SECOND DIVISION

G.R. No. 152411 September 29, 2004

UNIVERSITY OF THE PHILIPPINES, petitioner,

vs.
PHILAB INDUSTRIES, INC., respondent.

DECISION

CALLEJO, SR., J.:

Before the Court is a petition for review on certiorari of the Decision 1 of the Court of
Appeals in CA-G.R. CV No. 44209, as well as its Resolution2 denying the petitioner’s
motion for the reconsideration thereof. Themo1 mo2 Court of Appeals set aside the
Decision3 of Branch 150 of the Regional Trial Court (RTC) of Makati City, which
dismissed the complaint of the respondent against the petitioner for sum of money and
damages.

The Facts of the Case

Sometime in 1979, the University of the Philippines (UP) decided to construct an

integrated system of research organization known as the Research Complex. As part
of the project, laboratory equipment and furniture were purchased for the National
Institute of Biotechnology and Applied Microbiology (BIOTECH) at the UP Los
Baños. Providentially, the Ferdinand E. Marcos Foundation (FEMF) came forward
and agreed to fund the acquisition of the laboratory furniture, including the fabrication
thereof.

Renato E. Lirio, the Executive Assistant of the FEMF, gave the go-signal to
BIOTECH to contact a corporation to accomplish the project. On July 23, 1982, Dr.
William Padolina, the Executive Deputy Director of BIOTECH, arranged for
Philippine Laboratory Industries, Inc. (PHILAB), to fabricate the laboratory furniture
and deliver the same to BIOTECH for the BIOTECH Building Project, for the account
of the FEMF. Lirio directed Padolina to give the go-signal to PHILAB to proceed
with the fabrication of the laboratory furniture, and requested Padolina to forward the
contract of the project to FEMF for its approval.

On July 13, 1982, Padolina wrote Lirio and requested for the issuance of the purchase
order and downpayment for the office and laboratory furniture for the project, thus:

1. Supply and Installation of Laboratory furniture for the BIOTECH

Building Project
Amount : P2,934,068.90
Supplier : Philippine Laboratory Furniture Co.,
College, Laguna
Attention : Mr. Hector C. Navasero
President
Downpayment : 40% or ₱1,173,627.56
2. Fabrication and Supply of office furniture for the BIOTECH Building
Project
Amount : P573,375.00
Supplier : Trans-Oriental Woodworks, Inc.
1st Avenue, Bagumbayan Tanyag, Taguig, Metro
Manila
Downpayment : 50% or ₱286,687.504

Padolina assured Lirio that the contract would be prepared as soon as possible before
the issuance of the purchase orders and the downpayment for the goods, and would be
transmitted to the FEMF as soon as possible.

In a Letter dated July 23, 1982, Padolina informed Hector Navasero, the President of
PHILAB, to proceed with the fabrication of the laboratory furniture, per the directive
of FEMF Executive Assistant Lirio. Padolina also requested for copies of the shop
drawings and a sample contract5 for the project, and that such contract and drawings
had to be finalized before the down payment could be remitted to the PHILAB the
following week. However, PHILAB failed to forward any sample contract.

Subsequently, PHILAB made partial deliveries of office and laboratory furniture to

BIOTECH after having been duly inspected by their representatives and FEMF
Executive Assistant Lirio.

On August 24, 1982, FEMF remitted ₱600,000 to PHILAB as downpayment for the
laboratory furniture for the BIOTECH project, for which PHILAB issued Official
Receipt No. 253 to FEMF. On October 22, 1982, FEMF made another partial payment
of ₱800,000 to PHILAB, for which the latter issued Official Receipt No. 256 to
FEMF. The remittances were in the form of checks drawn by FEMF and delivered to
PHILAB, through Padolina.

On October 16, 1982, UP, through Emil Q. Javier, the Chancellor of UP Los Baños
and FEMF, represented by its Executive Officer, Rolando Gapud, executed a
Memorandum of Agreement (MOA) in which FEMF agreed to grant financial support
and donate sums of money to UP for the construction of buildings, installation of
laboratory and other capitalization for the project, not to exceed ₱29,000,000.00. The
obligations of FEMF under the MOA are the following:

ARTICLE II

OBLIGATIONS OF THE FOUNDATION

2.1. The FOUNDATION, in carrying out its principal objectives of promoting

philantrophic and scientific projects through financial support to such projects
that will contribute to the country’s economic development, shall grant such
financial support and donate such sums of money to the RESEARCH
COMPLEX as may be necessary for the construction of buildings, installation
of laboratories, setting up of offices and physical plants and facilities and other
capital investment of the RESEARCH COMPLEX and/or any of its component
Research Institutes not to exceed ₱29 Million. For this purpose, the
FOUNDATION shall:

(a) Acquire and donate to the UNIVERSITY the site for the
RESEARCH COMPLEX; and

(b) Donate or cause to be donated to the UNIVERSITY the sum of

TWENTY-NINE MILLION PESOS (₱29,000,000.00) for the
construction of the buildings of the National Institutes of Biotechnology
and Applied Microbiology (BIOTECH) and the installation of their
laboratories and their physical plants and other facilities to enable them
to commence operations.

