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Republic of the Philippines SUPREME COURT Baguio City EN BANC G.R. No. 178902 April 21, 2010
consent of his estranged wife, Rosario Gabriel Roca (Rosario), to the sale. Upon Tarciano¶s compliance with these conditions, the Fuentes spouses were to take possession of the lot and pay him an additional P140,000.00 or P160,000.00, depending on whether or not he succeeded in demolishing the house standing on it. If Tarciano was unable to comply with these conditions, the Fuentes spouses would become owners of the lot without any further formality and payment. The parties left their signed agreement with Atty. Plagata who then worked on the other requirements of the sale. According to the lawyer, he went to see Rosario in one of his trips to Manila and had her sign an affidavit of consent.3 As soon as Tarciano met the other conditions, Atty. Plagata notarized Rosario¶s affidavit in Zamboanga City. On January 11, 1989 Tarciano executed a deed of absolute sale4 in favor of the Fuentes spouses. They then paid him the additional P140,000.00 mentioned in their agreement. A new title was issued in the name of the spouses5 who immediately constructed a building on the lot. On January 28, 1990 Tarciano passed away, followed by his wife Rosario who died nine months afterwards. Eight years later in 1997, the children of Tarciano and Rosario, namely, respondents Conrado G. Roca, Annabelle R. Joson, and Rose Marie R. Cristobal, together with Tarciano¶s sister, Pilar R. Malcampo, represented by her son, John Paul M. Trinidad (collectively, the Rocas), filed an action for annulment of sale and reconveyance of the land against the Fuentes spouses before the Regional Trial Court (RTC) of Zamboanga City in Civil Case 4707. The Rocas claimed that the sale to the spouses was void since Tarciano¶s wife, Rosario, did not give her consent to it. Her signature on the affidavit of consent had been forged. They thus prayed that the property be reconveyed to them upon reimbursement of the price that the Fuentes spouses paid Tarciano.6 The spouses denied the Rocas¶ allegations. They presented Atty. Plagata who testified that he personally saw Rosario sign the affidavit at her residence in Paco, Manila, on September 15, 1988. He admitted, however, that he notarized the document in Zamboanga City four months later on January 11, 1989.7 All the same, the Fuentes spouses pointed out that the claim of forgery was personal to Rosario and she alone could invoke it. Besides, the fouryear prescriptive period for nullifying the sale on ground of fraud had already lapsed.
Both the Rocas and the Fuentes spouses presented handwriting experts at the trial. Comparing Rosario¶s standard signature on the affidavit with those on various documents she signed, the Rocas¶ expert testified that the signatures were not written by the same person. Making the same comparison, the spouses¶ expert concluded that they were.8 On February 1, 2005 the RTC rendered judgment, dismissing the case. It ruled that the action had already prescribed since the ground cited by the Rocas for annulling the sale, forgery or fraud, already prescribed under Article 1391 of the Civil Code four years after its discovery. In this case, the Rocas may be deemed to have notice of the fraud from the date the deed of sale was registered with the Registry of Deeds and the new title was issued. Here, the Rocas filed their action in 1997, almost nine years after the title was issued to the Fuentes spouses on January 18, 1989.9 Moreover, the Rocas failed to present clear and convincing evidence of the fraud. Mere variance in the signatures of Rosario was not conclusive proof of forgery.10 The RTC ruled that, although the Rocas presented a handwriting expert, the trial court could not be bound by his opinion since the opposing expert witness contradicted the same. Atty. Plagata¶s testimony remained technically unrebutted.11 Finally, the RTC noted that Atty. Plagata¶s defective notarization of the affidavit of consent did not invalidate the sale. The law does not require spousal consent to be on the deed of sale to be valid. Neither does the irregularity vitiate Rosario¶s consent. She personally signed the affidavit in the presence of Atty. Plagata.12 On appeal, the Court of Appeals (CA) reversed the RTC decision. The CA found sufficient evidence of forgery and did not give credence to Atty. Plagata¶s testimony that he saw Rosario sign the document in Quezon City. Its jurat said differently. Also, upon comparing the questioned signature with the specimen signatures, the CA noted significant variance between them. That Tarciano and Rosario had been living separately for 30 years since 1958 also reinforced the conclusion that her signature had been forged.
Since Tarciano and Rosario were married in 1950, the CA concluded that their property relations were governed by the Civil Code under which an action for annulment of sale on the ground of lack of spousal consent may be brought by the wife during the marriage within 10 years from the transaction. Consequently, the action that the Rocas, her heirs, brought in 1997 fell within 10 years of the January 11, 1989 sale. Considering, however, that the sale between the Fuentes spouses and Tarciano was merely voidable, the CA held that its annulment entitled the spouses to reimbursement of what they paid him plus legal interest computed from the filing of the complaint until actual payment. Since the Fuentes spouses were also builders in good faith, they were entitled under Article 448 of the Civil Code to payment of the value of the improvements they introduced on the lot. The CA did not award damages in favor of the Rocas and deleted the award of attorney¶s fees to the Fuentes spouses.13 Unsatisfied with the CA decision, the Fuentes spouses came to this court by petition for review.14 The Issues Presented The case presents the following issues: 1. Whether or not Rosario¶s signature on the document of consent to her husband Tarciano¶s sale of their conjugal land to the Fuentes spouses was forged; 2. Whether or not the Rocas¶ action for the declaration of nullity of that sale to the spouses already prescribed; and 3. Whether or not only Rosario, the wife whose consent was not had, could bring the action to annul that sale. The Court¶s Rulings First. The key issue in this case is whether or not Rosario¶s signature on the document of consent had been forged. For, if the signature were genuine, the fact that she gave
MANUEL O. FUENTES and LETICIA L. FUENTES, Petitioners, vs. CONRADO G. ROCA, ANNABELLE R. JOSON, ROSE MARIE R. CRISTOBAL and PILAR MALCAMPO, Respondents. DECISION ABAD, J.: This case is about a husband¶s sale of conjugal real property, employing a challenged affidavit of consent from an estranged wife. The buyers claim valid consent, loss of right to declare nullity of sale, and prescription. The Facts and the Case Sabina Tarroza owned a titled 358-square meter lot in Canelar, Zamboanga City. On October 11, 1982 she sold it to her son, Tarciano T. Roca (Tarciano) under a deed of absolute sale.1 But Tarciano did not for the meantime have the registered title transferred to his name. Six years later in 1988, Tarciano offered to sell the lot to petitioners Manuel and Leticia Fuentes (the Fuentes spouses). They arranged to meet at the office of Atty. Romulo D. Plagata whom they asked to prepare the documents of sale. They later signed an agreement to sell that Atty. Plagata prepared2 dated April 29, 1988, which agreement expressly stated that it was to take effect in six months. The agreement required the Fuentes spouses to pay Tarciano a down payment of P60,000.00 for the transfer of the lot¶s title to him. And, within six months, Tarciano was to clear the lot of structures and occupants and secure the
her consent to her husband¶s sale of the conjugal land would render the other issues merely academic. The CA found that Rosario¶s signature had been forged. The CA observed a marked difference between her signature on the affidavit of consent15 and her specimen signatures.16 The CA gave no weight to Atty. Plagata¶s testimony that he saw Rosario sign the document in Manila on September 15, 1988 since this clashed with his declaration in the jurat that Rosario signed the affidavit in Zamboanga City on January 11, 1989. The Court agrees with the CA¶s observation that Rosario¶s signature strokes on the affidavit appears heavy, deliberate, and forced. Her specimen signatures, on the other hand, are consistently of a lighter stroke and more fluid. The way the letters "R" and "s" were written is also remarkably different. The variance is obvious even to the untrained eye. Significantly, Rosario¶s specimen signatures were made at about the time that she signed the supposed affidavit of consent. They were, therefore, reliable standards for comparison. The Fuentes spouses presented no evidence that Rosario suffered from any illness or disease that accounted for the variance in her signature when she signed the affidavit of consent. Notably, Rosario had been living separately from Tarciano for 30 years since 1958. And she resided so far away in Manila. It would have been quite tempting for Tarciano to just forge her signature and avoid the risk that she would not give her consent to the sale or demand a stiff price for it. What is more, Atty. Plagata admittedly falsified the jurat of the affidavit of consent. That jurat declared that Rosario swore to the document and signed it in Zamboanga City on January 11, 1989 when, as Atty. Plagata testified, she supposedly signed it about four months earlier at her residence in Paco, Manila on September 15, 1988. While a defective notarization will merely strip the document of its public character and reduce it to a private instrument, that falsified jurat, taken together with the marks of forgery in the signature, dooms such document as proof of Rosario¶s consent to the sale of the land. That the Fuentes spouses honestly relied on the notarized affidavit as proof of Rosario¶s consent does not matter. The sale is still void without an authentic consent.
