Development Bank of the Philippines v.

Traverse Development Corporation

and Central Surety and Insurance Company
G.R. No. 169293
October 5, 2011

Facts: Traverse Development Corporation acquired a 1-year fire insurance for

its three-storey building from FGU Insurance Corporation as compliance of a
condition in the real estate mortgage entered with Development Bank of the
Philippines- Tarlac Branch. The following year, FGU Insurance Corporation
then automatically renewed Traverse’s fire insurance for another year.
However, DBP had already transferred the building’s insurance to Central
Surety & Insurance Company, for the same terms. A fire then engulfed
Traverse’s building. Traverse informed Central Surety & Insurance Company
about the incident and claimed their insurance. Central Surety & Insurance
Company did not agree and wants to settle at a lower amount. Traverse then
filed for a Complaint before the RTC, against Central Surety & Insurance
Company and DBP for payment of its claim and damages because the delay
prevented Traverse from receiving rentals for its building, its loan with DBP
had increased due to interest and penalties, and it had suffered actual
damages. Traverse included DBP as co-defendant because it failed to
convince Central Surety & Insurance Company to pay, considering it
transferred the insurance to Central without Traverse’s knowledge.

On the contrary, DBP averred that Traverse had knowledge of the transfer by
its payment of the premium, documentary stamp tax and other charges for the
new insurance policy.Central argued that Traverse had no valid and sufficient
cause of action because DBP was the real party-in-interest and it violated
material conditions in its policy. It also argued that the building was not a total
loss, as the it was only partially damaged.

The lower court rendered its decision, among others, ordering DBP to
extinguish the loan of Traverse, which was later deleted after partially granting
the motion for reconsideration, and that it is solidarily liable with Central in the
payment of attorney’s fees and cost of litigation. DBP and Central appealed
but was dismissed. Central’s motion for reconsideration was denied but DBP’s
was partially granted in the rectification of the decision but not setting aside of
the decision on the solidarity of attorney’s fees and litigation cost. Hence, this
petition for review.

Issue: Whether of not DBP can be held solidarily liable with Central for the
payment of attorney’s fees and cost of litigation?
Ruling: No. DBP cannot be held solidarily liable with Central for the payment
of attorney’s fees and cost of litigation.

Decision: The Supreme Court said that in the absence of stipulation,

attorney’s fees may be recovered as actual or compensatory damages under
any of the circumstances provided for in Article 2208 of the Civil Code. More
importantly paragraph 2, which states that, “When the defendant’s act or
omission has compelled the plaintiff to litigate with third persons or to incur
expenses to protect his interest”. Even if it DBP had a hand in the transfer of
the fire insurance to Central, it is not sufficient to hold DBP solidarily liable with
Central to pay for the attorney’s fees and cost of litigation. DBP could not be
blamed for transferring the insurance to Central because of the previous
delays in Traverse’s submission of its insurance policy. The award of attorneys
fees is the exception rather than the rule and the court must state explicitly the
legal reason for such award. The Supreme Court cited the case of ABS-CBN
Broadcasting Corporation v. Court of Appeals, in which the court held that,
“The power of the court to award attorneys fees Under Article 2208 demands
factual, legal and equitable justification.” It was not DBP’s act of transferring
the insurance policy from FGU to Central that compelled Traverse to litigate its
claims, but rather Central’s persistent refusal to pay the claims. Only Central
should be held liable to for the payment of the attorney’s fees and cost of
litigation.

