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OBLIGATIONS AND CONTRACTS CASES

[G.R. No. 136031. January 4, 2002] During


the first day of trading or on October 22, 1992, Lim made a net profit of
JEFFERSON LIM, petitioner, vs. QUEENSLAND TOKYO P6,845.57.[9] Shia went to the office of Lim and informed him about it. He
COMMODITIES, INC., respondent. was elated. He agreed to continue trading. During the second day of
DECISION trading or on October 23, 1992, they lost P44,465.[10]
QUISUMBING, J.:
Meanwhile, on October 22, 1992, respondent learned that it would take
Before us is a petition for review assailing the June 25, 1998, decision[1] seventeen (17) days to clear the managers check given by petitioner.
of the Court of Appeals in CA-G.R. CV No. 46495 which reversed and set Hence, on October 23, 1992, at about 11:00 A.M., upon managements
aside the decision of the Regional Trial Court of Cebu, Branch 24, request, Shia returned the check to petitioner who informed Shia that
dismissing the complaint by respondent for a sum of money as well as petitioner would rather replace the managers check with a travelers
petitioners counterclaim. check.[11] Considering that it was 12:00 noon already, petitioner
requested Shia to come back at 2:00 P.M.. Shia went with petitioner to the
Private respondent Queensland Tokyo Commodities, Incorporated bank to purchase a travelers check at the PCI Bank, Juan Luna Branch at
(Queensland, for brevity) is a duly licensed broker engaged in the trading 2:00 P.M.. Shia noticed that the travelers check was not indorsed but Lim
of commodities futures with full membership and with a floor trading right told Shia that Queensland could sign the indorsee portion.[12] Because
at the Manila Futures Exchange, Inc..[2] Shia trusted the latters good credit rating, and out of ignorance, he
brought the check back to the office unsigned.[13] Inasmuch as that was
Sometime in 1992, Benjamin Shia, a market analyst and trader of a busy Friday, the check was kept in the drawer of respondents
Queensland, was introduced to petitioner Jefferson Lim by Marissa consultant. Later, the travelers check was deposited with Citibank.[14]
Bontia,[3] one of his employees. Marissas father was a former employee
of Lims father.[4] On October 26, 1992, Shia informed petitioner that they incurred a
floating loss of P44,695[15] on October 23, 1992. He told petitioner that
Shia suggested that Lim invest in the Foreign Exchange Market, trading they could still recover their losses. He could unlock the floating loss on
U.S. dollar against the Japanese yen, British pound, Deutsche Mark and Friday. By unlocking the floating loss, the loss on a particular day is
Swiss Franc. minimized.

Before investing, Lim requested Shia for proof that the foreign exchange On October 27, 1992, Citibank informed respondent that the travelers
was really lucrative. They conducted mock tradings without money check could not be cleared unless it was duly signed by Lim, the original
involved. As the mock trading showed profitability, Lim decided to invest purchaser of the travelers check. A Miss Arajo, from the accounting staff
with a marginal deposit of US$5,000 in managers check. The marginal of Queensland, returned the check to Lim for his signature, but the latter,
deposit represented the advance capital for his future tradings. It was aware of his P44,465 loss, demanded for a liquidation of his account and
made to apply to any authorized future transactions, and answered for said he would get back what was left of his investment.[16] Meanwhile,
any trading account against which the deposit was made, for any loss of Lim signed only one portion of the travelers check, leaving the other half
whatever nature, and for all obligations, which the investor would incur blank. He then kept it.[17] Arajo went back to the office without it.
with the broker.[5]
Respondent asked Shia to talk to petitioner for a settlement of his account
Because respondent Queensland dealt in pesos only, it had to convert but petitioner refused to talk with Shia. Shia made follow-ups for more
US$5,000 in managers check to pesos, amounting to P125,000 since the than a week beginning October 27, 1992. Because petitioner disregarded
exchange rate at that time was P25 to US$1.00. To accommodate this request, respondent was compelled to engage the services of a
petitioners request to trade right away, it advanced the P125,000 from its lawyer, who sent a demand letter[18] to petitioner. This letter went
own funds while waiting for the managers check to clear. Thereafter, a unheeded. Thus, respondent filed a complaint[19] against petitioner,
deposit notice in the amount of P125,000 was issued to Queensland, docketed as Civil Case No. CEB-13737, for collection of a sum of money.
marked as Exhibit E. This was sent to Lim who received it as indicated by
his signature marked as Exhibit E-1. Then, Lim signed the Customers On April 22, 1994, the trial court rendered its decision, thus:
Agreement, marked as Exhibit F, which provides as follows:
WHEREFORE, in view of all the foregoing, the complaint is dismissed
25. Upon signing of this Agreement, I shall deposit an initial margin either without pronouncement as to costs. The defendants counterclaim is
by personal check, managers check or cash. In the case of the first, I likewise dismissed.
shall not be permitted to trade until the check has been cleared by my
bank and credited to your account. In respect of margin calls or additional SO ORDERED.[20]
deposits required, I shall likewise pay them either by personal check,
managers check or cash. In the event my personal check is dishonored, On appeal by Queensland, the Court of Appeals reversed and set aside
the company has the right without call or notice to settle/close my trading the trial courts decision, with the following fallo:
account against which the deposit was made. In such event, any loss of
whatever nature shall be borne by me and I shall settle such loss upon WHEREFORE, the decision appealed from is hereby REVERSED AND
demand together with interest and reasonable cost of collection. However, SET ASIDE, and another one is entered ordering appellee [Jefferson Lim]
in the event such liquidation gives rise to a profit then such amount shall to pay appellant the sum of P125,000.00, with interest at the legal rate
be credited to the Company. The above notwithstanding, I am not relieved until the whole amount is fully paid, P10,000.00 as attorneys fees, and
of any legal responsibility as a result of my check being dishonored by my costs.[21]
bank.[6]
Petitioner herein filed a motion for reconsideration before the Court of
Petitioner Lim was then allowed to trade with respondent company which Appeals, which was denied in a resolution dated October 6, 1998.[22]
was coursed through Shia by virtue of the blank order forms, marked as
Exhibits G, G-1 to G-13,[7] all signed by Lim. Respondent furnished Lim Dissatisfied, petitioner filed the instant recourse alleging that the appellate
with the daily market report and statements of transactions as evidenced court committed errors:
by the receiving forms, marked as Exhibits J, J-1 to J-4,[8] some of which
were received by Lim. I - IN REVERSING THE DECISION OF THE RTC WHICH DISMISSED
RESPONDENTS COMPLAINT;

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OBLIGATIONS AND CONTRACTS CASES
investment as stated in the Risk Disclosure Statement,[34] located in the
II - IN HOLDING THAT THE PETITIONER IS ESTOPPED IN same box where petitioner signed.
QUESTIONING THE VALIDITY OF THE CUSTOMERS AGREEMENT
AND FROM DENYING THE EFFECTS OF HIS CONDUCT; Further, petitioner contends that the Customers Agreement was rendered
nugatory because: (1) the marginal deposit he gave was in dollars and (2)
III - IN NOT TAKING JUDICIAL NOTICE OF THE LETTER OF respondent allowed him to trade even before the US$5,000 managers
RESPONDENT THAT THE SEC HAS ISSUED A CEASE AND DESIST check was cleared. This contention is disingenuous to say the least, but
ORDER AGAINST THE MANILA INTERNATIONAL FUTURES hardly meritorious.
EXCHANGE COMMISSION AND ALL COMMODITY TRADERS
INCLUDING THE RESPONDENT. Petitioner himself was responsible for the issuance of the US$5,000
managers check. It was he who failed to replace the managers check with
Despite the petitioners formulation of alleged errors, we find that the main cash. He authorized Shia to start trading even before the US$5,000 check
issue is whether or not the appellate court erred in holding that petitioner had cleared. He could not, in fairness to the other party concerned, now
is estopped from questioning the validity of the Customers Agreement that invoke his own misdeeds to exculpate himself, conformably with the basic
he signed. principle in law that he who comes to court must come with clean hands.

The essential elements of estoppel are: (1) conduct of a party amounting Contrary to petitioners contention, we also find that respondent did not
to false representation or concealment of material facts or at least violate paragraph 14 of the Guidelines for Spot/Futures Currency Trading,
calculated to convey the impression that the facts are otherwise than, and which provides:
inconsistent with, those which the party subsequently attempts to assert;
(2) intent, or at least expectation, that this conduct shall be acted upon by, 14. DEPOSITS & PAYMENTS
or at least influence, the other party; and (3) knowledge, actual or
constructive, of the real facts.[23] All deposits, payments and repayments, etc. will be in Philippine
Currency. When a deposit with the Company is not in cash or bank draft,
Here, it is uncontested that petitioner had in fact signed the Customers such deposit will not take effect in the account concerned until it has been
Agreement in the morning of October 22, 1992,[24] knowing fully well the confirmed NEGOTIABLE for payment by authorized management
nature of the contract he was entering into. The Customers Agreement personnel.[35]
was duly notarized and as a public document it is evidence of the fact,
which gave rise to its execution and of the date of the latter.[25] Next, Respondent claims it informed petitioner of its policy not to accept dollar
petitioner paid his investment deposit to respondent in the form of a investment. For this reason, it converted the petitioners US$5,000
managers check in the amount of US$5,000 as evidenced by PCI Bank managers check to pesos (P125,000) out of respondents own funds to
Managers Check No. 69007, dated October 22, 1992.[26] All these are accommodate petitioners request to trade right away.[36] On record, it
indicia that petitioner treated the Customers Agreement as a valid and appears that petitioner agreed to the conversion of his dollar deposit to
binding contract. pesos. [37]

Moreover, we agree that, on petitioners part, there was misrepresentation Neither is there merit in petitioners contention that respondent violated the
of facts. He replaced the managers check with an unendorsed travelers Customers Agreement by allowing him to trade even if his managers
check, instead of cash, while assuring Shia that respondent Queensland check was not yet cleared, as he had no margin deposit as required by
could sign the indorsee portion thereof.[27] As it turned out, Citibank the Customers Agreement, viz:
informed respondent that only the original purchaser (i.e. the petitioner)
could sign said check. When the check was returned to petitioner for his 5. Margin Receipt
signature, he refused to sign. Then, as petitioner himself admitted in his
Memorandum,[28] he used the travelers check for his travel expenses. A Margin Receipt issued by the Company shall only be for the purpose of
[29] acknowledging receipt of an amount as margin deposit for Spot/Futures
Currency Trading. All checks received for the purpose of margin deposits
More significantly, petitioner already availed himself of the benefits of the have to be cleared through such bank account as may be opened by the
Customers Agreement whose validity he now impugns. As found by the Company before any order can be accepted.[38]
CA, even before petitioners initial marginal deposit (in the form of the PCI
managers check dated October 22, 1992)[30] was converted into cash, But as stated earlier, respondent advanced petitioners marginal deposit of
he already started trading on October 22, 1992, thereby making a net P125,000 out of its own funds while waiting for the US$5,000 managers
profit of P6,845.57. On October 23, he continued availing of said check to clear, relying on the good credit standing of petitioner. Contrary
agreement, although this time he incurred a floating loss of P44,645.[31] to petitioners averment now, respondent had advanced his margin deposit
While he claimed he had not authorized respondent to trade on those with his approval. Nowhere in the Guidelines adverted to by petitioner
dates, this claim is belied by his signature affixed in the order forms, was such an arrangement prohibited. Note that the advance was made
marked as Exhibits G, G-1 to G-13.[32] with petitioners consent, as indicated by his signature, Exhibit E-1,[39]
affixed in the deposit notice, Exhibit E,[40] sent to him by respondent. By
Clearly, by his own acts, petitioner is estopped from impugning the validity his failure to seasonably object to this arrangement and by affixing his
of the Customers Agreement. For a party to a contract cannot deny the signature to the notice of deposit, petitioner is barred from questioning
validity thereof after enjoying its benefits without outrage to ones sense of said arrangement now.
justice and fairness.
Anent the last assigned error, petitioner faults the appellate court for not
It appears that petitioners reason to back out of the agreement is that he taking judicial notice of the cease and desist order against the Manila
began sustaining losses from the trade. However, this alone is insufficient International Futures Exchange Commission and all commodity traders
to nullify the contract or disregard its legal effects. By its very nature it is including respondent. However, we find that this issue was first raised
already a perfected, if not a consummated, contract. Courts have no only in petitioners motion for reconsideration of the Court of Appeals
power to relieve parties from obligations voluntarily assumed, simply decision. It was never raised in the Memorandum[41] filed by petitioner
because their contracts turned out to be disastrous or unwise before the trial court. Hence, this Court cannot now, for the first time on
investments.[33] Notably, in the Customers Agreement, petitioner has appeal, pass upon this issue. For an issue cannot be raised for the first
been forewarned of the high risk involved in the foreign currency time on appeal. It must be raised seasonably in the proceedings before
2