Second. Contrary to the ruling of the Court of Appeals, the law that applies to this case is the Family Code, not the Civil Code. Although Tarciano and Rosario got married in 1950, Tarciano sold the conjugal property to the Fuentes spouses on January 11, 1989, a few months after the Family Code took effect on August 3, 1988. When Tarciano married Rosario, the Civil Code put in place the system of conjugal partnership of gains on their property relations. While its Article 165 made Tarciano the sole administrator of the conjugal partnership, Article 16617 prohibited him from selling commonly owned real property without his wife¶s consent. Still, if he sold the same without his wife¶s consent, the sale is not void but merely voidable. Article 173 gave Rosario the right to have the sale annulled during the marriage within ten years from the date of the sale. Failing in that, she or her heirs may demand, after dissolution of the marriage, only the value of the property that Tarciano fraudulently sold. Thus: Art. 173. The wife may, during the marriage, and within ten years from the transaction questioned, ask the courts for the annulment of any contract of the husband entered into without her consent, when such consent is required, or any act or contract of the husband which tends to defraud her or impair her interest in the conjugal partnership property. Should the wife fail to exercise this right, she or her heirs, after the dissolution of the marriage, may demand the value of property fraudulently alienated by the husband. But, as already stated, the Family Code took effect on August 3, 1988. Its Chapter 4 on Conjugal Partnership of Gains expressly superseded Title VI, Book I of the Civil Code on Property Relations Between Husband and Wife.18 Further, the Family Code provisions were also made to apply to already existing conjugal partnerships without prejudice to vested rights.19 Thus: Art. 105. x x x The provisions of this Chapter shall also apply to conjugal partnerships of gains already established between spouses before the effectivity of this Code, without prejudice to vested rights already acquired in accordance with the Civil Code or other laws, as provided in Article 256. (n)
Consequently, when Tarciano sold the conjugal lot to the Fuentes spouses on January 11, 1989, the law that governed the disposal of that lot was already the Family Code. In contrast to Article 173 of the Civil Code, Article 124 of the Family Code does not provide a period within which the wife who gave no consent may assail her husband¶s sale of the real property. It simply provides that without the other spouse¶s written consent or a court order allowing the sale, the same would be void. Article 124 thus provides: Art. 124. x x x In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include the powers of disposition or encumbrance which must have the authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. x x x Under the provisions of the Civil Code governing contracts, a void or inexistent contract has no force and effect from the very beginning. And this rule applies to contracts that are declared void by positive provision of law,20 as in the case of a sale of conjugal property without the other spouse¶s written consent. A void contract is equivalent to nothing and is absolutely wanting in civil effects. It cannot be validated either by ratification or prescription.21 But, although a void contract has no legal effects even if no action is taken to set it aside, when any of its terms have been performed, an action to declare its inexistence is necessary to allow restitution of what has been given under it.22 This action, according to Article 1410 of the Civil Code does not prescribe. Thus: Art. 1410. The action or defense for the declaration of the inexistence of a contract does not prescribe. Here, the Rocas filed an action against the Fuentes spouses in 1997 for annulment of sale and reconveyance of the real property that Tarciano sold without their mother¶s (his wife¶s) written consent. The passage of time did not erode the right to bring such an action.
Besides, even assuming that it is the Civil Code that applies to the transaction as the CA held, Article 173 provides that the wife may bring an action for annulment of sale on the ground of lack of spousal consent during the marriage within 10 years from the transaction. Consequently, the action that the Rocas, her heirs, brought in 1997 fell within 10 years of the January 11, 1989 sale. It did not yet prescribe. The Fuentes spouses of course argue that the RTC nullified the sale to them based on fraud and that, therefore, the applicable prescriptive period should be that which applies to fraudulent transactions, namely, four years from its discovery. Since notice of the sale may be deemed given to the Rocas when it was registered with the Registry of Deeds in 1989, their right of action already prescribed in 1993. But, if there had been a victim of fraud in this case, it would be the Fuentes spouses in that they appeared to have agreed to buy the property upon an honest belief that Rosario¶s written consent to the sale was genuine. They had four years then from the time they learned that her signature had been forged within which to file an action to annul the sale and get back their money plus damages. They never exercised the right. If, on the other hand, Rosario had agreed to sign the document of consent upon a false representation that the property would go to their children, not to strangers, and it turned out that this was not the case, then she would have four years from the time she discovered the fraud within which to file an action to declare the sale void. But that is not the case here. Rosario was not a victim of fraud or misrepresentation. Her consent was simply not obtained at all. She lost nothing since the sale without her written consent was void. Ultimately, the Rocas ground for annulment is not forgery but the lack of written consent of their mother to the sale. The forgery is merely evidence of lack of consent. Third. The Fuentes spouses point out that it was to Rosario, whose consent was not obtained, that the law gave the right to bring an action to declare void her husband¶s sale of conjugal land. But here, Rosario died in 1990, the year after the sale. Does this mean that the right to have the sale declared void is forever lost?