Yolanda E. Garlet v. Vencidor T. Garlet

August 2, 2017
G.R. No. 193544

Facts: Yolanda E. Garlet and Vencidor T. Garlet met and became intimately
involved with each other, which resulted in Yolanda getting pregnant. She
gave birth to their son and later on got married. They soon had another child.
Vencidor is aware that Yolanda is working in Japan as an entertainer. There
was no ante-nuptial agreement before they contracted marriage and also there
was no separation of properties during their marriage. After awhile, Yolanda
and Vencidor experienced marital problems and they separated. Yolanda has
the custody of the children and she was the one supporting them. She
admitted that they acquired properties during their cohabitation with her own
money. She then filed for a Declaration of Nullity of Marriage on the ground of
Vencidor’s psychological incapacity to fulfill his essential marital obligations to
Yolanda and their children. Yolanda also admitted that Vencidor did not
undergo a psychological examination by the psychologist sought by her
because he did not appear to the invitation. The clinical psychologist found
Vencidor to be suffering from Narcissistic Type of Personality Disorder. The
RTC rendered a decision that their marriage is null and void on the ground of
psychological incapacity. The CA on appeal rendered a decision contrary to
that of the RTC.
Issue: Whether or not the marriage between Yolanda and Vencidor is null and
void?

Ruling: No. The marriage between Yolanda and Vencidor is not null and void.

Decision: The Supreme Court agrees with the CA that the totality of Yolanda’s
evidence is insufficient to establish Vencidor’s psychological incapacity.
Yolanda imputes almost every imaginable negative character trait against
Vencidor, but not only do they not satisfactorily constitute manifestations of
Vencidor’s psychological incapacity as contemplated in the Family Code,
Yolanda’s averments are riddled with inconsistencies that are sometimes
contradicted by her own evidence.

The Court is not bound by the psychological report. While the Court previously
held that “there is no requirement that the person to be declared
psychologically incapacitated be personally examined by a physician,” yet, this
is qualified by the phrase, “if the totality of evidence presented is enough to
sustain a finding of psychological incapacity.” The psychologist’s findings must
still be subjected to a careful and serious scrutiny as to the bases of the same,
particularly, the source/s of information, as well as the methodology employed.

James Ient and Maharlika Schulze v. Tullet Prebon, Inc.