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OBLIGATIONS AND CONTRACTS CASES
the lower court. Questions raised on appeal must be within the issues On
framed by the parties and, consequently, issues not raised in the trial February 10, 1972, Jaime and his uncle Salvador forged a Kasunduan ng
court cannot be raised for the first time on appeal.[42] Paglipat Ng Karapatan sa Isang Lagay na Lupang Solar (Kasunduan)
whereby Jaime transferred ownership of the 65 square meters (the
WHEREFORE, the instant petition is DENIED for lack of merit. The questioned property) in favor of Salvador.
decision of the Court of Appeals dated June 25, 1998, in CA-G.R. CV No.
46495 is AFFIRMED. Costs against petitioner. After Apolinario died, his daughter Angela Hermosilla filed a protest before
the Land Authority, which became the National Housing Authority (NHA),
SO ORDERED. [5] contending that as an heir of the deceased, she is also entitled to Lots
12 and 19. By Resolution of June 10, 1981, the NHA dismissed the
protest.
HEIRS OF SALVADOR HERMOSILLA, namely: ADELAIDA H.
DOLLETON, RUBEN HERMOSILLA, LOLITA H. DE LA VEGA, The NHA later awarded on March 16, 1986 Lot 19 to Jaime for which he
ERLINDA H. INOVIO, CELIA H. VIVIT, ZENAIDA H. ACHOY, PRECILLA and his wife were issued a title, Transfer Certificate of Title No. T-156296,
H. LIMPIAHOY, and EDGARDO HERMOSILLA, on September 15, 1987.[6]
Petitioners,
-versus- On May 25, 1992, petitioners filed an action for Annulment of Title on the
Spouses JAIME REMOQUILLO and LUZ REMOQUILLO, ground of fraud with damages against Jaime and his spouse, together
Respondents. with the Register of Deeds, before the Regional Trial Court (RTC) of Bian,
G.R. No. 167320 Laguna, alleging that by virtue of the Kasunduan executed in 1972, Jaime
had conveyed to his uncle Salvador the questioned propertypart of Lot 19
Present: covered by TCT No. T-156296 which was issued in 1987.
QUISUMBING, Chairperson, By Decision[7] of May 11, 1999, the RTC of Bian, Laguna, Branch 25,
CARPIO, found the Kasunduan a perfected contract of sale, there being a meeting
CARPIO MORALES, of the minds upon an identified object and upon a specific price, and that
TINGA, and ownership over the questioned property had already been transferred and
VELASCO, JR., JJ. delivered to Salvador.
Promulgated: On the alleged failure of consideration of the Kasunduan, the trial court
held that the same did not render the contract void, but merely allowed an
January 30, 2007
action for specific performance. The dispositive portion of the trial courts
x----------------------------------------------------
Decision reads:
----x
WHEREFORE, judgment is hereby rendered declaring plaintiffs as co-
DECISION
owners of the 65 square meters of the 341 square meters covered by
CARPIO MORALES, J.: TCT T-156296, registered in the name of defendants. The Court hereby
directs the Register of Deeds of Laguna, Calamba Branch, to cancel said
Petitioners Heirs of Salvador Hermosilla, namely: Adelaida H. Dolleton, Transfer Certificate of Title, and in lieu thereof, to issue another [to]
Ruben Hermosilla, Lolita H. de la Vega, Erlinda H. Inovio,[1] Celia[2] H. plaintiffs [as] co-owners of the above portion.
Vivit, Zenaida H. Achoy, Precilla[3] H. Limpiahoy, and Edgardo
Hermosilla, assail the Court of Appeals Decision[4] dated September 29, No pronouncement as to costs.
2004 which reversed the trial courts decision in their favor and
SO ORDERED.[8] (Underscoring supplied)
accordingly dismissed their complaint.
Subject of the controversy is a 65-square meter portion of a lot located in
Poblacion, San Pedro, Laguna. The Court of Appeals, reversing the decision of the trial court, held that
the Kasunduan was void because at the time of its execution in 1972, the
On August 31, 1931, the Republic of the Philippines acquired through Republic of the Philippines was still the owner of Lot 19, hence, no right
purchase the San Pedro Tunasan Homesite. thereover was transmitted by Jaime who was awarded the Lot in 1986,
and consequently no right was transmitted by Salvador through
Apolinario Hermosilla (Apolinario), who was occupying a lot in San Pedro
succession to petitioners. And it found no evidence of fraud in Jaimes act
Tunasan Homesite until his death in 1964, caused the subdivision of the
of having Lot 19, including the questioned property, registered in his and
lot into two, Lot 12 with an area of 341 square meters, and Lot 19 with an
his wifes name in 1987.
area of 341 square meters of which the 65 square meters subject of this
controversy form part. At all events, the appellate court held that the action had prescribed, it
having been filed in 1992, more than four years from the issuance to
On April 30, 1962, Apolinario executed a Deed of Assignment transferring
Jaime and his wife of the Transfer Certificate of Title.
possession of Lot 19 in favor of his grandson, herein respondent Jaime
Remoquillo (Jaime). As the Land Tenure Administration (LTA) later found Hence, the present petition for review on certiorari.
that Lot 19 was still available for disposition to qualified applicants, Jaime,
being its actual occupant, applied for its acquisition before the LTA on May Petitioners argue that the application of the law on prescription would
10, 1963. perpetrate fraud and spawn injustice, they citing Cometa v. Court of
Appeals;[9] and that at any rate, prescription does not lie against a co-
On July 8, 1963, Apolinario conveyed Lot 12 to his son Salvador owner. Cometa involves a different factual milieu concerning the right of
Hermosilla (Salvador), Jaimes uncle. redemption, however. And petitioners contention that prescription does
not lie against a co-owner fails because only the title covering the
Salvador later filed an application to purchase Lot 12 which was awarded
questioned property, which petitioners claim to solely own, is being
to him by the defunct Land Authority on December 16, 1971.
assailed.

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OBLIGATIONS AND CONTRACTS CASES
While this Court finds that the action is, contrary to the appellate courts transfer
ruling, not barred by the statute of limitations, it is still dismissible as or encumbrance made in violation hereof shall be null and void: Provided,
discussed below. however, That such privilege or preference may be waived or forfeited
only in favor of the Land Authority . . .[17] (Italics in the original, emphasis
Albeit captioned as one for Annulment of Title, the Complaint ultimately and underscoring supplied)
seeks the reconveyance of the property.

From the allegations of the Complaint, petitioners seek the reconveyance Petitioners insistence on any right to the property under the Kasunduan
of the property based on implied trust. The prescriptive period for the thus fails.
reconveyance of fraudulently registered real property is 10 years,
reckoned from the date of the issuance of the certificate of title,[10] if the [T]he transfer became one in violation of law (the rules of the PHHC being
plaintiff is not in possession, but imprescriptible if he is in possession of promulgated in pursuance of law have the force of law) and therefore void
the property. ab initio. Hence, appellant acquired no right over the lot from a contract
void ab initio, no rights are created. Estoppel, as postulated by petitioner,
An action for reconveyance based on an implied trust prescribes in ten will not apply for it cannot be predicated on an illegal act. It is generally
years. The ten-year prescriptive period applies only if there is an actual considered that as between the parties to a contract, validity cannot be
need to reconvey the property as when the plaintiff is not in possession of given to it by estoppel if it is prohibited by law or is against public policy.
the property. However, if the plaintiff, as the real owner of the property [18] (Emphasis and underscoring supplied)
also remains in possession of the property, the prescriptive period to
recover the title and possession of the property does not run against him.
In such a case, an action for reconveyance, if nonetheless filed, would be Petitioners go on to postulate that if the Kasunduan is void, it follows that
in the nature of a suit for quieting of title, an action that is imprescriptible. the 1962 Deed of Assignment executed by Apolinario in favor of Jaime is
[11] (Emphasis and underscoring supplied) likewise void to thus deprive the latter of any legal basis for his occupation
and acquisition of Lot 19.

It is undisputed that petitioners houses occupy the questioned property Petitioners position fails. Petitioners lose sight of the fact that, as reflected
and that respondents have not been in possession thereof.[12] Since above, Jaime acquired Lot 19 in his own right, independently of the Deed
there was no actual need to reconvey the property as petitioners of Assignment.
remained in possession thereof, the action took the nature of a suit for
quieting of title, it having been filed to enforce an alleged implied trust In another vein, since the property was previously a public land,
after Jaime refused to segregate title over Lot 19. One who is in actual petitioners have no personality to impute fraud or misrepresentation
possession of a piece of land claiming to be the owner thereof may wait against the State or violation of the law.[19] If the title was in fact
until his possession is disturbed or his title is attacked before taking steps fraudulently obtained, it is the State which should file the suit to recover
to vindicate his right.[13] From the body of the complaint, this type of the property through the Office of the Solicitor General. The title originated
action denotes imprescriptibility. from a grant by the government, hence, its cancellation is a matter
between the grantor and the grantee.[20]
As priorly stated, however, when the Kasunduan was executed in 1972 by
Jaime in favor of Salvador petitioners predecessor-in-interest Lot 19, of At all events, for an action for reconveyance based on fraud to prosper,
which the questioned property forms part, was still owned by the the plaintiff must prove by clear and convincing evidence not only his title
Republic. Nemo dat quod non habet.[14] Nobody can give what he does to the property but also the fact of fraud. Fraud is never presumed.
not possess. Jaime could not thus have transferred anything to Salvador Intentional acts to deceive and deprive another of his right, or in some
via the Kasunduan. manner injure him must be specifically alleged and proved by the plaintiff
by clear and convincing evidence.[21] Petitioners failed to discharge this
Claiming exception to the rule, petitioners posit that at the time the burden, however.
Kasunduan was executed by Jaime in 1972, his application which was
filed in 1963 for the award to him of Lot 19 was still pending, hence, the WHEREFORE, the petition is, in light of the foregoing ratiocination,
Kasunduan transferred to Salvador Jaimes vested right to purchase the DENIED.
same, in support of which they cite a law on estoppel, Art. 1434 of the
SO ORDERED.
Civil Code, which provides that [w]hen a person who is not the owner of a
thing sells or alienates and delivers it and later, the seller or grantor
acquires title thereto, such title passes by operation of law to the buyer or ACCESSORIES SPECIALIST INC., a.k.a. ARTS 21 CORPORATION,
grantee.[15] and TADAHIKO HASHIMOTO,
Petitioners,
Petitioners reliance on Article 1434 of the Civil Code does not lie. The Vs.
principles of estoppel apply insofar as they are not in conflict with the ERLINDA B. ALABANZA, for and in behalf of her deceased husband,
provisions of the Civil Code, the Code of Commerce, the Rules of Court JONES B. ALABANZA,
and special laws.[16] Respondent.

Land Authority Administrative Order No. 4 (1967), RULES AND G.R. No. 168985
REGULATIONS GOVERNING DISPOSITION OF THE LAGUNA
SETTLEMENT PROJECT IN SAN PEDRO, LAGUNA, proscribes the Present:
conveyance of the privilege or preference to purchase a land from the
San Pedro Tunasan project before it is awarded to a tenant or bona fide QUISUMBING, J.,*
occupant, thus: YNARES-SANTIAGO,
Chairperson,
SEC. 6. Privilege of Preference to Purchase Intransferable; Waiver or AUSTRIA-MARTINEZ,
Forfeiture Thereof. From the date of acquisition of the estate by the NACHURA, and
Government and before issuance of the Order of Award, no tenant or REYES, JJ.
bona fide occupant in whose favor the land may be sold shall transfer or
encumber the privilege or preference to purchase the land, and any Promulgated:

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OBLIGATIONS AND CONTRACTS CASES
and
July 23, 2008 collateral security within ten (10) days from receipt of the said order,
otherwise their appeal shall be dismissed. The pertinent portion of such
x------------------------------------------------------------------------------------x order reads:

DECISION After a review however of respondents-appellants['] instant motion, We


find that the same does not proffer any valid or justifiable reason that
NACHURA, J.: would warrant a reduction of the appeal bond. Hence, the same must be
Before the Court is a petition for review on certiorari under Rule 45 of the denied.
Rules of Court assailing the Decision[1] dated April 15, 2005 and the
Resolution[2] dated July 12, 2005 of the Court of Appeals (CA) in CA-G.R. WHEREFORE, respondents-appellants are hereby ordered to post a cash
SP No. 84206. or surety bond in the amount equivalent to the monetary award of Four
Million Seven Hundred Sixty-Five Thousand and Two Hundred Pesos
(P4,765,200.00) granted in the appealed Decision (less the Two Hundred
The Facts and Ninety Thousand Pesos [P290,000.00] cash bond already posted),
and joint declaration, indemnity agreement and collateral security in case
The facts of the case, as narrated in the Decision of the CA: respondents-appellants opted to post a surety bond, as required by Art.
223 of the Labor Code as amended and Section 6, Rule VI of the NLRC
On September 27, 2002, private respondent Erlinda B. Alabanza (Erlinda, New Rules of Procedure as amended within an unextendible period of ten
for brevity), for and in behalf of her husband Jones B. Alabanza (Jones, (10) calendar days from receipt of this Order; otherwise, the appeal shall
for brevity) filed a complaint against petitioners Accessories Specialists, be dismissed for non-perfection thereof.
Inc. (ASI, for brevity) also known as ARTS 21 Corporation, and Tadahiko
Hashimoto for non-payment of salaries, separation pay, and 13th month SO ORDERED.
pay.
On February 19, 2004, the petitioners moved for a reconsideration of the
In her position paper, respondent Erlinda alleged, among others, that her said order. However, the public respondent in its resolution dated March
husband Jones was the Vice-President, Manager and Director of ASI. 18, 2004 denied the same and dismissed the appeal of the petitioners,
Jones rendered outstanding services for the petitioners from 1975 to thus:
October 1997. On October 17, 1997, Jones was compelled by the owner
of ASI, herein petitioner Tadahiko Hashimoto, to file his involuntary The reduction of appeal bond is not a matter of right but rests upon our
resignation on the ground that ASI allegedly suffered losses due to lack of sound discretion. Thus, after We denied respondents-appellants['] Motion
market and incurred several debts caused by a slam in the market. At the to Reduce [B]ond, they should have immediately complied with our 15
time of his resignation, Jones had unpaid salaries for eighteen (18) January 2004 Order directing them to post an additional cash or surety
months from May 1995 to October 1997 equivalent to P396,000.00 and bond in the amount equivalent to the judgment award less the cash bond
US$38,880.00. He was likewise not paid his separation pay already posted within the extended period of ten (10) days. In all,
commensurate to his 21 years of service in the amount of P462,000.00 respondents had twenty (20) days, including the ten (10)-day period,
and US$45,360.00 and 13th month pay amounting to P33,000.00. Jones prescribed under Article 223 of the Labor Code and under Section 6, Rule
demanded payment of his money claims upon resignation but ASI VI of the NLRC New Rules of Procedure, within which to post a cash or
informed him that it would just settle first the money claims of the rank- surety bond. To seek a reconsideration of our 15 January 2004 order is
and-file employees, and his claims will be paid thereafter. Knowing the tantamount to seeking another extension of the period within which to
predicament of the company, Jones patiently waited for his turn to be perfect an appeal, which is however, not allowed under Section 7, Rule VI
paid. Several demands were made by Jones but ASI just kept on assuring of the NLRC Rule. x x x
him that he will be paid his monetary claims. Jones died on August 5,
2002 and failed to receive the same. xxxx

On the other hand, the petitioners contend that Jones voluntarily resigned WHEREFORE, premises considered, the Motion for Reconsideration filed
on October 31, 1997. Thus, Erlindas cause of action has already by respondents-appellants is hereby DENIED and the instant appeal
prescribed and is forever barred on the ground that under Article 291 of DISMISSED for non-perfection thereof.
the Labor Code, all money claims arising from an employer-employee
relationship shall be filed within three (3) years from the time the cause of SO ORDERED.
action accrues. Since the complaint was filed only on September 27,
2002, or almost five (5) years from the date of the alleged illegal dismissal On April 22, 2004, the aforesaid resolution became final and executory.
of her husband Jones, Erlindas complaint is now barred. Thus, herein private respondent Erlinda filed a motion for execution.

