Case Doctrines in Civil Law II

CASE DOCTRINES IN LABOR LAW REVIEW II

Compiled by Glenn Rey D. Anino

Juris Doctor

University of Cebu

OBLIGATIONS

(part 1)

QUASI-DELICT

Tactaquin vs. Palileo, 21 SCRA 346, September 29, 1967

Remedial law; Motion to dismiss based on bar by prior judgment.—Where plaintiff-appellant suffered physical injuries and her daughter died as a result of an automobile accident, and defendant-appellee had been prosecuted for homicide, with serious physical injuries thru reckless negligence, found guilty, and sentenced to pay damages, the present civil action for damages involving the same accident is already barred by prior judgment, because “plaintiff cannot recover damages twice for the same act or omission of the defendant.”

Same; Reservation to institute separate civil action for damages.—Where the record tends to show that the reservation to institute a separate civil action for damages was made after defendant-appellee had already pleaded guilty and after the private prosecutor had entered his appearance jointly with the prosecuting attorney in the course of the criminal proceedings, such reservation must be deemed legally ineffective. [Tactaquin vs. Palileo, 21 SCRA 346(1967)]

Padua vs. Robles, 66 SCRA 485 , August 29, 1975

Judgment; Interpretation of; Sufficiency and efficacy of judgment tested by its substance rather than its form.—The sufficiency and efficacy of a judgment must be tested by its substance rather than its form. In construing a judgment, its legal effects including such effects that necessarily follow because of legal implications, rather than the language used, govern. Also, its meaning, operation, and consequences must be ascertained like any other written instrument. Thus, a judgment rests on the intention of the court as gathered from every part thereof, including the situation to which it applies and the attendant circumstances.

Same; Same; Adoption of interpretation which achieves moral justice where statement in judgment in question susceptible of two or more interpretations.—The statement on the civil liability of the driver must surely have a meaning; and even if the statement were reasonably susceptible of two or more interpretations, that which achieves moral justice should be adopted, eschewing the other interpretations which in effect would negate moral justice.

Same; Same; Judges; Judges should exercise extreme degree of care in formulation of dispositive portion of decision.—It is not amiss at this juncture to emphasize to all magistrates in all levels of the judicial hierarchy that extreme degree of care should be exercised in the formulation of the dispositive portion of a decision, because it is this portion that is to be executed once the decision becomes final. The adjudication of the rights and obligations of the parties, and the dispositions made as well as the directions and instructions given by the court in the premises in conformity with the body of the decision, must all be spelled out clearly, distinctly and unequivocally, leaving absolutely no room for dispute, debate or interpretation.

Criminal law; Civil liability in negligence cases; Option of offended party to file action for enforcement of civil liability based on culpa criminal or action for recovery of damages based on culpa aquiliana; Prohibition against recovery of damages twice for the same negligent act or omission.—Civil liability coexists with criminal responsibility. In negligence cases, the offended party (or his heirs) has the option between an action for enforcement of civil liability based on culpa criminal under article 100 of the Revised Penal Code and an action for recovery of damages based on culpa aquiliana under article 2177 of the Civil Code. The action for enforcement of civil liability based on culpa criminal section 1 of Rule 111 of the Rules of Court deems simultaneously instituted with the criminal action, unless expressly waived or reserved for a separate application by the offended party. Article 2177 of the Civil Code, however, precludes recovery of damages twice for the same negligent act or omission. [Padua vs. Robles, 66 SCRA 485(1975)]

Singson vs. Bank of the Philippine Islands, 23 SCRA 1117 , June 27, 1968

Civil law; Tort; Damages; Existence of a contract between the parties is not a bar to the commission of a, tort by the one against the other.—It has been repeatedly held: that the existence of a contract between the parties does not bar the commission of a tort by the one against the other and the consequent recovery 01 damages therefor (Cangco v. Manila Railroad, 38 Phil. 768; Yamada v. Manila Railroad, 33 Phil. 8; Vasquez v. Borja, 74 Phil. 560). Indeed, this view has been, in effect, reiterated in a comparatively recent case. Thus, in Air France vs. Carrascoso, L-21438, Sept. 28, 1966, involving an airplane passenger who, despite his first-class ticket, had been illegally ousted from his first-class accomodation 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.” [Singson vs. Bank of the Philippine Islands, 23 SCRA 1117(1968)]

Malipol vs. Tan, 55 SCRA 202 , January 21, 1974

Default; Trial court has discretion to set aside an order of default.—It is within the sound discretion of the court to set aside an order of default and to permit a defendant to file his answer and to be heard on the merits even after the reglementary period for the filing of the answer has expired, but it is not error, or an abuse of discretion, on the part of the court to refuse to set aside its order of default and to refuse to accept the answer where it finds no justifiable reason for the delay in the filing of the answer. x x x Unless it is shown clearly that a party has justifiable reason for the delay the court will not ordinarily exercise its discretion in his (defendant’s) favor. In the instant case, the appellants have not shown that they exercised such diligence as an ordinary prudent person would exercise to have the answer filed within the reglementary period. The damages asked for in the complaint amounts to P36,600.00. Lily Lim Tan, who is a business woman, should have considered the matter a serious one. But, for reasons she did not explain, she referred the complaint to her lawyer only after the lapse of ten (10) days from receipt thereof. She should have considered that four days might not be sufficient time for her lawyer to prepare and file the answer. x x x Because Atty. Chavez assured her, in their telephone conversation that he would take care of the complaint, appellant Lily Lim Tan took for granted that the answer would be filed on time. Said appellant should have checked before the expiration of the period for filing the answer whether the complaint was really taken care of, or not. But this, Lily Lim Tan failed to do, and this is another instance showing her lack of concern over the complaint.

Same; Where mistake in delay to file answer not appreciated. —The mistake, according to appellants, consisted in Atty. Chavez’ having told Atty. de Castro on June 10, 1966 that appellants received the summons and complaint on May 30, 1966. Even if Atty. Chavez had told Atty. de Castro the correct date, that is, that appellants received the summons on May 19, 1966, the answer could not have been filed on time by Atty. de Castro, because the reglementary period for filing the answer expired on June 3, 1966, and it was already June 10, 1966 when the complaint was endorsed by Atty. Chavez to Atty. de Castro.

Same; Where accident as ground for failure to file answer on time not appreciated.—The record does not show that Atty. Chavez was suffering from an abnormal mind on May 30, 1966. His actuations on May 30 were those that could be expected of a normal person. Atty. Chavez asked the employee of Lily Lim Tan about the date when his employer received the summons and complaint, and because the employee could not give him the desired information he placed a long distance telephone call to Lily Lim Tan to ask about said date. This action of Atty. Chavez showed that he was very much aware that the reglementary period within which the answer should be filed was to be computed from the date of the receipt of the summons and the complaint.

Same; Lawyers; Client bound by lawyer’s mistakes.—The appellants are bound by the mistakes, and may suffer by the negligence, of their lawyer.

Same; Same; Suicide; Commission of suicide by lawyer no proof he was abnormal at a prior date.—The fact that Atty. Chavez committed suicide on June 17, 1966 does not necessarily prove that he was abnormal, incompetent or insane on May 30, 1966. Although there is a judicial declaration that a sane man would not commit suicide, cognizance is nevertheless taken of the fact that circumstances at some given time may impel a person to commit suicide. The probative value of suicide in determining the sanity of a person is dependent on the factual situation in each case. Such matters as the reasons for the act of self-destruction, the circumstances indicating the person’s state of mind at the time, and other pertinent facts must be considered. The appellants had not indicated to the trial court any circumstance from which it could form an opinion on the mental condition of Atty. Chavez before he committed suicide. No error committed in refusing to set aside order of default.

Same; New trial; Motion to lift order of default treated as motion for new trial.—Let it be noted that the lower court rendered its decision on July 1, 1966, and the appellants received notice of said decision on August 23, 1966. The decision would have become final on September 22, 1966. On September 21, 1966 the appellants filed their motion to lift the order of default and for new trial. The motion of the appellants, therefore, was in the nature of a motion for new trial based on fraud, accident, mistake or excusable negligence under par. (a) of Section 1 of Rule 37 of the Rules of Court.

Same; Same; An affidavit of merit attached to a motion for new trial should state facts, not mere opinion or conclusions of law.—Under section 2 of Rule 37 the moving party must show that he has a meritorious defense. The facts constituting the movant’s good and substantial defense, which he may prove if the petition were granted, must be shown in the affidavit which should accompany the motion for a new trial. x x x In the instant case the allegations in the motion that defendants have good and valid defenses, namely: that the accident which gave rise to the case was caused by force majeure; that defendant Labsan is absolutely without fault in the accident that gave rise to the case; and that defendant Lily Lim Tan has exercised due diligence required of a good father of a family to prevent damage are mere conclusions which did not provide the court with any basis for determining the nature and merit of the probable defense. An affidavit of merit should state facts, and not mere opinion or conclusions of law.