The answer is no. As stated above, that sale was void from the beginning. Consequently, the land remained the property of Tarciano and Rosario despite that sale. When the two died, they passed on the ownership of the property to their heirs, namely, the Rocas.23 As lawful owners, the Rocas had the right, under Article 429 of the Civil Code, to exclude any person from its enjoyment and disposal.1avvphi1 In fairness to the Fuentes spouses, however, they should be entitled, among other things, to recover from Tarciano¶s heirs, the Rocas, the P200,000.00 that they paid him, with legal interest until fully paid, chargeable against his estate. Further, the Fuentes spouses appear to have acted in good faith in entering the land and building improvements on it. Atty. Plagata, whom the parties mutually entrusted with closing and documenting the transaction, represented that he got Rosario¶s signature on the affidavit of consent. The Fuentes spouses had no reason to believe that the lawyer had violated his commission and his oath. They had no way of knowing that Rosario did not come to Zamboanga to give her consent. There is no evidence that they had a premonition that the requirement of consent presented some difficulty. Indeed, they willingly made a 30 percent down payment on the selling price months earlier on the assurance that it was forthcoming. Further, the notarized document appears to have comforted the Fuentes spouses that everything was already in order when Tarciano executed a deed of absolute sale in their favor on January 11, 1989. In fact, they paid the balance due him. And, acting on the documents submitted to it, the Register of Deeds of Zamboanga City issued a new title in the names of the Fuentes spouses. It was only after all these had passed that the spouses entered the property and built on it. He is deemed a possessor in good faith, said Article 526 of the Civil Code, who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. As possessor in good faith, the Fuentes spouses were under no obligation to pay for their stay on the property prior to its legal interruption by a final judgment against them.24 What is more, they are entitled under Article 448 to indemnity for the improvements they introduced into the property with a right of retention until the reimbursement is made. Thus:
Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof. (361a) The Rocas shall of course have the option, pursuant to Article 546 of the Civil Code,25 of indemnifying the Fuentes spouses for the costs of the improvements or paying the increase in value which the property may have acquired by reason of such improvements. WHEREFORE, the Court DENIES the petition and AFFIRMS WITH MODIFICATION the decision of the Court of Appeals in CA-G.R. CV 00531 dated February 27, 2007 as follows: 1. The deed of sale dated January 11, 1989 that Tarciano T. Roca executed in favor of Manuel O. Fuentes, married to Leticia L. Fuentes, as well as the Transfer Certificate of Title T90,981 that the Register of Deeds of Zamboanga City issued in the names of the latter spouses pursuant to that deed of sale are DECLARED void; 2. The Register of Deeds of Zamboanga City is DIRECTED to reinstate Transfer Certificate of Title 3533 in the name of Tarciano T. Roca, married to Rosario Gabriel; 3. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R. Cristobal, and Pilar Malcampo are ORDERED to pay petitioner spouses Manuel and Leticia Fuentes the P200,000.00 that the latter paid Tarciano T. Roca, with legal interest from January 11, 1989 until fully paid, chargeable against his estate;
4. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R. Cristobal, and Pilar Malcampo are further ORDERED, at their option, to indemnify petitioner spouses Manuel and Leticia Fuentes with their expenses for introducing useful improvements on the subject land or pay the increase in value which it may have acquired by reason of those improvements, with the spouses entitled to the right of retention of the land until the indemnity is made; and 5. The RTC of Zamboanga City from which this case originated is DIRECTED to receive evidence and determine the amount of indemnity to which petitioner spouses Manuel and Leticia Fuentes are entitled. SO ORDERED. ROBERTO A. ABAD Associate Justice WE CONCUR: REYNATO S. PUNO Chief Justice
ARTURO D. BRION Associate Justice
DIOSDADO M. PERALTA Associate Justice MARIANO C. DEL CASTILLO Associate Justice JOSE PORTUGAL PEREZ Associate Justice
LUCAS P. BERSAMIN Associate Justice MARTIN S. VILLARAMA, JR. Associate Justice
JOSE CATRAL MENDOZA Associate Justice CERTIFIC ATION Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court. REYNATO S. PUNO Chief Justice Republic of the Philippines SUPREME COURT Baguio City
ANTONIO T. CARPIO Associate Justice
RENATO C. CORONA Associate Justice (On Leave) PRESBITERO J. VELASCO, JR. Associate Justice TERESITA J. LEONARDO-DE CASTRO Associate Justice
FIRST DIVISION G.R. No. 183628 April 7, 2010
CONCHITA CARPIO MORALES Associate Justice
DANIEL T. SO, Petitioner, vs. FOOD FEST LAND, INC. Respondent x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 183670
ANTONIO EDUARDO B. NACHURA Associate Justice
FOOD FEST LAND, INC., Petitioner, vs. DANIEL T. SO, Respondent. DECISION CARPIO MORALES, J.: Food Fest Land Inc. (Food Fest) entered into a September 14, 1999 Contract of Lease1 with Daniel T. So (So) over a commercial space in San Antonio Village, Makati City for a period of three years (1999-2002) on which Food Fest intended to operate a Kentucky Fried Chicken carry out branch. Before forging the lease contract, the parties entered into a preliminary agreement dated July 1, 1999, the pertinent portion of which stated: The lease shall not become binding upon us unless and until the government agencies concerned shall authorize, permit or license us to open and maintain our business at the proposed Lease Premises. We shall promptly make an application for permits, licenses and authority for our business and shall exercise due diligence to obtain it, provided, however, that you shall assist us by submitting such documents and papers and comply with such other requirements as the governmental agencies may impose. We shall give notice to you when the permits, license and authorities have been obtained. We shall also notify you if any of the required permits, licenses and authorities shall not be be (sic) given or granted within fifteen days (15) from your conform (sic)hereto. In such case, the agreement may be canceled and all rights and obligations hereunder shall cease.2 (underscoring supplied) While Food Fest was able to secure the necessary licenses and permits for the year 1999, it failed to commence business operations. For the year 2000, Food Fest¶s application for renewal of barangay business clearance was "held in abeyance until further study of [its] kitchen facilities."31avvphi1 As the barangay business clearance is a prerequisite to the processing of other permits, licenses and authority by the city government, Food Fest was unable to operate. Fearing further business losses, Food Fest, by its claim,
communicated its intent to terminate the lease contract to So who, however, did not accede and instead offered to help Food Fest secure authorization from the barangay. On So¶s advice, Food Fest wrote requests addressed to city officials for assistance to facilitate renewal. In August 2000, Food Fest, for the second time, purportedly informed So of its intent to terminate the lease, and it in fact stopped paying rent. So later sent a November 22, 2000 demand letter to Food Fest for the payment of rental arrearages and reiterated his offer to help it secure clearance from the barangay. Thus So wrote: "With regard to securing permits from the barangay & the City Hall, [with] which I am trying to help you, some form of representation, maybe not in cash, would definitely help in forging a longer term relationship."4 Food Fest demurred to the offer.1avvphi1 By letter of March 26, 2001,5 So again demanded payment of rentals from Food Fest from September 2000 to March 2001 amounting to P123,200.00. Food Fest denied any liability, however, and started to remove its fixtures and equipment from the premises. On April 2, 2001, So sent Food Fest a Final Notice of Termination with demand to pay and to vacate.6 On April 26, 2001, So filed a complaint for ejectment and damages against Food Fest before the Metropolitan Trial Court (MeTC) of Makati City. Branch 64 of the MeTC, by Decision of July 4, 2005,7 rendered judgment in favor of So, disposing as follows: WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against defendant, Food Fest Land, Inc., as follows: a. Ordering the defendant to pay the unpaid rentals from August 2000 until March 2001 with penalties accrued thereon. The security deposit in the sum of Sixty Four Thousand Pesos (Php64,000.00) is forfeited in favor of the plaintiff;
b. Ordering the defendant to pay liquidated damages in a sum equivalent to 25% of the total sum due and demandable; c. Ordering the defendant to pay the plaintiff a sum equivalent to 25% of the total claim as and for attorney¶s fees; and d. The costs of suit. SO ORDERED.8 On appeal, Branch 143 of the Regional Trial Court (RTC), by Decision of November 30, 2006,9 reversed the MeTC Decision, disposing as follows: WHEREFORE, premises considered, the judgment of the lower court dated 04 July 2005 is hereby REVERSED and SET ASIDE, ordering plaintiff Daniel T. So to pay defendant Food Fest the amount of Thirty Two Thousand Pesos (P32,000.00) as reimbursement for rentals paid for the months of July and August 2000; Twenty Thousand Pesos (P20,000.00) as exemplary damages; Twenty Thousand Pesos (P20,000.00) as attorney¶s fees and costs of suit. SO ORDERED.10 In reversing the MeTC, the RTC found that Food Fest already vacated the leased premises before So filed the complaint for ejectment; and whereas possession is the only issue for resolution in an ejectment case, So¶s cause of action only pertained to collection of the rental arrears. As to So¶s claim for payment of arrears, the RTC noted that since the claim exceeded the jurisdictional amount over which it can cognize, the RTC, applying Sec. 8, Rule 40 of the Rules of Court,11 treated the case as if it was originally filed with it. On the merits, the RTC held that Food Fest¶s failure to secure the authority to commence business operations resulted in the termination of its contractual obligations to So, including the obligation to pay rent.