On September 14, 2003, Labor Arbiter Reynaldo V. Abdon rendered a On May 31, 2004, the petitioners filed an opposition to the said motion for
decision ordering the petitioners to pay Erlinda the amount of execution. On June 11, 2004, Labor Arbiter Reynaldo Abdon issued an
P693,000.00 and US$74,040.00 or its equivalent in peso or amounting to order directing the issuance of a writ of execution.[3]
a total of P4,765,200.00 representing her husbands unpaid salaries, 13th
month pay, and separation pay, and five [percent] (5%) on the said total
award as attorneys fees. On May 28, 2004, petitioners filed a petition for certiorari under Rule 65 of
the Rules of Court before the CA and prayed for the issuance of a
On October 10, 2003, the petitioners filed a notice of appeal with motion temporary restraining order (TRO) and a writ of preliminary injunction. On
to reduce bond and attached thereto photocopies of the receipts for the June 30, 2004, the CA issued a TRO directing the respondents, their
cash bond in the amount of P290,000.00, and appeal fee in the amount of agents, assigns, and all persons acting on their behalf to refrain and/or
P170.00. cease and desist from executing the Decision dated September 14, 2003
and Resolution dated March 18, 2004 of the Labor Arbiter (LA).
On January 15, 2004, public respondent NLRC issued an order denying
the petitioners motion to reduce bond and directing the latter to post an On April 15, 2005, the CA issued the assailed Decision dismissing the
additional bond, and in case the petitioners opted to post a surety bond, petition. Petitioner filed a motion for reconsideration. On July 12, 2005,
the latter were required to submit a joint declaration, indemnity agreement the CA issued the assailed Resolution denying the motion for
reconsideration for lack of merit.
5

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On September 8, 2005, petitioners posted the instant petition presenting justification not to follow the prescriptive period imposed under Article 291
the following grounds in support of their arguments: 1) the cause of action of the Labor Code. Great injustice will be committed if we will brush aside
of respondent has already prescribed; 2) the National Labor Relations the employees claims on a mere technicality, especially when it was
Commission (NLRC) gravely abused its discretion when it dismissed the petitioners own action that prevented respondent from interposing the
appeal of petitioners for failure to post the complete amount of the appeal claims within the required period.[8]
bond; and 3) the monetary claim was resolved by the LA with uncertainty.
II
The Issues
Petitioners argue that the NLRC committed grave abuse of discretion in
The following are the issues that should be resolved in order to come up dismissing their appeal for failure to post the complete amount of the
with a just determination of the case: bond. They assert that they cannot post an appeal bond equivalent to the
monetary award rendered by the LA due to financial incapacity. They say
I. Whether the cause of action of respondents has already prescribed; that strict enforcement of the NLRC Rules of Procedure[9] that the appeal
II. Whether the posting of the complete amount of the bond in an appeal bond shall be equivalent to the monetary award is oppressive and would
from the decision of the LA to the NLRC is an indispensable requirement have the effect of depriving petitioners of their right to appeal.[10]
for the perfection of the appeal despite the filing of a motion to reduce the
amount of the appeal bond; and Article 223 of the Labor Code mandates that in case of a judgment of the
III. Whether there were sufficient bases for the grant of the monetary LA involving a monetary award, an appeal by the employer to the NLRC
award of the LA to the respondent. may be perfected only upon the posting of a cash or surety bond issued
by a reputable bonding company duly accredited by the Commission, in
The Ruling of the Court the amount equivalent to the monetary award in the judgment appealed
from.
We resolve to deny the petition.
The posting of a bond is indispensable to the perfection of an appeal in
I cases involving monetary awards from the decision of the LA.[11] The
intention of the lawmakers to make the bond a mandatory requisite for the
Petitioners aver that the action of the respondents for the recovery of perfection of an appeal by the employer is clearly limned in the provision
unpaid wages, separation pay and 13th month pay has already that an appeal by the employer may be perfected "only upon the posting
prescribed since the action was filed almost five years from the time of a cash or surety bond." The word "only" makes it perfectly plain that the
Jones severed his employment from ASI. Jones filed his resignation on lawmakers intended the posting of a cash or surety bond by the employer
October 31, 1997, while the complaint before the LA was instituted on to be the essential and exclusive means by which an employer's appeal
September 29, 2002. Petitioners contend that the three-year prescriptive may be perfected. The word "may" refers to the perfection of an appeal as
period under Article 291[4] of the Labor Code had already set-in, thereby optional on the part of the defeated party, but not to the compulsory
barring all of respondents money claims arising from their employer- posting of an appeal bond, if he desires to appeal. The meaning and the
employee relations. intention of the legislature in enacting a statute must be determined from
the language employed; and where there is no ambiguity in the words
Based on the findings of facts of the LA, it was ASI which was responsible
used, then there is no room for construction.[12]
for the delay in the institution of the complaint. When Jones filed his
resignation, he immediately asked for the payment of his money claims. The filing of the bond is not only mandatory but also a jurisdictional
However, the management of ASI promised him that he would be paid requirement that must be complied with in order to confer jurisdiction
immediately after the claims of the rank-and-file employees had been upon the NLRC.[13] Non-compliance therewith renders the decision of the
paid. Jones relied on this representation. Unfortunately, the promise was LA final and executory.[14] This requirement is intended to assure the
never fulfilled even until the time of Jones death. workers that if they prevail in the case, they will receive the money
judgment in their favor upon the dismissal of the employer's appeal. It is
In light of these circumstances, we can apply the principle of promissory
intended to discourage
estoppel, which is a recognized exception to the three-year prescriptive
period enunciated in Article 291 of the Labor Code.
employers from using an appeal to delay or evade their obligation to
satisfy their employees' just and lawful claims.[15]
Promissory estoppel may arise from the making of a promise, even
In the instant case, the failure of petitioners to comply with the
though without consideration, if it was intended that the promise should
requirement of posting a bond equivalent in amount to the monetary
be relied upon, as in fact it was relied upon, and if a refusal to enforce it
award is fatal to their appeal. Section 6 of the New Rules of Procedure of
would virtually sanction the perpetration of fraud or would result in other
the NLRC mandates, among others, that no motion to reduce bond shall
injustice.[5] Promissory estoppel presupposes the existence of a promise
be entertained except on meritorious grounds and upon the posting of a
on the part of one against whom estoppel is claimed. The promise must
bond in a reasonable amount in relation to the monetary award. The
be plain and unambiguous and sufficiently specific so that the court can
NLRC has the full discretion to grant or deny their motion to reduce the
amount of the appeal bond. The finding of the NLRC that petitioners did
understand the obligation assumed and enforce the promise according to
not present sufficient justification for the reduction thereof is generally
its terms.[6]
conclusive upon this Court absent a showing that the denial was tainted
In order to make out a claim of promissory estoppel, a party bears the with bad faith.
burden of establishing the following elements: (1) a promise was Furthermore, we would like to reiterate that appeal is not a constitutional
reasonably expected to induce action or forbearance; (2) such promise right, but a mere statutory privilege. Thus, parties who seek to avail
did, in fact, induce such action or forbearance; and (3) the party suffered themselves of it must comply with the statutes or rules allowing it.
detriment as a result.[7] Perfection of an appeal in the manner and within the period permitted by
law is mandatory and jurisdictional. The requirements for perfecting an
All the requisites of promissory estoppel are present in this case. Jones appeal must, as a rule, be strictly followed. Such requirements are
relied on the promise of ASI that he would be paid as soon as the claims considered indispensable interdictions against needless delays and are
of all the rank-and-file employees had been paid. If not for this promise necessary for the orderly discharge of the judicial business. Failure to
that he had held on to until the time of his death, we see no reason why perfect the appeal renders the judgment of the court final and executory.
he would delay filing the complaint before the LA. Thus, we find ample Just as a losing party has the privilege to file an appeal within the

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OBLIGATIONS AND CONTRACTS CASES
prescribed period, so does the winner also have the correlative right to The lease
enjoy the finality of the decision.[16] contract provided that the late Vda. De Coronado could build a firewall on
her rented property which must be at least as high as the store; and in
case of modification of the public market, she or her heir/s would be given
III preferential rights.

The propriety of the monetary award of the LA is already binding upon this Visitacion took over the store when her mother died sometime in 1984.9
Court. As we have repeatedly pointed out, petitioners failure to perfect From then on up to January 1993, Visitacion secured the yearly Mayors
their appeal in the manner and period required by the rules makes the permits.10
award final and executory. Petitioners stance that there was no sufficient
basis for the award of the payment of withheld wages, separation pay and Sometime in 1986, a fire razed the public market of Nagcarlan. Upon
13th month pay must fail. Such matters are questions of facts requiring Visitacions request for inspection on 15 May 1986, District Engineer
the presentation of evidence. Findings of facts of administrative and Marcelino B. Gorospe (Engineer Gorospe) of the then Ministry of Public
quasi-judicial bodies, which have acquired expertise on specific matters, Works and Highways,11 Regional Office No. IV-A, found that the store of
are accorded weight and respect by the Court. They are deemed final and Visitacion remained intact and stood strong. This finding of Engineer
conclusive, unless compelling reasons are presented for us to digress Gorospe was contested by the Municipality of Nagcarlan.
therefrom.
The store of Visitacion continued to operate after the fire until 15 October
WHEREFORE, in view of the foregoing, the petition is DENIED for lack of 1993.
merit. The Decision dated April 15, 2005 and the Resolution dated July
12, 2005 of the Court of Appeals in CA-G.R. SP No. 84206 are hereby On 1 September 1993, Visitacion received a letter12 from Mayor
AFFIRMED. Comendador directing her to demolish her store within five (5) days from
notice. Attached to the letter were copies of Sangguniang Bayan
SO ORDERED. Resolution No. 15613 dated 30 August 1993 and a Memorandum issued
by Asst. Provincial Prosecutor Marianito Sasondoncillo of Laguna.
G.R. Nos. 159017-18 March 9, 2011
The relevant provisos of the Resolution No. 156 states that:
PAULINO S. ASILO, JR., Petitioner,
vs. NOW THEREFORE, be it RESOLVED, as it hereby resolved to authorize
THE PEOPLE OF THE PHILIPPINES and Spouses VISITACION AND Hon. Demetrio T. Comendador to enforce and order the Coronados to
CESAR C. BOMBASI, Respondents. demolish the building constructed on the space previously rented to them
in order to give way for the construction of a new municipal market
x - - - - - - - - - - - - - - - - - - - - - - -x building.

G.R. No. 159059 RESOLVED FURTHER, to authorize Demetrio T. Comendador, Honorable


Mayor of Nagcarlan to file an Unlawful Detainer Case with damages for
VICTORIA BUETA VDA. DE COMENDADOR, IN REPRESENTATION the expenses incurred due to the delay in the completion of the project if
OF DEMETRIO T. COMENDADOR, Petitioner, the Coronados continuously resists the order.
vs.
VISITACION C. BOMBASI AND CESAR C. BOMBASI, Respondents. On 3 September 1993, Visitacion wrote a reply letter to Mayor
Comendador saying that: (1) the lease contract was still existing and
DECISION legally binding; (2) she was willing to vacate the store as long as same
place and area would be given to her in the new public market; and (3) in
PEREZ, J.: case her proposals are not acceptable to Mayor Comendador, for the
latter to just file an unlawful detainer case against her pursuant to
At bench are appeals by certiorari1 from the Decision2 of the Fourth Sangguniang Bayan Resolution No. 156. Pertinent portions of the letter
Division of the Sandiganbayan; (1) finding Demetrio T. Comendador3 read:
(Mayor Comendador) and Paulino S. Asilo, Jr.4 guilty beyond reasonable
doubt of violation of Sec. 3(e) of Republic Act No. 3019; (2) dismissing the x x x With all due respect to the resolution of the Municipal Council and
cases against accused Alberto S. Angeles;5 (3) ordering the defendants the opinion rendered by the Laguna Asst. Provincial Prosecutor, it is my
Municipality of Nagcarlan, Laguna, Demetrio T. Comendador and Paulino considered view, however, arrived at after consultation with my legal
S. Asilo, Jr. to pay the plaintiffs now respondents Visitacion C. Bombasi counsel, that our existing lease contract is still legally binding and in full
(Visitacion) and Cesar C. Bombasi damages; and (4) dismissing the force and effect. Lest I appear to be defiant, let me reiterate to you and
cases against the spouses Alida and Teddy Coroza6 and Benita and the council that we are willing to vacate the said building provided that a
Isagani Coronado.7 new contract is executed granting to us the same space or lot and the
same area. I believe that our proposal is most reasonable and fair under
The factual antecedents of the case are: the circumstance. If you are not amenable to the said proposal, I concur
with the position taken by the Council for you to file the appropriate action
On 15 March 1978, Private Respondent Visitacions late mother Marciana in court for unlawful detainer to enable our court to finally thresh out our
Vda. De Coronado (Vda. De Coronado) and the Municipality of differences.141avvphi1
Nagcarlan, Laguna (represented by the then Municipal Mayor Crisostomo
P. Manalang) entered into a lease contract whereby the Municipality On 15 September 1993, Asst. Provincial Prosecutor Florencio Buyser
allowed the use and enjoyment of property comprising of a lot and a store sent a letter to Visitacion ordering her to vacate the portion of the public
located at the corner of Coronado and E. Fernandez Sts. at Poblacion, market she was occupying within 15 days from her receipt of the letter;
Nagcarlan, Laguna, in favor of the respondents mother for a period of else, a court action will be filed against her.
twenty (20) years beginning on 15 March 1978 until 15 March 1998,
extendible for another 20 years.8 On 11 October 1993, the Sangguniang Bayan of Nagcarlan, Laguna
issued Resolution No. 183 authorizing Mayor Comendador to demolish

