Professional Documents
Culture Documents
Armovit Vs Ca
Armovit Vs Ca
Armovit Vs Ca
Held:
G.R. No. 107518 October 8, 1998 If the ship is valued without reference to its actual future
engagements and only in the light of its profit-earning
FACTS:
potentiality, then it may be necessary to add to the
In the early morning of September 21, 1977, M/V Maria value thus assessed the anticipated profit on a charter
Efigenia XV, owned by Maria Efigenia Fishing or other engagement which it was unable to fulfill.
Corporation on its way to Navotas, Metro Manila collided
Damages cannot be presumed and courts, in making an
with the vessel Petroparcel owned by the Luzon
award must point out specific facts that could afford a
Stevedoring Corporation (LSC). Board of Marine Inquiry,
basis for measuring whatever compensatory or actual
Philippine Coast Guard Commandant Simeon N.
Alejandro found Petroparcel to be at fault.
damages are borne proven through sole testimony of
general manager without objection from LSC.
Gatchalian v. Delim
Admissibility of evidence refers to the question of Facts:
whether or not the circumstance (or evidence) is to
considered at all. On the other hand, the probative value On July 11, 1973, petitioner Reynalda Gatchalian
of evidence refers to the question of whether or not it boarded as paying passenger a minibus owned by
proves an issue respondents. While the bus was running along the
highway, a “snapping sound” was heard, and after a
Hearsay evidence whether objected to or not has no
short while, the bus bumped a cement flower pot,
probative value.
turned turtle and fell into a ditch. The passengers were
In the absence of competent proof on the actual damage confined in the hospital, and their bills were paid by
suffered, private respondent is `entitled to nominal respondent’s spouse on July 14. Before Mrs. Delim left,
damages which, as the law says, is adjudicated in order she had the injured passengers sign an already prepared
that a right of the plaintiff, which has been violated or affidavit waiving their claims against respondents.
invaded by defendant, may be vindicated and Petitioner was among those who signed.
recognized, and not for the purpose of indemnifying the Notwithstanding the said document, petitioner filed a
plaintiff for any loss suffered awarded in every obligation claim to recover actual and moral damages for loss of
arising from law, contracts, quasi-contracts, acts or employment opportunities, mental suffering and
omissions punished by law, and quasi-delicts, or in every inferiority complex caused by the scar on her forehead.
case where property right has been invaded. Respondents raised in defense force majeure and the
waiver signed by petitioner. The trial court upheld the
Damages in name only and not in fact amount to be validity of the waiver and dismissed the complaint. The
awarded as nominal damages shall be equal or at least appellate court ruled that the waiver was invalid, but
commensurate to the injury sustained by private also that the petitioner is not entitled to damages.
respondent considering the concept and purpose of such
damages. Issues:
Ordinarily, the receipt of insurance payments should (1) Whether there was a valid waiver
diminish the total value of the vessel quoted by private (2) Whether the respondent was negligent
respondent in his complaint considering that such (3) Whether the petitioner is entitled to actual and moral
payment is causally related to the loss for which it damages
claimed compensation.
1) Ordering defendants to pay plaintiff jointly and 3) he signed a motion for the court to issue an Order to
severally the sum of P32,480.00, with legal rate of release the said sum of money to him and gave the
interest to be computed from May 2, 1979, date of filing same to Mr. Nilo Gonzaga (husband of Sonia) to be filed
of this complaint until fully paid; in court. However, after the Order was subsequently
issued by the court, a certain Engineer Decena of the
2) Ordering defendants to pay plaintiff jointly and Highway Engineers Office issued the authority to release
severally the sum of P5,000.00 as exemplary damages; the funds not to him but to Mr. Gonzaga.
3) Ordering defendants to pay plaintiff jointly and When he failed to recover the amount from PNB,
severally the sum of P5,000.00 as attorneys fees; private respondent filed a motion with the court to
require PNB to pay the same to him.
4) To pay the costs of this suit.
Petitioner filed an opposition contending that Sonia
SO ORDERED.2 Gonzaga presented to it a copy of the May 22, 1978
order and a special power of attorney by virtue of which
The facts are the following: petitioner delivered the check to her.
The matter was set for hearing on July 21, 1978 and Bank and Trust Company that it allowed Sonia Gonzaga
petitioner was directed by the court to produce the said to encash Tans check on the basis of the SPA.
special power of attorney thereat. However, petitioner
failed to do so. We find the petition unmeritorious.
The court decided that there was need for the There is no question that no payment had ever
matter to be ventilated in a separate civil action and been made to private respondent as the check was
thus private respondent never delivered to him. When the court ordered
petitioner to pay private respondent the amount of P3
filed a complaint with the Regional Trial Court in 2,480.00, it had the obligation to deliver the same to
Bacolod City (Branch 44) against petitioner and Juan him. Under Art. 1233 of the Civil Code, a debt shall not
Tagamolila, PNBs Assistant Branch Manager, to recover be understood to have been paid unless the thing or
the said amount. service in which the obligation consists has been
completely delivered or rendered, as the case may be.
