From Cheng Spec Proc Cases Batch2

8/18/2019 From Cheng Spec Proc Cases Batch2

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Special Proceedings Cases Batch 2 2nd Sem 2015-16

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Contents

Case # 1: Barredo vs CA (G.R. No. L-17863) ..................................................... 2Case # 2: Sikat vs. Vda. De Villaueva (G.R. No. L-35925) ............................ 6

Case # 3: De Villanueva vs. PNB (G.R. No. L-18403) ................................... 17

Case # 4: Belama vs. Polinar (G.R. No. L-24098 ) ........................................ 23

Case # 5: Stronghold Insurance Co. Inc. vs. Republic-Asahi glass Corp.

(G.R. No. 147561)........................................................................................................ 27

Case # 6: Gabriel vs. Bilon (G.R. No. 146989) ................................................ 37Case # 7: Union Bank vs. Santibañez (G.R. No. 149926)........................... 56

Case # 8: Sheker vs. Sheker (G.R. No. 157912) .............................................. 69

Case # 9: People vs. Bayotas (G.R. No. 102007) ........................................... 77

Case # 10 Hilado vs. CA (G.R. No. 164108) ...................................................... 95

Case # 11: Nacar vs. Nistal (G.R. No. L-33006).......................................... 107

Case # 12: Briones vs. Henson-Cruz (G.R. No. 159130) ......................... 120

Case # 13: Saligumba vs. Palanog (G.R. No. 143365) ............................. 136

Case # 14: Sarsaba vs. De Te (G.R. No. 175910) ........................................ 148


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Case # 1: Barredo vs CA (G.R. No. L-17863)

G.R. No. L-17863 November 28, 1962

MANUEL H. BARREDO, ET AL., petitioners,vs.

THE COURT OF APPEALS, ET AL., respondents.

REYES, J.B.L., J.:

The present appeal by the heirs of the late Fausto Barredo involves a

tardy claim to collect the face value of a promissory note forP20,000.00 plus 12% interest per annum from 21 December 1949,the date of its maturity, plus attorney's fees and costs in the sum ofP2,000.00, from the intestate estate of the late Charles A.McDonough, represented herein by the administrator, W. I. Douglas.

The promissory note was secured by a mortgage executed on 31December 1940 in favor of Fausto Barredo over the leasehold rights

of McDonough on the greater portion of a parcel of registered landlocated at Dongalo Parañaque, Rizal, owned by Constantino Factor,and over four (4) houses which McDonough had constructed on theleased land. The lease contract between Factor and McDonoughprovided for a term of 10 years from 1 September 1936; but onDecember 1940, the parties extended the term up to 31 August1961. The original lease, the extension of its term, and the mortgagewere all inscribed at the back of certificate of title of the land.

Upon Fausto Barredo's death on 8 October 1942, his heirs, in a deedof extrajudicial partition, adjudicated unto themselves the securedcredit of the deceased, and had the same recorded on the aforesaidcertificate of title.


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This annotation was, however, cancelled when one day in August1944 Manuel H. Barredo was ordered to appeal before an officer ofthe Japanese Imperial Army at the Army and Navy Club and wascommanded to bring with him all the documents pertaining to the

mortgage executed by the late McDonough whose privateproperties, because of his enemy citizenship, were, in the words ofthe Court of Appeals, "appropriated by the triumphant invader".Manuel H. Barredo was paid P20,000.00 in Japanese war notes bythe occupation authorities and made to sign, as he did sign, acertification stating "that in consideration of P20,000.00 which Ihave received today, I am requested the Register of Deeds to cancelthe mortgage of these properties"; and, as requested, the

cancellation was inscribed at the back of the title.

Charles McDonough died on 15 March 1945; thereupon, SpecialProceedings No. 70173 of the Court of First Instance of Manila,captioned "In re: Intestate Estate of Charles A. McDonough", wasinstituted; and pursue a court order of 17 August 1945, theadministrator caused to be published in the "Philippine Progress"for three consecutive weeks, on 23 and 30 August 1945 and 6

September 1945, a notice to creditors requiring them to their claimswith the clerk of court within 6 months reckoned from the date of itsfirst publication and expiring 23 February 1946.

On 22 October 1947, the heirs of Fausto Barredo filed their belatedclaim against the estate of McDonough. This claim was opposed bythe administrator. After hearing the lower court allowed the claim,but the Court of Appeals reversed the order of allowance; hence, theBarredo heirs appealed to this Court, assigning the following alleged

errors:

1. That the Court of Appeals erred in holding that the "onemonth" period referred to in Section 2 of Rule 87 of Rules ofCourt is to be counted from and after the expiration of the six-month period fixed in the published notice to claims, and in


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further holding that the trial court had therefore committed areversible error in admitting and allowing the claim of hereinpetitioners; and

2. That the respondent Court of Appeals erred in holding thatthe only logical conclusion is that the P20,000.00 in Japanesemoney paid by the Japanese military authorities to petitionerManuel H. Barredo were paid for the redemption ofpromissory note secured by mortgage of the four buildings.

It is pertinent to state before discussing the argumentation ofcounsel that in view of the burning and destruction of the buildings

which were the subject of the mortgage, the petitioners manifestedtheir wish to abandon their security and prosecute the claim againstthe estate as for a simple money debt, and that when the Barredoheirs filed their claim, no order of distribution had entered in theproceedings.

Section 2, Rule 87, of the Rules of Court reads:

SEC. 2. Time within which claims shall be filed . — In the notice

provided in section 1, the court shall state the time for thefiling of claims against the estate, which shall not be more thantwelve nor less than six months after the date of the firstpublication of the notice. However, at any time before an orderof distribution is entered, on application of a creditor who hasfailed to file his claim within the time previously limited, thecourt may, for cause shown and on such terms as are equitable,allow such claim to be filed within a time not exceeding one

month.The probate court previously fixed the period for filing claims at six(6) months reckoned from the date of first publication, and the saidnotice to creditors was first published on 23 August 1945. Thepresent claim was filed on 22 October 1947. There is no doubt,


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therefore, that the claim was filed outside of the period previouslyfixed. But a tardy claim may be allowed, at the discretion of thecourt, upon showing of cause for failure to present said claim ontime.

The respondent administrator, relying on the case of the Estate ofHoward J. Edmands, 87 Phil. 405, argues that the one-month periodfor filing late claims mentioned in Section 2, Rule 87, of the Rules ofCourt should be counted from the expiration of the regular six-month period, but this pronouncement was but an obiter dictum thatdid not resolve the issue involved in said case. The true rulingappears in the case of Paulin vs. Aquino, L-11267, March 20, 1958,

wherein the controverted one month period was clarified as follows:The one-month period specified in this section is the timegranted claimants, and the same is to begin from the orderauthorizing the filing of the claims. It does not mean that theextension of one month starts from the expiration of theoriginal period fixed by the court for the presentation ofclaims. (Emphasis supplied)

However, the probate court's discretion in allowing a claim after theregular period for filing claims but before entry of an order ofdistribution presupposes not only claim for apparent merit but alsothat cause existed to justify the tardiness in filing the claim. Here,petitioners alleged as excuse for their tardiness the recent recoveryof the papers of the late Fausto Barredo from the possession of hislawyer who is now deceased. This ground insufficient, due to theavailability, and knowledge by the petitioners, of the annotation at

the back of the certificate of title of the mortgage embodying theinstant claim, as well as the payment of P20,000.00 made by theJapanese military authorities.

The order of the trial court allowing the late claim withoutjustification, because under Section 2, Rule 8 of the Rules of Court,


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said court has no authority to admit a belated claim for no cause orfor an insufficient cause.1

In view of the conclusions thus arrived at, it becomes unnecessary to

discuss whether the payment by the Japanese was intended as adischarge of the promissory note. Suffice it to say that there is noother cogent explanation for the payment made to the mortgagees,who were not the owners of the encumbered property.

FOR THE FOREGOING REASONS, the appealed decision is affirmed,with costs against the petitioners.