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OBLIGATIONS AND CONTRACTS CASES
the store being occupied by Visitacion using legal means. The significant before the
portion of the Resolution reads: Office of the Ombudsman. On 22 February 1996, an Information22
against Mayor Comendador, Asilo and Angeles was filed, which reads:
Kung kaya ang Sangguniang Bayan ay buong pagkakaisang IPINASIYA:
Ang pagbibigay kapangyarihan kay Kgg. Demetrio T. Comendador na That on or about October 15, 1993, at Nagcarlan, Laguna, Philippines,
ipagiba ang anumang istrakturang nagiging sagabal sa mabilis at maayos and within the jurisdiction of this Honorable Court, the above-named
na pagbabangon ng pamilihang bayan.15 accused, all public officers, accused Demetrio T. Comendador, being then
the Municipal Mayor, accused Paulino S. Asilo, Jr. being then the
On 14 October 1993, Municipal Administrator Paulino S. Asilo, Jr. (Asilo) Municipal Administrator and accused Alberto S. Angeles being then the
also sent a letter16 to Visitacion informing her of the impending demolition Municipal Planning and Development Coordinator, all of the Municipality
of her store the next day. Within the same day, Visitacion wrote a reply of Nagcarlan, Laguna, committing the crime herein charged in relation to,
letter17 to Asilo, alleging that there is no legal right to demolish the store while in the performance and taking advantage of their official functions,
in the absence of a court order and that the Resolutions did not sanction conspiring and confederating with each other, and with evident bad faith,
the demolition of her store but only the filing of an appropriate unlawful manifest partiality or through gross inexcusable negligence, did then and
detainer case against her. She further replied that if the demolition will there willfully, unlawfully, criminally cause the demolition of a public
take place, appropriate administrative, criminal and civil actions will be market stall leased by the municipal government in favor of one Visitacion
filed against Mayor Comendador, Asilo and all persons who will take part Coronado-Bombasi without legal or justifiable ground therefor, thus,
in the demolition. causing undue injury to the latter in the amount of PESOS: FOUR
HUNDRED THIRTY SEVEN THOUSAND AND NINE HUNDRED ONLY
On 15 October 1993, Mayor Comendador relying on the strength of (P437,900.00).
Sangguniang Bayan Resolution Nos. 183 and 156 authorized the
demolition of the store with Asilo and Angeles supervising the work. Upon their arraignments, all the accused entered their separate pleas of
"Not Guilty."
Engineer Winston Cabrega (Engineer Cabrega), a licensed civil engineer,
estimated the cost of the demolished property as amounting to On 4 March 1997, the Sandiganbayan promulgated a Resolution ordering
P437,900.0018 the consolidation of Civil Case No. SP-4064 (94)23 with Criminal Case
No. 23267 pending before the Third Division pursuant to Section 4,
On 19 August 1994, Visitacion, together with her husband Cesar Bombasi Presidential Decree No. 1606, which pertinently reads:
(Spouses Bombasi) filed with the Regional Trial Court of San Pablo City,
Laguna a Civil Case19 for damages with preliminary injunction against Any provision of law or Rules of Court to the contrary notwithstanding, the
the Municipality of Nagcarlan, Laguna, Mayor Demetrio T. Comendador, criminal action and the corresponding civil action for the recovery of civil
Paulino S. Asilo, Jr., and Alberto S. Angeles. The complaint was soon liability arising from the offense charged shall at all times be
after amended to include the Spouses Benita and Isagani Coronado and simultaneously instituted with, and jointly determined in the same
Spouses Alida and Teddy Coroza as formal defendants because they proceeding by the Sandiganbayan or the appropriate courts, the filing of
were then the occupants of the contested area. the criminal action being deemed to necessarily carry with it the filing of
the civil action, and no right to reserve the filing of such civil action
The spouses prayed for the following disposition: separately from the criminal action shall be recognized; Provided,
however, that where the civil action had heretofore been filed separately
1. RESTRAINING or ENJOINING defendant Municipality and defendant but judgment therein has not yet been rendered, and the criminal case is
Municipal Mayor from leasing the premises subject of lease Annex "A" hereafter filed with the Sandiganbayan or the appropriate court, said civil
hereof, part of which is now occupied by PNP Outpost and by the action shall be transferred to the Sandiganbayan or the appropriate court
Municipal Collectors Office, and the equivalent adjacent area thereof, and as the case may be, for consolidation and joint determination with the
to cause the removal of said stalls; criminal action, otherwise the separate civil action shall be deemed
abandoned.24
2. UPHOLDING the right of plaintiffs to occupy the equivalent corner area
of the leased areas being now assigned to other persons by defendants During the pendency of the case, Alberto S. Angeles died on 16
Municipality and/or by defendant Municipal Mayor, and to allow plaintiffs November 1997. Accordingly, the counsel of Angeles filed a motion to
to construct their stalls thereon; drop accused Angeles. On 22 September 1999, the Third Division of
Sandiganbayan issued an Order25 DISMISSING the case against
3. MAKING the injunction permanent, after trial; Angeles. The germane portion of the Order reads:

4. ORDERING defendants to pay plaintiffs, jointly and severally, the In view of the submission of the death certificate of accused/defendant
following Alberto S. Angeles, and there being no objection on the part of the Public
Prosecutor, cases against deceased accused/defendant Angeles only, are
(a) P437,900.00 for loss of building/store and other items therein; hereby DISMISSED.

(b) P200,000.00 for exemplary damages; The death of Mayor Comendador followed on 17 September 2002. As a
result, the counsel of the late Mayor filed on 3 March 2003 a
(c) P200,000.00 for moral damages; Manifestation before the Sandiganbayan informing the court of the fact of
Mayor Comendadors death.
(d) P30,.00 for attorneys fees and P700.00 for every attendance of
counsel in court. On 28 April 2003, the Sandiganbayan rendered a decision, the dispositive
portion of which reads as follows:
5. GRANTING further reliefs upon plaintiffs as justice and equity may
warrant in the premises.20 WHEREFORE, premises considered, judgment is hereby rendered as
follows:
Spouses Bombasi, thereafter, filed a criminal complaint21 against Mayor
Comendador, Asilo and Angeles for violation of Sec. 3(e) of Republic Act In Criminal Case No. 23267, the court finds accused Demetrio T.
No. 3019 otherwise known as the "Anti-Graft and Corrupt Practices Act" Comendador and Paulino S. Asilo, Jr. guilty beyond reasonable doubt of

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OBLIGATIONS AND CONTRACTS CASES
violation of Sec. 3(e) of Republic Act. No. 3019 as amended, and in the that
absence of aggravating and mitigating circumstances, applying the assuming arguendo that there was indeed liability on the part of the
Indeterminate Sentence Law, said accused are sentenced to suffer the accused public officials, the actual amount of damages being claimed by
indeterminate penalty of 6 years and 2 months imprisonment as minimum the Spouses Bombasi has no basis and was not duly substantiated.
to 10 years and 1 day as maximum.
Liability of the accused public officials
The order of the court dated September 22, 1999 dismissing the cases under Republic Act No. 3019
against the accused Alberto S. Angeles, who died on November 16, 1997
is hereby reiterated. Section 3(e) of Republic Act No. 3019 provides:

In Civil Case No. 4064, defendants Municipality of Nagcarlan, Laguna, In addition to acts or omissions of public officers already penalized by
Demetrio T. Comendador and Paulino S. Asilo, Jr. are hereby ordered existing law, the following shall constitute corrupt practices of any public
jointly and severally to pay plaintiff P437,900.00 as actual damages for officer and are hereby declared to be unlawful:
the destruction of the store; P100,000.00 as moral damages; P30,000.00
as attorneys fees, and to pay the cost of the suit. The prayer for xxxx
exemplary damages is denied as the court found no aggravating
circumstances in the commission of the crime. (e) Causing any undue injury to any party, including the Government, or
giving any private party any unwarranted benefits, advantage or
In view of this courts finding that the defendant spouses Alida and Teddy preference in the discharge of his official, administrative or judicial
Coroza are lawful occupants of the subject market stalls from which they functions through manifest partiality, evident bad faith or gross
cannot be validly ejected without just cause, the complaint against them is inexcusable negligence. This provision shall apply to officers and
dismissed. The complaint against defendant spouses Benita and Isagani employees of offices or government corporations charged with the grant
Coronado is likewise dismissed, it appearing that they are similarly of licenses or permits or other concessions.
situated as the spouses Coroza. Meanwhile, plaintiff Visitacion Bombasi is
given the option to accept market space being given to her by the The elements of the offense are as follows: (1) that the accused are public
municipality, subject to her payment of the appropriate rental and permit officers or private persons charged in conspiracy with them; (2) that said
fees. public officers commit the prohibited acts during the performance of their
official duties or in relation to their public positions; (3) that they caused
The prayer for injunctive relief is denied, the same having become moot undue injury to any party, whether the Government or a private party; (4)
and academic. OR that such injury is caused by giving unwarranted benefits, advantage
or preference to the other party; and (5) that the public officers have acted
The compulsory counterclaim of defendant Comendador is likewise with manifest partiality, evident bad faith or gross inexcusable
denied for lack of merit.26 negligence.33

Within the same day, Asilo, through his counsel, filed a Motion for We sustain the Sandiganbayan in its finding of criminal and civil liabilities
Reconsideration27 of the Decision alleging that there was only an error of against petitioner Asilo and petitioner Mayor Comendador as here
judgment when he complied with and implemented the order of his represented by his widow Victoria Bueta.
superior, Mayor Comendador. He likewise alleged that there is no liability
when a public officer commits in good faith an error of judgment. The We agree with the Sandiganbayan that it is undisputable that the first two
Sandiganbayan, on its Resolution28 dated 21 July 2003 denied the requisites of the criminal offense were present at the time of the
Motion for Reconsideration on the ground that good faith cannot be commission of the complained acts and that, as to the remaining
argued to support his cause in the face of the courts finding that bad faith elements, there is sufficient amount of evidence to establish that there
attended the commission of the offense charged. The Court further was an undue injury suffered on the part of the Spouses Bombasi and
explained that the invocation of compliance with an order of a superior is that the public officials concerned acted with evident bad faith when they
of no moment for the "demolition [order] cannot be described as having performed the demolition of the market stall.
the semblance of legality inasmuch as it was issued without the authority
and therefore the same was patently illegal."29 Causing undue injury to any party, including the government, could only
mean actual injury or damage which must be established by evidence.34
The counsel for the late Mayor also filed its Motion for Reconsideration30
on 12 May 2003 alleging that the death of the late Mayor had totally In jurisprudence, "undue injury" is consistently interpreted as "actual."
extinguished both his criminal and civil liability. The Sandiganbayan on its Undue has been defined as "more than necessary, not proper, [or] illegal;"
Resolution31 granted the Motion insofar as the extinction of the criminal and injury as "any wrong or damage done to another, either in his person,
liability is concerned and denied the extinction of the civil liability holding rights, reputation or property [that is, the] invasion of any legally protected
that the civil action is an independent civil action. interest of another." Actual damage, in the context of these definitions, is
akin to that in civil law.35
Hence, these Petitions for Review on Certiorari.32
It is evident from the records, as correctly observed by the
Petitioner Asilo argues that in order to sustain conviction under Sec. 3(e) Sandiganbayan, that Asilo and Mayor Comendador as accused below did
of Republic Act No. 3019 or "The Anti-Graft and Corrupt Practices Act," not deny that there was indeed damage caused the Spouses Bombasi on
the public officer must have acted with manifest partiality, evident bad account of the demolition. We affirm the finding that:
faith or gross negligence. He also contended that he and his co-accused
acted in good faith in the demolition of the market and, thereby, no liability xxx. Clearly, the demolition of plaintiffs store was carried out without a
was incurred. court order, and notwithstanding a restraining order which the plaintiff was
able to obtain. The demolition was done in the exercise of official duties
On the other hand, Petitioner Victoria argues that the death of Mayor which apparently was attended by evident bad faith, manifest partiality or
Comendador prior to the promulgation of the decision extinguished NOT gross inexcusable negligence as there is nothing in the two (2) resolutions
ONLY Mayor Comendadors criminal liability but also his civil liability. She which gave the herein accused the authority to demolish plaintiffs store.
also asserted good faith on the part of the accused public officials when
they performed the demolition of the market stall. Lastly, she contended
9

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OBLIGATIONS AND CONTRACTS CASES
"Evident bad faith" connotes not only bad judgment but also palpably and The
patently fraudulent and dishonest purpose to do moral obliquity or Sandiganbayan upheld the opposition of the prosecution which
conscious wrongdoing for some perverse motive or ill will.36 [It] disposition was not appealed.
contemplates a state of mind affirmatively operating with furtive design or
with some motive or self-interest or ill will or for ulterior purposes.37 We note, first off, that the death of Angeles and of Mayor Comendador
during the pendency of the case extinguished their criminal liabilities.
It is quite evident in the case at bar that the accused public officials
committed bad faith in performing the demolition. We now hold, as did the Sandiganbayan that the civil liability of Mayor
Comendador survived his death; and that of Angeles could have likewise
First, there can be no merit in the contention that respondents structure is survived had it not been for the fact that the resolution of the
a public nuisance. The abatement of a nuisance without judicial Sandiganbayan that his death extinguished the civil liability was not
proceedings is possible if it is nuisance per se.38 Nuisance per se is that questioned and lapsed into finality.
which is nuisance at all times and under any circumstance, regardless of
location and surroundings.39 In this case, the market stall cannot be We laid down the following guidelines in People v. Bayotas:46
considered as a nuisance per se because as found out by the Court, the
buildings had not been affected by the 1986 fire. This finding was certified Death of the accused pending appeal of his conviction extinguishes his
to by Supervising Civil Engineer Wilfredo A. Sambrano of the Laguna criminal liability as well as the civil liability based solely thereon. As opined
District Engineer Office.40 To quote: by Justice Regalado, in this regard, "the death of the accused prior to final
judgment terminates his criminal liability and only the civil liability directly
An inspection has been made on the building (a commercial arising from and based solely on the offense committed, i.e., civil liability
establishment) cited above and found out the following: ex delicto in senso strictiore."