On petition for review, the Court of Appeals, by Decision of April 18, 2008,12 upheld the RTC¶s jurisdiction over the complaint. It, however, declared that Food Fest¶s obligation to pay rent was not extinguished upon its failure to secure permits to operate. Thus, it disposed: WHEREFORE, premises considered, the assailed decision dated November 30, 2006 of the RTC, Branch 143, Makati City is hereby REVERSED and SET ASIDE, ordering respondent FFLI to pay petitioner Daniel T. So the following: 1. Unpaid rentals from August 2000 until March 31, 2001 with penalties accrued thereon. The security deposit is forfeited in favor of petitioner So; 2. Temperate damages in the amount of P50,000.00; 3. P20,000.00 as attorney¶s fees; and 4. Costs of suit. SO ORDERED.13 The parties¶ respective motions for reconsideration having been denied, they filed their respective petitions before this Court which, by Resolution of October 6, 2008, resolved to consolidate G.R. No. 183628 (Daniel T. So vs. Food Fest Land, Inc.) with G.R. No. 183670 (Food Fest Land, Inc. vs. Daniel T. So). So maintains that the MeTC had jurisdiction over his complaint for ejectment. For, So contends, Food Fest did not vacate the leased premises before his filing (on April 26, 2001) of the complaint. So admitted in his Complaint, however, that Food Fest started pulling out equipment and other machineries from the premises even before the final notice was received by it on April 2, 2001. 13. In or the last few days of March 2001, defendant FOOD FEST LAND, INC. started to remove and pull out
and all rights and obligations hereunder shall cease.22 (underscoring supplied) Food Fest was able to secure the permits, licenses and authority to operate when the lease contract was executed. Its failure to renew these permits, licenses and authority for the succeeding year, does not, however, suffice to declare the lease functus officio, nor can it be construed as an unforeseen event to warrant the application of Article 1267. Contracts, once perfected, are binding between the contracting parties. Obligations arising therefrom have the force of law and should be complied with in good faith. Food Fest cannot renege from the obligations it has freely assumed when it signed the lease contract. WHEREFORE, the Court of Appeals Decision of April 18, 2008 is AFFIRMED with MODIFICATION. Food Fest is ORDERED to pay So liquidated damages in the amount equivalent to 25% of the total sum due and demandable. Further, So is ORDERED to pay attorney¶s fees in the amount equivalent to 25% of the total sum due and demandable. In all other respects, the decision is AFFIRMED. SO ORDERED. CONCHITA CARPIO MORALES Associate Justice WE CONCUR: REYNATO S. PUNO Chief Justice Chairperson TERESITA J. LEONARDO-DE CASTRO Associate Justice
its equipment, appliances, fittings, furnishings, movable articles and other accessories and facilities that it had earlier placed and installed in the leased premises, but due to its wanton lack of care in doing so, so much damage and destruction was caused to the leased premises, resulting in the breakage of and damage to the concrete walls and partition in the building as well as the steel gate leading to the leased premises and other parts of the building and its premises.14 (emphasis and underscoring supplied) Two elements are paramount in possession ± there must be occupancy, apprehension or taking, and there must be intent to possess.15 In the present case, given the immediately quoted allegation-admission of So, intent to possess was not present on Food Fest¶s part. In another vein, So claims that Food Fest did not exercise care in removing the installations and fixtures, thereby causing destruction to the premises to thus entitle him to damages, as well as to damages corresponding to unrealized profits (lucrum cessans) to answer for the period during which the unit was not rented out. Unrealized profits fall under the category of actual or compensatory damages. If there exists a basis for a reasonable expectation that profits would have continued to be generated had there been no breach of contract, indemnification for damages based on such expected profits is proper. This is, however, subject to the rule that a party is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved.16 Other than the photographs evincing damage to the premises, no evidence was proffered to show So¶s entitlement to unrealized profits. That the leased unit was not subsequently leased is not solely attributable to Food Fest. As borne by the records, no renovation was undertaken by So for almost three years following Food Fest¶s vacation of the premises in 2001. The quotations issued by construction companies for purposes of renovation were issued only in 2004. So is not without recourse under the lease contract, however. Thus the pertinent provisions of the lease contract provide:
7. LIABILITY OF LESSEE FOR DAMAGES- LESSEE hereby agrees that any damage to the leased premises or its appurtenances caused by said LESSEE or its agents, employees, customers, guests or any other person without the fault of LESSOR shall be LESSEE¶s sole responsibility and liability, which damage shall, upon demand by LESSOR be repaired promptly at its expense. 16. TERMINATION OF THE LEASE- LESSEE agrees to return and surrender the leased premises at the expiration of the term of this lease in as good condition as reasonable wear and tear will permit and without delay whatsoever, devoid of all occupants, furniture, machinery, equipment and signages, articles and effects of any kind, other than such alterations or improvements which cannot be removed without damaging the leased premises. 23. PENALTY CLAUSE ± Any and all accounts payable by LESSEE under this Contract of Lease and other charges which may be claimed against LESSEE, but not paid by LESSEE to LESSOR within fifteen (15) days from due date shall be subject to penalty charges of ONE PERCENT (1%) per month from due date until the account is paid in full. 23.1. Should LESSOR be compelled to seek judicial relief against LESSEE the latter shall, in addition to any other claim for damages pay as liquidated damages to LESSOR an amount equivalent to twenty-five percent (25%) of the amount due, but in no case less than P500.00: and an attorney¶s fee in the amount equivalent to 25% of the amount claimed but in no case less than P3,000.00 as well as all expenses of litigation.17 Respecting So¶s claim for renovation expenses, the same must be denied absent proof as to the actual cost of renovation. Only firm offers or quotations from construction companies are in the records. Following Article 2224 of the Civil Code,18 however, the appellate court¶s award of temperate damages is in order. This Court notes that the appellate court did not award liquidated damages in contravention of the contract. As for the appellate court¶s award of P20,000.00 as attorney¶s fees, the contractual stipulation should prevail.
As for Food Fest¶s invocation of the principle of rebus sic stantibus as enunciated in Article 1267 of the Civil Code to render the lease contract functus officio, and consequently release it from responsibility to pay rentals, the Court is not persuaded. Article 1267 provides: Article 1267. When the service has become so difficult as to be manifestly beyond the contemplation of the parties, the obligor may also be released therefrom, in whole or in part. This article, which enunciates the doctrine of unforeseen events, is not, however, an absolute application of the principle of rebus sic stantibus, which would endanger the security of contractual relations. The parties to the contract must be presumed to have assumed the risks of unfavorable developments. It is, therefore, only in absolutely exceptional changes of circumstances that equity demands assistance for the debtor.19 Food Fest claims that its failure to secure the necessary business permits and licenses rendered the impossibility and non-materialization of its purpose in entering into the contract of lease, in support of which it cites the earlierquoted portion of the preliminary agreement dated July 1, 1999 of the parties.20 The cause or essential purpose in a contract of lease is the use or enjoyment of a thing.21 A party¶s motive or particular purpose in entering into a contract does not affect the validity or existence of the contract; an exception is when the realization of such motive or particular purpose has been made a condition upon which the contract is made to depend. The exception does not apply here. It is clear that the condition set forth in the preliminary agreement pertains to the initial application of Food Fest for the permits, licenses and authority to operate. It should not be construed to apply to Food Fest¶s subsequent applications. Consider the following qualification in the preliminary agreement: xxx We shall also notify you if any of the required permits, licenses and authorities shall not be be (sic) given or granted within fifteen days (15) from your conform (sic) hereto. In such case, the agreement may be canceled
