperman but he certainly benefited from the effects of the compromise a(reement which obli(ed $ablo 4aldehuesa to withdraw, as he did withdraw his opposition to the re(istration of the Roa property under the 5orrens system. 5he Roa property was subse&uently re(istered without opposition and title was issued thereto in the name of Alfredo Roa, his brother =osimo and his sisters 5rinidad, ;speran<a and Concepcion, all surnamed Roa as co-owners thereof. Certainly, the Roas may not escape compliance from their obli(ation under the compromise a(reement by partitionin( the property and assi(nin( the property in dispute as part of the share of the petitioners. 1oreover, it will be a pure and simple case of un@ust enrichment for petitioners to ac&uire and own the property of $ablo 4aldehuesa, without payin( the value thereof or eDchan(in( the land with another with an e&ual area as ori(inally a(reed. Eith respect to the second assi(nment of error, Ee do not a(ree with the holdin( of the respondent appellate court that an eDpress trust was created between the parties by reason of the compromise a(reement entered into between them. ;Dpress trusts are created by the intention of the trustor or one of the parties 2Article , ,, New Civil Code3. Ehile no particular words are re&uired for the creation of an eDpress trust, it bein( sufficient that a trust is clearly intended 2Article , , New Civil Code3, in the case at bar, Ee find no direct and positive intent to create a trust relationship between the parties to the compromise a(reement under which $ablo 4aldehuesa a(reed to withdraw his opposition to the application for re(istration upon the commitment of the Roas to (ive 4aldehuesa another piece of land of e&ual area or pay its price of $ ::.::. 0t seems clear to Cs that the Roas under the compromise a(reement did not commit themselves to hold the lot claimed by $ablo 4aldehuesa for $ablo 4aldehuesa and in $ablo 4aldehuesa)s name. 0f the compromise a(reement did not result to an eDpress trust relationship, did it, however, (ive rise to an implied trustI $rivate respondents claim that under the terms of the compromise a(reement, the land claimed by $ablo 4aldehuesa should be deemed held in trust by the Roas when the latter failed to relocate him or pay the price therefor. 5he respondent appellate court tooA private respondents) position, and opined, # thus J 0t could thus be (leaned that had it not been for the promise of the Roas contained in ;Dhibit ,, 4aldehuesa would not have been induced to withdraw his opposition in the land re(istration case. Ehen, therefore, the Roas turned their bacA to a solemn a(reement entered in a court proceedin(s, they were (uilty of fraud. /raud is every Aind of deception, whether in the form of insidious machinations, manipulations, concealments or misrepresentations, for the purpose of leadin( another party into error and then eDecute a particular act. 0t must have a determinin( influence on the consent of the victim.# 0t results from the fore(oin( that althou(h the creation of an eDpress trust leaves room for doubt, by operation of law, an implied trust is created, Art. , .". 0f property is ac&uired throu(h mistaAe or fraud, the person obtainin( it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. 2N.C.C3#. Ee cannot sustain the holdin( of the respondent appellate court in its Resolution denyin( petitioners) motion for reconsideration that by operation of law an implied trust was created under the terms of the compromise a(reement in the li(ht of Article , ." of the New Civil Code cited above. Ee rule that Art. , ." is not applicable because it is &uite clear that the property of $ablo 4aldehuesa was ac&uired by the Roas not throu(h mistaAe or fraud but by reason of the voluntary a(reement of 4aldehuesa to withdraw his opposition to the re(istration of the land under the 5orrens system. 5here is incontrovertible evidence that the Roas intended to abide by the compromise a(reement at the time of the eDecution of the same. 5he private respondents themselves introduced additional evidence which showed that on 1ay ,,, ,-8!, 5rinidad Roa, ;speran<a Roa de *n(pin, Concepcion Roa and =osimo Roa confirmed in writin( the terms and conditions of the a(reement they had entered into with $ablo 4aldehuesa in the land re(istration proceedin(s. ;ven the respondent appellate court eDpressly determined the aforesaid failure of the Roas to comply with the terms of the compromise a(reement to be an afterthou(ht6 thus, 5he chan(e of mind of the plaintiff-appellant later is of no moment in the case at bar. 4 Ehile it is *ur rulin( that the compromise a(reement between the parties did not create an eDpress trust nor an implied trust under Art. , ." of the New Civil Code, Ee may, however, maAe recourse to the principles of the (eneral law of trusts, insofar as they are not in conflict with the New Civil Code, Code of Commerce, the Rules of Court and special laws which under Art. , 8 of the New Civil Code are adopted. Ehile Articles , ? to , ." of the New Civil Code enumerates cases of implied trust, Art. , ! specifically stipulates that the enumeration of the cases of implied trust does not eDclude others established by the (eneral law of trusts, but the limitations laid down in Art , 8 sha( be applicable. 0n American law and @urisprudence, Ee find the followin( (eneral principlesB A constructive trust, otherwise Anown as a trust eD maleficio, a trust eD delicto, a trust de son tort, an involuntary trust, or an implied trust, is a trust by operation of law which arises contrary to intention and in invitum, a(ainst one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wron(, or by any form of unconscionable conduct, artifice, concealment, or &uestionable means, or who in any way a(ainst e&uity and (ood conscience,

either has obtained or holds the le(al ri(ht to property which he ou(ht not, in e&uity and (ood conscience, hold and en@oy. 0t is raised by e&uity to satisfy the demands of @ustice. 9owever, a constructive trust does not arise on every moral wron( in ac&uirin( or holdin( property or on every abuse of confidence in business or other affairs6 ordinarily such a trust arises and will be declared only on wron(ful ac&uisitions or retentions of property of which e&uity, in accordance with its fundamental principles and the traditional eDercise of its @urisdiction or in accordance with statutory provision, taAes co(ni<ance. 0t has been broadly ruled that a breach of confidence, althou(h in business or social relations, renderin( an ac&uisition or retention of property by one person unconscionable a(ainst another, raises a constructive trust. And specifically applicable to the case at bar is the doctrine that #A constructive trust is substantially an appropriate remedy a(ainst un@ust enrichment. 0t is raised by e&uity in respect of property, which has been ac&uired by fraud, or where, although acquired originally without fraud , it is a(ainst e&uity that it should be retained by the person holdin( it.# 2!" Am. %ur. 8d, +ec. 888, p. !3. 5he above principle is not in conflict with the New Civil Code, Code of Commerce, Rules of Court and special laws. And since Ee are a court of law and of e&uity, the case at bar must be resolved on the (eneral principles of law on constructive trust which basically rest on e&uitable considerations in order to satisfy the demands of @ustice, morality, conscience and fair dealin( and thus protect the innocent a(ainst fraud. As the respondent court said, #0t behooves upon the courts to shield fiduciary relations a(ainst every manner of chicAanery or detestable desi(n cloaAed by le(al technicalities.# 5he neDt point to resolve is whether the counterclaim of private respondents for the reconveyance of the property in dispute has already prescribed in the li(ht of established @urisprudence that the ri(ht to enforce an implied trust prescribes in ten years. Admittedly, $ablo 4aldehuesa and his heirs remained in possession of the property in &uestion in ,-8. when by reason of the compromise a(reement 4aldehuesa withdrew his opposition to the re(istration applied for by the Roas for which reason the latter were able to obtain a 5orrens title to the property in their name. 9owever, 4aldehuesa and his heirs continued their possession of the land until he sold the property in &uestion to private respondents herein on April 3:, ,-3: and the latter remained in possession and were never disturbed in their occupancy until the filin( of the ori(inal complaint for recovery of possession on +ept. ,, ,-.. after demand was made upon them when a relocation survey initiated by petitioners established that private respondents were actually occupyin( about 8 hectares on the eastern end of the property. Cpon these facts, the prescriptive period may only be counted from the time petitioners repudiated the trust relation in ,-.. upon the filin( of the complaint for recovery of possession a(ainst private respondents so that the counterclaim of the private respondents contained in their amended answer of %une ,8, ,-." wherein they asserted absolute ownership of the disputed realty by reason of their continuous and adverse possession of the same is well within the ten-year prescriptive period. /inally, the case at bar is &uite similar to the case of Dolores Pacheco vs. Santiago Arro, ?. $hil. .:., wherein the claim to the lots in the cadastral case was withdrawn by the respondents relyin( upon the assurance and promise made in open court by Dr. 1. K. in behalf of %. K. y R., the predecessor-in-interest of the petitioners and the Court held that a trust or a fiduciary relation between them arose, or resulted therefrom, or was created thereby and the trustee cannot invoAe the statute of limitations to bar the action and defeat the ri(ht of the cestuis &ue trustent. 2Cited in 5olentino, Civil Code of the $hilippines, 4ol. 04, p. "8!3.
E9;R;/*R;, 0N 40;E */ 59; /*R;G*0NG, the @ud(ment appealed from is hereby A//0R1;D. +* *RD;R;D.