1. It is a two-storey building, sketch of which is attached. Corollarily, the claim for civil liability survives notwithstanding the death of
(the) accused, if the same may also be predicated on a source of
2. It is located within the market site. obligation other than delict. Article 1157 of the Civil Code enumerates
these other sources of obligation from which the civil liability may arise as
3. The building has not been affected by the recent fire. a result of the same act or omission:

4. The concrete wall[s] does not even show signs of being exposed to a) Law
fire.41
b) Contracts
Second, the Sangguniang Bayan resolutions are not enough to justify
demolition. Unlike its predecessor law,42 the present Local Government c) Quasi-contracts
Code43 does not expressly provide for the abatement of nuisance.44 And
even assuming that the power to abate nuisance is provided for by the d) Acts or omissions punished by law; and
present code, the accused public officials were under the facts of this
case, still devoid of any power to demolish the store. A closer look at the e) Quasi-delicts. (Emphasis ours)
contested resolutions reveals that Mayor Comendador was only
authorized to file an unlawful detainer case in case of resistance to obey Where the civil liability survives, as explained [above], an action for
the order or to demolish the building using legal means. Clearly, the act of recovery therefore may be pursued but only by way of filing a separate
demolition without legal order in this case was not among those provided civil action47 and subject to Section 1, Rule 111 of the 1985 Rules on
by the resolutions, as indeed, it is a legally impossible provision. Criminal Procedure as amended. This separate civil action may be
enforced either against the executor/administrator or the estate of the
Furthermore, the Municipality of Nagcarlan, Laguna, as represented by accused, depending on the source of obligation upon which the same is
the then Mayor Comendador, was placed in estoppel after it granted based as explained above.
yearly business permits45 in favor of the Spouses Bombasi. Art. 1431 of
the New Civil Code provides that, through estoppel, an admission or Finally, the private offended party need not fear a forfeiture of his right to
representation is rendered conclusive upon the person making it, and file this separate civil action by prescription, in cases where during the
cannot be denied or disproved as against the person relying thereon. The prosecution of the criminal action and prior to its extinction, the private-
representation made by the municipality that the Spouses Bombasi had offended party instituted together therewith the civil action. In such case,
the right to continuously operate its store binds the municipality. It is the statute of limitations on the civil liability is deemed interrupted during
utterly unjust for the Municipality to receive the benefits of the store the pendency of the criminal case, conformably with provisions of Article
operation and later on claim the illegality of the business. 1155 of the New Civil Code, which should thereby avoid any
apprehension on a possible privation of right by prescription.
The bad faith of the petitioners completes the elements of the criminal
offense of violation of Sec. 3(e) of Republic Act No. 3019. The same bad Upon death of the accused pending appeal of his conviction, the criminal
faith serves as the source of the civil liability of Asilo, Angeles, and Mayor action is extinguished inasmuch as there is no longer a defendant to
Comendador. stand as the accused; the civil action instituted therein for recovery of civil
liability ex delicto is ipso facto extinguished, grounded as it is on the
It must be noted that when Angeles died on 16 November 1997, a motion criminal.48
to drop him as an accused was filed by his counsel with no objection on
the part of the prosecution. The Sandiganbayan acted favorably on the The New Civil Code provisions under the Chapter, Human Relations,
motion and issued an Order dismissing all the cases filed against were cited by the prosecution to substantiate its argument that the civil
Angeles. On the other hand, when Mayor Comendador died and an action based therein is an independent one, thus, will stand despite the
adverse decision was rendered against him which resulted in the filing of death of the accused during the pendency of the case.
a motion for reconsideration by Mayor Comendadors counsel, the
prosecution opposed the Motion specifying the ground that the civil On the other hand, the defense invoked Section 4 of Presidential Decree
liability did not arise from delict, hence, survived the death of the accused. No. 1606, as amended by Republic Act No. 8249, in support of its
argument that the civil action was dependent upon the criminal action,

10

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OBLIGATIONS AND CONTRACTS CASES
thus, was extinguished upon the death of the accused. The law provides The Court
that: is in one with the prosecution that there was a violation of the right to
private property of the Spouses Bombasi. The accused public officials
Any provision of law or the Rules of Court to the contrary notwithstanding, should have accorded the spouses the due process of law guaranteed by
the criminal action and the corresponding civil action for the recovery of the Constitution and New Civil Code. The Sangguniang Bayan
civil liability arising from the offense charged shall at all times be Resolutions as asserted by the defense will not, as already shown, justify
simultaneously instituted with, and jointly determined in the same demolition of the store without court order. This Court in a number of
proceeding by, the Sandiganbayan, the filing of the criminal action being decisions51 held that even if there is already a writ of execution, there
deemed to necessarily carry with it the filing of the civil action, and no must still be a need for a special order for the purpose of demolition
right to reserve the filing of such action shall be recognized. (Emphasis issued by the court before the officer in charge can destroy, demolish or
ours) remove improvements over the contested property.52 The pertinent
provisions are the following:
We agree with the prosecution.
Before the removal of an improvement must take place, there must be a
Death of Mayor Comendador during the pendency of the case could have special order, hearing and reasonable notice to remove. Section 10(d),
extinguished the civil liability if the same arose directly from the crime Rule 39 of the Rules of Court provides:
committed. However, in this case, the civil liability is based on another
source of obligation, the law on human relations.49 The pertinent articles (d) Removal of improvements on property subject of execution. When
follow: the property subject of execution contains improvements constructed or
planted by the judgment obligor or his agent, the officer shall not destroy,
Art. 31 of the Civil Code states: demolish or remove said improvements except upon special order of the
court, issued upon motion of the judgment obligee after due hearing and
When the civil action is based on an obligation not arising from the act or after the former has failed to remove the same within a reasonable time
omission complained of as a felony, such civil action may proceed fixed by the court.
independently of the criminal proceedings and regardless of the result of
the latter. The above-stated rule is clear and needs no interpretation. If demolition is
necessary, there must be a hearing on the motion filed and with due
And, Art. 32(6) states: notices to the parties for the issuance of a special order of demolition.53

Any public officer or employee, or any private individual, who directly or This special need for a court order even if an ejectment case has
indirectly obstructs, defeats, violates or in any manner impedes or impairs successfully been litigated, underscores the independent basis for civil
any of the following rights and liberties of another person shall be liable to liability, in this case, where no case was even filed by the municipality.
the latter for damages:
The requirement of a special order of demolition is based on the
(6) The right against deprivation of property without due process of law; rudiments of justice and fair play. It frowns upon arbitrariness and
oppressive conduct in the execution of an otherwise legitimate act. It is an
xxxx amplification of the provision of the Civil Code that every person must, in
the exercise of his rights and in the performance of his duties, act with
In any of the cases referred to in this article, whether or not the justice, give everyone his due, and observe honesty and good faith.54
defendant's act or omission constitutes a criminal offense, the aggrieved
party has a right to commence an entirely separate and distinct civil action Notably, the fact that a separate civil action precisely based on due
for damages, and for other relief. Such civil action shall proceed process violations was filed even ahead of the criminal case, is
independently of any criminal prosecution (if the latter be instituted), and complemented by the fact that the deceased plaintiff Comendador was
may be proved by a preponderance of evidence. substituted by his widow, herein petitioner Victoria who specified in her
petition that she has "substituted him as petitioner in the above captioned
As held in Aberca v. Ver: case." Section 1, Rule III of the 1985 Rules in Criminal Procedure
mentioned in Bayotas is, therefore, not applicable. Truly, the
It is obvious that the purpose of the above codal provision [Art. 32 of the Sandiganbayan was correct when it maintained the separate docketing of
New Civil Code] is to provide a sanction to the deeply cherished rights the civil and criminal cases before it although their consolidation was
and freedoms enshrined in the Constitution. Its message is clear; no man erroneously based on Section 4 of Presidential Decree No. 1606 which
may seek to violate those sacred rights with impunity. x x x.50 deals with civil liability "arising from the offense charged."

Indeed, the basic facts of this case point squarely to the applicability of We must, however, correct the amount of damages awarded to the
the law on human relations. First, the complaint for civil liability was filed Spouses Bombasi.
way AHEAD of the information on the Anti-Graft Law. And, the complaint
for damages specifically invoked defendant Mayor Comendadors To seek recovery of actual damages, it is necessary to prove the actual
violation of plaintiffs right to due process. Thus: amount of loss with a reasonable degree of certainty, premised upon
competent proof and on the best evidence obtainable.55 In this case, the
xxxx Court finds that the only evidence presented to prove the actual damages
incurred was the itemized list of damaged and lost items56 prepared by
In causing or doing the forcible demolition of the store in question, the Engineer Cabrega, an engineer commissioned by the Spouses Bombasi
individual natural defendants did not only act with grave abuse of to estimate the costs.
authority but usurped a power which belongs to our courts of justice; such
actuations were done with malice or in bad faith and constitute an As held by this Court in Marikina Auto Line Transport Corporation v.
invasion of the property rights of plaintiff(s) without due process of law. People of the Philippines,57

xxxx x x x [W]e agree with the contention of petitioners that respondents failed
to prove that the damages to the terrace caused by the incident amounted
to P100,000.00. The only evidence adduced by respondents to prove

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OBLIGATIONS AND CONTRACTS CASES
actual damages claimed by private respondent were the summary liability
computation of damage made by Engr. Jesus R. Regal, Jr. amounting to survives. The Municipality of Nagcarlan, Paulino Asilo and Demetrio T.
P171,088.46 and the receipt issued by the BB Construction and Steel Comendador, as substituted by Victoria Bueta Vda. De Comendador, are
Fabricator to private respondent for P35,000.00 representing cost for hereby declared solidarily liable to the Spouses Bombasi for temperate
carpentry works, masonry, welding, and electrical works. Respondents damages in the amount of P200,000.00 and moral damages in the
failed to present Regal to testify on his estimation. In its five-page amount of P100,000.00.
decision, the trial court awarded P150,000.00 as actual damages to
private respondent but failed to state the factual basis for such award. Costs against the petitioners-appellants.
Indeed, the trial court merely declared in the decretal portion of its
decision that the "sum of P150,000.00 as reasonable compensation SO ORDERED.
sustained by plaintiff for her damaged apartment." The appellate court, for
its part, failed to explain how it arrived at the amount of P100,000.00 in its PRISMA CONSTRUCTION & DEVELOPMENT CORPORATION and
three-page decision. Thus, the appellate court merely declared: ROGELIO S. PANTALEON,
Petitioners,
With respect to the civil liability of the appellants, they contend that there vs
was no urgent necessity to completely demolish the apartment in question ARTHUR F. MENCHAVEZ ,
considering the nature of the damages sustained as a result of the Respondent.
accident. Consequently, appellants continue, the award of P150,000.00
as compensation sustained by the plaintiff-appellee for her damaged G.R. No. 160545
apartment is an unconscionable amount.