2.2. In addition, the FOUNDATION shall, subject to the approval of the Board
of Trustees of the FOUNDATION, continue to support the activities of the
RESEARCH COMPLEX by way of recurrent additional grants and donations
for specific research and development projects which may be mutually agreed
upon and, from time to time, additional grants and donations of such amounts
as may be necessary to provide the RESEARCH COMPLEX and/or any of its
 Research Institutes with operational flexibility especially with regard to
incentives to staff purchase of equipment/facilities, travel abroad, recruitment
of local and expatriate staff and such other activities and inputs which are
difficult to obtain under usual government rules and regulations.6

The Board of Regents of the UP approved the MOA on November 25, 1982.7

In the meantime, Navasero promised to submit the contract for the installation of
laboratory furniture to BIOTECH, by January 12, 1983. However, Navasero failed to
do so. In a Letter dated February 1, 1983, BIOTECH reminded Navasero of the need
to submit the contract so that it could be submitted to FEMF for its evaluation and
approval.8 Instead of submitting the said contract, PHILAB submitted to BIOTECH
an accomplishment report on the project as of February 28, 1983, and requested
payment thereon.9 By May 1983, PHILAB had completed 78% of the project,
amounting to ₱2,288,573.74 out of the total cost of ₱2,934,068.90. The FEMF had
already paid forty percent (40%) of the total cost of the project. On May 12, 1983,
Padolina wrote Lirio and furnished him the progress billing from PHILAB.10 On
August 11, 1983, the FEMF made another partial payment of ₱836,119.52
representing the already delivered laboratory and office furniture after the requisite
inspection and verification thereof by representatives from the BIOTECH, FEMF, and
PHILAB. The payment was made in the form of a check, for which PHILAB issued
Official Receipt No. 202 to FEMF through Padolina.11

On July 1, 1984, PHILAB submitted to BIOTECH Invoice No. 01643 in the amount
of ₱702,939.40 for the final payment of laboratory furniture. Representatives from
BIOTECH, PHILAB, and Lirio for the FEMF, conducted a verification of the
accomplishment of the work and confirmed the same. BIOTECH forwarded the
invoice to Lirio on December 18, 1984 for its payment.12 Lirio, in turn, forwarded the
invoice to Gapud, presumably sometime in the early part of 1985. However, the
FEMF failed to pay the bill. PHILAB reiterated its request for payment through a
letter on May 9, 1985.13 BIOTECH again wrote Lirio on March 21, 1985, requesting
the payment of PHILAB’s bill.14 It sent another letter to Gapud, on November 22,
1985, again appealing for the payment of PHILAB’s bill.15 In a Letter to BIOTECH
dated December 5, 1985, PHILAB requested payment of ₱702,939.40 plus interest
thereon of ₱224,940.61.16 There was, however, no response from the FEMF. On
February 24, 1986, PHILAB wrote BIOTECH, appealing for the payment of its bill
even on installment basis.17

President Marcos was ousted from office during the February 1986 EDSA Revolution.
On March 26, 1986, Navasero wrote BIOTECH requesting for its much-needed
assistance for the payment of the balance already due plus interest of ₱295,234.55 for
its fabrication and supply of laboratory furniture.18
On April 22, 1986, PHILAB wrote President Corazon C. Aquino asking her help to
secure the payment of the amount due from the FEMF.19 The letter was referred to
then Budget Minister Alberto Romulo, who referred the letter to then UP President
Edgardo Angara on June 9, 1986. On September 30, 1986, Raul P. de Guzman, the
Chancellor of UP Los Baños, wrote then Chairman of the Presidential Commission on
Good Government (PCGG) Jovito Salonga, submitting PHILAB’s claim to be
officially entered as "accounts payable" as soon as the assets of FEMF were liquidated
by the PCGG.20

In the meantime, the PCGG wrote UP requesting for a copy of the relevant contract
and the MOA for its perusal.21

Chancellor De Guzman wrote Navasero requesting for a copy of the contract executed
between PHILAB and FEMF. In a Letter dated October 20, 1987, Navasero informed
De Guzman that PHILAB and FEMF did not execute any contract regarding the
fabrication and delivery of laboratory furniture to BIOTECH.

Exasperated, PHILAB filed a complaint for sum of money and damages against UP.
In the complaint, PHILAB prayed that it be paid the following:

(1) PESOS: SEVEN HUNDRED TWO THOUSAND NINE HUNDRED

THIRTY NINE & 40/100 (₱702,939.40) plus an additional amount (as shall be
determined during the hearing) to cover the actual cost of money which at the
time of transaction the value of the peso was eleven to a dollar (₱11.00:$1) and
twenty seven (27%) percent interest on the total amount from August 1982
until fully paid;

(2) PESOS: ONE HUNDRED THOUSAND (₱100,000.00) exemplary

damages;

(3) FIFTY THOUSAND [PESOS] (₱50,000.00) as and for attorney’s fees; and

(4) Cost of suit.22

PHILAB alleged, inter alia, that:

3. Sometime in August 1982, defendant, through its officials, particularly MR.

WILLIAM PADOLINA, Director, asked plaintiff to supply and install several
laboratory furnitures and equipment at BIOTECH, a research laboratory of
herein defendant located at its campus in College, Laguna, for a total contract
price of PESOS: TWO MILLION NINE HUNDRED THIRTY-NINE
THOUSAND FIFTY-EIGHT & 90/100 (₱2,939,058.90);
 4. After the completion of the delivery and installation of said laboratory
furnitures and equipment at defendant’s BIOTECH Laboratory, defendant paid
three (3) times on installment basis:

a) ₱600,000.00 as per Official Receipt No. 253 dated August 24, 1982;

b) ₱800,000.00 as per Official Receipt No. 256 dated October 22, 1982;

c) ₱836,119.52 as per Official Receipt No. 202 dated August 11, 1983;

thus leaving a balance of PESOS: SEVEN HUNDRED TWO THOUSAND

NINE HUNDRED THIRTY-NINE & 40/100 (₱702,939.40).