Civil law; Quasi-delict; In actions for quasi-delict the employer is solidarily liable with the employee for damages.— The action in the instant case was brought not to demand civil liability arising from a crime. The complaint makes no mention of a crime having been committed, much less of the driver having been convicted of a crime. But there is an allegation in the complaint that Labsan was the authorized driver of the Lily Lim Tan in connection with her gasoline business. The instant action, therefore, was based, as the complaint shows, on quasi-delict. Under Article 2180 of the Civil Code, which treats of quasi-delicts, the liability of the owners and managers of an establishment or enterprise for damages caused by their employees is primary and direct, not subsidiary. The employer, however, can demand from his employee reimbursement of the amount which he paid under his liability. [Malipol vs. Tan, 55 SCRA 202(1974)]

Marcia vs. Court of Appeals, 120 SCRA 193 , January 27, 1983

Actions, Tort; Criminal Procedure; No independent civil action for damages may be filed where injuries resulted from criminal negligence. Article 33 of the new Civil Code applies only to injuries intentionally committed.—The above article speaks only of defamation, fraud and physical injuries. The injuries suffered by herein petitioners were alleged to be the result of criminal negligence; they were not inflicted with malice. Hence, no independent civil action for damages may be instituted in connection therewith. Further, Section 3 (c), Rule 111 of the Rules of Court states that “(c) Extinction of the penal action does not carry with it extinction of the civil, unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil might arise did not exist.” Otherwise stated, unless the act from which the civil liability arises is declared to be non-existent in the final judgment, the extinction of the criminal liability will not carry with it the extinction of the civil liability.

Same; Same; Same; Judgment; Where a civil action was separately filed based on injuries arising from reckless driving, but the driver was acquitted in the criminal case on the ground that he was not negligent and that the case is a “pure accident” the civil action for damages should be dismissed.—Relative to the admissibility of the documents, to wit; (a) the records of the criminal case against Paje, (b) the decision of the Court of Appeals acquitting the latter; and (c) copy of the brief of the respondent Paje as accused-appellant, suffice it to say that since petitioners’ cause of action is based on the alleged recklessness and imprudence of respondent Paje, it necessarily follows that his acquittal by the Court of Appeals and its declaration that the mishap was “pure accident” are relevant and material evidence. In fact, the lower court may even take judicial notice of the decision of the Court of Appeals in said criminal case.

  

Fernando vs. Court of Appeals, 208 SCRA 714 , May 08, 1992

Civil Law; Negligence; Definition of; Under the Law, a person who by his omission causes damage to another, there being negligence is obliged to pay for the damage done.—Negligence has been defined as the failure to observe for the protection of the interests of another person that degree of care, precaution, and vigilance which the circumstances justly demand, whereby such other person suffers injury (Corliss v. Manila Railroad Company, L-21291, March 28, 1969, 27 SCRA 674, 680). Under the law, a person who by his omission causes damage to another, there being negligence, is obliged to pay for the damage done (Article 2176, New Civil Code).

Same; Same; To be entitled to damages for an injury resulting from the negligence of another, a claimant must establish the relation between the omission and the damage; Definition of Proximate cause.—To be entitled to damages for an injury resulting from the negligence of another, a claimant must establish the relation between the omission and the damage. He must prove under Article 2179 of the New Civil Code that the defendant’s negligence was the immediate and proximate cause of his injury. Proximate cause has been defined as that cause, which, in natural and continuous sequence unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred (Vda. de Bataclan, et al. v. Medina, 102 Phil. 181, 186). Proof of such relation of cause and effect is not an arduous one if the claimant did not in any way contribute to the negligence of the defendant. However, where the resulting injury was the product of the negligence of both parties, there exists a difficulty to discern which acts shall be considered the proximate cause of the accident. [Fernando vs. Court of Appeals, 208 SCRA 714(1992)]

Metro Manila Transit Corp. vs. Court of Appeals, 223 SCRA 521 , June 21, 1993

Remedial Law; Civil Procedure; Petition for review on certiorari under Rule 45 of the Rules of Court; The Supreme Court in Lacsamana vs. The Intermediate Appellate Court, et al. allows a petition for review on certiorari from a decision rendered by the Court of Appeals under Sec. 1, Rule 45 of the Revised Rules of Court to be filed within 15 days from notice of judgment or of the denial of the motion for reconsideration filed in due time and paying at the same time the corresponding docket fee.—We digress to reiterate, in view of erroneous submissions that we continue to receive, that in the case of a petition for review on certiorari from a decision rendered by the Court of Appeals, Section 1, Rule 45 of the Rules of Court, which has long since been clarified in Lacsamana vs. The Hon. Second Special Cases Division of the Intermediate Appellate Court, et al., allows the same to be filed “within fifteen (15) days from notice of judgment or of the denial of the motion for reconsideration filed in due time, and paying at the same time the corresponding docket fee.” In other words, in the event a motion for reconsideration is filed and denied, the period of fifteen (15) days begins to run all over again from notice of the denial resolution. Otherwise put, if a motion for reconsideration is filed, the reglementary period within which to appeal the decision of the Court of Appeals to the Supreme Court is reckoned from the date the party who intends to appeal received the order denying the motion for reconsideration. Furthermore, a motion for extension of time to file a petition for review may be filed with this Court within said reglementary period, paying at the same time the corresponding docket fee.

Same; Evidence; It is now well-settled that while the findings of fact of the Court of Appeals are entitled to great respect, and even finality at times, that rule is not inflexible and is subject to well established exceptions.—At this juncture, it suffices to note that factual findings of the trial court may be reversed by the Court of Appeals, which is vested by law with the power to review both legal and factual issues, if on the evidence of record, it appears that the trial court may have been mistaken particularly in the appreciation of evidence, which is within the domain of the Court of Appeals. The general rule laid down in a plethora of cases is that such findings of fact by the Court of Appeals are conclusive upon and beyond the power of review of the Supreme Court. However, it is now well-settled that while the findings of fact of the Court of Appeals are entitled to great respect, and even finality at times, that rule is not inflexible and is subject to well established exceptions, to wit: (1) when the conclusion is a finding grounded entirely on speculation, surmises and conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) where there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same are contrary to the admissions of both appellant and appellee; (7) when the findings of the Court of Appeals are contrary to those of the trial court; (8) when the findings of fact are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition, as well as in the petitioner’s main and reply briefs are not disputed by the respondents and (10) when the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and are contradicted by the evidence on record.

Civil Law; Obligations and Contracts; Quasi-delict; Where the injury is due to the concurrent negligence of the drivers of the colliding vehicles, the drivers and owners of said vehicles shall be primarily, directly and solidarily liable for damages and it is immaterial that one action is based on quasi-delict and the other on culpa-contractual.—With the allegation and subsequent proof of negligence against the defendant driver and of an employer-employee relation between him and his co-defendant MMTC in this instance, the case is undoubtedly based on a quasi-delict under Article 2180. When the employee causes damage due to his own negligence while performing his own duties, there arises the juris tantum presumption that the employer is negligent, rebuttable only by proof of observance of the diligence of a good father of a family. For failure to rebut such legal presumption of negligence in the selection and supervision of employees, the employer is likewise responsible for damages, the basis of the liability being the relationship of pater familias or on the employer’s own negligence. As early as the case of Gutierrez vs. Gutierrez, and thereafter, we have consistently held that where the injury is due to the concurrent negligence of the drivers of the colliding vehicles, the drivers and owners of the said vehicles shall be primarily, directly and solidarity liable for damages and it is immaterial that one action is based on quasi-delict and the other on culpa contractual, as the solidarity of the obligation is justified by the very nature thereof.

Same; Same; Same; Defense of due diligence in the selection and supervision of employees; The mere formulation of various company policies on safety without showing that they were being complied with is not sufficient to exempt petitioner from liability arising from negligence of its employees.—In order that the defense of due diligence in the selection and supervision of employees may be deemed sufficient and plausible, it is not enough to emptily invoke the existence of said company guidelines and policies on hiring and supervision. As the negligence of the employee gives rise to the presumption of negligence on the part of the employer, the latter has the burden of proving that it has been diligent not only in the selection of employees but also in the actual supervision of their work. The mere allegation of the existence of hiring procedures and supervisory policies, without anything more, is decidedly not sufficient to overcome such presumption. We emphatically reiterate our holding, as a warning to all employers, that “(t)he mere formulation of various company policies on safety without showing that they were being complied with is not sufficient to exempt petitioner from liability arising from negligence of its employees. It is incumbent upon petitioner to show that in recruiting and employing the erring driver the recruitment procedures and company policies on efficiency and safety were followed.” Paying lip-service to these injunctions or merely going through the motions of compliance therewith will warrant stern sanctions from the Court.

Same; Same; Same; Damages; Art. 2211 of the Civil Code provides that in quasi-delicts, interest as a part of the damages may be awarded in the discretion of the court and not as a matter of right.—Finally, we believe that respondent court acted in the exercise of sound discretion when it affirmed the trial court’s award, without requiring the payment of interest thereon as an item of damages just because of delay in the determination thereof, especially since private respondent did not specifically pray therefor in her complaint. Article 2211 of the Civil Code provides that in quasi-delicts, interest as a part of the damages may be awarded in the discretion of the court, and not as a matter of right. We do not perceive that there have been intentional dilatory maneuvers or any special circumstances which would justify that additional award and, consequently, we find no reason to disturb said ruling.