Further, in one case,58 this Court held that the amount claimed by the Present:
respondent-claimants witness as to the actual amount of damages
"should be admitted with extreme caution considering that, because it was *NACHURA, J.,
a bare assertion, it should be supported by independent evidence." The BRION, Acting Chairperson,
Court further said that whatever claim the respondent witness would DEL CASTILLO,
allege must be appreciated in consideration of his particular self- ABAD, and
interest.59 There must still be a need for the examination of the PEREZ, JJ.
documentary evidence presented by the claimants to support its claim Promulgated:
with regard to the actual amount of damages.
March 9, 2010
The price quotation made by Engineer Cabrega presented as an x------------------------------------------------------------------------------------------x
exhibit60 partakes of the nature of hearsay evidence considering that the DECISION
person who issued them was not presented as a witness.61 Any
evidence, whether oral or documentary, is hearsay if its probative value is BRION, J.:
not based on the personal knowledge of the witness but on the
knowledge of another person who is not on the witness stand. Hearsay We resolve in this Decision the petition for review on certiorari[1] filed by
evidence, whether objected to or not, has no probative value unless the petitioners Prisma Construction & Development Corporation (PRISMA)
proponent can show that the evidence falls within the exceptions to the and Rogelio S. Pantaleon (Pantaleon) (collectively, petitioners) who seek
hearsay evidence rule.62 Further, exhibits do not fall under any of the to reverse and set aside the Decision[2] dated May 5, 2003 and the
exceptions provided under Sections 37 to 47 of Rule 130 of the Rules of Resolution[3] dated October 22, 2003 of the Former Ninth Division of the
Court. Court of Appeals (CA) in CA-G.R. CV No. 69627. The assailed CA
Decision affirmed the Decision of the Regional Trial Court (RTC), Branch
Though there is no sufficient evidence to award the actual damages 73, Antipolo City in Civil Case No. 97-4552 that held the petitioners liable
claimed, this Court grants temperate damages for P200,000.00 in view of for payment of P3,526,117.00 to respondent Arthur F. Menchavez
the loss suffered by the Spouses Bombasi. Temperate damages are (respondent), but modified the interest rate from 4% per month to 12%
awarded in accordance with Art. 2224 of the New Civil Code when the per annum, computed from the filing of the complaint to full payment. The
court finds that some pecuniary loss has been suffered but its amount assailed CA Resolution denied the petitioners Motion for Reconsideration.
cannot, from the nature of the case, be proven with certainty. The amount
of temperate or moderated damages is usually left to the discretion of the FACTUAL BACKGROUND
courts but the same should be reasonable, bearing in mind that the
temperate damages should be more than nominal but less than The facts of the case, gathered from the records, are briefly summarized
compensatory.63 Without a doubt, the Spouses Bombasi suffered some below.
form of pecuniary loss in the impairment of their store. Based on the
record of the case,64 the demolished store was housed on a two-story On December 8, 1993, Pantaleon, the President and Chairman of the
building located at the markets commercial area and its concrete walls Board of PRISMA, obtained a P1,000,000.00[4] loan from the respondent,
remained strong and not affected by the fire. However, due to the failure with a monthly interest of P40,000.00 payable for six months, or a total
of the Spouses Bombasi to prove the exact amount of damage in obligation of P1,240,000.00 to be paid within six (6) months,[5] under the
accordance with the Rules of Evidence,65 this court finds that following schedule of payments:
P200,000.00 is the amount just and reasonable under the circumstances.
January 8, 1994 . P40,000.00
WHEREFORE, the instant appeal is DENIED. Accordingly, the Decision of February 8, 1994 ... P40,000.00
the Sandiganbayan dated 28 April 2003 is hereby AFFIRMED WITH March 8, 1994 ... P40,000.00
MODIFICATION. The Court affirms the decision finding the accused April 8, 1994 . P40,000.00
Paulino S. Asilo, Jr. and Demetrio T. Comendador guilty of violating May 8, 1994 .. P40,000.00
Section 3(e) of Republic Act No. 3019. We declare the finality of the June 8, 1994 P1,040,000.00[6]
dismissal of both the criminal and civil cases against Alberto S. Angeles Total P1,240,000.00
as the same was not appealed. In view of the death of Demetrio T. To secure the payment of the loan, Pantaleon issued a promissory note[7]
Comendador pending trial, his criminal liability is extinguished; but his civil that states:

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OBLIGATIONS AND CONTRACTS CASES
not more
I, Rogelio S. Pantaleon, hereby acknowledge the receipt of ONE MILLION than 4% per month. The appellate court, however, noted that the interest
TWO HUNDRED FORTY THOUSAND PESOS (P1,240,000), Philippine of 4% per month, or 48% per annum, was unreasonable and should be
Currency, from Mr. Arthur F. Menchavez, representing a six-month loan reduced to 12% per annum. The CA affirmed the RTCs finding that
payable according to the following schedule: PRISMA was a mere instrumentality of Pantaleon that justified the
piercing of the veil of corporate fiction. Thus, the CA modified the RTC
January 8, 1994 . P40,000.00 Decision by imposing a 12% per annum interest, computed from the filing
February 8, 1994 ... P40,000.00 of the complaint until finality of judgment, and thereafter, 12% from finality
March 8, 1994 ... P40,000.00 until fully paid.[17]
April 8, 1994 . P40,000.00
May 8, 1994 .. P40,000.00 After the CA's denial[18] of their motion for reconsideration,[19] the
June 8, 1994 P1,040,000.00 petitioners filed the present petition for review on certiorari under Rule 45
of the Rules of Court.
The checks corresponding to the above amounts are hereby
acknowledged.[8] THE PETITION

and six (6) postdated checks corresponding to the schedule of payments. The petitioners submit that the CA mistakenly relied on their board
Pantaleon signed the promissory note in his personal capacity,[9] and as resolution to conclude that the parties agreed to a 4% monthly interest
duly authorized by the Board of Directors of PRISMA.[10] The petitioners because the board resolution was not an evidence of a loan or
failed to completely pay the loan within the stipulated six (6)-month forbearance of money, but merely an authorization for Pantaleon to
period. perform certain acts, including the power to enter into a contract of loan.
The expressed mandate of Article 1956 of the Civil Code is that interest
From September 8, 1994 to January 4, 1997, the petitioners paid the due should be stipulated in writing, and no such stipulation exists. Even
following amounts to the respondent: assuming that the loan is subject to 4% monthly interest, the interest
covers the six (6)-month period only and cannot be interpreted to apply
September 8, 1994 P320,000.00 beyond it. The petitioners also point out the glaring inconsistency in the
October 8, 1995.P600,000.00 CA Decision, which reduced the interest from 4% per month or 48% per
November 8, 1995.....P158,772.00 annum to 12% per annum, but failed to consider that the amount of
January 4, 1997 P30,000.00[11] P3,526,117.00 that the RTC ordered them to pay includes the
compounded 4% monthly interest.
As of January 4, 1997, the petitioners had already paid a total of THE CASE FOR THE RESPONDENT
P1,108,772.00. However, the respondent found that the petitioners still
had an outstanding balance of P1,364,151.00 as of January 4, 1997, to The respondent counters that the CA correctly ruled that the loan is
which it applied a 4% monthly interest.[12] Thus, on August 28, 1997, the subject to a 4% monthly interest because the board resolution is attached
respondent filed a complaint for sum of money with the RTC to enforce to, and an integral part of, the promissory note based on which the
the unpaid balance, plus 4% monthly interest, P30,000.00 in attorneys petitioners obtained the loan. The respondent further contends that the
fees, P1,000.00 per court appearance and costs of suit.[13] petitioners are estopped from assailing the 4% monthly interest, since
they agreed to pay the 4% monthly interest on the principal amount under
In their Answer dated October 6, 1998, the petitioners admitted the loan of the promissory note and the board resolution.
P1,240,000.00, but denied the stipulation on the 4% monthly interest,
arguing that the interest was not provided in the promissory note. THE ISSUE
Pantaleon also denied that he made himself personally liable and that he
made representations that the loan would be repaid within six (6) months. The core issue boils down to whether the parties agreed to the 4%
[14] monthly interest on the loan. If so, does the rate of interest apply to the 6-
month payment period only or until full payment of the loan?
THE RTC RULING
OUR RULING
The RTC rendered a Decision on October 27, 2000 finding that the
respondent issued a check for P1,000,000.00 in favor of the petitioners We find the petition meritorious.
for a loan that would earn an interest of 4% or P40,000.00 per month, or a
total of P240,000.00 for a 6-month period. It noted that the petitioners Interest due should be stipulated in writing; otherwise, 12% per annum
made several payments amounting to P1,228,772.00, but they were still
indebted to the respondent for P3,526,117.00 as of February 11,[15] 1999 Obligations arising from contracts have the force of law between the
after considering the 4% monthly interest. The RTC observed that contracting parties and should be complied with in good faith.[20] When
PRISMA was a one-man corporation of Pantaleon and used this the terms of a contract are clear and leave no doubt as to the intention of
circumstance to justify the piercing of the veil of corporate fiction. Thus, the contracting parties, the literal meaning of its stipulations governs.[21]
the RTC ordered the petitioners to jointly and severally pay the In such cases, courts have no authority to alter the contract by
respondent the amount of P3,526,117.00 plus 4% per month interest from construction or to make a new contract for the parties; a court's duty is
February 11, 1999 until fully paid.[16] confined to the interpretation of the contract the parties made for
themselves without regard to its wisdom or folly, as the court cannot
The petitioners elevated the case to the CA via an ordinary appeal under supply material stipulations or read into the contract words the contract
Rule 41 of the Rules of Court, insisting that there was no express does not contain.[22] It is only when the contract is vague and ambiguous
stipulation on the 4% monthly interest. that courts are permitted to resort to the interpretation of its terms to
determine the parties intent.
THE CA RULING
In the present case, the respondent issued a check for P1,000,000.00.
The CA decided the appeal on May 5, 2003. The CA found that the parties [23] In turn, Pantaleon, in his personal capacity and as authorized by the
agreed to a 4% monthly interest principally based on the board resolution Board, executed the promissory note quoted above. Thus, the
that authorized Pantaleon to transact a loan with an approved interest of P1,000,000.00 loan shall be payable within six (6) months, or from

13

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OBLIGATIONS AND CONTRACTS CASES
January 8, 1994 up to June 8, 1994. During this period, the loan shall Medel
earn an interest of P40,000.00 per month, for a total obligation of finds no application in the present case where no other stipulation exists
P1,240,000.00 for the six-month period. We note that this agreed sum can for the payment of any extra amount except a specific sum of P40,000.00
be computed at 4% interest per month, but no such rate of interest was per month on the principal of a loan payable within six months.
stipulated in the promissory note; rather a fixed sum equivalent to this rate Additionally, no issue on the excessiveness of the stipulated amount of
was agreed upon. P40,000.00 per month was ever put in issue by the petitioners;[41] they
only assailed the application of a 4% interest rate, since it was not agreed
Article 1956 of the Civil Code specifically mandates that no interest shall upon.
be due unless it has been expressly stipulated in writing. Under this
provision, the payment of interest in loans or forbearance of money is It is a familiar doctrine in obligations and contracts that the parties are
allowed only if: (1) there was an express stipulation for the payment of bound by the stipulations, clauses, terms and conditions they have
interest; and (2) the agreement for the payment of interest was reduced in agreed to, which is the law between them, the only limitation being that
writing. The concurrence of the two conditions is required for the payment these stipulations, clauses, terms and conditions are not contrary to law,
of interest at a stipulated rate. Thus, we held in Tan v. Valdehueza[24] and morals, public order or public policy.[42] The payment of the specific sum
Ching v. Nicdao[25] that collection of interest without any stipulation in of money of P40,000.00 per month was voluntarily agreed upon by the
writing is prohibited by law. petitioners and the respondent. There is nothing from the records and, in
fact, there is no allegation showing that petitioners were victims of fraud
Applying this provision, we find that the interest of P40,000.00 per month when they entered into the agreement with the respondent.
corresponds only to the six (6)-month period of the loan, or from January Therefore, as agreed by the parties, the loan of P1,000,000.00 shall earn
8, 1994 to June 8, 1994, as agreed upon by the parties in the promissory P40,000.00 per month for a period of six (6) months, or from December 8,
note. Thereafter, the interest on the loan should be at the legal interest 1993 to June 8, 1994, for a total principal and interest amount of
rate of 12% per annum, consistent with our ruling in Eastern Shipping P1,240,000.00. Thereafter, interest at the rate of 12% per annum shall
Lines, Inc. v. Court of Appeals:[26] apply. The amounts already paid by the petitioners during the pendency of
the suit, amounting to P1,228,772.00 as of February 12, 1999,[43] should
When the obligation is breached, and it consists in the payment of a sum be deducted from the total amount due, computed as indicated above. We
of money, i.e., a loan or forbearance of money, the interest due should be remand the case to the trial court for the actual computation of the total
that which may have been stipulated in writing. Furthermore, the interest amount due.
due shall itself earn legal interest from the time it is judicially demanded.
In the absence of stipulation, the rate of interest shall be 12% per annum Doctrine of Estoppel not applicable
to be computed from default, i.e., from judicial or extrajudicial demand
under and subject to the provisions of Article 1169 of the Civil Code. The respondent submits that the petitioners are estopped from disputing
(Emphasis supplied) the 4% monthly interest beyond the six-month stipulated period, since
they agreed to pay this interest on the principal amount under the
We reiterated this ruling in Security Bank and Trust Co. v. RTC-Makati, Br. promissory note and the board resolution.
61,[27] Sulit v. Court of Appeals,[28] Crismina Garments, Inc. v. Court of
Appeals,[29] Eastern Assurance and Surety Corporation v. Court of We disagree with the respondents contention.
Appeals,[30] Sps. Catungal v. Hao,[31] Yong v. Tiu,[32] and Sps. Barrera
v. Sps. Lorenzo.[33] Thus, the RTC and the CA misappreciated the facts We cannot apply the doctrine of estoppel in the present case since the
of the case; they erred in finding that the parties agreed to a 4% interest, facts and circumstances, as established by the record, negate its
compounded by the application of this interest beyond the promissory application. Under the promissory note,[44] what the petitioners agreed to
notes six (6)-month period. The facts show that the parties agreed to the was the payment of a specific sum of P40,000.00 per month for six
payment of a specific sum of money of P40,000.00 per month for six months not a 4% rate of interest per month for six (6) months on a loan
months, not to a 4% rate of interest payable within a six (6)-month period. whose principal is P1,000,000.00, for the total amount of P1,240,000.00.
Thus, no reason exists to place the petitioners in estoppel, barring them
Medel v. Court of Appeals not applicable from raising their present defenses against a 4% per month interest after
the six-month period of the agreement. The board resolution,[45] on the
The CA misapplied Medel v. Court of Appeals[34] in finding that a 4% other hand, simply authorizes Pantaleon to contract for a loan with a
interest per month was unconscionable. monthly interest of not more than 4%. This resolution merely embodies
the extent of Pantaleons authority to contract and does not create any
In Medel, the debtors in a P500,000.00 loan were required to pay an right or obligation except as between Pantaleon and the board. Again, no
interest of 5.5% per month, a service charge of 2% per annum, and a cause exists to place the petitioners in estoppel.
penalty charge of 1% per month, plus attorneys fee equivalent to 25% of
the amount due, until the loan is fully paid. Taken in conjunction with the Piercing the corporate veil unfounded
stipulated service charge and penalty, we found the interest rate of 5.5%
to be excessive, iniquitous, unconscionable, exorbitant and hence, We find it unfounded and unwarranted for the lower courts to pierce the
contrary to morals, thereby rendering the stipulation null and void. corporate veil of PRISMA.