In its defense, petitioner contended that private
respondent had duly authorized Sonia Gonzaga to act as The burden of proof of such payment lies with the
his agent. debtor.3 In the instant case, neither the SPA nor the
check issued by petitioner was ever presented in court.
On September 28, 1979, petitioner filed a third-
party complaint against the spouses Nilo and Sonia The testimonies of petitioners own witnesses
Gonzaga praying that they be ordered to pay private regarding the check were conflicting. Tagamolila
respondent the amount of P32,480.00. However, for testified that the check was issued to the order of Sonia
failure of petitioner to have the summons served on the Gonzaga as attorney-in-fact of Loreto Tan,4 while Elvira
Gonzagas despite opportunities given to it, the third- Tibon, assistant cashier of PNB (Bacolod Branch), stated
party complaint was dismissed. that the check was issued to the order of Loreto Tan.5
Tagamolila, in his answer, stated that Sonia Furthermore, contrary to petitioners contention that
Gonzaga presented a Special Power of Attorney to him all that is needed to be proved is the existence of the
but borrowed it later with the promise to return it, SPA, it is also necessary for evidence to be presented
claiming that she needed it to encash the check. regarding the nature and extent of the alleged powers
and authority granted to Sonia Gonzaga; more
On June 7, 1989, the trial court rendered judgment specifically, to determine whether the document indeed
ordering petitioner and Tagamolila to pay private authorized her to receive payment intended for private
respondent jointly and severally the amount of respondent. However, no such evidence was ever
P32,480.00 with legal interest, damages and attorneys presented.
fees.
Section 2, Rule 130 of the Rules of Court states that:
Both petitioner and Tagamolila appealed the case to
the Court of Appeals. SEC. 2. Original writing must be produced; exceptions.
In a resolution dated April 8, 1991, the appellate - There can be no evidence of a writing the contents of
court dismissed Tagamolilas appeal for failure to pay the which is the subject of inquiry, other than the original
docket fee within the reglementary period. writing itself, except in the following cases:
On August 31, 1992, the Court of Appeals affirmed (a) When the original has been lost, destroyed, or cannot be
the decision of the trial court against petitioner, with the produced in court;
modification that the award of P5,000.00 for exemplary
damages and P5,000.00 for attorneys fees by the trial (b) When the original is in the possession of the party
court was deleted. against whom the evidence is offered, and the latter fails to
produce it after reasonable notice;
Hence, this petition.
(c) When the original is a record or other document in the
custody of a public officer;
Petitioner PNB states that the issue in this case is
whether or not the SPA ever existed. It argues that the
(d) When the original has been recorded in an existing
existence of the SPA need not be proved by it under the
record a certified copy of which is made evidence by law;
best evidence rule because it already proved the
existence of the SPA from the testimonies of its
(e) When the original consists of numerous accounts or
witnesses and by the certification issued by the Far East
other documents which cannot be examined in court
without great loss of time and the fact sought to be In the case at bench, while there is a clear breach of
established from them is only the general result of the petitioners obligation to pay private respondents, there is
whole. no evidence that it acted in a fraudulent, wanton, reckless
or oppressive manner. Furthermore, there is no award to
Section 4, Rule 130 of the Rules of Court allows the compensatory damages which is a prerequisite before
presentation of secondary evidence when the original is lost exemplary damages may be awarded. Therefore, the award
or destroyed, thus: by the trial court of P5,000.00 as exemplary damages is
baseless.
SEC. 4. Secondary evidence when original is lost or
destroyed. - When the original writing has been lost or WHEREFORE, the decision of the Court of Appeals is
destroyed, or cannot be produced in court, upon proof of its AFFIRMED with the modification that the award by the
execution and loss or destruction, or unavailability, its Regional Trial Court of P5,000.00 as attorneys fees is
contents may be proved by a copy, or by a recital of its REINSTATED.
contents in some authentic document, or by the
recollection of witnesses. SO ORDERED.