LUCAS P. BERSAMIN Associate Justice
MARTIN S. VILLARAMA, JR. Associate Justice
respondent laments that the denial of petitioners¶ motion for reconsideration was rightly done by the Court of Appeals.13 On October 20. petitioners filed a Motion to Dismiss9 on the ground that the claim on which the action had been brought was unenforceable under the statute of frauds. it was likewise asserted that the trial court committed grave abuse of discretion in not discharging/dissolving the writ of preliminary attachment. private respondent notes that with respect to the Court of Appeals¶ denial of the certiorari petition. they faulted the trial court for not dismissing the complaint despite the fact that the alleged contract was unenforceable under the statute of frauds. vs. Instead of addressing private respondent¶s allegations. To begin with. Respondent claimed that because of Ople¶s earnest representation that funds had already been allocated for the project. 81888. finding no merit in the petition.00. Respondents. delivered to and received by petitioner municipality on different dates. 2005. OPLE.. CEBU CITY. respondent prayed for full payment of the said amount.: This is a Joint Petition1 under Rule 45 of the Rules of Court brought by the Municipality of Hagonoy. because it raised no new matter that had not yet been addressed.820. the case was deemed submitted for decision. contracts are obligatory in whatever form they may have been entered CERTIFIC ATION Pursuant to Section 13. Ople allegedly did not heed respondent¶s claim for payment. following assessment of the parties¶ arguments.000.6 However. Felix V. DUMDUM. BULACAN. J.18 Commenting on the petition. We now rule on the petition. and in effect disregarding the rule that the local government is immune from suit. CEB-28587 denying petitioners¶ motion to dismiss and motion to discharge/dissolve the writ of preliminary attachment previously issued in the case.R. the trial court issued an Order7 granting respondent¶s prayer for a writ of preliminary attachment conditioned upon the posting of a bond equivalent to the amount of the claim. the total obligation of petitioner had already totaled P10. respondent. in his capacity as the Presiding Judge of the REGIONAL TRIAL COURT.000. did not obtain.11 Petitioners also filed a Motion to Dissolve and/or Discharge the Writ of Preliminary Attachment Already Issued. and FELIX V. Bulacan and its former chief executive. represented by the HON. As of the filing of the complaint. this petition. attorney¶s fees of P100. Respondent had entered into an agreement with petitioner municipality through Ople for the delivery of motor vehicles. from the January 31. petitioners elevated the matter to the Court of Appeals via a petition for certiorari under Rule 65. PUNO Chief Justice Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G. CLERK OF COURT & EX-OFFICIO SHERIFF of the REGIONAL TRIAL COURT of BULACAN and his DEPUTIES. But it does not declare them invalid because they are not reduced to writing inasmuch as. the same was rightly done. Again. Bulacan and its chief executive. They averred that contracts of this nature. with interest at not less than 2% per month. The term "Statute of Frauds" is descriptive of statutes that require certain classes of contracts to be in writing.12 invoking immunity of the state from suit.026. DECISION PERALTA. they advanced that the bills of lading attached to the complaint were hardly probative. 2003 Orders. despite having made several deliveries. pointing out that there was no written contract or document that would evince the supposed agreement they entered into with respondent. which raises no matter different from those passed upon by the Court of Appeals. 2003. In it.00 as damages for business losses. in his personal capacity. and failure to substantiate the allegation of fraud.000. It was alleged that sometime in the middle of the year 2000.060. they reason that the complaint should have been dismissed at the first instance based on unenforceability and that the motion to dissolve/discharge the preliminary attachment should have been granted.16 Petitioners moved for reconsideration. as the fact of delivery may be properly and adequately addressed at the trial of the case on the merits. was contacted by petitioner Ople. REYNATO S. Municipal Mayor. To prove this.00 and the costs of the suit. doing business under the name and style KD SURPLUS. in this case. HON. and that the dissolution of the writ of preliminary attachment was not proper under the premises inasmuch as the application for the writ sufficiently alleged fraud on the part of petitioners. Article 1403 of the Civil Code.17 Hence. 168289 March 22. the Court of Appeals. FELIX V. 2005 Decision2 and the May 23.13 exclusive of penalties and damages.10 To address the claim that respondent had made the deliveries under the agreement. she agreed to deliver from her principal place of business in Cebu City twenty-one motor vehicles whose value totaled P5. The case stems from a Complaint5 filed by herein private respondent Emily Rose Go Ko Lim Chao against herein petitioners.21 In other words. P500. as well as for ordering the filing of an answer and in effect allowing private respondent to prove that she did make several deliveries of the subject motor vehicles. HON. heavy equipment. 2010 Case No. JR. From this. Mayor Felix V. doing business as KD Surplus and as such engaged in buying and selling surplus trucks. but merely regulate the formalities of the contract necessary to render it enforceable. upheld private respondent¶s claim and affirmed the trial court¶s order. Believing that the trial court had committed grave abuse of discretion in issuing the two orders. which supposedly were needed to carry out certain developmental undertakings in the municipality.20 requires for enforceability certain contracts enumerated therein to be evidenced by some note or memorandum. No. SIMEON P. HON. would ordinarily be subject to several preconditions such as a public bidding and prior approval of the municipal council which. the trial court issued the Writ of Preliminary Attachment8 directing the sheriff "to attach the estate. The assailed resolution denied reconsideration. Ople (Ople) for collection of a sum of money and damages. but the same was likewise denied for lack of merit and for being a mere scrap of paper for having THE MUNICIPALITY OF HAGONOY.R. she attached to the complaint copies of the bills of lading showing that the items were consigned. CLERK OF COURT & EX-OFFICIO SHERIFF of the REGIONAL TRIAL COURT of CEBU CITY. On January 31. On March 20. the trial court issued an Order14 denying the two motions. petitioners impress upon us the notion that no contract was ever entered into by the local government with respondent. On February 13. 2003. Ople in his official and personal capacity. petitioners ascribe error to the Court of Appeals for dismissing their challenge against the trial court¶s October 20 and December 29. In their present recourse. I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. 2003 Order4 issued by the Regional Trial Court of Cebu City. before being undertaken by the municipality. Article VIII of the Constitution. OPLE. Thus. real and personal properties" of petitioners. Additionally. 2003. 2005 Resolution3 of the Court of Appeals in CA-G. inasmuch as these documents had been accomplished and handled exclusively by respondent herself as well as by her employees and agents. SP No. and EMILY ROSE GO KO LIM CHAO. 2003. In the same breath.000.00 as exemplary damages. the Statute of Frauds only lays down the method by which the enumerated contracts may be proved. the Statute of Frauds found in paragraph (2). Petitioners. Petitioners moved for reconsideration.6 been filed by an unauthorized counsel. machinery. and that do not deprive the parties of the right to contract with respect to the matters therein involved. the Municipality of Hagonoy. but they were denied in an Order15 dated December 29. as prayed for in the motion.19 After the filing of the parties¶ respective memoranda. plus P500. The assailed decision affirmed the October 20. BRANCH 7. unenforceability of the contract. by law. spare parts and related supplies. Branch 7 in Civil .
