EN BANC
[G.R. No. L-27187. July 22, 1971.]
ANTONIO MONTEJO and CONSOLACION BIBERA, plaintiffs-appellants,vs. VICENTA UROTIA, as heir of JUANA BIBERA, ET AL., defendants-appellees.
[G.R. No. L-29098. July 22, 1971.]
PEOPLE'S CAR, INC., plaintiff-appellee,vs. JOSE ARCELLANA, and THE CAPITAL INSURANCE AND SURETY CO., INC., defendants. THE CAPITAL INSURANCE AND SURETY CO., INC., defendant-appellant.
[G.R. No. L-29373. July 22, 1971.]
REGINO BOLIVAR, plaintiff-appellee,vs. ISABELO BANDAYREL and DANIEL BOQUER, defendants. ISABELO BANDAYREL,defendant-appellant.
[G.R. No. L-29454. July 22, 1971.]
PAGADIAN IRON MINES, INC., plaintiff-appellant,vs. SURIGAO CONSOLIDATED MINING CO., INC. and SANTOS REVIL, ET AL., defendants-appellees.
[G.R. No. L-29542. July 22, 1971.]
JOSE O. MADERAZO, plaintiff-appellant,vs. LIM LIAN KHOAN, alias KHOAN LIMSICO, defendant-appellee.
[G.R. No. L-30711. July 22, 1971.]
THE REPUBLIC OF THE PHILIPPINES, Represented by the PHILIPPINE NATIONAL BANK, as Trustee, petitioner, vs. THE HONORABLE PEDRO SAMSON C. ANIMAS, in his capacity as Judge of the Court of First Instance of South Cotabato, 16th Judicial Dist., Br. II, General Santos City, and ANTONIO BUHAT,respondents.
[G.R. No. L-30744. July 22, 1971.]
NORA D. SANTOS, plaintiff-appellant, vs. ALADINO TANIONGON, defendant-appellee.
[G.R. No. L-30933. July 22, 1971.]
BRIGIDO GUDMALIN and MONICA SABIJON, petitioners-appellants,vs. COURT OF APPEALS, Branch IV, HON. VICENTE ERICTA, Judge of the Court of First Instance of Zamboanga del Sur, CESAR ALAESTANTE, The Provincial Sheriff of Zamboanga del Sur, BASILIA PILAPIL and JUAN MALAGAR, respondents-appellees.
[G.R No. L-31072. July 22, 1971.]
HENRY OLILANG, petitioner-appellant,vs. TEODORO NOCON, FELIZARDO ENRIQUEZ, CONRADO F. ESTRELLA, in his capacity as Governor of the Land Authority, and HON. RAFAEL M. SALAS, in his capacity as Executive Secretary to the President of the Philippines, et al.,respondents-appellees.
G.R. No. L-27187:
Segundo M. Zosa for plaintiffs-appellants.
Federico P. Pasana for defendants-appellees.
G.R. No. L-29098:
B. C. del Rosario & Associates and R. G. M. Reyes & Associates for plaintiff-appellee.
Achacoso, Ocampo & Simbulan for defendant-appellant.
G.R. No. L-29373:
Benigno Palaganas for plaintiff-appellee.
Samson S. Alcantara for defendant-appellant.
G.R. No. L-29454:
Agustin Fausto & Sotero Catanduanes and Bausa, Ampil & Suarez for plaintiff-appellant.
Gamboa & Gamboa for defendants-appellees.
G.R. No. L-29542:
Teofilo V. Ogsimer for plaintiff-appellant.
Bienvenido A. Tan, Jr. for defendant-appellee.
G.R. No. L-30711:
Jose T. Tayoto for petitioner.
Rufino B. Bañas for respondent Antonio Buhat.
G.R. No. L-30744:
Niceto C. Joaquin for plaintiff-appellant.
Benjamin Hidalgo for defendant-appellee.
G.R. No. L-30933:
Ebarle, Ubay, Cerilles, Real & Dueñas for petitioners-appellants.
Antonio M. Ceniza for respondents-appellees.
G.R. No. L-31072:
Palacios & Borja for petitioner-appellant.
Pablo & Constantino for respondent-appellee Governor of the Land Authority.
Wenceslao V. Jarin for respondent-appellee Teodoro Nocon.
Solicitor General Felix V. Makasiar, Assistant Solicitor General Antonio A. Torres and Solicitor Raul I. Goco for respondent-appellee The Executive Secretary, etc.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; DISMISSAL OF ACTIONS; FAILURE TO PROSECUTE; DISMISSAL RESTS UPON SOUND DISCRETION OF THE COURT. — Construing the provision of Section 3 of Rule 17 of the present Rules of Court, it was held in Smith Bell & Co. v. American President Lines, Ltd. (94 Phil. 879, 880), and this view was reiterated in subsequent cases (Bautista v. Teodoro, 101 Phil. 701, 704 and other cases cited), that ". . . (t)he dismissal of an action pursuant to this rule rests upon the sound discretion of the court . . ."
2. ID.; ID.; ID.; UNREASONABLE LENGTH OF TIME; CONSTRUED. — As to what constitutes an "unreasonable length of time," within the purview of the above-quoted provision, We have ruled that it "depends upon the circumstances of each particular case"; that "the sound discretion of the court" in the determination of said question "will not be disturbed, in the absence of patent abuse"; and that "the burden of showing abuse of judicial discretion is upon appellant since every presumption is in favor of the correctness of the court's action." (Brandt v. Behn, Meyer & Co., 38 Phil. 351, 354 and other cases cited)
3. ID.; ID.; MOTIONS; MOTION FOR POSTPONEMENT; ADDRESSED TO SOUND DISCRETION OF THE COURT. — The fact that the plaintiffs had filed a motion for continuance. . . does not entitle the plaintiffs to presume that their motion for continuance would be granted. Motions for postponement are left to the sound discretion of the trial court and unless there be an abuse of such discretion this Court will not interfere with the exercise of that discretion (Montelibano v. Benares, 103 Phil. 106, 109).