Libi vs. Intermediate Appellate Court, 214 SCRA 16 , September 18, 1992

Civil Law; Damages; Liability of parents for damages caused by their minor children under Article 2180 of the Civil Code.—In imposing sanctions for the so-called vicarious liability of petitioners, respondent court cites Fuellas vs. Cadano, et al. which supposedly holds that “(t)he subsidiary liability of parents for damages caused by their minor children imposed by Article 2180 of the New Civil Code covers obligations arising from both quasi-delicts and criminal offenses,” followed by an extended quotation ostensibly from the same case explaining why under Article 2180 of the Civil Code and Article 101 of the Revised Penal Code parents should assume subsidiary liability for damages caused by their minor children. The quoted passages are set out two paragraphs back, with pertinent underscoring for purposes of the discussion hereunder. Now, we do not have any objection to the doctrinal rule holding the parents liable, but the categorization of their liability as being subsidiary, and not primary, in nature requires a hard second look considering previous decisions of this court on the matter which warrant comparative analyses. Our concern stems from our readings that if the liability of the parents for crimes or quasidelicts of their minor children is subsidiary, then the parents can neither invoke nor be absolved of civil liability on the defense that they acted with the diligence of a good father of a family to prevent damages. On the other hand, if such liability imputed to the parents is considered direct and primary, that diligence would constitute a valid and substantial defense. We believe that the civil liability of parents for quasi-delicts of their minor children, as contemplated in Article 2180 of the Civil Code, is primary and not subsidiary. In fact, if we apply Article 2194 of said code which provides for solidary liability of joint tortfeasors, the persons responsible for the act or omission, in this case the minor and the father and, in case of his death or incapacity, the mother, are solidarily liable. Accordingly, such parental liability is primary and not subsidiary, hence the last paragraph of Article 2180 provides that “(t)he responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage.”

Criminal Law; Civil liability of parents for crimes committed by their minor children.—Accordingly, just like the rule in Article 2180 of the Civil Code, xxx the civil liability of the parents for crimes committed by their minor children is likewise direct and primary, and also subject to the defense of lack of fault or negligence on their part, that is, the exercise of the diligence of a good father of a family. That in both quasi-delicts and crimes the parents primarily respond for such damages is buttressed by the corresponding provisions in both codes that the minor transgressor shall be answerable or shall respond with his own property only in the absence or in case of insolvency of the former. Thus, for civil liability ex quasi delicto of minors, Article 2182 of the Civil Code states that “(i)f the minor causing damage has no parents or guardian, the minor x x x shall be answerable with his own property in an action against him where a guardian ad litem shall be appointed.” For civil liability ex delicto of minors, an equivalent provision is found in the third paragraph of Article 101 of the Revised Penal Code, to wit: “Should there be no person having such x x x minor under his authority, legal guardianship or control, or if such person be insolvent, said x x x minor shall respond with (his) own property, excepting property exempt from execution, in accordance with civil law.”

DELICTS

People vs. Sendaydiego, 81 SCRA 120 , January 20, 1978

Criminal Procedure; Rules that criminal action should be prosecuted under direction and control of fiscal and that provincial fiscal shall represent the province in any court not violated with appearance of private prosecutors considering their authority to appear, Case at bar.—It is contended that the trial court erred in allowing private prosecutors Millora and Urbiztondo to prosecute the case, thereby allegedly subjecting the accused to proceedings marked by undue publicity, prejudgment, bias and political self-interest. x x x At the commencement of the preliminary investigation, the counsel for the accused auditor inquired whether Atty. Millora was authorized by the provincial board to act as private prosecutor in representation of the province of Pangasinan, the offended party. Atty. Millora replied that there was a board resolution designating him as private prosecutor. The acting provincial commander, who filed the complaints, manifested to the trial court that he had authorized Atty. Millora to act as private prosecutor. x x x At the commencement of the trial on Feb. 23, 1970 the city fiscal, an assistant provincial fiscal, and Atty. Millora, the private prosecutor, appeared for the prosecution. The city fiscal moved “that the private prosecutor (Millora) be authorized to conduct the examination subject to our (the fiscal’s) control and supervision.” At the hearing on April 23, 1970 the same city fiscal moved that Atty. Urbiztondo be authorized to examine the prosecution witnesses under his supervision and control. The trial court granted the motion. The record shows that at every hearing the provincial fiscal, the city fiscal or an assistant fiscal were present together with the private prosecutor. Under the foregoing circumstances, we believe that there was substantial compliance with the rule that the criminal action should be “prosecuted under the direction and control of the fiscal” and that “the provincial fiscal shall represent the province” in any court.

Same; Judgment; Decision convicting accused based on unassailable probative value of documents presented, not on bias and prejudice; Penalties; When penalty of reclusion perpetua not imposable.—The observation of accused Sendaydiego’s counsel, that the imposition of reclusion perpetua “could have been the result of the undue publicity, prejudgment, bias and political self-interest which attended the proceedings,” is not well-founded. The trial court’s decision dispels any doubt as to its impartiality. The evidence in the three cases is mainly documentary. The unassailable probative value of the documents involved, rather than bias and prejudice, was the decisive factor on which the trial court anchored the judgment of conviction. Moreover, as already adverted to, Sendaydiego’s death had rendered moot the issue as to the propriety of the imposition of reclusion perpetua. And, x x x, reclusion perpetua cannot be imposed in these cases (malversation thru falsification) because the crimes committed were not complex.

Same; Same; Trial court’s conclusion that the two accused were guilty beyond reasonable doubt for committing conspiracy is correct; Case at bar.—Several circumstances indicate that Sendaydiego conspired with the other accused Samson. Donato N. Rosete, the assistant provincial treasurer, testified that, contrary to the usual procedure, he affixed his initial to paragraph 3 of the vouchers after Sendaydiego had signed it. Rosete adhered to that unusual procedure because the interested party, Samson, who hand-carried the vouchers, approached Rosete after he (Samson) had conferred with the provincial treasurer and Samson told Rosete to initial the voucher because it was areglodo na (already settled) since the treasurer had already signed the voucher. x x x. Rosete’s testimony and affidavit confute appellant Sendaydiego’s contention that the trial court erred in finding that he signed the questioned vouchers before Rosete had placed his initial in them. After the treasurer had signed the voucher, Rosete’s duty to initial it was only ministerial.

Same; Same; Charge of gross negligence against the accused provincial treasurer has been proven by a prosecution.—Sendaydiego’s counsel stressed that no gross negligence can be imputed to the treasurer (malversation is a crime which can be committed by means of dolo or culpa and the penalty in either case is the same). This argument does not deserve serious consideration because the facts proven by the prosecution show that he had a tie-up with Samson and that he acted maliciously in signing the six questioned vouchers.

Same; Same; Evidence; Acquittal; Acquittal of one accused does not mean acquittal of other accused since evidence presented and charges against the accused (one as accomplice, and the other as principal) are different; Documentary and oral evidence also presented established their criminal liability.—The last contention put forward for Sendaydiego (accused) is that, because the trial court acquitted the auditor, then the treasurer’s exoneration follows as a matter of course. We see no merit in that contention because the evidence for the prosecution against Sendaydiego is not the same as its evidence against the auditor. For that reason, the auditor was charged only as an accomplice, whereas, the treasurer was charged as a principal. The auditor based his defense on the undeniable fact that the treasurer had approved the six vouchers “for pre-audit and payment” before they were passed upon by the auditor. In short, the auditor was misled by the treasurer’s certification which the auditor apparently assumed to have been made in good faith when in truth it was made in bad faith. We are convinced after a minutiose examination of the documentary and oral evidence and an unprejudiced consideration of the arguments of Sendaydiego’s learned counsel that his criminal liability was established beyond reasonable doubt and, therefore, the civil liability of his estate for the amounts malversed was duly substantiated.

Same; Preliminary investigation; A CFI judge who conducted the preliminary investigation of a case is not barred from trying the same case on the merits; That judge can try the case without bias and prejudice is assumed.—Our searching study of the record fails to sustain Samson’s insinuation that he was prejudiced by the fact that the Judge, who conducted the preliminary investigation, was the one who tried the case and convicted him. Judge Bello tried the case fairly. His conduct of the trial does not show that he had already prejudged their guilt. Section 13, Rule 112 of the Rules of Court, in allowing a Court of First Instance to conduct a preliminary investigation, does not disqualify it from trying the case after it had found probable cause and after the fiscal, as directed by the Court, had filed the corresponding information. The rule assumes that the judge, who conducted the preliminary investigation, could impartially try the case on the merits. We cannot assume that judges as a rule are opinionated and narrow-minded insomuch that they would invariably be iron-bound by their findings at the preliminary investigation. The case of a Judge of the Court of First Instance, who conducts a preliminary investigation and then tries the case on the merits, is similar to a situation where an inferior court conducts a preliminary investigation of a grave or less grave offense falling within the concurrent jurisdiction of the Court of First Instance and the inferior court. In such a case the inferior court after terminating the preliminary investigation is not obligated x x x to remand the case to the Court of first Instance for trial. The inferior court has the option to try the case on the merits. The assumption is that the inferior court can try the case without any ingrained bias or undue prejudice.