5. That notwithstanding repeated demands for the past eight years, defendant
arrogantly and maliciously made plaintiff believe that it was going to pay the
balance aforestated, that was why plaintiff’s President and General Manager
himself, HECTOR C. NAVASERO, personally went to and from UP Los
Baños to talk with defendant’s responsible officers in the hope of expecting
payment, when, in truth and in fact, defendant had no intention to pay
whatsoever right from the start on a misplaced ground of technicalities. Some
of plaintiff’s demand letters since year 1983 up to the present are hereto
attached as Annexes A, B, C, D, E, F, G, and H hereof;

6. That by reason of defendant’s malicious, evil and unnecessary

misrepresentations that it was going to pay its obligation and asking plaintiff so
many red tapes and requirements to submit, compliance of all of which took
plaintiff almost eight (8) years to finish, when, in truth and in fact, defendant
had no intention to pay, defendant should be ordered to pay plaintiff no less
than PESOS: ONE HUNDRED THOUSAND (₱100,000.00) exemplary
damages, so that other government institutions may be warned that they must
not unjustly enrich themselves at the expense of the people they serve.23

In its answer, UP denied liability and alleged that PHILAB had no cause of action
against it because it was merely the donee/beneficiary of the laboratory furniture in
the BIOTECH; and that the FEMF, which funded the project, was liable to the
PHILAB for the purchase price of the laboratory furniture. UP specifically denied
obliging itself to pay for the laboratory furniture supplied by PHILAB.

After due proceedings, the trial court rendered judgment dismissing the complaint
without prejudice to PHILAB’s recourse against the FEMF. The fallo of the decision
reads:
 WHEREFORE, this case is hereby DISMISSED for lack of merit without
prejudice to plaintiff's recourse to the assets of the Marcos Foundation for the
unpaid balance of ₱792,939.49.

SO ORDERED.24

Undaunted, PHILAB appealed to the Court of Appeals (CA) alleging that the trial
court erred in finding that:

1. the contract for the supply and installation of subject laboratory furniture and
equipment was between PHILAB and the Marcos Foundation; and,

2. the Marcos Foundation, not the University of the Philippines, is liable to pay
the respondent the balance of the purchase price.25

The CA reversed and set aside the decision of the RTC and held that there was never a
contract between FEMF and PHILAB. Consequently, PHILAB could not be bound by
the MOA between the FEMF and UP since it was never a party thereto. The appellate
court ruled that, although UP did not bind itself to pay for the laboratory furniture;
nevertheless, it is liable to PHILAB under the maxim: "No one should unjustly enrich
himself at the expense of another."

The Present Petition

Upon the denial of its motion for reconsideration of the appellate court’s decision, UP,
now the petitioner, filed its petition for review contending that:

I. THE COURT OF APPEALS ERRED WHEN IT FAILED TO APPLY THE

LAW ON CONTRACTS BETWEEN PHILAB AND THE MARCOS
FOUNDATION.

II. THE COURT OF APPEALS ERRED IN APPLYING THE LEGAL

PRINCIPLE OF UNJUST ENRICHMENT WHEN IT HELD THAT THE
UNIVERSITY, AND NOT THE MARCOS FOUNDATION, IS LIABLE TO
PHILAB.26

Prefatorily, the doctrinal rule is that pure questions of facts may not be the subject of
appeal by certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as this mode
of appeal is generally restricted to questions of law.27 However, this rule is not
absolute. The Court may review the factual findings of the CA should they be
contrary to those of the trial court.28 Correspondingly, this Court may review findings
of facts when the judgment of the CA is premised on a misapprehension of facts.29
On the first assigned error, the petitioner argues that the CA overlooked the
evidentiary effect and substance of the corresponding letters and communications
which support the statements of the witnesses showing affirmatively that an implied
contract of sale existed between PHILAB and the FEMF. The petitioner furthermore
asserts that no contract existed between it and the respondent as it could not have
entered into any agreement without the requisite public bidding and a formal written
contract.

The respondent, on the other hand, submits that the CA did not err in not applying the
law on contracts between the respondent and the FEMF. It, likewise, attests that it was
never privy to the MOA entered into between the petitioner and the FEMF. The
respondent adds that what the FEMF donated was a sum of money equivalent to
₱29,000,000, and not the laboratory equipment supplied by it to the petitioner. The
respondent submits that the petitioner, being the recipient of the laboratory furniture,
should not enrich itself at the expense of the respondent.

The petition is meritorious.

It bears stressing that the respondent’s cause of action is one for sum of money
predicated on the alleged promise of the petitioner to pay for the purchase price of the
furniture, which, despite demands, the petitioner failed to do. However, the
respondent failed to prove that the petitioner ever obliged itself to pay for the
laboratory furniture supplied by it. Hence, the respondent is not entitled to its claim
against the petitioner.