Case # 2: Sikat vs. Vda. De Villaueva (G.R. No. L-35925)

G.R. No. L-35925 November 10, 1932

RICARDO SIKAT, Judicial Administrator of the intestate estate ofthe deceased Mariano P. Villanueva, plaintiff-appellant,vs.QUITERIA VIUDA DE VILLANUEVA, Judicial Administratrix of theintestate estate of the deceased Pedro Villanueva, defendant-appellee.

VILLA-REAL, J.:

The plaintiff Ricardo Sikat, as judicial administrator of the intestateestate of Mariano P. Villanueva, appeals to this court from thejudgment of the Court of First Instance of Manila, the dispositivepart of which reads as follows:

In view of the foregoing considerations, let judgment beentered absolving the defendant from the complaint, and, noevidence having been adduced in support of the counterclaim,the plaintiff is also absolved therefrom, without specialpronouncement as to costs.


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In support of his appeal, the appellant assigns the following allegederrors as committed by the court a quo in its judgment, to wit:

1. The lower court erred in holding that the claim of the

administrator of the estate of Mariano P. Villanueva against theestate of Pedro Villanueva has already prescribed.

2. The lower court erred in dismissing the complaint.

The present case was commenced by virtue of a complaint filed byRicardo Sikat, as judicial administrator of the intestate estate ofMariano P. Villanueva, against Quiteria Vda. de Villanueva, as judicialadministratrix of the intestate estate of Pedro Villanueva, prayingthat the decision of the committee on claims and appraisal in theintestate proceedings of the aforesaid Pedro Villanueva with regardto the credit of the late Mariano P. Villanueva be confirmed by thecourt, and the defendant as judicial administratrix, be ordered topay the plaintiff the amount of P10,192.92, with legal interest fromJuly 15, 1919 until fully paid, and the costs.

In answer to the complaint, the defendant denied each and every

allegation thereof, and set up a special defense of prescription, and acounterclaim for P15,536.69 which she alleges the estate of MarianoP. Villanueva owes to the estate of Pedro Villanueva; and she prayedfor judgment absolving her from the complaint and sentencing theplaintiff to pay her said amount with interest and costs.

At the hearing of the case, the parties submitted the followingagreed statement of facts to the court:

1. That plaintiff and defendant are both of age, the former areresiding in the municipality of Malinao, and the latter in themunicipality of Tabaco, Province of Albay, P. I.; that theplaintiff, Ricardo Sikat, instituted the present action as judicialadministrator of the estate of Mariano P. Villanueva, dulyappointed in place of the former administrator, Enrique V.


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Kare, by the Court of Firts Instance of Albay; and the defendantis the judicial administratrix of the estate of Pedro Villanueva,duly appointed by the Court of First Instance of the City ofManila.

2. That the intestate proceedings of the estate of Mariano P.Villanueva were instituted in the Court of First Instance ofAlbay, and Julio V. Quijano was appointed administrator; thatthe intestate proceedings for the settlement of the estate ofPedro Villanueva, were also commenced therein as civil caseNo. 3011, upon application of Julio V. Quijano, for the purposementioned in the order of the court, dated August 14, 1919, a

copy of which is attached and made a part of this agreedstatement of facts, as Exhibit A.

3. That by an order dated August 19, 1919, the Court of FirstInstance of Albay appointed Quiteria Vda. de Villanuevaadministratrix of the estate of Pedro Villanueva, and onSeptember 11, 1919 Tomas Almonte and Pablo Rocha wereappointed commissioners to compose the committee on claimsand appraisal.

4. That on September 16, 1919 the then administrator of theestate of Mariano P. Villanueva, Julio V. Quijano, filed with saidcommittee a written claim for the same sums as now claimed,according to Exhibit B, attached to and made a part of thisagreed statement of facts, and adduced evidence in supportthereof before the committee.

5. That in view of the fact that Quiteria Vda. de Villanuevaquestioned the jurisdiction of the Court of First Instance ofAlbay over the intestate proceedings of the estate of PedroVillanueva, and upon appeal the Supreme Court decided (seedecision of October 21, 1921, a copy of which is attached to andmade a part hereof as Exhibit C) that said Court of First


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Instance had no jurisdiction to take cognizance of the saidintestate proceedings, at the instance of both parties, thecommittee composed of Tomas Almonte and Pablo Rochaabstained from making any report on the aforementioned

claim to the Court of First Instance of Albay.

6. That in view of this decision of the Supreme Court holdingthe Court of First Instance of Albay incompetent to takecognizance of the intestate proceedings in the estate of PedroVillanueva, these proceedings were instituted in the Court ofFirst Instance of Manila through the application of EnriqueKare, as judicial administrator of the intestate estate of

Mariano P. Villanueva in case No. 28244, filed on June 18, 1925,upon the ground that when Pedro Villanueva died he owed theestate of Mariano P. Villanueva the sum of P10,192.92, withlegal interest from June 15, 1919.

7. That after the Court of First Instance of Manila hadappointed Quiteria Vda. de Villanueva, administratrix of theestate of Pedro Villanueva, and Mamerto Roxas and NicanorRoxas as commissioners to compose the committee on claimsand appraisal, Enrique Kare, as administrator of the estate ofMariano P. Villanueva, filed his claim with the committee onSeptember 22, 1925, and that the same claim appears in thepresent complaint.

8. That the said committee on claims and appraisal, composedof Mamerto Roxas and Nicanor Roxas, admitted the claim anddecided in favor of the estate of Mariano P. Villanueva, filing

their report with the court accordingly.

9. That the defendant administratrix, Quiteria Vda. deVillanueva, took a timely appeal from this report, and so thepresent complaint has been filed.


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10. That the evidence presented to this committee on claimsand appraisal by the parties to the present case, and the rulingsand decisions of said committee upon all the claims andcounterclaims filed with it, are contained in the record entitled

"Report of the Committee on Claims and Appraisal" of theintestate proceedings of Pedro Villanueva, No. 28244 of theCourt of First Instance of Manila.

Manila, December 18, 1930.

In addition to the agreed statement of facts quoted above, there wasadduced in evidence the document dated September 22, 1909,

executed by the late Pedro Villanueva in favor of his father, the lateMariano P. Villanueva, which literally reads as follows:

I owe my father, Mariano P. Villanueva, the following amounts:

For the balance account, three thousand five hundred thirty-nine pesos and eight centavos, Philippine currency.

For the capital invested by Mariano P. Villanueva in said

bazaar, three thousand pesos, Philippine currency.For the debt of the late Sulpicio Briznela, six hundred forty-nine pesos and seventy-seven centavos, Philippine currency.

For salary accruing to me during the months of January,February, March, and April, 1907, unduly withheld, havingworked in his office during that time, four hundred pesos,Philippine currency.

For the entry in the book, dated October 31, 1904, but if it isthereafter discovered to have been paid, it shall be null andvoid, two thousand four hundred forty pesos and sevencentavos, Philippine currency.


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For the cost of a horse from Muñoz y Cia., Manila, one hundredsixty-four pesos, Philippine currency.

The amounts stated above are written as they appear in my

father's books.

(Sgd.) PED. VILLANUEVA.

The sole question to decide in this appeal, raised in the firstassignment of error, is whether the trial court erred in holding thatthe aforesaid claim of Mariano P. Villanueva's estate against PedroVillanueva estate has already prescribed.

There is no question that at the time of Pedro Villanueva's death theright of Mariano P. Villanueva's estate to collect the credit againsthim by virtue of the abovequoted acknowledgment of indebtednesshad not yet prescribed.

Section 703 of the Code of Civil Procedure provides:

SEC. 703. CERTAIN ACTIONS SURVIVE. — Actions to recoverthe title or possession of real estate, buildings, or any interesttherein, actions to recover damages for an injury to person orproperty, real or personal, and actions to recover thepossession of specific articles of personal property, shallsurvive, and may be commenced and prosecuted by or againstthe executor or administrator; but all other actionscommenced against the deceased before his death shall bediscontinued, and the claims therein involved presented beforethe committee as herein provided.

