[ GR Nos.

26948 and 26949, Oct 08, 1927 ]

STREET, J.:
These two actions were instituted in the Court of First Instance of the Province of
Pampanga by the respective plaintiffs, Silvestra Baron and Guillermo Baron, for the
purpose of recovering from the defendant, Pablo David, the value of palay alleged to
have been sold by the plaintiffs to the defendant in the year 1920. Owing to the fact that
the defendant is the same in both cases and that the two cases depend in part upon the
same facts, the cases were heard together in the trial court and determined in a single
opinion. The same course will accordingly be followed here.

In the first case, i. e., that in which Silvestra Baron is plaintiff, the court gave judgment
for her to recover of the defendant the sum of P5,238.51, with costs. From this judgment
both the plaintiff and the defendant appealed.

In the second case, i. e., that in which Guillermo Baron is plaintiff, the court gave
judgment for him to recover of the defendant the sum of P5,734.60, with costs, from
which judgment both the plaintiff and the defendant also appealed. In the same case the
defendant interposed a counterclaim in which he asked credit for the sum of P2,800
which he had advanced to the plaintiff Guillermo Baron on various occasions. This credit
was admitted by the plaintiff and allowed by the trial court. But the defendant also
interposed a cross-action against Guillermo Baron in which the defendant claimed
compensation for damages alleged to have been suffered by him by reason of the
alleged malicious and false statements made by the plaintiff against the defendant in
suing out an attachment against the defendant's property soon after the institution of the
action. In the same cross-action the defendant also sought compensation for damages
incident to the shutting down of the defendant's rice mill for the period of one hundred
seventy days during which the above-mentioned attachment was in force. The trial
judge disallowed these claims for damages, and from this feature of the decision the
defendant appealed. We are therefore confronted with five distinct appeals in this
record.

Prior to January 17,1921, the defendant Pablo David had been engaged in running a
rice mill in the municipality of Magalang, in the Province of Pampanga, a mill which was
well patronized by the rice growers of the vicinity and almost constantly running. On the
date stated a fire occurred that destroyed the mill and its contents, and it was some time
before the mill could be rebuilt and put in operation again. Silvestra Baron, the plaintiff in
the first of the actions before us, is an aunt of the defendant; while Guillermo Baron, the
plaintiff in the other action, is his uncle in the months of March, April, and May, 1920,
Silvestra Baron placed a quantity of palay in the defendant's mill; and this, in connection
with some that she took over from Guillermo Baron, amounted to 1,012 cavans and 24
kilos. During approximately the same period Guillermo Baron placed other 1,865 cavans
and 43 kilos of palay in the mill. No compensation has ever been received by Silvestra
Baron upon account of the palay thus placed with the defendant. As against the palay
delivered by Guillermo Baron, he has received from the defendant advancements
amounting to P2,800; but apart from this he has not been compensated. Both the
plaintiffs claim that the palay which was delivered by them to the defendant was sold to
the defendant; while the defendant, on the other hand, claims that the palay was
deposited subject to future withdrawal by the depositors or subject to some future sale
which was never effected. He therefore supposes himself to be relieved from all
responsibility by virtue of the fire of January 17, 1921, already mentioned.

The plaintiffs further say that their palay was delivered to the defendant at his special
request, coupled with a promise on his part to pay for the same at the highest price per
cavan at which palay would sell during the year 1920; and they say that in August of
that year the defendant promised to pay them severally the price of P8.40 per cavan,
which was about the top of the market for the season, provided they would wait for
payment until December. The trial judge found that no such promise had been given;
and the incredulity of the court upon this point seems to us to be justified. A careful
examination of the proof, however, leads us to the conclusion that the plaintiffs did,
some time in the early part of August, 1920, make demand upon the defendant for a
settlement, which he evaded or postponed, leaving the exact amount due to the
plaintiffs undetermined.