Remedial Law; Appeal; Criminal Law; Extinction of criminal liability; Survival of civil liability; Death of an accused-appellant after final judgment of a trial court but before the judgment had become final and executory due to pendency of an appeal extinguished his criminal liability but his civil liability survives.—The death of appellant Sendaydiego during the pendency of his appeal or before the judgment of conviction rendered against him by the lower court became final and executory extinguished his criminal liability, meaning his obligation to serve the personal or imprisonment penalties and his liability to pay the fines or pecuniary penalties. x x x The claim of complainant Province of Pangasinan for the civil liability survived Sendaydiego because his death occurred after final judgment was rendered by the Court of First Instance of Pangasinan, which convicted him of three complex crimes of malversation through falsification and ordered him to indemnify the Province. x x x

Same; Same; Jurisdiction; Dismissal of appeal of deceased accused as to his criminal liability; The Supreme Court continues to exercise appellate jurisdiction over an accused’s possible civil liability for the money claims of claimant arising from criminal acts complained of, as if no criminal case had been instituted; Filing of a separate civil action to recover civil liability not necessary.—Notwithstanding the dismissal of the appeal of the deceased Sendaydiego insofar as his criminal liability is concerned, the Court Resolved to continue exercising appellate jurisdiction over his possible civil liability for the money claims of the Province of Pangasinan arising from the alleged criminal acts complained of, as if no criminal case had been instituted against him, thus making applicable, in determining his civil liability, Article 30 of the Civil Code x x x, and, for that purpose, his counsel is directed to inform this Court within ten (10) days of the names and addresses of the decedent’s heirs or whether or not his estate is under administration and has a duly appointed judicial administrator. Said heirs or administrator will be substituted for the deceased insofar as the civil action for the civil liability is concerned x x x the title of this case should be amended to show its civil aspect. x x x Sendaydiego’s appeal will be resolved only for the purpose of showing his criminal liability which is the basis of the civil liability for which his estate would be liable.

Vda. de Paman vs. Señeris, 115 SCRA 709 , July 30, 1982

Criminal Law; Reckless Imprudence; Subsidiary liability of an employer under Art. 103, Revised Penal Code, enforceable in the same criminal case where award was made; Execution; Proceeding for enforcement of the subsidiary liability part of proceeding for execution of judgment; Control by court of processes of execution.—Against the foregoing considerations, Section 1, Rule 111 of the Rules of Court provides, however, that “when a criminal action is instituted, the civil action for recovery of civil liability arising from the offense charged is impliedly instituted with the criminal action, unless the offended party expressly waives the civil action or reserves his right to institute it separately.” That means as if two actions are joined in one as twins, each one complete with the same completeness as any of the two normal persons composing the twins. It means that the civil action may be tried and prosecuted, with all the ancillary processes provided by law. Said provision will be rendered meaningless if the subsidiary civil liability is not allowed to be enforced in the same proceeding. To remedy the situation and thereby afford due process to the alleged employer, this Court directed the court a quo in Pajarito vs. Señeris (supra) to hear and decide in the same proceeding the subsidiary liability of the alleged owner and operator of the passenger bus. It was explained therein that the proceeding for the enforcement of the subsidiary liability may be considered as part of the proceeding for the execution of the judgment. A case in which an execution has been issued is regarded as still pending so that all proceedings on the execution are proceedings in the suit. There is no question that the court which rendered the judgment has a general supervisory control over its process of execution, and this power carries with it the right to determine every question of fact and law which may be involved in the execution.

Same; Same; Same; Institution of separate and independent action to enforce employer’s subsidiary liability unnecessary as it will prolong agony of victims’ heirs; Judgment of conviction sentencing a defendant employer to pay indemnity conclusive upon employer in an action for enforcement of employer’s subsidiary liability as to the civil liability and as to its amount.—Moreover, it has been invariably held that a judgment of conviction sentencing a defendant employer to pay an indemnity in the absence of any collusion between the defendant and the offended party, is conclusive upon the employer in an action for the enforcement of the latter’s subsidiary liability not only with regard to the civil liability, but also with regard to its amount. This being the case, this Court stated in Rotea vs. Halili, 109 Phil. 495 that the court has no other function than to render decision based upon the indemnity awarded in the criminal case and has no power to amend or modify it even if in its opinion an error has been committed in the decision. A separate and independent action is, therefore, unnecessary and would only unduly prolong the agony of the heirs of the victim.

Petralba vs. Sandiganbayan, 200 SCRA 644 , August 16, 1991

Criminal Law; Malversation of public funds; Death of accused; Extinguishment of criminal liability.—Under Article 89 of the Revised Penal Code, death of the convict extinguishes criminal liability x x x. Criminal liability does not only mean the obligation to serve the personal or imprisonment penalties but it also includes the liability to pay the fines or pecuniary penalties. Pecuniary liability is extinguished only when the death of the offender occurs before final judgment. (Art. 89(1), Revised Penal Code). In the case at bar, petitioner Richard V. Petralba died pending appeal and before any final judgment therein. Hence, the death of Richard V. Petralba extinguished his personal and pecuniary (such as the fine) liabilities.

Same; Same; Same; Civil liability.—Extinction of criminal liability does not necessarily mean that the civil liability is also extinguished. In People vs. Navoa, 132 SCRA 410, and in People vs. Sendaydiego, 81 SCRA 120, We ruled that only the criminal liability (including the fine, which is pecuniary, but not civil) of the accused is extinguished by his death, but the civil liability remains. The claim of the government for the civil liability survives Petralba but only if the offense can be proved.

Villegas vs. Court of Appeals, 271 SCRA 148 , April 11, 1997

Remedial Law; Criminal Procedure; Actions; The rule established was that the survival of the civil liability depends on whether the same can be predicated on sources of obligations other than delict.—Fortunately, this Court has already settled this issue with the promulgation of the case of People v. Bayotas (G.R. No. 102007) on September 2, 1994, viz.: “It is thus evident that as jurisprudence evolved from Castillo to Torrijos, the rule established was that the survival of the civil liability depends on whether the same can be predicated on sources of obligations other than delict. Stated differently, the claim for civil liability is also extinguished together with the criminal action if it were solely based thereon, i.e., civil liability ex delicto. x x x x x x x x x (I)n recovering damages for injury to persons thru an independent civil action based on Article 33 of the Civil Code, the same must be filed against the executor or administrator of the estate of deceased accused (under Sec. 1, Rule 87, infra) and not against the estate under Sec. 5, Rule 86 because this rule explicitly limits the claim to those for funeral expenses, expenses for the last sickness of the decedent, judgment for money and claims arising from contract, express or implied.

Same; Same; Same; Death of the accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability based solely thereon.—Death of the accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability based solely thereon. As opined by Justice Regalado, in this regard, ‘the death of the accused prior to final judgment terminates his criminal liability and only the civil liability directly arising from and based solely on the offense committed, i.e., civil liability ex delicto in senso strictiore.’

Same; Same; Same; The claim for civil liability survives notwithstanding the death of the accused, if the same may also be predicated on a source of obligation other than delict.—Corollarily, the claim for civil liability survives notwithstanding the death of (the) accused, if the same may also be predicated on a source of obligation other than delict. Article 1157 of the Civil Code enumerates these other sources of obligation from which the civil liability may arise as a result of the same act or omission: a) Law; b) Contracts; c) Quasi-contracts; d) x x x x x x x x x e) Quasi-delicts.

Same; Same; Same; The statute of limitations on the civil liability is deemed interrupted during the pendency of the criminal case.—The private offended party need not fear a forfeiture of his right to file this separate civil action by prescription, in cases where during the prosecution of the criminal action and prior to its extinction, the private of fended party instituted together therewith the civil action. In such case, the statute of limitations on the civil liability is deemed interrupted during the pendency of the criminal case, conformably with (the) provisions of Article 1155 of the Civil Code, that should thereby avoid any apprehension on a possible privation of right by prescription.”

Same; Same; Same; Where both proceedings were terminated without final adjudication, the civil action of the offended party under Article 33 may yet be enforced separately.—The Bayotas ruling, however, makes the enforcement of a deceased accused’s civil liability dependent on two factors, namely, that it be pursued by filing a separate civil action and that it be made subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure, as amended. Obviously, in the case at bar, the civil action was deemed instituted with the criminal. There was no waiver of the civil action and no reservation of the right to in-stitute the same, nor was it instituted prior to the criminal action. What then is the recourse of the private offended party in a criminal case such as this which must be dismissed in accordance with the Bayotas doctrine, where the civil action was impliedly instituted with it? The answer is likewise provided in Bayotas, thus: “ ‘Assuming that for lack of express reservation, Belamala’s civil action for damages was to be considered instituted together with the criminal action still, since both proceedings were terminated without final adjudication, the civil action of the offended party under Article 33 may yet be enforced separately.’ ”

Heirs of the Late Teodoro Guaring, Jr. vs. Court of Appeals, 269 SCRA 283 , March 07, 1997

Actions; Quasi-Delicts; Torts; Criminal Law; Acquittal of the accused, even if based on a finding that he is not guilty, does not carry with it the extinction of the civil liability based on quasidelict.—It is now settled that acquittal of the accused, even if based on a finding that he is not guilty, does not carry with it the extinction of the civil liability based on quasi-delict. Thus, in Tayag v. Alcantara, it was held: . . . a separate civil action lies against the offender in a criminal act, whether or not he is criminally prosecuted and found guilty or 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 referred to in Par. (c), Section 3, Rule 111 [now Rule 111, §2(b)], 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 quasidelict 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. . . .

