Topic/s or Doctrine/s: While the Supreme Court, by way of an exception, can disturb the

factual findings of the lower courts if they are not supported by substantial evidence, a party
however cannot merely claim that its case falls under any of the exceptions to the general
rule. The party claiming the exception must demonstrate and prove that a review of the factual
findings is necessary
THIRD DIVISION
TERP CONSTRUCTION CORPORATION vs BANCO FILIPINO SAVINGS AND
MORTGAGE BANK
G.R. No. 221771, September 18, 2019
LEONEN, J.

FACTS:
Sometime in 1995, Terp Construction planned to develop a housing project called the
Margarita Eastville and a condominium called Margarita Plaza. To finance the projects, Terp
Construction, Home Insurance Guaranty Corporation, and Planters Development Bank (Planters
Bank) agreed to raise funds through the issuance of bonds worth P400 million called the
Margarita Project Participation Certificates.
The three (3) companies entered into a Contract of Guaranty in which they agreed that
Terp Construction would sell the Margarita Bonds and convey the funds generated into an asset
pool named the Margarita Asset Pool Formation and Trust Agreement. Planters Bank, as trustee,
would be the custodian of the assets in the asset pool with the corresponding obligation to pay
the interests and redeem the bonds at maturity. Home Insurance Guaranty Corporation, as
guarantor, would pay investors the value of the bond at maturity plus 8.5% interest per year.
Banco Filipino purchased Margarita Bonds for P100 million. It asked for additional interest other
than the guaranteed 8.5% per annum, based on the letters dated February 3, 1997 and April 8,
1997 written by Terp Construction Senior Vice President Alberto Escalona (Escalona).
Terp Construction began constructing Margarita Eastville and Margarita Plaza. After the
economic crisis in 1997, however, it suffered unrealized income and could not proceed with the
construction.
When the Margarita Bonds matured, the funds in the asset pool were insufficient to pay
the bond holders. Pursuant to the Contract of Guaranty, Planters Bank conveyed the asset pool
funds to Home Insurance Guaranty Corporation, which then paid Banco Filipino interest
earnings of 8.5% per year. Banco Filipino, however, sent Terp Construction a demand letter
dated January 31, 2001, alleging that it was entitled to a 15.5% interest on its investment and that
as of July 1, 2001, it was entitled to a seven percent (7%) remaining unpaid interest. Terp
Construction refused to pay the demanded interest.
Terp Construction filed a Complaint for declaration of nullity of interest, damages, and
attorney's fees against Banco Filipino. It alleged that it only agreed to pay the seven percent (7%)
additional interest on the condition that all the asset pool funds would be released to Terp
Construction for it to pay the additional interest. However, it could not have paid the additional
interest since the funds of the asset pool were never released to it.
Banco Filipino, on the other hand, alleged that it was induced into buying the Margarita
Bonds after Terp Construction, through its senior vice president's letters, committed to pay
15.5% interest on a P50 million bond that Banco Filipino held for a client and 16.5% interest on
a P50 million bond it held for another client. It alleged that Terp Construction paid the additional
interest twice during the Margarita Bonds' holding period.
On May 29, 2010, the Regional Trial Court issued a Decision in favor of Terp
Construction. It found that there was no evidence to show that Terp Construction was obligated
to pay the interest differentials, and that the act of Escalona, the senior vice president, were not
binding on the corporation since they were not ratified. On October 16, 2014, the Court of
Appeals rendered a Decision setting aside the Regional Trial Court Decision. According to the
Court of Appeals, both parties agreed that Terp Construction would pay Banco Filipino
additional interest other than the guaranteed 8.5%.
Terp Construction filed a Motion for Reconsideration, but this was denied. Hence, it filed
with the Supreme Court a petition under Rule 45 of the Rules of Court alleging that the case falls
under one (1) of the recognized exceptions since the factual findings of the trial court and the
Court of Appeals are conflicting.

ISSUE: Are factual questions proper in this case in view of the conflicting factual findings of the
Regional Trial Court and the Court of Appeals?

