1. Fua Cam Lu vs. Yap, 74 Phil 287

G.R. No. L-48797 July 30, 1943

FUA CAM LU, plaintiff-appellee, vs. YAP FAUCO and YAP SINGCO, defendants-appellants.

Vicente J. Francisco for petitioner. M.H. de Joya for respondents.

The plaintiff-appellee, Fua Cam Lu, obtained in civil case No. 42125 of the Court of First Instance of Manila a judgment sentencing the defendants-appellants, Yap Fauco and Yap Singco, to pay P1,538.04 with legal interest and costs. By virtue of a writ of execution, a certain parcel of land belonging to the appellants, assessed at P3,550 and situated in Donsol, Sorsogon was levied upon the provincial sheriff of Sorsogon who, on November 15, 1933, made a notice, duly posted in three conspicuous places in the municipalities of Donsol and Sorsogon and published in the Mamera Press, that said land would be sold at public auction on December 12, 1933. On December 16, 1933, the appellants executed a mortgage in favor of the appellee, wherein it was stipulated that their obligation under the judgment in civil case No. 41225 was reduced to P1,200 which was made payable in four installments of P300 during the period commencing on February 8, 1934, and ending on August 8, 1935l that to secure the payment of the said P1,200, a camarin belonging to the appellants and built on the above-mentioned land, was mortgaged to the appellee; that in case the appellants defaulted in the payment of any of the installments, they would pay ten per cent of the unpaid balance as attorney's fees. plus the costs of the action to be brought by the appellee by reason of such default, and the further amount of P338, representing the discount conceded to the appellants. As a result of the agreement thus reached by the parties, the sale of the land advertised by the provincial sheriff did not take place. However, pursuant to an alias writ of execution issued by the Court of First instance of manila in civil case No. 42125 on March 31, 1934, the provincial sheriff, without publishing a new notice, sold said land at a public auction held on May 28, 1934, to the appellee for P1,923.32. On June 13, 1935, the provincial sheriff executed a final deed in favor of the appellee. On August 29, 1939, the appellee instituted the present action in the Court of First Instance of Sorsogon against the appellants in view of their refusal to recognize appellee's title and to vacate the land. The appellants relied on the legal defenses that their obligation under the judgment in civil case No. 42125 was novated by the mortgage executed by them in favor of the appellee and that the sheriffs sale was void for lack of necessary publication. These contentions were overruled by the lower court which rendered judgment declaring the appellee to be the owner of the land and ordering the appellants to deliver the same to him, without special pronouncement as to costs. The appellants seek the reversal of this judgment.

We concur in the theory that appellants liability under the judgment in civil case No. 42125 had been extinguished by the settlement evidenced by the mortgage executed by them in favor of the appellee on December 16, 1933. Although said mortgage did not expressly cancel the old obligation, this was impliedly novated by reason of incompatibly resulting from the fact that, whereas the judgment was for P1,538.04 payable at one time, did not provide for attorney's fees, and was not secured, the new obligation is or P1,200 payable in installments, stipulated for attorney's fees, and is secured by a mortgage. The appellee, however, argues that the later agreement merely extended the time of payment and did not take away his concurrent right to have the judgment executed. This court not have been the purpose for executive the mortgage, because it was therein recited that the appellants promised to pay P1,200 to the appellee as a settlement of the judgment in civil case No. 42125 (en forma de transaccion de la decision . . . en el asunto civil No. 42125). Said judgment cannot be said to have been settled, unless it was extinguished.

Moreover, the sheriff's sale in favor of the appellee is void because no notice thereof was published other than that which appeared in the Mamera Press regarding the sale to be held on December 12, 1933. Lack of new publication is shown by appellee's own evidence and the issue, though not raised in the pleadings, was thereby tried by implied consent of the parties, emphasized by the appellants in the memorandum filed by them in the lower court and squarely threshed out in this Court by both the appellants and the appellee. The latter had, besides, admitted that there was no new publication, and so much so that in his brief he merely resorted to the argument that "section 460 of Act 190 authorized the sheriff to adjourn any sale upon execution to any date agreed upon in writing by the parties . . . and does not require the sheriff to publish anew the public sale which was adjourned." The appellee has correctly stated the law but has failed to show that it supports his side, for it is not pretended that there was any written agreement between the parties to adjourn the sale advertised for December 12, 1933, to May 28, 1934. Neither may it be pretended that the sale in favor of the appellee was by virtue of a mere adjournment, it appearing that it was made pursuant to an alias writ of execution. Appellee's admission has thus destroyed the legal presumption that official duty was regularly performed.

The appealed judgment is, therefore, reversed and the defendants-appellants, who are hereby declared to be the owners of the land in question are absolved from the complaint, with costs against the appellee. So ordered.

Yulo, C.J., Ozaeta and Bocobo, JJ., concur.

2. Millar vs. CA, 38 SCRA 642

G.R. No. L-29981 April 30, 1971

EUSEBIO S. MILLAR, petitioner, vs. THE HON. COURT OF APPEALS and ANTONIO P. GABRIEL, respondents.

Fernandez Law Office and Millar and Esguerra for petitioner.

Francisco de la Fuente for respondents.

CASTRO, J.:

On February 11, 1956, Eusebio S. Millar (hereinafter referred to as the petitioner) obtained a favorable judgment from the Court of First Instance of Manila, in civil case 27116, condemning Antonio P. Gabriel (hereinafter referred to as the respondent) to pay him the sum of P1,746.98 with interest at 12% per annum from the date of the filing of the complaint, the sum of P400 as attorney's fees, and the costs of suit. From the said judgment, the respondent appealed to the Court of Appeals which, however, dismissed the appeal on January 11, 1957.

Subsequently, on February 15, 1957, after remand by the Court of Appeals of the case, the petitioner moved ex parte in the court of origin for the issuance of the corresponding writ of execution to enforce the judgment. Acting upon the motion, the lower court issued the writ of execution applied for, on the basis of which the sheriff of Manila seized the respondent's Willy's Ford jeep (with motor no. B-192297 and plate no. 7225, Manila, 1956).

The respondent, however, pleaded with the petitioner to release the jeep under an arrangement whereby the respondent, to secure the payment of the judgement debt, agreed to mortgage the vehicle in favor of the petitioner. The petitioner agreed to the arrangement; thus, the parties, on February 22, 1957, executed a chattel mortgage on the jeep, stipulating, inter alia, that

This mortgage is given as security for the payment to the said EUSEBIO S. MILLAR, mortgagee, of the judgment and other incidental expenses in Civil Case No. 27116 of the Court of First Instance of Manila against Antonio P. Gabriel, MORTGAGOR, in the amount of ONE THOUSAND SEVEN HUNDRED (P1,700.00) PESOS, Philippine currency, which MORTGAGOR agrees to pay as follows:

March 31, 1957 EIGHT HUNDRED FIFTY (P850) PESOS;

April 30, 1957 EIGHT HUNDRED FIFTY (P850.00) PESOS.

Upon failure of the respondent to pay the first installment due on March 31, 1957, the petitioner obtained an alias writ of execution. This writ which the sheriff served on the respondent only on May 30, 1957 after the lapse of the entire period stipulated in the chattel mortgage for the respondent to comply with his obligation was returned unsatisfied.

So on July 17, 1957 and on various dates thereafter, the lower court, at the instance of the petitioner, issued several alias writs, which writs the sheriff also returned unsatisfied. On September 20, 1961, the petitioner obtained a fifth alias writ of execution. Pursuant to this last writ, the sheriff levied on certain personal properties belonging to the respondent, and then scheduled them for execution sale.

However, on November 10, 1961, the respondent filed an urgent motion for the suspension of the execution sale on the ground of payment of the judgment obligation. The lower court, on November 11, 1961, ordered the suspension of the execution sole to afford the respondent the opportunity to prove his allegation of payment of the judgment debt, and set the matter for hearing on November 25, 1961. After hearing, the lower court, on January 25, 1962, issued an order the dispositive portion of which reads:

IN VIEW WHEREOF, execution reiterated for P1,700.00 plus costs of execution.

The lower court ruled that novation had taken place, and that the parties had executed the chattel mortgage only "to secure or get better security for the judgment.

The respondent duly appealed the aforesaid order to the Court of Appeals, which set aside the order of execution in a decision rendered on October 17, 1968, holding that the subsequent agreement of the parties impliedly novated the judgment obligation in civil case 27116.

