THIRD DIVISION

MAKATI STOCK EXCHANGE,

INC., MA. VIVIAN YUCHENGCO,
ADOLFO M. DUARTE, MYRON C.
PAPA, NORBERTO C. NAZARENO,
GEORGE UY-TIOCO, ANTONIO A.
LOPA, RAMON B. ARNAIZ, LUIS
J.L.
VIRATA,
and
ANTONIO
GARCIA, JR.
Petitioners,

1997 and Resolution dated 18 May 1999 of the Court of

Appeals in CA-G.R. SP No. 38455.
G.R. No. 138814

The facts of the case are as follows:

SEC Case No. 02-94-4678 was instituted on 10

February 1994 by respondent Miguel V. Campos, who filed
with the Securities, Investigation and Clearing Department
(SICD) of the Securities and Exchange Commission (SEC), a
YNARES-SANTIAGO,
Petition against herein petitioners Makati Stock Exchange, Inc.
Chairperson,
(MKSE) and MKSE directors, Ma. Vivian Yuchengco, Adolfo
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
M. Duarte, Myron C. Papa, Norberto C. Nazareno, George UyNACHURA, and Tioco, Antonio A, Lopa, Ramon B. Arnaiz, Luis J.L. Virata,
- versus PERALTA, JJ.
and Antonio Garcia, Jr.Respondent, in said Petition, sought: (1)
the nullification of the Resolution dated 3 June 1993 of the
MKSE Board of Directors, which allegedly deprived him of his
MIGUEL V. CAMPOS, substituted by
right to participate equally in the allocation of Initial Public
JULIA
ORTIGAS
VDA.
Offerings (IPO) of corporations registered with MKSE; (2) the
DECAMPOS,[1]
Promulgated:
delivery of the IPO shares he was allegedly deprived of, for
Respondent.
which he would pay IPO prices; and (3) the payment of P2
April 16, 2009
million as moral damages, P1 million as exemplary damages,
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - and P500,000.00 as attorneys fees and litigation expenses.
- - - - - - - -x
Present:

DECISION

CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule
45 seeking the reversal of the Decision[2] dated 11 February

On 14 February 1994, the SICD issued an Order

granting respondents prayer for the issuance of a Temporary
Restraining Order to enjoin petitioners from implementing or
enforcing the 3 June 1993 Resolution of the MKSE Board of
Directors.
The SICD subsequently issued another Order on 10
March 1994 granting respondents application for a Writ of
Preliminary Injunction, to continuously enjoin, during the

pendency of SEC Case No. 02-94-4678, the implementation or

enforcement of the MKSE Board Resolution in
question. Petitioners assailed this SICD Order dated 10 March
1994 in a Petition for Certiorari filed with the SEC en banc,
docketed as SEC-EB No. 393.
On 11 March 1994, petitioners filed a Motion to
Dismiss respondents Petition in SEC Case No. 02-94-4678,
based on the following grounds: (1) the Petition became moot
due to the cancellation of the license of MKSE; (2) the SICD
had no jurisdiction over the Petition; and (3) the Petition failed
to state a cause of action.
The SICD denied petitioners Motion to Dismiss in an
Order dated 4 May 1994. Petitioners again challenged the 4
May 1994 Order of SICD before the SEC en bancthrough
another Petition for Certiorari, docketed as SEC-EB No. 403.
In an Order dated 31 May 1995 in SEC-EB No. 393,
the SEC en banc nullified the 10 March 1994 Order of SICD in
SEC Case No. 02-94-4678 granting a Writ of Preliminary
Injunction in favor of respondent. Likewise, in an Order dated
14 August 1995 in SEC-EB No. 403, the SEC en banc annulled
the 4 May 1994 Order of SICD in SEC Case No. 02-94-4678
denying petitioners Motion to Dismiss, and accordingly
ordered the dismissal of respondents Petition before the SICD.
Respondent filed a Petition for Certiorari with the
Court of Appeals assailing the Orders of the SEC en
banc dated 31 May 1995 and 14 August 1995 in SEC-EB No.
393 and SEC-EB No. 403, respectively. Respondents Petition

before the appellate court was docketed as CA-G.R. SP No.

38455.
On 11 February 1997, the Court of Appeals
promulgated its Decision in CA-G.R. SP No. 38455, granting
respondents Petition for Certiorari, thus:
WHEREFORE, the petition in so far as
it prays for annulment of the Orders dated May
31, 1995 and August 14, 1995 in SEC-EB Case
Nos. 393 and 403 is GRANTED. The said
orders are hereby rendered null and void and set
aside.
Petitioners filed a Motion for Reconsideration of the
foregoing Decision but it was denied by the Court of Appeals
in a Resolution dated 18 May 1999.
Hence, the present Petition for Review raising the
following arguments:
I.
THE SEC EN BANC DID NOT COMMIT
GRAVE
ABUSE
OF
DISCRETION
AMOUNTING TO LACK OR EXCESS OF
JURISDICTION WHEN IT DISMISSED THE
PETITION FILED BY RESPONDENT
BECAUSE ON ITS FACE, IT FAILED TO
STATE A CAUSE OF ACTION.

II.
THE GRANT OF THE IPO ALLOCATIONS
IN FAVOR OF RESPONDENT WAS A MERE
ACCOMMODATION GIVEN TO HIM BY
THE BOARD OF [DIRECTORS] OF THE
MAKATI STOCK EXCHANGE, INC.
III.
THE COURT OF APPEALS ERRED IN
HOLDING THAT THE SEC EN BANC
COMMITTED
GRAVE
ABUSE
OF
DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION WHEN IT
MADE AN EXTENDED INQUIRY AND
PROCEEDED
TO
MAKE
A
DETERMINATION AS TO THE TRUTH OF
RESPONDENTS ALLEGATIONS IN HIS
PETITION AND USED AS BASIS THE
EVIDENCE ADDUCED DURING THE
HEARING ON THE APPLICATION FOR THE
WRIT OF PRELIMINARY INJUNCTION TO
DETERMINE
THE
EXISTENCE
OR
VALIDITY OF A STATED CAUSE OF
ACTION.

INVESTING
PUBLIC. HENCE,
RESPONDENTS CLAIM FOR DAMAGES IS
ILLUSORY AND HIS PETITION A
NUISANCE SUIT.[3]
On 18 September 2001, counsel for respondent
manifested to this Court that his client died on 7 May 2001. In a
Resolution dated 24 October 2001, the Court directed the
substitution of respondent by his surviving spouse, Julia
Ortigas vda. de Campos.
Petitioners want this Court to affirm the dismissal by
the SEC en banc of respondents Petition in SEC Case No. 0294-4678 for failure to state a cause of action. On the other
hand, respondent insists on the sufficiency of his Petition and
seeks the continuation of the proceedings before the SICD.
A cause of action is the act or omission by which a
party violates a right of another.[4] A complaint states a cause of
action where it contains three essential elements of a cause of
action, namely: (1) the legal right of the plaintiff, (2) the
correlative obligation of the defendant, and (3) the act or
omission of the defendant in violation of said legal right. If
these elements are absent, the complaint becomes vulnerable to
dismissal on the ground of failure to state a cause of action.

IV.
IPO
ALLOCATIONS
GRANTED
TO
BROKERS ARE NOT TO BE BOUGHT BY
THE BROKERS FOR THEMSELVES BUT
ARE TO BE DISTRIBUTED TO THE

If a defendant moves to dismiss the complaint on the

ground of lack of cause of action, he is regarded as having
hypothetically admitted all the averments thereof. The test of
sufficiency of the facts found in a complaint as constituting a
cause of action is whether or not admitting the facts alleged,

the court can render a valid judgment upon the same in

accordance with the prayer thereof. The hypothetical admission
extends to the relevant and material facts well pleaded in the
complaint and inferences fairly deducible therefrom. Hence, if
the allegations in the complaint furnish sufficient basis by
which the complaint can be maintained, the same should not be
dismissed regardless of the defense that may be assessed by the
defendant.[5]
Given the foregoing, the issue of whether respondents
Petition in SEC Case No. 02-94-4678 sufficiently states a cause
of action may be alternatively stated as whether, hypothetically
admitting to be true the allegations in respondents Petition in
SEC Case No. 02-94-4678, the SICD may render a valid
judgment in accordance with the prayer of said Petition.
A reading of the exact text of respondents Petition in
SEC Case No. 02-94-4678 is, therefore, unavoidable. Pertinent
portions of the said Petition reads:
7. In recognition of petitioners invaluable
services, the general membership of respondent
corporation [MKSE] passed a resolution
sometime in 1989 amending its Articles of
Incorporation, to include the following provision
therein:
ELEVENTH WHEREAS,
Mr. Miguel Campos is the only
surviving incorporator of the
Makati Stock Exchange, Inc. who
has maintained his membership;

WHEREAS,
he
has
unselfishly served the Exchange
in various capacities, as governor
from 1977 to the present and as
President from 1972 to 1976 and
again as President from 1988 to
the present;
WHEREAS,
such
dedicated service and leadership
which has contributed to the
advancement and well being not
only of the Exchange and its
members but also to the
Securities industry, needs to be
recognized and appreciated;
WHEREAS, as such, the
Board of Governors in its
meeting held on February 09,
1989
has
correspondingly
adopted a resolution recognizing
his valuable service to the
Exchange, reward the same, and
preserve for posterity such
recognition by proposing a
resolution to the membership
body which would make him as
Chairman Emeritus for life and
install in the Exchange premises
a commemorative bronze plaque
in his honor;

NOW, THEREFORE, for

and in consideration of the above
premises, the position of the
Chairman Emeritus to be
occupied by Mr. Miguel Campos
during
his
lifetime
and
irregardless of his continued
membership in the Exchange
with the Privilege to attend all
membership meetings as well as
the meetings of the Board of
Governors of the Exchange, is
hereby created.
8. Hence, to this day, petitioner is not
only an active member of the respondent
corporation, but its Chairman Emeritus as well.
9. Correspondingly, at all times material
to this petition, as an active member and
Chairman Emeritus of respondent corporation,
petitioner has always enjoyed the right given to
all the other members to participate equally in
the Initial Public Offerings (IPOs for brevity) of
corporations.
10. IPOs are shares of corporations
offered for sale to the public, prior to the listing
in the trading floor of the countrys two stock
exchanges. Normally, Twenty Five Percent
(25%) of these shares are divided equally
between the two stock exchanges which in turn

divide these equally among their members, who

pay therefor at the offering price.
11. However, on June 3, 1993, during a
meeting of the Board of Directors of respondentcorporation, individual respondents passed a
resolution to stop giving petitioner the IPOs he is
entitled to, based on the ground that these shares
were allegedly benefiting Gerardo O. Lanuza, Jr.,
who these individual respondents wanted to get
even with, for having filed cases before the
Securities and Exchange (SEC) for their
disqualification as member of the Board of
Directors of respondent corporation.
12. Hence, from June 3, 1993 up to the
present time, petitioner has been deprived of his
right to subscribe to the IPOs of corporations
listing in the stock market at their offering prices.
13. The collective act of the individual
respondents in depriving petitioner of his right to
a share in the IPOs for the aforementioned
reason, is unjust, dishonest and done in bad faith,
causing petitioner substantial financial damage.[6]
There is no question that the Petition in SEC Case No.
02-94-4678 asserts a right in favor of respondent, particularly,
respondents alleged right to subscribe to the IPOs of
corporations listed in the stock market at their offering prices;
and stipulates the correlative obligation of petitioners to
respect respondents right, specifically, by continuing to allow

respondent to subscribe to the IPOs of corporations listed in the

stock market at their offering prices.
However, the terms right and obligation in respondents
Petition are not magic words that would automatically lead to
the conclusion that such Petition sufficiently states a cause of
action. Right and obligation are legal terms with specific legal
meaning. A right is a claim or title to an interest in anything
whatsoever that is enforceable by law.[7] Anobligation is
defined in the Civil Code as a juridical necessity to give, to do
or not to do.[8] For every right enjoyed by any person, there is a
corresponding obligation on the part of another person to
respect such right. Thus, Justice J.B.L. Reyes offers[9] the
definition given by Arias Ramos as a more complete definition:
An obligation is a juridical relation
whereby a person (called the creditor) may
demand from another (called the debtor) the
observance of a determinative conduct (the
giving, doing or not doing), and in case of
breach, may demand satisfaction from the
assets of the latter.
The Civil Code enumerates the sources of obligations:
Art. 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts.