Considering that the contents of the SPA are also in Regalado (Chairman), Puno, and Mendoza, JJ., concur.
issue here, the best evidence rule applies. Hence, only the
original document (which has not been presented at all) is SECOND DIVISION
the best evidence of the fact as to whether or not private
respondent indeed authorized Sonia Gonzaga to receive the
[G.R. No. 129782. June 29, 2001]
check from petitioner. In the absence of such document, PEOPLE OF THE PHILIPPINES, plaintiff and
petitioners arguments regarding due payment must fail. appellee, vs. BALWINDER SINGH, GURMOK
SINGH, DALVIR SINGH, DIAL SINGH,
Regarding the award of attorneys fees, we hold that
AMARJIT SINGH, MOHINDER SINGH, MALKIT
SINGH DHILLON, JOHINDER SINGH and
private respondent Tan is entitled to the same. Art. 2208 of
KULDIP SINGH, defendant,
the Civil Code allows attorneys fees to be awarded if the
claimant is compelled to litigate with third persons or to BALWINDER SINGH, MALKIT, SINGH, MOHINDER
incur expenses to protect his interest by reason of an SINGH and DALVIR SINGH, defendants-appellants.
unjustified act or omission of the party from whom it is DECISION
sought.6
BUENA, J.:
In Rasonable v. NLRC, et al., we held that when a
7 Appellants Balwinder, Malkit, Mohinder and Dalvir,
party is forced to litigate to protect his rights, he is entitled all surnamed Singh, were convicted of the crime of
to an award of attorneys fees. Murder in Criminal Case No. 8683 for killing Surinder
Singh, and Frustrated Murder in Criminal Cases No. 8682
for stabbing Dilbag Singh. Each of them were sentenced
As for the award of exemplary damages, we agree with to suffer the penalty of reclusion perpetua for murder,
the appellate court that the same should be deleted. and the indeterminate penalty of 8 years and one (1)
day of prision mayor as minimum, to twelve (12) years
Under Art. 2232 of the Civil Code, exemplary damages and one (1) day of reclusion temporal as maximum for
may be awarded if a party acted in a wanton, fraudulent, frustrated murder.
reckless, oppressive, or malevolent manner. However, they It appears that these four (4) appellants, who are
cannot be recovered as a matter of right; the court has yet Indian nationals, were charged with murder and
to decide whether or not they should be adjudicated. 8 frustrated murder along with their six (6) compatriots,
namely: Gurmok, Dalvir, Dial, Johinder, Kuldip and
Jurisprudence has set down the requirements for Amarjit Singh. Only these four (4) appellants were
exemplary damages to be awarded: prosecuted because the rest of their co-accused are at-
large, except for Dial Singh, who died while under
detention.
1. they may be imposed by way of example in addition to
compensatory damages, and only after the claimants right Dilbag Singh, private complainant for frustrated
to them has been established; murder in Criminal Case No. 8682, recounts that on
November 26, 1993, at around 7:30 in the morning while
he was cleaning his motorbike in front of the Mendiola
2. they cannot be recovered as a matter of right, their Apartment in Barangay Canlalay, Bian, Laguna, Dalvir,
determination depending upon the amount of Balwinder, Gurmok, Jarnail, Amarjit, Mohinder, Dial,
compensatory damages that may be awarded to the Kuldip- all surnamed Singh-Johander Singh Dhillon, and
claimant; Malkit Singh Dhillon arrived, shouting foul remarks in
their native language and demanding Surinder Singh to
3. the act must be accompanied by bad faith or done in a come out of the apartment. When Surinder Singh came
out of his apartment, Dalvir Singh tried to stab him but
wanton, fraudulent, oppressive or malevolent manner.9
Surinder Singh was able to move away. Dalvir Singh told
his companions to hold Surinder Singh as he will kill
him. Thereafter, Dial Singh and Johinder Singh each held superior strength, treachery and with evident
the right and left arms of Surinder Singh, with Kuldip premeditation, the said accused, having inflicted the
Singh pushing Surinder Singh on his back. Dalvir Singh wounds upon SURINDER SINGH while being held by the
then stabbed Surinder Singh, hitting him on the right other accused, and as a result thereof, the said wounds
side of his stomach, and causing him to fall on the being necessarily mortal/fatal, thereby causing the
ground. Dial Singh remarked that Surinder Singh failed direct and immediate death of said SURINDER SINGH, to
to give money and if others will likewise refuse, the the damage and prejudice of his surviving heirs.
same fate will befall them. As Surinder Singh tried to get
All contrary to law and with the qualifying/aggravating
up, Malkit Singh Dhillon and Jarnail Singh started hitting
circumstances of abuse of superior strength, evident
him with lead pipes all over his body, while Johinder
premeditation and alevosia, and the generic aggravating
Singh and Dial Singh punched and kicked Surinder.
circumstance of known conspiracy.