where consent to be sued is given by general or special law. the same is binding on the trial court for the purpose of ruling on the motion to dismiss. it is principally a matter of evidence that may be properly ventilated at the trial of the case on the merits. Hence. hence. The Court of Appeals is thus correct in affirming the same. as it then descends to the level of the other contracting party.22 The object is to prevent fraud and perjury in the enforcement of obligations depending. the Court ordered that the writ of preliminary attachment issued in that case be lifted. We now address the question of whether there is a valid reason to deny petitioners¶ motion to discharge the writ of preliminary attachment. Execution may not issue upon such judgment. Court of Appeals.27 This hypothetical admission. Section 22 of the Local Government Code of 1991.32 Private respondent.33 The general rule spelled out in Section 3.401avvphi1 Anent the other issues raised by petitioners relative to the denial of their motion to dissolve the writ of attachment. since the inception of the instant case that she has entered into a contract with petitioners. according to Viewmaster Construction Corporation v. because statutes waiving non-suability do not authorize the seizure of property to satisfy judgments recovered from the action. posit that as a municipal corporation. i. As held in City of Caloocan v. she has already performed her part of the obligation under the agreement by undertaking the delivery of the 21 motor vehicles contracted for by Ople in the name of petitioner municipality. Consent is implied when the government enters into a business contract. Article XVI of the Constitution is that the state and its political subdivisions may not be sued without their consent. these issues are not to be taken up in resolving the motion to discharge. lest we run the risk of deciding or prejudging the main case and force a trial on the merits at this stage of the proceedings. Verily. for evidence thereof.7 into.35 where the suability of the state is conceded and by which liability is ascertained judicially.24 If an action is nevertheless filed in court. hence. By invoking unenforceability under the Statute of Frauds. still.30 Stated differently. and either party may then enforce its claims against the other.41 There is one final concern raised by petitioners relative to the denial of their motion for reconsideration. where the motion to dismiss is predicated on grounds that are not indubitable. for her part. unless there has been. Chapter 2. Nevertheless. or it may be embodied in a general or special law34 such as that found in Book I. the material allegations of the complaint are deemed to be hypothetically admitted. which vests municipal corporations with the power to sue and be sued.25 Rule 16 of the Rules of Court. The argument is flawed. because it was not shown that there had been compliance with the required bidding or that the municipal council had approved the contract. San Diego. to wit: The universal rule that where the State gives its consent to be sued by private parties either by general or special law. is based on obvious considerations of public policy. the implication thereof is limited only to the resultant verdict on the action before execution of the judgment. the Court holds that the writ of preliminary attachment must be dissolved and. must be treated as a mere scrap of paper. x x x39 With this in mind. since the property of the municipality may not. Intermediate Appellate Court. they also advance that it should not have been issued in the first place. was able to substantiate the allegation of fraud in the same way that the fraud attributable to petitioners was sufficiently alleged in the complaint and. of course.. In that case which involved a suit on a contract entered into by an entity supervised by the Office of the President. a difference lies between suability and liability. in the event that respondent¶s claim is validated. unenforceability of the contract and the veracity of private respondent¶s allegation of fraud. she contends that the arguments offered by petitioners against the writ of preliminary attachment clearly touch on matters that when ruled upon in the hearing for the motion to discharge. which vests local government units with certain corporate powers ²one of them is the power to sue and be sued. the state is at liberty to determine for itself whether to satisfy the judgment or not. No other principle in remedial law is more settled than that when a motion to dismiss is filed.42 . it may limit claimant¶s action "only up to the completion of proceedings anterior to the stage of execution" and that the power of the Courts ends when the judgment is rendered. by affidavit. Be that as it may. since there exists an indication by way of allegation that there has been performance of the obligation on the part of respondent. the trial court was in error in ordering the garnishment of its funds. the Court held that while the said entity opened itself to suit by entering into the subject contract with a private entity. they submit that not only was there an error committed by the trial court in denying their motion to dissolve the writ of preliminary attachment. These statutes only convey an implication that the legislature will recognize such judgment as final and make provisions for its full satisfaction. As far as she is concerned.29 extends not only to the relevant and material facts well pleaded in the complaint. it shall warrant a dismissal under Section 1(i).38 is instructive on this point. where it appears that the allegations in the complaint furnish sufficient basis on which the complaint can be maintained. she has amply discussed the basis for the issuance of the writ of preliminary attachment in her affidavit. Petitioners. no grave abuse of discretion has been committed by the trial court in denying petitioners¶ motion to dismiss this case. the writ of attachment in this case would only prove to be useless and unnecessary under the premises. since government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgments. beyond the reach of garnishment and attachment proceedings. which were public in nature and. Thus. While there is merit in private respondent¶s position that she. petitioners are in effect acknowledging the existence of a contract between them and private respondent ² only. Hence. be subjected to writs of execution and garnishment ² unless. Otherwise put. on the unassisted memory of witnesses by requiring certain enumerated contracts and transactions to be evidenced by a writing signed by the party to be charged. There. Still. would amount to a trial of the case on the merits. the Municipality of Hagonoy is immune from suit. Thus.23 The effect of noncompliance with this requirement is simply that no action can be enforced under the given contracts. petitioners theorize that there could not have been a contract by which the municipality agreed to be bound. and that petitioners¶ claim of immunity from suit is negated by Section 22 of the Local Government Code. hence. they believe that respondent has not been able to substantiate her allegations of fraud necessary for the issuance of the writ. Roxas28 and Navoa v. there has been a corresponding appropriation provided by law.e. the case is excluded from the coverage of the rule on dismissals based on unenforceability under the statute of frauds. Suffice it to say that while this assertion might be a viable defense against respondent¶s claim. provided all the essential requisites for their validity are present. the Court highlighted the reason for the rule. Further. it must not have been issued in the very first place. suffice it to say that these pertain to the merits of the main action. the issuance of the writ would have been justified. Disbursements of public funds must be covered by the corresponding appropriations as required by law. Petitioners have not at any time expressly denied this allegation and. This claim is well substantiated ² at least for the initial purpose of setting out a valid cause of action against petitioners ² by copies of the bills of lading attached to the complaint.26 It has been private respondent¶s consistent stand. indeed. the said contract cannot be enforced by action for being non-compliant with the legal requisite that it be reduced into writing. contrary to petitioners¶ claim.31 It is interesting to note at this point that in their bid to have the case dismissed. the same should not be dismissed regardless of the defenses that may be raised by the defendants. Title I. they are open to suit but only when they consent to it. advocating a negative stance on this issue.37 citing Commissioner of Public Highways v. the better policy is to deny the motion without prejudice to taking such measures as may be proper to assure that the ends of justice may be served. hence. The functions and public services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects.36 Traders Royal Bank v. Allarde. but also to inferences that may be fairly deduced from them. In other words. and that its properties are by law exempt from execution and garnishment. and that the parties be allowed to prove their respective claims at the trial on the merits. naming petitioner municipality as consignee of the shipment. among others. They complain that it was an error for the Court of Appeals to have denied the motion on the ground that the same was filed by an unauthorized counsel and. Accordingly. counters that. total or partial performance of the obligation on the part of either party.