The appellate court stated that the following circumstances sufficiently demonstrate the incompatibility between the judgment debt and the obligation embodied in the deed of chattel mortgage, warranting a conclusion of implied novation:

1. Whereas the judgment orders the respondent to pay the petitioner the sum of P1,746.98 with interest at 12% per annum from the filing of the complaint, plus the amount of P400 and the costs of suit, the deed of chattel mortgage limits the principal obligation of the respondent to P1,700;

2. Whereas the judgment mentions no specific mode of payment of the amount due to the petitioner, the deed of chattel mortgage stipulates payment of the sum of P1,700 in two equal installments;

3. Whereas the judgment makes no mention of damages, the deed of chattel mortgage obligates the respondent to pay liquidated damages in the amount of P300 in case of default on his part; and

4. Whereas the judgment debt was unsecured, the chattel mortgage, which may be foreclosed extrajudicially in case of default, secured the obligation.

On November 26, 1968, the petitioner moved for reconsideration of the appellate court's decision, which motion the Court of Appeals denied in its resolution of December 7, 1968. Hence, the present petition for certiorari to review the decision of the Court of Appeals, seeking reversal of the appellate court's decision and affirmance of the order of the lower court.

Resolution of the controversy posed by the petition at bar hinges entirely on a determination of whether or not the subsequent agreement of the parties as embodied in the deed of chattel mortgage impliedly novated the judgment obligation in civil case 27116. The Court of Appeals, in arriving at the conclusion that implied novation has taken place, took into account the four circumstances heretofore already adverted to as indicative of the incompatibility between the judgment debt and the principal obligation under the deed of chattel mortgage.

1. Anent the first circumstance, the petitioner argues that this does not constitute a circumstance in implying novation of the judgment debt, stating that in the interim from the time of the rendition of the judgment in civil case 27116 to the time of the execution of the deed of chattel mortgage the respondent made partial payments, necessarily resulting in the lesser sum stated in the deed of chattel mortgage. He adds that on record appears the admission by both parties of the partial payments made before the execution of the deed of chattel mortgage. The erroneous conclusion arrived at by the Court of Appeals, the petitioner argues, creates the wrong impression that the execution of the deed of chattel mortgage provided the consideration or the reason for the reduced judgment indebtedness.

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 he 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 indictum 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.

At best, the deed of chattel mortgage simply specified exactly how much the respondent still owed the petitioner by virtue of the judgment in civil case 27116. The parties apparently in their desire to avoid any future confusion as to the amounts already paid and as to the sum still due, decoded to state with specificity in the deed of chattel mortgage only the balance of the judgment debt properly collectible from the respondent. All told, therefore, the first circumstance fails to satisfy the test of substantial and complete incompatibility between the judgment debt an the pecuniary liability of the respondent under the chattel mortgage agreement.

2. The petitioner also alleges that the third circumstance, considered by the Court of Appeals as indicative of incompatibility, is directly contrary to the admissions of the respondent and is without any factual basis. The appellate court pointed out that while the judgment made no mention of payment of damages, the deed of chattel mortgage stipulated the payment of liquidated damages in the amount of P300 in case of default on the part of the respondent.

However, the petitioner contends that the respondent himself in his brief filed with the Court of Appeals admitted his obligation, under the deed of chattel mortgage, to pay the amount of P300 by way of attorney's fees and not as liquidated damages. Similarly, the judgment makes mention of the payment of the sum of P400 as attorney's fees and omits any reference to liquidated damages.

The discrepancy between the amount of P400 and tile sum of P300 fixed as attorney's fees in the judgment and the deed of chattel mortgage, respectively, is explained by the petitioner, thus: the partial payments made by the respondent before the execution of the chattel mortgage agreement were applied in satisfaction of part of the judgment debt and of part of the attorney's fee fixed in the judgment, thereby reducing both amounts.

At all events, in the absence of clear and convincing proof showing that the parties, in stipulating the payment of P300 as attorney's fees in the deed of chattel mortgage, intended the same as an obligation for the payment of liquidated damages in case of default on the part of the respondent, we find it difficult to agree with the conclusion reached by the Court of Appeals.

3. As to the second and fourth circumstances relied upon by the Court of Appeals in holding that the montage obligation superseded, through implied novation, the judgment debt, the petitioner points out that the appellate court considered said circumstances in a way not in accordance with law or accepted jurisprudence. The appellate court stated that while the judgment specified no mode for the payment of the judgment debt, the deed of chattel mortgage provided for the payment of the amount fixed therein in two equal installments.

On this point, we see no substantial incompatibility between the mortgage obligation and the judgment liability of the respondent sufficient to justify a conclusion of implied novation. The stipulation for the payment of the obligation under the terms of the deed of chattel mortgage serves only to provide an express and specific method for its extinguishment payment in two equal installments. The chattel mortgage simply gave the respondent a method and more time to enable him to fully satisfy the judgment indebtedness. 1 The chattel mortgage agreement in no manner introduced any substantial modification or alteration of the judgment. Instead of extinguishing the obligation of the respondent arising from the judgment, the deed of chattel mortgage expressly ratified and confirmed the existence of the same, amplifying only the mode and period for compliance by the respondent.

The Court of Appeals also considered the terms of the deed of chattel mortgage incompatible with the judgment because the chattel mortgage secured the obligation under the deed, whereas the obligation under the judgment was unsecured. The petitioner argues that the deed of chattel agreement clearly shows that the parties agreed upon the chattel mortgage solely to secure, not the payment of the reduced amount as fixed in the aforesaid deed, but the payment of the judgment obligation and other incidental expenses in civil case 27116.

The unmistakable terms of the deed of chattel mortgage reveal that the parties constituted the chattel mortgage purposely to secure the satisfaction of the then existing liability of the respondent arising from the judgment against him in civil case 27116. As a security for the payment of the judgment obligation, the chattel mortgage agreement effectuated no substantial alteration in the liability of the respondent.

The defense of implied novation requires clear and convincing proof of complete incompatibility between the two obligations. 2 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.

We do not see any substantial incompatibility between the two obligations as to warrant a finding of an implied novation. Nor do we find satisfactory proof showing that the parties, by explicit terms, intended the full discharge of the respondent's liability under the judgment by the obligation assumed under the terms of the deed of chattel mortgage so as to justify a finding of express novation.

ACCORDINGLY, the decision of the Court of Appeals of October 17, 1968 is set aside, and the order of the Court of First Instance of Manila of January 25, 1962 is affirmed, at respondent Antonio Gabriel's cost.

3. Sandico vs. Piguing, 42 SCRA 322

G.R. No. L-26115 November 29, 1971

CARLOS SANDICO, SR., and TEOPISTO P. TIMBOL, petitioners, vs. THE HONORABLE MINERVA R. INOCENCIO PIGUING, Judge of the Court of First Instance of Pampanga, and DESIDERIO PARAS, respondents.

Lorenzo G. Timbol for petitioners.

Abel de Ocera for respondent Desiderio Paras.

CASTRO, J.:

On April 16, 1960 the spouses Carlos Sandico and Enrica Timbol, and Teopisto P. Timbol, administrator of the estate of the late Sixta Paras, obtained a judgment in their favor against Desiderio Paras (hereinafter referred to as the respondent) in civil case 1554, an action for easement and damages in the Court of First Instance of Pampanga. On appeal, the Court of Appeals affirmed and modified the judgment, as follows:

IN VIEW WHEREOF, judgment affirmed and modified; as a consequence, defendant is condemned to recognize the easement which is held binding as to him; he is sentenced to pay plaintiffs the sums of P5,000.00 actual, and P500.00 exemplary damages, and P500.00 attorney's fees; plus costs in both instances. 1

Thereafter, upon remand to the court a quo of civil case 1554, the Sandicos and Timbol (hereinafter referred to as the petitioners) moved for the issuance of a writ of execution to enforce the appellate court's judgment which had acquired finality. Acting upon the motion, the court a quo issued a writ of execution on July 22, 1964. This writ the provincial sheriff served upon the respondent on August 22, 1964.

Meanwhile the petitioners and the respondent reached a settlement, finally agreeing to the reduction of the money judgment from P6,000 to P4,000. Thus, the respondent, on August 5, 1964, paid the petitioners the sum of P3,000; he made another payment in the amount of P1,000 as evidenced by a receipt issued by the petitioners' counsel. This receipt is hereunder reproduced in full:

P1,000.00

RECEIVED from Mr. Desiderio Paras the sum of ONE THOUSAND PESOS (P1,000.00), Philippine Currency, in full satisfaction of the money judgment rendered against him in

Civil Case No. 1554 of the Court of First Instance of Pampanga, it being understood that the portion of the final judgment rendered in the said case ordering him to reconstruct the irrigation canal in question shall be complied with by him immediately.

City of Angeles, August 31, 1964.

(SGD.) DALMACIO P. TIMBOL Counsel for Plaintiffs in Civil Case No. 1554

I AGREE: (SGD.) DESIDERIO PARAS

Subsequently, the petitioners sent the respondent a letter dated November 5, 1964 demanding compliance by the latter with the portion of the judgment in civil case 1554 relative to the reconstruction and reopening of the irrigation canal.

On February 12, 1965 the provincial sheriff returned the writ of execution issued on July 22, 1964 unsatisfied.