Therefore, an obligation imposed on a person, and the

corresponding right granted to another, must be rooted in at
least one of these five sources. The mere assertion of a right
and claim of an obligation in an initiatory pleading, whether a
Complaint or Petition, without identifying the basis or source
thereof, is merely a conclusion of fact and law.A pleading
should state the ultimate facts essential to the rights of action or
defense asserted, as distinguished from mere conclusions of
fact or conclusions of law.[10] Thus, a Complaint or Petition
filed by a person claiming a right to the Office of the President
of this Republic, but without stating the source of his purported
right, cannot be said to have sufficiently stated a cause of
action. Also, a person claiming to be the owner of a parcel of
land cannot merely state that he has a right to the ownership
thereof, but must likewise assert in the Complaint either a
mode of acquisition of ownership or at least a certificate of title
in his name.
In the case at bar, although the Petition in SEC Case
No. 02-94-4678 does allege respondents right to subscribe to
the IPOs of corporations listed in the stock market at their
offering prices, and petitioners obligation to continue
respecting and observing such right, the Petition utterly failed
to lay down the source or basis of respondents right and/or
petitioners obligation.
Respondent merely quoted in his Petition the MKSE
Board Resolution, passed sometime in 1989, granting him the
position of Chairman Emeritus of MKSE for life.However,
there is nothing in the said Petition from which the Court can
deduce that respondent, by virtue of his position as Chairman

Emeritus of MKSE, was granted by law, contract, or any other

legal source, the right to subscribe to the IPOs of corporations
listed in the stock market at their offering prices.
A meticulous review of the Petition reveals that the
allocation of IPO shares was merely alleged to have been done
in accord with a practice normally observed by the members of
the stock exchange, to wit:
IPOs are shares of corporations offered for sale
to the public, prior to their listing in the trading
floor
of
the
countrys
two
stock
exchanges. Normally, Twenty-Five Percent
(25%) of these shares are divided equally
between the two stock exchanges which in
turn divide these equally among their
members, who pay therefor at the offering
price.[11] (Emphasis supplied)
A practice or custom is, as a general rule, not a source
of a legally demandable or enforceable right.[12] Indeed, in labor
cases, benefits which were voluntarily given by the employer,
and which have ripened into company practice, are considered
as rights that cannot be diminished by the employer.
[13]
Nevertheless, even in such cases, the source of the
employees right is not custom, but ultimately, the law, since
Article 100 of the Labor Code explicitly prohibits elimination
or diminution of benefits.
There is no such law in this case that converts the
practice of allocating IPO shares to MKSE members, for

subscription at their offering prices, into an enforceable or

demandable right. Thus, even if it is hypothetically admitted
that normally, twenty five percent (25%) of the IPOs are
divided equally between the two stock exchanges -- which, in
turn, divide their respective allocation equally among their
members, including the Chairman Emeritus, who pay for IPO
shares at the offering price -- the Court cannot grant
respondents prayer for damages which allegedly resulted from
the MKSE Board Resolution dated 3 June 1993 deviating from
said practice by no longer allocating any shares to respondent.
Accordingly, the instant Petition should be granted. The
Petition in SEC Case No. 02-94-4678 should be dismissed for
failure to state a cause of action. It does not matter that the
SEC en banc, in its Order dated 14 August 1995 in SEC-EB
No. 403, overstepped its bounds by not limiting itself to the
issue of whether respondents Petition before the SICD
sufficiently stated a cause of action. The SEC en banc may
have been mistaken in considering extraneous evidence in
granting petitioners Motion to Dismiss, but its discussion
thereof are merely superfluous and obiter dictum. In the main,
the SEC en banc did correctly dismiss the Petition in SEC Case
No. 02-94-4678 for its failure to state the basis for respondents
alleged right, to wit:
Private respondent Campos has failed to
establish the basis or authority for his alleged
right to participate equally in the IPO
allocations of the Exchange. He cited paragraph
11 of the amended articles of incorporation of
the Exchange in support of his position but a

careful reading of the said provision shows

nothing therein that would bear out his
claim. The provision merely created the position
of chairman emeritus of the Exchange but it
mentioned nothing about conferring upon the
occupant thereof the right to receive IPO
allocations.[14]
With the dismissal of respondents Petition in SEC Case
No. 02-94-4678, there is no more need for this Court to resolve
the propriety of the issuance by SCID of a writ of preliminary
injunction in said case.
WHEREFORE, the Petition is GRANTED. The
Decision of the Court of Appeals dated 11 February 1997 and
its Resolution dated 18 May 1999 in CA-G.R. SP No. 38455
are REVERSED and SET ASIDE. The Orders dated 31 May
1995 and 14 August 1995 of the Securities and Exchange
Commission en banc in SEC-EB Case No. 393 and No. 403,
respectively, are hereby reinstated. No pronouncement as to
costs.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. 109125 December 2, 1994

ANG YU ASUNCION, ARTHUR GO AND KEH
TIONG, petitioners,
vs.
THE HON. COURT OF APPEALS and BUEN REALTY
DEVELOPMENT CORPORATION, respondents.
Antonio M. Albano for petitioners.
Umali, Soriano & Associates for private respondent.

VITUG, J.:
Assailed, in this petition for review, is the decision of the Court
of Appeals, dated 04 December 1991, in CA-G.R. SP No.
26345 setting aside and declaring without force and effect the
orders of execution of the trial court, dated 30 August 1991 and
27 September 1991, in Civil Case No. 87-41058.
The antecedents are recited in good detail by the appellate
court thusly:

On July 29, 1987 a Second Amended Complaint

for Specific Performance was filed by Ang Yu
Asuncion and Keh Tiong, et al., against Bobby
Cu Unjieng, Rose Cu Unjieng and Jose Tan
before the Regional Trial Court, Branch 31,
Manila in Civil Case No. 87-41058, alleging,
among others, that plaintiffs are tenants or
lessees of residential and commercial spaces
owned by defendants described as Nos. 630-638
Ongpin Street, Binondo, Manila; that they have
occupied said spaces since 1935 and have been
religiously paying the rental and complying with
all the conditions of the lease contract; that on
several occasions before October 9, 1986,
defendants informed plaintiffs that they are
offering to sell the premises and are giving them
priority to acquire the same; that during the
negotiations, Bobby Cu Unjieng offered a price
of P6-million while plaintiffs made a counter
offer of P5-million; that plaintiffs thereafter
asked the defendants to put their offer in writing
to which request defendants acceded; that in
reply to defendant's letter, plaintiffs wrote them
on October 24, 1986 asking that they specify the
terms and conditions of the offer to sell; that
when plaintiffs did not receive any reply, they
sent another letter dated January 28, 1987 with
the same request; that since defendants failed to
specify the terms and conditions of the offer to
sell and because of information received that
defendants were about to sell the property,

plaintiffs were compelled to file the complaint

to compel defendants to sell the property to
them.
Defendants filed their answer denying the
material allegations of the complaint and
interposing a special defense of lack of cause of
action.
After the issues were joined, defendants filed a
motion for summary judgment which was
granted by the lower court. The trial court found
that defendants' offer to sell was never accepted
by the plaintiffs for the reason that the parties
did not agree upon the terms and conditions of
the proposed sale, hence, there was no contract
of sale at all. Nonetheless, the lower court ruled
that should the defendants subsequently offer
their property for sale at a price of P11-million
or below, plaintiffs will have the right of first
refusal. Thus the dispositive portion of the
decision states:
WHEREFORE, judgment is
hereby rendered in favor of the
defendants and against the
plaintiffs summarily dismissing
the complaint subject to the
aforementioned condition that if
the defendants subsequently
decide to offer their property for

sale for a purchase price of

Eleven Million Pesos or lower,
then the plaintiffs has the option
to purchase the property or of
first refusal, otherwise,
defendants need not offer the
property to the plaintiffs if the
purchase price is higher than
Eleven Million Pesos.
SO ORDERED.
Aggrieved by the decision, plaintiffs appealed to
this Court in
CA-G.R. CV No. 21123. In a decision
promulgated on September 21, 1990 (penned by
Justice Segundino G. Chua and concurred in by
Justices Vicente V. Mendoza and Fernando A.
Santiago), this Court affirmed with modification
the lower court's judgment, holding:
In resume, there was no meeting
of the minds between the parties
concerning the sale of the
property. Absent such
requirement, the claim for
specific performance will not lie.
Appellants' demand for actual,
moral and exemplary damages
will likewise fail as there exists
no justifiable ground for its

award. Summary judgment for

defendants was properly granted.
Courts may render summary
judgment when there is no
genuine issue as to any material
fact and the moving party is
entitled to a judgment as a matter
of law (Garcia vs. Court of
Appeals, 176 SCRA 815). All
requisites obtaining, the decision
of the court a quo is legally
justifiable.
WHEREFORE, finding the
appeal unmeritorious, the
judgment appealed from is
hereby AFFIRMED, but subject
to the following modification:
The court a quo in the aforestated
decision gave the plaintiffsappellants the right of first
refusal only if the property is
sold for a purchase price of
Eleven Million pesos or lower;
however, considering the
mercurial and uncertain forces in
our market economy today. We
find no reason not to grant the
same right of first refusal to
herein appellants in the event that
the subject property is sold for a

price in excess of Eleven Million

pesos. No pronouncement as to
costs.
SO ORDERED.
The decision of this Court was brought to the
Supreme Court by petition for review
on certiorari. The Supreme Court denied the
appeal on May 6, 1991 "for insufficiency in
form and substances" (Annex H, Petition).
On November 15, 1990, while CA-G.R. CV No.
21123 was pending consideration by this Court,
the Cu Unjieng spouses executed a Deed of Sale
(Annex D, Petition) transferring the property in
question to herein petitioner Buen Realty and
Development Corporation, subject to the
following terms and conditions:
1. That for and in consideration
of the sum of FIFTEEN
MILLION PESOS
(P15,000,000.00), receipt of
which in full is hereby
acknowledged, the VENDORS
hereby sells, transfers and
conveys for and in favor of the
VENDEE, his heirs, executors,
administrators or assigns, the
above-described property with all

the improvements found therein

including all the rights and
interest in the said property free
from all liens and encumbrances
of whatever nature, except the
pending ejectment proceeding;
2. That the VENDEE shall pay
the Documentary Stamp Tax,
registration fees for the transfer
of title in his favor and other
expenses incidental to the sale of
above-described property
including capital gains tax and
accrued real estate taxes.
As a consequence of the sale, TCT No.
105254/T-881 in the name of the Cu Unjieng
spouses was cancelled and, in lieu thereof, TCT
No. 195816 was issued in the name of petitioner
on December 3, 1990.
On July 1, 1991, petitioner as the new owner of
the subject property wrote a letter to the lessees
demanding that the latter vacate the premises.
On July 16, 1991, the lessees wrote a reply to
petitioner stating that petitioner brought the
property subject to the notice of lis
pendens regarding Civil Case No. 87-41058

annotated on TCT No. 105254/T-881 in the

name of the Cu Unjiengs.
The lessees filed a Motion for Execution dated
August 27, 1991 of the Decision in Civil Case
No. 87-41058 as modified by the Court of
Appeals in CA-G.R. CV No. 21123.
On August 30, 1991, respondent Judge issued an
order (Annex A, Petition) quoted as follows:
Presented before the Court is a
Motion for Execution filed by
plaintiff represented by Atty.
Antonio Albano. Both defendants
Bobby Cu Unjieng and Rose Cu
Unjieng represented by Atty.
Vicente Sison and Atty. Anacleto
Magno respectively were duly
notified in today's consideration
of the motion as evidenced by the
rubber stamp and signatures upon
the copy of the Motion for
Execution.
The gist of the motion is that the
Decision of the Court dated
September 21, 1990 as modified
by the Court of Appeals in its
decision in CA G.R. CV-21123,
and elevated to the Supreme

Court upon the petition for

review and that the same was
denied by the highest tribunal in
its resolution dated May 6, 1991
in G.R. No.
L-97276, had now become final
and executory. As a consequence,
there was an Entry of Judgment
by the Supreme Court as of June
6, 1991, stating that the aforesaid
modified decision had already
become final and executory.
It is the observation of the Court
that this property in dispute was
the subject of theNotice of Lis
Pendens and that the modified
decision of this Court
promulgated by the Court of
Appeals which had become final
to the effect that should the
defendants decide to offer the
property for sale for a price of
P11 Million or lower, and
considering the mercurial and
uncertain forces in our market
economy today, the same right of
first refusal to herein
plaintiffs/appellants in the event
that the subject property is sold

for a price in excess of Eleven

Million pesos or more.
WHEREFORE, defendants are
hereby ordered to execute the
necessary Deed of Sale of the
property in litigation in favor of
plaintiffs Ang Yu Asuncion, Keh
Tiong and Arthur Go for the
consideration of P15 Million
pesos in recognition of plaintiffs'
right of first refusal and that a
new Transfer Certificate of Title
be issued in favor of the buyer.
All previous transactions
involving the same property
notwithstanding the issuance of
another title to Buen Realty
Corporation, is hereby set aside
as having been executed in bad
faith.
SO ORDERED.
On September 22, 1991 respondent Judge issued
another order, the dispositive portion of which
reads:
WHEREFORE, let there be Writ
of Execution issue in the above-

entitled case directing the Deputy

Sheriff Ramon Enriquez of this
Court to implement said Writ of
Execution ordering the
defendants among others to
comply with the aforesaid Order
of this Court within a period of
one (1) week from receipt of this
Order and for defendants to
execute the necessary Deed of
Sale of the property in litigation
in favor of the plaintiffs Ang Yu
Asuncion, Keh Tiong and Arthur
Go for the consideration of
P15,000,000.00 and ordering the
Register of Deeds of the City of
Manila, to cancel and set aside
the title already issued in favor of
Buen Realty Corporation which
was previously executed between
the latter and defendants and to
register the new title in favor of
the aforesaid plaintiffs Ang Yu
Asuncion, Keh Tiong and Arthur
Go.
SO ORDERED.
On the same day, September 27, 1991 the
corresponding writ of execution (Annex C,
Petition) was issued. 1