Amarjit Singh, who was holding a gun, warned everyone
not to help Surinder Singh or else he will shoot. Thereat, Criminal Case No. 8682[8] Frustrated Murder
when all these things were going on, private
complainant Dilbag Singh tried to stop them but That on or about November 26, 1993 in the Municipality
Balwinder Singh stabbed him on the left side of his back. of Bian, Province of Laguna, Philippines and within the
Gurmok Singh likewise stabbed him with a bolo, but he jurisdiction of this Honorable Court, the above-named
was not hit as he was able to move to one side. After accused conspiring, confederating and mutually helping
that, the ten (10) accused Indians left. with one another, did then and there willfully, unlawfully
and feloniously, with abuse of superior strength,
Dilbag Singh and Surinder Singh, both injured, were treachery and evident premeditation, while armed with
brought to the Perpetual Help Hospital, Bian, Laguna, by bolos, lead pipes, fan knife and hand-gun, with the
Jaswinder Singh, Johinder Singh Gill, Balwinder Singh Gill intent of taking the life of DILBAG SINGH, attack, assault
and Alwan Singh, for treatment. There, Surinder Singh thereby inflicting upon him mortal wound on the left side
was pronounced dead on arrival. of his body directly by overt acts thus, performing all the
acts of execution which would have nevertheless did not
From the hospital, private complainant Dilbag
produce it, by reason of causes independent of their will,
Singh, Jaswinder Singh, Balwinder Singh Gill, a lady
that is: the able and timely medical assistance given the
named Vilma, and other companions went to the police
said DILBAG SINGH which prevented his death.
station in Bian, Laguna, and reported the incident. Both
Dilbag Singh and Jaswinder Singh executed a sworn CONTRARY TO LAW.
statement.
Initially, the case was filed with the Regional Trial
On the basis of the sworn statement, the Chief Court of Bian, Laguna and was raffled to Branch 24. Both
Investigator of the Bian Police Station filed on November cases were tried jointly.
28, 1993, a complaint for the crime of homicide with the
Municipal Trial Court (MTC) of Bian, Laguna for purposes Upon arraignment, on September 23, 1994, three
of preliminary investigation. (3) appellants, Balwinder, Malkit and Mohinder Singh,
manifested that they are not entering any plea. Thus,
On January 7, 1994,[1] after finding probable cause, the court entered for them a plea of not guilty pursuant
the MTC recommended to upgrade the charges to to Section 1(c), Rule 116 of the Rules of Court. [9] The
Murder and Frustrated Murder, and forwarded the arraignment of Dalvir and Dial Singh followed on
records of the case to the Provincial Prosecutor.[2] October 25, 1994.[10]
On February 17, 1994, 3rd Assistant Prosecutor of On October 6, 1994, appellants filed a petition for
Laguna, Fernando V. Balinado, rendered a resolution bail.[11] While hearing the petition for bail, appellants
recommending that only Dalvir Singh be charged with filed a motion to inhibit and a petition for change of
homicide, and that frustrated homicide be filed against venue.[12] Subsequently, on May 30, 1995, the hearing
Balwinder and Gurmok Singh.[3] Thereafter, the on the petition for bail was continued before the
Information for homicide was filed against Dalvir Singh, Regional Trial Court of San Pedro, Laguna. On December
and frustrated homicide against Balwinder and Gurmok 13, 1995, RTC of San Pedro, Laguna denied the petition
Singh[4] with the Regional Trial Court of Laguna. Before for bail.[13]
arraignment, private complainants Dilbag Singh and
their heirs of Surinder Singh, thru their counsel, moved The evidence presented during the bail hearings
for reinvestigation.[5] were automatically reproduced at the trial.
[G.R. No. 118367. January 5, 1998] 6. After defendant DBP has appropriated the
Leasehold Rights of plaintiff Lydia Cuba
LYDIA P. CUBA, petitioner, vs. COURT OF APPEALS, over the fishpond in question, defendant
DEVELOPMENT BANK OF THE PHILIPPINES DBP, in turn, executed a Deed of
and AGRIPINA P. CAPERAL, respondents. Conditional Sale of the Leasehold Rights in
favor of plaintiff Lydia Cuba over the same
fishpond in question;
DECISION
12. After the Notice of Rescission, defendant The trial court also declared invalid condition no. 12
DBP took possession of the Leasehold of the Assignment of Leasehold Rights for being a clear
Rights of the fishpond in question; case of pactum commissoriumexpressly prohibited and
declared null and void by Article 2088 of the Civil
13. That after defendant DBP took possession Code. It then concluded that since DBP never acquired
of the Leasehold Rights over the fishpond lawful ownership of CUBAs leasehold rights, all acts of
in question, DBP advertised in the SUNDAY ownership and possession by the said bank were
PUNCH the public bidding dated June 24, void. Accordingly, the Deed of Conditional Sale in favor
1984, to dispose of the property; of CUBA, the notarial rescission of such sale, and the
Deed of Conditional Sale in favor of defendant Caperal,
14. That the DBP thereafter executed a Deed of as well as the Assignment of Leasehold Rights executed
Conditional Sale in favor of defendant by Caperal in favor of DBP, were also void and
Agripina Caperal on August 16, 1984; ineffective.