It should be stated that the palay in question was placed by the plaintiffs in the
defendant's mill with the understanding that the defendant was at liberty to convert it
into rice and dispose of it at his pleasure. The mill was actively running during the entire
season, and as palay was daily coming in from many customers and as rice was being
constantly shipped by the defendant to Manila, or other rice markets, it was impossible
to keep the plaintiffs' palay segregated. In fact the defendant admits that the plaintiffs'
palay was mixed with that of others. In view of the nature of the defendant's activities
and the way in which the palay was handled in the defendant's mill, it is quite certain
that all of the plaintiffs' palay, which was put in before June 1,1920, had been milled and
disposed of long prior to the fire of January 17, 1921. Furthermore, the proof shows
that when the fire occurred there could not have been more than about 360 cavans of
palay in the mill, none of which by any reasonable probability could have been any part
of the palay delivered by the plaintiffs. Considering the fact that the defendant had thus
milled and doubtless sold the plaintiffs' palay prior to the date of the fire, it results that
he is bound to account for its value, and his liability was not extinguished by the
occurrence of the fire. In the briefs before us it seems to have been assumed by the
opposing attorneys that in order for the plaintiffs to recover, it is necessary that they
should be able to establish that the plaintiffs' palay was delivered in the character of a
sale, and that if, on the contrary, the defendant should prove that the delivery was made
in the character of deposit, the defendant should be absolved. But the case does not
depend precisely upon this explicit alternative; for even supposing that the palay may
have been delivered in the character of deposit, subject to future sale or withdrawal at
plaintiffs' election, nevertheless if it was understood that the defendant might mill the
palay and he has in fact appropriated it to his own use, he is of course bound to account
for its value. Under article 1768 of the Civil Code, when the depositary has permission
to make use of the thing deposited, the contract loses the character of mere deposit and
becomes a loan or a commodatum; and of course by appropriating the thing, the bailee
becomes responsible for its value. In this connection we wholly reject the defendant's
pretense that the palay delivered by the plaintiffs or any part of it was actually
consumed in the fire of January, 1921. Nor is the liability of the defendant in any wise
affected by the circumstance that, by a custom prevailing among rice millers in this
country, persons placing palay with them without special agreement as to price are at
liberty to withdraw it later, proper allowance being made for storage and shrinkage, a
thing that is sometimes done, though rarely.

In view of what has been said it becomes necessary to discover the price which the
defendant should be required to pay for the plaintiffs' palay. Upon this point the trial
judge fixed upon P6.15 per cavan; and although we are not exactly in agreement with
him as to the propriety of the method by which he arrived at this figure, we are
nevertheless of the opinion that, all things considered, the result is approximately
correct. It appears that the price of palay during the months of April, May, and June,
1920, had been excessively high in the Philippine Islands, and even prior to that period
the Government of the Philippine Islands had been attempting to hold the price in check
by executive regulation. The highest point which was touched in this season was
apparently about P8.50 per cavan, but the market began to sag in May or June and
presently entered upon a precipitate decline. As we have already stated, the plaintiffs
made demand upon the defendant for settlement in the early part of August; and, so far
as we are able to judge from the proof, the price of P6.15 per cavan, fixed by the trial
court, is about the price at which the defendant should be required to settle as of that
date. It was the date of the demand of the plaintiffs for settlement that determined the
price to be paid by the defendant, and this is true whether the palay was delivered in the
character of sale with price undetermined or in the character of deposit subject to use
by the defendant. It results that the plaintiffs are respectively entitled to recover the
value of the palay which they had placed with the defendant during the period referred
to, with interest from the date of the filing of their several complaints.

As already stated, the trial court found that at the time of the fire there were about 360
cavans of palay in the mill and that this palay was destroyed. His Honor assumed that
this was part of the palay delivered by the plaintiffs, and he held that the defendant
should be credited with said amount. His Honor therefore deducted from the claims of
the plaintiffs their respective proportionate shares of this amount of palay. We are
unable to see the propriety of this feature of the decision. There were many customers
of the defendant's rice mill who had placed their palay with the defendant under the
same conditions as the plaintiffs, and nothing can be more certain than that the palay
which was burned did not belong to the plaintiffs. That palay without a doubt had long
been sold and marketed. The assignments of error of each of the plaintiffs-appellants in
which this feature of the decision is attacked are therefore well taken; and the appealed
judgments must be modified by eliminating the deductions which the trial court allowed
from the plaintiffs' claims.