SOL&D$R&T4: G.R. No. "56#72 $0ri- 7! 2779 T.E .E&RS O% GEORGE 4. /OE! $etitioners, vs. 8$L$4$N &NSUR$N'E 'O8/$N4! &N'.! Respondent. D ; C 0 + 0 * N '.&'O-N$9$R&O! J.: 5he instant $etition for Review under Rule ., of the Rules of Court assails the Decision8 dated 8" %une 8::8 of the Court of Appeals in CA-G.R. +$ No. "!8-!, which (ranted the $etition for Certiorari of respondent 1alayan 0nsurance Company, 0nc. 210C03 and recalled and set aside the *rder 3 dated " +eptember 8::, of the Re(ional 5rial Court 2R5C3, 7ranch !3, of Antipolo City, in Civil Case No. -3-8!:.. 5he R5C, in its recalled *rder, denied the Notice of Appeal of 10C0 and (ranted the 1otion for the 0ssuance of a Erit of ;Decution filed by petitioners 9eirs of Geor(e K. $oe. 5he present $etition also challen(es the Resolution dated 8November 8::8 of the appellate court denyin( petitionersL 1otion for Reconsideration. Records show that on 8" %anuary ,--" at about B . a.m., Geor(e K. $oe 2Geor(e3 while waitin( for a ride to worA in front of Capital Garments Corporation, *rti(as Avenue ;Dtension, 7aran(ay Dolores, 5aytay, Ri<al, was run over by a ten-wheeler 0su<u hauler trucA with $late No. $19-?.? owned by Rhoda +antos 2Rhoda3, and then bein( driven by Eillie >abrador 2Eillie3.. 5he said trucA was insured with respondent 10C0 under $olicy No. C4-8-3::! "-?. 5o seeA redress for Geor(eLs untimely death, his heirs and herein petitioners, namely, his widow ;mercelinda, and their children /lerida and /ernando, filed with the R5C a Complaint for dama(es a(ainst Rhoda and respondent 10C0, docAeted as Civil Case No. -3-8!:.." $etitioners identified Rhoda and respondent 10C0, as followsB Defendant R9*DA +AN5*+ is liAewise of le(al a(e, /ilipino and a resident of Real +treet, $amplona, >as $i'as, 1etro 1anila where she may be served with summons and other court processes. M9erein respondentN 1A>AKAN 0N+CRANC; C*1$ANK, 0NC. 2hereinafter #M10C0N# for brevity3 is a corporation duly or(ani<ed and eDistin( under $hilippine law with address at Kuchen(co 7ld(., ? F. $aredes +treet, 7inondo, 1anila where it may be served with summons and other processes of this 9onorable Court6 Defendant Rhoda +antos, who is en(a(ed in the business, amon( others, of sellin( (ravel and sand is the re(istered owner of one 0su<u 5rucA, with $late No. $19-?.? and is the employer of Eillie >abrador the authori<ed driver of the aforesaid trucA. MRespondent 10C0N on the other hand is the insurer of Rhoda +antos under a valid and eDistin( insurance policy duly issued by said M10C0N, $olicy No. C4-8-3-::! "-? over the sub@ect vehicle owned by Rhoda +antos, 5rucA9auler 0su<u ,: wheeler with plate no. $19-?.?, serial no. +R= .,-,-8?3 : and motor no. ,:$A,- :3?:3. Cnder

said insurance policy, M10C0N binds itself, amon( others, to be liable for dama(es as well as any bodily in@ury to third persons which may be caused by the operation of the insured vehicle. ! And prayed thatB M%Nud(ment issue in favor of Mherein petitionersN orderin( MRhoda and herein respondent 10C0N @ointly and solidarily to pay the MpetitionersN the followin(B ,. Actual dama(es in the total amount of 590R5K +0O 59*C+AND 2$3",:::.::3 $;+*+ for funeral and burial eDpenses6 8. Actual dama(es in the amount of ;0G95 9CNDR;D /04; 59*C+AND N0N; 9CNDR;D ;0G95K /*CR 2$?:.,-? .::3 $;+*+ as loss of earnin(s and financial support (iven by the deceased by reason of his income and employment6 3. 1oral dama(es in the amount of /0/5K 59*C+AND 2$.:,:::.::3 $;+*+6 . ;Demplary dama(es in the amount of /0/5K 59*C+AND 2$.:,:::.::3 $;+*+6 .. AttorneyLs fees in the amount of /0/5K 59*C+AND 2$.:,:::.::3 $;+*+ and liti(ation eDpense in the amount of *N; 59*C+AND /04; 9CNDR;D 2$,,.::.::3 $;+*+ for each court appearance6 ". 5he costs of suit. *ther reliefs @ust and e&uitable in the premises are liAewise prayed for. ? Rhoda and respondent 10C0 made the followin( admissions in their %oint Answer - B 5hat MRhoda and herein respondent 10C0N admit the alle(ations in para(raphs 8, 3 and of the complaint6 5hat MRhoda and respondent 10C0N admit the alle(ations in para(raph . of the complaint that the car(o trucA is insured with MrespondentN 1alayan 0nsurance Company, 0nc. M210C03N however, the liability of the insured company attached only if there is a @udicial pronouncement that the insured and her driver are liable and moreover, the liability of the insurance company is sub@ect to the limitations set forth in the insurance policy. ,: Rhoda and respondent 10C0 denied liability for Geor(eLs death averrin(, amon( other defenses, thatB a3 the accident was caused by the ne(li(ent act of the victim Geor(e, who surreptitiously and uneDpectedly crossed the road, catchin( the driver Eillie by surprise, and despite the latterLs effort to swerve the trucA to the ri(ht, the said vehicle still came into contact with the victim6 b3 the liability of respondent 10C0, if any, would attach only upon a @udicial pronouncement that the insured Rhoda and her driver Eillie are liable6 c3 the liability of 10C0 should be based on the eDtent of the insurance covera(e as embodied in RhodaLs policy6 and d3 Rhoda had always eDercised the dili(ence of a (ood father of a family in the selection and supervision of her driver Eillie. After the termination of the pre-trial proceedin(s, trial on the merits ensued. $etitioners introduced and offered evidence in support of their claims for dama(es a(ainst 10C0, and then rested their case. 5hereafter, the hearin(s for the reception of the evidence of Rhoda and respondent 10C0 were scheduled, but they failed to adduce their evidence despite several postponements (ranted by the trial court. 5hus, durin( the hearin( on - %une ,--., the R5C, upon motion of petitionersL counsel, issued an *rder ,, declarin( that Rhoda and respondent 10C0 had waived their ri(ht to present evidence, and orderin( the parties to already submit their respective 1emorandum within ,. days, after which, the case would be deemed submitted for decision. Rhoda and respondent 10C0 filed a 1otion for Reconsideration ,8 of the *rder dated - %une ,--., but it was denied by the R5C in another *rder dated ,, Au(ust ,--.. ,3 Conse&uently, Rhoda and respondent 10C0 filed a $etition for Certiorari, 1andamus, , $rohibition and 0n@unction with $rayer for a 5emporary Restrainin( *rder and Erit of $reliminary 0n@unction, assailin( the *rders dated - %une ,--. and ,, Au(ust ,--. of the R5C foreclosin( their ri(ht to adduce evidence in support of their defense. 5he $etition was docAeted as CA-G.R. +$ No. 3?- ?. 5he Court of Appeals, throu(h its 5hird Division, promul(ated a Decision ,. on 8- April ,--", denyin( due course to the $etition in CA-G.R. +$ No. 3?- ?. Rhoda and respondent 10C0 elevated the matter to the +upreme Court via a $etition for Certiorari,," docAeted as G.R. No. ,8"8 . 5his Court liAewise dismissed the $etition in G.R. No. ,8"8 in a Resolution dated 3: +eptember ,--". ,! ;ntry of %ud(ment was made in G.R. No. ,8"8 on ? November ,--".,? *n 8? /eb 8:::, the R5C rendered a Decision in Civil Case No. -3-8!:., the dispositive portion of which readsB
Eherefore, Rhoda and herein respondent 10C0 are hereby ordered to pay @ointly and solidarily to the herein petitioners the followin(B ,. 1oral dama(es amountin( to $,::,:::.::6 8. Actual dama(es for loss of earnin( capacity amountin( to $?:.,-? .::6 3. $3",:::.:: for funeral eDpenses6 . $.:,:::.:: as eDemplary dama(es6 .. $.:,:::.:: for attorneyLs fees plus $,,.:: per court appearance6 and ". Cost of suit.,-

Rhoda and respondent 10C0 received their copy of the fore(oin( R5C Decision on , 1arch 8:::. 8: *n 88 1arch 8:::, respondent 10C0 and Rhoda filed a 1otion for Reconsideration 8, of said Decision, averrin( therein that the R5C erred in rulin( that the obli(ation of Rhoda and respondent 10C0 to petitioners was solidary or @oint and several6 in computin( Geor(eLs loss of earnin( capacity not in accord with established @urisprudence6 and in awardin( moral dama(es althou(h it was not buttressed by evidence. Resolvin( the 1otion of respondent 10C0 and Rhoda, the R5C issued an *rder 88 on 8 %anuary 8::, modifyin( and amendin( its Decision dated 8? /ebruary 8:::, and dismissin( the case a(ainst respondent 10C0. 5he R5C held thatB After a careful evaluation of the issues at hand, the contention of the Mherein respondent 10C0N as far as the solidary liability of the insurance company with the other defendant MRhodaN is meritorious. 9owever, the assailed Decision can be modified or amended to correct the same honest inadvertence without necessarily reversin( it and set aside to conform with the evidence on hand. 5he R5C also re-computed Geor(eLs loss of earnin( capacity, as followsB 5he computation of actual dama(es for loss of earnin( capacity was determined by applyin( the formula adopted in the American ;Dpectancy 5able of 1ortality or the actuarial of Combined ;Dperience 5able of 1ortality applied in D

D D 4illa Rey 5ransit, 0nc. v. Court of Appeals 23, +CRA .8,3. 1oral dama(es is awarded in accordance with Article 88:" of the New Civil Code of the $hilippines. Ehile death indemnity in the amount of $.:,:::.:: is automatically awarded in cases where the victim had died 2$eople v. +ison, +eptember , , ,--: M,?- +CRA " 3N3. 83 0n the end, the R5C decreedB
E9;R;/*R;, in view of the fore(oin( consideration, the Decision of this Court dated 8? /ebruary 8::: is hereby amended or modified. +aid Decision should read as followsB #Eherefore, defendant Rhoda +antos is hereby ordered to pay to the Mherein petitionersN the followin(B ,. 1oral dama(es amountin( to $,::,:::.::6 8. Actual dama(es for loss of earnin( capacity amountin( to $,:8,,:".::6 3. $3",:::.:: for funeral eDpenses6 . $.:,:::.:: as death indemnity6 .. $.:,:::.:: for attorneyLs fees plus $,,.::.:: per court appearance6 ". Costs of the suit.