Applying Medel, we invalidated and reduced the stipulated interest in The doctrine of piercing the corporate veil applies only in three (3) basic
Spouses Solangon v. Salazar[35] of 6% per month or 72% per annum instances, namely: a) when the separate and distinct corporate
interest on a P60,000.00 loan; in Ruiz v. Court of Appeals,[36] of 3% per personality defeats public convenience, as when the corporate fiction is
month or 36% per annum interest on a P3,000,000.00 loan; in Imperial v. used as a vehicle for the evasion of an existing obligation; b) in fraud
Jaucian,[37] of 16% per month or 192% per annum interest on a cases, or when the corporate entity is used to justify a wrong, protect a
P320,000.00 loan; in Arrofo v. Quio,[38] of 7% interest per month or 84% fraud, or defend a crime; or c) is used in alter ego cases, i.e., where a
per annum interest on a P15,000.00 loan; in Bulos, Jr. v. Yasuma,[39] of corporation is essentially a farce, since it is a mere alter ego or business
4% per month or 48% per annum interest on a P2,500,000.00 loan; and in conduit of a person, or where the corporation is so organized and
Chua v. Timan,[40] of 7% and 5% per month for loans totalling controlled and its affairs so conducted as to make it merely an
P964,000.00. We note that in all these cases, the terms of the loans were instrumentality, agency, conduit or adjunct of another corporation.[46] In
open-ended; the stipulated interest rates were applied for an indefinite the absence of malice, bad faith, or a specific provision of law making a
period. corporate officer liable, such corporate officer cannot be made personally
liable for corporate liabilities.[47]
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OBLIGATIONS AND CONTRACTS CASES
rendered
In the present case, we see no competent and convincing evidence of judgment in favor of PVB. On appeal, however, the CA reversed the
any wrongful, fraudulent or unlawful act on the part of PRISMA to justify decision of the RTC and dismissed PVB's petition for the issuance of a
piercing its corporate veil. While Pantaleon denied personal liability in his writ of possession. The CA Decision became final and executory on
Answer, he made himself accountable in the promissory note in his January 14, 2004.
personal capacity and as authorized by the Board Resolution of PRISMA.
[48] With this statement of personal liability and in the absence of any Meanwhile, after due proceedings in L.R.C. Case No. A-124-1024, the
representation on the part of PRISMA that the obligation is all its own RTC rendered judgment granting the petition of PVB. The dispositive
because of its separate corporate identity, we see no occasion to consider portion of the RTC Decision, dated August 6, 2001, reads as follows:
piercing the corporate veil as material to the case.
WHEREFORE, the Register of Deeds of Angeles City is directed to issue
WHEREFORE, in light of all the foregoing, we hereby REVERSE and another owner's duplicate copies of T.C.T. Nos. T-12567, 29117 (3793)
SET ASIDE the Decision dated May 5, 2003 of the Court of Appeals in and 35788 in favor of petitioner Philippine Veterans Bank, which shall
CA-G.R. CV No. 69627. The petitioners loan of P1,000,000.00 shall bear contain a memorandum of the fact that they be issued in place of the lost
interest of P40,000.00 per month for six (6) months from December 8, ones but shall, in all respect, be entitled to like faith and credit as the
1993 as indicated in the promissory note. Any portion of this loan, unpaid original duplicates and shall thereafter be regarded as such for all
as of the end of the six-month payment period, shall thereafter bear purposes of Pres. Decree No. 1529, after the petitioner shall have
interest at 12% per annum. The total amount due and unpaid, including complied with all the mandatory requirements of the law on the matter.
accrued interests, shall bear interest at 12% per annum from the finality of
this Decision. Let this case be REMANDED to the Regional Trial Court, SO ORDERED.3
Branch 73, Antipolo City for the proper computation of the amount due as
herein directed, with due regard to the payments the petitioners have Feeling aggrieved, Rogelio filed an appeal with the CA. On August 25,
already remitted. Costs against the respondent. 2003, the CA issued the presently assailed Resolution dismissing
SO ORDERED. Rogelio's appeal for his failure to file his appellant's brief.

[G.R. NO. 165938 : November 25, 2009] Rogelio filed a motion for reconsideration, but the same was denied by
the CA in a subsequent Resolution dated November 2, 2004.
ROGELIO DIZON, Petitioner, v. PHILIPPINE VETERANS BANK,
Respondent. Hence, the present petition based on the following grounds:

DECISION I. Whether or not the questioned second Petition for Issuance of Owner's
Duplicate copy of Transfer Certificate of Title Nos. T-12567, 2917 (3793),
PERALTA, J.: 5788 in lieu of lost owner's copy filed by the Petitioner-Appellee on July
26, 1999, after more than sixteen (16) years after the Foreclosure Sale
Assailed in the present Petition for Review on Certiorari under Rule 45 of sometime in December 8, 1983 is barred by prescription;
the Rules of Court is the Resolution1 of the Court of Appeals (CA) in CA-
G.R. CV No. 72856, dated August 25, 2003, which dismissed herein II. Whether or not the three (3) defective, fictitious and/or fake Owner's
petitioner's appeal, and its Resolution2 dated November 2, 2004 denying duplicate certificates of title attached in the dismissed original petition filed
petitioner's motion for reconsideration. on June 1986 when it was the Respondent Bank (petitioner therein) itself
which placed the remarks on the upper right corner of the titles the
The undisputed facts are as follows: phrase: ALLEGEDLY FAKE in our possession presented as collaterals are
similar to the three (3) certified true copies of the original certificates of
Herein petitioner Rogelio Dizon and his wife Corazon were the owners of title on file at the Register of Deeds of Angeles City attached in the
three parcels of land located in Angeles City, Pampanga covered by second Petition and marked as Annexes "A", "B" and "C" thereof
Transfer Certificate of Title (TCT) Nos. T-12567, T-35788 and T-29117-R respectively;
(3793). On September 26, 1979, the Spouses Dizon mortgaged these lots
to herein respondent Philippine Veterans Bank (PVB) as security for a III. Whether or not Atty. Ma. Rosario A. Sabalburo, Head of Assets
credit accommodation which they obtained from PVB. The Spouses Dizon Recovery Department of the PVB, has committed the crime of perjury in
failed to pay their obligation. As a consequence, PVB extrajudicially her Sworn Affidavit of Loss that she executed on July 23, 1999, by
foreclosed the mortgage and was able to acquire the subject properties at presenting as pieces of evidence the copies of the original certificates of
public auction conducted on December 8, 1983. Subsequently, a title secured from the Register of Deeds of Angeles City and not the
Certificate of Sale was issued in favor of PVB which was registered with machine copies of the owner's duplicate certificates of title that were
the Register of Deeds of Angeles City on November 22, 1984. found in their file as claimed or true xerox copies from RTC BR. 62;

Sometime in June 1986, PVB filed with the Regional Trial Court (RTC) of IV. Whether or not the documentary bases (the three certified copies of
Angeles City a Petition for the Issuance of Owner's Duplicate Certificate title issued by the Register of Deeds of Angeles City only last November
of Title covering the subject lots. The case was docketed as L.R.C. CAD. 16, 1999 which were duly verified by Mr. Ronnie Vergara and Mr.
CASE NO. A-124-91. Apparently, for failure of PVB to prosecute the case Herminio Manalang, the records officer and Vault Keeper, respectively of
for an unreasonable length of time, the petition was dismissed without the said Office, used in the Respondent Bank's second Petition are the
prejudice. very same copies of the said collaterals having the same annotations and
encumbrances making them as the true and faithful reproductions of the
On July 26, 1999, PVB filed anew with the RTC of Angeles City a Petition titles used in the Bank's first Petition filed by the Petitioner on June 19,
for Issuance of Owner's Duplicate Copy of Transfer Certificate of Title 1986. (Emphasis supplied.)4
over the same parcels of land. The case was docketed as L.R.C. Case
No. A-124-1024. Herein petitioner opposed the petition. The petition lacks merit.

On November 16, 1999, PVB filed with the RTC of Angeles City an ex- With respect to the first issue, petitioner contends that the petition filed by
parte petition for the issuance of a writ of possession. The case was respondent bank has prescribed, citing Article 1142 of the Civil Code
docketed as Cad. Case No. A-124-1057. On February 19, 2002, the RTC which states that "[a] mortgage action prescribes in ten years."

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In the
It is true that, under Article 1142 of the Civil Code, an action to enforce a present case, petitioner may not renege on his own acts and
right arising from a mortgage should be enforced within ten (10) years representations to the prejudice of respondent bank, which has relied on
from the time the right of action accrues; otherwise, it will be barred by them. Since petitioner entered into a binding contract on his own volition
prescription and the mortgage creditor will lose his rights under the using the titles which he now assails, he is therefore estopped from
mortgage.5 It is clear that the actions referred to under Article 1142 of the questioning the authenticity of these documents which paved the way for
Civil Code are those that necessarily arise from a mortgage. In the the consummation of the contract from which he derived benefit.
present case, however, PVB's petition for the issuance of an owner's
duplicate certificate of title already arises from its right as the owner of the Other than to harass the respondent, the Court is at a loss as to what
subject properties and no longer as a mortgagee. The mortgage contract petitioner really desires to achieve in opposing the respondent bank's
respondent entered into with petitioner had already been foreclosed, the petition. The Court agrees with respondent's observation that petitioner's
properties sold and the sale in favor of PVB registered with the Register actuations are demonstrative of his desperate attempt to cling on to the
of Deeds of the Province of Cagayan. Hence, since the petition filed by subject properties despite the fact that he has lost them by reason of
PVB is not a mortgage action, the provisions of Article 1142 of the Civil foreclosure due to his failure to pay his obligations and his subsequent
Code do not apply. inability to redeem them during the period allowed by law.

In any case, Presidential Decree (PD) No. 1529, otherwise known as the Coming to the third and fourth issues, petitioner calls on the Court to
Property Registration Decree, the law that specifically governs petitions resolve issues of fact. Settled is the rule that a Petition for Review on
for the replacement of lost duplicate certificates of title, does not provide Certiorari filed with this Court under Rule 45 of the Revised Rules of Court
for any limitation or period for filing the said petition. The silence of the law shall raise only questions of law.10 This Court is not a trier of facts. It is
on this matter can only be interpreted to mean that there is no intention to not its function to analyze or weigh evidence. The jurisdiction of this Court
provide a prescriptive period for filing this petition. over cases brought to it is limited to the review and rectification of errors
allegedly committed by the lower courts.11 While there are exceptions to
As to the second issue, petitioner anchors his opposition to the petition this rule,12 the Court finds that the present case does not fall under any
filed by PVB on the contention that the titles, which he presented to the of them.
bank as evidence that the subject properties were used as security for the
loan he and his wife incurred with the said bank, were genuine but were In any case, what petitioner is trying to impress upon the Court in the third
later on altered by the bank's officials and employees with whom he and fourth issues is that PVB is concealing the fact that the alleged
allegedly entered a deal in order to have his loan approved. Petitioner spurious copies of the subject TCTs were not actually lost. However, the
claims that this altered and spurious titles were the ones presented by Court gives full faith and credence to the finding of the RTC that the
PVB in its first petition filed with the RTC in June 1986. However, these owner's duplicate copies in the possession of PVB were, in fact, lost. This
allegations remain unsubstantiated. They are self-serving statements is consistent with the settled rule that appellate courts should not, unless
which are not supported by any evidence whatsoever. It is settled that one for strong and cogent reasons, reverse the findings of fact of trial
who alleges a fact has the burden of proving it and mere allegation is not courts.13 This is so because trial judges are in a better position to
evidence.6 The established fact remains that petitioner and his wife were examine real evidence and at a vantage point to observe the actuation
the ones who submitted to PVB the authentic owner's copy of the titles and the demeanor of the witnesses.14 In the instant case, the Court finds
over the subject properties and that these copies were no sufficient reason to depart from the above findings of the RTC.
lost.rbl r l l lbrr
Petitioner further questions PVB's submission of the certified true copies
The Court cannot follow the logic in petitioner's arguments considering of the TCTs covering the subject properties, which were taken from the
that, in the first place, he and his wife were the ones who submitted the files of the Register of Deeds of Angeles City. However, PVB has
titles to PVB. Now that PVB seeks to obtain a duplicate copy of the titles sufficiently explained that it is only submitting evidence to prove that it
covering the subject properties which it legally acquired, petitioner has complied with the jurisdictional requirement under Section 10915 of PD
made a complete turnaround and now assails the authenticity of these No. 1529, which directs a person applying for the issuance of another
titles which he and his wife used to obtain their loan. Nonetheless, duplicate certificate of title to file a sworn statement with the concerned
petitioner is estopped from doing so. Register of Deeds of the fact of loss or destruction of the original owner's
duplicate copy of the subject TCT.
Settled is the rule that a person, who by his deed or conduct has induced
another to act in a particular manner, is barred from adopting an It bears to emphasize that in a petition for the issuance of a second
inconsistent position, attitude or course of conduct that thereby causes owner's duplicate copy of a certificate of title in replacement of a lost one,
loss or injury to the latter.7 The doctrine of estoppel is based upon the the only questions to be resolved are: whether or not the original owner's
grounds of public policy, fair dealing, good faith and justice, and its duplicate copy has indeed been lost and whether the petitioner seeking
purpose is to forbid one to speak against his own act, representations, or the issuance of a new owner's duplicate title is the registered owner or
commitments to the injury of one to whom they were directed and who other person in interest.16
reasonably relied thereon.8
The first question is factual and, in the present case, the RTC had already
Article 1431 of the Civil Code states that "[t]hrough estoppel an admission made a finding that the original owner's duplicate copy of the subject
or representation is rendered conclusive upon the person making it, and TCTs had indeed been lost. In this respect, the Court finds no cogent
cannot be denied or disproved as against the person relying thereon." reason to depart from the findings of the RTC as discussed earlier.