The trial judge also allowed a deduction from the claim of the plaintiff Guillermo Baron of
167 cavans of palay, as indicated in Exhibits 12, 13, 14, and 16. This was also
erroneous. These exhibits relate to transactions that occurred nearly two years after the
transactions with which we are here concerned, and they were offered in evidence
merely to show the character of subsequent transactions between the parties, it
appearing that at the time said exhibits came into existence the defendant had
reconstructed his mill and that business, relations with Guillermo Baron had been
resumed. The transactions shown by these exhibits (which relate to palay withdrawn by
the plaintiff from the defendant's mill) were not made the subject of controversy in either
the complaint or the cross-complaint of the defendant in the second case. They
therefore should not have been taken into account as a credit in favor of the defendant.
Said credit must therefore be likewise disallowed, though this feature of our decision will
of course be without prejudice to any proper adjustment of the rights of the parties with
respect to these subsequent transactions that they have heretofore or may hereafter
effect.

The preceding discussion disposes of all vital contentions relative to the liability of the
defendant upon the causes of action stated in the complaints. We proceed therefore
now to consider the question of the liability of the plaintiff Guillermo Baron upon the
cross-complaint of Pablo David in case R. G. No. 26949. In this cross-action the
defendant seeks, as stated in the third paragraph of this opinion, to recover damages
for the wrongful suing out of an attachment by the plaintiff and the levy of the same
upon the defendant's rice mill. It appears that about two and one-half months after said
action was begun, the plaintiff, Guillermo Baron, asked for an attachment to be issued
against the property of the defendant; and to procure the issuance of said writ the
plaintiff made affidavit to the effect that the defendant was disposing, or attempting to
dispose of his property for the purpose of defrauding the plaintiff. Upon this affidavit an
attachment was issued as prayed, and on March 27, 1924, it was levied upon the
defendant's rice mill, and other property, real and personal.

Upon attaching the property the sheriff closed the mill and placed it in the care of a
deputy. Operations were not resumed until September 13,1924, when the attachment
was dissolved by an order of the court and the defendant was permitted to resume
control. At the time the attachment was levied there were, in the bodega, more than
20,000 cavans of palay belonging to persons who held receipts therefor; and in order to
get this grain away from the sheriff, twenty-four of the depositors found it necessary to
submit third-party claims to the sheriff. When these claims were put in the sheriff notified
the plaintiff that a bond in the amount of P50,000 must be given, otherwise the grain
would, be released. The plaintiff, being unable or unwilling to give this bond, the sheriff
surrendered the palay to the claimants; but the attachments the rice mill was maintained
until September 13, as above stated, covering a period of one hundred seventy days
during which the mill was idle. The ground upon which the attachment was based, as
set forth in the plaintiffs affidavit, was that the defendant was disposing or attempting to
dispose of his property for the purpose of defrauding the plaintiff. That this allegation
was false is clearly apparent, and not a word of proof has been submitted in support of
the assertion. On the contrary, the defendant testified that at the time this attachment
was secured he was solvent and could have paid his indebtedness to the plaintiff if
judgment had been rendered against him in ordinary course. His financial condition
was of course well known to the plaintiff, who is his uncle. The defendant also states
that he had not conveyed away any of his property, nor had intended to do so, for the
purpose of defrauding the plaintiff. We have before us therefore a case of a baseless
attachment, recklessly sued out upon a false affidavit and levied upon the defendant's
property to his great and needless damage. That the act of the plaintiff in suing out the
writ was wholly unjustifiable is perhaps also indicated in the circumstance that the
attachment was finally dissolved upon the motion of the plaintiff himself.

The defendant testified that his mill was accustomed to clean from 400 to 450 cavans of
palay per day, producing 225 cavans of rice, of 57 kilos each. The price charged for
cleaning each cavan of rice was 30 centavos. The defendant also stated that the
expense of running the mill per day was from P18 to P25, and that the net profit per day
on the mill was more than P40. As the mill was not accustomed to run on Sundays and
holidays, we estimate that the defendant lost the profit that would have been earned on
not less than one hundred forty work days. Figuring his profits at P40 per day, which
would appear to be a conservative estimate, the actual net loss resulting from his failure
to operate the mill during the time stated could not have been less than P5,600. The
reasonableness of these figures is also indicated in the fact that the twenty-four
customers who intervened with third-party claims took out of the camarin 20,000cavans
of palay, practically all of which, in the ordinary course of events, would have been
milled in this plant by the defendant. And of course other grain would have found its way
to this mill if it had remained open during the one hundred forty days when it was
closed.