There is no dispute that the respondent is not privy to the MOA executed by the
petitioner and FEMF; hence, it is not bound by the said agreement. Contracts take
effect only between the parties and their assigns.30 A contract cannot be binding upon
and cannot be enforced against one who is not a party to it, even if he is aware of such
contract and has acted with knowledge thereof.31 Likewise admitted by the parties, is
the fact that there was no written contract executed by the petitioner, the respondent
and FEMF relating to the fabrication and delivery of office and laboratory furniture to
the BIOTECH. Even the CA failed to specifically declare that the petitioner and the
respondent entered into a contract of sale over the said laboratory furniture. The
parties are in accord that the FEMF had remitted to the respondent partial payments
via checks drawn and issued by the FEMF to the respondent, through Padolina, in the
total amount of ₱2,288,573.74 out of the total cost of the project of ₱2,934,068.90 and
that the respondent received the said checks and issued receipts therefor to the FEMF.
There is also no controversy that the petitioner did not pay a single centavo for the
said furniture delivered by the respondent that the petitioner had been using ever
since.
We agree with the petitioner that, based on the records, an implied-in-fact contract of
sale was entered into between the respondent and FEMF. A contract implied in fact is
one implied from facts and circumstances showing a mutual intention to contract. It
arises where the intention of the parties is not expressed, but an agreement in fact
creating an obligation. It is a contract, the existence and terms of which are manifested
by conduct and not by direct or explicit words between parties but is to be deduced
from conduct of the parties, language used, or things done by them, or other pertinent
circumstances attending the transaction. To create contracts implied in fact,
circumstances must warrant inference that one expected compensation and the other
to pay.32 An implied-in-fact contract requires the parties’ intent to enter into a
contract; it is a true contract.33 The conduct of the parties is to be viewed as a
reasonable man would view it, to determine the existence or not of an implied-in-fact
contract.34 The totality of the acts/conducts of the parties must be considered to
determine their intention. An implied-in-fact contract will not arise unless the meeting
of minds is indicated by some intelligent conduct, act or sign.35

In this case, the respondent was aware, from the time Padolina contacted it for the
fabrication and supply of the laboratory furniture until the go-signal was given to it to
fabricate and deliver the furniture to BIOTECH as beneficiary, that the FEMF was to
pay for the same. Indeed, Padolina asked the respondent to prepare the draft of the
contract to be received by the FEMF prior to the execution of the parties (the
respondent and FEMF), but somehow, the respondent failed to prepare one. The
respondent knew that the petitioner was merely the donee-beneficiary of the
laboratory furniture and not the buyer; nor was it liable for the payment of the
purchase price thereof. From the inception, the FEMF paid for the bills and statement
of accounts of the respondent, for which the latter unconditionally issued receipts to
and under the name of the FEMF. Indeed, witness Lirio testified:

Q: Now, did you know, Mr. Witness, if PHILAB Industries was aware that it
was the Marcos Foundation who would be paying for this particular transaction
for the completion of this particular transaction?

A: I think they are fully aware.

Q: What is your basis for saying so?

A: First, I think they were appraised by Dr. Padolina. Secondly, there were
occasions during our inspection in Los Baños, at the installation site, there were
occasions, two or three occasions, when we met with Mr. Navasero who is the
President, I think, or manager of PHILAB, and we appraised him that it was
really between the foundation and him to which includes (sic) the construction
 company constructing the building. He is fully aware that it is the foundation
who (sic) engaged them and issued the payments.36

The respondent, in its Letter dated March 26, 1986, informed the petitioner and sought
its assistance for the collection of the amount due from the FEMF:

Dear Dr. Padolina:

May we request for your much-needed assistance in the payment of the balance
still due us on the laboratory furniture we supplied and installed two years ago?

Business is still slow and we will appreciate having these funds as soon as
possible to keep up our operations.

We look forward to hearing from you regarding this matter.

Very truly yours,

PHILAB INDUSTRIES, INC.37

The respondent even wrote former President Aquino seeking her assistance for the
payment of the amount due, in which the respondent admitted it tried to collect from
her predecessor, namely, the former President Ferdinand E. Marcos:

YOUR EXCELLENCY:

At the instance of the national government, subject laboratory furnitures were

supplied by our company to the National Institute of Biotechnology & Applied
Microbiology (BIOTECH), University of the Philippines, Los Baños, Laguna,
in 1984.

Out of the total contract price of PESOS: TWO MILLION NINE HUNDRED
THIRTY-NINE THOUSAND FIFTY-EIGHT & 90/100 (₱2,939,058.90), the
previous administration had so far paid us the sum of ₱2,236,119.52 thus
leaving a balance of PESOS: ONE MILLION FOUR HUNDRED TWELVE
THOUSAND SEVEN HUNDRED FORTY-EIGHT & 61/100 (₱1,412.748.61)
inclusive of interest of 24% per annum and 30% exchange rate adjustment.

On several occasions, we have tried to collect this amount from your

predecessor, the latest of which was subject invoice (01643) we submitted to
DR. W. PADOLINA, deputy director of BIOTECH. But this, notwithstanding,
 our claim has remained unacted upon up to now. Copy of said invoice is hereto
attached for easy reference.

Now that your excellency is the head of our government, we sincerely hope that
payment of this obligation will soon be made as this is one project the Republic
of the Philippines has use of and derives benefit from.38

Admittedly, the respondent sent to the petitioner its bills and statements of accounts
for the payments of the laboratory furniture it delivered to the petitioner which the
petitioner, through Padolina, transmitted to the FEMF for its payment. However, the
FEMF failed to pay the last statement of account of the respondent because of the
onset of the EDSA upheaval. It was only when the respondent lost all hope of
collecting its claim from the government and/or the PCGG did it file the complaint
against the petitioner for the collection of the payment of its last delivery of laboratory
furniture.