If in pursuance of the legal provision just quoted, all actionscommenced against a debtor shall be discontinued upon his death,and the claims involved filed with the committee on claims andappraisal appointed in the testate or intestate proceedings unlessthey are actions to recover the title or possession of real estate,


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buildings, or any interest therein, damages for an injury to person orproperty, real or personal, or the possession of specific articles ofpersonal property, which actions shall survive and may becommenced and prosecuted by or against the executor or

administrator, then with a greater reason should credits that havenot prescribed at the debtor's death, and upon which no action hadbeen brought, be presented before the committee on claims andappraisal for collection.

Section 689 of the same Code provides:

SEC. 689. COURT TO LIMIT TIME FOR PRESENTING CLAIMS.

— The court shall allow such time as the circumstances of thecase requires for the creditors to present their claims to thecommittee for examination and allowance; but not, in the firstinstance, more than twelve months, or less than six months;and the time allowed shall be stated in the commission. Thecourt may extend the time as circumstances require, but not sothat the whole time shall exceed eighteen months.

The questions arises as to which of these two prescriptions should

govern the case: ordinary prescription, established in chapter III, orextraordinary prescription, created in section 689 aforecited, bothof the Code of Civil Procedure. It is a rule of statutory constructionthat when there are two different provisions upon one subjectmatter, one of them general and the other specific, the latter shouldprevail, if both cannot stand together. In the present case accordingto the law, Mariano P. Villanueva's credit cannot be judiciallycollected from Pedro Villanueva although the right of action has not

prescribed, because the latter is dead; and it cannot be collectedfrom his estate because the action is not one of those that surviveupon his death. To remedy this situation the law established a newprescriptive period for such cases, which being incompatible withthe ordinary period of prescription both in commencement and induration, must be deemed to have superseded the latter.


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This court has so held in Santos vs. Manarang (27 Phil., 209, 213.), intreating of the period of prescription established in section 689 ofthe Code of Civil Procedure, as follows:

It cannot be questioned that this section supersedes theordinary limitation of actions provided for in chapter 3 of theCode. It is strictly confined, in its application, to claims againstthe estates of deceased persons, and has been almostuniversally adopted as part of the probate law of the UnitedStates. It is commonly termed the statute of non-claims, and itspurpose is to settle the affairs of the estate with dispatch, sothat the residue may be delivered to the persons entitled

thereto without their being afterwards called upon to respondin actions for claims, which, under the ordinary statute oflimitations, have not yet prescribed.lawphil.net

Now then, with reference to the extraordinary prescriptionestablished for claims against deceased persons, has the claim ofMariano P. Villanueva's estate against Pedro Villanueva's estateprescribed?

The trial court decided the question in the affirmative, citing section49 of the aforecited Act No. 190, which reads:

SEC. 49. SAVING IN OTHER CASES. — If, in an actioncommenced, or attempted to be commenced, in due time, ajudgment for the plaintiff be reversed, or if the plaintiff failotherwise than upon the merits, and the time limited for thecommencement of such action has, at the date of such reversal

or failure, expired, the plaintiff, or, if he die and the cause ofaction survive, his representatives, may commence a newaction within one year after such date, and this provision shallapply to any claim asserted in any pleading by a defendant.


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This provision of law speaks of an "action", which, according tosection 1 of Act No. 190, "means an ordinary suit in a court of justice,by which one party prosecutes another for the enforcement orprotection of a right, or the redress or prevention of a wrong".

According to this definition, the proceeding here in question is notan action but a special proceeding, which, according to the samesection, is any other remedy provided by law. The very reference insection 49 to actions brought against debtors before their deathclearly means ordinary actions and not special proceedings.

The saving clause, then, in section 49 of Act No. 190 does notdirectly apply to special proceedings.

In re Estate of De Dios (24 Phil., 573), cited in the aforementionedcase of Santos vs. Manarang, this court laid down the followingdoctrine:

The purpose of the law, in fixing a period within which claimsagainst an estate must be presented, is to insure a speedysettlement of the affairs of the deceased person and the earlydelivery of the property, to the persons entitled to receive it.

The speedy settlement of the estate of deceased persons for thebenefit of creditors and those entitled to the residue by way ofinheritance or legacy after the debts and expenses of administrationhave been paid, is the ruling spirit of our probate law.

Thus section 642, paragraph 2, of the Code of Civil Procedureprovides:

SEC. 642. TO WHOM ADMINISTRATION GRANTED. — If noexecutor is named in the will, or if a person dies intestate,administration shall be granted:

x x x x x x x x x


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2. If such surviving husband or wife, as the case may be, or nextof kin, or the person selected by them, be unsuitable, or if thehusband or widow, or next of kin neglect thirty days after thedeath of the person to apply for administration, or to request

that administration be granted to some other person, it may begranted to one or more of the principal creditors, if competentand willing to serve. . . .

We have seen that under section 689 of the Code, the maximumperiod for the presentation of claims against the estate of a deceasedperson is eighteen months from the time fixed by the committee onclaims and appraisal in its notice, and this period may be extended

one month if a creditor applies for it within six months after the firstterm, according to section 690. lawphil.net

It may be argued in this case that inasmuch as none of the personsentitled to be appointed administrators or to apply for theappointment of an administrator have taken any step in thatdirection, and since no administrator or committee on claims andappraisal has been appointed to fix the time for filing claims, theright of the plaintiff, as administrator of Mariano P. Villanueva'sestate, to present the latter's claim against Pedro Villanueva's estatecould not prescribe.

If as we have stated, the object of the law in fixing short specialperiods for the presentation of claims against the estate of adeceased person is to settle the affairs of the estate as soon aspossible in order to pay off the debts and distribute the residue; andif a creditor having knowledge of the death of his debtor is

interested in collecting his credit as soon as possible; and ifaccording to law the persons entitled to the administration or topropose another person for administrator have thirty days from thedeath within which to claim that right, after which time the courtmay appoint any creditor of the intestate debtor: then the plaintiffherein as administrator of Mariano P. Villanueva's estate, was guilty


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of laches in not instituting the intestate proceedings of PedroVillanueva in the Court of First Instance of Manila until after thelapse of three years after this court had set aside the intestateproceedings begun in the Court of First Instance of Albay for lack of

jurisdiction over the place where the decedent had died, that is,from October 21, 1921, to June 18, 1925. Wherefore, taking intoaccount the spirit of the law upon the settlement and partition ofestates, and the fact that the administration of Mariano P.Villanueva's estate had knowledge of Pedro Villanueva's death, andinstituted the intestate proceedings for the settlement of the latter'sestate in the Court of First Instance of Albay and filed Mariano P.Villanueva's claim against it, which was not allowed because this

court held those proceedings void for lack of jurisdiction, the estateof Mariano P. Villanueva was guilty of laches in not instituting thesame proceedings in the competent court, the Court of First Instanceof Manila, until after three years had elapsed, and applying theprovisions of section 49 of the Code of Civil Procedure by analogy,we declare the claim of Mariano P. Villanueva to have prescribed. Tohold otherwise would be to permit a creditor having knowledge ofhis debtor's death to keep the latter's estate in suspense indefinitely,

by not instituting either testate or intestate proceedings in order topresent his claim, to the prejudice of the heirs and legatees. Even inthe case of the summary settlement of an estate under section 598,as amended by Act No. 2331, the Code of Civil Procedure limits thetime within which a creditor may file his claim to two years after thesettlement and distribution of the estate.

In view of the foregoing considerations, we are of opinion and sohold that whenever a creditor's claim presented in the intestateproceedings of the estate of his debtor is not allowed because thecourt has no jurisdiction, and such creditor permits more than threeyears to elapse before instituting the same proceedings in thecompetent court, the claim is barred by laches, applying theprovisions of section 49 of the Code of Civil Procedure, by analogy.


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By virtue whereof, the judgment appealed from is affirmed with

costs against the appellant. So ordered.