15. Thereafter, defendant Caperal was awarded As to damages, the trial court found ample
Fishpond Lease Agreement No. 2083-A on evidence on record that in 1984 the representatives of
December 28, 1984 by the Ministry of DBP ejected CUBA and her caretakers not only from the
Agriculture and Food. fishpond area but also from the adjoining big house; and
that when CUBAs son and caretaker went there on 15
Defendant Caperal admitted only the facts stated in September 1985, they found the said house unoccupied
paragraphs 14 and 15 of the pre-trial order. [3] and destroyed and CUBAs personal belongings,
machineries, equipment, tools, and other articles used in
fishpond operation which were kept in the house were
Trial was thereafter had on other matters.
missing. The missing items were valued at
about P550,000. It further found that when CUBA and
The principal issue presented was whether the act
her men were ejected by DBP for the first time in 1979,
of DBP in appropriating to itself CUBAs leasehold rights
CUBA had stocked the fishpond with 250,000 pieces of
over the fishpond in question without foreclosure
bangus fish (milkfish), all of which died because the DBP
proceedings was contrary to Article 2088 of the Civil
representatives prevented CUBAs men from feeding the
Code and, therefore, invalid. CUBA insisted on an
fish. At the conservative price of P3.00 per fish, the
affirmative resolution.DBP stressed that it merely
gross value would have been P690,000, and after
exercised its contractual right under the Assignments of
deducting 25% of said value as reasonable allowance for
Leasehold Rights, which was not a contract of
the cost of feeds, CUBA suffered a loss of P517,500. It
mortgage.Defendant Caperal sided with DBP.
then set the aggregate of the actual damages sustained
by CUBA at P1,067,500.
The trial court resolved the issue in favor of CUBA
by declaring that DBPs taking possession and ownership
The trial court further found that DBP was guilty of
of the property without foreclosure was plainly violative
gross bad faith in falsely representing to the Bureau of
of Article 2088 of the Civil Code which provides as
Fisheries that it had foreclosed its mortgage on CUBAs
follows:
leasehold rights. Such representation induced the said
Bureau to terminate CUBAs leasehold rights and to
approve the Deed of Conditional Sale in favor of
CUBA. And considering that by reason of her unlawful
ejectment by DBP, CUBA suffered moral shock, a) The sum of ONE MILLION SIXTY-SEVEN
degradation, social humiliation, and serious anxieties for THOUSAND FIVE HUNDRED PESOS
which she became sick and had to be hospitalized the (P1,067,500.00), as and for actual damages;
trial court found her entitled to moral and exemplary
damages. The trial court also held that CUBA was b) The sum of ONE HUNDRED THOUSAND
entitled to P100,000 attorneys fees in view of the (P100,000.00) PESOS as moral damages;
considerable expenses she incurred for lawyers fees and
in view of the finding that she was entitled to exemplary c) The sum of FIFTY THOUSAND (P50,000.00)
damages. PESOS, as and for exemplary damages;
2. DECLARING the Deed of Conditional Sale dated CUBA and DBP interposed separate appeals from
February 21, 1980 by and between the the decision to the Court of Appeals. The former sought
defendant Development Bank of the Philippines an increase in the amount of damages, while the latter
and plaintiff (Exh. E and Exh. 1) and the acts of questioned the findings of fact and law of the lower
notarial rescission of the Development Bank of court.
the Philippines relative to said sale (Exhs. 16
and 26) as void and ineffective; In its decision [5] of 25 May 1994, the Court of
Appeals ruled that (1) the trial court erred in declaring
3. DECLARING the Deed of Conditional Sale dated that the deed of assignment was null and void and that
August 16, 1984 by and between defendant Caperal could not validly acquire the
the Development Bank of the Philippines and leasehold rights from DBP; (2) contrary to the claim of
defendant Agripina Caperal (Exh. F and Exh. DBP, the assignment was not a cession under Article
21), the Fishpond Lease Agreement No. 2083-A 1255 of the Civil Code because DBP appeared to be the
dated December 28, 1984 of defendant Agripina sole creditor to CUBA - cession presupposes plurality of
Caperal (Exh. 23) and the Assignment of debts and creditors; (3) the deeds of assignment
Leasehold Rights dated February 12, 1985 represented the voluntary act of CUBA in assigning her
executed by defendant Agripina Caperal in favor property rights in payment of her debts, which
of the defendant Development Bank of the amounted to a novation of the promissory notes
Philippines (Exh. 24) as void ab initio; executed by CUBA in favor of DBP; (4) CUBA was
estopped from questioning the assignment of the
4. ORDERING defendant Development Bank of the leasehold rights, since she agreed to repurchase the
Philippines and defendant Agripina Caperal, said rights under a deed of conditional sale; and (5)
jointly and severally, to restore to plaintiff the condition no. 12 of the deed of assignment was an
latters leasehold rights and interests and right express authority from CUBA for DBP to sell whatever
of possession over the fishpond land in right she had over the fishpond. It also ruled that CUBA
question, without prejudice to the right of was not entitled to loss of profits for lack of evidence,
defendant Development Bank of the Philippines but agreed with the trial court as to the actual damages
to foreclose the securities given by plaintiff; of P1,067,500. It, however, deleted the amount of
exemplary damages and reduced the award of moral
5. ORDERING defendant Development Bank of the damages from P100,000 to P50,000 and attorneys fees,
Philippines to pay to plaintiff the following from P100,000 to P50,000.