5he case a(ainst 1alayan 0nsurance Company, 0nc. is hereby dismissed.# 8 0t was petitionersL turn to file a 1otion for Reconsideration 8. of the 8 %anuary 8::, *rder, to which respondent 10C0 filed a #4i(orous *pposition to the $laintiffLs 1otion for Reconsideration.# 8" *n ,. %une 8::,, the R5C issued an *rder reinstatin( its Decision dated 8? /ebruary 8:::, relevant portions of which stateB /indin( the ar(uments raised by the Mherein petitionersN in their 1otion for Reconsideration of the *rder of this Court dated %anuary 8 , 8::, to be more meritorious to Mherein respondentLsN 1alayan 0nsurance Co., 0nc. 2sic3 ar(uments in its vi(orous opposition thereto, said motion is hereby (ranted. Accordin(ly, the *rder under consideration is hereby reconsidered and set aside. 5he decision of this Court dated /ebruary 8?, 8::: is hereby reinstated. Notify parties herein.8! Respondent 10C0 received a copy of the ,. %une 8::, *rder of the R5C on 8! %une 8::,. A((rieved by the latest turn of events, respondent 10C0 filed on - %uly 8::, a Notice of Appeal 8? of the 8? /ebruary 8::: Decision of the R5C, reinstated by the ,. %une 8::, Resolution of the same court. Rhoda did not @oin respondent 10C0 in its Notice of Appeal.8$etitioners filed their *pposition3: to the Notice of Appeal of respondent 10C0, with a 1otion for the 0ssuance of Erit of ;Decution. After considerin( the recent pleadin(s of the parties, the R5C, in its *rder dated " +eptember 8::,, denied the Notice of Appeal of respondent 10C0 and (ranted petitionersL 1otion for the 0ssuance of Erit of ;Decution. 5he R5C reasoned in its *rderB 5he records disclosed that on /ebruary 8?, 8::: this Court rendered a Decision in favor of the Mherein petitionersN and a(ainst MRhoda and herein respondent 10C0N. 5he Decision was said to have been received by 10C0 on 1arch , , 8:::. ;i(ht days after or on 1arch 88, 8:::, 10C0 mailed its 1otion for Reconsideration to this Court and (ranted the same in the *rder dated %anuary 8 , 8::,. /rom this *rder, MpetitionersN filed a 1otion for Reconsideration on /ebruary 8,, 8::, to which 10C0 filed a vi(orous opposition. *n %une ,., 8::, this Court (ranted MpetitionersLN motion reinstatin( the Decision dated /ebruary 8?, 8:::. Accordin( to 10C0, the %une ,., 8::, order was received by it on %une 8!, 8::,. 10C0 filed a Notice of Appeal on %uly -, 8::, or twelve 2,83 days from receipt of said *rder. M$etitionersN contend that the Notice of Appeal was filed out of time while MrespondentN 10C0 opposes, ar(uin( otherwise. 5he latter interposed that the *rder dated %une ,., 8::, is in reality a new Decision thereby (ivin( it a fresh fifteen 2,.3 days within which to file notice of appeal. MRespondentN 10C0Ls contention is not meritorious. 5he fifteen 2,.3 day period within which to file a notice of appeal should be recAoned from the date it received the Decision on 1arch , , 8:::. +o that when 10C0 mailed its 1otion for Reconsideration on 1arch 88, 8:::, ei(ht 2?3 days had already lapsed, 10C0 has remainin( seven 2!3 days to file a notice of appeal. 9owever, when it received the last *rder of this Court it tooA MrespondentN 10C0 twelve 2,83 days to file the same. Needless to say, 10C0Ls Notice of Appeal was filed out of time. 5he Court cannot countenance the ar(ument of 10C0 that a resolution to a motion for a final order or @ud(ment will have the effect of (ivin( a fresh re(lementary period. 5his would be contrary to what was provided in the rules of procedure. 3, Accordin(ly, the R5C ad@ud(edB E9;R;/*R;, premises considered, Mherein respondentN 10C0Ls Notice of Appeal is hereby Denied for havin( filed out of time maAin( the Decision of this Court dated /ebruary 8?, 8::: as final and eDecutory. Accordin(ly, the 1otion for 0ssuance of Erit of ;Decution filed by Mherein petitionersN is hereby Granted. Notify parties herein.38 Respondent 10C0 filed a $etition for Certiorari33 under Rule ". of the Rules of Court before the Court of Appeals, which was docAeted as CA-G.R. +$ No. "!8-!. 5he $etition assailed, for havin( been rendered by the R5C with (rave abuse of discretion amountin( to lacA or eDcess of @urisdiction, the followin(B 2,3 the *rder dated " +eptember 8::,, denyin( the Notice of Appeal of respondent 10C0 and (rantin( petitionersL 1otion for the 0ssuance of Erit of ;Decution6 283 the Decision dated 8? /ebruary 8:::, holdin( Rhoda and respondent 10C0 @ointly and severally liable for Geor(eLs death6 and 233 the *rder dated ,. %une 8::,, reinstatin( the Decision dated 8? /ebruary 8:::. 5he Court of Appeals (ranted the $etition for Certiorari of respondent 10C0 in a Decision dated 8" %une 8:::, ratiocinatin( thusB /rescin*in: t+ere,ro;! <e +o-* t+)t t+e ,i,teen ("5) *)= 0erio* to )00e)- ;ust >e rec?one* ,ro; t+e ti;e t+e @+erein res0on*entA 8)-)=)n receive* t+e or*er *)te* "5 June 277" reversin: in toto t+e or*er o, 24 J)nu)r= 2777 )n* reinst)tin: in ,u-- t+e Decision *)te* 2 %e>ru)r= 2777. T+us! MrespondentN 1alayan had until ,8 %uly 8::, within which to file its notice of appeal. 5herefore, when MrespondentN 1alayan filed its notice of appeal on :- %uly 8::,, it was well within the re(lementary period and should have been (iven due course by the public respondent court.

0t was therefore, an eDcess of @urisdiction on the part of the public respondent court when it recAoned the MrespondentN 1alayanLs period to appeal on the date it received on , 1arch 8::: the formerLs decision dated 8? /ebruary 8:::. As earlier eDpostulated, the said decision was completely vacated insofar as the MrespondentN 1alayan is concerned when the public respondent court in its order dated 8 %anuary 8::, dismissed the case a(ainst the former. 5hus, to recAon the fifteen 2,.3 days to appeal from the day the MrespondentN 1alayan received the said decision on , 1arch 8:::, is the hei(ht of absurdity because there was nothin( for the MrespondentN 1alayan to appeal inasmuch as the public respondent court vacated the said decision in favor of the former. 5he aforesaid conclusion finds support in +ta. Romana vs. >acson 2,: +CRA -33, where the court, relyin( on the case of 1a(dalena ;state, 0nc. vs. Calua(, ,, +CRA 33 , held that where the court of ori(in made a thorou(hly 2sic3 restudy of the ori(inal @ud(ment and rendered the amended and clarified @ud(ment only after considerin( all the factual and le(al issues, the amended and clarified decision was an entirely new decision which superseded 2sic3. /or all intents and purposes, the court concluded the trial court rendered a new @ud(ment from which the time to appeal must be recAoned. 0n the instant case, what is involved is not merely a substantial amendment or modification of the ori(inal decision, but the total reversal thereof in the order dated 8 %anuary 8:::. Given the rationale in the aforecited cases, it is only lo(ical that the period of appeal be counted from 8! %une 8::,, the date that MrespondentN 1alayan received the order dated ,. %une 8::, reversin( in toto the order of 8 %anuary 8::: and reinstatin( the Decision dated 8? /ebruary 8:::.3 2;mphasis supplied.3 5he fallo of the Decision of the Court of Appeals readsB
E9;R;/*R;, in consideration of the fore(oin( premises, the petition for certiorari is partially GRAN5;D. Accordin(ly, the public respondent courtLs order dated :" +eptember 8::, is hereby R;CA>>;D and +;5 A+0D;. $ublic respondent court is hereby directed to approve the petitioner 1alayanLs notice of appeal and to refrain from eDecutin( the writ of eDecution (ranted on :" +eptember 8::,.3.

5he Court of Appeals denied petitionersL 1otion for Reconsideration in a Resolution dated 8- November 8::8. Cnderstandably distrau(ht, petitioners come before this Court in this $etition for Review, which raise the followin( issuesB 0. Ehether or not the respondent Court of Appeals committed (rave abuse of discretion when it ruled that private respondent could file a $etition for Certiorari even thou(h its 1otion for Reconsideration was still pendin( resolution with the lower court. 00. Ehether or not the respondent Court of Appeals committed (rave abuse of discretion when it ruled that the private respondent had filed its Notice of Appeal with the trial court within the re(lementary period. 3" 5he Court first turns its attention to the primary issue for its resolutionB whether the Notice of Appeal filed by respondent 10C0 before the R5C was filed out of time. 5he period for filin( a Notice of Appeal is set by Rule ,, +ection 3 of the ,--! Rules of CourtB +;C. 3. $eriod of ordinary appeal. 5he appeal shall be taAen within fifteen 2,.3 days from notice of the @ud(ment or final order appealed from. Ehere a record on appeal is re&uired, the appellants shall file a notice of appeal and a record on appeal within thirty 23:3 days from notice of the @ud(ment or final order. D D D. 5he period of appeal shall be interrupted by a timely motion for new trial or reconsideration. No motion for eDtension of time to file a motion for new trial or reconsideration shall be allowed. 0t is clear under the Rules that an appeal should be taAen within ,. days from the notice of @ud(ment or final order appealed from.3! A final @ud(ment or order is one that finally disposes of a case, leavin( nothin( more for the court to do with respect to it. 0t is an ad@udication on the merits which, considerin( the evidence presented at the trial, declares cate(orically what the ri(hts and obli(ations of the parties are6 or it may be an order or @ud(ment that dismisses an action.3? $ropitious to petitioners is Neypes v. ourt of Appeals,3- which the Court promul(ated on , +eptember 8::., and wherein it laid down the fresh period ruleB 5o standardi<e the appeal periods provided in the Rules and to afford liti(ants fair opportunity to appeal their cases, the Court deems it practical to allow a ,res+ 0erio* o, "5 *)=s <it+in <+ic+ to ,i-e t+e notice o, )00e)- in the Re(ional 5rial Court, counted from receipt of the order dismissin( a motion for a new trial or motion for reconsideration. 9enceforth, this B,res+ 0erio* ru-eB s+)-- )-so )00-= to Rule : (overnin( appeals from the 1unicipal 5rial Courts to the Re(ional 5rial Courts6 Ru-e 42 on 0etitions ,or revie< ,ro; t+e Re:ion)- Tri)- 'ourts to t+e 'ourt o, $00e)-s6 Rule 3 on appeals from &uasi-@udicial a(encies to the Court of Appeals and Rule . (overnin( appeals by certiorari to the +upreme Court. 5he new rule aims to re(iment or maAe the appeal period uniform, to be counted from receipt of the order denyin( the motion for new trial, motion for reconsideration 2whether full or partial3 or any final order or resolution. 2;mphases ours.3 5he fresh period of ,. days becomes si(nificant when a party opts to file a motion for new trial or motion for reconsideration. 0n this manner, the trial court which rendered the assailed decision is (iven another opportunity to review the case and, in the process, minimi<e andPor rectify any error of @ud(ment. : Eith the advent of the fresh period rule, parties who availed themselves of the remedy of motion for reconsideration are now allowed to file a notice of appeal within fifteen days from the denial of that motion. , 5he Court has accentuated that the fresh period rule is not inconsistent with Rule ,, +ection 3 of the Rules of Court which states that the appeal shall be taAen #within fifteen 2,.3 days from notice of @ud(ment or final order appealed from.# 5he use of the dis@unctive word #or# si(nifies disassociation and independence of one thin( from another. 0t should, as a rule, be construed in the sense which it ordinarily implies. 8 9ence, the use of #or# in the above provision supposes that the notice of appeal may be filed within ,. days from the notice of @ud(ment or within ,. days from notice of the final order in the case. Applyin( the fresh period rule, the Court a(rees with the Court of Appeals and holds that respondent 10C0 seasonably filed its Notice of Appeal with the R5C on - %uly 8::,, @ust ,8 days from 8! %une 8::,, when it