Case # 3: De Villanueva vs. PNB (G.R. No. L-18403)

G.R. No. L-18403 September 30, 1961

IN RE ADMINISTRATION OF THE ESTATE OF PASCUALVILLANUEVA. MAURICIA G. DE VILLANUEVA, petitioner,vs.

PHILIPPINE NATIONAL BANK, defendant-appellant.

PAREDES, J.:

A case certified by the Court of Appeals on the ground that theissues involved are purely of law.

For the administration of the estate of her deceased husband,Pascual Villanueva, the widow Mauricia G. Villanueva, on December

19, 1949, petitioned the Court of First Instance of Agusan, for lettersof Administration (Sp. Proc. No. 67). The petition was set for hearingand Notice thereof was published on February 25, March 4, and 11,1950, in the Manila Daily Bulletin. At the hearing, other heirs whileagreeing to the placing of estate under administration, opposed theappointment the widow. The name of Atty. Teodulo R. Ricaforte,suggested and all the parties agreed. After the taking the requiredoath, Atty. Ricaforte entered upon the performance of his duties.

Under date of November 9, 1950 the Clerk of the Agusan CFI, issuedthe following Notice to Creditors:

Letters of administration having been issued in the aboveentitled case in favor of Teodulo R. Ricaforte for the settle ofthe intestate of Pascual Villanueva, deceased;


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Notice is hereby given to all persons having claims for moneyagainst the decedent, the said Pascual Villanueva, arising fromcontract, express or implied, whether the same be due, not dueor contingent, for funeral expenses and expenses of last

sickness of the deceased, and Judgment for money against him,requiring them to file their claims with the clerk of courtwithin six but not beyond twelve months after date of the firstpublication of this notice, serving copies of such claims uponadministrator, the said Teodulo R. Ricaforte.

The above notice contained the usual order for publication thereof(once a week for three consecutive weeks) which was effected, thru

the Morning Times of City, a newspaper of general circulation, onNov. 16, 23 and 30, 1950, which expired on November 16, 1951.

On July 20, 1953, the defendant-appellant Philippine National Bankfiled in the administration proceedings, Creditor's Claim of thefollowing tenor —

The Philippine National Bank, Creditor of Pascual Villanueva,deceased, respectfully presents its claim against the estate of

the said deceased for Approval as follows:

Original amount thru Agusan Agency on Dec. 20, 1939........................................................ P600.00

To int. at 10%: on P600.00 fr. 12-20-39 to 6-5-53...................................................................... 747.45

Total due as of June 5, 1953 (Daily int. of P0.1644 after June 5,

1953) .......................... P1,347.45

That the said obligation has been due demandable since Dec.20, 1940; that the same is true and just claim and that it is stillunpaid without any set-off.


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On October 12, 1954, the Philippine National Bank filed a Motion forAdmission of claim, stating —

1. That the Philippine National Bank filed its claim dated July

20, 1953;

2. That the last action taken on the claim was an ordered thisHonorable Court issued on March 20, 1954, transferring thehearing of the claim until the next calendar of the court,without objection of the administrator;

3. That the administrator has not answered the claim nordenied the same.1awphîl.nèt

WHEREFORE, it is respectfully prayed that an order be issuedadmitting and approving the claim and ordering theadministrator to pay the Bank the amount of the claim.

The administrator, on November 5, 1954, opposed the alleging thathe had no knowledge or information sufficient to form a belief as tothe truth of the allegations therein. As special defenses, he

interposed — That the same indebtedness, if it existed, has already beenpaid;

That the caused action for the recovery of the aforesaidamount of P1,847.45 is barred by the statute of limitations, formore than ten (10) Years have elapsed since the cause ofaction accrued up to present time;

That the said claim is barred forever on the ground that noticeto creditors having been published in the MORNING TIMES ofCebu City, a newspaper of general circulation in on November16, 23 and 30, 1950, ... the Philippine National Bank failed tofile its claim within the time limited in the notice, ....


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The appellant PNB, on November 14, 1958, more than four (4) Yearsafter the opposition of the claim presented by the administrator,filed a pleading captioned "Petition for an Extension of time withinwhich to File the Claim of Philippine National Bank", alleging, among

others, that Sec. 2, Rule 87 of the Rules, allows the filing of claimseven if the period stated in the notice to creditors elapsed, uponcause shown and on such terms as equitable; that its failure topresent the claiming with the period stated in the notice, was its lackof knowledge of administration proceedings, for while saidmaintains a branch office in Agusan, the employees did not come toknow of the proceedings, the notice has been published in theMorning Times, a newspaper very limited circulation.

On January 16, 1959, the CFI issued the following Order —

It appearing that the claim of the Philippine National Bankagainst the estate of the deceased Pascual Villanueva alreadybarred by the statute of limitations because the claim was dueand demandable since December 20, 1940, but filed on July 20,1953, after the expiration of ten years, considering that saidfiling was furthermore not present court within the periodfixed by Sec. 2, Rule 87 of the Rules of Court, and no reasonhaving been shown to justify the tension of time for its filing,the Court resolves to deny it as it hereby denies the petition foran extension of time for filing of the claim by the PhilippineNational Bank. The failure of the Bank to present on time theclaim was due its own fault and can hardly be consideredexcusable negligence.

Appellant Bank moved to reconsider the above Order, arguing thatthe statute of limitations had been suspended by the MoratoriumLaw, and that the courts can extend the period limited in the notice,under special circumstances, and on grounds of equity (Velasquez v.Teod 46 Phil. 757). The PNB listed five incidents, which consideredspecial circumstances to warrant the of the extension to present the


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claim, among which the lack of knowledge of the pendency of theadministration proceedings; the legitimacy of the loan secured thedeceased; that when it filed the claim, it did know that the periodstated in the notice had already expired.

In disposing the motion for reconsideration, the lower court, onMarch 3,1959, said —

The Court believes that the filing of money claim on July 20,1953 in the Office of the Clerk of Court did not suspendrunning of the period of prescription because said claim wasfiled out of time and therefore invalid for all legal purposes. A

careful revision of the record shows that the PhilippineNational Bank, contrary to the pretension of its counsel, hadknowledge of the present administration proceedings longbefore July 20, 1953, because the second payment of the claimdue to the deceased Pascual Villanueva from the PhilippineWar Damage Commission in the amount of P6,441.30, wasdeposited in the Agusan Agency of the Bank in June, 1951. Andin the inventory filed by the new administrator Francisco S.Conde, on February 27, 1957, the following item appears:

Money belonging to the said deceased which came intothe hands of the administrator on December 1, 1951,appearing in the Bank A-1114, Agusan Agency depositedby the late administrator Teodulo R. Ricaforte. — P6,897.52.

WHEREFORE, the motion for reconsideration is denied for lack

of merits.The order of January 16, 1959 was the subject of the appeal to theCourt of Appeals which, as stated at the threshold of this opinion,certified the same to this Court.


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The important issue presented is whether or not the in question isalready barred. Admittedly, the claim was filed outside of the periodprovided for in the Order of the lower court, within which to presentclaims against the estate. The period fixed in the notice lapsed on

November 16, 1951 and the claim was filed on July 20, 1953 orabout 1 year and 8 months late. This notwithstanding, appellantcontends that it did not know of such administration proceedings,not even its employees in the Branch Office in Butuan City, Agusan.It is to be noted that the petition for Letters of Administration andthe Notice to Creditors were duly published in the Manila DailyBulletin and in the Morning Times, respectively, which was a fullcompliance with the requirements of the Rules. Moreover, the

supposed lack of knowledge of the proceedings on the part ofappellant and its employees had been belied by uncontested andeloquent evidence, consisting of a deposit of an amount of money bythe administrator Of the estate in said Bank (Agusan Agency). Thedeposit was made on December 1, 1951, inspite of which theappellant Bank only filed its claim on July 20, 1953. It is quite truethat the Courts can extend the period within Which to presentclaims against the estate, even after the period limited has elapsed;

but such extension should be granted under special circumstances.The lower did not find any justifiable reason to give the extensionand for one thing, there was no period to extend, the same hadelapsed.