Upon failure and refusal of the respondent to rebuild and reopen the irrigation canal, the petitioners, on March 3, 1965, filed with the court a quo, with Judge Minerva R. Inocencio Piguing (hereinafter referred to as the respondent judge) presiding, a motion to declare the said private respondent in contempt of court, pursuant to provisions of section 9, Rule 39 of the Rules of Court. Opposing the motion, the respondent alleged recognition by him of the existence of the easement and compliance with the appellate court's judgment, stating that he had dug a canal in its former place, measuring about one and-a-half feet deep, for the petitioners' use.

On September 8, 1965 the respondent judge issued an order denying the petitioners' motion to declare the respondents in contempt of court, ruling that.

... it appears from the dispositive part of the decision that the defendant was only ordered to recognize the easement which is held binding as to him and to pay the plaintiffs the sums P5,000.00 of actual, and P500.00 exemplary damages.

Apparently, it is clear from the dispositive part of the decision that there is nothing to show that the defendant was ordered to reconstruct the canal.

On September 16, 1965 the petitioners moved for issuance of an alias writ of execution to enforce the judgement of the Court of Appeals. This motion the respondent judge granted in an order dated September 25, 1965. On November 3, 1965. the respondent moved to set aside the said alias writ, alleging full satisfaction of the judgment per agreement of the parties when the petitioner received the sum of P4,000 in August, 1964 as evidenced by the receipt dated August 31, 1964.

The respondent judge then issued an order dated November 11, 1965 directing the provincial sheriff to suspend the execution of the alias writ until further orders. On February 3, 1966 the respondent judge issued an order calling, and directing the quashal of the alias writ of execution. The respondent judge stated in her order that the agreement of the parties "novated" the money judgment provided for in the decision of the Court of Appeals, ruling that the said decision.

... which is sought now to be executed by this Court, has already been fully satisfied as to the money judgment and nothing more is left to be executed from the aforesaid Decision as it does not allege (aside from money judgment) any other condition except for the defendants to recognize the easement therein.

With their subsequent motion for reconsideration denied by the respondent judge, the petitioners, on May 27, 1966, filed with this Court the present petition 2 for certiorari seeking to set aside (1) the order of the respondent judge dated September 8, 1965 denying their motion to declare the respondent in contempt of court in civil case 1554, and (2) the orders of the respondent judge dated February 3, 1966 and March 30, 1966 granting the respondent's motion to set aside the alias writ of execution issued in the same civil case, on the ground that the respondent judge acted in excess of jurisdiction or with grave abuse of discretion.

Here tendered for resolution are the following issues:

(1) Whether the respondent judge correctly constructed the judgment of the Court of Appeals as not requiring the respondent to reconstruct and reopen the irrigation canal, and consequently, whether the said respondent judge acted in excess of jurisdiction or with grave abuse of discretion in denying the petitioners' motion to declare the respondent in contempt of court for failing and refusing to comply with the appellate court's judgment; and

(2) Whether the payment by the respondent to the petioners of the amount of P4,000 extinguished the money judgment, and, consequently, whether the respondent judge acted in excess of jurisdiction or with grave abuse of discretion in ordering the recall and quashal of the alias writ of execution.

1. Anent the first issue, the petitioners argue that although the dispositive portion of the appellate court's judgment omitted any directive to the respondent to reconstruct and reopen the irrigation canal, the Court of Appeals' order requiring recognition of the easement on the part of the said respondent suffices to make him aware of his obligation under the judgment. The only way of recognizing the easement, the petitioners continue, consists in performing positive act the reconstruction and restoration of the irrigation canal to its former condition. Moreover, to understand the full intendment of the dispositive portion of the judgment directing the respondent "to recognize the easement" necessitates reference to a statement in the decision of the Court of Appeals that reads:

... the result of this must be to justify the conclusion prayed for by the plaintiffs that the easement should be held to be existing and binding upon defendant and he should be held to have acted without authority in closing the canal which should be ordered reopened.

On the other hand, the respondent alleges that there is no ambiguity in the phraseology of the portion of the Court of Appeals' judgment condemning to recognize the easement. Said decision requires him only to "recognize" the easement and in compliance therewith, he gives the petitioners permission to reconstruct and reopen the irrigation canal themselves. Neither the decision a quo nor that of the appellate court orders him to reconstruct and reopen the irrigation canal.

The agreement reached by the petitioners and the respondent in August, 1964 relative to the judgment of the appellate court which had acquired finality and the interpretation by the parties themselves of the said judgment, specifically its dispositive portion, as embodied in the receipt dated August 31, 1964, constitute the considerations of prime importance in the resolution of the first question. No doubt exists that the parties entered into the agreement, fully aware of the judgment of the appellate court ordering the respondent to comply with two obligations, to wit, payment of a sum of money and recognition of the easement. The receipt evidencing the agreement, aside from providing for the reduction of the money

judgment, provides for the reconstruction of the irrigation canal. Such constitutes the interpretation accorded by the parties to that part of the dispositive portion of the appellate court's judgment condemning the respondent to recognize the easement. This stipulation one wherein the respondent clearly recognizes his obligation "to reconstruct the irrigation canal" embodied in precise and clear terms in the receipt binds the said respondent, a signatory to the said receipt, and requires from him full compliance. We thus fail to perceive any reason to sustain the contention of the respondent that he has no obligation at all to reconstruct and reopen the irrigation canal, a position utterly inconsistent with his agreement with the petitioners as embodied in the receipt dated August 31, 1964.

The record, however, shows that the respondent exerted efforts to reconstruct the portion of the irrigation canal running through his land by digging a canal about one meter wide and about one-and-a-half feet deep. This partial reconstruction of the irrigation canal the petitioners admit. Still, the petitioners demand the reconstruction of the irrigation canal to its former condition measuring four meters wide, five feet deep, and one-hundred and twenty-eight meters long contending that the rebuilt canal serves no useful purpose because the water passing through it overflows, which overflow ultimately causes the destruction of the canal itself. Nonetheless, we believe that need to give full force and effect to the existence of the easement demands that the respondent reconstruct the irrigation canal to its condition before he closed and destroyed the same. After all, the respondent himself in his answer dated June 16, 1959 filed with the court a quo admitted the original dimensions of the irrigation canal as four meters wide and one-hundred and twenty-eight meters long. The respondent's attempt, to rebuild the irrigation canal, partially and not in conformity with the dimensions of the original one, does not constitute satisfactory and substantial compliance with his obligation to recognize the easement per the appellate court's judgment and to reconstruct the irrigation canal pursuant to his agreement with the petitioners in August, 1964.

Due to the respondent's failure and refusal to reconstruct and reopen the irrigation canal, the petitioners sought to declare him in contempt of court, under the provisions of section 9 of Rule 39 of the Rules of Court. The respondent judge, however, believing that the appellate court's judgement required the respondent merely to recognize the equipment without doing any positive act of reconstruction and reopening of the irrigation canal, dismissed the petition motion to declare the respondent in contempt of court. In doing so, the petitioners allege, the respondent judge acted in excess of jurisdiction or with grave abuse of discretion. The petitioners thus ask us now to annul the order of the respondent judge denying their motion to declared the respondent in contempt of court or, by way of native, to declare the respondent in contempt of court and to punish him accordingly.

The petitioners predicate their stand mainly upon the provisions of section 9 of Rule 39 of the Rules of Court. Said section reads:

Sec. 9. Writ of execution of special judgment. When judgment requires the performance of any other act than the payment of money, or the sale or delivery of real or personal property, a certified copy of the judgment shall be attached the writ of execution and shall be served by the officer upon the party against whom the same is rendered, or upon any of person required thereby, or by law, to obey the same, and party or person may be punished forcontempt if he disobeys such judgment.

Section 9 applies to specific acts other than those cover by section 10 of the same rule. Section 10 pertinently provides:

See. 10. Judgment for an acts; vesting title. If a judgment directs a party to execute a conveyance of land, or to deliver deeds or other documents, or to perform any other specific act, and the party fails to comply within the time specified, the court may direct the

act to be done at the cost of disobedient party by some other person appointed by the court and the act when so done shall have like effect as if done by the party. ...

Section 9 refers to a judgment directing the performance of a specific act which the said judgment requires the party or person to personally do because of his personal qualifications and circumstances. Section 10 refers to a judgment requiring the execution of a conveyance of land or the delivery of deeds or other documents or the performance of any other specific act susceptible of execution by some other person or in some other way provided by law with the same effect. Under section 10, the court may designate some other person to do the act ordained to be done by the judgment, the reasonable cost of its performance chargeable to the disobedient party. The act, when so done, shall have the same effect as if performed by the party himself. In such an instance, the disobedient party incurs no liability for contempt. 3 Under section 9, the court may resort to proceedings for contempt in order to enforce obedience to a judgment which requires the personal performance of a specific act other than the payment of money, or the sale or delivery of real or personal property.