amounts:
The Court of Appeals thus declared as valid the be foreclosed. And, condition no. 33 provided that if
following: (1) the act of DBP in appropriating Cubas foreclosure is actually accomplished, the usual 10%
leasehold rights and interest under Fishpond Lease attorneys fees and 10% liquidated damages of the total
Agreement No. 2083; (2) the deeds of assignment obligation shall be imposed. There is, therefore, no shred
executed by Cuba in favor of DBP; (3) the deed of of doubt that a mortgage was intended.
conditional sale between CUBA and DBP; and (4) the
deed of conditional sale between DBP and Caperal, the Besides, in their stipulation of facts the parties
Fishpond Lease Agreement in favor of Caperal, and the admitted that the assignment was by way of security for
assignment of leasehold rights executed by Caperal in the payment of the loans; thus:
favor of DBP. It then ordered DBP to turn over possession
of the property to Caperal as lawful holder of the 3. As security for said loans, plaintiff Lydia P. Cuba
leasehold rights and to pay CUBA the following amounts: executed two Deeds of Assignment of her
(a) P1,067,500 as actual damages; P50,000 as moral Leasehold Rights.
damages; andP50,000 as attorneys fees.
In Peoples Bank & Trust Co. vs. Odom,[9] this Court
Since their motions for reconsideration were denied, had the occasion to rule that an assignment to
[6]
DBP and CUBA filed separate petitions for review. guarantee an obligation is in effect a mortgage.
In its petition (G.R. No. 118342), DBP assails the We find no merit in DBPs contention that the
award of actual and moral damages and attorneys fees assignment novated the promissory notes in that the
in favor of CUBA. obligation to pay a sum of money the loans (under the
promissory notes) was substituted by the assignment of
Upon the other hand, in her petition (G.R. No. the rights over the fishpond (under the deed of
118367), CUBA contends that the Court of Appeals erred assignment). As correctly pointed out by CUBA, the said
(1) in not holding that the questioned deed of assignment merely complemented or supplemented the
assignment was a pactum commissorium contrary to notes; both could stand together. The former was only
Article 2088 of the Civil Code; (b) in holding that the an accessory to the latter. Contrary to DBPs submission,
deed of assignment effected a novation of the the obligation to pay a sum of money remained, and the
promissory notes; (c) in holding that CUBA was estopped assignment merely served as security for the loans
from questioning the validity of the deed of assignment covered by the promissory notes. Significantly, both the
when she agreed to repurchase her leasehold rights deeds of assignment and the promissory notes were
under a deed of conditional sale; and (d) in reducing the executed on the same dates the loans were
amounts of moral damages and attorneys fees, in granted. Also, the last paragraph of the assignment
deleting the award of exemplary damages, and in not stated: The assignor further reiterates and states all
increasing the amount of damages. terms, covenants, and conditions stipulated in the
promissory note or notes covering the proceeds of this
We agree with CUBA that the assignment of loan, making said promissory note or notes, to all intent
leasehold rights was a mortgage contract. and purposes, an integral part hereof.
It is undisputed that CUBA obtained from DBP three Neither did the assignment amount to payment
separate loans totalling P335,000, each of which was by cession under Article 1255 of the Civil Code for the
covered by a promissory note. In all of these notes, plain and simple reason that there was only one
there was a provision that: In the event of foreclosure of creditor, the DBP. Article 1255 contemplates the
the mortgage securing this notes, I/We further bind existence of two or more creditors and involves the
myself/ourselves, jointly and severally, to pay the assignment of all the debtors property.