Same; Same; Same; Same; It was error for the Court of Appeals to skip the review of the evidence in the instant case for damages based on quasi-delict and instead base its decision on the findings of the trial court in the criminal case, in the process disregarding the fact that the present case had been instituted independently of the criminal case, and that the petitioners herein took no part in the criminal prosecution.—In the present case, the dispositive portion of the decision of the RTC in the criminal case reads: WHEREFORE, the Court, entertaining reasonable doubt as to his guilt, the accused is hereby acquitted, of the offense of reckless imprudence resulting to double homicide and damage to property as charged in the Information, without pronouncement as to costs. SO ORDERED. It was thus error for the appellate court to skip the review of the evidence in this case and instead base its decision on the findings of the trial court in the criminal case. In so doing, the appellate court disregarded the fact that this case had been instituted independently of the criminal case and that petitioners herein took no part in the criminal prosecution. In fact this action was filed below before the prosecution presented evidence in the criminal action. The attention of the Court of Appeals was called to the decision in the criminal case, which was decided on September 7, 1990, only when the decision of the trial court in this case was already pending review before it (the Court of Appeals).

Same; Same; Same; Same; Due Process; It is unfair to bind petitioners to the result of the criminal action when the fact is that they did not take part therein.—It is unfair to bind petitioners to the result of the criminal action when the fact is that they did not take part therein. That the witnesses presented on behalf of the petitioners are different from those presented by the prosecution should have brought home to the appellate court the fundamental unfairness of considering the decision in the criminal case conclusive of the civil case.

LOSS DUE TO FORTUITOUS EVENT

Austria vs. Court of Appeals, 39 SCRA 527 , June 10, 1971

Words and phrases; Requisites of fortuitous event.—It is recognized in this jurisdiction that to constitute a caso fortuito that would exempt a person from responsibility, it is necessary that (1) the event must be independent of the human will (or rather, of the debtor's or obligor's); (2) the occurrence must render it impossible for the debtor to fulfill the obligation in a normal manner; and that (3) the obligor must be free of participation in, or aggravation of, the injury to the creditor (Reyes & Puno, Outline of Philippine Civil Law, Vol. IV, pages 25-26, citing Lasam v. Smith, 45 Phil. 657, 661). A fortuitous event, therefore, can be produced by nature, e.g., earthquakes, storms, floods, etc., or by the act of man, such as war, attack by bandits, robbery, (Tolentino, Civil Code of the Philippines, Vol. IV, 1962 ed., page 117, citing 3 Salvat 83-84), provided that the event has all the characteristics ennumerated above.

Agency; Receipt of thing for sale on commission basis; Robbery as defense against civil action for loss of thing.—Where MA received from GA a pendant with diamonds to be sold on commission basis, which MA later on failed to return because of a robbery committed upon her, it is not necessary that there be a conviction for robbery for MA to be relieved from civil liability of returning the pendant under Art, 1174, New Civil Code, as it would only be sufficient to establish that the unforseeable event, the robbery in this case, did take place without any concurrent fault on the debtor's part, and this can be done by preponderant evidence. To require, moreover. prior conviction in order to establish robbery as a fact, would demand proof beyond reasonable doubt to prove a fact in a civil case.

KINDS OF CONDITIONS

Tible vs. Aquino, 65 SCRA 207 , July 22, 1975

Civil law; Contracts; Novation; Mere extension of payment does not result in a novation.—Here, evidence of a nature that approaches the approximation of moral certainty, and not merely preponderance of evidence, indicates the real transaction that took place between Aquino and Tible was that Tible borrowed P50,000.00 from Aquino before Tible bought 2,000 hectares of timberland from Aquino for an agreed consideration of P107,000.00. Respondent Appellate Courts ruling relative to the four promissory notes (Exhs. “A”, “A-1”, “A-2”, “A-3”) as executed by Tible in favor of Aquino to pay the balance of the agreed consideration of the sale, that “the subsequent agreement between Aquino and Tible as to another mode of payment by giving the latter more time to pay does not necessarily constitute novation as contemplated in Article 1291 of the New Civil Code on the well settled principle on novation that a ‘mere extension of payment and the addition of another obligation not incompatible with the old one is not a novation thereof’, is well-buttressed by the evidence and We find no compelling reason to overturn the same.

Same; Same; There is a void conditional obligation where the efficacy of the contract depends on the will of the debtor.—Neither do We see any reason to disagree with respondent Appellate Court’s ruling that “the condition that payment of amounts embodied in the promissory notes shall be dependent upon Tible’s operation of the forest concession be acquired from Aquino is undoubtedly a void conditional obligation since its fulfillment is made to depend upon the exclusive will of the debtor, Tible (Art. 1115, Civil Code)”. The payment of the remaining balance of the purchase price of the 2,000 hectares of timberland cannot be made to depend on the exclusive will of the debtor, Tible, whether or not he will operate the timber concession.

Jurisdiction; Estoppel; A party is estopped from disputing the jurisdiction of a court after invoking it himself.—Petitioner’s argument that the trial court erred in giving due course to Aquino’s claim for P30,000.00 since it was filed about eleven months after the date of the first publication of the notice to creditors hardly deserves consideration at this time. When the trial court accepted the claim, what the petitioner did, instead of questioning the trial court’s jurisdiction on the matter, was to file a counterclaim against claimant Aquino, wherein she was sustained by the trial court, and she urged the respondent Appellate Court to affirm it when claimant Aquino appealed the trial court’s order. It is now late in the day to question the timeliness of the filing of the claim.

WHEN NO PERIOD IS FIXED

Central Philippine University vs. Court of Appeals, 246 SCRA 511 , July 17, 1995

Donations; Onerous Donations; Words and Phrases; An onerous donation is one executed for a valuable consideration which is considered the equivalent of the donation itself.—We find it difficult to sustain the petition. A clear perusal of the conditions set forth in the deed of donation executed by Don Ramon Lopez, Sr., gives us no alternative but to conclude that his donation was onerous, one executed for a valuable consideration which is considered the equivalent of the donation itself, e.g., when a donation imposes a burden equivalent to the value of the donation. A gift of land to the City of Manila requiring the latter to erect schools, construct a children’s playground and open streets on the land was considered an onerous donation. Similarly, where Don Ramon Lopez donated the subject parcel of land to petitioner but imposed an obligation upon the latter to establish a medical college thereon, the donation must be for an onerous consideration.

Same; Same; Obligations; Conditional Obligations; When a person donates land to another on the condition that the latter would build upon the land a school, the condition imposed is not a condition precedent or a suspensive condition but a resolutory one.—Under Art. 1181 of the Civil Code, on conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition. Thus, when a person donates land to another on the condition that the latter would build upon the land a school, the condition imposed was not a condition precedent or a suspensive condition but a resolutory one.

Same; Same; Same; Same; If there is no fulfillment or compliance with the resolutory condition, the donation may now be revoked and all rights which the donee may have acquired under it shall be deemed lost and extinguished.—It is not correct to say that the schoolhouse had to be constructed before the donation became effective, that is, before the donee could become the owner of the land, otherwise, it would be invading the property rights of the donor. The donation had to be valid before the fulfillment of the condition. If there was no fulfillment or compliance with the condition, such as what obtains in the instant case, the donation may now be revoked and all rights which the donee may have acquired under it shall be deemed lost and extinguished.

Same; Same; Same; Same; Statute of Limitations; Prescription; Where the time within which the condition should be fulfilled depends upon the exclusive will of the donee, its absolute acceptance and the acknowledgment of its obligation provided in the deed of donation are sufficient to prevent the statute of limitations from barring the action for annulment of donation.—The claim of petitioner that prescription bars the instant action of private respondents is unavailing. The condition imposed by the donor, i.e., the building of a medical school upon the land donated, depended upon the exclusive will of the donee as to when this condition shall be fulfilled. When petitioner accepted the donation, it bound itself to comply with the condition thereof. Since the time within which the condition should be fulfilled depended upon the exclusive will of the petitioner, it has been held that its absolute acceptance and the acknowledgment of its obligation provided in the deed of donation were sufficient to prevent the statute of limitations from barring the action of private respondents upon the original contract which was the deed of donation.

Same; Same; Same; Same; Same; Same; Actions; A cause of action arises when that which should have been done is not done, or that which should not have been done is done, and in cases where there is no special provision for such computation, recourse must be had to the rule that the period must be counted from the day on which the corresponding action could have been instituted.—Moreover, the time from which the cause of action accrued for the revocation of the donation and recovery of the property donated cannot be specifically determined in the instant case. A cause of action arises when that which should have been done is not done, or that which should not have been done is done. In cases where there is no special provision for such computation, recourse must be had to the rule that the period must be counted from the day on which the corresponding action could have been instituted. It is the legal possibility of bringing the action which determines the starting point for the computation of the period. In this case, the starting point begins with the expiration of a reasonable period and opportunity for petitioner to fulfill what has been charged upon it by the donor.

Same; Same; Same; Same; Same; Same; Same; When the obligation does not fix a period but from its nature and circumstances it can be inferred that a period was intended, the courts may fix the duration thereof.—Thus, when the obligation does not fix a period but from its nature and circumstances it can be inferred that a period was intended, the general rule provided in Art. 1197 of the Civil Code applies, which provides that the courts may fix the duration thereof because the fulfillment of the obligation itself cannot be demanded until after the court has fixed the period for compliance therewith and such period has arrived.

Same; Same; Same; Same; Same; Same; Same; There is no more need to fix the duration of a term of the obligation when more than a reasonable period of fifty (50) years has already been allowed the donee to avail of the opportunity to comply with the condition in the donation.—This general rule however cannot be applied considering the different set of circumstances existing in the instant case. More than a reasonable period of fifty (50) years has already been allowed petitioner to avail of the opportunity to comply with the condition even if it be burdensome, to make the donation in its favor forever valid. But, unfortunately, it failed to do so. Hence, there is no more need to fix the duration of a term of the obligation when such procedure would be a mere technicality and formality and would serve no purpose than to delay or lead to an unnecessary and expensive multiplication of suits.