An examination of the case at bar makes it apparent that the same falls within the contemplation of section 10, and not of section 9 as the petitioners contend. The reconstruction and reopening of the irrigation canal may be done by same other person designated by the court, at the cost of the respondent. In fact, the respondent in his attempt to rebuild the irrigation canal, contracted the services of one Gerardo Salenga. Accordingly, in conformity with the appellate court's judgment as further mutually interpreted by the parties themselves, the court a quo, because of the failure and refusal of the respondent to restore the irrigation canal to its former condition and to reopen it, should have appointed some other person to do the reconstruction, charging the expenses therefor to the said respondent.

2. As to the second question, which relates to the money judgment, the petitioners vehemently insist on their right to recover an additional sum of P2,000 the alleged unsatisfied portion of the appellate court's judgement requiring the respondent to pay to the petitioners the total amount of P6,000 corresponding to damages and attorney's fees. The petitioners allege that their agreement with the respondent in August, 1964, reducing the amount due from the respondent, constitutes neither waiver of their claim for the sum of P2,000 nor novation of the money judgment provided for in the Court of Appeals' decision. They state that their agreement with the respondent reduced the amount of the money judgment, subject to the condition that the latter reconstruct and reopen the irrigation canal immediately. This, they argue, does not constitute alteration of the appellate court's judgment.

For his part, the respondent contends that his payment of the sum of P4,000, received and acknowledged by the petitioners through their counsel as "in full satisfaction of the money judgment" in civil case 1554, extinguished his pecuniary liability. Thus, when the petitioners, notwithstanding the admitted payment of the judgment debt in the lesser amount of P4,000, still sought to enforce the money judgment for the full amount of P6,000 through an alias writ of execution, the court a quo, in recalling and quashing the alias writ previously issued, acted correctly andwithin its authority.

Parenthetically, the petitioner's application for the issuance of the alias writ of execution dated September 16, 1965, the alias writ of execution dated September 29, 1965, and the levy on execution and the notice of sheriff's sale, both dated October 21, 1965, all refer to the amount of P6,000 and make no mention whatsoever of the true status of the judgement debt. On this point the respondent charges the petitioners with concealing from the court a quo the true amount, if any, still due from him. And in effect, he alleges, the petitioners apparently seek the payment of the judgment debt twice. The petitioners, however, emphasize that they demand payment of only the balance of P2,000. To rebut the respondents charge of concealment, they state that they informed the court a quo that the respondent already paid them the sum of P4,000. Furthermore, they allege that another lawyer, a former associate of their counsel, prepared their motion for the issuance of the alias writ of execution, received the alias writ and

delivered the same to the sheriff. Impliedly, therefore, they attribute the inconsistency regarding the amount still allegedly due from the respondent to the former associate of their counsel.

Reverting to the second question, the appellate court's judgment obliges the respondent to do two things: (1) to recognize the easement, and (2) to pay the petitioners the sums of P5,000 actual and P500 exemplary damages and P500 attorney's fees, or a total of P6,000. The full satisfaction of the said judgment requires specific performance and payment of a sum of money by the respondent.

We adjudge the respondent's judgment debt as having been fully satisfied. We see no valid objection to the petitioners and the respondent entering into an agreement regarding the monetary obligation of the latter under the judgment of the Court of Appeals, reducing the same from P6,000 to P4,000. The payment by the respondent of the lesser amount of P4,000, accepted by the petitioners without any protest or objection and acknowledged by them as "in full satisfaction of the money judgment" in civil case 1554, completely extinguished the judgment debt and released the respondent from his pecuniary liability.

Both the petitioners and the respondent take exception to the respondent judge's ruling that their agreement of August, 1964 to reduce the judgment debt, as evidenced by the receipt hereinbefore adverted to, "novated" the money judgment rendered by the appellate court.

Novation results in two stipulations one to extinguish an existing obligation, the other to substitute a new one in its place. 4 Fundamental it is that novation effects a substitution or modification of an obligation by another or an extinguishment of one obligation in the creation of another. In the case at hand, we fail to see what new or modified obligation arose out of the payment by the respondent of the reduced amount of P4,000 and substitute the monetary liability for P6,000 of the said respondent under the appellate court's judgment. Additionally, to sustain novation necessitates that the same be so declared in unequivocal terms clearly and unmistakably shown by the express agreement of the parties or by acts of equivalent import or that there is complete and substantial incompatibility between the two obligations. 5

Neither do we appreciate the petitioners' stand that, according to their agreement with the respondent, their assent to the reduction of the money judgment was subject to the condition that the respondent reconstruct and reopen the portion of the irrigation canal passing through his land immediately. The petitioners even state that the receipt of August 31, 1964 embodies this condition.

The terms of the receipt dated August 31, 1964, we find clear and definite. The receipt neither expressly nor impliedly declares that the reduction of the money judgment was conditioned on the respondent's reconstruction and reopening of the irrigation canal. The receipt merely embodies the recognition by the respondent of his obligation to reconstruct the irrigation canal. And the receipt simply requires the respondent to comply with such obligation "immediately." The obligation of the respondent remains as a portion of the Court of Appeals' judgment. In fact, the petitioners themselves, in their letter dated November 5, 1964, sent to the respondent, demanding that the latter reconstruct the irrigation canal immediately, referred to the same not as a condition but as "the portion of the judgment" in civil case 1594.

Consequently, the respondent judge, when she granted the motion of the respondent to set aside the alias writ of execution and issued the order dated February 3, 1966 recalling and quashing the said alias writ, acted correctly. Courts have jurisdiction to entertain motions to quash previously issued writs of execution because courts have the inherent power, for the advancement of justice, to correct the errors of their ministerial officers and to control their own processes. However, this power, well circumscribed, to quash the writ, may be exercised only in certain situations, as when it appears that (a) the writ has been

improvidently issued, or (b) the writ is defective in substance, or (c) the writ has been issued against the wrong party, or (d) the judgment debt has been paid or otherwise satisfied, or (e) the writ has been issued without authority, or (f) there has been a change in the situation of the parties which renders such execution inequitable, or (g) the controversy has never been submitted to the judgment of the court, and, therefore, no judgment at all has ever been rendered thereon. 6 In the instant case, the payment of the judgment debt by the respondent, although in a reduced amount but accepted by the petitioners as "in full satisfaction of the money judgment," warrants the quashal of the alias writ.

ACCORDINGLY, judgment is hereby rendered, (1) declaring that the respondent judge did not act in excess of jurisdiction or with grave abuse of discretion in issuing the order dated February 3, 1966 (granting the respondent's motion to set aside the alias writ of execution, and recalling and guashing the said alias writ) and the order dated March 30, 1966 (denying the petitioners' motion for reconsideration, of the order dated February 3, 1966) ; and (2) remanding the case to the court a quo with instructions that the respondent court (a) conduct an ocular inspection of the irrigation canal passing through the respondent's land to determine whether or not the said canal has been rebuilt in accordance with its original dimensions; (b) in the event that the said canal fails to meet the measurements of the original one, order the respondent to reconstruct the same to its former condition; and (3) in the event of the respondent's further refusal or failure to do so, appoint some other person to reconstruct the canal in accordance with its original dimensions, at the cost of the said respondent, pursuant to section 10 of Rule 39 of the Rules of Court. Without pronouncement as to costs.

4. NPC vs. Dayrit, 125 SCRA 849

G.R. Nos. L-62845-46 November 25, 1983

NATIONAL POWER CORPORATION, petitioner, vs. JUDGE ABELARDO M. DAYRIT, Court of First Instance of Manila, Branch 39, and DANIEL R. ROXAS, doing business as United Veterans Security Agency and Foreign Boats Watchmen, respondents.

The Solicitor General for petitioner.

William C. Arceno for respondents.

ABAD SANTOS, J.:+.wph!1

This is a petition to set aside the Order, dated September 22, 1982, of the respondent judge. The prayer is premised on the allegation that the questioned Order was issued with grave abuse of discretion.

In Civil Case No. 133528 of the defunct Court of First Instance of Manila, DANIEL E. ROXAS, doing business under the name and style of United Veterans Security Agency and Foreign Boats Watchmen, sued the NATIONAL POWER CORPORATION (NPC) and two of its officers in Iligan City. The purpose of the suit was to compel the NPC to restore the contract of Roxas for security services which the former had terminated.