received the denial of its 1otion for Reconsideration of the ,. %une 8::, Resolution reinstatin( the 8? /ebruary 8::: Decision of the R5C. 5he fresh period rule may be applied to the case of respondent 10C0, althou(h the events which transpired concernin( its Notice of Appeal tooA place in %une and %uly 8::,, inasmuch as rules of procedure may be (iven retroactive effect on actions pendin( and undetermined at the time of their passa(e. 5he Court notes that Neypes was promul(ated on , +eptember 8::., while the instant $etition was still pendin( before this Court. Reference may be made to !epublic v. ourt of Appeals, 3 involvin( the retroactive application of A.1. No. ::-8-:3+C which provided that the ":-day period within which to file a petition for certiorari shall be recAoned from receipt of the order denyin( the motion for reconsideration. 0n said case, the Court declared that rules of procedure #may be (iven retroactive effect to actions pendin( and undetermined at the time of their passa(e and this will not violate any ri(ht of a person who may feel that he is adversely affected, inasmuch as there is no vested ri(hts in rules of procedure.# 9ence, the fresh period rule laid down in Neypes was applied by the Court in resolvin( the subse&uent cases of Su"away v. #rban $an%, &nc., ;lbi'a v. Ceni<a, . /irst A&ua +u(ar 5raders, 0nc. v. 7anA of the $hilippine 0slands, " even thou(h the antecedent facts (ivin( rise to said cases transpired before the promul(ation of Neypes. 0n De los +antos v. 4da de 1an(ubat, ! particularly, the Court applied the fresh period rule, elucidatin( that procedural law refers to the ad@ective law which prescribes rules and forms of procedure in order that courts may be able to administer @ustice. $rocedural laws do not come within the le(al conception of a retroactive law, or the (eneral rule a(ainst the retroactive operation of statutes. 5he fresh period rule is irrefra(ably procedural, prescribin( the manner in which the appropriate period for appeal is to be computed or determined and, therefore, can be made applicable to actions pendin( upon its effectivity without dan(er of violatin( anyone elseLs ri(hts. +ince the Court affirms the rulin( of the Court of Appeals that respondent 10C0 filed its Notice of Appeal with the R5C within the re(lementary period, the appropriate action, under ordinary circumstances, would be for the Court to remand the case to the R5C so that the R5C could approve the Notice of Appeal of respondent 10C0 and respondent 10C0 could already file its appeal with the Court of Appeals. 9owever, considerin( that the case at bar has been pendin( for almost siDteen years, ? and the records of the same are already before this Court, remand is no lon(er necessary. %urisprudence dictates that remand of a case to a lower court does not follow if, in the interest of @ustice, the +upreme Court itself can resolve the dispute based on the records before it. As a rule, remand is avoided in the followin( instancesB 2a3 where the ends of @ustice would not be subserved by a remand6 or 2b3 where public interest demands an early disposition of the case6 or 2c3 where the trial court has already received all the evidence presented by both parties, and the +upreme Court is in a position, based upon said evidence, to decide the case on its merits. 0n >ao v. $eople, the +upreme Court, in consideration of the years that it had taAen for the controversy therein to reach it, concluded that remand of the case to a lower court was no lon(er the more eDpeditious and practical route to follow, and it then decided the said case based on the evidentiary record before it. 5he consistent stand of the Court has always been that a case should be decided in its totality, resolvin( all interlocAin( issues in order to render @ustice to all concerned and to end the liti(ation once and for all. 4erily, courts should always strive to settle the entire controversy in a sin(le proceedin(, leavin( no root or branch to bear the seed of future liti(ation. Ehere the public interest so demands, the court will broaden its in&uiry into a case and decide the same on the merits rather than merely resolve the procedural &uestion raised. +uch rule obtains in this case. 5he Court is convinced that the non-remandin( of the case at bar is absolutely @ustified. $etitioners have already suffered from the tra(ic loss of a loved one, and must not be made to endure more pain and uncertainty brou(ht about by the continued pendency of their claims a(ainst those liable. 5he case has been dra((in( on for almost ," years now without the petitioners havin( been fully compensated for their loss. 5he Court cannot countenance such a (larin( indifference to petitionersL cry for @ustice. 5o be sure, they deserve nothin( less than full compensation to (ive effect to their substantive ri(hts..3 5he complete records of the present case have been elevated to this Court, and the pleadin(s and evidence therein could fully support its factual ad@udication. 0ndeed, after painstaAin(ly (oin( over the records, the Court finds that the material and decisive facts are beyond disputeB Geor(e was Ailled when he was hit by the trucA driven by Eillie, an employee of Rhoda6 and the trucA is insured with respondent 10C0. 5he only issue left for the Court to resolve is the eDtent of the liability of Rhoda and respondent 10C0 for Geor(eLs death and the appropriate amount of the dama(es to be awarded to petitioners. 5he Court now turns to the issue of who is liable for dama(es for the death of Geor(e. Respondent 10C0 does not deny that it is the insurer of the trucA. Nevertheless, it asserts that its liability is limited, and it should not be held solidarily liable with Rhoda for all the dama(es awarded to petitioners. A solidary or @oint and several obli(ation is one in which each debtor is liable for the entire obli(ation, and each creditor is entitled to demand the whole obli(ation. 0n a @oint obli(ation, each obli(or answers only for a part of the whole liability and to each obli(ee belon(s only a part of the correlative ri(hts. Eell-entrenched is the rule that solidary obli(ation cannot li(htly be inferred. 5here is solidary liability only when the obli(ation eDpressly so states, when the law so provides or when the nature of the obli(ation so re&uires. . 0t is settled that where the insurance contract provides for indemnity a(ainst liability to third persons, the liability of the insurer is direct and such third persons can directly sue the insurer. 5he direct liability of the insurer under indemnity contracts a(ainst third party liability does not mean, however, that the insurer can be held solidarily liable with the insured andPor the other parties found at fault, since they are bein( held liable under different obli(ations. 5he liability of the insured carrier or vehicle owner is based on tort, in accordance with the provisions of the Civil Code6.. while that of the insurer arises from contract, particularly, the insurance policy. 5he third-party liability of the insurer is only up to the eDtent of the insurance policy and that re&uired by law6 and it cannot be held solidarily liable for anythin( beyond that amount.." Any award beyond the insurance covera(e would already be the sole liability of the insured andPor the other parties at fault. .!