Having reached the above conclusions, We deem it necessary todetermine the question as to whether or not the Moratorium Lawhad suspended the prescriptive period for filing of the claim underconsideration.

WHEREFORE, the order subject of the appeal is hereby affirmed,with costs against appellant Philippine National Bank, in bothinstances.


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Case # 4: Belama vs. Polinar (G.R. No. L-24098 )

G.R. No. L-24098 November 18, 1967

BUENAVENTURA BELAMALA, petitioner-appellee,vs.

MARCELINO POLINAR, administrator, oppositor-appellant.

REYES, J.B.L., J.:

Appeal from judgment of the Court of First Instance of Bohol (Sp.

Proc. No. 369) allowing a money claim of appellee Belamala againstthe estate of the deceased Mauricio Polinar, for damages caused tothe claimant. Originally taken to the Court of Appeals, the case wascertified to this Court as involving only questions of law.

Issue in the case is whether the civil liability of an accused ofphysical injuries who dies before final judgment, is extinguished byhis demise, to the extent of barring any claim therefor against his

estate.There is no dispute as to the facts, which were stipulated, in thecourt of origin, to be as follows (Rec. of Appeal, pp. 41-43):

STIPULATED AGREEMENT OF FACTS

xxx xxx xxx

1. That the claimant Buenaventura Belamala is the sameoffended party in Criminal Case No. 1922 filed before theCOURT OF FIRST INSTANCE OF BOHOL, against the sameMauricio Polinar above mentioned and against other accused,for Frustrated Murder;


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2. That the administrator Marcelino Polinar is one of thelegitimate children of the above mentioned Mauricio Polinarnow deceased;

3. That on May 24, 1954, the complaint for Frustrated Murderwas filed in the Justice of the Peace of Clarin, Bohol against saidMauricio Polinar, et al, and when said case was remanded tothe Court of First Instance of Bohol, the Information on saidCriminal Case No. 1922 was filed on March 12, 1955;

4. That on May 28, 1966, the COURT OF FIRST INSTANCE OFBOHOL rendered a decision thereof, convicting the said

Mauricio Polinar of the crime of serious physical injuries andsentenced him to pay to the offended party BuenaventuraBelamala, now claimant herein, the amount of P990.00, plusthe amount of P35.80 as indemnity the amount of P1,000.00 asmoral damages;

5. That on June 18, 1956, the accused (the late MauricioPolinar) appealed to the Court of Appeals from the decision ofthe Court of First Instance of Bohol;

6. That on July 27, 1956, while the appeal of said MauricioPolinar was pending before the Court of Appeals, he died; andthat there was no Notice or Notification of his death has everbeen filed in the said Court of Appeals;

7. That the decision of the Court of Appeals in said CriminalCase No. 1922, has affirmed the decision of the Court of FirstInstance of Bohol, in toto, and said decision of the Court ofAppeals was promulgated on March 27, 1958; but saidMauricio Polinar has already died on July 27, 1956;

8. That the late Mauricio Polinar is survived by his wife,Balbina Bongato and his children, namely:


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1. Narcisa Polinar, Davao2. Geronimo Polinar, Pagadian3. Mariano Polinar, Clarin, Bohol4. Ireneo Polinar, Clarin, Bohol

5. Marcelino Polinar, Clarin, Bohol6. Mauro Polinar, Clarin, Bohol7. Demetrio Polinar, Clarin, Bohol

9. That the parties have reserved to present in Court evidenceon facts not agreed to herein by the parties.

It is to be observed that the reservation of additional evidence was

waived by the parties at the trial (see Decision of trial court, Rec.App. p. 54).

The Court a quo, overruling the contention of the Administrator-appellant that the death of the accused prior to final judgmentextinguished all criminal and civil liabilities resulting from theoffense, in view of Article 89, paragraph 1 of the Revised Penal Code,admitted the claim against the estate in the amount of P2,025.80with legal interest from the date claim was filed (30 July 1959) until

paid. No payment was ordered pending final determination of thesum total of claims admitted against the estate.

Not satisfied with the ruling, the Administrator has appealed,insisting on his theory in the Court below.

We see no merit in the plea that the civil liability has beenextinguished, in view of the provisions of the Civil Code of thePhilippines of 1950 (Rep. Act No. 386) that became operativeeighteen years after the Revised Penal Code. As pointed out by theCourt below, Article 33 of the Civil Code establishes a civil action fordamages on account of physical injuries, entirely separate anddistinct from the criminal action.


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Art. 33. In cases of defamation, fraud, and physical injuries, acivil action for damages, entirely separate and distinct from thecriminal action, may be brought by the injured party. Such civilaction shall proceed independently of the criminal prosecution,

and shall require only a preponderance of evidence.

Assuming that for lack of express reservation, Belamala's civil actionfor damages was to be considered instituted together with thecriminal action, still, since both proceedings were terminatedwithout final adjudication, the civil action of the offended partyunder Article 33 may yet be enforced separately. Such claim in noway contradicts Article 108, of the Penal Code, that imposes the

obligation to indemnify upon the deceased offender's heirs, becausethe latter acquired their decedents obligations only to the extent ofthe value of the inheritance (Civil Code, Art. 774). Hence, theobligation of the offender's heirs under Article 108 ultimatelybecomes an obligation of the offender's estate.

The appellant, however, is correct in the contention that the claimshould have been prosecuted by separate action against theadministrator, as permitted by sections 1 and 2 of Revised Rule 87,since the claim is patently one "to recover damages for an injury to

person or property" (Rule 87, sec. 1). Belamala's action can not beenforced by filing a claim against the estate under Rule 86, becausesection 5 of that rule explicitly limits the claims to those for funeralexpenses, expenses for last sickness, judgments for money and"claims against the decedent, arising from contract , express orimplied ;" and this last category (the other three being inapposite)includes only "all purely personal obligations other than those which

have their source in delict or tort " (Leung Ben vs. O'Brien, 38 Phil.182, 189-194) and Belamala's damages manifestly have a tortiousorigin. To this effect was our ruling in Aguas vs. Llemos, L-18107,Aug. 30, 1962.


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Furthermore, it does not appear that the award of the trial Courtwas based on evidence submitted to it; apparently it relied merelyon the findings in the criminal case, as embodied in decisions thatnever became final because the accused died during the pendency of

said case.

WHEREFORE, the decision under appeal is hereby reversed and setaside, but without prejudice to the action of appellee Belamalaagainst the Administrator of the Estate of Mauricio Polinar. No costs.So ordered.

Case # 5: Stronghold Insurance Co. Inc. vs. Republic-Asahi glass

Corp. (G.R. No. 147561)

G.R. No. 147561 June 22, 2006

STRONGHOLD INSURANCE COMPANY, INC., Petitioner,vs.

REPUBLIC-ASAHI GLASS CORPORATION, Respondent.

D E C I S I O N

PANGANIBAN, CJ:

Asurety company’s liability under the performance bond it issues issolidary. The death of the principal obligor does not, as a rule,extinguish the obligation and the solidary nature of that liability.

The Case

Before us is a Petition for Review1 under Rule 45 of the Rules ofCourt, seeking to reverse the March 13, 2001 Decision2 of the Courtof Appeals (CA) in CA-GR CV No. 41630. The assailed Decisiondisposed as follows:

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"WHEREFORE, the Order dated January 28, 1993 issued by thelower court is REVERSED and SET ASIDE. Let the records of theinstant case be REMANDED to the lower court for the reception ofevidence of all parties."3

The Facts

The facts of the case are narrated by the CA in this wise:

"On May 24, 1989, [respondent] Republic-Asahi Glass Corporation(Republic-Asahi) entered into a contract with x x x Jose D. Santos, Jr.,the proprietor of JDS Construction (JDS), for the construction ofroadways and a drainage system in Republic-Asahi’s compound inBarrio Pinagbuhatan, Pasig City, where [respondent] was to pay x xx JDS five million three hundred thousand pesos (P5,300,000.00)inclusive of value added tax for said construction, which wassupposed to be completed within a period of two hundred forty(240) days beginning May 8, 1989. In order ‘to guarantee the faithful

and satisfactory performance of its undertakings’ x x x JDS, shallpost a performance bond of seven hundred ninety five thousandpesos (P795,000.00). x x x JDS executed, jointly and severally with

[petitioner] Stronghold Insurance Co., Inc. (SICI) Performance BondNo. SICI-25849/g(13)9769.