After several incidents, the litigants entered into a Compromise Agreement on October 14, 1981, and they asked the Court to approve it. Accordingly, a Decision was rendered on October 30, 1981, which reads as follows: t.hqw

In order to abbreviate the proceedings in this case, the parties, instead of going into trial, submitted a compromise agreement, as follows: t.hqw

The parties, DANIEL E. ROXAS, etc. and NATIONAL POWER CORPORATION, ET AL., represented by its President Mr. Gabriel Y. Itchon with due and proper authority under NP Board Resolution No. 81-224, assisted by their respective counsel, to this Honorable Court respectfully submit the following compromise agreement:

1. The defendant National Power Corporation shall pay to plaintiff the sum of P7,277.45, representing the amount due to plaintiff for the services of one of plaintiff's supervisors;

2. The defendant shall pay plaintiff the value of the line materials which were stolen but recovered, by plaintiff's agency which value is to be determined after a joint inventory by the representatives of both parties;

3. The parties shall continue with the contract of security services under the same terms and conditions as the previous contract effective upon the signing thereof;

4. The parties waive all their respective claims and counterclaims in favor of each other;

5. The parties agree to faithfully comply with the foregoing agreement.

PRAYER

WHEREFORE, it is respectfully prayed that the Hon. Court approve the following compromise agreement.'

Examining the foregoing agreement, the Court finds that the same is in accordance with law and not against morals and public policy.

CONFORMABLY, the Court hereby renders judgment in accordance with the terms and conditions thereof, enjoining the parties to strictly comply with the terms and conditions of the compromise agreement, without pronouncement as to cost. (Rollo, pp. 33-34.)

The judgment was not implemented for reasons which have no relevance here.

On May 14, 1982, the NPC executed another contract for security services with Josette L. Roxas whose relationship to Daniel is not shown. At any rate Daniel has owned the contract. The NPC refused to implement the new contract for which reason Daniel filed a Motion for Execution in the aforesaid civil case which had been re-numbered R-82-10787. The Motion reads: t.hqw

PLAINTIFF, by counsel, respectfully shows:

1. On October 30, 1981, this Honorable Court rendered its decision based on compromise agreement submitted by the parties, under which it was provided, among others, that t.hqw

3. The parties shall continue with the contract of security services under the same terms and conditions as the previous contract effective upon the signing thereof;

2. To date, after more than about eight (8) months since the decision of this Honorable Court, defendant National Power Corporation, through bad faith by reason of excuses made one after another, has yet to comply with the aforesaid terms of the decision. It has not reinstated the contract with the plaintiff in gross violation of the terms of the said compromise agreement which this Honorable Court approved, 'enjoining the parties to strictly comply with the terms and conditions of the compromise agreement,

3. Hence, plaintiff is compelled to seek the assistance of this Honorable Court for the execution of its decision.

PRAYER t.hqw

WHEREFORE, it is respectfully prayed that this Honorable Court order the issuance of the writ of execution for the enforcement of the aforesaid portion of its decision. (Rollo, pp. 35-36.)

Acting on the Motion, the respondent judge issued the following Order: t.hqw

Acting on the motion for execution dated July 14, 1982, visibly over the objection and/or opposition to the motion for execution dated July 19, 1982, the Court, considering that the decision of October 30, 1981 was based on a Compromise Agreement entered into by and between the parties which decidedly, become final and executory, is inclined to grant said action.

CONFORMABLY, let the corresponding writ of execution be issued to be served by the Deputy Sheriff assigned to this branch. (Rollo, p. 54.)

The NPC assails the Order on the ground that it directs execution of a contract which had been novated by that of May 14, 1982. Upon the other hand, Roxas claims that said contract was executed precisely to implement the compromise agreement for which reason there was no novation.

We sustain the private respondent. Article I of the May 14, 1982, agreement supports his contention. Said article reads: t.hqw

ARTICLE I

DOCUMENTS COMPRISING THE CONTRACT

The letter proposal dated September 5, 1981; CORPORATION'S counter- proposal dated September 11, 1981; Board Resolution No. 81-244 dated September 28, 1981; the Compromise Agreement and Court Decision dated October 30, 1981 in Civil Case No. 133528 CFI-Manila; other subsequent letters and the performance bond of AGENCY to be flied in favor of CORPORATION in the manner hereinafter provided, are hereby expressly made integral parts of this contract by reference. (Rollo, pp. 59-60.)

It is elementary that novation is never presumed; it must be explicitly stated or there must be manifest incompatibility between the old and the new obligations in every aspect. Thus the Civil Code provides: t.hqw

Art. 1292. In order that an obligation may be extinguished by another which substitutes the same, it is imperative that it be so declared in unequivocal terms, or that the old and the new obligations be on every point incompatible with each other.

In the case at bar there is nothing in the May 14, 1982, agreement which supports the petitioner's contention. There is neither explicit novation nor incompatibility on every point between the "old" and the "new" agreements.

WHEREFORE, the petition is denied for lack of merit with costs against the petitioner.

SO ORDERED.1wph1.t

5. Rodriguez vs. Reyes, 37 SCRA 195

December 28, 1970

G.R. No. L-26396 ANTONIO RODRIGUEZ, petitioner-appellant, vs. THE HON. ANDRES REYES, Presiding Judge, Branch VI, CFI, Rizal, et al., respondent-appellees.

G.R. Nos. L-27016-27 December 28, 1970 ABELARDO SUBIDO, as Commissioner of Civil Service, petitioner,

, J.:

Salonga, Ordoez, Yap, Sicat and Associates for petitioner-appellant.

Office of the Solicitor General for respondents-appellees.

Nos. L-27026-27:

Office of the Solicitor Bernardo P. Pardo, and Alfredo Daza, Ricardo Diaz and Ernesto Ross for petitioner.

Salonga, Ordoez, Yap, Sicat and Associates for respondents.

MAKALINTAL, J.:

These three cases are interrelated. L-26396 is an appeal by Dr. Antonio Rodriguez from the judgment of the Court of First Instance of Rizal dismissing the petition for certiorari he had filed against Abelardo Subido, Commissioner of Civil Service, in connection with the latter's decision in two administrative cases against said petitioner.

L-27026 and L-27027 are original petitions for certiorari and prohibition filed in this Court by Commissioner Subido, questioning the actuation of the Civil Service Board of Appeals in taking cognizance of the appeal from the same decision rendered by him against Dr. Rodriguez.

Dr. Rodriguez was Medical Adviser (Chief of Section) in the Bureau of Medical Services. On July 1, 1959, he was detailed as head of the National Mental Hospital by the then Secretary of Health, Dr. Elpidio Valencia. On July 8, 1960 he was administratively charged on nine counts (Adm. Case No. R-23237), to investigate which the Secretary formed a committee composed of several members. Pending investigation, or on May 29, 1961, Dr. Rodriguez was appointed "Chief of Hospital IV (R-54) in the Hospital Services (National Mental Hospital), Field Operations," which appointment was approved by the Acting Chief, Personnel Transaction Division, in behalf of then Commissioner of Civil Service Amado del Rosario. After the investigation, where evidence was adduced by both parties, the committee rendered its report on November 20, 1961, finding the respondent innocent. Upon its recommendation the Secretary of Health exonerated him completely and indorsed the findings to Commissioner del Rosario, who, however, in his decision dated May 17, 1962, found Dr. Rodriguez "guilty of indiscretion" in connection with specification "b" of the charges, for having caused slaughtered pigs (belonging to the National Mental Hospital) to be given to his superior and to the Auditor General." The penalty administered to him was an "admonition to be more careful in his activities."

On June 29, 1962 Dr. Rodriguez moved for reconsideration. In his motion he did not question the factual findings in the decision; he simply pointed out that the offense of "indiscretion" did not exist in the statutes or in the civil service rules and regulations. His prayer was that the verdict on that particular count "be entirely deleted from the records of the case." Eight months thereafter, or on February 22, 1963, Rodriguez wrote a letter to the Commissioner of Civil Service withdrawing his motion for reconsideration and manifesting his conformity to the decision of May 17, 1962. The reason he gave for the withdrawal was that the administrative case had been pending for a long time and affected not only his peace of mind but also the "interest of (the) public institution committed to his responsibility." On March 18, 1963 the request for withdrawal was granted by the Department Legal Counsel of the Civil Service Commission, who signed the corresponding indorsement "For the Commissioner." On May 6, 1963 Abelardo Subido, then Acting Commissioner of Civil Service, revoked the grant of withdrawal as having been issued without authority.

Meanwhile, under date of January 23, 1962, another administrative complaint, No. 24354, had been lodged with the Secretary of Health against Dr. Rodriguez. One of the seven charges was electioneering. Again the Secretary created an investigating committee, to which he issued the following directive: .

To study the nature of such charges and determine the merit of each case. In case this committee finds sufficient grounds for investigation, it is hereby directed that a formal investigation be conducted in accordance with existing rules and regulations. After the investigation of the case, the Committee shall submit to the undersigned its findings, comments and recommendations.

The investigating committee required Dr. Rodriguez to submit his explanation, which he did on March 6, 1962. On August 29, 1962 the committee, on the basis of the said explanation alone and without conducting a formal investigation, rendered a memorandum report recommending exoneration. On October 29, 1962 the Secretary of Health indorsed the recommendation, with his full concurrence, to the Civil Service Commissioner.