D E C I S I O N
CONCEPCION, C.J p:
These are appeals from orders of dismissal for failure to prosecute. Inasmuch as the issues therein are substantially the same, these nine (9) cases are herein decided jointly.
L-27187. In their complaint, filed with the Court of First Instance of Leyte, on July 2, 1962, plaintiffs Antonio Montejo and Consolacion Bibera seek: a) to prevent the foreclosure of a mortgage on several parcels of land they claim to own in common with the defendants, as well as on several personal properties allegedly belonging exclusively to plaintiff Antonio Montejo; b) to have said parcels of land partitioned among its co-owners; c) the release, from the aforementioned mortgage, of the said personal properties and of plaintiffs' shares in said land; and d) the collection of certain sums of money allegedly due from the defendants to plaintiff Antonio Montejo. There were 24 defendants under the original complaint, which was amended to include 20 additional defendants. Inasmuch as 17 defendants had not been summoned as of September 27, 1963, said court then issued an order, inter alia, directing the plaintiffs to exert efforts to cause said defendants to be summoned. Over two years later, or on October 25, 1965, the court dismissed the case for failure of the plaintiffs to comply with said order.
L-29098. This case, for the collection of a sum of money 1 from defendants Jose Arcellana and the Capital Insurance & Surety Co., Inc.,2was initiated in the City Court of Manila, on April 20, 1966. Judgment for plaintiff People's Car, Inc., having been rendered, on September 7, 1967, defendant Capital Insurance & Surety Co., Inc., appealed to the Court of First Instance of Manila. On October 24, 1967, the latter issued a notice to the parties, advising them that the appealed case had then been docketed in said court. Counsel for the appellant received, on December 18, 1967, notice to the effect that a pre-trial would be held on January 4, 1968. He, however, failed to appear at said pre-trial. Hence, the Court forthwith ordered the appeal dismissed and the judgment appealed from revived, for failure to prosecute on the part of said appellant.
L-29373. In this action, commenced on October 28, 1965, for the recovery of a sum of money 3 from defendants Isabelo Bandayrel and Daniel Boquer, the latter was declared in default, whereas Bandayrel and plaintiff Bolivar submitted a written "stipulation of facts and compromise agreement," in pursuance of which, on June 21, 1966, the City Court of Manila rendered judgment for Bolivar. On August 12, 1966, defendant Bandayrel "appealed" to the Court of First Instance of Manila, which thereafter set the case for pre-trial on February 22, 1967. On motion of both parties, upon the ground that they were "exploiting the feasibility of settling the case amicably," the court issued, on February 5, 1968, an order granting them up to February 29, 1968, "within which to submit their amicable settlement or a negative manifestation," and, "in the event of the latter," resetting the case for hearing on April 8, 1968. On this date, both parties appeared before the court. Upon inquiry by the same about the "status of the amicable settlement, (c)ounsel for the plaintiff-appellee manifested that the defendants have not submitted any proposed settlement terms" and moved that the appeal be dismissed, which was granted immediately.
L-29454. This action was filed with the Court of First Instance of Zamboanga, on October 11, 1960, to restrain the defendants "from performing any and all acts which will tend to prejudice" the alleged rights of plaintiff Pagadian Iron Mines over a given iron lode claim in the barrio of Midsalip, municipality of Liargao, Zamboanga del Sur, as well as to recover damages. After the issues were joined, the case was set for trial on March 24, 1961. This was cancelled on March 18, 1961, on motion of both parties, who alleged that "there are negotiations for the amicable settlement" of the case. The same was several times, thereafter, set for hearing, which was, just as often postponed, mostly upon the same ground. After thirteen (13) such postponements, the case was, on September 8, 1966, set for hearing on December 8, 1966, which both parties moved again to be postponed for the reason "that the parties are still exploring the possibility of setting this case amicably." Considering, however, that the case had been pending for over six (6) years, the court ordered the case dismissed "for failure to prosecute." A reconsideration of this order was later denied.
L-29542. On August 28, 1963, Jose O. Maderazo brought this action, in the Pasay City Court, to recover a sum of money 4 from defendant Lim Lian Khoan alias Khoan Limsico. Said court having rendered judgment, on September 29, 1964, dismissing the case, Maderazo appealed to the Court of First Instance of Rizal, which, on November 13, 1964 notified the parties that the appeal had been docketed with said court and that the period to file pleadings would commence from receipt of said notice. On October 30, 1965, the case was ordered dismissed "(f)or failure to prosecute for an unreasonable length of time."
L-30711. This action, instituted, on October 3, 1964, in the Municipal Court of General Santos, Cotabato, is for the recovery from Antonio Buhat of a sum of money left to him in 1946. The case having been dismissed upon the ground of prescription, plaintiff, Republic of the Philippines, appealed to the Court of First Instance. Both parties were, on August 8, 1966, notified that the record of the case had been received by the latter court, which, on January 30, 1969, dismissed it upon the ground of failure of the plaintiff to prosecute the same for an unreasonable length of time.
L-30744. In her complaint, filed, with the Court of First Instance of South Cotabato, on July 19, 1967, plaintiff Nora D. Santos seeks to recover, from defendant Aladino Taniongon, the possession of a parcel of land in Barrio Cebuano, Tupi, South Cotabato, as well as damages. Defendant filed, on August 3, 1967, his answer with a counterclaim, to which plaintiff replied, on August 14, 1967 with an answer to the counterclaim. On January 23, 1969, the case was dismissed for failure to prosecute, plaintiff having done nothing in the meantime.