We reject the ruling of the CA holding the petitioner liable for the claim of the
respondent based on the maxim that no one should enrich itself at the expense of
another.

Unjust enrichment claims do not lie simply because one party benefits from the efforts
or obligations of others, but instead it must be shown that a party was unjustly
enriched in the sense that the term unjustly could mean illegally or unlawfully.39

Moreover, to substantiate a claim for unjust enrichment, the claimant must

unequivocally prove that another party knowingly received something of value to
which he was not entitled and that the state of affairs are such that it would be unjust
for the person to keep the benefit.40 Unjust enrichment is a term used to depict result
or effect of failure to make remuneration of or for property or benefits received under
circumstances that give rise to legal or equitable obligation to account for them; to be
entitled to remuneration, one must confer benefit by mistake, fraud, coercion, or
request.41 Unjust enrichment is not itself a theory of reconvey. Rather, it is a
prerequisite for the enforcement of the doctrine of restitution.42

Article 22 of the New Civil Code reads:

Every person who, through an act of performance by another, or any other

means, acquires or comes into possession of something at the expense of the
latter without just or legal ground, shall return the same to him. (Boldface
supplied)
In order that accion in rem verso may prosper, the essential elements must be present:
(1) that the defendant has been enriched, (2) that the plaintiff has suffered a loss, (3)
that the enrichment of the defendant is without just or legal ground, and (4) that the
plaintiff has no other action based on contract, quasi-contract, crime or quasi-delict.43

An accion in rem verso is considered merely an auxiliary action, available only when
there is no other remedy on contract, quasi-contract, crime, and quasi-delict. If there is
an obtainable action under any other institution of positive law, that action must be
resorted to, and the principle of accion in rem verso will not lie.44

The essential requisites for the application of Article 22 of the New Civil Code do not
obtain in this case. The respondent had a remedy against the FEMF via an action
based on an implied-in-fact contract with the FEMF for the payment of its claim. The
petitioner legally acquired the laboratory furniture under the MOA with FEMF; hence,
it is entitled to keep the laboratory furniture.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed

Decision of the Court of Appeals is REVERSED AND SET ASIDE. The Decision of
the Regional Trial Court, Makati City, Branch 150, is REINSTATED. No costs.

SO ORDERED.

FIRST DIVISION

G. R. No. 166876 March 24, 2006

ARTEMIO INIEGO,1Petitioner,
vs.
The HONORABLE JUDGE GUILLERMO G. PURGANAN, in his official capacity as Presiding
Judge of the Regional Trial Court, Branch 42, City of Manila, and FOKKER C.
SANTOS, Respondents.

DECISION

CHICO-NAZARIO, J.:
For this Court to grant this petition for review on certiorari under Rule 45 of the Rules of Court,
petitioner has to persuade us on two engaging questions of law. First, he has to convince us that
actions for damages based on quasi-delict are actions that are capable of pecuniary estimation, and
therefore would fall under the jurisdiction of the municipal courts if the claim does not exceed the
jurisdictional amount of P400,000.00 in Metro Manila. Second, he has to convince us that the moral
and exemplary damages claimed by the private respondent should be excluded from the
computation of the above-mentioned jurisdictional amount because they arose from a cause of
action other than the negligent act of the defendant.

Petitioner urges us to reverse the 28 October 2004 Decision and 26 January 2005 Resolution of the
Court of Appeals, Eighth Division, in CA-G.R. SP No. 76206 denying due course to the petition for
certiorari filed by petitioner under Rule 65, elevating the 21 October 2002 Omnibus Order and the 21
January 2003 Order of the Regional Trial Court (RTC), Branch 42, City of Manila. The dispositive
portion of the 28 October 2004 Decision of the Court of Appeals reads:

WHEREFORE, the petition is DENIED DUE COURSE and DISMISSED for lack of merit.2

The factual and procedural antecedents of this case are as follows:

On 1 March 2002, private respondent Fokker Santos filed a complaint for quasi-delict and damages
against Jimmy T. Pinion, the driver of a truck involved in a traffic accident, and against petitioner
Artemio Iniego, as owner of the said truck and employer of Pinion. The complaint stemmed from a
vehicular accident that happened on 11 December 1999, when a freight truck allegedly being driven
by Pinion hit private respondent’s jitney which private respondent was driving at the time of the
accident.

On 24 August 2002, private respondent filed a Motion to Declare defendant in Default allegedly for
failure of the latter to file his answer within the final extended period. On 28 August 2002, petitioner
filed a Motion to Admit and a Motion to Dismiss the complaint on the ground, among other things,
that the RTC has no jurisdiction over the cause of action of the case.

On 21 October 2002, public respondent Judge Guillermo G. Purganan, acting as presiding judge of
the RTC, Branch 42, Manila, issued the assailed Omnibus Order denying the Motion to Dismiss of
the petitioner and the Motion to Declare Defendant in Default of the private respondent. Pertinent
portions of the Omnibus Order and the dispositive portion thereof read:

In his opposition to the motion to declare him in default and his Motion to Admit defendant IÑEGO
alleged that he never received the Order dated 12 August 2002. But believing in good faith, without
being presumptuous, that his 3rd Motion for additional Time to file or any appropriate [pleading]
would be granted, he filed the aforesaid Motion received by the Court on 23 August 2002.