On September 12, 1963 Commissioner Abelardo Subido rendered a joint decision in the two cases. In Case No. 23237 he found Dr. Rodriguez guilty of misconduct in office for having loaned government construction materials to a private contractor in connection with a project the latter was doing for the National Mental Hospital. It was a charge not touched upon in the motion for reconsideration of Dr. Rodriguez, and of which he had already been found innocent by the investigating Committee created by the Secretary of Health, by the Secretary himself, and by Civil Service Commissioner del Rosario. In Case No. 24354 the Commissioner found the respondent guilty of the charge of electioneering. The penalty

imposed was dismissal from office, which the Commissioner ordered, in the same decision, immediately executed "in the public interest."

Dr. Rodriguez personally received a copy of the decision on September 14, 1963. On the same day he filed a petition for certiorari with preliminary injunction in the Court of First Instance of Rizal, alleging that the decision had been rendered without due process of law, and without jurisdiction or with grave abuse of discretion. The injunction was issued by the Court, restraining immediate execution of the verdict of dismissal.

On February 23, 1966 Dr. Rodriguez appealed the decision of Commissioner Subido to the Civil Service Board of Appeals. On May 4, 1966 the Court of First Instance dismissed the petition for certiorari on the ground of non-exhaustion of administrative remedies. Dr. Rodriguez moved to reconsider, and after his motion was denied, filed a petition for review with preliminary injunction in the Court of Appeals, which thereafter certified the case to this Court, where it was docketed as Case No. 26396.

Commissioner Subido, on his part, tried to have the Civil Service Board of Appeals dismiss the respondent's appeal before it on the ground that the same had been filed out of time and that his decision was already final. The Board turned down the plea, and Commissioner Subido came to this Court on certiorari and prohibition, his petition being docketed under Nos. L-27026 and 27027.

On January 5, 1967, this Court issued an order temporarily restraining the Civil Service Board of Appeals from taking cognizance of and assuming jurisdiction over the appeal taken by Dr. Rodriguez, but the order failed to take effect because two days before, or on January 3, the Board had decided the appeal, declaring the decision of Commissioner Subido null and void for having been rendered "without jurisdiction and without due process of law," and ordering the reinstatement of Dr. Rodriguez to his position.

There are two issues presented for resolution: (a) whether or not the decision of Commissioner Subido was rendered with jurisdiction and/or due process; and (b) whether or not the appeal taken by Dr. Rodriguez to the Civil Service Board of Appeals was timely.

1. With respect to Administrative Case No. 23237 our position is that the decision of Commissioner Amado del Rosario dated May 17, 1962, finding Dr. Rodriguez guilty of indiscretion and imposing upon him the penalty of admonition, had already become final and therefore beyond the jurisdiction of Commissioner Subido to set it aside when he did so and rendered his own decision on September 12, 1963. True, Dr. Rodriguez moved for reconsideration of the del Rosario decision. But he withdrew that motion on February 22, 1963; and since no action thereon had yet been taken at the time, the withdrawal was a matter of right on his part, subject neither to approval nor to disapproval by the Commissioner.

It has been said, however, that the complainant in the said administrative case sent a letter to the Commissioner on December 20, 1962, asking for a "revaluation of the entire evidence in this case ...." We do not believe, however, that the step thus taken by the complainant kept the case open independently of the motion of Dr. Rodriguez and its subsequent withdrawal. It bears emphasis that this motion of Dr. Rodriguez did not question the findings of fact in the del Rosario decision. The only point it raised was a legal one - that in connection with the specific charge of which he had been found guilty, there was no such offense in the civil service law or regulations as "indiscretion"; and on this ground he asked that the decision be modified accordingly.

The letter of the complainant was evidently not intended to be a motion for reconsideration, since the complainant was later on to request the Commissioner that it be considered as such a motion - this on April 3, 1963, after Dr. Rodriguez had withdrawn his own motion. If the letter was but an answer or

opposition to the said motion of Dr. Rodriguez, then it became functus oficio after the latter was withdrawn. On the other hand, if it was an independent motion for reconsideration in itself then it was filed out of time - more than seven (7) months after the Del Rosario decision was rendered. In either case that decision had already become final when Commissioner Subido reconsidered it and rendered his own decision on September 12, 1963.

2. Going now to Administrative Case No. 24354, our view is that the decision of the Commissioner suffers from a basic infirmity - that it violated the principle of due process, having been rendered without investigation and without first affording the respondent an opportunity to defend himself. It must be remembered that the authority given by the Secretary of Health to the investigating committee he had created was, "to study the nature of (the) charges and determine the merit of each case (and) in case this committee finds sufficient grounds for investigation, it is hereby directed that a formal investigation be conducted in accordance with existing rules and regulations."

The validity of the Subido decision is sought to be justified by the argument that under Section 32 of the Civil Service Act of 1959 Dr. Rodriguez had the right to elect a formal investigation, and since he made no such election he cannot later on be heard that an investigation was denied him. There is here a confusion as to the order of priority among the rungs of the procedural ladder. Dr. Rodriguez could hardly have asked for a formal investigation at the stage in which the administrative case was at the time. He had merely been required to submit his explanation in writing, which he did. The committee was still to determine whether there were sufficient grounds for investigation, and if there were, to conduct a formal investigation. This is explicit in the instruction given by the Secretary of Health. The committee found, on the basis of the charges and the explanation, that no formal investigation was necessary, and hence it recommended that the charges be dropped for lack of merit. The recommendation was thereupon favorably indorsed by the Secretary of Health to the Commissioner of Civil Service. There was manifestly neither need nor occasion for Dr. Rodriguez to elect a formal investigation pursuant to the Civil Service Law. It would have been not only premature but inconsistent for him to ask that he be formally investigated on charges of which he had already been exonerated.

If, despite the findings of the investigating committee and the concurring recommendation of the Secretary of Health, the Civil Service Commissioner still considered the charges grave enough to warrant further action, the basic principle of due process required that Dr. Rodriguez be first heard in his own defense, or at least allowed to express a choice to undergo a formal investigation or not in accordance with Section 32 of the Civil Service Act. This right was not accorded him. Ironically enough Dr. Rodriguez was found guilty of electioneering on the strength of a letter he had annexed to his explanation submitted to the investigating committee - a letter which, if anything, was exculpatory in the light of the charge against him and the explanation that he had submitted. He was accused of electioneering for the benefit of the Nacionalista Party; the letter was sent to him by some Liberal Party men in Bulacan thanking him for having employed fourteen (14) skilled workers who turned out to be "Liberals."

A revealing sidelight on this aspect of the case, which shows how precipitate and groundless was the pronouncement of the guilt of Dr. Rodriguez, is the following excerpt from the decision of the Civil Service Board of Appeals:

In the instant case, the Commissioner, without giving the respondent a chance to be heard, found him guilty of partisan political activity on the basis of a letter from Liberal Party officials thanking him for having employed skilled laborers, 14 of whom were election inspectors of the party in Malolos, Bulacan. If a hearing had been conducted by the Commissioner before he convicted the respondent of electioneering, the latter could have had the opportunity to explain how he came to employ the 14 skilled laborers referred to. Upon questioning by the Board at the hearing of this appeal, the respondent informed the Board that he did not know the 14 men before he employed them; that they were screened

by a screening committee in the hospital, before they were employed, together with hundreds of other recommendees; that these 14 were only part of the 300 casual laborers employed in the hospital because it was greatly undermanned; that the screening committee recommended the employment of the 14 because they were found to be skilled and with tools; that these applicants for employment who were not skilled or did not have tools were not employed in the hospital regardless of recommendation; that the 14 workers were not employed at the same time, but they represent the total workers from Malolos who had been employed at various times; and that he came to know that the 14 were election inspectors of the Liberal Party in Malolos after he had already the letter of thanks regarding their employment. Respondent, however, was barred from making this explanation by his immediate conviction and dismissal without a hearing. Consequently, respondent was denied due process.

3. Assuming that Commissioner Subido could validly render his joint decision of September 12, 1963, the next question was the appeal taken by Dr. Rodriguez to the Civil Service Board of Appeal timely? As already observed hereinabove, over the Commissioner's objection the Board took cognizance of the appeal, held itself with jurisdiction to entertain the same, and on January 3, 1967 promulgated its resolution declaring the decision appealed from null and void and ordering the reinstatement of Dr. Rodriguez to his position.