as borne by the records. 2. because there seems to be no matter raised therein that has not yet been previously addressed in the assailed decision of the Court of Appeals as well as in the proceedings below. the Court of Appeals concluded that it was as if petitioner municipality and petitioner Ople. CEB-28587. over the subject property in favor of respondents Spouses Morte in consideration of a loan in the amount of P180. municipal legal officer Joselito Reyes. Chairperson CERTIFIC ATION Pursuant to Section 13.00. Accordingly. Later on.00. 1977. Petitioner Manuel T.4 a deed of sale. 2003 Writ of Preliminary Attachment issued in Civil Case No. as he previously did upon the filing of the petition. Petitioners Fe Davis Maramba.5 a deed of sale. in his personal capacity. Jocelyn D. Kasunduan ng Bilihang Tuluyan (Exhibit"H"). in his official capacity. T-6358 of the Register of Deeds of Bulacan. REYNATO S.8 It can be derived from the records that petitioner Ople.000. each of which was signed by petitioner Renato as an instrumental witness. HAO. Associate Justice ANTONIO EDUARDO B. PERALTA Associate Justice WE CONCUR: RENATO C.R. Renato Davis. SPOUSES TEOFILO R. Flordeliza D. was "adopting all the pleadings filed for and in behalf of [Ople¶s personal representation] relative to this case. 1974. Primitiva executed another document. respondents Spouses Villarico and Spouses Morte executed before Notary Public Mamerto A. for both the municipality and Mayor Ople. Yeh.000. On February 14.00.000. Primitiva. VILLARICO.6 a deed of sale. covered by TCT No. to wit: 1. On February 15. FLORDELIZA D.48 The Court of Appeals is mistaken. CEB-28587 is ordered lifted. as counsel. Primitiva executed a document denominated as Kasulatan ng Sanglaan (Exhibit "J"). BRANCH 12. however.R. de Guia alleged to be the owner of the subject property. only Ople¶s personal representation signed the motion for reconsideration. RENATO DAVIS. having acquired the same from his co-petitioners. filed his Rule 65 petition with the Court of Appeals through the representation of the law firm Chan Robles & Associates. Barretto (respondents Spouses Villarico) for and in consideration of the amount of P33. HON. 1973. REGIONAL TRIAL COURT. SP No.00 payable in one (1) year from date of contract at 12% interest. 1977. however. DECISION PERALTA. J. respondents Spouses Villarico executed a document denominated as Kasunduan ng Bilihang Tuluyan (Exhibit "G"). 161074 March 22. MORTE. the said motion for reconsideration would warrant a denial. RENATO C. the owner of the ½ undivided portion (subject property) of two parcels of land (fishpond). had never moved for reconsideration of the assailed decision. In any event. CV No. for himself and as Attorneyin-Fact of FE DAVIS MARAMBA. 1979. 38031.: Before us is a petition for review on certiorari which assails the Decision1 dated August 30. Respondents. PUNO Chief Justice . Villarico (respondents Spouses JOSE CATRAL MENDOZA Associate Justice ATTEST ATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. 2005 Decision of the Court of Appeals in CA-G. 2010 Morte) over the subject property in consideration of Primitiva's loan in the amount of P20. in favor of respondents spouses Teofilo R. Branch 7 denying petitioners¶ motion to dismiss in Civil Case No. the Petition is GRANTED IN PART. JOCELYN D. none of which exceptions obtains in this case. Court of Appeals47 that only under well-defined exceptions may a private counsel be engaged in lawsuits involving a municipality.3 a deed of mortgage.000. Court of Appeals46 and Municipality of Pililla.000. wherein she again sold the subject property to respondents Spouses Villarico for the amount of P180. and that would have otherwise warranted a different treatment of the issues involved. No. Bulacan. DE GUIA. ANGELINA C. SPOUSES RUPERTO and MILAGROS VILLARICO. VELASCO.R. over the same subject property in favor of spouses Ruperto C. 2003 Decision of the Regional Trial Court of Cebu City. wherein they sold back the subject property to Primitiva for the same amount of P33. JR.45 From this. 2003 of the Court of Appeals (CA) in CA-G.00. AND DEPUTY SHERIFF BENJAMIN C. situated in Meycauayan." all documents were duly notarized and petitioner Renato was one of the instrumental witnesses in all these documents. Except for Exhibit "H. CORONA Associate Justice Chairperson PRESBITERO J.7 a deed of mortgage. filed with the Court of Appeals a Manifestation with Entry of Appearance43 to the effect that he.000. Kasulatan ng Sanglaan (Exhibit "A")8 executed by Primitiva mortgaging the subject property to respondent Spouses Morte in consideration of a loan in the amount of P500. Rizal v. Kasunduan ng Bilihang Tuluyan (Exhibit "F"). QUEBLATIN and BETTY DAVIS. Petitioners. 1977. and adverts to the ruling in Ramos v. On November 10. not only the certiorari petition filed with the Court of Appeals. Villarico and Milagros D. 2002 and the Resolution2 dated November 28. Queblatin and Betty Davis are the heirs of the late Primitiva Lejano Davis (Primitiva). CORONA Associate Justice Third Division. The antecedents. Abaño the following five (5) documents. but also all other pleadings that may be filed thereafter by Ople¶s personal representation. I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. Primitiva executed a Kasulatan ng Sanglaan (Exhibit "I"). DIOSDADO M. including the motion for reconsideration subject of this case. NACHURA Associate Justice Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G. There is no showing that the municipal legal officer made the same manifestation. in his official capacity and for petitioner municipality. YEH. BULACAN. MALOLOS. The assailed decision is REVERSED insofar as it affirmed the said trial court¶s denial of petitioners¶ motion to discharge the writ of preliminary attachment issued in that case. PRESIDING JUDGE. The January 31. On March 26. 81888 is AFFIRMED insofar as it affirmed the October 20. Article VIII of the Constitution and the Division Chairperson¶s Attestation. Morte and Angelina C. the August 4. Primitiva executed another document. vs. SO ORDERED. that after the issuance of the Court of Appeals¶ decision. General Power of Attorney (Exhibit "B")9 executed by Primitiva appointing respondent MANUEL T. are as follows: On August 8. On March 28. it is clear that petitioner municipality¶s legal officer was intent on adopting."44 It appears. WHEREFORE.00. counsel for petitioner Ople. As can be seen from the manner in which the Manifestation with Entry of Appearance is worded.
Thus. 14 indebtedness to them. b) Kasunduan ng Bilihang Tuluyan (Exhibit "G") dated February 14. the same is hereby DISMISSED with costs against said plaintiff. 1986. 1979 represented the actual and subsisting transactions between the parties. so as to avoid the foreclosure of the mortgage over the subject property. 5. the RTC rendered its Decision. Spouses Villarico. an Amended Complaint for annulment of real estate mortgage and contract of lease with preliminary injunction against respondents Spouses Morte." "G. the Notary Public who notarized the questioned documents. On January 16.000. the evidence having shown the plaintiffs.00 per year as rental. 1977. the latter filed with the Office of the Provincial Sheriff of Bulacan. since Primitiva signed them under threat of immediate foreclosure of mortgage on the subject property and without any valuable consideration. that there was no other force or intimidation used by respondents Spouses upon him or his mother. "A" & "1") dated November 10.16 The RTC found that petitioner Renato. Thereafter. Pagpapawalang Saysay ng Kasulatan ng Sanglaan (Exhibit "D")11 . a petition for extrajudicial foreclosure of real estate mortgage. their successor-in-interest. as lessor. and the "Kasulatan ng Pagpapabuwis ng Palaisdaan (Exhs. issued and was served on Sheriff Hao and respondents Spouses. that in his presence. Abaño.00 SO ORDERED. for himself and as attorney-in-fact of the other co-petitioners. among other things. On March 6. not entitled upon the facts and the law to the relief prayed for in the amended complaint. 3. was then Primitiva's lawyer and not of respondents. subsequently. that he explicitly declared that his mother had to execute Exhibit "A" to restructure her indebtedness to respondents Spouses Morte. that Atty. Bulacan. Declaring the "Kasulatan ng Sanglaan (Exhs. ARE NOT VOID AND SIMULATED. contending that the documents were null and void. 1974. Respondents clarified that the documents Pagpapawalang Saysay ng Kasulatan ng Sanglaan (Exhibit "D") and the Pagpapawalang Saysay at Pagpapawalang Bisa ng Mga Kasulatan (Exhibit "E"). ASSUMING ARGUENDO. 4. 1979. 1986. The RTC also found that Primitiva executed the questioned documents for valuable consideration as established by petitioner Renato's testimony that his mother executed the documents to restructure her outstanding obligation with respondents.000. judgment is hereby rendered : 1. 1977 for a loan of P180. THUS. Ordering plaintiffs to pay defendants attorney's fees in the amount of P20.15 Petitioners' motion for reconsideration was denied in a Resolution dated November 28. Ordering the Ex-Officio Sheriff. Costs shall be taxed against appellants. were executed to avoid confusion and to show that the latest documents dated November 10. and that petitioner Renato was one of the instrumental witnesses in these documents. which made the earlier documents. and Deputy Sheriff Benjamin C. to wit: A. for and in her behalf. 