The essential elements of estoppel are: (1) conduct of a party amounting As to the second question, there is no dispute that PVB has an interest
to false representation or concealment of material facts or at least over the subject properties having acquired the same at public auction.
calculated to convey the impression that the facts are otherwise than, and
inconsistent with, those which the party subsequently attempts to assert; In sum, there is no doubt as to the identity of the subject properties. There
(2) intent, or at least expectation, that this conduct shall be acted upon by, is neither any dispute with respect to the fact that petitioner and his wife
or at least influence, the other party; and (3) knowledge, actual or mortgaged these properties to PVB and that they subsequently failed to
constructive, of the real facts.9 pay their obligations to the latter. Nor is there any issue as to the validity
of the foreclosure proceedings as well as the auction sale conducted and
PVB's subsequent acquisition of the subject properties.

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OBLIGATIONS AND CONTRACTS CASES
premises;
Hence, on the basis of the foregoing, the Court finds that the RTC that Kue then sent another letter, dated January 31, 1989, informing them
committed no error in granting PVB's petition for the issuance of an that he had already acquired the said property and that they were
owner's duplicate copy of certificates of title covering the subject requested to vacate the premises within fifteen (15) days from receipt
properties. thereof;4 and that because of this development, on May 7, 1991,
petitioners filed an action for "Determination of True Balance of Mortgage
WHEREFORE, the petition is DENIED. The Resolutions dated August 25, Debt, Annulment/Setting Aside of Extrajudicial Foreclosure of Mortgage
2003 and November 2, 2004, respectively, of the Court of Appeals in CA- and Damages, with Prayer for Preliminary Injunction" against PAB.5
G.R. CV No. 72856, are AFFIRMED.
On May 27, 1996, the RTC dismissed petitioners complaint. It ruled,
SO ORDERED. among others, that: 1) PAB was not guilty of bad faith in conducting the
extrajudicial foreclosure as it, at one time, even suspended the conduct of
G.R. No. 193453 June 5, 2013 the foreclosure upon the request of petitioners, who, nevertheless, failed
to exert effort to settle their accounts; 2) because petitioners failed to
SPOUSES RUBIN AND PORTIA HOJAS, Petitioners, redeem their properties within the period allowed, PAB became its
vs. absolute owner and, as such, it had the right to sell the same to Kue, who
PHILIPPINE AMANAH BANK AND RAMON KUE, Respondents. acquired the property for value and in good faith; and 3) the subsequent
foreclosure and auction sale having been conducted above board and in
DECISION accordance with the requisite legal procedure, collusion between PAB and
Kue was certainly alien to the issue.6
MENDOZA, J.:
Aggrieved, petitioners filed an appeal assailing the May 27, 1996 RTC
This is a petition for review on certiorari assailing the July 28, 2010 Decision. They asserted that the March 9, 1988 Letter of Carpizo to
Decision1 of the Court of Appeals (CA), in CA-G.R. CV No. 55722, which Roberto Hojas extended the redemption period from April 21 to December
affirmed the May 27, 1996 Decision of the Regional Trial Court, Branch 31, 1988. Considering that they had relied on Carpizos representation,
13, Zamboanga City (RTC), dismissing Civil Case No. 1028 (3952), an PAB violated the principle of estoppel when it conducted the public sale
action for "Determination of True Balance of Mortgage, Debt, on November 4, 1988.7 Their basis was the portion of said letter which
Annulment/Setting stated:

Aside of Extrajudicial Foreclosure of Mortgage and Damages, with Prayer xxxx


for Preliminary Injunction."
As the Bank has adopted an incentive scheme whereby payments are
The petitioners, Spouses Rubin and Portia Hojas (petitioners), alleged liberalized to give chances to former owners to repossess their properties,
that on April 11, 1980, they secured a loan from respondent Philippine we suggest that you advise your parents to drop by at our Zamboanga
Amanah Bank (PAB) in the amount of P450,000.00; that this loan was Office so they can avail of this rare privilege which shall be good only up
secured by a mortgage, covering both personal and real properties; that to December 31, 1988. (Emphasis supplied)8
from May 14, 1981 to June 27, 1986, they made various payments
amounting to P486,162.13; that PAB, however, did not properly credit The CA was not sympathetic with petitioners position. It held that the
their payments; that based on the summary of payments furnished by period of redemption was never extended. The date "December 31, 1988"
PAB to them on February 24, 1989, only 13 payments were credited, was not an extension of the redemption period. It was merely the last day
erroneously amounting to P317,048.83; that PAB did not credit the for the availment of the liberalized payment for the repossession of
payment they made totaling P165,623.24; and that, in the statement of foreclosed assets under PABs incentive scheme. PAB, through said
their account as of October 17, 1984, PAB listed their total payment as letter, did not make an unqualified representation to petitioners that it had
412,211.54 on the principal, and P138,472.09 as 30% interest, all extended the redemption period. As such, PAB could not be said to have
amounting to P550,683.63, despite the fact that at that time, petitioners violated the principle of estoppel when it conducted a public sale on
had already paid the total sum of P486,162.13.2 November 4, 1988.9 Thus, the dispositive portion of the CA decision
reads:
Petitioners further averred that for failure to pay the loan, PAB applied for
the extrajudicial foreclosure of the mortgaged real properties of petitioners ACCORDINGLY, the instant appeal is DENIED. The Decision dated May
with the Ex-Officio Sheriff; that consequently, a Notice of Extrajudicial 27, 1996, of the Regional Trial Court, 9th Judicial Region, Branch No. 13
Foreclosure was issued on January 12, 1987 setting the foreclosure sale of Zamboanga City, in Civil Case No. 1028 (3952), is AFFIRMED.
on April 21, 1987 and, stating therein the mortgage debt in the sum of
P450,000.00; and that, in the public auction conducted, PAB acquired SO ORDERED.10
said real property.3
Undaunted, petitioners filed the present petition for review. It postulated
It was further alleged that on March 9, 1988, through the intervention of the sole issue:
then Senator Aquilino Pimentel, Farouk A. Carpizo (Carpizo), the
OICPresident of PAB, wrote Roberto Hojas (Roberto), petitioners son, WHETHER OR NOT THE CA ERRED IN NOT HOLDING PAB TO HAVE
informing him that although the one-year redemption period would expire VIOLATED THE PRINCIPLE OF ESTOPPEL WHEN THE LATTER
on April 21, 1988, by virtue of the banks incentive scheme, the CONDUCTED THE NOVEMBER 4, 1988 PUBLIC SALE.
redemption period was extended until December 31, 1988; that despite
said letter from the OIC-President, the OIC of the Project Development Petitioners reiterated their argument that the November 4, 1988 public
Department of PAB wrote Rubin Hojas that the real properties acquired by sale by PAB was violative of the principle of estoppel because said bank
PAB would be sold in a public bidding before the end of August, 1988; that made it appear that the one-year redemption period was extended. As
on November 4, 1988, a public bidding was conducted; that in the said such, when PAB sold the property before said date, they suffered
bidding, the mortgaged properties were awarded to respondent Ramon damages and were greatly prejudiced.11 They also argued that since they
Kue (Kue); that subsequently, they received a letter from the OIC of the manifested their interest in availing of the said "incentive scheme," PAB
Project Development Department, dated January 3, 1989, informing them should have, at the very least, waited until December 31, 1988, before it
that they had fifteen (15) days from receipt within which to vacate the sold the subject foreclosed property in a public auction.12

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OBLIGATIONS AND CONTRACTS CASES
bidding.
On the other hand, PAB explains that the purpose of the "incentive Thus, on August 11, 1988, Iribani wrote the petitioners about the
scheme" was to give previous owners the chance to redeem their scheduled bidding. In response, the petitioners told Iribani that they would
properties on easy payment term basis, through condonation of some go Manila to explain their case. They did not, however, return even after
charges and penalties and allowing payment by installment based on their the public bidding. In this regard, the CA was correct when it wrote:
proposals which may be acceptable to PAB. Therefore, the March 9, 1988
Letter of Carpizo was an invitation for petitioners to submit a proposal to Here, there is no estoppel to speak of. The letter does not show that the
PAB.13 It was not meant to extend the one-year redemption period. Bank had unqualifiedly represented to the Hojases that it had extended
the redemption period to December 31, 1988. Thus, the Hojases have no
As early as August 11, 1988, PAB wrote petitioners informing them of the basis in positing that the public sale conducted on November 4, 1988 was
scheduled public bidding. After receipt of the letter, petitioners went to null and void for having been prematurely conducted.19
PAB to signify their willingness to avail of the said incentive scheme.
They, however, failed to submit a proposal. In fact, PAB did not hear from Moreover, petitioners allegation that they had signified their intention to
petitioners again. As such, the respondent sold the subject property in a avail of the incentive scheme (which they have equated to their intention
public sale on November 4, 198814 PAB cited the RTCs finding that to redeem the property), did not amount to an exercise of redemption
although the petitioners manifested their intention to avail of the incentive precluding the bank from making the public sale.20 In the case of China
scheme desire alone was not sufficient. Redemption is not a matter of Banking Corporation v. Martir,21 this Court expounded on what
intent but involved making the proper payment or tender of the price of constitutes a proper exercise of the right of redemption, to wit:
the land within the specified period.15
The general rule in redemption is that it is not sufficient that a person
The petition is bereft of merit. offering to redeem manifests his desire to do so. The statement of
intention must be accompanied by an actual and simultaneous tender of
Through estoppel, an admission or representation is rendered conclusive payment. This constitutes the exercise of the right to repurchase.
upon the person making it, and cannot be denied or disproved as against
the person relying on it.16 This doctrine is based on the grounds of public In several cases decided by the Court where the right to repurchase was
policy, fair dealing, good faith, and justice and its purpose is to forbid one held to have been properly exercised, there was an unequivocal tender of
to speak against his own act, representations or commitments to the payment for the full amount of the repurchase price. Otherwise, the offer
injury of one to whom they were directed and who reasonably relied on to redeem is ineffectual. Bona fide redemption necessarily implies a
it.17 Thus, in order for this doctrine to operate, a representation must reasonable and valid tender of the entire repurchase price, otherwise the
have been made to the detriment of another who relied on it. In other rule on the redemption period fixed by law can easily be circumvented.
words, estoppel would not lie against one who, in the first place, did not
make any representation. Moreover, jurisprudence also characterizes a valid tender of payment as
one where the full redemption price is tendered. Consequently, in this
In this case, a perusal of the letter, on which petitioners based their case, the offer by respondents on July 24, 1986 to redeem the foreclosed
position that the redemption period had been extended, shows otherwise. properties for 1,872,935 and the subsequent consignation in court of
Pertinent portions of the said letter read: P1,500,000 on August 27, 1986, while made within the period of
redemption, was ineffective since the amount offered and actually
xxxx consigned not only did not include the interest but was in fact also way
below the P2,782,554.66 paid by the highest bidder/purchaser of the
Our records show that the above account has already been foreclosed by properties during the auction sale.
the bank. However, the borrowers concerned can still exercise the one (1)
year right of redemption over the foreclosed properties until April 21, In Bodiongan vs. Court of Appeals, we held:
1988.
In order to effect a redemption, the judgment debtor must pay the
As the Bank has adopted an incentive scheme whereby payments are purchaser the redemption price composed of the following: (1) the price
liberalized to give chances to former owners to repossess their properties, which the purchaser paid for the property; (2) interest of 1% per month on
we suggest that you advise your parents to drop by at our Zamboanga the purchase price; (3) the amount of any assessments or taxes which the
Office so they can avail of this rare privilege which shall be good only up purchaser may have paid on the property after the purchase; and (4)
to December 31, 1988. [Emphases and Underscoring Supplied]18 interest of 1% per month on such assessments and taxes x x x.

As correctly held by the RTC and upheld by the CA, the date "December Furthermore, Article 1616 of the Civil Code of the Philippines provides:
31, 1988" refers to the last day when owners of foreclosed properties, like
petitioners, could submit their payment proposals to the bank. The letter The vendor cannot avail himself of the right to repurchase without
was very clear. It was about the availment of the liberalized payment returning to the vendee the price of the sale x x x.
scheme of the bank. On the last day for redemption, the letter was also
clear. It was April 21, 1988. It was never extended. It is not difficult to understand why the redemption price should either be
fully offered in legal tender or else validly consigned in court. Only by such
The opportunity given to the petitioners was to avail of the liberalized means can the auction winner be assured that the offer to redeem is
payment scheme which program would expire on December 31, 1988. As being made in good faith.1wphi1
explained by Abraham Iribani (Iribani), the OIC of the Project
Development Department of PAB, it was to give a chance to previous Respondents' repeated requests for information as regards the amount of
owners to repossess their properties on easy term basis, possibly by loan availed from the credit line and the amount of redemption, and
condonation of charges and penalties and payment on instalment. The petitioner's failure to accede to said requests do not invalidate the
letter of Carpizo was an invitation to the petitioners to come to the bank foreclosure. Respondents can find other ways to know the redemption
with their proposal. It appears that the petitioners could not come up with price. For one, they can examine the Certificate of Sale registered with
a proposal acceptable to the bank. the Register of Deeds to verify the purchase price, or upon the filing of
their complaint, they could have moved for a computation of the
For said reason, the mortgaged property was included in the list of redemption price and consigned the same to the court. At any rate,
mortgaged properties that would be sold through a scheduled public whether or not respondents '"were diligent in asserting their willingness to

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OBLIGATIONS AND CONTRACTS CASES
pay is irrelevant. Redemption within the period allowed by law is not a avail of
matter of intent but a question of payment or valid tender of the full the scheme, they were also ready to pay the redemption price. Hence, as
redemption price within said period. they failed to exercise their right of redemption and failed to take
advantage of the liberalized incentive scheme, PAB was well within its
Even the complaint instituted by respondents cannot aid their plight right to sell its property in a public sale.
because the institution of an action to annul a foreclosure sale does not
suspend the running of the redemption period. (Underscoring supplied)22 WHEREFORE, the petition is DENIED.

In the case at bench, the record is bereft of concrete evidence that would SO ORDERED.
show that, aside from the fact that petitioners manifested their intention to

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