0n 4da. de 1a(lana v. Consolacion,.? it was ruled that an insurer in an indemnity contract for third-party liability is directly liable to the in@ured party up to the eDtent specified in the a(reement, but it cannot be held solidarily liable beyond that amount. Accordin( to respondent 10C0, its liability as insurer of RhodaLs trucA is limited. /ollowin( 4da. de 1a(lana, petitioners would have had the option either 2,3 to claim the amount awarded to them from respondent 10C0, up to the eDtent of the insurance covera(e, and the balance from Rhoda6 or 283 to enforce the entire @ud(ment a(ainst Rhoda, sub@ect to reimbursement from respondent 10C0 to the eDtent of the insurance covera(e. 5he Court, thou(h, is precluded from applyin( its rulin( in 4da. de 1a(lana by the difference in one vital detail between the said case and the one at bar. 5he insurer was able to sufficiently establish its limited liability in 4da. de 1a(lana, while the same cannot be said for respondent 10C0 herein. 5he Court hi(hli(hts that in this case, the insurance policy between Rhoda and respondent 10C0, coverin( the trucA involved in the accident which Ailled Geor(e, was never presented. 5here is no means, therefore, for this Court to ascertain the supposed limited liability of respondent 10C0 under said policy. Eithout the presentation of the insurance policy, the Court cannot determine the eDistence of any limitation on the liability of respondent 10C0 under said policy, and the eDtent or amount of such limitation. 0t should be remembered that respondent 10C0 readily admits that it is the insurer of the trucA that hit and Ailled Geor(e, eDcept that it insists that its liability under the insurance policy is limited. As the party assertin( its limited liability, respondent 10C0 then has the burden of evidence to establish its claim. 0n civil cases, the party that alle(es a fact has the burden of provin( it. 7urden of proof is the duty of a party to present evidence on the facts in issue necessary to prove its claim or defense by the amount of evidence re&uired by law. .- Re(rettably, respondent 10C0 failed to dischar(e this burden.": 5he Court cannot rely on mere alle(ations of limited liability sans proof. 5he failure of respondent 10C0 to present the insurance policy Q which, understandably, is not in petitionersL possession, but in the custody and absolute control of respondent 10C0 as the insurer andPor Rhoda as the insured Q (ives rise to the presumption that its presentation is pre@udicial to the cause of respondent 10C0. ", Ehen the evidence tends to prove a material fact which imposes a liability on a party, and he has it in his power to produce evidence which, from its very nature, must overthrow the case made a(ainst him if it is not founded on fact, and he refuses to produce such evidence, the presumption arises that the evidence, if produced, would operate to his pre@udice and support the case of his adversary. "8 Respondent 10C0 had all the opportunity to prove before the R5C that its liability under the insurance policy it issued to Rhoda, was limited6 yet, respondent 10C0 failed to do so. 5he failure of respondent 10C0 to rebut that which would have naturally invited an immediate, pervasive, and stiff opposition from it created an adverse inference that either the controvertin( evidence to be presented by respondent 10C0 would only pre@udice its case, or that the uncontroverted evidence of petitioners indeed speaAs of the truth. And such adverse inference, reco(ni<ed and adhered to by courts in @ud(in( the wei(ht of evidence in all Ainds of proceedin(s, surely is not without basis Q its rationale and effect rest on sound, lo(ical and practical considerations, vi<B 5he presumption that a man will do that which tends to his obvious advanta(e, if he possesses the means, supplies a most important test for @ud(in( of the comparative wei(ht of evidence D D D 0f, on the supposition that a char(e or claim is unfounded, the party a(ainst whom it is made has evidence within his reach by which he may repel that which is offered to his pre@udice, his omission to do so supplies a stron( presumption that the char(e or claim is well founded6 it would be contrary to every principle of reason, and to all eDperience of human conduct, to form any other conclusion.# 2+tarAie on ;vidence, p. ? ", 1oore on /acts, 4ol. 0, p. . 3 DDDD 5he ordinary rule is that one who has Anowled(e peculiarly within his own control, and refuses to divul(e it, cannot complain if the court puts the most unfavorable construction upon his silence, and infers that a disclosure would have shown the fact to be as claimed by the opposin( party.# 2+ociete, etc., v. Allen, -: /ed. Rep. ?,., ?,!, 33 C.C.A. 8?8, per 5aft, C.%., 1oore on /acts, 4ol. 0, p. .",3. "3 5he inference still holds even if it be assumed, for ar(ument)s saAe, that the solidary liability of respondent 10C0 with Rhoda is improbable, for it has liAewise been said thatB EeaA evidence becomes stron( by the ne(lect of the party a(ainst whom it is put in, in not showin( by means within the easy control of that party that the conclusion drawn from such evidence is untrue. 2$ittsbur(h, etc., R. Co. v. Calla(han, .: 000. App. "!", "?,, 1oore on /acts, 4ol. 0, p. .!83. " Given the admission of respondent 10C0 that it is the insurer of the trucA involved in the accident that Ailled Geor(e, and in the utter absence of proof to establish both the eDistence and the eDtentPamount of the alle(ed limited liability of respondent 10C0 as insurer, the Court could only conclude that respondent 10C0 had a(reed to fully indemnify third-party liabilities. Conse&uently, there is no more difference in the amounts of dama(es which petitioners can recover from Rhoda or respondent 10C06 petitioners can recover the said amounts in full from either of them, thus, maAin( their liabilities solidary or @oint and several. 5he Court now comes to the issue of the amounts of the dama(es awarded. 0n its Decision dated 88 /ebruary 8:::, the R5C awarded petitioners moral and actual dama(es, as well as funeral eDpenses and attorneyLs fees. +ubse&uently, in its *rder dated 8 %anuary 8::,, the R5C reduced the amount of actual dama(es from $?:.,-? .:: to $,:8,,:".::, but additionally awarded death indemnity in the amount of $.:,:::.::. 0ts award of moral dama(es and funeral eDpenses as well as attorneyLs fees remained constant in its 8? /ebruary 8::: decision and was carried over to its 8 %anuary 8::, *rder. 5he Court shall now proceed to scrutini<e said award of dama(es. As re(ards the award of actual dama(es, Article 8,-- of the Civil Code provides that #MeNDcept as provided by law or by stipulation one is entitled to an ade&uate compensation only for such pecuniary loss suffered by him as he has duly proved D D D.# 5he R5C awarded $3",:::.:: for burial eDpenses. 5he award of $3",:::.:: for burial eDpenses is duly supported by receipts evidencin( that petitioners did incur this eDpense. 5he petitioners held a waAe for two days at their residence and another two days at the >oyola 1emorial $arA. ". 5he amount covered the eDpenses by petitioners for the waAe, funeral and burial of Geor(e. ""

As to compensation for loss of earnin( capacity, the R5C initially awarded $?:.,-? .:: in its 8? /ebruary 8::: Decision, which it later reduced to $,:8,,:".:: on 8 %anuary 8::,. Art. 88:" of the Civil Code provides that in addition to the indemnity for death caused by a crime or &uasi-delict, the #defendant shall be liable for the loss of the earnin( capacity of the deceased, and the indemnity shall be paid to the heirs of the latter, D D D.# Compensation of this nature is awarded not for loss of earnin(s but for loss of capacity to earn money. 9ence, it is proper that compensation for loss of earnin( capacity should be awarded to the petitioners in accordance with the formula established in decided cases for computin( net earnin( capacity, to witB 5he formula for the computation of unearned income isB Net ;arnin( Capacity R life eDpectancy D 2(ross annual income -reasonable and necessary livin( eDpenses3. >ife eDpectancy is determined in accordance with the formulaB 8 P 3 D M?: - a(e of deceased at the time of deathN "! %urisprudence provides that the first factor, i.e., life eDpectancy, shall be computed by applyin( the formula 28P3 D M?: - a(e at deathN3 adopted in the American ;Dpectancy 5able of 1ortality or the Actuarial of Combined ;Dperience 5able of 1ortality. 5he second factor is computed by multiplyin( the life eDpectancy by the net earnin(s of the deceased, i.e., the total earnin(s less eDpenses necessary in the creation of such earnin(s or income and less livin( and other incidental eDpenses. 5he loss is not e&uivalent to the entire earnin(s of the deceased, but only such portion that he would have used to support his dependents or heirs. 9ence, the Court deducts from his (ross earnin(s the necessary eDpenses supposed to be used by the deceased for his own needs. 5he Court eDplained in 4illa Rey 5ransit v. Court of Appeals"? B M5he award of dama(es for loss of earnin( capacity isN concerned with the determination of the losses or dama(es sustained by the private respondents, as dependents and intestate heirs of the deceased, and that said dama(es consist, not of the full amount of his earnin(s, but of the support they received or would have received from him had he not died in conse&uence of the ne(li(ence of petitioner)s a(ent. 0n fiDin( the amount of that support, we must recAon with the #necessary eDpenses of his own livin(,# which should be deducted from his earnin(s. 5hus, it has been consistently held that earnin( capacity, as an element of dama(es to one)s estate for his death by wron(ful act is necessarily his net earnin( capacity or his capacity to ac&uire money, #less necessary eDpense for his own livin(.# +tated otherwise, the amount recoverable is not the loss of the entire earnin(, but rather the loss of that portion of the earnin(s which the beneficiary would have received. 0n other words, only net earnin(s, and not (ross earnin(s are to be considered that is, the total of the earnin(s less eDpenses necessary in the creation of such earnin(s or income and less livin( and other incidental eDpenses.# Applyin( the aforestated @urisprudential (uidelines in the computation of the amount of award for dama(es set out in 4illa Rey, the Court computes the award for the loss of Geor(eLs earnin( capacity as followsB >ife eDpectancy R 8P3 D M?: - a(e of deceased at the time of deathN 8P3 D M?: J ."N 8P3 D M8 N /*R1C>A Q N;5 ;ARN0NG CA$AC05K 2N;C3 0fB A(e at time of death of Geor(e $oe R .?"1onthly 0ncome at time of death R $",- "!: Gross Annual 0ncome 2GA03 R M2",- "3 2,83N R $?3,3.8 ReasonablePNecessary >ivin( ;Dpenses 2RPN>;3 R .:S!, of GA0 R $ ,,"!" N;C R M8P3 2?:-.?3N M?3,3.8- ,,"!"N R M8P3 2883N M ,,"!"N R M, ."!N M ,,"!"N R $",,,3?".-8 5herefore, Geor(eLs lost net earnin( capacity is e&uivalent to $",,,3?".-8 5he R5C awarded moral dama(es!8 in the amount of $,::,:::.::. Eith respect to moral dama(es, the same are awarded under the followin( circumstancesB 5he award of moral dama(es is aimed at a restoration, within the limits of the possible, of the spiritual status &uo ante. 1oral dama(es are desi(ned to compensate and alleviate in some way the physical sufferin(, mental an(uish, fri(ht, serious anDiety, besmirched reputation, wounded feelin(s, moral shocA, social humiliation, and similar in@ury un@ustly caused a person. Althou(h incapable of pecuniary computation, they must be proportionate to the sufferin( inflicted. 5he amount of the award bears no relation whatsoever with the wealth or means of the offender. 0n the instant case, petitionersL testimonies reveal the intense sufferin( which they continue to eDperience as a result of Geor(eLs death.!3 0t is not difficult to comprehend that the sudden and uneDpected loss of a husband and father would cause mental an(uish and serious anDiety in the wife and children he left behind. 1oral dama(es in the amount of $,::,:::.:: are proper for Geor(eLs death.! 5he R5C also awarded $.:,:::.:: as death indemnity which the Court shall not disturb. 5he award of $.:,:::.:: as death indemnity is in accordance with current rulin(s of the Court. !. /inally, the R5C awarded attorneys fees to petitioners. $etitioners are entitled to attorneyLs fees. Cnder Article 8::? of the Civil Code, attorneyLs fees may be (ranted when a party is compelled to liti(ate or incur eDpenses to protect his interest by reason of an un@ustified act of the other party. !" 0n 1etro 1anila 5ransit Corporation v. Court of Appeals,!! the Court held that an award of $.:,:::.:: as attorneyLs fees was reasonable. 9ence, petitioners are entitled to attorneyLs fees in that amount.!?
E9;R;/*R;, premises considered, the instant $etition is $AR50A>>K GRAN5;D. Ehile the Court A//0R1+ the Decision, dated 8" %une 8::8, and Resolution, dated 8- November 8::8, of the Court of Appeals in CA-G.R. +$ No. "!8-!, (rantin( the $etition for Certiorari of respondent 1alayan 0nsurance Company, 0nc., the Court, nonetheless, R;+*>4;+, in consideration of

the speedy administration of @ustice, and the peculiar circumstances of the case, to (ive DC; C*CR+; to the present $etition and decide the same on its merits. Rhoda +antos and respondent 1alayan 0nsurance Company, 0nc. are hereby ordered to pay @ointly and severally the petitioners 9eirs of Geor(e K. $oe the followin(B 2,3 /uneral eDpenses $3",:::.::6 283 Actual dama(es for loss of earnin( capacity $",,,3?".-86 233 1oral dama(es amountin( to $,::,:::.::6 2 3 Death indemnity $.:,:::.::6 and 2.3 AttorneyLs fees $.:,:::.:: plus $,,.::.:: per court appearance. No costs. +* *RD;R;D.