L-30933. The complaint for reconveyance in this case, filed on October 5, 1960, with the Court of First Instance of Zamboanga del Sur, having been dismissed for lack of cause of action, plaintiffs Brigido Gudmalin and Monica Sabijon filed, on March 31, 1962, their notice of appeal, appeal bond and record on appeal. When the latter was considered for approval, on April 14, 1962, counsel for the defendants pointed out that its caption did not set forth the full names of all parties. Thereupon, the Judge who presided over the court stated: "(w)ith (that) modification, the court will approve the record on appeal." Plaintiffs claim to have later amended the same "by inclusion of all parties in handwriting duly initialed" in the original Record on Appeal, on file in the Office of the Clerk of Court although without giving respondents the notice required in Section 7 of Rule 41 of the Rules of Court. Over five (5) years later, or on August 11, 1967, the appeal was dismissed for failure of the plaintiffs to submit an amended record on appeal, in accordance with said provision of the Rules of Court, or to apprise the defendants and the court of the handwritten correction made in the original record on appeal.
L-31072. This is a special civil action for certiorari, prohibition and mandamus, filed, with the Court of First Instance of Manila, on September 2, 1967, to annul and set aside a decision of respondent Conrado F. Estrella, as Governor of the Land Authority, approving the sale of a parcel of land in the District of Paco, Manila, to private respondent Teodoro Nocon, after said lot had been allegedly sold to petitioner Henry Olilang, and to require said Governor Estrella to allocate the disputed land to Olilang. On December 17, 1968, the court issued an order setting the case for hearing on February 6, 1969, but, despite notice given to counsel for Olilang, he did not appear before the court on that date. Thereupon, the case was dismissed. On February 11, 1969, Olilang's counsel filed a motion for Relief or Reconsideration upon the ground that, in making the memorandum of said hearing, in his new pocket calendar, his office secretary had erroneously made the corresponding entry in the space for February 11, 1969, instead of February 6, 1969. This motion was denied.
Section 3 of Rule 17 of the present Rules of Court, which is a reproduction of Section 3 of Rule 30 of the Rules of Court effective July 1, 1940, reads:
"Failure to prosecute. — If plaintiff fails to appear at the time of the trial, or to prosecute this action for an unreasonable length of time, or to comply with these rules or any other of the court, the action may be dismissed upon motion of the defendant or upon the court's own motion. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise provided by court."
Construing this provision, it was held in Smith Bell & Co. v. American President Lines, Ltd., 5 and this view was reiterated in subsequent cases,6that ". . . (t)he dismissal of an action pursuant to this rule rests upon the sound discretion of the court . . ."
As to what constitutes an "unreasonable length of time," within the purview of the above-quoted provision, We have ruled that it "depends upon the circumstances of each particular case"; that "the sound discretion of the court" in the determination of said question "will not be disturbed, in the absence of patent abuse"; and that "the burden of showing abuse of judicial discretion is upon appellant since every presumption is in favor of the correctness of the court's action." 7
Thus, this Court refused to disturb orders of dismissal for failure of the plaintiffs to prosecute for a period of four (4) years, 8 about three (3) years,9over a year, 10 less than a year, 11 and even less than three (3) months, 12 as well as for failure of the plaintiffs to comply, for less than two (2) months, with an order directing him to file a bill of particulars. 13
Let us now examine the cases under consideration, in the light of the foregoing precedents.
Plaintiffs-appellants in L-27187 assail the order of dismissal appealed from upon the ground: a) that the duty to serve summons upon the defendants devolves upon the clerk of court, not upon the plaintiffs; and 2) that service of summons by publication is not feasible in this case. The first ground is clearly untenable. We find no cogent reason to depart from the position taken in Smith Bell & Co. vs. American President Lines, in which this Court ruled:
"The appellants contend that under sections 1, 2, and 3, of Rule 31, Rules of Court, it is the duty of the clerk of court and not of the plaintiff to include a case in the trial calendar after the issues are joined and that it is also the duty of the clerk of court and not the plaintiff to fix the date for trial and to cause a notice to be served upon the parties. But the duty imposed upon the clerk in these sections of the Rules does not relieve the plaintiff of his own duty to prosecute the case diligently, for the non-performance of that duty by plaintiff is by section 3 of Rule 30 made an express ground for dismissing the action. If the clerk, therefore, in the present cases had been negligent, it was plaintiff's duty to call the court's attention to that fact so that the administration of justice would not suffer delay."
The second ground did not justify plaintiffs' inaction for three (3) years. If there was no means of summoning any of the defendants, plaintiffs should have so informed the court and moved for their exclusion from the complaint, within a reasonable period of time, so that the case could be disposed on one way or another instead of being left pending indefinitely, the contributing to the clogging of our court dockets. Besides, plaintiffs could have asked that the defendants be summoned by publication, pursuant to sections 16 and 17 of Rule 41 of the Rules of Court, the action being one for partition of real properties in the Philippines.
Appellant in L-29098 alleges that the failure of his counsel to appear at the pre-trial, on January 4, 1968, was due to the fact that he then had to attend the trial of another case; that he had filed, on December 27, 1967, a motion for postponement of said pre-trial upon such ground; and that, although the motion was denied on December 29, 1967, notice of the order to this effect was not received by him until January 12, 1968, or eight (8) days after the scheduled pre-trial. These reasons are insufficient to warrant a reversal of the order appealed from. Appellant was represented by the "Achacoso, Ocampo and Simbulan" Law Firm, on behalf of which Atty. Sabino P. Palomares, Jr. had appeared. If Atty. Palomares had another case set for trial on January 4, 1968, any of the three (3) members of the law firm could have and should have appeared at the pre-trial of the case at bar. Moreover, in the absence of an order granting said motion for postponement, appellant's counsel was not justified in assuming that the motion would be granted.