deficiency, if any. [7]
Nor did the assignment constitute dation in
Simultaneous with the execution of the notes was payment under Article 1245 of the civil Code, which
the execution of Assignments of Leasehold reads: Dation in payment, whereby property is alienated
Rights [8] where CUBA assigned her leasehold rights and to the creditor in satisfaction of a debt in money, shall
interest on a 44-hectare fishpond, together with the be governed by the law on sales. It bears stressing that
improvements thereon. As pointed out by CUBA, the the assignment, being in its essence a mortgage, was
deeds of assignment constantly referred to the assignor but a security and not a satisfaction of indebtedness.[10]
(CUBA) as borrower; the assigned rights, as mortgaged
properties; and the instrument itself, as mortgage We do not, however, buy CUBAs argument that
contract. Moreover, under condition no. 22 of the deed, condition no. 12 of the deed of assignment
it was provided that failure to comply with the terms and constituted pactum commissorium. Said condition reads:
condition of any of the loans shall cause all other loans
to become due and demandable and all mortgages shall
12. That effective upon the breach of any condition of Cuba over the fishpond in question. Its contention that it
this assignment, the Assignor hereby appoints the limited itself to mere administration by posting
Assignee his Attorney-in-fact with full power and caretakers is further belied by the deed of conditional
authority to take actual possession of the property sale it executed in favor of CUBA. The deed stated:
above-described, together with all improvements
thereon, subject to the approval of the Secretary of WHEREAS, the Vendor [DBP] by virtue of a deed of
Agriculture and Natural Resources, to lease the same or assignment executed in its favor by the herein vendees
any portion thereof and collect rentals, to make repairs [Cuba spouses] the former acquired all the rights and
or improvements thereon and pay the same, to sell or interest of the latter over the above-described property;
otherwise dispose of whatever rights the Assignor has or
might have over said property and/or its improvements The title to the real estate property [sic] and all
and perform any other act which the Assignee may improvements thereon shall remain in the name of the
deem convenient to protect its interest. All expenses Vendor until after the purchase price, advances and
advanced by the Assignee in connection with purpose interest shall have been fully paid. (Emphasis supplied).
above indicated which shall bear the same rate of
interest aforementioned are also guaranteed by this It is obvious from the above-quoted paragraphs that
Assignment.Any amount received from rents, DBP had appropriated and taken ownership of CUBAs
administration, sale or disposal of said property may be leasehold rights merely on the strength of the deed of
supplied by the Assignee to the payment of repairs, assignment.
improvements, taxes, assessments and other incidental
expenses and obligations and the balance, if any, to the
DBP cannot take refuge in condition no. 12 of the
payment of interest and then on the capital of the
deed of assignment to justify its act of appropriating the
indebtedness secured hereby. If after disposal or sale of
leasehold rights. As stated earlier, condition no. 12 did
said property and upon application of total amounts
not provide that CUBAs default would operate to vest in
received there shall remain a deficiency, said Assignor
DBP ownership of the said rights. Besides, an
hereby binds himself to pay the same to the Assignee
assignment to guarantee an obligation, as in the present
upon demand, together with all interest thereon until
case, is virtually a mortgage and not an absolute
fully paid. The power herein granted shall not be
conveyance of title which confers ownership on the
revoked as long as the Assignor is indebted to
assignee.[12]
the Assignee and all acts that may be executed by the
Assignee by virtue of said power are hereby ratified.
At any rate, DBPs act of appropriating CUBAs
leasehold rights was violative of Article 2088 of the Civil
The elements of pactum commissorium are as
Code, which forbids a creditor from appropriating, or
follows: (1) there should be a property mortgaged by
disposing of, the thing given as security for the payment
way of security for the payment of the principal
of a debt.
obligation, and (2) there should be a stipulation for
automatic appropriation by the creditor of the thing
The fact that CUBA offered and agreed to
mortgaged in case of non-payment of the principal
repurchase her leasehold rights from DBP did not estop
obligation within the stipulated period.[11]
her from questioning DBPs act of appropriation. Estoppel
is unavailing in this case. As held by this Court in some
Condition no. 12 did not provide that the ownership
cases,[13] estoppel cannot give validity to an act that is
over the leasehold rights would automatically pass to
prohibited by law or against public policy. Hence, the
DBP upon CUBAs failure to pay the loan on time. It
appropriation of the leasehold rights, being contrary to
merely provided for the appointment of DBP as attorney-
Article 2088 of the Civil Code and to public policy,
in-fact with authority, among other things, to sell or
cannot be deemed validated by estoppel.
otherwise dispose of the said real rights, in case of
default by CUBA, and to apply the proceeds to the
Instead of taking ownership of the questioned real
payment of the loan. This provision is a standard
rights upon default by CUBA, DBP should have
condition in mortgage contracts and is in conformity
foreclosed the mortgage, as has been stipulated in
with Article 2087 of the Civil Code, which authorizes the
condition no. 22 of the deed of assignment. But, as
mortgagee to foreclose the mortgage and alienate the
admitted by DBP, there was no such foreclosure. Yet, in
mortgaged property for the payment of the principal
its letter dated 26 October 1979, addressed to the
obligation.