Same; Same; Same; Same; Same; Same; Same; Rescission; When obligor cannot comply with what is incumbent upon him, the obligee may seek rescission, and in the absence of any just cause for the court to determine the period of the compliance, there is no more obstacle for the court to decree the rescission claimed.—Moreover, under Art. 1191 of the Civil Code, when one of the obligors cannot comply with what is incumbent upon him, the obligee may seek rescission and the court shall decree the same unless there is just cause authorizing the fixing of a period. In the absence of any just cause for the court to determine the period of the compliance, there is no more obstacle for the court to decree the rescission claimed.

Same; Same; Same; Same; Contracts; Doubts referring to incidental circumstances of a gratuitous contract should be resolved in favor of the least transmission of rights and interests.—Finally, since the questioned deed of donation herein is basically a gratuitous one, doubts referring to incidental circumstances of a gratuitous contract should be resolved in favor of the least transmission of rights and interests.

Gregorio Araneta, Inc. vs. Phil. Sugar Estates Development Co., Ltd., 20 SCRA 330 , May 31, 1967

Obligations; Contracts; Sale; Pleadings; When court should not fix the period for performing an obligation.—Where the issue raised in the pleadings was whether the seller of the land was given in the contract of sale a reasonable time within which to construct the streets around the perimeter of the land sold, the court, in an action for specific performance to compel the construction of said. streets or for recovery of' damages, cannot fix a period within which the seller should construct the streets. The court should determine whether. the parties had agreed that the seller should have reasonable time to perform its part of the bargain. If the contract so provided, then there was a period fixed, a "reasonable time", and all that the court should have done was to determine if that reasonable time had already elapsed when the suit was filed. If it had passed, then the court should' declare that the petitioner had breached the contract, as averred in the complaint. and fix the resulting damages. On the other hand, if the reasonable time had not yet elapsed, the court perforce was bound to dismiss the action for being premature. But in no case can it be logically held that, under the pleadings, the intervention of the court to fix the period for performance was warranted, for Article 1197 of the New Civil Code is precisely predicated. on the absence of any period fixed by the parties.

Same; Pleading and practice; When amendment of complaint is necessary.—If the complaint did not ask that a period for the performance of an obligation be fixed, and the court wants to fix a period, it cannot proceed to do so unless the complaint is first amended.

Same; Specific performance; Power of court to fix period.—Article 1197 of the New Civil Code involves a two-step process. The court must first determine that the obligation does not fix a period (or that the period depends upon the debtor's will) and that the intention of the parties, as may be inferred from the nature and circumstances of the obligation, is to have a period for its performance. The second step is to ascertain the period probably contemplated by the parties. The court cannot arbitrarily fix a period out of thin air.

Same; Period within which obligation to construct streets on land occupied by squatters should be performed.—Where the seller obligated itself to construct streets around the perimeter of the land sold (site of the Santo Domingo Church in Quezon City) and the parties were aware that the land, on which the streets would be constructed, was occupied by squatters, the time for the performance of the seller's obligation should be fixed at the date that all the squatters on the affected areas are finally evicted therefrom. While this solution would render the date of performance indefinite, still the circumstances of the case admit of no other reasonable view. This very indefiniteness explains why the contract did not specify any exact period of performance. The ruling that the obligation should be performed within two years is not warranted. [Gregorio Araneta, Inc. vs. Phil. Sugar Estates Development Co., Ltd., 20 SCRA 330(1967)]

PASSIVE SOLIDARITY

Philippine National Bank vs. Asuncion, 80 SCRA 321 , November 23, 1977

Obligations and contracts; Joint and solidary obligations; Right of creditor to proceed against any one of the solidary debtors or some or all of them, simultaneously.—Article 1216 of the New Civil Code gives the creditor the right to “proceed against anyone of the solidary debtors or some or all of them simultaneously.” The choice is undoubtedly left to the solidary creditor to determine against whom he will enforce collection. In case of the death of one of the solidary debtors, he (the creditor) may, if he so chooses, proceed against the surviving solidary debtors without necessity of filing a claim in the estate of the deceased debtors. It is not mandatory for him to have the case dismissed as against the surviving debtors and file his claim against the estate of the deceased solidary debtor. For, to require the creditor to proceed against the estate, making it a condition precedent for any collection action against the surviving debtors to prosper, would deprive him of his substantive rights provided by Article 1216 of the New Civil Code.

Statutory construction; A substantive law cannot be amended by a procedural law.—If Section 6, Rule 86 of the Revised Rules of Court were applied literally, Article 1216 of the New Civil Code would, in effect, be repealed since under the Rules of Court, petitioner has no choice but to proceed against the estate of the deceased only. Obviously, this provision diminishes the Bank’s right under the New Civil Code to proceed against any one, some or all of the solidary debtors. Such a construction is not sanctioned by the principle, which is too well settled to require citation, that a substantive law cannot be amended by a procedural rule. Otherwise stated, Section 6, Rule 86 of the Revised Rules of Court cannot be made to prevail over Article 1216 of the New Civil Code, the former being merely procedural, while the latter, substantive. Moreover, no less than the New Constitution of the Philippines, in Section 5, Article X, provides that rules promulgated by the Supreme Court should not diminish, increase or modify substantive rights.

WHO SHOULD MAKE PAYMENT

Tibajia, Jr. vs. Court of Appeals, 223 SCRA 163 , June 04, 1993

Civil Law; Republic Act No. 529; Central Bank Act; Payment; A check is not legal tender and that a creditor may validly refuse payment by check, whether it be a manager’s, cashier’s or personal check.—From the aforequoted provisions of law, it is clear that this petition must fail. In the recent cases of Philippine Airlines, Inc. vs. Court of Appeals and Roman Catholic Bishop of Malolos, Inc. vs. Intermediate Appellate Court, this Court held that—“A check, whether a manager’s check or ordinary check, is not legal tender, and an offer of a check in payment of a debt is not a valid tender of payment and may be refused receipt by the obligee or creditor.” The ruling in these two (2) cases merely applies the statutory provisions which lay down the rule that a check is not legal tender and that a creditor may validly refuse payment by check, whether it be a manager’s, cashier’s or personal check.

Filipino Pipe and Foundry Corp. vs. NAWASA, 161 SCRA 32 , May 03, 1988

Civil Law; Obligations & Contracts; Extraordinary Inflation, defined.—Extraordinary inflation exists when “there is a decrease or increase in the purchasing power of the Philippine currency which is unusual or beyond the common fluctuation in the value of said currency, and such decrease or increase could not have been reasonably foreseen or was manifestly beyond the contemplation of the parties at the time of the establishment of the obligation. (Tolentino Commentaries and Jurisprudence on the Civil Code Vol. IV, p. 284.)

Same; Same; Same; Example of extraordinary inflation.—An ex-ample of extraordinary inflation is the following description of what happened to the deutschmark in 1920: “More recently, 111 the 1920’s Germany experienced a case of hyperinflation. In early 1921. the value of the German mark was 4.2 to the U.S. dollar. By May of the same year, it had stumbled to 62 to the U.S. dollar. And as prices went up rapidly, so that by October 1923, it had reached 4.2 trillion to the U.S. dollar!” (Bernardo M. Villegas & Victor R. Abola, Economics, An Introduction [Third Edition]). As reported, “prices were going up every week, then every day, then every hour. Women were paid several times a day so that they could rush out and exchange their money for something of value before what little purchasing power was left dissolved in their hands. Some workers tried to beat the constantly rising prices by throwing their money out of the windows to their waiting wives, who would rush to unload the nearly worthless paper. A postage stamp cost millions of marks and a loaf of bread, billions.” (Sidney Ruthberg, “The Money Balloon” New York: Simon and Schuster, 1975, p, 19, cited in “Economics, An Introduction” by Villegas & Abola, 3rd Ed.)

Same; Same; Same; Decline in the purchasing power of the Philippine peso cannot be considered “extraordinary,” since it is a universal trend and worldwide occurrence.—The trial court pointed out, however, that this is a worldwide occurrence, but hardly proof that the inflation is extraordinary in the sense contemplated by Article 1250 of the Civil Code, which was adopted by the Code Commission to provide “a just solution” to the “uncertainty and confusion as a result of contracts entered into or payments made during the last war.” (Report of the Code Commission, 132–133.) While appellant’s voluminous records and statistics proved that there has been a decline in the purchasing power of the Philippine peso, this downward fall of the currency cannot be considered “extraordinary.” It is simply a universal trend that has not spared our country.