The explanation of defendant IÑEGO has merit. The order dated 12 August 2002 was sent to a
wrong address, thus defendant IÑEGO did not receive it. Since it was not received, he was not
aware that the court would grant no further extension. The Motion to Admit Motion to Dismiss has to
be granted and the Motion to declare Defendant IÑEGO [in default] has to be DENIED.

xxxx

The plaintiff opines that this court has exclusive jurisdiction because the cause of action is the claim
for damages, which exceeds P400,000.00. The complaint prays for actual damages in the amount
of P40,000.00, moral damages in the amount of P300,000.00, and exemplary damages in the
amount of P150,000.00. Excluding attorney’s fees in the amount of P50,000.00, the total amount of
damages being claimed is P490,000.00.

Proceeding on the assumption that the cause of action is the claim of (sic) for damages in the total
amount of P490,000.00, this court has jurisdiction. But is the main cause of action the claim for
damages?

This court is of the view that the main cause of action is not the claim for damages but quasi-delict.
Damages are being claimed only as a result of the alleged fault or negligence of both defendants
under Article 2176 of the Civil Code in the case of defendant Pinion and under Article 2180 also of
the Civil Code in the case of defendant Iniego. But since fault or negligence (quasi-delicts) could not
be the subject of pecuniary estimation, this court has exclusive jurisdiction.

xxxx

WHEREFORE, in view of all the foregoing, the motion to declare defendant Iniego in default and the
said defendant’s motion to dismiss are denied.3

On 7 November 2002, petitioner filed a Motion for Reconsideration of the Omnibus Order of 21
October 2002. On 21 January 2003, public respondent issued an Order denying petitioner’s motion
for reconsideration. Pertinent portions of the 21 January 2003 Order are reproduced hereunder:

What this court referred to in its Order sought to be reconsidered as not capable of pecuniary
estimation is the CAUSE OF ACTION, which is quasi-delict and NOT the amount of damage prayed
for.

xxxx

WHEREFORE, in view of the foregoing, the motion for reconsideration is DENIED.4

Petitioner elevated the 21 October 2002 and 21 January 2003 Orders of the RTC to the Court of
Appeals on petition for certiorari under Rule 65 of the Rules of Court. On 28 October 2004, the Court
of Appeals promulgated the assailed Decision, the dispositive portion thereof reads:

WHEREFORE, the petition is DENIED DUE COURSE and dismissed for lack of merit.5

On 22 November 2004, petitioner moved for reconsideration, which was denied by the Court of
Appeals on 26 January 2005. Hence, this present petition.

Petitioner claims that actions for damages based on quasi-delict are actions that are capable of
pecuniary estimation; hence, the jurisdiction in such cases falls upon either the municipal courts (the
Municipal Trial Courts, Metropolitan Trial Courts, Municipal Trial Courts In Cities, And Municipal
Circuit Trial Courts), or the Regional Trial Courts, depending on the value of the damages claimed.

Petitioner argues further that should this Court find actions for damages capable of pecuniary
estimation, then the total amount of damages claimed by the private respondent must
exceed P400,000.00 in order that it may fall under the jurisdiction of the RTC. Petitioner asserts,
however, that the moral and exemplary damages claimed by private respondent be excluded from
the computation of the total amount of damages for jurisdictional purposes because the said moral
and exemplary damages arose, not from the quasi-delict, but from the petitioner’s refusal to pay the
actual damages.
 I

Actions for damages based on quasi-delicts are primarily and effectively actions for the recovery of a
sum of money for the damages suffered because of the defendant’s alleged tortious acts, and are
therefore capable of pecuniary estimation.

In a recent case,6 we did affirm the jurisdiction of a Municipal Circuit Trial Court in actions for
damages based on quasi-delict, although the ground used to challenge said jurisdiction was an
alleged forum shopping, and not the applicability of Section 19(1) of Batas Pambansa Blg. 129.

According to respondent Judge, what he referred to in his assailed Order as not capable of
pecuniary estimation is the cause of action, which is a quasi-delict, and not the amount of damage
prayed for.7 From this, respondent Judge concluded that since fault or negligence in quasi-delicts
cannot be the subject of pecuniary estimation, the RTC has jurisdiction. The Court of Appeals
affirmed respondent Judge in this respect.8

Respondent Judge’s observation is erroneous. It is crystal clear from B.P. Blg. 129, as amended by
Republic Act No. 7691, that what must be determined to be capable or incapable of pecuniary
estimation is not the cause of action, but the subject matter of the action.9 A cause of action is "the
delict or wrongful act or omission committed by the defendant in violation of the primary rights of the
plaintiff."10 On the other hand, the "subject matter of the action" is "the physical facts, the thing real or
personal, the money, lands, chattels, and the like, in relation to which the suit is prosecuted, and not
the delict or wrong committed by the defendant."11

The case of Lapitan v. Scandia, Inc., et al.,12 has guided this Court time and again in determining
whether the subject matter of the action is capable of pecuniary estimation. In Lapitan, the Court
spoke through the eminent Mr. Justice Jose B.L. Reyes:

In determining whether an action is one the subject matter of which is not capable of pecuniary
estimation this Court has adopted the criterion of first ascertaining the nature of the principal action
or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered
capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of
first instance [now Regional Trial Courts] would depend on the amount of the claim. However, where
the basic issue is something other than the right to recover a sum of money, where the money claim
is purely incidental to, or a consequence of, the principal relief sought like suits to have the
defendant perform his part of the contract (specific performance) and in actions for support, or for
annulment of a judgment or to foreclose a mortgage, this court has considered such actions as
cases where the subject of the litigation may not be estimated in terms of money, and are cognizable
exclusively by courts of first instance [now Regional Trial Courts]. x x x.13 (Emphasis supplied.)