N* N*4A50*N ;4;N C9ANG; */ $AR50;+ Q ;>;1;N5 */ N*4A50*N >ACT0NG

G.R. No. "6#244 June 22! 2779 S/OUSES JOSE T. 3$LEN9UEL$ )n* GLOR&$ 3$LEN9UEL$! $etitioners, vs.C$L$4$$N DE3ELO/8ENT D &NDUSTR&$L 'OR/OR$T&ON! Respondent. D ; C 0 + 0 * N /ER$LT$! J.: 5his is a petition for review on certiorari assailin( the Decision, dated %anuary 83, 8:: of the Court of

Appeals in CA-G.R. C4 No. "-?, , and its Resolution 8 dated April 8:, 8:: , denyin( petitionersL motion for reconsideration. 5he factual and procedural antecedents are as followsB Talayaan Development and 0ndustrial Corporation 2Talayaan3 is the owner of a parcel of land covered by 5ransfer Certificate of 5itle 25C53 No. 5-,33:8"3 issued by the Re(ister of Deeds of 1etro 1anila, District 000. >ater, petitioners, +pouses %ose 5. 4alen<uela and Gloria 4alen<uela 2Gloria3, occupied the said property and introduced several improvements thereon. Ehen Talayaan discovered that the lot was bein( ille(ally occupied by the petitioners, it demanded that they immediately vacate the premises and surrender possession thereof. $etitioners then ne(otiated with Talayaan to purchase the portion of the lot they were occupyin(. *n Au(ust ., ,-- , the parties eDecuted a Contract to +ell wherein they stipulated that petitioners would purchase 83" s&uare meters of the sub@ect property for $,, ,",:::.::. $etitioners initially (ave $.::,:::.:: upon si(nin( the contract and a(reed to pay the balance of $-,",:::.:: in twelve 2,83 e&ual monthly installments, or $!",333.!. a month until fully paid.. 5he parties also a(reed that, in case petitioners failed to pay any of the installments, they would be liable for li&uidated penalty at the rate of 3S a month compounded monthly until fully paid. 0t was also stipulated that Talayaan shall eDecute the correspondin( deed of absolute sale over the sub@ect property only upon full payment of the total purchase price. " 5hereafter, petitioners made the followin( paymentsB $!:,:::.:: on *ctober 8:, ,-- 6 $!:,:::.:: on November 83, ,-- 6 and $"?,:::.:: on December 8:, ,-- , or a total of $8:?,:::.::. After these payments, petitioners failed to pay the a(reed monthly installments. 0n a letter! dated +eptember ", ,--., petitioners re&uested Talayaan that they be issued a deed of sale for the ,,? s&. m. portion of the lot where their house was standin(, considerin( that they no lon(er had the resources to pay the remainin( balance. 5hey reasoned that, since they had already paid one-half of the purchase price, or a total of $!:?,:::.:: representin( ,,? s&. m. of the sub@ect property, they should be issued a deed of sale for the said portion of the property. 0n a letter? dated December ,., ,--., Talayaan reminded petitioners of their unpaid balance and asAed that they settle it within the neDt few days. 0n a demand letter - dated %anuary 3:, ,--", Talayaan, throu(h counsel, demanded that petitioners pay their outstandin( obli(ation, includin( the a(reed penalties, within ten 2,:3 days from receipt of the letter, or they would be constrained to file the necessary actions a(ainst them. A(ain, in a letter ,: dated 1arch 3:, ,--", Talayaan (ave petitioners another opportunity to settle their obli(ation within a period of ten 2,:3 days from receipt thereof.'avvphi' *n %une ,3, ,--", petitioners wrote Atty. Atilano 9uaben >im, then counsel of Talayaan, and re&uested him to intercede on their behalf and to propose to Talayaan that GloriaLs sister, %uliet /lores Giron 2%uliet3, was willin( to assume payment of the remainin( balance for the ,,? s&. m. portion of the sub@ect property at $,:,:::.:: a month.,, $etitioners stated that they had already separated the said ,,? s&. m. portion and had the property surveyed by a licensed (eodetic en(ineer to determine the unpaid portion of the property that needed to be separated from their lot. *n %anuary 8:, ,--!, 1arch 8:, ,--!, April 8:, ,--!, %une 8:, ,--!, %uly 8:, ,--!, +eptember 8:, ,--!, *ctober 8:, ,--!, and December 8:, ,--!, %uliet made payments of $,:,:::.:: per month to Talayaan, which the latter accepted for and in behalf of her sister Gloria. ,8 5hereafter, TalayaanLs in-house counsel, Atty. Reynaldo Romero, demanded that petitioners pay their outstandin( obli(ation. 9owever, his demands remained unheeded. 5hus, on %une ,-, ,--?, Talayaan filed a Complaint for Rescission of Contract and Dama(es,3 a(ainst petitioners before the Re(ional 5rial Court 2R5C3 of Caloocan City, 7ranch ,8", which was later docAeted as Civil Case No. C-,?3!?. *n +eptember 3, ,--?, petitioners filed their Answer with Counterclaim , prayin(, amon( other thin(s, that the R5C dismiss the complaint and for Talayaan to deliver the correspondin( 5C5 to the sub@ect property, so that the same may be cancelled and a new one issued in the name of the petitioners. $etitioners also prayed for the award of eDemplary dama(es, moral dama(es, attorneyLs fees, and cost of suit. ,. After filin( their respective pleadin(s, trial on the merits ensued. *n Au(ust 8, 8:::, the R5C rendered a Decision ," in favor of Talayaan, rescindin( the contract between the parties6 orderin( the petitioners to vacate the premises6 and to pay the amount of $,::,:::.:: as attorneyLs fees. 5he decretal portion of the Decision readsB 0N 40;E */ A>> 59; /*R;G*0NG, @ud(ment is hereby rendered rescindin( the contract between the plaintiff and the defendants and orderin( the defendants and all persons claimin( ri(hts under them to vacate the premises and to surrender possession thereof to the plaintiff. 1oreover, defendants shall pay the amount of $,::,:::.:: as attorneyLs fees. 5he counterclaim of the defendants is hereby ordered D0+10++;D for lacA of merit. +* *RD;R;D. ,! A((rieved, petitioners sou(ht recourse before the Court of Appeals 2CA3 in their appeal docAeted as CA-G.R. C4 No. ,"38 . $etitioners ar(ued that the R5C erred whenB 05 RC>;D 59A5 59; $>A0N50//-A$$;>>;; 1AD; A 4A>0D /*R1A> D;1AND C$*N 59; D;/;NDAN5+A$$;>AN5+ 5* $AK 59; >A55;RL+ DC; AND *C5+5AND0NG *7>0GA50*N6