The recourse taken by Dr. Rodriguez to the Court of First Instance of Rizal on certiorari with preliminary injunction was eventually dismissed by that Court on the ground that the petitions had not exhausted the administrative remedy available to him, namely, by appeal to the Civil Service Board of Appeals. It is, to our mind, open to serious doubt whether such an appeal was an adequate remedy for the purposes sought by the petitioner in that case. He was, first of all, challenging the jurisdiction of the Commissioner to render the decision with, respect to the first administrative case, and pleading lack of due process and grave abuse of discretion with respect to the other. And the immediate relief prayed for was preliminary injunction to restrain the execution of the decision already ordered by the Commissioner. These remedies, while clearly spelled out in the Rules of Court as within the dispensation of the courts, are nebulous and unsettled when sought in administrative bodies. An appeal to the Civil Service Board of Appeals connotes a review of the case on its merits, a reappraisal of the evidence and of the penalty meted below. When the need of the moment, however, is to stop immediate execution of that penalty and, after hearing, to set aside the decision altogether on grounds of jurisdiction and due process, we are not prepared to say the doors of the courts must remain shut. It is preferable to overlook slight deviations from procedural paths which even to the discerning may appears quite hazy than disregard the greater imperatives of justice and fair play. After all the course pursued in the court below was one in equity, and the function of equity is to avert or prevent civil injury which may otherwise be irreparable.

Considering all these circumstances, we are of the view that the issuance of the writ of preliminary injunction by the Court of First Instance interrupted the running of the period within which an appeal could be taken from the Civil Service Commissioner to the Civil Service Board of Appeals; and that therefore the appeal, actually taken on the day Dr. Rodriguez received copy of the court's decision, wherein the injunction was dissolved, was a timely one. In the case of Geukeko vs. Araneta, etc., 102 Phil. 706, decided December 24, 1957, the party adversely affected by a decision of the Director of Lands relative to disputed lot in the Tambobong estate went directly to the Court of First Instance and sought to annul the said decision instead of appealing to the Secretary of Agriculture and Natural Resources, which he was supposed to do within 60 days under the rules promulgated by that official. No injunction was issued by the court, which dismissed the case after more than two years on the ground that the plaintiff had not exhausted his available administrative remedies. An appeal was then taken from the decision of the Director of the Bureau of Lands to the Secretary of Agriculture and Natural Resources. This Court held, when the matter came up before it on mandamus and prohibition, that the institution of the court action suspended the running of the period for such appeal, making reference to the administrative policy of the Department to that effect.

In connection with the administrative cases against Dr. Rodriguez, the Civil Service Board of Appeals similarly took cognizance of his appeal and held that it was timely. Indeed in its decision it cites a number of cases where appeals (forwarded to it by the Commissioner) were entertained even after the expiration of the time limit. It did no more than what the Secretary of Agriculture and Natural Resources did in the Geukeko case, and with even greater justification, for there was a judicial injunction issued against the execution of the decision of the Civil Service Commmissioner.

When the vote on these cases was taken, four members of this Court, including the undersigned, concurred in this opinion; two members dissented four abstained from voting; and the last one, Justice Felix V. Makasiar, had not yet been appointed. Since the votes on either side are short of the required majority, the petition of Commissioner Abelardo Subido in G. R. Nos. L-27026 and L-27027 should be, as it is hereby, dismissed, and the jurisdiction of the Civil Service Board of Appeals in the appeal taken by Dr. Antonio Rodriguez is deemed upheld. Considering that the said Board has already rendered its decision, the petition in No. L-26396 is, likewise, dismissed as moot and academic.

6. Batchelder vs. CA, 44 SCRA 45 GEORGE W. BATCHELDER, doing business under the name and style of Batchelder Equipment, Plaintiff-Appellant, v. THE CENTRAL BANK OF THE PHILIPPINES, Defendant-Appellant.

SYLLABUS

1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; SOURCES OF OBLIGATIONS; LAW AS SOURCE OF OBLIGATION. One of the sources of an obligation is law. A legal norm could so require that a particular party be chargeable with a prestation or undertaking to give or to deliver or to do or to render some service. It is an indispensable requisite though that such a provision thus in fact exists. There must be a showing to that effect. 2. ID.: ID.; ID.: CB CIRCULAR NOT SOURCE OF OBLIGATION IN INSTANT CASE. It is true that a Central Bank circular may have the force and effect of law. especially so when issued in pursuance of its quasi-legislative power. That of itself, however, is no justification to conclude that it has thereby assumed an obligation. To be impressed with such a character, however, it must be categorically demonstrated that the very administrative agency, which is the source of such obligation, would place such a burden on itself. In the instant case, it cannot be so plausibly maintained. The assertion that there is a self-imposed obligation on the part of defendant Central Bank to resell US$154,094.56 to plaintiff at the exchange rate of P2.00375 to US$1.00 by the issuance of the circulars in question is thus lacking in persuasiveness.

R E S O L U T I O N

FERNANDO, J.:

An ably-written motion for the reconsideration of our decision of March 29, 1972 was submitted by plaintiff-appellant through its counsel, Delegate Mauro Baradi. It is based primarily on this contention: "Said decision failed to consider that if there was no contract obligating the defendant to resell US$154,094.56 to plaintiff at the exchange rate of P2.00375 to US$1.00, the judgment of the lower court can and should nevertheless be sustained on the basis of there being such an obligation arising from law."

1 It is clear therefore that there is a retreat from the untenable position taken by it, both in the lower court and here on appeal, that there was a contract between it and defendant Central Bank of the Philippines that gave rise to such a duty on the part of the latter. This time, it would predicate its alleged right to the exchange rate of P2.00375 to US$1.00 to an obligation of defendant Central Bank arising from law. This point, while strongly pressed in a pleading that is not without its plausibility, loses sight of the ratio decidendi of our decision of March 29, 1972 that the Central Bank acted not as a juridical person with power to enter into contracts but as a regulatory agency entrusted with the delicate function of managing the currency. It is far-fetched to assume that such an administrative body by the issuance of the circulars in question did transform itself into just another party to a juridical relation, called upon to satisfy a credit. As will be more fully explained, the motion for reconsideration cannot suffice to call for a reversal of our judgment Our decision of March 29, 1972 therefore stands. Plaintiff-appellant would sustain its principal contention thus:" Laws, as used in the Civil Code, include administrative orders and regulations not contrary to the laws or the Constitution. Thus, in his Outlines on Civil Law, a distinguished member of this Court, Hon. Jose B.L. Reyes (with Judge Ricardo Puno as co-author), in outlining the sources from which the rule of law applicable to a given controversy is to be found, states . . .B. Statute (laws) applicable to the point in controversy. The word includes enactments by the legislative authority, original or delegated (executive or administrative orders or regulations). But the latter shall be valid only when they are not contrary to the laws or the Constitution. In People v. Que Po Lay, this Honorable Court held: . . . It is true that Circular No. 20 of the Central Bank is not a statute or law but being issued for the implementation of the law authorizing its issuance, it has the force and effect of law according to settled jurisprudence. (See U.S. v. Tupasi Molina, 29 Phil. 119 and authorities cited therein). [Underscoring supplied]. The various resolutions and memoranda issued by the defendant, having the force and effect of law, if not themselves laws, therefore can be the sources of obligations." 2 It is, of course, true that obligations arise from 1) law; 2) contracts; 3) quasi-contracts; 4) acts or omissions punished by law and 5) quasi-delicts. 3 One of the sources of an obligation then is a law. A legal norm could so require that a particular party be chargeable with a prestation or undertaking to give or to deliver or to do or to render some service. It is an indispensable requisite though that such a provision thus in fact exists. There must be a showing to that effect. As early as 1909 in Pelayo v. Lauron, 4 this Court through Justice Torres, categorically declared: "Obligation arising from law are not presumed." 5 For in the language of Justice Street in Leung Ben v. OBrien, 6 a 1918 decision, such an obligation is "a creation of the positive law." 7 They are ordinarily traceable to code or statute. 8 It is true though, as noted in the motion for reconsideration, following People v. Que Po Lay, 9 that a Central Bank circular may have the force and effect of law, especially so when issued in pursuance of its quasi-legislative power. That of itself, however, is no justification to conclude that it has thereby assumed an obligation. To be impressed with such a character, however, it must be categorically demonstrated that the very administrative agency, which is the source of such regulation, would place such a burden on itself. Here certainly, it cannot be so plausibly maintained. As was noted in the decision sought to be reconsidered after a recital of the statutory objectives of defendant Central Bank to maintain monetary stability as well as to preserve the international value of the peso: "It would be then to set at naught fundamental concepts in administrative law that accord due recognition to the vesting of quasi-legislative and quasi-judicial power in administrative law for the purpose of attaining statutory objectives, especially now that government is saddled with greater responsibilities due to the complex situation of the modern era, if the lower court is to be upheld. For if such be the case then, by the judiciary failing to exercise due care in its oversight of an administrative agency, substituting its own discretion for what usually is the more expert appraisal of such an instrumentality, there may even be a frustration if not a nullification of the objective of the law." 10 The assertion that there is such a self-imposed obligation on the part of defendant Central Bank is thus lacking in persuasiveness. 11

With the above disposition of the principal contention, the two other points of the motion for reconsideration that there was in fact such compliance with the rules and regulations of defendant Central Bank and that he has acquired a vested right, likewise fall to the ground. It is not to be lost sight of that all the while defendant Central Bank precisely had denied that there was such a compliance, indicating in what respect such deficiency was incurred. No reliance could be placed on the lower court decision reversed by us based on the assumption that there was a contract between plaintiff and defendant. Commendably, plaintiff-appellant in this motion for reconsideration appears to be of the same mind. Necessarily any claim that a vested right has accrued is likewise untenable. It cannot be said then that our decision of March 29, 1972 should be overturned. WHEREFORE, the motion for reconsideration is denied. 7. Republic vs. PLDT, 26 SCRA 620

G.R. No. L-18841 January 27, 1969

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, defendant-appellant.

Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General Antonio A. Torres and Solicitor Camilo D. Quiason for plaintiff-appellant. Ponce Enrile, Siguion Reyna, Montecillo and Belo for defendant-appellant.

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

Direct appeals, upon a joint record on appeal, by both the plaintiff and the defendant from the dismissal, after hearing, by the Court of First Instance of Manila, in its Civil Case No. 35805, of their respective complaint and counterclaims, but making permanent a preliminary mandatory injunction theretofore issued against the defendant on the interconnection of telephone facilities owned and operated by said parties.

The plaintiff, Republic of the Philippines, is a political entity exercising governmental powers through its branches and instrumentalities, one of which is the Bureau of Telecommunications. That office was created on 1 July 1947, under Executive Order No. 94, with the following powers and duties, in addition to certain powers and duties formerly vested in the Director of Posts: 1awphil.t

SEC. 79. The Bureau of Telecommunications shall exercise the following powers and duties:

(a) To operate and maintain existing wire-telegraph and radio-telegraph offices, stations, and facilities, and those to be established to restore the pre-war telecommunication service under the Bureau of Posts, as well as such additional offices or stations as may hereafter be established to provide telecommunication service in places requiring such service;

(b) To investigate, consolidate, negotiate for, operate and maintain wire-telephone or radio telephone communication service throughout the Philippines by utilizing such existing facilities in cities, towns, and provinces as may be found feasible and under such terms and conditions or arrangements with the present owners or operators thereof as may be agreed upon to the satisfaction of all concerned;

(c) To prescribe, subject to approval by the Department Head, equitable rates of charges for messages handled by the system and/or for time calls and other services that may be rendered by said system;

(d) To establish and maintain coastal stations to serve ships at sea or aircrafts and, when public interest so requires, to engage in the international telecommunication service in agreement with other countries desiring to establish such service with the Republic of the Philippines; and

(e) To abide by all existing rules and regulations prescribed by the International Telecommunication Convention relative to the accounting, disposition and exchange of messages handled in the international service, and those that may hereafter be promulgated by said convention and adhered to by the Government of the Republic of the Philippines. 1

The defendant, Philippine Long Distance Telephone Company (PLDT for short), is a public service corporation holding a legislative franchise, Act 3426, as amended by Commonwealth Act 407, to install, operate and maintain a telephone system throughout the Philippines and to carry on the business of electrical transmission of messages within the Philippines and between the Philippines and the telephone systems of other countries. 2 The RCA Communications, Inc., (which is not a party to the present case but has contractual relations with the parties) is an American corporation authorized to transact business in the Philippines and is the grantee, by assignment, of a legislative franchise to operate a domestic station for the reception and transmission of long distance wireless messages (Act 2178) and to operate broadcasting and radio-telephone and radio-telegraphic communications services (Act 3180). 3

Sometime in 1933, the defendant, PLDT, and the RCA Communications, Inc., entered into an agreement whereby telephone messages, coming from the United States and received by RCA's domestic station, could automatically be transferred to the lines of PLDT; and vice-versa, for calls collected by the PLDT for transmission from the Philippines to the United States. The contracting parties agreed to divide the tolls, as follows: 25% to PLDT and 75% to RCA. The sharing was amended in 1941 to 30% for PLDT and 70% for RCA, and again amended in 1947 to a 50-50 basis. The arrangement was later extended to radio-telephone messages to and from European and Asiatic countries. Their contract contained a stipulation that either party could terminate it on a 24-month notice to the other. 4 On 2 February 1956, PLDT gave notice to RCA to terminate their contract on 2 February 1958. 5

Soon after its creation in 1947, the Bureau of Telecommunications set up its own Government Telephone System by utilizing its own appropriation and equipment and by renting trunk lines of the PLDT to enable government offices to call private parties. 6 Its application for the use of these trunk lines was in the usual form of applications for telephone service, containing a statement, above the signature of the applicant, that the latter will abide by the rules and regulations of the PLDT which are on file with the Public Service Commission. 7 One of the many rules prohibits the public use of the service furnished the telephone subscriber for his private use. 8 The Bureau has extended its services to the general public since 1948, 9 using the same trunk lines owned by, and rented from, the PLDT, and prescribing its (the Bureau's) own schedule of rates. 10 Through these trunk lines, a Government Telephone System (GTS) subscriber could make a call to a PLDT subscriber in the same way that the latter could make a call to the former.

On 5 March 1958, the plaintiff, through the Director of Telecommunications, entered into an agreement with RCA Communications, Inc., for a joint overseas telephone service whereby the Bureau would convey radio-telephone overseas calls received by RCA's station to and from local residents. 11 Actually, they inaugurated this joint operation on 2 February 1958, under a "provisional" agreement. 12

On 7 April 1958, the defendant Philippine Long Distance Telephone Company, complained to the Bureau of Telecommunications that said bureau was violating the conditions under which their Private Branch Exchange (PBX) is inter-connected with the PLDT's facilities, referring to the rented trunk lines, for the Bureau had used the trunk lines not only for the use of government offices but even to serve private persons or the general public, in competition with the business of the PLDT; and gave notice that if said violations were not stopped by midnight of 12 April 1958, the PLDT would sever the telephone connections. 13 When the PLDT received no reply, it disconnected the trunk lines being rented by the Bureau at midnight on 12 April 1958. 14 The result was the isolation of the Philippines, on telephone services, from the rest of the world, except the United States. 15

At that time, the Bureau was maintaining 5,000 telephones and had 5,000 pending applications for telephone connection. 16 The PLDT was also maintaining 60,000 telephones and had also 20,000 pending applications. 17 Through the years, neither of them has been able to fill up the demand for telephone service.

The Bureau of Telecommunications had proposed to the PLDT on 8 January 1958 that both enter into an interconnecting agreement, with the government paying (on a call basis) for all calls passing through the interconnecting facilities from the Government Telephone System to the PLDT. 18 The PLDT replied that it was willing to enter into an agreement on overseas telephone service to Europe and Asian countries provided that the Bureau would submit to the jurisdiction and regulations of the Public Service Commission and in consideration of 37 1/2% of the gross revenues. 19 In its memorandum in lieu of oral argument in this Court dated 9 February 1964, on page 8, the defendant reduced its offer to 33 1/3 % (1/3) as its share in the overseas telephone service. The proposals were not accepted by either party.

On 12 April 1958, plaintiff Republic commenced suit against the defendant, Philippine Long Distance Telephone Company, in the Court of First Instance of Manila (Civil Case No. 35805), praying in its complaint for judgment commanding the PLDT to execute a contract with plaintiff, through the Bureau, for the use of the facilities of defendant's telephone system throughout the Philippines under such terms and conditions as the court might consider reasonable, and for a writ of preliminary injunction against the defendant company to restrain the severance of the existing telephone connections and/or restore those severed.

Acting on the application of the plaintiff, and on the ground that the severance of telephone connections by the defendant company would isolate the Philippines from other countries, the court a quo, on 14 April 1958, issued an order for the defendant:

(1) to forthwith reconnect and restore the seventy-eight (78) trunk lines that it has disconnected between the facilities of the Government Telephone System, including its overseas telephone services, and the facilities of defendant; (2) to refrain from carrying into effect its threat to sever the existing telephone communication between the Bureau of Telecommunications and defendant, and not to make connection over its telephone system of telephone calls coming to the Philippines from foreign countries through the said Bureau's telephone facilities and the radio facilities of RCA Communications, Inc.; and (3) to accept and connect through its telephone system all such telephone calls coming to the Philippines from foreign countries until further order of this Court.

On 28 April 1958, the defendant company filed its answer, with counterclaims.

It denied any obligation on its part to execute a contrary of services with the Bureau of Telecommunications; contested the jurisdiction of the Court of First Instance to compel it to enter into interconnecting agreements, and averred that it was justified to disconnect the trunk lines heretofore

leased to the Bureau of Telecommunications under the existing agreement because its facilities were being used in fraud of its rights.