"The fact that the plaintiffs had filed a motion for continuance . . . does not entitle the plaintiffs to presume that their motion for continuance would be granted. Motions for postponement are left to the sound discretion of the trial court and unless there be an abuse of such discretion this Court will not interfere with the exercise of that discretion . . ." 14
As regards L-29373, having been rendered pursuant to a compromise between plaintiff Bolivar and defendant Bandayrel, who has not assailed the validity of said compromise, the judgment of the City Court was not appealable. 15 Regardless of whether or not Bandayrel had failed to exercise reasonable diligence in the prosecution of his appeal, the same was, therefore, dismissed properly.
Considering, with respect to L-29454, that from March 24, 1961, when the case was set for trial, to December 8, 1966, when it was dismissed, over five (5) years and eight (8) months had elapsed, during which plaintiff had done nothing to prosecute the case, and that, in its order of March 17, 1964, the lower court had already warned the parties "that no further postponement shall be granted," it is clear that the order of dismissal therein appealed from was fully justified.
Neither has appellant in L-29542 shown that there was a patent abuse of discretion in dismissing the case for failure on his part, as plaintiff therein, to prosecute it for over eleven (11) months considering that the subject matter of the litigation was a small sum of money 16 and that appellant's claim therefor had been found by the city court to be groundless. 17
In L-30711, both parties were notified, on August 8, 1966, that the record of the appeal taken by the plaintiff therein — from the judgment of dismissal rendered by the municipal court of General Santos — had been received by the Court of First Instance of Cotabato. Yet, up to January 30, 1969, when the case was ordered dismissed, or for about two (2) years and a half, plaintiff-appellant had taken no step whatsoever to prosecute its claim. The excuse given by counsel for the plaintiff is that he was waiting for the clerk of the court of first instance to issue the proper notice of pre-trial, without which the case would not be ready for trial. This excuse is untenable. In the language of the Smith Bell case:
". . . (T)he duty imposed upon the clerk . . . does not relieve the plaintiff of his own duty to prosecute the case diligently, for the non-performance of that duty by plaintiff is by section 3 of Rule 30 made an express ground for dismissing the action. If the clerk, therefore, in the present cases had been negligent, it was plaintiff's duty to call the court's attention to that fact so that the administration of justice would not suffer delay."
Similarly, the order of dismissal for the inaction of plaintiff in L-30744, from August 14, 1967 — when she filed her reply, with an answer to the defendant's counterclaim — to January 23, 1969 — or for over seventeen (17) months — when said order was issued — was, likewise, justified. Appellant's argument to the effect that the case was not ready for trial, no pre-trial having as yet been held, is — for the reasons adverted to in relation to L-30711 — devoid of merit.
So is the appeal in L-30933, more than five (5) years having elapsed from the submission of appellants' record on appeal on April 14, 1962, to August 11, 1967, when the appeal was dismissed. Appellants maintain that their duty to see to it that the record on appeal was transmitted and certified to this appellate court starts only from its approval. It is their duty as appellants to exercise due diligence in the prosecution of their appeal. Obviously, this duty includes that of securing the approval of the record on appeal and its transmittal to the appellate court.
Lastly, the mistake allegedly committed by the office secretary of the appellant's counsel, in L-31072, in making the entry for the hearing of the case on February 6, 1969, in the space for February 11, 1969, in his new pocket calendar, is too flimsy to warrant a reversal of the order of dismissal complained of, apart from being difficult to believe. At any rate, the sworn statement of appellant Olilang, attached, by way of affidavit of merit, to his motion for relief, does not satisfy the requirements therefor, it being no more than a general, abstract assertion of a conclusion that he has "a valid and meritorious cause of action against the respondents" therein, without any fact in support thereof.
WHEREFORE, the orders appealed from in each of these nine (9) cases are hereby affirmed, with costs against the respective appellants, except appellant in L-30711, which is the Government. It is so ordered.
Reyes, J.B.L., Makalintal, Zaldivar, Fernando, Teehankee and Villamor, JJ., concur.
Dizon and Castro, JJ., are on leave.
Barredo, J., concurs except in G.R. No. L-29542, as to which he reiterates his views in Gonzales v. Chua Keng Kian, G.R. No. L-26430, March 11, 1969.
Makasiar J., did not take part.
Footnotes
1. P1,737.50, with interest, plus 26% as attorney's fees.
2. For repairs made in Arcellana's car which was insured with the company.
3. P4,872.59.
4. A little over P3,000.
5. 94 Phil. 879, 880.
6. Bautista v. Teodoro, 101 Phil. 701, 704; Montelibano v. Benares, 103 Phil. 106, 109; Flores v. Philippine Alien Property Administrator, 107 Phil. 773, 778.
7. Brandt v. Behn, Meyer & Co., 38 Phil. 351, 354; Masiglat v. Mayor of Pasay City, 104 Phil. 319, 322; Vernus-Sanciangco v. Sanciangco, L-16219, April 28, 1962; Smith Bell & Co. v. American President Lines, Ltd., supra; Adorable v. Bonifacio, L-10698, April 22, 1959; Flores v. Philippine Alien Property Administrator, supra; Inter-Island Gas Service, Inc. v. De la Cerna, L-17631, October 19, 1966.