Actions for damages based on quasi-delicts are primarily and effectively actions for the recovery of a
sum of money for the damages suffered because of the defendant’s alleged tortious acts. The
damages claimed in such actions represent the monetary equivalent of the injury caused to the
plaintiff by the defendant, which are thus sought to be recovered by the plaintiff. This money claim is
the principal relief sought, and is not merely incidental thereto or a consequence thereof. It bears to
point out that the complaint filed by private respondent before the RTC actually bears the caption "for
DAMAGES."

Fault or negligence, which the Court of Appeals claims is not capable of pecuniary estimation, is not
actionable by itself. For such fault or negligence to be actionable, there must be a resulting damage
to a third person. The relief available to the offended party in such cases is for the reparation,
restitution, or payment of such damage, without which any alleged offended party has no cause of
action or relief. The fault or negligence of the defendant, therefore, is inextricably intertwined with the
claim for damages, and there can be no action based on quasi-delict without a claim for damages.

We therefore rule that the subject matter of actions for damages based on quasi-delict is capable of
pecuniary estimation.

II

The amount of damages claimed is within the jurisdiction of the RTC, since it is the claim for all kinds
of damages that is the basis of determining the jurisdiction of courts, whether the claims for
damages arise from the same or from different causes of action.

Despite our concurrence in petitioner’s claim that actions for damages based on quasi-delict are
actions that are capable of pecuniary estimation, we find that the total amount of damages claimed
by the private respondent nevertheless still exceeds the jurisdictional limit of P400,000.00 and
remains under the jurisdiction of the RTC.

Petitioner argues that in actions for damages based on quasi-delict, claims for damages arising from
a different cause of action (i.e., other than the fault or negligence of the defendant) should not be
included in the computation of the jurisdictional amount. According to petitioner, the moral and
exemplary damages claimed by the respondents in the case at bar are not direct and proximate
consequences of the alleged negligent act. Petitioner points out that the complaint itself stated that
such moral and exemplary damages arose from the alleged refusal of defendants to honor the
demand for damages, and therefore there is no reasonable cause and effect between the fault or
negligence of the defendant and the claim for moral and exemplary damages.14 If the claims for
moral and exemplary damages are not included in the computation for purposes of determining
jurisdiction, only the claim for actual damages in the amount of P40,000.00 will be considered, and
the MeTC will have jurisdiction.

We cannot give credence to petitioner’s arguments. The distinction he made between damages
arising directly from injuries in a quasi-delict and those arising from a refusal to admit liability for a
quasi-delict is more apparent than real, as the damages sought by respondent originate from the
same cause of action: the quasi-delict. The fault or negligence of the employee and the juris tantum
presumption of negligence of his employer in his selection and supervision are the seeds of the
damages claimed, without distinction.

Even assuming, for the sake of argument, that the claims for moral and exemplary damages arose
from a cause of action other than the quasi-delict, their inclusion in the computation of damages for
jurisdictional purposes is still proper. All claims for damages should be considered in determining the
jurisdiction of the court regardless of whether they arose from a single cause of action or several
causes of action. Rule 2, Section 5, of the Rules of Court allows a party to assert as many causes of
action as he may have against the opposing party. Subsection (d) of said section provides that
where the claims in all such joined causes of action are principally for recovery of money, the
aggregate amount claimed shall be the test of jurisdiction.15

Hence, whether or not the different claims for damages are based on a single cause of action or
different causes of action, it is the total amount thereof which shall govern. Jurisdiction in the case at
bar remains with the RTC, considering that the total amount claimed, inclusive of the moral and
exemplary damages claimed, is P490,000.00.

In sum, actions for damages based on quasi-delicts are actions that are capable of pecuniary
estimation. As such, they fall within the jurisdiction of either the RTC or the municipal courts,
depending on the amount of damages claimed. In this case, the amount of damages claimed is
within the jurisdiction of the RTC, since it is the claim for all kinds of damages that is the basis of
determining the jurisdiction of courts, whether the claims for damages arise from the same or from
different causes of action.

WHEREFORE, the petition for review on certiorari is hereby DENIED for lack of merit. The Decision
and Resolution of the Court of Appeals dated 28 October 2004 and 26 January 2005, respectively,
are AFFIRMED insofar as they held that the Regional Trial Court has jurisdiction. No costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-24837 June 27, 1968

JULIAN C. SINGSON and RAMONA DEL CASTILLO, plaintiffs,

vs.
BANK OF THE PHILIPPINE ISLANDS and SANTIAGO FREIXAS, in his capacity as President of
the said Bank, defendants.

Gil B. Galang for plaintiffs.

Aviado and Aranda for defendants.