On 04 December 1991, the appellate court, on appeal to it by

private respondent, set aside and declared without force and
effect the above questioned orders of the court a quo.
In this petition for review on certiorari, petitioners contend that
Buen Realty can be held bound by the writ of execution by
virtue of the notice of lis pendens, carried over on TCT No.
195816 issued in the name of Buen Realty, at the time of the
latter's purchase of the property on 15 November 1991 from
the Cu Unjiengs.
We affirm the decision of the appellate court.
A not too recent development in real estate transactions is the
adoption of such arrangements as the right of first refusal, a
purchase option and a contract to sell. For ready reference, we
might point out some fundamental precepts that may find some
relevance to this discussion.
An obligation is a juridical necessity to give, to do or not to do
(Art. 1156, Civil Code). The obligation is constituted upon the
concurrence of the essential elements thereof, viz: (a)
The vinculum juris or juridical tie which is the efficient cause
established by the various sources of obligations (law,
contracts, quasi-contracts, delicts and quasi-delicts); (b)
the object which is the prestation or conduct; required to be
observed (to give, to do or not to do); and (c) the subjectpersons who, viewed from the demandability of the obligation,
are the active (obligee) and the passive (obligor) subjects.

Among the sources of an obligation is a contract (Art. 1157,

Civil Code), which is a meeting of minds between two persons
whereby one binds himself, with respect to the other, to give
something or to render some service (Art. 1305, Civil Code). A
contract undergoes various stages that include its negotiation or
preparation, its perfection and, finally, its
consummation. Negotiation covers the period from the time the
prospective contracting parties indicate interest in the
contract to the time the contract is concluded (perfected).
The perfection of the contract takes place upon the concurrence
of the essential elements thereof. A contract which
is consensual as to perfection is so established upon a mere
meeting of minds, i.e., the concurrence of offer and acceptance,
on the object and on the cause thereof. A contract which
requires, in addition to the above, the delivery of the object of
the agreement, as in a pledge or commodatum, is commonly
referred to as a real contract. In a solemn contract, compliance
with certain formalities prescribed by law, such as in a
donation of real property, is essential in order to make the act
valid, the prescribed form being thereby an essential element
thereof. The stage ofconsummation begins when the parties
perform their respective undertakings under the contract
culminating in the extinguishment thereof.
Until the contract is perfected, it cannot, as an independent
source of obligation, serve as a binding juridical relation. In
sales, particularly, to which the topic for discussion about the
case at bench belongs, the contract is perfected when a person,
called the seller, obligates himself, for a price certain, to deliver
and to transfer ownership of a thing or right to another, called

the buyer, over which the latter agrees. Article 1458 of the
Civil Code provides:
Art. 1458. By the contract of sale one of the
contracting parties obligates himself to transfer
the ownership of and to deliver a determinate
thing, and the other to pay therefor a price
certain in money or its equivalent.
A contract of sale may be absolute or
conditional.
When the sale is not absolute but conditional, such as in a
"Contract to Sell" where invariably the ownership of the thing
sold is retained until the fulfillment of a positive suspensive
condition (normally, the full payment of the purchase price),
the breach of the condition will prevent the obligation to
convey title from acquiring an obligatory force. 2 In Dignos vs.
Court of Appeals (158 SCRA 375), we have said that, although
denominated a "Deed of Conditional Sale," a sale is still
absolute where the contract is devoid of any proviso that title is
reserved or the right to unilaterally rescind is stipulated, e.g.,
until or unless the price is paid. Ownership will then be
transferred to the buyer upon actual or constructive delivery
(e.g., by the execution of a public document) of the property
sold. Where the condition is imposed upon the perfection of the
contract itself, the failure of the condition would prevent such
perfection. 3 If the condition is imposed on the obligation of a
party which is not fulfilled, the other party may either waive
the condition or refuse to proceed with the sale (Art. 1545,
Civil Code). 4

An unconditional mutual promise to buy and sell, as long as the

object is made determinate and the price is fixed, can be
obligatory on the parties, and compliance therewith may
accordingly be exacted. 5
An accepted unilateral promise which specifies the thing to be
sold and the price to be paid, when coupled with a valuable
consideration distinct and separate from the price, is what may
properly be termed a perfected contract of option. This contract
is legally binding, and in sales, it conforms with the second
paragraph of Article 1479 of the Civil Code, viz:
Art. 1479. . . .
An accepted unilateral promise to buy or to sell
a determinate thing for a price certain is binding
upon the promissor if the promise is supported
by a consideration distinct from the price.
(1451a) 6
Observe, however, that the option is not the contract of sale
itself. 7 The optionee has the right, but not the obligation, to
buy. Once the option is exercised timely, i.e., the offer is
accepted before a breach of the option, a bilateral promise to
sell and to buy ensues and both parties are then reciprocally
bound to comply with their respective undertakings. 8
Let us elucidate a little. A negotiation is formally initiated by
an offer. An imperfect promise (policitacion) is merely an offer.
Public advertisements or solicitations and the like are
ordinarily construed as mere invitations to make offers or only

as proposals. These relations, until a contract is perfected, are

not considered binding commitments. Thus, at any time prior
to the perfection of the contract, either negotiating party may
stop the negotiation. The offer, at this stage, may be withdrawn;
the withdrawal is effective immediately after its manifestation,
such as by its mailing and not necessarily when the offeree
learns of the withdrawal (Laudico vs. Arias, 43 Phil. 270).
Where a period is given to the offeree within which to accept
the offer, the following rules generally govern:
(1) If the period is not itself founded upon or supported by a
consideration, the offeror is still free and has the right to
withdraw the offer before its acceptance, or, if an acceptance
has been made, before the offeror's coming to know of such
fact, by communicating that withdrawal to the offeree (see Art.
1324, Civil Code; see also Atkins, Kroll & Co. vs. Cua, 102
Phil. 948, holding that this rule is applicable to a unilateral
promise to sell under Art. 1479, modifying the previous
decision in South Western Sugar vs. Atlantic Gulf, 97 Phil.
249; see also Art. 1319, Civil Code; Rural Bank of Paraaque,
Inc., vs. Remolado, 135 SCRA 409; Sanchez vs. Rigos, 45
SCRA 368). The right to withdraw, however, must not be
exercised whimsically or arbitrarily; otherwise, it could give
rise to a damage claim under Article 19 of the Civil Code
which ordains that "every person must, in the exercise of his
rights and in the performance of his duties, act with justice,
give everyone his due, and observe honesty and good faith."
(2) If the period has a separate consideration, a contract of
"option" is deemed perfected, and it would be a breach of that
contract to withdraw the offer during the agreed period. The

option, however, is an independent contract by itself, and it is

to be distinguished from the projected main agreement (subject
matter of the option) which is obviously yet to be concluded.
If, in fact, the optioner-offeror withdraws the offer before its
acceptance(exercise of the option) by the optionee-offeree, the
latter may not sue for specific performance on the proposed
contract ("object" of the option) since it has failed to reach its
own stage of perfection. The optioner-offeror, however, renders
himself liable for damages for breach of the option. In these
cases, care should be taken of the real nature of
the consideration given, for if, in fact, it has been intended to
be part of the consideration for the main contract with a right of
withdrawal on the part of the optionee, the main contract could
be deemed perfected; a similar instance would be an "earnest
money" in a contract of sale that can evidence its perfection
(Art. 1482, Civil Code).
In the law on sales, the so-called "right of first refusal" is an
innovative juridical relation. Needless to point out, it cannot be
deemed a perfected contract of sale under Article 1458 of the
Civil Code. Neither can the right of first refusal, understood in
its normal concept, per se be brought within the purview of an
option under the second paragraph of Article 1479,
aforequoted, or possibly of an offer under Article 1319 9 of the
same Code. An option or an offer would require, among other
things, 10 a clear certainty on both the object and the cause or
consideration of the envisioned contract. In a right of first
refusal, while the object might be made determinate, the
exercise of the right, however, would be dependent not only on
the grantor's eventual intention to enter into a binding juridical
relation with another but also on terms, including the price, that

obviously are yet to be later firmed up. Prior thereto, it can at

best be so described as merely belonging to a class of
preparatory juridical relations governed not by contracts (since
the essential elements to establish the vinculum juris would still
be indefinite and inconclusive) but by, among other laws of
general application, the pertinent scattered provisions of the
Civil Code on human conduct.
Even on the premise that such right of first refusal has been
decreed under a final judgment, like here, its breach cannot
justify correspondingly an issuance of a writ of execution
under a judgment that merely recognizes its existence, nor
would it sanction an action for specific performance without
thereby negating the indispensable element of consensuality in
the perfection of contracts. 11 It is not to say, however, that the
right of first refusal would be inconsequential for, such as
already intimated above, an unjustified disregard thereof,
given, for instance, the circumstances expressed in Article
19 12 of the Civil Code, can warrant a recovery for damages.
The final judgment in Civil Case No. 87-41058, it must be
stressed, has merely accorded a "right of first refusal" in favor
of petitioners. The consequence of such a declaration entails no
more than what has heretofore been said. In fine, if, as it is here
so conveyed to us, petitioners are aggrieved by the failure of
private respondents to honor the right of first refusal, the
remedy is not a writ of execution on the judgment, since there
is none to execute, but an action for damages in a proper forum
for the purpose.

Furthermore, whether private respondent Buen Realty

Development Corporation, the alleged purchaser of the
property, has acted in good faith or bad faith and whether or
not it should, in any case, be considered bound to respect the
registration of the lis pendens in Civil Case No. 87-41058 are
matters that must be independently addressed in appropriate
proceedings. Buen Realty, not having been impleaded in Civil
Case No. 87-41058, cannot be held subject to the writ of
execution issued by respondent Judge, let alone ousted from
the ownership and possession of the property, without first
being duly afforded its day in court.
We are also unable to agree with petitioners that the Court of
Appeals has erred in holding that the writ of execution varies
the terms of the judgment in Civil Case No. 87-41058, later
affirmed in CA-G.R. CV-21123. The Court of Appeals, in this
regard, has observed:
Finally, the questioned writ of execution is in
variance with the decision of the trial court as
modified by this Court. As already stated, there
was nothing in said decision 13 that decreed the
execution of a deed of sale between the Cu
Unjiengs and respondent lessees, or the fixing of
the price of the sale, or the cancellation of title
in the name of petitioner (Limpin vs. IAC, 147
SCRA 516; Pamantasan ng Lungsod ng Maynila
vs. IAC, 143 SCRA 311; De Guzman vs. CA,
137 SCRA 730; Pastor vs. CA, 122 SCRA 885).