"On May 23, 1989, [respondent] paid to x x x JDS seven hundredninety five thousand pesos (P795,000.00) by way of downpayment.

"Two progress billings dated August 14, 1989 and September 15,1989, for the total amount of two hundred seventy four thousand sixhundred twenty one pesos and one centavo (P274,621.01) weresubmitted by x x x JDS to [respondent], which the latter paid.According to [respondent], these two progress billings accounted foronly 7.301% of the work supposed to be undertaken by x x x JDSunder the terms of the contract.

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"According to the Sheriff’s Return dated June 14, 1991, submitted to

the lower court by Deputy Sheriff Rene R. Salvador, summons wereduly served on defendant-appellee SICI. However, x x x Jose D.Santos, Jr. died the previous year (1990), and x x x JDS Construction

was no longer at its address at 2nd Floor, Room 208-A, San BuenaBldg. Cor. Pioneer St., Pasig, Metro Manila, and its whereabouts wereunknown.

"On July 10, 1991, [petitioner] SICI filed its answer, alleging that the[respondent’s] money claims against [petitioner and JDS] have been

extinguished by the death of Jose D. Santos, Jr. Even if this were notthe case, [petitioner] SICI had been released from its liability under

the performance bond because there was no liquidation, with theactive participation and/or involvement, pursuant to proceduraldue process, of herein surety and contractor Jose D. Santos, Jr.,hence, there was no ascertainment of the corresponding liabilities ofSantos and SICI under the performance bond. At this point in time,said liquidation was impossible because of the death of Santos, whoas such can no longer participate in any liquidation. The unilateralliquidation on the party (sic) of [respondent] of the work

accomplishments did not bind SICI for being violative of proceduraldue process. The claim of [respondent] for the forfeiture of theperformance bond in the amount of P795,000.00 had no factual andlegal basis, as payment of said bond was conditioned on thepayment of damages which [respondent] may sustain in the event xx x JDS failed to complete the contracted works. [Respondent] canno longer prove its claim for damages in view of the death of Santos.SICI was not informed by [respondent] of the death of Santos. SICIwas not informed by [respondent] of the unilateral rescission of itscontract with JDS, thus SICI was deprived of its right to protect itsinterests as surety under the performance bond, and therefore itwas released from all liability. SICI was likewise denied due processwhen it was not notified of plaintiff-appellant’s process ofdetermining and fixing the amount to be spent in the completion of


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the unfinished project. The procedure contained in Article XV of thecontract is against public policy in that it denies SICI the right toprocedural due process. Finally, SICI alleged that [respondent]deviated from the terms and conditions of the contract without the

written consent of SICI, thus the latter was released from all liability.SICI also prayed for the award of P59,750.00 as attorney’s fees, andP5,000.00 as litigation expenses.

"On August 16, 1991, the lower court issued an order dismissing thecomplaint of [respondent] against x x x JDS and SICI, on the groundthat the claim against JDS did not survive the death of its soleproprietor, Jose D. Santos, Jr. The dispositive portion of the [O]rder

reads as follows:‘ACCORDINGLY, the complaint against the defendants Jose D. Santos,Jr., doing business under trade and style, ‘JDS Construction’ and

Stronghold Insurance Company, Inc. is ordered DISMISSED.

‘SO ORDERED.’

"On September 4, 1991, [respondent] filed a Motion for

Reconsideration seeking reconsideration of the lower court’s August16, 1991 order dismissing its complaint. [Petitioner] SICI field its‘Comment and/or Opposition to the Motion for Reconsideration.’ On

October 15, 1991, the lower court issued an Order, the dispositiveportion of which reads as follows:

‘WHEREFORE, premises considered, the Motion for Reconsiderationis hereby given due course. The Order dated 16 August 1991 for thedismissal of the case against Stronghold Insurance Company, Inc., isreconsidered and hereby reinstated (sic). However, the case againstdefendant Jose D. Santos, Jr. (deceased) remains undisturbed.

‘Motion for Preliminary hearing and Manifestation with Motion filed

by [Stronghold] Insurance Company Inc., are set for hearing onNovember 7, 1991 at 2:00 o’clock in the afternoon.


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‘SO ORDERED.’

"On June 4, 1992, [petitioner] SICI filed its ‘Memorandum for

Bondsman/Defendant SICI (Re: Effect of Death of defendant Jose D.

Santos, Jr.)’ reiterating its prayer for the dismissal of [respondent’s]complaint.

"On January 28, 1993, the lower court issued the assailed Orderreconsidering its Order dated October 15, 1991, and ordered thecase, insofar as SICI is concerned, dismissed. [Respondent] filed itsmotion for reconsideration which was opposed by [petitioner] SICI.On April 16, 1993, the lower court denied [respondent’s] motion for

reconsideration. x x x."4

Ruling of the Court of Appeals

The CA ruled that SICI’s obligation under the surety agreement was

not extinguished by the death of Jose D. Santos, Jr. Consequently,Republic-Asahi could still go after SICI for the bond.

The appellate court also found that the lower court had erred in

pronouncing that the performance of the Contract in question hadbecome impossible by respondent’s act of rescission. The Contractwas rescinded because of the dissatisfaction of respondent with theslow pace of work and pursuant to Article XIII of its Contract withJDS.

The CA ruled that "[p]erformance of the [C]ontract was impossible,not because of [respondent’s] fault, but because of the fault of JDS

Construction and Jose D. Santos, Jr. for failure on their part to make

satisfactory progress on the project, which amounted to non-performance of the same. x x x [P]ursuant to the [S]urety [C]ontract,SICI is liable for the non-performance of said [C]ontract on the partof JDS Construction."5

Hence, this Petition.6

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Issue

Petitioner states the issue for the Court’s consideration in the

following manner:

"Death is a defense of Santos’ heirs which Stronghold could also

adopt as its defense against obligee’s claim."7

More precisely, the issue is whether petitioner’s liability under the

performance bond was automatically extinguished by the death ofSantos, the principal.

The Court’s Ruling

The Petition has no merit.

Sole Issue:

Effect of Death on the Surety’s Liability

Petitioner contends that the death of Santos, the bond principal,extinguished his liability under the surety bond. Consequently, it

says, it is automatically released from any liability under the bond.

As a general rule, the death of either the creditor or the debtor doesnot extinguish the obligation.8 Obligations are transmissible to theheirs, except when the transmission is prevented by the law, thestipulations of the parties, or the nature of the obligation.9 Onlyobligations that are personal10 or are identified with the personsthemselves are extinguished by death.11

Section 5 of Rule 8612 of the Rules of Court expressly allows theprosecution of money claims arising from a contract against theestate of a deceased debtor. Evidently, those claims are not actuallyextinguished.13 What is extinguished is only the obligee’s action orsuit filed before the court, which is not then acting as a probatecourt .14

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In the present case, whatever monetary liabilities or obligationsSantos had under his contracts with respondent were notintransmissible by their nature, by stipulation, or by provision oflaw. Hence, his death did not result in the extinguishment of those

obligations or liabilities, which merely passed on to his estate.15 Death is not a defense that he or his estate can set up to wipe out theobligations under the performance bond. Consequently, petitioneras surety cannot use his death to escape its monetary obligationunder its performance bond.