05 RC>;D 59A5 59; $R0NC0$>; */ N*4A50*N */ AN ;O0+50NG *7>0GA50*N 0+ N*5 A$$>0CA7>; 0N 59; 0N+5AN5 CA+;6 05 RC>;D 59A5 59; $R0NC0$>; */ R;+C0++0*N 0+ A$$>0CA7>; 0N 59; CA+; AND 59A5 59; $>A0N50//A$$;>>;; 0+ ;N505>;D 59;R;5* 40+-U-40+ 59; D;/;NDAN5+-A$$;>>AN5+6 05 /A0>;D 5* RC>; 59A5 59; $>A0N50//-A$$;>>;; 0+ 7ARR;D 7K ;+5*$$;> /R*1 A+T0NG /*R 59; R;+C0++0*N */ 59; C*N5RAC5 5* +;>>. 05 RC>;D 59A5 59; D;/;NDAN5+-A$$;>>AN5+ D0D N*5 9A4; 59; /0NANC0A> CA$AC05K 5* $AK 59; R;1A0N0NG 7A>ANC; */ 59; *7>0GA50*N AND 59A5, C*N+;FC;N5>K, C*1$>0ANC; E059 59; 5;R1+ */ 59; +A0D *7>0GA50*N 9A+ 7;C*1; 01$*++07>;. 05 RC>;D 59A5 59; $>A0N50//-A$$;>>;; 0+ ;N505>;D 5* 05+ C>A01 /*R A55*RN;KL+ /;;+ AND 59; C*+5 */ +C05.,? *n %anuary 83, 8:: , the CA rendered a Decision affirmin( the Decision of the R5C, the dispositive portion of which readsB E9;R;/*R;, premises considered, the assailed decision dated Au(ust 8, 8::: is hereby A//0R1;D, and the present appeal is hereby D0+10++;D for lacA of merit. +* *RD;R;D. 2;mphasis supplied.3 ,$etitioners filed a 1otion for Reconsideration,8: but it was denied for lacA of merit in a Resolution 8, dated April 8:, 8:: . 9ence, the present petition assi(nin( the followin( errorsB 0. 59; 9*N*RA7>; C*CR5 */ A$$;A>+ ;RR;D 0N /A0>0NG 5* A$$>K 59; $R*40+0*N+ */ 59; N;E C040> C*D; R;GARD0NG +C7+5AN50A> $;R/*R1ANC; 0N 59; %C+5 R;+*>C50*N */ 59; $;5050*N;R+L A$$;A>. 00. 59; 9*N*RA7>; C*CR5 */ A$$;A>+ +9*C>D 9A4; A$$>0;D 59; A$$>0CA7>; $R*40+0*N+ */ 59; >AE 40+-U-40+ 59; R;+C0++0*N */ C*N5RAC5+ 5* +;>> R;A> $R*$;R5K, +$;C0/0CA>>K 59; R;FC0R;1;N5 */ A $R0*R AND 4A>0D>K N*5AR0=;D >;55;R */ D;1AND. 000. 59; 9*N*RA7>; C*CR5 */ A$$;A>+ /A0>;D 5* A$$>K 5* 59; 0N+5AN5 CA+; 59; $;R50N;N5 $R*40+0*N+ */ 59; N;E C040> C*D; R;GARD0NG 59; $R0NC0$>; */ N*4A50*N A+ A 1*D; */ ;O50NGC0+90NG AN *7>0GA50*N. 04. 59; AEARD, 7K 59; C*CR5 */ A$$;A>+, */ A55*RN;KL+ /;;+, EA+ N*5 0N ACC*RD E059 59; /AC5+ AND 59; >AE. $etitioners maintain that they should have been entitled to (et at least one-half of the sub@ect property, because payment e&uivalent to its value has been made to, and received by Talayaan. $etitioners posit that the R5C should have applied Article ,83 88 of the Civil Code to the present case, considerin( that it has been factually established that they were able to pay at least one-half of the total obli(ation in (ood faith. $etitioners contend that Talayaan allowed %uliet to continue with the payment of the other half of the property in installments of $,:,:::.:: a month. 5hey also insist that they or %uliet was not (iven proper demand. 5hey maintain that the demand letters that were previously sent to them were for their previous obli(ation with Talayaan and not for the new a(reement between %uliet and Talayaan to assume payment of the unpaid portion of the sub@ect property. $etitioners aver that, for a demand of rescission to be valid, it is an absolute re&uirement that should be made by way of a duly notari<ed written notice. $etitioners liAewise claim that there was a valid novation in the present case. 5hey aver that the CA failed to see that the ori(inal contract between the petitioners and Talayaan was altered, chan(ed, modified and restructured, as a conse&uence of the chan(e in the person of the principal debtor and the monthly amorti<ation to be paid for the sub@ect property. Ehen they a(reed to a monthly amorti<ation of $,:,:::.:: per month, the ori(inal contract was chan(ed6 and Talayaan reco(ni<ed %ulietLs capacity to pay, as well as her desi(nation as the new debtor. 5he ori(inal contract was novated and the principal obli(ation to pay for the remainin( half of the sub@ect property was transferred from petitioners to %uliet. Ehen Talayaan accepted the payments made by the new debtor, %uliet, it waived its ri(ht to rescind the previous contract. 5hus, the action for rescission filed by Talayaan a(ainst them, was unfounded, since the contract sou(ht to be rescinded was no lon(er in eDistence. /inally, petitioners &uestion the R5CLs award of attorneyLs fees. 5hey maintain that there was no basis for the R5C to have awarded the same. 5hey claim that Talayaan was not forced, by their acts, to liti(ate, because %uliet was offerin( to pay the installments, but the offer was denied by Talayaan. 1oreover, since there were no awards for moral and eDemplary dama(es, the award of attorneyLs fees would have no basis and should be deleted. 5he petition is devoid of merit. 0n the present case, the nature and characteristics of a contract to sell is determinative of the propriety of the remedy of rescission and the award of attorneyLs fees. Cnder a contract to sell, the seller retains title to the thin( to be sold until the purchaser fully pays the a(reed purchase price. 5he full payment is a positive suspensive condition, the non-fulfillment of which is not a breach of contract, but merely an event that prevents the seller from conveyin( title to the purchaser. 5he non-payment of the purchase price renders the contract to sell ineffective and without force and effect. 83 CnliAe a contract of sale, where the title to the property passes to the vendee upon the delivery of the thin( sold, in a contract to sell, ownership is, by a(reement, reserved to the vendor and is not to pass to the vendee until full payment of the purchase price. *therwise stated, in a contract of sale, the vendor loses ownership over the property and cannot recover it until and unless the contract is resolved or rescinded6 whereas, in a contract to sell, title is retained by the vendor until full payment of the purchase price. 0n the latter contract, payment of the price is a positive suspensive condition, failure of which is not a breach but an event that prevents the obli(ation of the vendor to convey title from becomin( effective.8 +ince the obli(ation of respondent did not arise because of the failure of petitioners to fully pay the purchase price, Article ,,-,8. of the Civil Code would have no application. Rayos v. Court of Appeals8" elucidatesB Construin( the contracts to(ether, it is evident that the parties eDecuted a contract to sell and not a contract of sale. 5he petitioners retained ownership without further remedies by the respondents until the payment of the purchase

price of the property in full. +uch payment is a positive suspensive condition, failure of which is not really a breach, serious or otherwise, but an event that prevents the obli(ation of the petitioners to convey title from arisin(, in accordance with Article ,,? of the Civil Code. D D D DDDD 5he non-fulfillment by the respondent of his obli(ation to pay, which is a suspensive condition to the obli(ation of the petitioners to sell and deliver the title to the property, rendered the contract to sell ineffective and without force and effect. 5he parties stand as if the conditional obli(ation had never eDisted. Article ,,-, of the New Civil Code will not apply because it presupposes an obli(ation already eDtant. 5here can be no rescission of an obli(ation that is still non-eDistin(, the suspensive condition not havin( happened. 5he partiesL contract to sell eDplicitly provides that Talayaan #shall eDecute and deliver the correspondin( deed of absolute sale over# the sub@ect property to the petitioners #upon full payment of the total purchase price.# +ince petitioners failed to fully pay the purchase price for the entire property, TalayaanLs obli(ation to convey title to the property did not arise. 5hus, Talayaan may validly cancel the contract to sell its land to petitioner, not because it had the power to rescind the contract, but because their obli(ation thereunder did not arise. $etitioners failed to pay the balance of the purchase price. +uch payment is a positive suspensive condition, failure of which is not a breach, serious or otherwise, but an event that prevents the obli(ation of the seller to convey title from arisin(.8! 5he non-fulfillment by petitioners of their obli(ation to pay, which is a suspensive condition for the obli(ation of Talayaan to sell and deliver the title to the property, rendered the Contract to +ell ineffective and without force and effect. 5he parties stand as if the conditional obli(ation had never eDisted. 8? 0nasmuch as the suspensive condition did not taAe place, Talayaan cannot be compelled to transfer ownership of the property to petitioners. As re(ards petitionersL claim of novation, we do not (ive credence to petitionersL assertion that the contract to sell was novated when %uliet was alle(edly desi(nated as the new debtor and substituted the petitioners in payin( the balance of the purchase price. Novation is the eDtin(uishment of an obli(ation by the substitution or chan(e of the obli(ation by a subse&uent one which eDtin(uishes or modifies the first, either by chan(in( the ob@ect or principal conditions, or by substitutin( another in place of the debtor, or by subro(atin( a third person in the ri(hts of the creditor. 8Article ,8-8 of the Civil Code provides that #MiNn order that an obli(ation may be eDtin(uished by another which substitutes the same, it is imperative that it be so declared in une&uivocal terms, or that the old and the new obli(ations be on every point incompatible with each other.# Novation is never presumed. $arties to a contract must eDpressly a(ree that they are abro(atin( their old contract in favor of a new one. 0n the absence of an eDpress a(reement, novation taAes place only when the old and the new obli(ations are incompatible on every point. 3: 5he test of incompatibility is whether or not the two obli(ations can stand to(ether, each one havin( its independent eDistence. 0f they cannot, they are incompatible and the latter obli(ation novates the first. 3, 5hus, in order that a novation can taAe place, the concurrence of the followin( re&uisites are indispensableB ,3 5here must be a previous valid obli(ation6 83 5here must be an a(reement of the parties concerned to a new contract6 33 5here must be the eDtin(uishment of the old contract6 and 3 5here must be the validity of the new contract. 0n the instant case, none of the re&uisites are present. 5here is only one eDistin( and bindin( contract between the parties, because Talayaan never a(reed to the creation of a new contract between them or %uliet. 5rue, petitioners may have offered that they be substituted by %uliet as the new debtor to pay for the remainin( obli(ation. Nonetheless, Talayaan did not ac&uiesce to the proposal. 0ts acceptance of several payments after it demanded that petitioners pay their outstandin( obli(ation did not modify their ori(inal contract. $etitioners, admittedly, have been in default6 and TalayaanLs acceptance of the late payments is, at best, an act of tolerance on the part of Talayaan that could not have modified the contract. As to the partial payments made by petitioners from +eptember ,", ,-- to December 8:, ,--!, amountin( to $!??,:::.::, this Court resolves that the said amount be returned to the petitioners, there bein( no provision re(ardin( forfeiture of payments made in the Contract to +ell. 5o rule otherwise will be un@ust enrichment on the part of Talayaan at the eDpense of the petitioners. Also, the three percent 23S3 penalty interest appearin( in the contract is patently ini&uitous and unconscionable as to warrant the eDercise by this Court of its @udicial discretion. Art. 888! of the Civil Code provides that #MlNi&uidated dama(es, whether intended as an indemnity or a penalty, shall be e&uitably reduced if they are ini&uitous or unconscionable.# A perusal of the Contract to +ell reveals that the three percent 23S3 penalty interest on unpaid monthly installments 2per condition No. 33 would translate to a yearly penalty interest of thirty-siD percent 23"S3. Althou(h this Court on various occasions has eliminated alto(ether the three percent 23S3 penalty interest for bein( unconscionable,38 Ee are not inclined to do the same in the present case. A reduction is more consistent with fairness and e&uity. Ee should not lose si(ht of the fact that Talayaan remains an unpaid seller and that it has suffered, one way or another, from petitionersL non-performance of its contractual obli(ations. 0n view of such (larin( reality, Ee invoAe the authority (ranted to us by Article ,88- 33 of the Civil Code, and as e&uity dictates, the penalty interest is accordin(ly reimposed at a reduced rate of one percent 2,S3 interest per month, or twelve percent 2,8S3 per annum,3 to be deducted from the partial payments made by the petitioners. 'avvphi' As to the award of attorneyLs fees, the undeniable source of the present controversy is the failure of petitioners to pay the balance of the purchase price. 0t is elementary that when attorneyLs fees is awarded, they are so ad@udicated, because it is in the nature of actual dama(es suffered by the party to whom it is awarded, as he was constrained to en(a(e the services of a counsel to represent him for the protection of his interest. 3. 5hus, althou(h the award of attorneyLs fees to Talayaan was warranted by the circumstances obtained in this case, we find it e&uitable to reduce the award from $,::,:::.:: to $.:,:::.::.
E9;R;/*R;, premises considered, the Decision of the Re(ional 5rial Court in Civil Case No. C-,?3!?, dated Au(ust 8, 8:::, is hereby 1*D0/0;D to the eDtent that the contract between the parties is cancelled and the attorneyLs fees is reduced to

$.:,:::.::. Respondent is further ordered to refund the amount paid by the petitioners after deductin( the penalty interest due. 0n all other aspects, the Decision stands. +ub@ect to the above dis&uisitions, the Decision dated %anuary 83, 8:: and the Resolution dated April 8:, 8:: , of the Court of Appeals in CA-G.R. C4 No. "-?, , are A//0R1;D. +* *RD;R;D.