It is likewise quite obvious to us that the decision in Civil Case

No. 87-41058 could not have decreed at the time the execution
of any deed of sale between the Cu Unjiengs and petitioners.
WHEREFORE, we UPHOLD the Court of Appeals in
ultimately setting aside the questioned Orders, dated 30 August
1991 and 27 September 1991, of the court a quo. Costs against
petitioners.
SO ORDERED.
Narvasa, C.J., Padilla, Bidin, Regalado, Davide, Jr., Romero,
Bellosillo, Melo, Quiason, Puno and Mendoza, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-7089

August 31, 1954

DOMINGO DE LA CRUZ, plaintiff-appellant,

vs.
NORTHERN THEATRICAL ENTERPRISES INC., ET
AL., defendants-appellees.
Conrado Rubio for appellant.
Ruiz, Ruiz, Ruiz, Ruiz, and Benjamin Guerrero for appellees.
MONTEMAYOR, J.:
The facts in this case based on an agreed statement of facts are
simple. In the year 1941 the Northern Theatrical Enterprises
Inc., a domestic corporation operated a movie house in Laoag,
Ilocos Norte, and among the persons employed by it was the
plaintiff DOMINGO DE LA CRUZ, hired as a special guard
whose duties were to guard the main entrance of the cine, to

maintain peace and order and to report the commission of

disorders within the premises. As such guard he carried a
revolver. In the afternoon of July 4, 1941, one Benjamin Martin
wanted to crash the gate or entrance of the movie house.
Infuriated by the refusal of plaintiff De la Cruz to let him in
without first providing himself with a ticket, Martin attacked
him with a bolo. De la Cruz defendant himself as best he could
until he was cornered, at which moment to save himself he shot
the gate crasher, resulting in the latter's death.
For the killing, De la Cruz was charged with homicide in
Criminal Case No. 8449 of the Court of First Instance of Ilocos
Norte. After a re-investigation conducted by the Provincial
Fiscal the latter filed a motion to dismiss the complaint, which
was granted by the court in January 1943. On July 8, 1947, De
la Cruz was again accused of the same crime of homicide, in
Criminal Case No. 431 of the same Court. After trial, he was
finally acquitted of the charge on January 31, 1948. In both
criminal cases De la Cruz employed a lawyer to defend him.
He demanded from his former employer reimbursement of his
expenses but was refused, after which he filed the present
action against the movie corporation and the three members of
its board of directors, to recover not only the amounts he had
paid his lawyers but also moral damages said to have been
suffered, due to his worry, his neglect of his interests and his
family as well in the supervision of the cultivation of his land,
a total of P15,000. On the basis of the complaint and the
answer filed by defendants wherein they asked for the
dismissal of the complaint, as well as the agreed statement of
facts, the Court of First Instance of Ilocos Norte after rejecting
the theory of the plaintiff that he was an agent of the

defendants and that as such agent he was entitled to

reimbursement of the expenses incurred by him in connection
with the agency (Arts. 1709-1729 of the old Civil Code), found
that plaintiff had no cause of action and dismissed the
complaint without costs. De la Cruz appealed directly to this
Tribunal for the reason that only questions of law are involved
in the appeal.
We agree with the trial court that the relationship between the
movie corporation and the plaintiff was not that of principal
and agent because the principle of representation was in no
way involved. Plaintiff was not employed to represent the
defendant corporation in its dealings with third parties. He was
a mere employee hired to perform a certain specific duty or
task, that of acting as special guard and staying at the main
entrance of the movie house to stop gate crashers and to
maintain peace and order within the premises. The question
posed by this appeal is whether an employee or servant who in
line of duty and while in the performance of the task assigned
to him, performs an act which eventually results in his
incurring in expenses, caused not directly by his master or
employer or his fellow servants or by reason of his
performance of his duty, but rather by a third party or stranger
not in the employ of his employer, may recover said damages
against his employer.
The learned trial court in the last paragraph of its decision
dismissing the complaint said that "after studying many laws or
provisions of law to find out what law is applicable to the facts
submitted and admitted by the parties, has found none and it
has no other alternative than to dismiss the complaint." The

trial court is right. We confess that we are not aware of any law
or judicial authority that is directly applicable to the present
case, and realizing the importance and far-reaching effect of a
ruling on the subject-matter we have searched, though vainly,
for judicial authorities and enlightenment. All the laws and
principles of law we have found, as regards master and
servants, or employer and employee, refer to cases of physical
injuries, light or serious, resulting in loss of a member of the
body or of any one of the senses, or permanent physical
disability or even death, suffered in line of duty and in the
course of the performance of the duties assigned to the servant
or employee, and these cases are mainly governed by the
Employer's Liability Act and the Workmen's Compensation
Act. But a case involving damages caused to an employee by a
stranger or outsider while said employee was in the
performance of his duties, presents a novel question which
under present legislation we are neither able nor prepared to
decide in favor of the employee.
In a case like the present or a similar case of say a driver
employed by a transportation company, who while in the
course of employment runs over and inflicts physical injuries
on or causes the death of a pedestrian; and such driver is later
charged criminally in court, one can imagine that it would be to
the interest of the employer to give legal help to and defend its
employee in order to show that the latter was not guilty of any
crime either deliberately or through negligence, because should
the employee be finally held criminally liable and he is found
to be insolvent, the employer would be subsidiarily liable. That
is why, we repeat, it is to the interest of the employer to render
legal assistance to its employee. But we are not prepared to say

and to hold that the giving of said legal assistance to its

employees is a legal obligation. While it might yet and possibly
be regarded as a normal obligation, it does not at present count
with the sanction of man-made laws.
If the employer is not legally obliged to give, legal assistance
to its employee and provide him with a lawyer, naturally said
employee may not recover the amount he may have paid a
lawyer hired by him.
Viewed from another angle it may be said that the damage
suffered by the plaintiff by reason of the expenses incurred by
him in remunerating his lawyer, is not caused by his act of
shooting to death the gate crasher but rather by the filing of the
charge of homicide which made it necessary for him to defend
himself with the aid of counsel. Had no criminal charge been
filed against him, there would have been no expenses incurred
or damage suffered. So the damage suffered by plaintiff was
caused rather by the improper filing of the criminal charge,
possibly at the instance of the heirs of the deceased gate
crasher and by the State through the Fiscal. We say improper
filing, judging by the results of the court proceedings, namely,
acquittal. In other words, the plaintiff was innocent and
blameless. If despite his innocence and despite the absence of
any criminal responsibility on his part he was accused of
homicide, then the responsibility for the improper accusation
may be laid at the door of the heirs of the deceased and the
State, and so theoretically, they are the parties that may be held
responsible civilly for damages and if this is so, we fail to see
now this responsibility can be transferred to the employer who
in no way intervened, much less initiated the criminal

proceedings and whose only connection or relation to the

whole affairs was that he employed plaintiff to perform a
special duty or task, which task or duty was performed lawfully
and without negligence.
Still another point of view is that the damages incurred here
consisting of the payment of the lawyer's fee did not flow
directly from the performance of his duties but only indirectly
because there was an efficient, intervening cause, namely, the
filing of the criminal charges. In other words, the shooting to
death of the deceased by the plaintiff was not the proximate
cause of the damages suffered but may be regarded as only a
remote cause, because from the shooting to the damages
suffered there was not that natural and continuous sequence
required to fix civil responsibility.
In view of the foregoing, the judgment of the lower court is
affirmed. No costs.
Bengzon, Padilla, Reyes, A., Bautista Angelo, Labrador,
Concepcion, and Reyes, J.B.L., JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-13667

April 29, 1960

PRIMITIVO ANSAY, ETC., ET AL., plaintiffs-appellants,

vs.
THE BOARD OF DIRECTORS OF THE NATIONAL
DEVELOPMENT COMPANY, ET AL., defendantsappellees.
Celso A. Fernandez for appellants.
Juan C. Jimenez, for appellees.
PARAS, C. J.:
On July 25, 1956, appellants filed against appellees in the
Court of First Instance of Manila a complaint praying for a
20% Christmas bonus for the years 1954 and 1955. The court a
quo on appellees' motion to dismiss, issued the following
order:
Considering the motion to dismiss filed on 15 August,
1956, set for this morning; considering that at the

hearing thereof, only respondents appeared thru counsel

and there was no appearance for the plaintiffs although
the court waited for sometime for them; considering,
however, that petitioners have submitted an opposition
which the court will consider together with the
arguments presented by respondents and the Exhibits
marked and presented, namely, Exhibits 1 to 5, at the
hearing of the motion to dismiss; considering that the
action in brief is one to compel respondents to declare a
Christmas bonus for petitioners workers in the National
Development Company; considering that the Court
does not see how petitioners may have a cause of action
to secure such bonus because:
(a) A bonus is an act of liberality and the court takes it
that it is not within its judicial powers to command
respondents to be liberal;
(b) Petitioners admit that respondents are not under
legal duty to give such bonus but that they had only ask
that such bonus be given to them because it is a moral
obligation of respondents to give that but as this Court
understands, it has no power to compel a party to
comply with a moral obligation (Art. 142, New Civil
Code.).
IN VIEW WHEREOF, dismissed. No pronouncement
as to costs.
A motion for reconsideration of the afore-quoted order was
denied. Hence this appeal.

Appellants contend that there exists a cause of action in their

complaint because their claim rests on moral grounds or what
in brief is defined by law as a natural obligation.
Since appellants admit that appellees are not under legal
obligation to give such claimed bonus; that the grant arises
only from a moral obligation or the natural obligation that they
discussed in their brief, this Court feels it urgent to reproduce
at this point, the definition and meaning of natural obligation.
Article 1423 of the New Civil Code classifies obligations into
civil or natural. "Civil obligations are a right of action to
compel their performance. Natural obligations, not being based
on positive law but on equity and natural law, do not grant a
right of action to enforce their performance, but after voluntary
fulfillment by the obligor, they authorize the retention of what
has been delivered or rendered by reason thereof".
It is thus readily seen that an element of natural obligation
before it can be cognizable by the court is voluntary fulfillment
by the obligor. Certainly retention can be ordered but only after
there has been voluntary performance. But here there has been
no voluntary performance. In fact, the court cannot order the
performance.
At this point, we would like to reiterate what we said in the
case of Philippine Education Co. vs. CIR and the Union of
Philippine Education Co., Employees (NUL) (92 Phil., 381; 48
Off. Gaz., 5278)
xxx

xxx

xxx

From the legal point of view a bonus is not a

demandable and enforceable obligation. It is so when it
is made a part of the wage or salary compensation.
And while it is true that the subsequent case of H. E.
Heacock vs. National Labor Union, et al., 95 Phil., 553; 50 Off.
Gaz., 4253, we stated that:
Even if a bonus is not demandable for not forming part
of the wage, salary or compensation of an employee,
the same may nevertheless, be granted on equitable
consideration as when it was given in the past, though
withheld in succeeding two years from low salaried
employees due to salary increases.
still the facts in said Heacock case are not the same as in the
instant one, and hence the ruling applied in said case cannot be
considered in the present action.
Premises considered, the order appealed from is hereby
affirmed, without pronouncement as to costs.
Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador,
Concepcion, Endencia Barrera and Gutierrez David,
JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-4089

January 12, 1909

ARTURO PELAYO, plaintiff-appellant,

vs.
MARCELO LAURON, ET AL., defendants-appellees.
J.H. Junquera, for appellant.
Filemon Sotto, for appellee.
TORRES, J.:
On the 23rd of November, 1906, Arturo Pelayo, a physician
residing in Cebu, filed a complaint against Marcelo Lauron and
Juana Abella setting forth that on or about the 13th of October
of said year, at night, the plaintiff was called to the house of the
defendants, situated in San Nicolas, and that upon arrival he
was requested by them to render medical assistance to their
daughter-in-law who was about to give birth to a child; that
therefore, and after consultation with the attending physician,
Dr. Escao, it was found necessary, on account of the difficult
birth, to remove the fetus by means of forceps which operation
was performed by the plaintiff, who also had to remove the
afterbirth, in which services he was occupied until the
following morning, and that afterwards, on the same day, he
visited the patient several times; that the just and equitable

value of the services rendered by him was P500, which the

defendants refuse to pay without alleging any good reason
therefor; that for said reason he prayed that the judgment be
entered in his favor as against the defendants, or any of them,
for the sum of P500 and costs, together with any other relief
that might be deemed proper.
In answer to the complaint counsel for the defendants denied
all of the allegation therein contained and alleged as a special
defense, that their daughter-in-law had died in consequence of
the said childbirth, and that when she was alive she lived with
her husband independently and in a separate house without any
relation whatever with them, and that, if on the day when she
gave birth she was in the house of the defendants, her stay their
was accidental and due to fortuitous circumstances; therefore,
he prayed that the defendants be absolved of the complaint
with costs against the plaintiff.
The plaintiff demurred to the above answer, and the court
below sustained the demurrer, directing the defendants, on the
23rd of January, 1907, to amend their answer. In compliance
with this order the defendants presented, on the same date, their
amended answer, denying each and every one of the allegations
contained in the complaint, and requesting that the same be
dismissed with costs.
As a result of the evidence adduced by both parties, judgment
was entered by the court below on the 5th of April, 1907,
whereby the defendants were absolved from the former
complaint, on account of the lack of sufficient evidence to
establish a right of action against the defendants, with costs

against the plaintiff, who excepted to the said judgment and in

addition moved for a new trial on the ground that the judgment
was contrary to law; the motion was overruled and the plaintiff
excepted and in due course presented the corresponding bill of
exceptions. The motion of the defendants requesting that the
declaration contained in the judgment that the defendants had
demanded therefrom, for the reason that, according to the
evidence, no such request had been made, was also denied, and
to the decision the defendants excepted.
Assuming that it is a real fact of knowledge by the defendants
that the plaintiff, by virtue of having been sent for by the
former, attended a physician and rendered professional services
to a daughter-in-law of the said defendants during a difficult
and laborious childbirth, in order to decide the claim of the said
physician regarding the recovery of his fees, it becomes
necessary to decide who is bound to pay the bill, whether the
father and mother-in-law of the patient, or the husband of the
latter.
According to article 1089 of the Civil Code, obligations are
created by law, by contracts, by quasi-contracts, and by illicit
acts and omissions or by those in which any kind of fault or
negligence occurs.
Obligations arising from law are not presumed. Those
expressly determined in the code or in special laws, etc., are the
only demandable ones. Obligations arising from contracts have
legal force between the contracting parties and must be
fulfilled in accordance with their stipulations. (Arts. 1090 and
1091.)