CONCEPCION, C.J.:

Appeal by plaintiffs, Julian Singson and his wife, Ramona del Castillo, from a decision of the Court of
First Instance of Manila dismissing their complaint against defendants herein, the Bank of the
Philippine Islands and Santiago Freixas.

It appears that Singson, was one of the defendants in civil case No. 23906 of the Court of First
Instance, Manila, in which judgment had been rendered sentencing him and his co-defendants
therein, namely, Celso Lobregat and Villa-Abrille & Co., to pay the sum of P105,539.56 to the
plaintiff therein, Philippine Milling Co. Singson and Lobregat had seasonably appealed from said
judgment, but not Villa-Abrille & Co., as against which said judgment, accordingly, became final and
executory. In due course, a writ of garnishment was subsequently served upon the Bank of the
Philippine Islands — in which the Singsons had a current account — insofar as Villa-Abrille's credits
against the Bank were concerned. What happened thereafter is set forth in the decision appealed
from, from which we quote:

Upon receipt of the said Writ of Garnishment, a clerk of the bank in charge of all matters of
execution and garnishment, upon reading the name of the plaintiff herein in the title of the
Writ of Garnishment as a party defendants, without further reading the body of the said
garnishment and informing himself that said garnishment was merely intended for the
deposits of defendant Villa-Abrille & Co., Valentin Teus, Fernando F. de Villa-Abrille and
Joaquin Bona, prepared a letter for the signature of the President of the Bank informing the
plaintiff Julian C. Singson of the garnishment of his deposits by the plaintiff in that case.
 Another letter was also prepared and signed by the said President of the Bank for the
Special Sheriff dated April 17, 1963.

Subsequently, two checks issued by the plaintiff Julian C. Singson, one for the amount of
P383 in favor of B. M. Glass Service dated April 16, 1963 and bearing No. C-424852, and
check No. C-394996 for the amount of P100 in favor of the Lega Corporation, and drawn
against the said Bank, were deposited by the said drawers with the said bank. Believing that
the plaintiff Singson, the drawer of the check, had no more control over the balance of his
deposits in the said bank, the checks were dishonored and were refused payment by the
said bank. After the first check was returned by the bank to the B. M. Glass Service, the
latter wrote plaintiff Julian C. Singson a letter, dated April 19, 1963, advising him that his
check for P383.00 bearing No. C-424852 was not honored by the bank for the reason that
his account therein had already been garnished. The said B. M. Glass Service further stated
in the said letter that they were constrained to close his credit account with them. In view
thereof, plaintiff Julian C. Singson wrote the defendant bank a letter on April 19, 1963,
claiming that his name was not included in the Writ of Execution and Notice of Garnishment,
which was served upon the bank. The defendant President Santiago Freixas of the said bank
took steps to verify this information and after having confirmed the same, apologized to the
plaintiff Julian C. Singson and wrote him a letter dated April 22, 1963, requesting him to
disregard their letter of April 17, 1963, and that the action of garnishment from his account
had already been removed. A similar letter was written by the said official of the bank on
April 22, 1963 to the Special Sheriff informing him that his letter dated April 17, 1963 to the
said Special Sheriff was considered cancelled and that they had already removed the Notice
of Garnishment from plaintiff Singson's account. Thus, the defendants lost no time to rectify
the mistake that had been inadvertently committed, resulting in the temporary freezing of the
account of the plaintiff with the said bank for a short time.

xxx xxx xxx

On May 8, 1963, the Singsong commenced the present action against the Bank and its president,
Santiago Freixas, for damages1 in consequence of said illegal freezing of plaintiffs' account.
1äw phï1.ñët

After appropriate proceedings, the Court of First Instance of Manila rendered judgment dismissing
the complaint upon the ground that plaintiffs cannot recover from the defendants upon the basis of a
quasi-delict, because the relation between the parties is contractual in nature; because this case
does not fall under Article 2219 of our Civil Code, upon which plaintiffs rely; and because plaintiffs
have not established the amount of damages allegedly sustained by them.

The lower court held that plaintiffs' claim for damages cannot be based upon a tort or quasi-delict,
their relation with the defendants being contractual in nature. We have repeatedly held, however,
that the existence of a contract between the parties does not bar the commission of a tort by the one
against the order and the consequent recovery of damages therefor.2 Indeed, this view has been, in
effect, reiterated in a comparatively recent case. Thus, in Air France vs. Carrascoso,3 involving an
airplane passenger who, despite his first-class ticket, had been illegally ousted from his first-class
accommodation and compelled to take a seat in the tourist compartment, was held entitled to
recover damages from the air-carrier, upon the ground of tort on the latter's part, for, although the
relation between a passenger and a carrier is "contractual both in origin and nature ... the act that
breaks the contract may also be a tort".

In view, however, of the facts obtaining in the case at bar, and considering, particularly, the
circumstance, that the wrong done to the plaintiff was remedied as soon as the President of the bank
realized the mistake he and his subordinate employee had committed, the Court finds that an award
of nominal damages — the amount of which need not be proven4 — in the sum of P1,000, in addition
to attorney's fees in the sum of P500, would suffice to vindicate plaintiff's rights.5

WHEREFORE, the judgment appealed from is hereby reversed, and another one shall be entered
sentencing the defendant Bank of the Philippine Islands to pay to the plaintiffs said sums of P1,000,
as nominal damages, and P500, as attorney's fees, apart from the costs. It is so ordered.

Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro and Angeles, JJ., concur.
Fernando, J., took no part.