8. E.E. Elser, Inc. v. De la Rama Steamship Co., 94 Phil. 812; Smith Bell & Co. v. American President Lines, Ltd., supra; Adorable v. Bonifacio, supra; Ventura v. Baysa, L-12960, January 31, 1962.
9. Inter-Island Gas Service, Inc. v. De la Cerna, supra.
10. See Chuan v. De la Fuente, 90 Phil. 813; 815; Ortega v. De Guzman, L-25758, February 18, 1967; Insurance Co. of North America v. Republic, L-26794, November 15, 1967.
11. Flores v. Philippine Alien Property Administrator, supra, at pp. 777-778.
12. Sunico v. Villapando, 14 Phil. 352; Masiglat v. Mayor of Pasay City, supra.
13. Bautista v. Teodoro, supra.
14. Montelibano v. Benares, supra, at p. 109.
15. De los Reyes v. De Ugarte, 75 Phil. 505; Enriquez v. Padilla, 77 Phil. 373; Serrano v. Reyes, L-16153, Dec. 29, 1960.
16. For services allegedly rendered by the plaintiff-appellant.
17. No employer-employee relationship existed between the parties. See Masiglat v. Mayor of Pasay City, supra; Flores v. Philippine Alien Property Administrator, supra.
EN BANC
[G.R. No. L-29203. July 26, 1971.]
MARITIME COMPANY OF THE PHILIPPINES, plaintiff-appellant, vs. REPARATIONS COMMISSION or REPARATIONS MISSION, defendant-appellee.
Rafael Dinglasan for plaintiff-appellant.Panfilo M. Manguera and Jober Ayura, for defendant-appellee.
SYLLABUS
1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; AUTONOMY OF CONTRACTS; PARTIES CAN STIPULATE TERMS NOT CONTRARY TO LAW; LIMIT. — It is to be recognized that a large degree of autonomy is accorded contracting parties. Not that it is unfettered. They may, according to the Civil Code, "establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy."(Art. 1306) The law thus sets limits. It is a fundamental requirement that the contract entered into must be in accordance with, and not repugnant to, an applicable statute. Its terms are embodied therein. The contracting parties need not repeat them. They do not even have to be referred to. Every contract thus contains not only what has been explicitly stipulated, but the statutory provisions that have any bearing on the matter.
2. ID.; ID.; EXISTING LAW FORMS PART OF CONTRACT WITHOUT NEED OF EXPRESS REFERENCE. — "(A)n existing law enters into and forms part of a valid contract without the need for the parties expressly making reference to it. Only thus could its validity insofar as some of its provisions are concerned be assured." (Lakas ng Manggagawang Makabayan (LMM) v. Abiera, L-29474, Dec. 19, 1970, 36 SCRA 437, 442) A fairly recent restatement of the principle, in the language of Justice J.B.L. Reyes, speaking for the Court, appears in Liberation Steamship Co., Inc. v. Court of Industrial Relations. Thus: "The rule is that the law forms part of, and is read into, every contract, unless clearly excluded therefrom in those cases where such exclusion is allowed . . ." (L-25389-90, June 27, 1968, 23 SCRA 1105)
3. ID.; ID.; ID.; CASE AT BAR. — What is the law that forms part of, and is to be read into, the contract between plaintiff-appellant and defendant-appellee? It is, to repeat, Section 11 of Republic Act No. 1789 as amended. More specifically: "The insurance, ocean freight and other expenses incident to importation shall be paid by the end-user in accordance with usual business practices." The last sentence is equally plain: "Nothing herein shall be construed as exempting the end-user from paying in full all the necessary costs, charges and expenses incident to the application for and the procurement, production, delivery and acquisition, of, the goods concerned." The above provisions, then, form part of and must be read into the shipping contracts between plaintiff-appellant and defendant-appellee, unless they could be "clearly excluded therefrom," assuming "such exclusion is allowed."
4. STATUTORY CONSTRUCTION; CONSTRUCTION NOT REQUIRED WHERE STATUTORY PROVISION IS FREE FROM AMBIGUITY. — This is one of those cases where a statutory provision free from any ambiguity, quite specific and definite, calls for application. Under such circumstances, there is not even any need for construction. The task of the judiciary is clear. It must consider the law as controlling. This is what the lower court did. Certainly, no error could justly be imputed to it.
5. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF THE TRIAL COURT, GENERALLY UPHELD ON APPEAL. — Clearly, then, this assignment of error is lacking in merit. Plaintiff-appellant, it must be stressed, cannot possibly be unaware of the controlling legal provisions, considering that it has been itself the beneficiary of the Reparation Act, not to mention the fact that it has previously collected from end-users. Such was a finding of the lower court, which we are not at liberty to disturb, the appeal being purely on questions of law.
D E C I S I O N
FERNANDO, J p:
Decisive of the crucial issue posed by this appeal from a decision of the lower court is the applicability of the well-settled principle that a statute should be considered as entering into and forming part of a contract. Plaintiff Maritime Company of the Philippines, now appellant, would deny that it is controlling in its suit to hold defendant Reparations Commission, now appellee, liable for the freight charges as the consignee of reparations goods, notwithstanding that under Section 11 of the Reparations Act, 1 ocean freight and other expenses incident to importation shall be paid by the end-user and not by such agency. That defendant is exempt from such obligation is further stressed by the concluding sentence thereof: "Nothing herein shall be construed as exempting the end-user from playing in full all the necessary costs, charges and expenses incident to the application for and the procurement, production, delivery and acquisition, of, the goods concerned." It could not have been entirely unexpected therefore for the lower court to reach the conclusion that it had no choice on the matter in view of the explicit character of such statutory language which must be read into the contract of shipment. So it held in dismissing plaintiff's complaint for the recovery of freight charges. As such decision is not vitiated by any infirmity, we affirm.