The rendering of medical assistance in case of illness is

comprised among the mutual obligations to which the spouses
are bound by way of mutual support. (Arts. 142 and 143.)
If every obligation consists in giving, doing or not doing
something (art. 1088), and spouses are mutually bound to
support each other, there can be no question but that, when
either of them by reason of illness should be in need of medical
assistance, the other is under the unavoidable obligation to
furnish the necessary services of a physician in order that
health may be restored, and he or she may be freed from the
sickness by which life is jeopardized; the party bound to
furnish such support is therefore liable for all expenses,
including the fees of the medical expert for his professional
services. This liability originates from the above-cited mutual
obligation which the law has expressly established between the
married couple.
In the face of the above legal precepts it is unquestionable that
the person bound to pay the fees due to the plaintiff for the
professional services that he rendered to the daughter-in-law of
the defendants during her childbirth, is the husband of the
patient and not her father and mother- in-law, the defendants
herein. The fact that it was not the husband who called the
plaintiff and requested his assistance for his wife is no bar to
the fulfillment of the said obligation, as the defendants, in view
of the imminent danger, to which the life of the patient was at
that moment exposed, considered that medical assistance was
urgently needed, and the obligation of the husband to furnish
his wife in the indispensable services of a physician at such
critical moments is specially established by the law, as has

been seen, and compliance therewith is unavoidable; therefore,

the plaintiff, who believes that he is entitled to recover his fees,
must direct his action against the husband who is under
obligation to furnish medical assistance to his lawful wife in
such an emergency.
From the foregoing it may readily be understood that it was
improper to have brought an action against the defendants
simply because they were the parties who called the plaintiff
and requested him to assist the patient during her difficult
confinement, and also, possibly, because they were her father
and mother-in-law and the sickness occurred in their house.
The defendants were not, nor are they now, under any
obligation by virtue of any legal provision, to pay the fees
claimed, nor in consequence of any contract entered into
between them and the plaintiff from which such obligation
might have arisen.
In applying the provisions of the Civil Code in an action for
support, the supreme court of Spain, while recognizing the
validity and efficiency of a contract to furnish support wherein
a person bound himself to support another who was not his
relative, established the rule that the law does impose the
obligation to pay for the support of a stranger, but as the
liability arose out of a contract, the stipulations of the
agreement must be held. (Decision of May 11, 1897.)
Within the meaning of the law, the father and mother-in-law
are strangers with respect to the obligation that devolves upon
the husband to provide support, among which is the furnishing
of medical assistance to his wife at the time of her

confinement; and, on the other hand, it does not appear that a

contract existed between the defendants and the plaintiff
physician, for which reason it is obvious that the former can
not be compelled to pay fees which they are under no liability
to pay because it does not appear that they consented to bind
themselves.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-13602

April 6, 1918

The foregoing suffices to demonstrate that the first and second

errors assigned to the judgment below are unfounded, because,
if the plaintiff has no right of action against the defendants, it is
needless to declare whether or not the use of forceps is a
surgical operation.

LEUNG BEN, plaintiff,

vs.
P. J. O'BRIEN, JAMES A OSTRAND and GEO. R.
HARVEY, judges of First Instance of city of
Manila,defendants.

Therefore, in view of the consideration hereinbefore set forth,

it is our opinion that the judgment appealed from should be
affirmed with the costs against the appellant. So ordered.

Thos. D. Aitken and W. A. Armstrong for plaintiff.

Kincaid & Perkins for defendants.
STREET, J.:

Mapa and Tracey, JJ., concur.

Arellano, C.J., and Carson, J., concurs in the result.
Willard, J., dissents.

This is an application for a writ of certiorari, the purpose of

which is to quash an attachment issued from the Court of First
Instance of the City of Manila under circumstances
hereinbelow stated.
Upon December 12, 1917, an action was instituted in the Court
of First Instance of the city of Manila by P. J. O'Brien to
recover of Leung Ben the sum of P15,000 alleged to have been
lost by the plaintiff to the defendant in a series of gambling,
banking and percentage games conducted ruing the two or
three months prior to the institution of the suit. In his verified
complaint the plaintiff asked for an attachment, under section
424, and 412 (1) of the Code of Civil Procedure, against the
property of the defendant, on the ground that the latter was

about to depart from the Philippine islands with intent to

defraud his creditors. This attachment was issued; and acting
under the authority thereof, the sheriff attached the sum of
P15,000 which had been deposited by the defendant with the
International Banking Corporation.
The defendant thereupon appeared by his attorney and moved
the court to quash the attachment. Said motion having
dismissed in the Court of First Instance, the petitioner, Leung
Ben, the defendant in that action, presented to this court, upon
January 8, 1918 his petition for the writ of certiorari directed
against P. J. O'Brien and the judges of the Court of First
Instance of the city of Manila whose names are mentioned in
the caption hereof. The prayer is that the Honorable James A.
Ostrand, as the judge having cognizance of the action in said
court be required to certify the record to this court for review
and that the order of attachment which had been issued should
be revoked and discharged. with costs. Upon the filing of said
petition in this court the usual order was entered requiring the
defendants to show cause why the writ should not issue. The
response of the defendants, in the nature of a demurrer, was
filed upon January 21, 1918; and the matter is now heard upon
the pleadings thus presented.
The provision of law under which this attachment was issued
requires that there should be accuse of action arising upon
contract, express or implied. The contention of the petitioner is
that the statutory action to recover money lost at gaming is that
the statutory action to recover money lost at gaming is no such
an action as is contemplated in this provision, and he therefore
insists that the original complaint shows on its face that the
remedy of attachment is not available in aid thereof; that the
Court of First Instance acted in excess of its jurisdiction in

granting the writ of attachment; that the petitioner has no plain,

speedy, and adequate remedy by appeal or otherwise; and that
consequently the writ of certiorari supplies the appropriate
remedy for his relief.
The case presents the two following questions of law, either of
which, if decided unfavorably to the petitioner, will be fatal to
his application:
(1) Supposing that the Court of First Instance has granted an
attachment for which there is no statutory authority, can this
court entertain the present petition and grant the desired relief?
(2) Is the statutory obligation to restore money won at gaming
an obligation arising from "contract, express or implied?"
We are of the opinion that the answer to the first question
should be in the affirmative. Under section 514 of the Code of
Civil Procedure the Supreme Court has original jurisdiction by
the writ of certiorari over the proceedings of Courts of First
Instance, wherever said courts have exceeded their jurisdiction
and there is no plaint, speedy, and adequate remedy. In the
same section, it is further declared that the proceedings in the
Supreme Court in such cases hall be as prescribed for Courts of
First Instance in section 217-221, inclusive, of said Code. This
Supreme Court, so far as applicable, the provisions contained
in those section to the same extent as if they had been
reproduced verbatim immediately after section 514. Turning to
section 217, we find that, in defining the conditions under
which certiorari can be maintained in a Court of First Instance
substantially the same language is used as is the same remedy
can be maintained in the Supreme Court of First Instance,
substantially the same language is used as is found in section

514 relative to the conditions under which the same remedy

can be maintained in the Supreme Court, namely, when the
inferior tribunal has exceeded its jurisdiction and there is no
appeal, nor any plain, speedy and adequate remedy. In using
these expressions the author of the Code of Civil Procedure
merely adopted the language which, in American jurisdictions
at least, had long ago reached the stage of stereotyped formula.
In section 220 of the same Code, we have a provision relative
to the final proceedings in certiorari, and herein it is stated that
the court shall determine whether the inferior tribunal has
regularly pursued its authority it shall give judgment either
affirming annulling, or modifying the proceedings below, as
the law requires. The expression, has not regularly pursued its
authority as here used, is suggestive, and we think it should be
construed in connection with the other expressions have
exceeded their jurisdiction, as used in section 514, and has
exceeded their jurisdiction as used in section 217. Taking the
three together, it results in our opinion that any irregular
exercise of juridical power by a Court of First Instance, in
excess of its lawful jurisdiction, is remediable by the writ
ofcertiorari, provided there is no other plain, speedy, and
adequate remedy; and in order to make out a case for the
granting of the writ it is not necessary that the court should
have acted in the matter without any jurisdiction whatever.
Indeed the repeated use of expression excess of jurisdiction
shows that the lawmaker contemplated the situation where a
court, having jurisdiction should irregularly transcend its
authority as well as the situation where the court is totally
devoid of lawful power.
It may be observed in this connection that the word jurisdiction
as used in attachment cases, has reference not only to the

authority of the court to entertain the principal action but also

to its authority to issue the attachment, as dependent upon the
existence of the statutory ground. (6 C. J., 89.) This distinction
between jurisdiction to issue the attachment as an ancillary
remedy incident to the principal litigation is of importance; as a
court's jurisdiction over the main action may be complete, and
yet it may lack authority to grant an attachment as ancillary to
such action. This distinction between jurisdiction over the
ancillary has been recognized by this court in connection with
actions involving the appointment of a receiver. Thus in Rocha
& Co. vs. Crossfield and Figueras (6 Phil. Rep., 355), a
receiver had been appointed without legal justification. It was
held that the order making the appointment was beyond the
jurisdiction of the court; and though the court admittedly had
jurisdiction of the main cause, the order was vacated by this
court upon application a writ of certiorari. (See Blanco vs.
Ambler, 3 Phil. Rep., 358, Blanco vs. Ambler and McMicking
3 Phil. Rep., 735, Yangco vs. Rohde, 1 Phil. Rep., 404.)
By parity of reasoning it must follow that when a court issues a
writ of attachment for which there is no statutory authority, it is
acting irregularly and in excess of its jurisdiction, in the sense
necessary to justify the Supreme Court in granting relief by the
writ of certiorari. In applying this proposition it is of course
necessary to take account of the difference between a ground of
attachment based on the nature of the action and a ground of
attachment based on the acts or the conditions of the defendant.
Every complaint must show a cause of action some sort; and
when the statue declares that the attachment may issue in an
action arising upon contract, the express or implied, it
announces a criterion which may be determined from an
inspection of the language of the complaint. The determination
of this question is purely a matter of law. On the other hand,

when the stature declares that an attachment may be issued

when the defendant is about to depart from the Islands, a
criterion is announced which is wholly foreign to the cause of
action; and the determination of it may involve a disputed
question of fact which must be decided by the court. In making
this determination, the court obviously acts within its powers;
and it would be idle to suppose that the writ of certiorari would
be available to reverse the action of a Court of First Instance in
determining the sufficiency of the proof on such a disputed
point, and in granting or refusing the attachment accordingly.
We should not be understood, in anything that has been said, as
intending to infringe the doctrine enunciated by this court in
Herrera vs. Barretto and Joaquin (25 Phil. Rep., 245), when
properly applied. It was there held that we would not, upon
application for a writ of certiorari, dissolve an interlocutory
mandatory injunction that had been issued in a Court of First
Instance as an incident in an action of mandamus. The issuance
of an interlocutory injunction depends upon conditions
essentially different from those involved in the issuance of an
attachment. The injunction is designed primarily for the
prevention of irreparable injury and the use of the remedy is in
a great measure dependent upon the exercise of discretion.
Generally, it may be said that the exercise of the injunctive
powers is inherent in judicial authority; and ordinarily it would
be impossible to distinguish between the jurisdiction of the
court in the main litigation and its jurisdiction to grant an
interlocutory injunction, for the latter is involved in the former.
That the writ of certiorari can not be used to reverse an order
denying a motion for a preliminary injunction is of course not
to cavil. (Somes vs. Crossfield and Molina, 8 Phil. Rep., 284.)