The liability of petitioner is contractual in nature, because itexecuted a performance bond worded as follows:

"KNOW ALL MEN BY THESE PRESENTS:

"That we, JDS CONSTRUCTION of 208-A San Buena Building,contractor, of Shaw Blvd., Pasig, MM Philippines, as principal and theSTRONGHOLD INSURANCE COMPANY, INC. a corporation dulyorganized and existing under and by virtue of the laws of thePhilippines with head office at Makati, as Surety, are held and firmlybound unto the REPUBLIC ASAHI GLASS CORPORATION and to any

individual, firm, partnership, corporation or association supplyingthe principal with labor or materials in the penal sum of SEVENHUNDRED NINETY FIVE THOUSAND (P795,000.00), PhilippineCurrency, for the payment of which sum, well and truly to be made,we bind ourselves, our heirs, executors, administrators, successorsand assigns, jointly and severally, firmly by these presents.

"The CONDITIONS OF THIS OBLIGATION are as follows;

"WHEREAS the above bounden principal on the ___ day of __________,19__ entered into a contract with the REPUBLIC ASAHI GLASSCORPORATION represented by _________________, to fully andfaithfully. Comply with the site preparation works road and

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drainage system of Philippine Float Plant at Pinagbuhatan, Pasig,Metro Manila.

"WHEREAS, the liability of the Surety Company under this bond

shall in no case exceed the sum of PESOS SEVEN HUNDRED NINETYFIVE THOUSAND (P795,000.00) Philippine Currency, inclusive ofinterest, attorney’s fee, and other damages, and shall not be liable

for any advances of the obligee to the principal.

"WHEREAS, said contract requires the said principal to give a goodand sufficient bond in the above-stated sum to secure the full andfaithfull performance on its part of said contract, and the satisfaction

of obligations for materials used and labor employed upon the work;"NOW THEREFORE, if the principal shall perform well and truly andfulfill all the undertakings, covenants, terms, conditions, andagreements of said contract during the original term of said contractand any extension thereof that may be granted by the obligee, withnotice to the surety and during the life of any guaranty requiredunder the contract, and shall also perform well and truly and fulfillall the undertakings, covenants, terms, conditions, and agreements

of any and all duly authorized modifications of said contract thatmay hereinafter be made, without notice to the surety except whensuch modifications increase the contract price; and such principalcontractor or his or its sub-contractors shall promptly makepayment to any individual, firm, partnership, corporation orassociation supplying the principal of its sub-contractors with laborand materials in the prosecution of the work provided for in the saidcontract, then, this obligation shall be null and void; otherwise it

shall remain in full force and effect. Any extension of the period oftime which may be granted by the obligee to the contractor shall beconsidered as given, and any modifications of said contract shall beconsidered as authorized, with the express consent of the Surety.


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"The right of any individual, firm, partnership, corporation orassociation supplying the contractor with labor or materials for theprosecution of the work hereinbefore stated, to institute action onthe penal bond, pursuant to the provision of Act No. 3688, is hereby

acknowledge and confirmed."16

As a surety, petitioner is solidarily liable with Santos in accordancewith the Civil Code, which provides as follows:

"Art. 2047. By guaranty a person, called the guarantor, binds himselfto the creditor to fulfill the obligation of the principal debtor in casethe latter should fail to do so.

"If a person binds himself solidarily with the principal debtor, theprovisions of Section 4,17 Chapter 3, Title I of this Book shall beobserved. In such case the contract is called a suretyship."

x x x x x x x x x

"Art. 1216. The creditor may proceed against any one of the solidarydebtors or some or all of them simultaneously. The demand made

against one of them shall not be an obstacle to those which maysubsequently be directed against the others, so long as the debt hasnot been fully collected."

Elucidating on these provisions, the Court in Garcia v. Court ofAppeals18 stated thus:

"x x x. The surety’s obligation is not an original and direct one forthe performance of his own act, but merely accessory or collateral to

the obligation contracted by the principal. Nevertheless, althoughthe contract of a surety is in essence secondary only to a validprincipal obligation, his liability to the creditor or promisee of theprincipal is said to be direct, primary and absolute; in other words,he is directly and equally bound with the principal. x x x."19

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Under the law and jurisprudence, respondent may sue, separately ortogether, the principal debtor and the petitioner herein, in view ofthe solidary nature of their liability. The death of the principaldebtor will not work to convert, decrease or nullify the substantive

right of the solidary creditor. Evidently, despite the death of theprincipal debtor, respondent may still sue petitioner alone, inaccordance with the solidary nature of the latter’s liability under the

performance bond.

WHEREFORE, the Petition is DENIED and the Decision of the Courtof Appeals AFFIRMED. Costs against petitioner.

SO ORDERED.

Case # 6: Gabriel vs. Bilon (G.R. No. 146989)

G.R. No. 146989 February 7, 2007

MELENCIO GABRIEL, represented by surviving spouse,FLORDELIZA V. GABRIEL, Petitioner,vs.

NELSON BILON, ANGEL BRAZIL AND ERNESTO PAGAYGAY, Respondents.

D E C I S I O N

AZCUNA, J.:

This is a petition for review on certiorari1 assailing the Decision andResolution of the Court of Appeals, respectively dated August 4,2000 and February 7, 2001, in CA-G.R. SP No. 52001 entitled"Nelson Bilon, et al. v. National Labor Relations Commission, et al."

The challenged decision reversed and set aside the decision2 of theNational Labor Relations Commission (NLRC) dismissingrespondents’ complaint for illegal dismissal and illegal deductions,

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and reinstating the decision of the Labor Arbiter finding petitionerguilty of illegal dismissal but not of illegal deductions subject to themodification that respondents be immediately reinstated to theirformer positions without loss of seniority rights and privileges

instead of being paid separation pay.

Petitioner, represented by his surviving spouse, Flordeliza V.Gabriel, was the owner-operator of a public transport business,"Gabriel Jeepney," with a fleet of 54 jeepneys plying the Baclaran-Divisoria-Tondo route. Petitioner had a pool of drivers, whichincluded respondents, operating under a "boundary system" of P400per day.

The facts3 are as follows:

On November 15, 1995, respondents filed their separate complaintsfor illegal dismissal, illegal deductions, and separation pay againstpetitioner with the National Labor Relations Commission (NLRC).These were consolidated and docketed as NLRC-NCR Case No. 00-11-07420-95.4

On December 15, 1995, the complaint was amended, impleading asparty respondent the Bacoor Transport Service Cooperative, Inc., asboth parties are members of the cooperative.

Respondents alleged the following:

1) That they were regular drivers of Gabriel Jeepney, drivingtheir respective units bearing Plate Nos. PHW 553, NXU 155,and NWW 557, under a boundary system of P400 per day,

plying Baclaran to Divisoria via Tondo, and vice versa, sinceDecember 1990, November 1984 and November 1991,respectively, up to April 30, 1995,5 driving five days a week,with average daily earnings of P400;

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2) That they were required/forced to pay additional P55.00per day for the following: a) P20.00 police protection; b)P20.00 washing; c) P10.00 deposit; and [d)] P5.00 garage fees;

3) That there is no law providing the operator to require thedrivers to pay police protection, deposit, washing, and garagefees.

4) That on April 30, 1995, petitioner told them not to driveanymore, and when they went to the garage to report for workthe next day, they were not given a unit to drive; and

5) That the boundary drivers of passenger jeepneys areconsidered regular employees of the jeepney operators. Beingsuch, they are entitled to security of tenure. Petitioner,however, dismissed them without factual and legal basis, andwithout due process.