HELD:
 No. As a general rule, only questions of law may be brought in a petition for review on
certiorari under Rule 45 of the Rules of Court. One of the exceptions, however, is when the
findings of fact of the lower courts are conflicting.
However, a party cannot merely claim that its case falls under any of the exceptions to
the general rule. The party claiming the exception must demonstrate and prove that a review of
the factual findings is necessary.
Here, petitioner claims that its case falls under the exceptions since the factual findings of
the trial court are in conflict with the factual findings of the Court of Appeals. The Court of
Appeals' reversal of the trial court's factual findings, however, is not sufficient reason to warrant
this Supreme Court's review.
The Court of Appeals is a trier of facts. Its factual findings, even if contradictory to those
of the trial court, may be binding on this Court when they are supported by substantial evidence.
In any case, there was no error in the factual findings of the Court of Appeals. Petitioner
categorically committed itself to pay respondent over and above the guaranteed interest of 8.5%
per annum. A corporation exercises its corporate powers through its board of directors. This
power may be validly delegated to its officers, committees, or agencies. The authority of such
individuals to bind the corporation is generally derived from law, corporate bylaws or
authorization from the board, either expressly or impliedly by habit, custom or acquiescence in
the general course of business. Petitioner's subsequent act of twice paying the additional interest
Escalona committed to during the term of the Margarita Bonds is considered a ratification of
Escalona's acts. Petitioner's only defense that they were "erroneous payment" since it never
obligated itself from the start cannot stand. Corporations are bound by errors of their own
making.
Topic/s or Doctrine/s: It is settled that the rules of procedure are not to be applied in a very
strict and technical sense. These are used only to help secure rather than override substantial
justice. The stringent application of the rules must yield to the demands of substantial justice.

THIRD DIVISION
PAULINO REYES, DANILO BAON, PACITA D. VADURIA, JULIE MONTOYA,
MERCEDES RAMOS, GERONIMO DERAIN, FELICIANO D. BAON, PACIFICO
DERAIN, EUTERIO SEVILLA, MAMERTO B. ESPINELLI, CARMELITA
GRAVADOS, AVELINO E. PASTOR, ANTONIO BUHAY, TIRZO GULFAN JR., FELIX
SOMBREMONTE, NICASIO TINAGUISAN, VICENTE VILLALUNA, LEOPOLDO DE
JOYA, LENIE DE JOYA, LIBERATO DE JOYA, CRESCENCIANA DE JOYA,
FRESCO CATAPANG, ROSITA CATAPANG, DOMINGO P. LIMBOC, VIRGILIO P.
LIMBOC, VICENTE LIMBOC, MARIO H. PERNO, LAZARITO CABRAL, CARLITO
CAPACIA, JOSE S. BAUTISTA, FELECITO BARCELON, LUIS MANGI,
CONCEPCION DERAIN, BASILISA DERAIN, GUILLERMO BAUTISTA, BEATRIZ
SEVILLA, FRANCISCO MENDOZA, TERESITA DINGLES, NICOLAS ASAHAN,
MOISES CARABLE, ROSITA MERCADO, LAMBERTO BAUTISTA, ENRIQUITO
DINGLES, CELERIO DINGLES, JOSE QUIROZ, ET AL., vs BANCO FILIPINO
SAVINGS AND MORTGAGE BANK
G.R. NO. 148967 : February 9, 2007

LEONEN, J.