But it will be said that the writ of certiorari is not available in

this cae, because the petitioner is protected by the attachment
bond, and that he has a plain, speedy, and adequate remedy
appeal. This suggestion seems to be sufficiently answered in
the case of Rocha & Co vs. Crossfield and Figueras (6 Phil.
Rep., 355), already referred to, and the earlier case there cited.
The remedy by appeal is not sufficiently speedy to meet the
exigencies of the case. An attachment is extremely violent, and
its abuse may often result in infliction of damage which could
never be repaired by any pecuniary award at the final hearing.
To postpone the granting of the writ in such a case until the
final hearing and to compel the petitioner to bring the case here
upon appeal merely in order to correct the action of the trial
court in the matter of allowing the attachment would seem both
unjust and unnecessary.
Passing to the problem propounded in the second question it
may be observed that, upon general principles,. recognize both
the civil and common law, money lost in gaming and
voluntarily paid by the loser to the winner can not in the
absence of statue, be recovered in a civil action. But Act No.
1757 of the Philippine Commission, which defines and
penalizes several forms of gambling, contains numerous
provisions recognizing the right to recover money lost in
gambling or in the playing of certain games (secs. 6, 7, 8, 9,
11). The original complaint in the action in the Court of First
Instance is not clear as to the particular section of Act No. 1757
under which the action is brought, but it is alleged that the
money was lost at gambling, banking, and percentage game in
which the defendant was banker. It must therefore be assumed
that the action is based upon the right of recovery given in
Section 7 of said Act, which declares that an action may be

brought against the banker by any person losing money at a

banking or percentage game.
Is this a cause arising upon contract, express or implied, as this
term is used in section 412 of the Code of Civil Procedure? To
begin the discussion, the English version of the Code of Civil
Procedure is controlling (sec. 15, Admin. Code, ed. of 1917).
Furthermore it is universally admitted to be proper in the
interpretation of any statute, to consider its historical
antecedents and its juris prudential sources. The Code of Civil
Procedure, as is well known, is an American contribution to
Philippine legislation. It therefore speaks the language of the
common-law and for the most part reflects its ideas. When the
draftsman of this Code used the expression contract, express or
implied, he used a phrase that has been long current among
writers on American and English law; and it is therefore
appropriate to resort to that system of law to discover the
appropriate to resort to that system of law to discover the
meaning which the legislator intended to convey by those
meaning which the legislator intended to convey by those
terms. We remark in passing that the expression contrato
tracito, used in the official translation of the Code of Civil
Procedure as the Spanish equivalent of implied contract, does
not appear to render the full sense of the English expression.
The English contract law, so far as relates to simple contracts is
planted upon two foundations, which are supplied by two very
different conceptions of legal liability. These two conceptions
are revealed in the ideas respectively underlying (1) the
common- law debt and (2) the assumptual promise. In the early
and formative stages of the common-law the only simple
contract of which the courts took account was the real contract
or contract re, in which the contractual duty imposed by law

arises upon the delivery of a chattle, as in

the mutuum, commodatum,depositum, and the like; and the
purely consensual agreements of the Roman Law found no
congenial place in the early common law system.
In course of time the idea underlying the contract re was
extended so as to include from one person to another under
such circumstances as to constitute a justa cuas debendi. The
obligation thereby created was a debt. The constitutive element
in this litigation is found in the fact that the debtor has received
something from the creditor, which he is bound by the
obligation of law to return or pay for. From an early day this
element was denominated the quid pro quo, an ungainly phrase
coined by Mediaeval Latinity. The quid pro quo was primarily
a materials or physical object, and its constituted the
recompense or equivalent acquired by the debtor. Upon the
passage of thequid pro quo from one party to the other, the law
imposed that real contractual duty peculiar to the debt. No one
conversant with the early history of English law would ever
conceive of the debt as an obligation created by promise. It is
the legal duty to pay or deliver a sum certain of money or an
ascertainable quantity of ponderable or measurable chattles.
The ordinary debt, as already stated, originates in a contract in
which a quid pro quo passes to the debtor at the time of the
creation of the debt, but the term is equally applicable to duties
imposed by custom or statute, or by judgment of a court.
The existence of a debt supposes one person to have possession
of thing (res) which he owes and hence ought to turn over the
owner. This obligation is the oldest conception of contract with
which the common law is familiar; and notwithstanding the
centuries that have rolled over Westminster Hall that

conception remains as one of the fundamental bases of the

common-law contract.
Near the end of the fifteenth century there was evolved in
England a new conception of contractual liability, which
embodied the idea of obligation resulting from promise and
which found expression in the common law assumpsit, or parol
promise supported by a consideration. The application of this
novel conception had the effect of greatly extending the filed of
contractual liability and by this means rights of action came to
be recognized which had been unknown before. The action of
assumpsit which was the instrument for giving effect to this
obligation was found to be a useful remedy; and presently this
action came to be used for the enforcement of common-law
debts. The result was to give to our contract law the superficial
appearance of being based more or less exclusively upon the
notion of the obligation of promise.

quantity of ponderable or measurable chattles which is

indicated by them debt has ever been recognized, in the
common-law system, as a true contract, regardless, of the
source of the duty or the manner in which it is create
whether derived from custom, statue or some consensual
transaction depending upon the voluntary acts of the parties.
the form of contract known as the debt is of the most ancient
lineage; and when reference is had to historical antecedents, the
right of the debt to be classed as a contract cannot be
questioned. Indeed when the new form of engagement
consisting of the parol promise supported by a consideration
first appeared, it was looked upon as an upstart and its right to
be considered a true contract was questioned. It was long
customary to refer to it exclusively as an assumpsit, agreement,
undertaking, or parol promise, in fact anything but a contract.
Only in time did the new form of engagement attain the dignity
of being classed among true contract.

An idea is widely entertained to the effect that all simple

contracts recognized in the common-law system are referable
to a singly category. They all have their roots, so many of us
imagine, in one general notion of obligation; and of course the
obligation of promise is supposed to supply this general notion,
being considered a sort of menstruum in which all other forms
of contractual obligation have been dissolved. This a mistake.
The idea of contractual duty embodied in the debt which was
the first conception of contract liability revealed in the
common law, has remained, although it was detained to be in a
measure obscured by the more modern conception of
obligation resulting from promise.

The term implied takers us into shadowy domain of those

obligations the theoretical classification of which has engaged
the attention of scholars from the time of Gaius until our own
day and has been a source of as much difficulty to the civilian
as to the common-law jurist. There we are concerned with
those acts which make one person debtor to another without
there having intervened between them any true agreement
tending to produce a legal bond (vinculum juris). Of late years
some American and English writers have adopted the term
quasi-contract as descriptive of these obligations or some of
them; but the expression more commonly used is implied
contract.

What has been said is intended to exhibit the fact that the duty
to pay or deliver a sum certain of money or an ascertainable

Upon examination of these obligations, from the view point of

the common-law jurisprudence, it will be found that they fall

readily into two divisions according as they bear an analogy to

the common-law debt or to the common law assumpsit. To
exhibit the scope of these different classes of obligations is
here impracticable. It is only necessary in this connection to
observe that the most conspicuous division is that which
comprises duties in the nature of debt. The characteristic
feature of these obligations is that upon certain states of fact
the law imposes an obligation to pay a sum certain of money;
and it is characteristic of this obligation that the money in
respect to which the duty is raised is conceived as being
equivalent of something taken or detained under circumstances
giving rise to the duty to return or compensate therefore. The
proposition that no one shall be allowed to enrich himself
unduly at the expense of another embodies the general
principle here lying at the basis of obligation. The right to
recover money improperly paid (repeticion de lo indebido) is
also recognized as belong to this class of duties.
It will observed that according to the Civil Code obligations are
supposed to be derived either from (1) the law, (2) contracts
and quasi-contracts, (3) illicit acts and omission, or (4) acts in
which some sort ob lame or negligence is present. This
enumeration of sources of obligations and the obligation
imposed by law are different types. The learned Italian jurist,
Jorge Giorgi, criticises this assumption and says that the
classification embodied in the code is theoretically erroneous.
His conclusion is that one or the other of these categories
should have been suppressed and merged in the other.
(Giorgi, Teoria de las Obligaciones, Spanish ed., vol. 5 arts. 5,
7, 9.) The validity of this criticism is, we thin, self-evident; and
it is of interest to note that the common law makes no
distinction between the two sources of liability. The obligations
which in the Code are indicated as quasi-contracts, as well as

those arising ex lege, are in the common la system, merged into

the category of obligations imposed by law, and all are
denominated implied contracts.
Many refinements, more or less illusory, have been attempted
by various writers in distinguishing different sorts of implied
contracts, as for example, the contract implied as of fact and
the contract implied as of law. No explanation of these
distinctions will be here attempted. Suffice it to say that the
term contract, express or implied, is used to by common-law
jurists to include all purely personal obligations other than
those which have their source in delict, or tort. As to these it
may be said that, generally speaking, the law does not impose a
contractual duty upon a wrongdoer to compensate for injury
done. It is true that in certain situations where a wrongdoer
unjustly acquired something at the expense of another, the law
imposes on him a duty to surrender his unjust acquisitions, and
the injured party may here elect to sue upon this contractual
duty instead of suing upon the tort; but even here the
distinction between the two liabilities, in contract and in tort, is
never lost to sight; and it is always recognized that the liability
arising out of the tort is delictual and not of a contractual or
quasi-contractual nature.
In the case now under consideration the duty of the defendant
to refund the money which he won from the plaintiff at gaming
is a duty imposed by statute. It therefore arises ex lege.
Furthermore, it is a duty to return a certain sum which had
passed from the plaintiff to the defendant. By all the criteria
which the common law supplies, this a duty in the nature of
debt and is properly classified as an implied contract. It is wellsettled by the English authorities that money lost in gambling
or by lottery, if recoverable at all, can be recovered by the loser

in an action of indebitatus assumpsit for money had and

received. (Clarke vs. Johnson. Lofft, 759; Mason vs. Waite, 17
Mass., 560; Burnham vs. Fisher, 25 Vt., 514.) This means that
in the common law the duty to return money won in this way is
an implied contract, or quasi-contract.
It is no argument to say in reply to this that the obligation here
recognized is called an implied contract merely because the
remedy commonly used in suing upon ordinary contract can be
here used, or that the law adopted the fiction of promise in
order to bring the obligation within the scope of the action
of assumpsit. Such statements fail to express the true import of
the phenomenon. Before the remedy was the idea; and the use
of the remedy could not have been approved if it had not been
for historical antecedents which made the recognition of this
remedy at one logical and proper. Furthermore, it should not be
forgotten that the question is not how this duty but what sort of
obligation did the author of the Code of Civil Procedure intend
to describe when he sued the term implied contract in section
412.
In what has been said we have assumed that the obligation
which is at the foundation of the original action in the court
below is not a quasi-contract, when judge by the principles of
the civil law. A few observations will show that this assumption
is not by any means free from doubt. The obligation in question
certainly does not fall under the definition of either of the twoquasi- contracts which are made the subject of special
treatment in the Civil Code, for its does not arise from a licit
act as contemplated in article 1895. The obligation is clearly a
creation of the positive law a circumstance which brings it
within the purview of article 1090, in relation with article,
1089; and it is also derived from an illicit act, namely, the

playing of a prohibited game. It is thus seen that the provisions

of the Civil Code which might be consulted with a view to the
correct theoretical classification of this obligation are
unsatisfactory and confusing.
The two obligations treated in the chapter devoted to quasicontracts in the Civil Code are (1) the obligation incident to the
officious management of the affairs of other person (gestion de
negocios ajenos) and (2) the recovery of what has been
improperly paid (cabro de lo indebido). That the authors of the
Civil Code selected these two obligations for special treatment
does not signify an intention to deny the possibility of the
existence of other quasi-contractual obligations. As is well said
by the commentator Manresa.
The number of the quasi-contracts may be indefinite as
may be the number of lawful facts, the generations of
the said obligations; but the Code, just as we shall see
further on, in the impracticableness of enumerating or
including them all in a methodical and orderly
classification, has concerned itself with two only
namely, the management of the affairs of other person
and the recovery of things improperly paid without
attempting by this to exclude the others. (Manresa, 2d
ed., vol. 12, p. 549.)
It would indeed have been surprising if the authors of the Code,
in the light of the jurisprudence of more than a thousand years,
should have arbitrarily assumed to limit the quasi-contract to
two obligations. The author from whom we have just quoted
further observes that the two obligations in question were
selected for special treatment in the Code not only because they
were the most conspicuous of the quasi-contracts, but because

they had not been the subject of consideration in other parts of

the Code. (Opus citat., 550.)
It is well recognized among civilian jurists that the quasicontractual obligations cover a wide range. The Italian jurist,
Jorge Giorgi, to whom we have already referred, considers
under this head, among other obligations, the following:
payments made upon a future consideration which is not
realized or upon an existing consideration which fails;
payments wrongfully made upon a consideration which is
contrary to law, or opposed to public policy; and payments
made upon a vicious consideration or obtained by illicit means
(Giorgi, Teoria de las Obligaciones, vol. 5, art. 130.)
Im permitting the recovery of money lost at play, Act No. 1757
has introduced modifications in the application of articles
1798, 180`, and 1305 of the Civil Code. The first two of these
articles relate to gambling contracts, while article 1305 treats of
the nullity of contracts proceeding from a vicious or illicit
consideration. Taking all these provisions together, it must be
apparent that the obligation to return money lost at play has a
decided affinity to contractual obligations; and we believe that
it could, without violence to the doctrines of the civil law, be
held that such obligations is an innominate quasi-contract. It is,
however, unnecessary to place the decision on this ground.
From what has been said it follows that in our opinion the
cause of action stated in the complaints in the court below is
based on a contract, express or implied and is therefore of such
nature that the court had authority to issue writ of attachment.
The application for the writ of certiorari must therefore be
denied and the proceedings dismissed. So ordered.