Minister of Agriculture and Natural Resources and
coursed through the Director of the Bureau of Fisheries
DBP, however, exceeded the authority vested by
and Aquatic Resources, DBP declared that it had
condition no. 12 of the deed of assignment. As admitted
foreclosed the mortgage and enforced the assignment of
by it during the pre-trial, it had [w]ithout foreclosure
leasehold rights on March 21, 1979 for failure of said
proceedings, whether judicial or extrajudicial,
spouses [Cuba spouces] to pay their loan amortizations.
appropriated the [l]easehold [r]ights of plaintiff Lydia
This only goes to show that DBP was aware of the
[14]
the value of the 230,000 pieces of bangus allegedly
necessity of foreclosure proceedings. stocked in 1979 when DBP first ejected CUBA from the
fishpond and the adjoining house. This award was
In view of the false representation of DBP that it had affirmed by the Court of Appeals.
already foreclosed the mortgage, the Bureau of Fisheries
cancelled CUBAs original lease permit, approved the We find that the alleged loss of personal belongings
deed of conditional sale, and issued a new permit in and equipment was not proved by clear evidence. Other
favor of CUBA. Said acts which were predicated on such than the testimony of CUBA and her caretaker, there
false representation, as well as the subsequent acts was no proof as to the existence of those items before
emanating from DBPs appropriation of the leasehold DBP took over the fishpond in question. As pointed out
rights, should therefore be set aside. To validate these by DBP, there was not inventory of the alleged lost items
acts would open the floodgates to circumvention of before the loss which is normal in a project which
Article 2088 of the Civil Code. sometimes, if not most often, is left to the care of other
persons. Neither was a single receipt or record of
Even in cases where foreclosure proceedings were acquisition presented.
had, this Court had not hesitated to nullify the
consequent auction sale for failure to comply with the Curiously, in her complaint dated 17 May 1985,
requirements laid down by law, such as Act No. 3135, as CUBA included losses of property as among the
amended.[15] With more reason that the sale of property damages resulting from DBPs take-over of the
given as security for the payment of a debt be set aside fishpond. Yet, it was only in September 1985 when her
if there was no prior foreclosure proceeding. son and a caretaker went to the fishpond and the
adjoining house that she came to know of the alleged
Hence, DBP should render an accounting of the loss of several articles. Such claim for losses of property,
income derived from the operation of the fishpond in having been made before knowledge of the alleged
question and apply the said income in accordance with actual loss, was therefore speculative. The alleged loss
condition no. 12 of the deed of assignment which could have been a mere afterthought or subterfuge to
provided: Any amount received from rents, justify her claim for actual damages.
administration, may be applied to the payment of
repairs, improvements, taxes, assessment, and other With regard to the award of P517,000 representing
incidental expenses and obligations and the balance, if the value of the alleged 230,000 pieces of bangus which
any, to the payment of interest and then on the capital died when DBP took possession of the fishpond in March
of the indebtedness. 1979, the same was not called for. Such loss was not
duly proved; besides, the claim therefor was delayed
We shall now take up the issue of damages. unreasonably.From 1979 until after the filing of her
complaint in court in May 1985, CUBA did not bring to
Article 2199 provides: the attention of DBP the alleged loss. In fact, in her
letter dated 24 October 1979,[19] she declared:
Except as provided by law or by stipulation, one is
entitled to an adequate compensation only for such 1. That from February to May 1978, I was then seriously
pecuniary loss suffered by him as he has duly ill in Manila and within the same period I neglected the
proved. Such compensation is referred to as actual or management and supervision of the cultivation and
compensatory damages. harvest of the produce of the aforesaid fishpond thereby
resulting to the irreparable loss in the produce of the
Actual or compensatory damages cannot be same in the amount of about P500,000.00 to my great
presumed, but must be proved with reasonable degree damage and prejudice due to fraudulent acts of some of
of certainty.[16] A court cannot rely on speculations, my fishpond workers.
conjectures, or guesswork as to the fact and amount of
damages, but must depend upon competent proof that Nowhere in the said letter, which was written seven
they have been suffered by the injured party and on the months after DBP took possession of the fishpond, did
best obtainable evidence of the actual amount thereof. CUBA intimate that upon DBPs take-over there was a
[17]
It must point out specific facts which could afford a total of 230,000 pieces of bangus, but all of which died
basis for measuring whatever compensatory or actual because of DBPs representatives prevented her men
damages are borne.[18] from feeding the fish.
In the present case, the trial court awarded in favor The award of actual damages should, therefore, be
of CUBA P1,067,500 as actual damages consisting struck down for lack of sufficient basis.
of P550,000 which represented the value of the alleged
lost articles of CUBA and P517,500 which represented
In view, however, of DBPs act of appropriating to render an accounting of the income derived from the
CUBAs leasehold rights which was contrary to law and operation of the fishpond in question.
public policy, as well as its false representation to the
then Ministry of Agriculture and Natural Resources that it Let this case be REMANDED to the trial court for the
had foreclosed the mortgage, an award of moral reception of the income statement of DBP, as well as the
damages in the amount of P50,000 is in order statement of the account of Lydia P. Cuba, and for the
conformably with Article 2219(10), in relation to Article determination of each partys financial obligation to one
21, of the Civil Code. Exemplary or corrective damages another.
in the amount of P25,000 should likewise be awarded by
way of example or correction for the public good. SO ORDERED.
[20]
There being an award of exemplary damages,
attorneys fees are also recoverable.[21] Bellosillo, Vitug, and Kapunan, JJ., concur.