In plaintiff's complaint of July 29, 1965, after setting forth its corporate character as well as that of the defendant Reparations Commission, which is vested by law with the power to enter into contracts and to sue and be sued, it alleged that shipments of reparations goods were loaded in three of its vessels consigned to defendant, with corresponding freight charges amounting to P228,250.58. 2 Then came the allegation that said vessels arrived in Manila and discharged all such shipment of reparations goods, which were duly delivered to and received by defendant as consignee in good order and condition, but defendant failed and refused to pay, notwithstanding repeated demands, the total amount of the freight charges above-mentioned.3There was a claim for attorney's fees in the amount of P20,000.00, plaintiff, according to the complaint, being compelled to engage counsel.4The prayer was for a judgment against defendant in favor of plaintiff in the aforesaid sum of P228,250.58 as freight charges plus 6% interest thereon from the date of the filing of the complaint until fully paid, and the sum of P20,000.00 by way of attorney's fees.
There was no denial in the answer of defendant filed on September 10, 1965 of the facts as alleged, but Section 11 of the Reparations Act was invoked to show that it was not liable at all for the freight charges, a matter which, according to defendant, was fully known to plaintiff as it had in several instances collected freight charges from the end-users concerned. 5 In its special affirmative defenses, defendant contended that plaintiff's claim was barred by a prior judgment under the principle of res adjudicata and that "as a carrier of reparations goods, [it] is not on]y presumed to know the law but is chargeable with knowledge of that law, and when it thus entered into a contract of carriage or affreightment of reparations goods, it rendered itself bound by the pertinent provision of Section 11 of the Reparations Law . . . on the question of who is liable for said freight charges; that as a matter of fact, plaintiff in its prior dealings with the defendant on this matter had so recognized and accepted the set-up as envisioned by Section 11 of the Reparations Law."6Its prayer was for the dismissal of the complaint with costs against plaintiff.
As noted, defendant's contention was sustained by the lower court in its decision of March 29, 1968 dismissing the complaint. After referring to the language of Section 11 of the Reparations Act, mentioned at the opening of this opinion, it reached the above conclusion, there being "no doubt on the interpretation as to who will pay for the freight charges." 7 It was likewise set forth therein that plaintiff in fact had been collecting freight charges from end-users and turning over a portion thereof, at least 50%, to defendant to pay its outstanding obligations, plaintiff having purchased several vessels through the Reparations Commission payable on installments.8There was no question then, to its mind, that plaintiff, considering such conduct, had no right to demand the payment of freight charges from defendant.9
From the above decision, an appeal was taken to this Court on April 26, 1968. The brief for plaintiff-appellant was filed on September 7 of the same year. Defendant-appellee Reparations Commission, in turn submitted its brief on October 7, 1968. There was no reply brief on the part of the appellant. Notwithstanding the vigorous presentation of the alleged errors imputed to the lower court, there is no legal justification, as was already indicated, for a reversal.
1. It is to be recognized that a large degree of autonomy is accorded contracting parties. Not that it is unfettered. They may, according to the Civil Code, 10 "establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy." The law thus sets limits. It is a fundamental requirement that the contract entered into must be in accordance with, and not repugnant to, an applicable statute. Its terms are embodied therein. The contracting parties need not repeat them. They do not even have to be referred to. Every contract thus contains not only what has been explicitly stipulated, but the statutory provisions that have any bearing on the matter. So it has been invariably held from United States v. Constantino, 11 a 1919 decision, to Lakas Ng Manggagawang Makabayan (LMM) v. Abiera, 2promulgated only a year ago. 13 According to Justice Malcolm, speaking for the Court in the former: "It is an elementary rule of contracts that the laws, in force at the time the contract was made, enter into and govern it." 14 This is how the matter is put in the Latest decision: "The principle is thus well-settled that an existing law enters into and forms part of a valid contract without the need for the parties expressly making reference to it. Only thus could its validity insofar as some of its provisions are concerned are assured." 15
A fairly recent restatement of the principle, in the language of Justice J.B.L. Reyes, speaking for the Court, appears in Liberation Steamship Co., Inc. vs. Court of Industrial Relations. 16 Thus: "The rule is that the law forms part of, and is read into, every contract, unless clearly excluded therefrom in those cases where such exclusion is allowed . . ." 17 What is the law that forms part of, and is to be read into, the contract between plaintiff-appellant and defendant-appellee? It is, to repeat, Section 11 of Republic Act No. 1789 as amended. 18 More specifically: "The insurance, ocean freight and other expenses incident to importation shall be paid by the end-user in accordance with usual business practice." The last sentence is equally plain: "Nothing herein shall be construed as exempting the end-user from paying in full all the necessary costs, charges and expenses incident to the application for and the procurement, production, delivery and acquisition, of, the goods concerned." The above provisions, then, form part of and must be read into the shipping contracts between plaintiff-appellant and defendant appellee, unless they could be "clearly excluded therefrom", assuming "such exclusion is allowed."
There is thus no persuasive force to the first error imputed to the lower court for their being applied to the contractual relationship between the parties. There is no showing that the shipping contracts between them are clearly excluded from the law, much less that such exclusion could be allowed. The lower court had no choice then. It yielded obedience to the law. What it did certainly cannot be stigmatized as error.
It is in that sense that reliance by plaintiff-appellant on the force and effect to be given the usual contracts between shipper and carriers, while finding support in the applicable provisions both of the Civil Code and the Code of Commerce, is far from persuasive. As was pointed out in the equally forceful brief of defendant-appellee, to so view the matter is to ignore what has been explicitly set forth in Section 11 of the Reparations Act which is controlling.