But this is not all. When the attachment was dissolved and the mill again opened, the
defendant found that his customers had become scattered and could not be easily
gotten back. So slow, indeed, was his patronage in returning that during the remainder
of the year 1924 the defendant was able to mill scarcely more than the grain belonging
to himself and his brothers; and even after the next season opened many of his old
customers did not return. Several of these individuals, testifying as witnesses in this
case, stated that, owing to the unpleasant experience which they had had in getting
back their grain from the sheriff in the third-party proceedings, they had not come back
to the mill of the defendant, though they had previously had much confidence in him.

As against the defendant's proof showing the facts above stated the plaintiff submitted
no evidence whatever. We are therefore constrained to hold that the defendant was
damaged by the attachment to the extent of P5,600, in profits lost by the closure of the
mill, and to the extent of P1,400 for injury to the good-will of his business, making a total
of P7,000. For this amount the defendant must recover judgment on his cross-
complaint.

The trial court, in dismissing the defendant's cross-complaint for damages resulting from
the wrongful suing out of the attachment, suggested that the closure of the rice mill was
a mere act of the sheriff for which the plaintiff was not responsible and that the
defendant might have been permitted by the sheriff to continue running the mill if he had
applied to the sheriff for permission to operate it. This singular suggestion will not bear a
moment's criticism. It was of course the duty of the sheriff, in levying the attachment, to
take the attached property into his possession, and the closure of the mill was a natural,
and even necessary, consequence of the attachment. For the damage thus inflicted
upon the defendant the plaintiff is undoubtedly responsible.

One feature of the cross-complaint consists in the claim of the defendant (cross-
complainant) for the sum of P20,000 as damages caused to the defendant by the false
and alleged malicious statements contained in the affidavit upon which the attachment
was procured. The additional sum of P5,000 is also claimed as exemplary damages. It
is clear that with respect to these damages the cross-action cannot be maintained, for
the reason that the affidavit in question was used in course of a legal proceeding for the
purpose of obtaining a legal remedy, and it is therefore privileged. But though, the
affidavit is not actionable as a libelous publication, this fact is no obstacle to the
maintenance of an action to recover the damage resulting from the levy of the
attachment.

Before closing this opinion a word should be said upon the point raised in the first
assignment of error of Pablo David as defendant in case R. G. No. 26949. In this
connection it appears that the deposition of Guillermo Baron was presented in court as
evidence and was admitted as an exhibit, without being actually read to the court. It is
supposed in the assignment of error now under consideration that the deposition is not
available as evidence to the plaintiff because it was not actually read out in court. This
contention is not well founded. It is true that in section 364 of the Code of Civil
Procedure it is said that a deposition, once taken, may be read by either party and will
then be deemed the evidence of the party reading it. The use of the word "read" in this
section finds its explanation of course in the American practice of trying cases for the
most part before juries. When a case is thus tried the actual reading of the deposition is
necessary in order that the jurymen may become acquainted with its contents. But in
courts of equity, and in all courts where judges have the evidence before them for
perusal at their pleasure, it is not necessary that the deposition should be actually read
when presented as evidence.

From what has been said it results that the judgment of the court below must be
modified with respect to the amounts recoverable by the respective plaintiffs in the two
actions R. G. Nos. 26948 and 26949 and must be reversed in respect to the disposition
of the cross-complaint interposed by the defendant in case R. G. No. 26949, with the
following results: In case R. G. No. 26948 the plaintiff Silvestra Baron will recover of the
defendant Pablo David the sum of P6,227.24, with interest from November 21, 1923,
the date of the filing of her complaint, and with costs. In case R. G. No. 26949 the
plaintiff Guillermo Baron will recover of the defendant Pablo David the sum of
P8,669.75, with interest from January 9, 1924. In the same case the defendant Pablo
David, as plaintiff in the cross-complaint, will recover of Guillermo Baron the sum of
P7,000, without costs. So ordered.