On his part, petitioner contended that:

1) He does not remember if the respondents were ever under

his employ as drivers of his passenger jeepneys. Certain,however, is the fact that neither the respondents nor otherdrivers who worked for him were ever dismissed by him. As amatter of fact, some of his former drivers just stoppedreporting for work, either because they found some otheremployment or drove for other operators, and like therespondents, the next time he heard from them was when theystarted fabricating unfounded complaints against him;

2) He made sure that none of the jeepneys would stay idle evenfor a day so he could collect his earnings; hence, it had been hispractice to establish a pool of drivers. Had respondentsmanifested their desire to drive his units, it would have beenimmaterial whether they were his former drivers or not. As


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long as they obtained the necessary licenses and references,they would have been accommodated and placed on schedule;

3) While he was penalized or made to pay a certain amount in

connection with similar complaints by other drivers in aprevious case before this, it was not because his culpabilitywas established, but due to technicalities involving oversightand negligence on his part by not participating in any stage ofthe investigation thereof; and

4) Respondents’ claim that certain amounts, as enumerated inthe complaint, were deducted from their day’s earnings is

preposterous. Indeed, there were times when deductions weremade from the day’s earnings of some drivers, but such wereinstallment payments for the amount previously advanced tothem. Most drivers, when they got involved in accidents orviolations of traffic regulations, managed to settle them, and inthe process they had to spend some money, but most of thetime they did not have the needed amount so they securedcash advances from him, with the understanding that the sameshould be paid back by installments through deductions fromtheir daily earnings or boundary.

On the other hand, Bacoor Transport Service Cooperative, Inc.(BTSCI) declared that it should not be made a party to the casebecause: 1) [I]t has nothing to do with the employment of itsmember-drivers. The matter is between the member-operator andtheir respective member-drivers. The member-drivers’ tenure ofemployment, compensation, work conditions, and other aspects of

employment are matters of arrangement between them and themember-operators concerned, and the BTSCI has nothing to do withit, as can be inferred from the Management Agreement betweenBTSCI and the member-operators; and 2) [T]he amount allegedlydeducted from respondents and the purpose for which they were


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applied were matters that the cooperative was not aware of, andmuch less imposed on them.

On September 17, 1996, respondents filed a motion to re-raffle the

case for the reason that the Labor Arbiter (Hon. Roberto I. Santos)failed "to render his decision within thirty (30) calendar days,without extension, after the submission of the case for decision."

On September 18, 1996, said Labor Arbiter inhibited himself fromfurther handling the case due to "personal reasons."

On November 8, 1996, Labor Arbiter Ricardo C. Nora, to whom thecase was re-raffled, ordered the parties to file their respectivememoranda within ten days, after which the case was deemedsubmitted for resolution.

On March 17, 1997, the Labor Arbiter (Hon. Ricardo C. Nora) handeddown his decision, the dispositive portion of which is worded asfollows:

WHEREFORE, premises considered, judgment is hereby rendered

declaring the illegality of [respondents’] dismissal and ordering[petitioner] Melencio Gabriel to pay the [respondents] the totalamount of ONE MILLION THIRTY FOUR THOUSAND PESOS[P1,034,000,] representing [respondents’] backwages andseparation pay as follows:

1. Nelson Bilon

Backwages P 284,800

Separation Pay 26,400 P 321,200

2. Angel Brazil

Backwages P 294,800


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Separation Pay 96,800 391,600

3. Ernesto Pagaygay

Backwages P 294,800Separation Pay 26,400 321,200

P 1,034,000

[Petitioner] Melencio Gabriel is likewise ordered to pay attorney’s

fees equivalent to five percent (5%) of the judgment award or theamount of P51,700 within ten (10) days from receipt of this

Decision.All other issues are dismissed for lack of merit.

SO ORDERED.6

Incidentally, on April 4, 1997, petitioner passed away. On April 18,1997, a copy of the above decision was delivered personally topetitioner’s house. According to respondents, petitioner’s surviving

spouse, Flordeliza Gabriel, and their daughter, after reading thecontents of the decision and after they had spoken to their counsel,refused to receive the same. Nevertheless, Bailiff Alfredo V.Estonactoc left a copy of the decision with petitioner’s wife and her

daughter but they both refused to sign and acknowledge receipt ofthe decision.7

The labor arbiter’s decision was subsequently served by registered

mail at petitioner’s residence and the same was received on May 28,1997.

On May 16, 1997, counsel for petitioner filed an entry of appearancewith motion to dismiss the case for the reason that petitioner passedaway last April 4, 1997.

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On June 5, 1997, petitioner appealed the labor arbiter’s decision to

the National Labor Relations Commission, First Division, contendingthat the labor arbiter erred:

1. In holding that [petitioner] Gabriel dismissed thecomplainants, Arb. Nora committed a serious error in thefindings of fact which, if not corrected, would cause grave orirreparable damage or injury to [petitioner] Gabriel;

2. In holding that ‘strained relations’ already exist between theparties, justifying an award of separation pay in lieu ofreinstatement, Arb. Nora not only committed a serious error in

the findings of fact, but he also abused his discretion;3. In computing the amount of backwages allegedly due[respondents] from 30 April 1995 to 15 March 1997, Arb. Noraabused his discretion, considering that the case had beensubmitted for decision as early as 1 March 1996 and that thesame should have been decided as early as 31 March 1996;

4. In using ‘P400.00’ and ‘22 days’ as factors in computing the

amount of backwages allegedly due [respondents], Arb. Noraabused his discretion and committed a serious error in thefindings of fact, considering that there was no factual orevidentiary basis therefor;

5. In using ‘33.5 months’ as factor in the computation of theamount of backwages allegedly due [respondents], Arb. Noracommitted a serious error in the findings of fact[,] becauseeven if it is assumed that backwages are due from 30 April1995 to 15 March 1997, the period between the two dates isonly 22½ months, and not 33½ months as stated in theappealed decision; and


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6. In not dismissing the case[,] despite notice of the death of[petitioner] Gabriel before final judgment, Arb. Nora abusedhis discretion and committed a serious error of law.8

On July 3, 1997, respondents filed a motion to dismiss petitioner’sappeal on the ground that the "surety bond is defective" and theappeal was "filed out of time," which move was opposed bypetitioner.

Subsequently, on April 28, 1998, the NLRC promulgated its firstdecision, the dispositive portion of which reads:

WHEREFORE, premises considered, the appealed decision is herebyreversed and set aside. The above-entitled case is hereby dismissedfor lack of employer-employee relationship.

SO ORDERED.9

Respondents filed a motion for reconsideration. They claimed thatthe decision did not discuss the issue of the timeliness of the appeal.The lack of employer-employee relationship was mentioned in the

dispositive portion, which issue was not raised before the laborarbiter or discussed in the body of the questioned decision. In viewof the issues raised by respondents in their motion, the NLRCrendered its second decision on October 29, 1998. The pertinentportions are hereby quoted thus:

… In the case at bar, [petitioner] Melencio Gabriel was notrepresented by counsel during the pendency of the case. A decisionwas rendered by the Labor Arbiter a quo on March 17, 1997 while

Mr. Gabriel passed away on April 4, 1997 without having received acopy thereof during his lifetime. The decision was only served onApril 18, 1997 when he was no longer around to receive the same.His surviving spouse and daughter cannot automatically substitutethemselves as party respondents. Thus, when the bailiff tendered acopy of the decision to them, they were not in a position to receive

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them. The requirement of leaving a copy at the party’s residence is

not applicable in the instant case because this presupposes that theparty is still living and is just not available to receive the decision.

The preceding considered, the decision of the labor arbiter has notbecome final because there was no proper service of copy thereof to[petitioner] ….

Undoubtedly, this case is for recovery of money which does notsurvive, and considering that the decision has not become final, thecase should have been dismissed and the appeal no longerentertained….

WHEREFORE, in view of the foregoing, the Decision of April 28,1998 is set aside and vacated. Furthermore, the instant case isdismissed and complainants are directed to pursue their claimagainst the proceedings for the settlement of the estate of thedeceased Melencio Gabriel.

SO ORDERED.10

Aggrieved by the decision of the NLRC, respondents elevated thecase to the Court of Appeals (CA) by way of a petition for certiorari.On August 4, 2000, the CA reversed the decisions of the NLRC:

…

Article 223 of the Labor Code categorically mandates that "an appealby the employer may be perfected only upon the posting of a cashbond or surety bond x x x." It is beyond peradventure then that the

non-compliance with the above conditio sine qua non, plus the factthat the appeal was filed beyond the reglementary period, shouldhave been enough reasons to dismiss the appeal.

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In any event, even conceding ex gratia that such procedu

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