Nor did the attempt by plaintiff-appellant to invoke equitable considerations strengthen an inherently weak case. It asserted that defendant-appellee was in a better position to collect the freight charges. This is the answer of the latter: "Contrary to appellant's contention, it is itself and not the appellee which is in a better position to collect the corresponding ocean freight. This is because under the Reparations Law and established reparations set-up, the incidental charges to reparations importations, including freight charges are to be paid by the end-user to the party concerned upon the arrival but before delivery of the goods to the end-user, and 'in accordance with usual business practices.' ( Sect. 11 R.A. 1789, as amended) Under this concept, before the carrier issues the 'Permit to deliver' the shipments, it could rightfully demand payment as a settlement of the freight charges. This is the stage more appropriate and commands a better facility in so far as the collection of the freight charges is concerned, and not after the goods shall have been released to the end-user by the carrier and the corresponding contract of Conditional Purchase and Sale executed by and between the Commission and the End-user concerned." 19 It cannot be said then that plaintiff-appellant's effort to thus collect would be futile. Moreover, there is always the remedy of a court action. Both in the answer of defendant-appellee 20 as well as in its brief, 21 reference was made to such a suit actually being filed by plaintiff-appellant against a reparations end-user, C. G. Nazario and Sons, Inc. as well as the Reparations Commission as far back as 1961. 22 It was therein decided that defendant-appellee was not liable for the freight charges, such obligation being incumbent on its co-defendant C. G. Nazario and Sons, Inc., the end-user.
At bottom then, this is one of those cases where a statutory provision free from any ambiguity, quite specific and definite, calls for application. Under such circumstances, there is not even any need for construction. The task of the judiciary is clear. 23 It must consider the law as controlling. This is what the lower court did. Certainly, no error could justly be imputed to it.
2. Nor is the second assignment of error deserving of a better fate. Plaintiff-appellant would find fault with the holding of the lower court that its having collected the freight charges on certain occasions from the end-users of reparations goods and applying portions thereof to the payment of its obligation to defendant-appellee for the purchase of several vessels indicated it had no right to demand payment thereof from the latter. On this point, the appealed decision reads: "The practice followed by the plaintiff in its dealings with the defendant establishes the fact that the plaintiff has been collecting the freight charges from the end-users and turning over a portion thereof (at least 50%) to the [defendant] in payment of the outstanding obligation of the plaintiff to the defendant, the plaintiff having purchased several vessels thru the Reparations Commission and paying the latter by installments . . . There is, therefore, no question that as far as the plaintiff in its relation with the defendant is concerned, said plaintiff has been collecting from the end-users the freight charges of reparations goods from the end-users and, therefore, it has no right to demand the same from the defendant." 24 On the face thereof, the imputation of error would be hard to justify. The conclusion reached proceeds from an accurate appraisal of plaintiff-appellant's conduct. Nor is it without support in the evidence.
So it was made manifest in defendant-appellee's brief in these words: "To exemplify and bolster the foregoing view, attention is respectfully invited to the herein quoted contents of Exhs. 6, 7 and 8 of defendant-appellee: From Exh. '6' which is a letter of the plaintiff-appellant to the defendant-appellee, dated August 7, 1963 containing the manifestation of plaintiff to turn over to the defendant 50% of freightage collected, we quote in part: 'Allowing some time for the collection of freights from the various end-users, we expect to remit to the Reparations Commission an approximate total of P60,000.00 within 60 days', (italics supplied) From Exh. '7' which is a letter dated October 3, 1963, of plaintiff-appellant to defendant-appellee we quote the following: 'As of August 28, 1963, the only remaining past due account, on this vessel was a delinquency interest of P4,600.46. On that date, however, we paid the Reparations Commission the sum of P37,629.80 representing 50% of the freights on reparations cargo . . .' (Italics supplied) And per Exh. '8' which is also a letter of plaintiff-appellant to defendant-appellee, dated Feb. 6, 1964, and which requests authority to load reparations cargoes on non-reparations vessels, there is manifested therein: 'We undertake to apply 10% of whatever freights collected on reparations cargo loaded on the above vessels to the Reparations Commission for our reparations account with you.' (Italics supplied)" 25
All that plaintiff-appellant could say on the matter is the following: "It is respectfully submitted, that even assuming arguendo only that on certain occasions plaintiff-appellant would collect the freight charges from the end-users concerned; nevertheless, that practice does not at all affect the question of who is liable for the freight charges under the contracts of carriage, . . . Just because herein plaintiff-appellant would, on certain occasions, collect the freight charges from the end-users by virtue of an understanding with the consignee or owner of said reparations goods, it does not necessarily follow that under the said contracts of affreightment, the end-users are already liable for said freight charges which are collectible and demandable thereunder only from the consignee thereof." 26 This attempt by plaintiff-appellant to erode its conduct of its legal significance is unavailing, considering that it is based on an assumption as to defendant-appellee being liable for the payment of the freight charges, which, as had been made clear, is at war with the specific language of the controlling statutory provision.
Clearly, then, this assignment of error is lacking in merit. Plaintiff-appellant, it must be stressed, cannot possibly be unaware of the controlling legal provisions, considering that it has been itself the beneficiary of the Reparations Act, not to mention the fact that it has previously collected from end-users. Such was a finding of the lower court, which we are not at liberty to disturb, the appeal being purely on questions of law. As the last two errors allegedly committed by the lower court were based on plaintiff-appellant's basic premise as to the non-applicability of Section 11 of the Reparations Act, no useful purpose would be served by any further discussion. It suffices to state that the appealed decision can thus stand the vigorous attack launched against it.