Arellano, C.J., Torres, Johnson and Carson, JJ., concur.

Separate Opinions
MALCOLM, J., concurring:
As I finished reading the learned and interesting decision of the
majority, the impression which remained was that the court was
enticed by the nice and unusual points presented to make a
hard case out of an easy one and unfortunately t do violence to
the principles of certiorari. The simple questions are : Di the
Court of First Instance of city of Manila exceed its jurisdiction
in granting an attachments against the property of the
defendant, now plaintiff? Has this defendant, now become the
plaintiff, any other plain, speedy and adequate remedy? The
answer are found in the decision of thinks court, in
Herrera vs. Barretto and Joaquin ([1913], 25 Phil., 245), from
which I quote the following:
It has been repeatedly held by this court that a writ
of certiorari will not be issued unless it clearly appears
that the court to which it is to be directed acted without
or in excess of jurisdiction. It will not be issued to cure
errors in the proceedings or to correct erroneous
conclusions of law or of fact. If the court has
jurisdiction. It will not be issued to cure errors in the
proceedings to correct jurisdiction of the subject matter
and f the person, decisions upon all question pertaining
to the cause are decisions within its jurisdiction and,
however irregular or erroneous they may be, cannot be

corrected by certiorari. The Code of Civil Procedure

giving Courts of First Instance general jurisdiction in
actions for mandamus, it goes without saying that the
Court of First Instance had jurisdiction in the present
case to resolve every question arising in such an action
and t decide every question presented to it which
pertained to the cause. It has already been held by this
court, that while it is a power to be exercised only in
extreme case, a Court of First Instance has power to
issue a mandatory injunction t stand until the final
determination of the action in which it is issued. While
the issuance of the mandatory injunction in this
particular case may have been irregular and erroneous,
a question concerning which we express no opinion,
nevertheless its issuance was within the jurisdiction of
the court and its action is not reveiwable on certiorari.
It is not sufficient to say that it was issued wrongfully
and without sufficient grounds and in the absence of the
other party. The question is, Did the court act with
jurisdiction?
It has been urged that the court exceeded its jurisdiction
in requiring the municipal president t issue the license,
for the reason that he was not the proper person to issue
it and that, if he was the proper person, he had the right
to exercise a discretion as to whom the license should
be issued. We do not believe that either of these
questions goes to the jurisdiction of the court to act.
One of the fundamental question in amandamus against
a public officer is whether or not that officer has the
right to exercise discretion in the performance of the act
which the plaintiff asks him to perform. It is one of the
essential determinations of the cause. To claim that the

resolution of that question may deprive the court of

jurisdiction is to assert a novel proposition. It is
equivalent to the contention that a court has jurisdiction
if he decides right but no jurisdiction if he decides
wrong. It may be stated generally that it is never
necessary to decide the fundamental questions of a
cause to determine whether the court has jurisdiction.
The question of jurisdiction is preliminary and never
touches the merits of the case. The determination of the
fundamental questions of a cause are merely the
exercise of a jurisdiction already conceded. In the case
at bar no one denies the power, authority or jurisdiction
of the Court of First Instance to take cognizance of an
action formandamus and to decide very question which
arises in that cause and pertains thereto. The contention
that the decision of one of those question, if wrong,
destroys jurisdiction involves an evident contradiction.
Jurisdiction is the authority to hear and determine a
cause the right to act in a case. Since it is the power
to hear and determine, it does not depend either upon
the regularity of the exercise of that power or upon the
rightfulness of the decision made. Jurisdiction should
therefore be distinguished from the exercise of
jurisdiction. The authority to decide a case at all, and
not the decision rendered therein, is what makes up
jurisdiction. Where there is jurisdiction of the person
and subject matter, as we have said before, the decision
of all other questions arising in the case an exercise of
that jurisdiction.
Then follows an elaborate citation and discussion of American
authorities, including a decision of the United States Supreme

Court and of the applicable Philippine cases. The decision

continues"
The reasons givens in these cases last cited for the
allowance of the writ of prohibition are applicable only
to the class of cases with which the decision deal and
do not in any way militate against the general
proposition herein asserted. Those which relate to
election contest are based upon the principle that those
proceedings, are special in their nature and must be
strictly followed, a material departure from the statute
resulting a loss, or in an excess of jurisdiction. The
cases relating to receivers are based, in a measure, upon
the principle the appointment of a receiver being
governed by the statute; and in part upon the theory that
the appointment of a receiver in an improper case is in
substance a bankruptcy proceeding, the taking of which
is expressly prohibited by law. The case relative to the
allowance of alimony pendente lite when the answer
denies the marriage is more difficult to distinguish. The
reasons in support of the doctrine laid down in that case
are given the opinion in full and they seem to place the
particular case to which they refer in a class by itself.
It is not alight things that the lawmakers have abolished
writs of error and with them certiorari and prohibition,
in so far as they were methods by which the mere errors
of an inferior curt could be corrected. As instruments to
that end they no longer exist. Their place is no taken by
the appeal. So long as the inferior court retains
jurisdiction its errors can be corrected only by that
method. The office of the writ ofcertiorari has been
reduced to the correction of defects

of jurisdiction solely and cannot legally be used for any

other purpose. It is truly an extra ordinary remedy and
in this jurisdiction, its use is restricted to truly
extraordinary cases cases in which the action of the
inferior court is wholly void, where any further steps in
the case would result in a waste of time and money and
would produce no result whatever; where the parties, or
their privies, would be utterly deceived; where a final
judgment or decree would be nought but a snare and a
delusion, deciding nothing, protecting nobody, a
juridical pretension, a recorded falsehood, a standing
menace. It is only to avoid such result as these that a
writ of certiorari is issuable; and even here an appeal
will lie if the aggrieved party prefers to prosecute it.
A full and thorough examination of all the decided
cases in this court touching the question of certiorari
and prohibition fully supports the proposition already
stated that, where a Court of First Instance has
jurisdiction of the subject matter and of the person, its
decision of any question pertaining to the cause,
however, erroneous, cannot be reviewed by certiorari,
but must be corrected by appeal.
I see no reason to override the decision in Herrera vs. Barretto
and Joaquin (supra). Accordingly, I can do no better than to
make the language of Justice Moreland my own. applying these
principles, it is self-evident that this court should no entertain
the present petition and should not grant the desired relief.

FISHER, J., dissenting:

I am in full accord with the view that the remedy
of certiorari may be invoked in such cases as this, but I am
constrained to dissent from the opinion of the majority as
regards the meaning of the term implied contract.
Section 412 of the code of Civil Procedure in connection with
section 424, authorizes the preliminary attachment of the
property of the defendant: "(1) In an action for the recovery of
money or damages on a cause of action arising upon contract,
express or implied, when the defendant is about to depart from
the Philippine Islands, with intent to defraud his creditors;
(2) . . .; (3) . . .; (4) . . .; (5) When the defendant has removed or
disposed of his property, or is about to do so, with intent to
defraud his creditors."
It is evident that the terms of paragraph five of the article cited
are much broader than those of the first paragraph. The fifth
paragraph is not limited to action arising from contract, but is
by its terms applicable to actions brought for the purpose of
enforcing extra-contractual rights as well as contract rights.
The limitation upon cases falling under paragraph five is to be
found, not in the character of the obligation for the
enforcement for which the action is brought, but in the terms of
article 4265, which requires that the affidavit show that the
amount due the plaintiff . . . is as much as the sum for which
the order is granted.
That is to say, when application is made for a preliminary
attachment upon the ground that the plaintiff is about to
dispose of his property with intent to defraud his creditors
thus bringing the case within the terms of paragraph five of the

section it is not necessary to show that the obligation in suit

is contractual in its origin, but is sufficient to show that the
breach of the obligation, as shown by the facts stated in the
complaint and affidavit, imposes upon the defendant the
obligation to pay a specific and definite sum. For example, if it
is alleged in the complaint that the defendant by negligence,
has caused the destruction by fire of a building belonging to
plaintiff, and that such building was worth a certain sum of
money, these facts would show a definite basis upon which to
authorize the granting of the writ. But if it were averred that the
defendant has published a libel concerning the plaintiff, to the
injury of his feeling and reputation, there is no definite basis
upon which to grant an attachment, because the amount of the
damage suffered, being necessarily uncertain and
indeterminate, cannot be ascertained definitely until the trail
has been completed.
But it appears that the legislature although it has seen fit to
authorize a preliminary attachment in aid of action of all kinds
when the defendant is concealing his property with intent to
defraud his creditors, has provided is about to depart from the
country with intent to defraud his creditos, the writ will issue
only when the action in aid of which it is sought arises from
a contract express or implied. If an attachment were permitted
upon facts bringing the application with the first paragraph of
the section in support of action of any kind, whether the
obligation sued upon is contractual or not, then paragraph five
would by construction be made absolutely identical with
paragraph one, and this would be in effect equivalent to the
complete eliminated of the last two lines of the first paragraph.
It is a rule of statutory construction that effect should be
given to all parts of the statue, if possible. I can see no
reason why the legislature should have limited cases falling

within the firs paragraph to action arising from contract and

have refrained from imposing this limitation with respect to
cases falling within the terms of the fifth paragraph, but this
should have no effect upon us in applying the law. Whether
there be a good reason for it or not the distinction exists.
Had the phrase express or implied not been used to qualify
contract, there would be no doubt whatever with regard to the
meaning of the word. In the Spanish Civil law contract are
always consensual, and it would be impossible to define as a
contract the judicial relation existing between a person who has
lost money at gaming and the winner of such money, simple
because the law imposes upon the winner the obligation of
making restitution. An obligation of this kind, far from being
consensual in its origin, arises against the will of the debtor. To
call such a relation a contract is, from the standpoint of the
civil law, a contradiction in terms.

But is said that as the phase express or implied has been used
to qualify the word contract and these words are found in statue
which speaks the language of the common law, this implies the
introduction into our law of the concept of the implied contract
of the English common-law, a concept which embraces a
certain class of obligation originating ex lege, which have been
arbitrarily classified as contracts, so that they might be
enforced by one of the formal actions of the common law
which legal tradition and practice has reserved for the
enforcement of contract. I cannot concur in this reasoning. I
believe that when a technical juridical term of substantive law
is used in the adjective law of these islands, we should seek its
meaning in our own substantive law rather than in the law of
America or of England. The code of Civil Procedure was not
enacted to establish rules of substantive law, but upon the
assumption of the existence of these rules.
In the case of Cayce vs. Curtis (Dallam's Decisions Texas
Reports, 403), it appears that the legislature, at a time when
that State still retained to a large extent the Spanish substantive
civil law, enacted a statue in which the word bonds is used. In
litigation involving the construction of that statute, one of the
parties contended that the work bond should be given the
technical meaning which it had in the English Common Law.
The court rejected this contention saying
On the first point it is urged by counsel for the appellant that
the word bond used in the statute being a common law term,
we must refer to the common law for its legal signification; and
that by that law no instrument is a bond which is not under
seal. The truth of the proposition that sealing is an absolute
requisite to the validity of a bond at common law is readily
admitted; but the applicability of that rule of the case under

consideration is not perceived. This bond was taken at a time

when the common law afforded no rule of decision or practice
in this country, and consequently that law cannot be
legitimately resorted to, even for the purpose for which it is
invoked by the counsel for the appellant, unless it be shown
that the civil law had not term of similar import for we regard it
as a correct rule of construction, that where technical terms are
used in a statute they are to be referred for their signification to
terms f similar import in the system of laws which prevails in
the country where the statues is passed, and not to another
system which is entirely foreign t the whole system of
municipal regulations by which that country is governed.
(Martin's Reports, vol. 3, 185; 7 Martin [N. S.], 162.)"
Consequently, I believe that in the interpretation of phase
"contract, express or implied," we should apply the rules of our
own substantive law. The phrase in itself offers no difficulty.
The concept of the contract, under the Civil Code, as a legal
relation of exclusively consensual origin, offers no difficulty.
Nor is any difficulty encountered in the gramatical sense of the
words express and "implied". Express according to the New
International Dictionary is that which is directly and distinctly
stated; expressed, not merely implied or left to interference.
Therefore, a contract entered into by means of letters, in which
the offer and the acceptance have been manifested by
appropriate words, would be an "express contract." The word
"imply" according to the same dictionary, is to involve in
substance or essence, or by fair inference, or by construction of
law, when not expressly stated in words or signs; to contain by
implication to include virtually.
Therefore, if I enter a tailor shop and order a suit of clothes,
although nothing is said regarding payment, it is an inference,