G.R. No. 189158
January 11, 2017

Facts: Petitioner Ient is a British national and the Chief Financial Officer of
Tradition Asia Pacific Pte. Ltd. (Tradition Asia) in Singapore. Petitioner
Schulze is a Filipino/German who does Application Support for Tradition
Financial Services Ltd. in London (Tradition London).Tradition Group and
Tullett are competitors in the inter-dealer broking business.
Sometime in August 2008, in line with Tradition Group's motive of expansion
and diversification in Asia, petitioners Ient and Schulze were tasked with the
establishment of a Philippine subsidiary of Tradition Asia to be known as
Tradition Financial Services Philippines, Inc. (Tradition Philippines). Tradition
Philippines was registered with the Securities and Exchange Commission
(SEC) on September 19, 2008.
On October 15, 2008, Tullett, through one of its directors, Gordon Buchan,
filed a Complaint-Affidavit against the officers/employees of the Tradition
Group for violation of the Corporation Code. Villalon and Chuidian were
charged with using their former positions in Tullett to sabotage said company
by orchestrating the mass resignation of its entire brokering staff in order for
them to join Tradition Philippines.
With respect to Villalon, Tullett claimed that the former held several meetings
between August 22 to 25, 2008 with members of Tullett's Spot Desk and
brokering staff in order to convince them to leave the company. Villalon
likewise supposedly intentionally failed to renew the contracts of some of the
brokers. On August 25, 2008, a meeting was also allegedly held in Howzat Bar
in Makati City where petitioners and a lawyer of Tradition Philippines were
present. At said meeting, the brokers of complainant Tullett were purportedly
induced, en masse, to sign employment contracts with Tradition Philippines
and were allegedly instructed by Tradition Philippines' lawyer as to how they
should file their resignation letters.
On August 26, 2008, Villalon allegedly informed Mr. Barry Dennahy, Chief
Operating Officer of Tullett Prebon in the Asia-Pacific, through electronic mail
that all of Tullett's brokers had resigned. Subsequently, on September 1, 2008,
in another meeting with Ient and Tradition Philippines' counsel, indemnity
contracts in favor of the resigning employees were purportedly distributed by
Tradition Philippines.
According to Tullett, respondents Villalon and Chuidian violated Sections 31
and 34 of the Corporation Code which made them criminally liable under
Section 144. As for petitioners Ient and Schulze, Tullett asserted that they
conspired with Villalon and Chuidian in the latter's acts of disloyalty against the
company.
Villalon and Chuidian filed their respective Counter-Affivadits.Villalon claimed
that the DOJ had previously proclaimed that Section 31 is not a penal provision
of law but only the basis of a cause of action for civil liability. Thus, he
concluded that there was no probable cause that he violated the Corporation
Code nor was the charge of conspiracy properly substantiated. Chuidian
claimed that she left Tullett simply to seek greener pastures. She argued that
Section 144 as a penal provision should be strictly construed against the State
and liberally in favor of the accused and Tullett has failed to substantiate its
charge of bad faith on her part.
In her Counter-Affidavit, petitioner Schulze denied the charges leveled against
her. She concluded that a charge of conspiracy which has for its basis Article 8
of the Revised Penal Code cannot be made applicable to the provisions of the
Corporation Code.Ient alleged in his Counter-Affidavit that the charges against
him were merely filed to harass Tradition Philippines and prevent it from
penetrating the Philippine market.
Tullett filed a petition for review with the Secretary of Justice to assail the
foregoing resolution of the Acting City Prosecutor of Makati City.Ient and
Schulze moved for reconsideration of the foregoing Resolution by the
Secretary of Justice.Ient and Schulze brought the matter to the Court of
Appeals via a petition for certiorari under Rule 65.
Issue: Whether or not the applicability of Section 144 of the Corporation Code
to Sections 31 and 34 of the same statute such that criminal liability attaches to
violations of Sections 31 and 34?
Ruling: No.
Decision: The provision of Section 144 of the Corporation Code is also
applicable in the case at bar as the penal provision provided therein is made
applicable to all violations of the Corporation Code, not otherwise specifically
penalized.
After a meticulous consideration of the arguments presented by both sides, the
Court comes to the conclusion that there is textual ambiguity in Section 144;
moreover, such ambiguity remains even after an examination of its legislative
history and the use of other aids to statutory construction, necessitating the
application of the rule of lenity in the case at bar.
There is no provision in the Corporation Code using similarly emphatic
language that evinces a categorical legislative intent to treat as a criminal
offense each and every violation of that law. Consequently, there is no
compelling reason for the Court to construe Section 144 as similarly employing
the term "penalized" or "penalty" solely in terms of criminal liability.
The Corporation Code was intended as a regulatory measure, not primarily as
a penal statute. Sections 31 to 34 in particular were intended to impose
exacting standards of fidelity on corporate officers and directors but without
unduly impeding them in the discharge of their work with concerns of litigation.

Spouses Renato and Florinda Dela Cruz v. Spouses Gil and Leonila Segovia
G. R. No. 149801
June 26, 2008

Facts: Two sisters, who were both married, entered into an agreement
regarding certain properties wherein one of the said sisters, Florinda de la
Cruz, entered into an agreement regarding the sale of one of the properties to
the other sister and where she signed without the husband Renato de la Cruz
signing the agreement.

Thereafter, the spouses de la Cruz filed a case for Nullity of Contract/

Agreement with Damages and one of the grounds relied upon was that the
agreement had no force and effect on account of the absence of the signature
of the husband of Florinda, Renato.

The case was dismissed by the Regional Trial Court [ RTC ] and the Court of
Appeals upheld the decision of the RTC.

Issue: Whether or not the contract is null and void due to the absence of the
husband’s signature?

Ruling: No.
Decision: The Supreme Court held that the presence of the husband even if
he did not sign the agreement would show that he had consented to the
agreement.

The case reached up to the Supreme Court which ruled that as to the ground
that the agreement had no force and effect because her husband did not sign
the agreement cannot be upheld in view of the actuations of the husband
which showed he agreed and gave his conformity to the agreement.