APPLICATION OF PAYMENT

Reparations Commission vs. Universal Deep-Sea Fishing Corp., 83 SCRA 764 , June 27, 1978

Civil Law; Contracts of conditional purchase and sale; First Installments under contracts of conditional purchase and sale of reparations goods already due and demandable when complaint for recovery of various amounts of money due under the contracts were filed; Interpretation of contracts; Terms of contracts for purchase and sale of reparations vessel very clear and leave no doubt as to the intention of the contracting parties; case at bar.—The terms of the contracts for the purchase and sale of the reparations vessels, however, are very clear and leave no doubt as to the intent of the contracting parties. Thus, in the contract concerning the M/S UNIFISH 1 and M/S UNIFISH 2, the parties expressly agreed that the first installment representing 10% of the purchase price or P53,642.84 shall be paid within 24 months from the date of complete delivery of the vessels or on May 8, 1961, and the balance to be paid in ten (10) equal yearly installments. The amount of P56,597.20 due on May 8, 1962, which is also claimed to be a “first installment,” is but the first of the ten (10) equal yearly installments of the balance of the purchase price. xxx Viewing the contracts between the parties xxx the first installment on the M/S UNIFISH 1 and M/S UNIFISH 2 of the amount of P53,642.84 was due on May 8, 1961, while the first installments on the M/S UNIFISH 3 and M/S UNIFISH 4, and the M/S UNIFISH 5 and M/S UNIFISH 6 in the amounts of P68,777.77 and P54,500.00 were due on July 31, 1961 and October 17, 1961, respectively. Accordingly, the obligation of UNIVERSAL to pay the first installments on the purchase price of the six (6) reparations vessels was already due and demandable when the present action was commenced on August 10, 1962. Also due and demanded from UNIVERSAL were the first of the ten (10) equal yearly installments on the balance of the purchase price of the M/S UNIFISH 1 and M/S UNIFISH 2 in the amount of P56,597.20 and P72,565.68 on the M/S UNIFISH 3 and M/S UNIFISH 4. The first accrued on May 8, 1962, while the second fell due on July 31, 1962.

Remedial Law; Sureties; Indemnity agrrements; Premiums; concept of; Since payment of premiums on performance bonds to the surety company had been expressly undertaken by the corporation in the indemnity agreements executed by it in favor of the surety company, Universal shall pay the premiums to the surety company.—The claim of the surety company to the effect that the trial court erred in not awarding it the amount of P7,231.42 as premiums on the performance bonds is well taken. The payment of premiums on the bonds to the surety company had been expressly undertaken by UNIVERSAL in the indemnity agreements executed by it in favor of the surety company. The premium is the consideration for furnishing the bonds and the obligation to pay the same subsists for as long as the liability of the surety shall exist. Hence, UNIVERSAL should pay the amount of P7,251.42 to the surety company.

Civil Law; Articles 1252 to 1254 of the Civil Code applicable to a person owing several debts of the same kind to a single creditor, but cannot be made applicable to a person whose obligation as mere surety is both contingent and singular, which is full and faithful compliance with the terms of the contract of conditional purchase and sale of reparations goods.—The rules contained in Articles 1252 and 1254 of the Civil Code apply to a person owing several debts of the same kind to a single creditor. They cannot be made applicable to a person whose obligation as a mere surety is both contingent and singular, which in this case is the full and faithful compliance with the terms of the contract of conditional purchase and sale of reparations goods. The obligation included the payment, not only of the first installment in the amount of P53,643.00, but also of the ten (10) equal yearly installments had also accrued; hence, no error was committed in holding the surety company to the full extent of its undertaking. Finally, We find no merit in the claim of the third-party defendant Pablo S, Sarmiento that he is not personally liable having merely executed the indemnity agreements in his capacity as acting general manager of UNIVERSAL. Pablo S. Sarmiento appears to have signed the indemnity agreement twice—the first, in his capacity as acting general manager of UNIVERSAL, and the second in his individual capacity. xxx

Same; Indemnity agreements; When defendant executed indemnity agreements in his capacity not only as acting general manager but also in his individual capacity and as shown by the acknowledgment, he is also personally liable under the indemnity agreements.—Besides, the “acknowledgment” stated that “Pablo S. Sarmiento for himself and on behalf of Universal Deep-Sea Fishing Corporation” personally appeared before the notary and acknowledged that the document is his own free and voluntary act and deed.

KINDS OF COMPENSATION/SET OFF/JUDICIAL

Gan Tion vs. Court of Appeals, 28 SCRA 235 , May 21, 1969

Attorney's fees; Award is in favor of litigant not of his counsel.—An award for attorney's fees is made in favor of the litigant, not of his counsel, and the litigant, not his counsel, is the judgment creditor who may enforce the judgment for attorney's fees for execution.

Civil law; Obligations; Extinguishment of obligations; Compensation; Award for attorney's fees as subject of legal compensation.—An award for attorney's fees is a proper subject of legal compensation.

OBLIGATIONS WHICH CANNOT BE COMPENSATED

International Corporate Bank, Inc. vs. IAC, 163 SCRA 296 , June 30, 1988

Obligations and Contracts; Foreclosure of Mortgage; Requisites of Legal Compensation under Art. 1279 of Ciuil Code.—Petitioner contends that after foreclosing the mortgage, there is still due from private respondent as deficiency the amount of P6.81 million against which it has the right to apply or set off private respondent's money market claim ofPl,062,063.83. The argument is without merit. As correctly pointed out by the respondent Court of Appeals—"Compensation shall take place when two persons, in their own right, are creditors and debtors of each other. (Art. 1278, Civil Code). 'When all the requisites mentioned in Art. 1279 of the Civil Code are present, compensation takes effect by operation of law, even without the consent or knowledge of the debtors.' (Art. 1290, Civil Code). Article 1279 of the Civil Code requires among others, that in order that legal compensation shall take place, 'the two debts be due' and 'they be liquidated and demandable.' Compensation is not proper where the claim of the person asserting the set-off against the other is not clear nor liquidated; compensation cannot extend to unliquidated, disputed claim arising from breach of contract. (Compania General de Tabacos vs. French and Unson, 39 Phil. 34; Lorenzo & Martinez vs. Herrero, 17 Phil. 29). "There can be no doubt that petitioner is indebted to private respondent in the amount ofPl,062,063.83 representing the proceeds of her money market investment. This is admitted. But whether private respondent is indebted to petitioner in the amount of P6.81 million representing th$ deficiency balance after the foreclosure of the mortgage executed to secure the loan extended to her, is vigorously disputed. This circumstance prevents legal compensation from taking place." (CA Decision, Rollo, pp. 112-113).

Same; Same; Same; Requirement that debts ?nust be liquidated and demandable not yet been met since the validity ofthe extrajudicial foreclosure and petitioners claim for deficiency still in question.—It must be noted that Civil Case No. 83-19717 is still pending consideration at the RTC Manila, for annulment of Sheriff s sale on extrajudicial foreclosure of private respondent's property from which the alleged deficiency arose. (Annex"AA", Rollo, pp. 181-189). Therefore, the validity of the extrajudicial foreclosure sale and petitioner's claim for deficiency are still in question, so much so that it is evident, that the requirement of Article 1279 that the debts must be liquidated and demandable has not yet been met. For this reason, legal compensation cannot take place under Article 1290 of the Civil Code.

Scune; Same; Pleadings; Statutojy Construction; Liberal Construction ofthe rules and pleadiiigs; Controlling to effect substantial justice.—Petitioner now assails the motion of the plaintiff (now private respondent) filed in the trial court for the release of the proceeds of the money market investment, arguing that it is deficient in form, the same being unverified (Petitioner's Memorandum, Rollo, p. 266). On this score, it has been held that "as enjoined by the Rules of Court and the controlling jurisprudence, a liberal construction of the rules and the pleadings is the controlling principle to effect substantial justice.

EFFECT OF ASSIGNMENT OF CREDIT

Perez vs. Court of Appeals, 127 SCRA 636 , February 20, 1984

Contracts; Obligations; No legal compensation can take place where the loan instruments to be set-off are not yet due and demandable.—Since, on the respective dates of maturity, specifically, August 6, 1974 and August 13, 1974, respectively, Ramon C. Mojica was still the holder of those bills, it can be safely assumed that it was he who had asked for the roll-overs on the said dates. MEVER was bound by the roll-overs since the assignment to it was made only on September 9, 1974. The inevitable result of the roll-overs of the principals was that Bill No. 1298 and Bill No. 1419 were not yet due and demandable as of the date of their assignment by MOJICA to MEVER on September 9, 1974, nor as of October 3, 1974 when MEVER surrendered said Bills to CONGENERIC. As a consequence, no legal compensation could have taken place because, for it to exist, the two debts, among other requisites, must be due and demandable.

Same; Same; Appeal; Supreme Court may, on appeal, consider a factual issue not raised in the trial court nor assigned as errors on appeal.—We note that the xerox copies of Bill No. 1298 and Bill No. 1419 attached by MEVER to its Brief do not contain the “roll-over” notations. However, MEVER’s own exhibits before respondent Appellate Court, Exhibits “3” and “3-A”, do show those notations and MEVER must be held bound by them. And although this issue may not have been squarely raised below, in the interest of substantial justice, this Court is not prevented from considering such a pivotal factual matter that had been overlooked by the Courts below. The Supreme Court is clothed with ample authority to review palpable errors not assigned as such if it finds that their consideration is necessary in arriving at a just decision.

Same; Same; Words and Phrases; “Money Market” defined.—There is another aspect to this case. What is involved here is a money market transaction. As defined by Lawrence Smith “the money market is a market dealing in standarized short-term credit instruments (involving large amounts) where lenders and borrowers do not deal directly with each other but through a middle man or dealer in the open market.” It involves “commercial papers” which are instruments “evidencing indebtedness of any person or entity . . ., which are issued, endorsed, sold or transferred or in any manner conveyed to another person or entity, with or without recourse”. The fundamental function of the money market device in its operation is to match and bring together in a most impersonal manner both the “fund users” and the “fund suppliers.” The money market is an “impersonal market”, free from personal considerations.” The market mechanism is intended to provide quick mobility of money and securities.”