both logical and legal, from my act that is my intention to pay

the reasonable value of the garments. The contract is implied,
therefore, is that in which the consent of the parties is implied.
Manresa, commenting upon article 1262 of the Civil Code,
says:
The essence of consent is the agreement of the parties
concerning that which is to constitute the contract . . . .
The forms of this agreement may vary according to
whether it is expressed verbally or in writing, by words
or by acts. Leaving the other differences for
consideration hereafter, we will only refer now to those
which exist between express consent
and implied consent . . . . It is unquestionable that
implied consentmanifested by act or conduct, produces
a contract. . . .
If it were necessary to have recourse to the English common
law for the purpose of ascertaining the meaning of the phrase
under consideration, we could find many decisions which gave
it the same meaning as that for which I contend.
An implied contract is where one party receives
benefits from another party, under such circumstances
that the law presume a promise on the part of the party
benefited to pay a reasonable price for the same. (Jones
vs. Tucker [Del.], 84 Atlantic, 1012.)
It is true that English courts have extended the concept of the
term contract to include certain obligations arisingex
lege without consent, express or implied. True contracts created
by implied consent are designated in the English common law

as contracts implied in the fact, while the so-called contracts in

which the consent is a fiction of law are called contracts
implied by law. But is evident that the latter are not real
contracts. They have been called contract arbitrarily by the
courts of England, and those of the Untied States in which the
English common law is in force, in order that certain actions
arising ex lege may be enforced by the action of assumpsit. In
the rigid formulism of the English common law the substantive
right had to be accommodated to the form of action. As is
stated in the monograph on the action of assumpsit in Ruling
Case Law. (volume 2, 743)
In theory it wan action to recover for the
nonperformance f simple contracts, and the formula and
proceedings were constructed and carried on
accordingly. . . . From the reign of Elizabeth this action
has been extended to almost every case where an
obligation arises from natural reason, . . . and it is now
maintained in many cases which its principles do not
comprehend and where fictions and intendments are
resorted to, to fit the actual cause of action to the theory
of the remedy. It is thus sanctioned where there has
been no . . . real contract, but where some duty is
deemed sufficient to justify the court in imputing the
promise to perform its, and hence in bending the
transaction to the form of action.
In the ancient English common law procedure the form of the
action was regarded as being much more important than the
substantive right to be enforced. If no form of action was found
in which the facts would fit, so much the worse for the facts! to
avoid the injustices to which this condition of affairs gave rise,
the judges invented those fictions which permitted them to

preserve the appearance of conservatism and change the law

without expressly admitting that they were doing so. The
indispensable averment, that they were doing so. The
indispensable avernment without which the action of assumpsit
would not lie, was that the defendant promised to pay plaintiff
the amount demanded. (Sector vs. Holmes, 17 Vs., 566.) In
true contracts, whether express or implied, this promise in fact
exists. In obligations arising ex lege there is no such promise,
and therefore the action of assumpsit could not be maintained,
and therefore the action of assumpsit could not be maintained,
although by reason of its relative simplicity it was one of the
most favored forms of action. In order to permit the litigant to
make use of this form of action for the enforcement of
ascertain classes of obligations arising ex lege, the judges
invented the fiction of the promise of the defendant to pay the
amount of the obligation, and as this fictitious promise give the
appearance of consensuality to the legal relations of the parties,
the name of implied contract is given to that class of extracontractual obligations enforcible by the action of assumpsit.
Now, it is not be supposed that it was the intention of the
Legislature in making use in the first paragraph of article 412
of the phrase contract, express or implied to corrupt the logical
simplicity of our concept of obligations by importing into our
law the antiquated fictions of the mediaeval English common
law. If one of the concepts of the term "implied contract" in the
English common law, namely, that in which consent is presume
from the conduct of the debtor, harmonizes with the concept of
the contract in our law, why should we reject that meaning and
hold that the Legislature intended to use this phrase in the
foreign and illogical sense of a contract arising without
consent? This is a civil law country. why should we be
compelled to study the fictions of the ancient English common

law, in order to be informed as to the meaning of the word

contract in the law of the Philippine Islands? Much more
reasonable to my mind was the conclusion of the Texas court,
under similar circumstances, to the effect to be referred for
their signification to terms of similar import in the system of
laws which prevails in the country where the statue is passed."
(Cayce vs. Curtis, supra.)
My conclusion is that the phase contract, express or implied
should be interpreted in the grammatical sense of the words
and limited to true contracts, consensual obligations arising
from consent, whether expressed in words, writing or signs, or
presumed from conduct. As it is evident that the defendant in
the present case never promised, him in the gambling game in
question, his obligation to restor the amounts won, imposed by
the law, is no contractual, but purely extra-contractual and
therefore the action brought not being one arising upon
contract express or implied, the plaintiff is not entitled to a
preliminary attachment upon the averment that the defendant is
about to depart from the Philippine Islands with with intent t
defraud his creditors, no averment being made in the compliant
or in the affidavit that the defendant has removed or disposed
of his property, or is about to depart with intent to defraud his
creditors, so as to bring the case within the terms of the fifth
paragraph of section 412.
I am unable to agree with the contention of the application
(Brief, p. 39) here that the phase in question should be
interpreted in such a way as to include all obligations, whether
arising from consent or ex lege, because that is equivalent to
eliminating all distinction between the first and the fifth
paragraphs by practically striking out the first two lines of
paragraph one. The Legislature has deliberately established this

distinction, and while we may be unable to see any reason why

it should have been made, it is our duty to apply
and interpret the law, and we are not authorized under the guise
of interpretation to virtually repeal part of the statute.
Nor can it be said that the relations between the parties litigant
constitute a quasi-contract. In the first place, quasi- contracts
are "lawful and purely voluntary acts by which the authors
thereof become obligated in favor of a third person. . . ." The
act which gave rise to the obligation ex lege relied upon by the
plaintiff in the court below isillicit an unlawful gambling
game. In the second place, the first paragraph of section 412 of
the Code of Civil Procedure does not authorize an attachment
in actions arising out of quasi contracts, but only in actions
arising out of contract, express or implied.
I am therefore of the opinion that the court below was without
jurisdiction to issue that writ of attachment and that the writ
should be declared null and void.
Avancea, J., concurs.

Exequil C. Masangkay for respondents.

FERNANDEZ, J.:
This is an appeal by certiorari, from the order of the Court of
First Instance of Cavite, Branch V, in Civil Case No. B-134
granting the motion of the defendants to dismiss the complaint
on the ground that there is another action pending between the
same parties for the same cause. 1
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-46179 January 31, 1978
CANDIDA VIRATA, TOMAS VIRATA, MANOLITO
VIRATA, EDERLINDA VIRATA, NAPOLEON VIRATA,
ARACELY VIRATA, ZENAIDA VIRATA, LUZMINDA
VIRATA, PACITA VIRATA, and EVANGELINA
VIRATA,petitioners,
vs.
VICTORIO OCHOA, MAXIMO BORILLA and THE
COURT OF FIRST INSTANCE OF CAVITE, 7th
JUDICIAL DISTRICT, BRANCH V, stationed at
BACOOR, CAVITE, respondents.
Remulla, Estrella & Associates for petitioners

The record shows that on September 24, 1975 one Arsenio

Virata died as a result of having been bumped while walking
along Taft Avenue, Pasay City by a passenger jeepney driven
by Maximo Borilla and registered in the name Of Victoria
Ochoa; that Borilla is the employer of Ochoa; that for the death
of Arsenio Virata, a action for homicide through reckless
imprudence was instituted on September 25, 1975 against
Maximo Borilla in the Court of First Instance of Rizal at Pasay
City, docketed as C Case No. 3162-P of said court; that at the
hearing of the said criminal case on December 12, 1975, Atty.
Julio Francisco, the private prosecutor, made a reservation to
file a separate civil action for damages against the driver on his
criminal liability; that on February 19, 1976 Atty. Julio
Francisco filed a motion in said c case to withdraw the
reservation to file a separate civil action; that thereafter, the
private prosecutor actively participated in the trial and
presented evidence on the damages; that on June 29, 1976 the
heirs of Arsenio Virata again reserved their right to institute a
separate civil action; that on July 19, 1977 the heirs of Arsenio

Virata, petitioners herein, commenced Civil No. B-134 in the

Court of First Instance of Cavite at Bacoor, Branch V, for
damages based on quasi-delict against the driver Maximo
Borilla and the registered owner of the jeepney, Victorio
Ochoa; that on August 13, 1976 the defendants, private
respondents filed a motion to dismiss on the ground that there
is another action, Criminal Case No. 3162-P, pending between
the same parties for the same cause; that on September 8, 1976
the Court of First Instance of Rizal at Pasay City a decision in
Criminal Case No. 3612-P acquitting the accused Maximo
Borilla on the ground that he caused an injury by name
accident; and that on January 31, 1977, the Court of First
Instance of Cavite at Bacoor granted the motion to Civil Case
No. B-134 for damages. 2
The principal issue is weather or not the of the Arsenio Virata,
can prosecute an action for the damages based on quasi-delict
against Maximo Borilla and Victoria Ochoa, driver and owner,
respectively on the passenger jeepney that bumped Arsenio
Virata.
It is settled that in negligence cases the aggrieved parties may
choose between an action under the Revised Penal Code or of
quasi-delict under Article 2176 of the Civil Code of the
Philippines. What is prohibited by Article 2177 of the Civil
Code of the Philippines is to recover twice for the same
negligent act.
The Supreme Court has held that:

According to the Code Commission: 'The

foregoing provision (Article 2177) though at
first sight startling, is not so novel or
extraordinary when we consider the exact nature
of criminal and civil negligence. The former is a
violation of the criminal law, while the latter is a
'culpa aquiliana' or quasi-delict, of ancient
origin, having always had its own foundation
and individuality, separate from criminal
negligence. Such distinction between criminal
negligence and 'culpa extra-contractual' or
quasi-delito has been sustained by decision of
the Supreme Court of Spain and maintained as
clear, sound and perfectly tenable by Maura, an
outstanding Spanish jurist. Therefore, under the
proposed Article 2177, acquittal from an
accusation of criminal negligence, whether on
reasonable doubt or not, shall not be a bar to a
subsequent civil action, not for civil liability
arising from criminal negligence, but for
damages due to a quasi-delict or 'culpa
aquiliana'. But said article forestalls a double
recovery. (Report of the Code Commission, p.
162.)
Although, again, this Article 2177 does seem to
literally refer to only acts of negligence, the
same argument of Justice Bocobo about
construction that upholds 'the spirit that given
life' rather than that which is literal that killeth
the intent of the lawmaker should be observed in

applying the same. And considering that the

preliminary chapter on human relations of the
new Civil Code definitely establishes the
separability and independence of liability in a
civil action for acts criminal in character (under
Articles 29 to 32) from the civil responsibility
arising from crime fixed by Article 100 of the
Penal Code, and, in a sense, the Rules of Court,
under Sections 2 and 3(c), Rule 111,
contemplate also the same separability, it is
'more congruent' with the spirit of law, equity
and justice, and more in harmony with modern
progress', to borrow the felicitous language in
Rakes vs. Atlantic Gulf and Pacific Co., 7 Phil.
to 359, to hod as We do hold, that Article 2176,
where it refers to 'fault covers not only acts 'not
punishable by law' but also criminal in
character, whether intentional and voluntary or
consequently, a separate civil action lies against
the in a criminal act, whether or not he is
criminally prosecuted and found guilty and
acquitted, provided that the offended party is not
allowed, if he is actually charged also
criminally, to recover damages on both scores,
and would be entitled in such eventuality only to
the bigger award of the, two assuming the
awards made in the two cases vary. In other
words the extinction of civil liability refereed to
in Par. (c) of Section 13, Rule 111, refers
exclusively to civil liability founded on Article
100 of the Revised Penal Code, whereas the

civil liability for the same act considered as a

quasi-delict only and not as a crime is not
extinguished even by a declaration in the
criminal case that the criminal act charged has
not happened or has not been committed by the
accused. Brief stated, We hold, in reitration of
Garcia, that culpa aquilina includes voluntary
and negligent acts which may be punishable by
law. 3
The petitioners are not seeking to recover twice for the same
negligent act. Before Criminal Case No. 3162-P was decided,
they manifested in said criminal case that they were filing a
separate civil action for damages against the owner and driver
of the passenger jeepney based on quasi-delict. The acquittal of
the driver, Maximo Borilla, of the crime charged in Criminal
Case No. 3162-P is not a bar to the prosecution of Civil Case
No. B-134 for damages based on quasi-delict The source of the
obligation sought to be enforced in Civil Case No. B-134
isquasi-delict, not an act or omission punishable by law. Under
Article 1157 of the Civil Code of the Philippines, quasi-delict
and an act or omission punishable by law are two different
sources of obligation.
Moreover, for the petitioners to prevail in the action for
damages, Civil Case No. B-134, they have only to establish
their cause of action by preponderance of the evidence.
WHEREFORE, the order of dismissal appealed from is hereby
set aside and Civil Case No. B-134 is reinstated and remanded

to the lower court for further proceedings, with costs against

the private respondents.
SO ORDERED.

Teehankee (Chairman), Makasiar, Muoz Palma and

Guerrero, JJ., concur.