In the decision, the Supreme Court said,

" x x x As found by the courts below, Renato's consent to the

Agreement was drawn from the fact that he was present at the
time it was signed by the sisters and their witnesses; he had
knowledge of the Agreement as it was presented to him for his
signature, although he did not sign the same because his wife
Florinda insisted that her signature already carried that of her
husband; Renato witnessed the fact that Leonila contributed her
hard earned savings in the amount of P36,000.00 to complete
their share in the purchase price of the properties in question in
the total amount of P 180,000.00. The aforesaid findings of the
court below are beyond review at this stage."

Although the Supreme Court had ruled that even if the husband or spouse did
not sign, his actuations and presence would show his consent, it is however,
dependent on the facts and only shows that in certain cases, the absence of
the signature of the other spouse would not automatically mean that the
agreement is void or the party who did not sign can simply move to cancel or
declare the agreement void because the spouse did not sign the agreement.

Catherine Ching, et al. vs. Quezon City Sports Club, Inc., et al.
G.R. No. 200150
November 7, 2016

Facts: Petitioner Catherine Ching was a member of the Quezon City Sports
Club, the respondent.

On September 2001, the respondent club implemented a special assessment

to their club members seeking an amount of P 2,500. Petitioner Catherine was
duly notified of the implementation of the special assessment through a Letter.
However, believing that the imposition of the special assessment was unjust
and/or illegal, she did not pay the same.
The Respondent board later on suspended the privileges of members who had
not paid the special assessment, including petitioner. Petitioner Catherine paid
the P2,500.00 special assessment only after her membership privileges were
already suspended. However, according to the petitioner, even though she
had already paid the special assessment, respondents continued harassing
her when she was at the respondent Club.

Petitioners instituted before the RTC a Complaint for damages against

respondents, based on Articles 19, 20, and 21 of the Civil Code. During trial, it
was manifested by the petitioner she was notified by the Respondent of her
expulsion as a regular member of respondent Club due to her filing of the civil
suit against respondents.

Issue: Whether petitioner Ching is entitled for damages?

Ruling: No.

Decision: The SC held that petitioner Ching is entitled to nominal damages

only. The respondent Quezon City Sports Club, Inc. was ordered to pay
petitioners Lorenzo Ching, Catherine Ching, Laurence Ching, and Christine
Ching nominal damages in the amount of P25,000.00.

According to the SC, there was no evidence that respondents acted in bad
faith by particularly singling out petitioners, from among all other members of
respondent Club who did not pay the assessment, to be harassed or
humiliated.

Considering that there was justifiable ground for the suspension of petitioner
Catherine's privileges in respondent Club, but her right to due process was
violated as she was not afforded notice and hearing prior to the suspension,
the Court proceeds to determine the reliefs to which petitioners are entitled.

The elements for the award of moral damages in a case are: (1) an injury
clearly sustained by the claimant; (2) a culpable act or omission factually
established; (3) a wrongful act or omission by the defendant as the proximate
cause of the injury sustained by the claimant; and (4) the award of damages
predicated on any of the cases stated in Article 2219 of the Civil Code.
Also, the person claiming moral damages must prove the existence of bad
faith by clear and convincing evidence, for the law always presumes good faith.
It is not enough that one suffered sleepless nights, mental anguish, and
serious anxiety as the result of the actuations of the other party. Invariably,
such action must be shown to have been willfully done in bad faith or with ill
motive.

There being no clear and convincing evidence of respondents' bad faith in

suspending petitioner Catherine's privileges in respondent Club nor in
implementing such suspension, petitioners are not entitled to moral damages.
Since the basis for moral damages has not been established, there is no basis
to recover exemplary damages and attorney's fees, as well.

Even so, the Court deems it proper to award nominal damages to petitioners.
Article 2221 of the Civil Code authorizes the award of nominal damages to a
plaintiff whose right has been violated or invaded by the defendant, for the
purpose of vindicating or recognizing that right, not for indemnifying the plaintiff
for any loss suffered. The Court may also award nominal damages in every
case where a property right has been invaded. The amount of such damages
is addressed to the sound discretion of the court, taking into account the
relevant circumstances. For its failure to observe due process, as provided
under Section 35(a) of the By-Laws, in the suspension of petitioner Catherine's
privileges, respondent Club is liable to pay petitioners nominal damages in the
amount of P25,000.00.