Same; Same; In money market transactions, no notice is given to borrower or issuer of commercial paper of its sale to the investor. Art. 1285, 1st paragraph of N.C.C. applicable in such cases as to bar legal compensation between debtor and assignee of creditor’s rights.—The impersonal character of the money market device overlooks the individuals or entities concerned. The issuer of a commercial paper in the money market necessarily knows in advance that it would be expeditiously transacted and transferred to any investor/lender without need of notice to said issuer. In practice, no notification is given to the borrower or issuer of commercial paper of the sale or transfer to the investor.

Same; Same; Same.—Accordingly, we find no applicability herein of Article 1285, 3rd paragraph of the Civil Code. Rather, it is the first paragraph of the same legal provision that is applicable: “ART. 1285. The debtor who has consented to the assignment of rights made by a creditor in favor of a third person, cannot set up against the assignee the compensation which would pertain to him against the assignor, unless the assignor was notified by the debtor at the time he gave his consent, that he reserved his right to the compensation.” [Perez vs. Court of Appeals, 127 SCRA 636(1984)]

KINDS OF NOVATION

Magdalena Estates, Inc. vs. Rodriguez, 18 SCRA 967 , December 17, 1966

Guaranty and suretyship; Interest; Where creditors receipt of payment by surety did not extinguish. obligation to pay interest.—The 'creditors' receipt of the sum of P5,000 from the surety as a payment of its. obligation under its bond did not extinguish the principal debtors'. obligation to pay the accumulated' interests on the said sum of P5,000. There was no waiver or condonation of the 'interest due from the principal debtors, which was not a part of the surety's liability.

Same; Surety's liability cannot be extended by implication.—The liability of the surety cannot be extended, by implication, beyond the terms of the contract.

Obligations; Application of payment.—The rules contained in Articles 1252 and 1254 of the New Civil Code apply to a person owing several debts of the same kind to a single creditor. They cannot be made applicable to a person whose obligation as a mere surety is both contingent and singular; his liability is confined to such obligation, and he is entitled to have all payments made applied exclusively to said obligation and to no other. Besides Article 1253 of the New Civil Code is merely directory and not mandatory.

Same; Novation; Novation by presumption is not favored.—Novation by presumption has never been favored. To be sustained, it needs to be established that the old and new obligations are incompatible on all points, or that the will to novate appears by express agreement of the parties or in acts of similar import. Thus, an obligation to pay a sum of money is not novated in a new instrument wherein the old is ratified, by changing only the terms of payment and adding other obligations, not incompatible with the old ones, or wherein the old contract is merely supplemented by the new one.

Same; When creditor's acceptance of payment from a third person does not release principal debtor.—The mere fact that the creditor receives a guaranty or accepts payments from a third person, who has agreed to assume the obligation, when there is no agreement that the first debtor shall be released from responsibility, does not constitute novation, and the creditor can still enforce the obligation against the original debtor. This rule applies to a surety bond, which is not a new and separate contract but an accessory of a promissory note. [Magdalena Estates, Inc. vs. Rodriguez, 18 SCRA 967(1966)]

Millar vs. Court of Appeals, 38 SCRA 642 , April 30, 1971

Civil law; Obligations and contracts; Compromises; Novation; Defense of implied novation requires clear and convincing proof of incompatibility between the two obligations.—The defense of implied novation requires clear and convincing proof of complete incompatibility between the two obligations. The law requires no specific form for an effective novation by implication. The test is whether the two obligations can stand together. If they cannot, incompatibility arises, and the second obligation novates the first. If they can stand together, no incompatibility results and novation does not take place.

Same; Same; Same; Same; Where new obligation merely reiterates or ratifies old obligation.—Where the new obligation merely reiterates or ratifies the old obligation, although the former effects but minor alterations or slight modifications with respect to the cause or object or conditions of the latter, such changes do not effectuate any substantial incompatibility between the two obligations. Only those essential and principal changes introduced by the new obligation producing an alteration or modification of the essence of the old obligation result in implied novation. In the case at bar, the mere reduction of the amount due in no sense constitutes a sufficient indicium of incompatibility, especially in the light of (a) the explanation by the petitioner that the reduced indebtedness was the result of the partial payments made by the respondent before the execution of the chattel mortgage agreement and (b) the latter’s admissions bearing thereon.

Cochingyan, Jr. vs. R&B Surety and Insurance Co., Inc., 151 SCRA 339 , June 30, 1987

Civil Law; Obligations and Contracts; Novation defined.—Novation is the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which terminates it, either by changing its object or principal conditions, or by substituting a new debtor in place of the old one, or by subrogating a third person to the rights of the creditor. Novation through a change of the object or principal conditions of an existing obligation is referred to as objective (or real) novation. Novation by the change of either the person of the debtor or of the creditor is described as subjective (or personal) novation. Novation may also be both objective and subjective (mixed) at the same time. In both objective and subjective novation, a dual purpose is achieved—an obligation is extinguished and a new one is created in lieu thereof.

Same; Same; Same; Novation is never presumed.—If objective novation is to take place, it is imperative that the new obligation expressly declare that the old obligation is thereby extinguished, or that the new obligation be on every point incompatible with the old one. Novation is never presumed: it must be established either by the discharge of the old debt by the express terms of the new agreement, or by the acts of the parties whose intention to dissolve the old obligation as a consideration of the emergence of the new one must be clearly discernible.

Same; Same; Same; If old debtor is not released, no novation occurs and the third person who assumed the obligation becomes a codebtor or surety or a co-surety.—Again, if subjective novation by a change in the person of the debtor is to occur, it is not enough that the juridical relation between the parties to the original contract is extended to a third person. It is essential that the old debtor be released from the obligation, and the third person or new debtor take his place in the new relation. If the old debtor is not released, no novation occurs and the third person who has assumed the obligation of the debtor becomes merely a co-debtor or surety or a co-surety.

Same; Same; Same; Novation is not implied when the parties to the new obligation expressly negated the lapsing of the old obligation.—Neither can the petitioners anchor their defense on implied novation. Absent an unequivocal declaration of extinguishment of a pre-existing obligation, a showing of complete incompatibility between the old and the new obligation (and nothing else) would sustain a finding of novation by implication. But where, as in this case, the parties to the new obligation expressly recognize the continuing existence and validity of the old one, where, in other words, the parties expressly negated the lapsing of the old obligation, there can be no novation. The issue of implied novation is not reached at all.

Same; Same; Same; Article 2079 of the Civil Code, not applicable; Case at bar.—The Indemnity Agreement speaks of the several indemnitors “apply[ing] jointly and severally (in solidum) to the [R & B Surety]—to become SURETY upon a SURETY BOND demanded by and in favor of [PNB] in the sum of [P400,000.00] for the faithful compliance of the terms and conditions set forth in said SURETY BOND—”. This part of the Agreement suggests that the indemnitors (including the petitioners) would become co-sureties on the Security Bond in favor of PNB. The record, however, is bereft of any indication that the petitioners-indemnitors ever in fact became cosureties of R & B Surety vis-a-vis the PNB. The petitioners, so far as the record goes, remained simply indemnitors bound to R & B Surety but not to PNB, such that PNB could not have directly demanded payment of the Principal Obligation from the petitioners. Thus, we do not see how Article 2079 of the Civil Code—which provides in part that “[a]n extension granted to the debtor by the creditor without the consent of the guarantor extinguishes the guaranty”—could apply in the instant case. The petitioner-indemnitors are, as it were, secondtier parties so far as the PNB was concerned and any extension of time granted by PNB to any of the first-tier obligors (PAGRICO, R & B Surety and the trustor[s]) could not prejudice the second-tier parties.

Same; Same; Same; Same; Theory behind Art 2079 is that an extension of time given to the principal debtor by the creditor without the surety’s consent would deprive the latter of his right to pay the creditor and to be immediately subrogated to the creditor’s remedies against the principal debtor upon original maturity.—The theory behind Article 2079 is that an extension of time given to the principal debtor by the creditor without the surety’s consent would deprive the surety of his right to pay the creditor and to be immediately subrogated to the creditor’s remedies against the principal debtor upon the original maturity date. The surety is said to be entitled to protect himself against the contingency of the principal debtor or the indemnitors becoming insolvent during the extended period. The underlying rationale is not present in the instant case.

Same; Same; Same; Indemnity clauses held enforceable and not against any public policy.—The last issue can be disposed of quickly, Clauses (b) and (c) of the Indemnity Agreements (quoted above) allow R & B Surety to recover from petitioners even before R & B Surety shall have paid the PNB. We have previously held similar indemnity clauses to be enforceable and not violative of any public policy. The petitioners lose sight of the fact that the Indemnity Agreements are contracts of indemnification not only against actual loss but against liability as well. While in a contract of indemnity against loss an indemnitor will not be liable until the person to be indemnified makes payment or sustains loss, in a contract of indemnity against liability, as in this case, the indemnitor’s liability arises as soon as the liability of the person to be indemnified has arisen without regard to whether or not he has suffered actual loss. Accordingly, R & B Surety was entitled to proceed against petitioners not only for the partial payments already made but for the full amount owed by PAGRICO to the PNB.