FACTS:
Petitioners are the tenants of the disputed portion of Hacienda Looc which has been the
subject of application for exclusion from CARP coverage. By virtue of Presidential Decree No.
27 issued by President Ferdinand E. Marcos on October 21, 1972, a portion of the hacienda with
an aggregate area of 1,282.9767 hectares that were planted with rice and corn were distributed to
the farmers, and emancipation patents (EPs) were accordingly issued.
The hacienda was acquired by the Development Bank of the Philippines (DBP) from the
Magdalena Estate, Inc. through a Deed of Cession in Payment of Debt on May 19, 1971, and by
a Deed of Assignment executed by the Philippine National Bank in favor of DBP on February 8,
1973.
Pursuant to Executive Order No. 14 issued on February 3, 1987 by President Corazon C.
Aquino, certain assets and liabilities of DBP were transferred to the Government of the Republic
of the Philippines. Among the properties that were transferred was Hacienda Looc.
On February 27, 1987, DBP executed a Deed of Transfer of the properties in favor of the
government. On the same date, a Trust Agreement was entered into by the government and the
Asset Privatization Trust (APT) whereby the latter was constituted trustee of Hacienda Looc.
On July 15, 1987, Republic Act (R.A.) No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law (CARL), was enacted. Under the law, a Comprehensive Agrarian Reform
Program (CARP) was to be undertaken by the government which shall cover, regardless of
tenurial arrangement and commodity produced, all public and private agricultural lands as
provided in the Constitution, including whenever applicable in accordance with law, other lands
of the public domain suitable to agriculture.
On June 28, 1990, APT entered into a Memorandum of Agreement (MOA) with the
Department of Agrarian Reform (DAR). Under the agreement, APT signified its intention to sell
to DAR portions of the hacienda under the Voluntary Offer to Sell (VOS) scheme of R.A. No.
6657 on the condition that DAR will return to APT non-CARPable portions of the property. APT
ceded possession and control of the entire property to DAR for the latter to undertake a field
verification and coverage of the CARPable areas of the hacienda.
On December 10, 1993, APT conducted a public bidding involving the property in
question. Bellevue Properties, Inc. tendered the highest cash bid. It thereafter assigned the right
to purchase the property to Manila Southcoast Development Corporation (MSDC), subrogating
to the latter all its rights, claims and benefits under the DAR-APT memorandum of agreement.
On March 7, 1995, MSDC filed an adverse claim over Hacienda Looc before the Register
of Deeds of Nasugbu, Batangas. In the same year, MSDC was able to register the disputed ten
parcels of land of the hacienda with an aggregate area of 1,219.0133 hectares.
On April 10, 1995, MSDC filed a petition before the Department of Agrarian Reform
Adjudication Board (DARAB), Region IV, for 1) the cancellation of the notices of acquisition
issued by DAR; 2) the cancellation of the CLOAs; and 3) the conversion of the property into
non-agricultural uses.
 On October 17, 1995, MSDC, Carmona Realty and private respondent executed a
Memorandum of Agreement (MOA) to enable MSDC and private respondent to have a joint
venture agreement relative to the development of Hacienda Looc into a mixed-use residential,
commercial, resort, leisure and recreational complex. Likewise, under the agreement, MSDC and
private respondent shall immediately develop about 1,269 hectares of the hacienda, comprised
largely of the afore-mentioned ten parcels of land.
Meanwhile, petitioners, along with the other farmer-beneficiaries affected by the order,
filed a complaint with the Office of the DAR Secretary objecting to the cancellation of their
respective CLOAs. According to them, they were never informed of the proceedings concerning
the cancellation of the CLOAs.
On December 26, 1996, the DAR Regional Director for Region IV issued an Order
granting the Petition for Exclusion filed by Fil-Estate pursuant to Administrative Order (A.O.)
No. 10, Series of 1994. As a result, the subject ten parcels of land with an aggregate area of
1,219.0133 hectares were exempted from CARP coverage.

On January 29, 1997, petitioners, aggrieved by the Order of Exclusion, filed their appeal
with the Office of the DAR Secretary. On March 25, 1998, the DAR Secretary issued an Order in
favor of Fil-Estate. Petitioners filed a motion for reconsideration but the same was denied by the
DAR Secretary in an order dated June 15, 1998.
On June 29, 1998, petitioners appealed the Orders of the DAR Secretary to the Office of
the President (OP). On July 5, 2000, the OP, through Executive Secretary Ronaldo Zamora,
issued a decision dismissing the appeal, and affirming the challenged orders of the DAR..
Petitioners filed a Petition for Review under Rule 43 of the Rules of Court with the Court
of Appeals (CA) assailing the decision of the Executive Secretary. The CA, in its resolution,
dated September 4, 2000, denied the petition on the ground that the verification and certification
of non-forum shopping was signed by only one (Guillermo Bautista) of the petitioners.
Moreover, according to the CA, in violation of Sec. 13, Rule 13 and Sec. 6(c) Rule 43, the
petition contains no affidavit of service while the assailed decision, material portions of the
record and other supporting papers are merely photocopies.
ISSUE: Is the Court of Appeals correct in dismissing the Petition for Review filed under Rule 43
of the Rules of Court?
HELD:
No. technicalities must not be used to stay the hands of justice and frustrate the novel
objectives of the agrarian law.
Upon a review of the records, the Supreme Court agrees with petitioners that there are
factual matters that should be re-examined to properly resolve this case. The Supreme Court is
not a trier of facts. The CA, having the appellate jurisdiction to rule on the controversy, must re-
evaluate the factual aspects of the case in order to prevent a miscarriage of justice.
While, generally, petitioners' failure to comply with the procedural requirements
prescribed under the Rules of Court would warrant the dismissal of the petition, fundamental
considerations of substantial justice persuade the Supreme Court to have the present case decided
on the merits rather than dismissed on a technicality. It is settled that the rules of procedure are
not to be applied in a very strict and technical sense. These are used only to help secure rather
than override substantial justice. The stringent application of the rules must yield to the demands
of substantial justice.