According to the SC, the By-laws of the Respondent club requires notice and
hearing prior to a member's suspension. Definitely, in this case, petitioner
Catherine did not receive notice specifically advising her that she could be
suspended for nonpayment of the special assessment. The Respondent fell
short of the stricter requirement under Section 35(a) of the same By-Laws.
Petitioner Catherine's right to due process was clearly violated.

The Court clarifies that only respondent Club shall be liable for the nominal
damages because in the absence of malice and bad faith, officers of a
corporation cannot be made personally liable for the liabilities of the
corporation which, by legal fiction, has a personality separate and distinct from
its officers, stockholders, and members.

Greenstar Express, Inc. And Fruto L. Sayson, Jr. v. Universal Robina

Corporation and Nissin Universal Robina Corporation
G.R. No. 205090
October 17, 2016

Facts: On February 25, 2003, a Mitsubishi L-300 van which Universal Robina
Corporation ( URC) owned figured in a vehicular accident with petitioner Green
Star Express, Inc.’ s (Green Star) passenger bus, resulting in the death of the
van’s driver. Thus, the bus driver, petitioner Fruto Sayson, Jr., was charged
with the crime of reckless imprudence resulting in homicide. Thereafter, Green
Star sent a demand letter to respondent Nissin Universal Robina Corporation
(NURC) for the repair of its passenger bus amounting to ₱567, 070.68. NURC
denied any liability therefore and argued that the criminal case shall determine
the ultimate liabilities of the parties. Thereafter, the criminal case was
dismissed without prejudice, due to insufficiency of evidence. Sayson and
Green Star then filed a complaint for damages against NURC before the R TC
of San Pedro, Laguna. Francis Tinio, one of NURC’s employees, was the one
who received the summons. On February 6, 2004, NURC filed a Motion to
Dismiss claiming lack of jurisdiction due to improper service.

Issue: Whether or not there is valid service of summons?

Ruling: No.

Decision: It is a well-established rule that the rules on service of summons

upon a domestic private juridical entity must be strictly complied with.
Otherwise, the court cannot be said to have acquired jurisdiction over the
person of the defendant.

NURC maintains that the RTC did not acquire jurisdiction over it as the
summons was received by its cost accountant, Francis Tinio. It argues that
under Section 11, Rule 14 of the 1997 Rules of Court, which provides the rule
on service of summons upon a juridical entity, in cases where the defendant is
a domestic corporation like NURC, summons may be served only through its
officers. Thus:
Section 11. Service upon domestic private juridical entity. – When the
defendant is a corporation, partnership or association organized under the
laws of the Philippines with a juridical personality, service may be made on the
president, managing partner, general manager, corporate secretary, treasurer,
or in-house counsel.

In the past, the Court upheld service of summons upon a construction project
manager, a corporation‘s assistant manager, and ordinary clerk of a
corporation, private secretary of corporate executives, retained counsel, and
officials who had control over the operations of the corporation like the
assistant general manager or the corporation‘s Chief Finance and
Administrative Officer. The Court then considered said persons as “agent”
within the contemplation of the old rule. Notably, under the new Rules, service
of summons upon an agent of the corporation is no longer authorized, The rule
now likewise states “general manager” instead of “manager”; “corporate
secretary” instead of merely “secretary”; and “treasure” instead of “cashier.” It
has now become restricted, limited, and exclusive only to the persons
enumerated in the aforementioned provision, following the rule in statutory
construction that the express mention of one person excludes all others, or
expression unions est exclusion alterius. Service must, therefore, be made
only on the person expressly listed in the rules. If the revision committee
intended to liberalize the rule on service of summons, it could have easily done
so by clear and concise language.