$;R/;C50*N of C*N5RAC5
G.R. No. "779#6 J)nu)r= " ! 27"2 ST$R(R&G.T S$LES ENTER/R&SES! &N'.! $etitioner, vs. /.&L&//&NE RE$LT4 'OR/OR$T&ON! 8SGR. DO8&NGO $. '&R&LOS! TRO/&'$N$ /RO/ERT&ES $ND DE3ELO/8ENT 'OR/OR$T&ON )n* ST$ND$RD RE$LT4 'OR/OR$T&ON! Respondents. D ; C 0 + 0 * N $($D! J.: 5he present case involves a determination of the perfection of contract of sale.

5he /acts and the Case *n April ,!, ,-?? Ramon >icup wrote 1s(r. Domin(o A. Cirilos, offerin( to buy three conti(uous parcels of land in $ara'a&ue that 5he 9oly +ee and $hilippine Realty Corporation 2$RC3 owned for $,,8 :.:: per s&uare meter. >icup accepted the responsibility for removin( the ille(al settlers on the land and enclosed a checA for $,::,:::.:: to #close the transaction.#, 9e undertooA to pay the balance of the purchase price upon presentation of the title for transfer and once the property has been cleared of its occupants. 1s(r. Cirilos, representin( 5he 9oly +ee and $RC, si(ned his name on the conforme portion of the letter and accepted the checA. 7ut the checA could not be encashed due to >icupLs stop-order payment. >icup wrote 1s(r. Cirilos on April 8", ,-??, re&uestin( that the titles to the land be instead transferred to petitioner +tarbri(ht +ales ;nterprises, 0nc. 2++;3. 9e enclosed a new checA for the same amount. ++;Ls representatives, 1r. and 1rs. Cu, did not si(n the letter. *n November 8-, ,-?? 1s(r. Cirilos wrote ++;, re&uestin( it to remove the occupants on the property and, should it decide not to do this, 1s(r. Cirilos would return to it the $,::,:::.:: that he received. *n %anuary 8 , ,-?- ++; replied with an #updated proposal.#8 0t would be willin( to comply with 1s(r. CirilosL condition provided the purchase price is lowered to $,,,.:.:: per s&uare meter. *n %anuary 8", ,-?- 1s(r. Cirilos wrote bacA, re@ectin( the #updated proposal.# 9e said that other buyers were willin( to ac&uire the property on an #as is, where is# basis at $,, ::.:: per s&uare meter. 9e (ave ++; seven days within which to buy the property at $,, ::.:: per s&uare meter, otherwise, 1s(r. Cirilos would taAe it that ++; has lost interest in the same. 9e enclosed a checA for $,::,:::.:: in his letter as refund of what he earlier received. *n /ebruary , ,-?- ++; wrote 1s(r. Cirilos that they already had a perfected contract of sale in the April ,!, ,-?? letter which he si(ned and that, conse&uently, he could no lon(er impose amendments such as the removal of the informal settlers at the buyerLs eDpense and the increase in the purchase price. ++; claimed that it (ot no reply from 1s(r. Cirilos and that the neDt thin( they Anew, the land had been sold to 5ropicana $roperties on 1arch 3:, ,-?-. *n 1ay ,., ,-?- ++; demanded rescission of that sale. 1eanwhile, on Au(ust , ,-?- 5ropicana $roperties sold the three parcels of land to +tandard Realty. 0ts demand for rescission unheeded, ++; filed a complaint for annulment of sale and reconveyance with dama(es before the Re(ional 5rial Court 2R5C3 of 1aAati, 7ranch ",, a(ainst 5he 9oly +ee, $RC, 1s(r. Cirilos, and 5ropicana $roperties in Civil Case -:-,?3. ++; amended its complaint on /ebruary 8 , ,--8, impleadin( +tandard Realty as additional defendant. 5he 9oly +ee sou(ht dismissal of the case a(ainst it, claimin( that as a forei(n (overnment, it cannot be sued without its consent. 5he R5C held otherwise but, on December ,, ,-- , 3 the Court reversed the rulin( of the R5C and ordered the case a(ainst 5he 9oly +ee dismissed. 7y *rder of %anuary 8", ,--" the case was transferred to the $ara'a&ue R5C, 7ranch 8.?. ++; alle(ed that >icupLs ori(inal letter of April ,!, ,-?? to 1s(r. Cirilos constituted a perfected contract. >icup even (ave an earnest money of $,::,:::.:: to #close the transaction.# 9is offer to rid the land of its occupants was a #mere (esture of accommodation if only to eDpedite the transfer of its title.# /urther, ++; claimed that, in representin( 5he 9oly +ee and $RC, 1s(r. Cirilos acted in bad faith when he set the price of the property at $,, ::.:: per s&uare meter when in truth, the property was sold to 5ropicana $roperties for only $!":."? per s&uare meter. 1s(r. Cirilos maintained, on the other hand, that based on their eDchan(e of letters, no contract of sale was perfected between ++; and the parties he represented. And, only after the ne(otiations between them fell throu(h did he sell the land to 5ropicana $roperties. 0n its Decision of /ebruary , , 8:::, the $ara'a&ue R5C treated the April ,!, ,-?? letter between >icum and 1s(r. Cirilos as a perfected contract of sale between the parties. 1s(r. Cirilos attempted to chan(e the terms of contract and return ++;Ls initial deposit but the parties reached no a(reement re(ardin( such chan(e. +ince such a(reement was wantin(, the ori(inal terms provided in the April ,!, ,-?? letter continued to bind the parties. *n appeal to the Court of Appeals 2CA3, the latter rendered @ud(ment on November ,:, 8::", . reversin( the $ara'a&ue R5C decision. 5he CA held that no perfected contract can be (leaned from the April ,!, ,-?? letter that ++; had relied on. 0ndeed, the subse&uent eDchan(e of letters between ++; and 1s(r. Cirilos show that the parties were (rapplin( with the terms of the sale. 1s(r. Cirilos made no unconditional acceptance that would (ive rise to a perfected contract. As to the $,::,:::.:: (iven to 1s(r. Cirilos, the CA considered it an option money that secured for ++; only the privile(e to buy the property even if >icup called it a #deposit.# 5he CA denied ++;Ls motion for reconsideration on 1ay 8, 8::!. 5he 0ssue $resented 5he only issue in this case is whether or not the CA erred in holdin( that no perfected contract of sale eDisted between ++; and the land owners, represented by 1s(r. Cirilos. 5he CourtLs Rulin( 5hree elements are needed to create a perfected contractB ,3 the consent of the contractin( parties6 283 an ob@ect certain which is the sub@ect matter of the contract6 and 233 the cause of the obli(ation which is established. " Cnder the law on sales, a contract of sale is perfected when the seller, obli(ates himself, for a price certain, to deliver and

to transfer ownership of a thin( or ri(ht to the buyer, over which the latter a(rees. ! /rom that moment, the parties may demand reciprocal performance. 5he Court believes that the April ,!, ,-?? letter between >icup and 1s(r. Cirilos, the representative of the propertyLs owners, constituted a perfected contract. Ehen 1s(r. Cirilos affiDed his si(nature on that letter, he eDpressed his conformity to the terms of >icupLs offer appearin( on it. 5here was meetin( of the minds as to the ob@ect and consideration of the contract. 7ut when >icup ordered a stop-payment on his deposit and proposed in his April 8", ,-?? letter to 1s(r. Cirilos that the property be instead transferred to ++;, a sub@ective novation tooA place. A sub@ective novation results throu(h substitution of the person of the debtor or throu(h subro(ation of a third person to the ri(hts of the creditor. 5o accomplish a sub@ective novation throu(h chan(e in the person of the debtor, the old debtor needs to be eDpressly released from the obli(ation and the third person or new debtor needs to assume his place in the relation.? Novation serves two functions Q one is to eDtin(uish an eDistin( obli(ation, the other to substitute a new one in its place Q re&uirin( concurrence of four re&uisitesB ,3 a previous valid obli(ation6 83 an a(reement of all parties concerned to a new contract6 33 the eDtin(uishment of the old obli(ation6 and 3 the birth of a valid new obli(ation. Notably, >icup and 1s(r. Cirilos affiDed their si(natures on the ori(inal a(reement embodied in >icupLs letter of April 8", ,-??. No similar letter a(reement can be found between ++; and 1s(r. Cirilos. 5he proposed substitution of >icup by ++; opened the ne(otiation sta(e for a new contract of sale as between ++; and the owners. 5he succeedin( eDchan(e of letters between 1r. +tephen Cu, ++;Ls representative, and 1s(r. Cirilos attests to an unfinished ne(otiation. 1s(r. Cirilos referred to his discussion with ++; re(ardin( the purchase as a #pendin( transaction.#,: Cu, on the other hand, re(arded ++;Ls first letter to 1s(r. Cirilos as an #updated proposal.# ,, 5his proposal tooA up two issuesB which party would undertaAe to evict the occupants on the property and how much must the consideration be for the property. 5hese are clear indications that there was no meetin( of the minds between the parties.'avvphi' As it turned out, the parties reached no consensus re(ardin( these issues, thus producin( no perfected sale between them. $arenthetically, 1s(r. Cirilos did not act in bad faith when he sold the property to 5ropicana even if it was for a lesser consideration. 1ore than a month had passed since the last communication between the parties on /ebruary , ,-?-. 0t is not improbable for prospective buyers to offer to buy the property durin( that time. 5he $,::,:::.:: that was (iven to 1s(r. Cirilos as #deposit# cannot be considered as earnest money. Ehere the parties merely eDchan(ed offers and counter-offers, no contract is perfected since they did not yet (ive their consent to such offers.,8 ;arnest money applies to a perfected sale. ++; cannot revert to the ori(inal terms stated in >icupLs letter to 1s(r. Cirilos dated April ,!, ,-?? since it was not privy to such contract. 5he parties to it were >icup and 1s(r. Cirilos. Cnder the principle of relativity of contracts, contracts can only bind the parties who entered into it. 0t cannot favor or pre@udice a third person. ,3 $etitioner ++; cannot, therefore, impose the terms >icup stated in his April ,!, ,-?? letter upon the owners. E9;R;/*R;, the Court D0+10++;+ the petition and A//0R1+ the Court of Appeals Decision dated November ,:, 8::" in CA-G.R. C4 "!3"".+* *RD;R;D.