3. One last word. This opinion deals with a shipping contract governed by specific provisions of the Reparations Act. Nothing in the opinion is to be considered applicable to contracts of a similar nature where ordinarily what has been explicitly agreed upon in the bill of lading is the measure of the respective rights and obligations of the parties.
WHEREFORE, the lower court decision of March 29, 1968 is affirmed. With costs against plaintiff-appellant.
Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Teehankee, Barredo, Villamor and Makasiar, JJ., concur.
Dizon, J., is on leave.
Castro, J., did not take part.
Footnotes
1. Republic Act No. 1789 (1957), as amended by Republic Act No. 3079 (1961).
2. Record on Appeal, Complaint, pars. 1 and 2.
3. Ibid, par. 3.
4. Ibid, par. 4.
5. Ibid, Answer, pars. 1 to 3.
6. Ibid, par. 5.
7. Ibid, pp. 16 and 17.
8. Ibid, p. 17.
9. Ibid.
10. Art. 1306. This used to be Art. 1255 of the old Civil Code.
11. 39 Phil. 552.
12. L-29474, 36 SCRA 437.
13. December 19, 1970.
14. United States v. Constantino, 39 Phil. 552, 556 (1919).
15. Lakas Ng Manggagawang Makabayan (LMM) v. Abiera, L-29474, Dec. 19, 1970, 36 SCRA 437, 442.
16. L-25389-90, June 27, 1968, 23 SCRA 1105.
17. Ibid, p. 1115. Manresa was likewise cited to this effect: "Pero en los mas de sus preceptos, la ley, como se ha dicho muchas veces, da un solo modelo del contrato, que pueden o no aceptar los contratantes. Sentado esto y siendo costumbre la modificacion de este modelo legal, puede surgir la duda de si el contrato que nada diga, se suple por los preceptos legales o por la practica que los modifica. La superioridad incontrovertible de la ley, hace suponer que el problema se decidiria generalmente por sta salvo dos excepciones: una indudable, cuando ella misma hace sus preceptos supletorios, no solo del pacto, sino de los usos locales; otra legitima, cuando la costumbre es constante, y adem s hay en el contrato datos para suponer su aceptacion." VIII Manresa, 5th ed., Part II, p. 535 (1950).
18. Sec. 10 of Republic Act No. 3079 (1961) amending Sec. 11 of the original act reads as follows: "[Sec.] 11. Terms of procurement. — As a general rule, reparations goods shall be procured on an f.o.b. (free-on-board) Japanese port basis: Provided, That the Mission may, if circumstances so warrant, procure such goods on c. and f. (cost and freight) Philippine port, exfactory or c.i.f. (cost, insurance and freight) Philippine port basis, in which case the suppliers shall be required to quote separately expenses for freight. When reparations goods shall be paid on installments, only the f.o.b. cost thereof, exclusive of the insurance, ocean freight and other expenses incident to importation shall be considered in computing the amount of the installments. The insurance shall be obtained from domestic insurance companies wholly owned by Filipino citizens: Provided, That upon delivery of reparations goods, whether partial or complete, pursuant to contract, to the end-user, whether a government agency or a private person or entity, the end-user shall insure at his expense said goods or parts thereof or attachment thereto, against loss or damage due to any and/or all causes, including but not limited to war, theft, robbery, unauthorized dismantling, with the Government Service Insurance System pursuant to the provisions of Republic Act Numbered Six hundred fifty-six, or with any private insurance company, eighty per cent of the capital of which is owned by Filipino citizens and the management of which is vested in such citizens, the policy to be endorsed in favor of the Commission to the extent of its insurable interest, for as long as the government has any insurable interest on such goods. The insurance, ocean freight and other expenses incident to importation shall be paid by end-user in accordance with usual business practices. As much as possible in the transportation of reparations goods from Japan to the Philippines, carriers of Philippine registry shall be preferred. The inspection and testing of reparations goods, whether intended for the government or for the private sector, shall be undertaken only by agencies specifically designated by the Philippine Government through the Mission: Provided, That preference shall be given to Philippine registered and internationally recognized inspection and testing firms. Nothing herein shall be construed as exempting the end-user from paying in full all the necessary costs, charges and expenses incident to the application for and the procurement, production, delivery and acquisition, of, the goods concerned."
19. Brief for Defendant-Appellee, p. 14.
20. Record on Appeal, p. 12.
21. Brief for Defendant-Appellee, p. 13.
22. Civil Case No. 49030 of the Court of First Instance of Manila.
23. Cf. People v. Mapa, L-22301, Aug. 30, 1967, 20 SCRA 1164; Pacific Oxygen & Acetylene Co. v. Central Bank, L-21881, March 1, 1968, 22 SCRA 917; Dequito v. Lopez, L-27757, March 28, 1968, 22 SCRA 1352; Padilla v. City of Pasay, L-24039, June 29, 1968, 23 SCRA 1349; Garcia v. Vasquez, L-26808, March 28, 1969, 27 SCRA 505; La Perla Cigar & Cigarette Factory v. Capapas, L-27948 & 28001-11, July 31, 1969, 28 SCRA 1085; Mobil Oil Phil., Inc. v. Diocares, L-26371, Sept. 30, 1969, 29 SCRA 656; Luzon Surety Co., Inc. v. De Garcia, L-25659, Oct. 31, 1969, 30 SCRA 111; Vda. de Macabenta v. Davao Stevedore Terminal Company, L-27489, April 30, 1970, 32 SCRA 553; Republic Flour Mills, Inc. v. Commissioner of Customs, L-28463, May 31, 1971.
24. Record on Appeal, Decision, p. 17.
25. Brief for Defendant-Appellee, pp. 12 and 13.
26. Brief for the Plaintiff-Appellant, pp. 16-17.