1979. to proceed with the extrajudicial foreclosure of the subject real estate mortgage. RTC. 1979. and that respondent Sheriff Hao had scheduled the auction sale of the subject property which would cause great and irreparable injury to petitioners. respondents Spouses Villarico claimed that they should have been in possession of the fishpond since 1979 if not for the unwarranted refusal of petitioner De Guia to vacate the fishpond despite demands. Primitiva also acknowledged in the same document the receipt of P150. Kasulatan ng Pagpapabuwis ng Palaisdaan (Exhibit "C")10 . they prayed that the public auction be enjoined.00 to respondents Spouses Morte as secured by a real estate mortgage on the subject property (Exhibit "A") executed on November 10. 2. respondents Spouses argued that these documents were executed for valuable consideration. 1986.13 the dispositive portion of which reads: WHEREFORE. WHETHER OR NOT THE COURT OF APPEALS ERRED IN DECLARING THAT THE "TRANSACTIONS" EXECUTED ON SAME DATE. and 3. A writ of preliminary injunction was. to lease. a Notice of Sheriffs¶ Sale of the property was published.000. as it hereby is AFFIRMED. Hence.000. Petitioners filed their appeal with the CA. NOVEMBER 10. In their Counterclaim. 1979. mortgage or sell said share. Hao. The RTC ruled that if respondents Spouses Morte threatened to foreclose the mortgage because of Primitiva's failure to pay her . 2002." "H" and "I. a former lawyer of Primitiva. Petitioners sought to annul the Kasulatan ng Sanglaan (Exhibit "A") and Kasulatan ng Pagbubuwis ng Palaisdaan (Exhibit "C"). Kasulatan ng Pagpapawalang Saysay at Pagpapawalang Bisa ng mga Kasulatan (Exhibit "E")12 . 1977.000.executed by Primitiva and respondent Spouses Villarico canceling the following documents: a) Kasunduan ng Bilihang Tuluyan (Exhibit "F") dated February 15.00. And it was also established by Atty." executed between Primitiva and the respondents Spouses of no force and effect. On February 17. the dispositive portion of which reads: UPON THE VIEW WE TAKE OF THIS CASE. they were only exercising their right as mortgagees and it was within their right to file a petition for extrajudicial foreclosure of the real estate mortgage. THE INSTANT PETITION INVOLVES A QUESTION OF LAW WELL WITHIN THE POWER OF REVIEW BY THIS HONORABLE TRIBUNAL. Primitiva failed to pay her loan in the amount of P500. to wit: Exhibits "F. Mamerto Abaño. particularly Manuel de Guia. 2002.000. as valid for all legal intents and purposes. 2003. and respondent Spouses Villarico. the judgment appealed from must be. filed with the Regional Trial Court (RTC) of Malolos. the RTC issued an Order granting petitioners' application for the issuance of a writ of preliminary injunction upon the filing of an injunction bond.executed by respondent spouses Morte canceling and rendering without any valid force and effect the "Kasulatan ng Sanglaan" (Exhibit "I") dated March 28. the CA issued its assailed Decision. did not deny the outstanding obligations of his mother to respondents. On February 28. TO INCLUDE PETITIONER DE GUIA. trial ensued. Thus. petitioner De Guia. both executed by Primitiva in favor of respondents Spouses on November 10.executed between Primitiva. "C" & "3") also dated November 10. because the amounts stated in those deeds had already been returned by Primitiva to respondent Spouses Villarico. certain amounts of money were given or paid by respondents Spouses to Primitiva. as lessees. over the same subject property at P10. B.00 AND THE LEASE CONTRACT AS VOID WHEN BOTH AGREEMENTS WERE NOT REGISTERED AND THEREFORE NOT BINDING TO THIRD PERSONS. petitioners filed a petition for review raising the following issues. Bulacan. Instead as prayed for by defendants.00 as advance payment of the yearly rentals for a period of fifteen (15) years . On August 30. C. WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT DECLARING THE SAID REAL ESTATE MORTGAGE FOR P500. Primitiva's son and an instrumental witness to all the questioned documents. and c) Kasunduan ng Bilihang Tuluyan (Exhibit "H") dated March 26.9 Spouses Villarico as her attorney-in-fact in the exercise of general control and supervision over the subject property with full authority to act as her representative and agent. In their Answer. 1979. both dated November 10. 1979.
Davis? A. After the interest accumulated and since we cannot pay we have to execute another mortgage in order not to foreclose the property. Q. The same was not paid also.00 regarding the same property Q." thus. Yes. And I supposed that your mother signed as the mortgagor. You are referring to Exh. How long was the period for that mortgage for P180. And so your mother was not able to pay that and naturally the interest accumulated? A. Davis? A. sir. as one of the instrumental witnesses. And so what happened? A. since the signatures of Primitiva and petitioner Renato. I signed as witness to the document. About 1977. Mr. Yes. Do you know what it meant ? A. Tell us. Q. sir. Yes. I could not recall how much but (interrupted). Q. PUNO: xxxx Q. A. Because of that the interest on the same loan was added to that making it bigger than the previously P180.00. PUNO: Q. their consent were vitiated.000 was executed by your mother. does not vitiate consent.000. she executed Exhibit "A" in order that the subject property will not be foreclosed. what happened to that mortgage? A.00. sir. Primitiva approached the Spouses Morte for the restructuring of her loan and.000. sir. Yes. Your mother also signed this document "Kasulatan ng Sanglaan"? A. sir. sir. or when the same is unsupported by the evidence on record. Yes. Q. what was your participation in that mortgage for P180. Yes. as valid. Davis. that other than the threat of foreclosure. Q. sir. if the claim is just or legal. sir. "A.000. Yes. the last paragraph of Article 1335 of the New Civil Code was applicable in this case.000. both dated November 10. Q. and that a threat to enforce one's just and legal claim through a competent authority did not vitiate Primitiva and petitioner Renato's consent.00. Mr. Now after this document or mortgage for P180. Could you recall . As correctly ruled by the lower courts. sir.000. Consequently. Q. Yes. sir. which provides that a threat to enforce one's claim through competent authority. You understood its contents? A. What happened after that? A. Yes. Q. Interest? A.18 which we found not obtaining in this case. Hence.17 A departure from the general rule may be warranted where the findings of fact of the Court of Appeals are contrary to the findings and conclusions of the trial court. It has been held that foreclosure of mortgaged properties in case of default in payment of a debtor is a legal remedy afforded by law to a creditor. 1977 executed between his mother and respondents Spouses Morte. Petitioner Renato's testimony on cross-examination stated: ATTY. We agree.00? A. 1979. is it not? A. Q. Now is this Exhibit "A" one of the documents which you said you signed in the office of Notary Public Mamerto Abaño? A. sir. sir. Q. Do you recall what document was that? A.20 . Records show that petitioner Renato indeed admitted that his mother Primitiva was not able to pay her loan in the amount of P180. were obtained under threat of an immediate foreclosure of the subject property.00 which was signed by your mother and attested by you as an instrumental witness thereon? A. Petitioners' claim that Exhibit "A" was simulated. How long a period? The period? A. Q. It was not paid by your mother? A. In petitions for review on certiorari as a mode of appeal under Rule 45 of the Rules of Court. Q. Mr. does not persuade us. Which mortgage are you referring to now. sir." ATTY. it was intended for only one (1) year. What year was that? A. sir. Q. The CA affirmed the RTC's finding that petitioner Renato admitted his mother's outstanding obligations to respondents Spouses Morte when he testified that his mother had to execute Exhibit "A" to restructure her indebtedness to respondents Spouses Morte to avoid the foreclosure of the mortgage on the subject property. as agreed upon in the earlier Deed of Mortgage dated March 28. Davis. Mr. petitioner Renato declared that there was no other force or intimidation exerted on them by respondents Spouses Morte to execute Exhibit "A". It was a mortgage for P500. is a factual issue. when was the due date of that mortgage for P180.19 Petitioner Renato's claim that he and his mother were threatened of foreclosure of the subject property if his mother would not sign Exhibit "A. the petitioner can raise only questions of law ± the Supreme Court is not the proper venue to consider a factual issue as it is not a trier of facts. sir. Q. Q.000. plus interest. xxxx Q. sir. Now when you read ± Before you signed this document as an instrumental witness you read its contents.00.000.10 The issue for resolution of whether the CA committed a reversible error when it upheld the RTC judgment declaring the Kasulatan ng Sanglaan (Exhibit "A") and the Kasulatan ng Pagpapabuwis ng Palaisdaan (Exhibit "C").000. Actually. And after that you signed as a witness? A. Q. a threat to foreclose the mortgage would not per se vitiate consent. Q. We executed another mortgage for P500. It was also for another year at 12%. sir. Yes. is devoid of merit. thus.
vs. Respondent.688. The Facts Pan Pacific Service Contractors.311. petitioner De Guia's claim that he was an innocent purchaser for value. was also simulated. and Deed of Sale dated March 26. and ordinarily will not be. we find no reason to deviate from the findings of both the trial and appellate courts that the assailed documents were validly executed by Primitiva in favor of the respondents Spouses. 169975 March 18. the Petition is hereby DENIED.00. is AFFIRMED. Inc. CORONA Associate Justice Chairperson PRESBITERO J. it had been established that there was sufficient consideration for the execution of the assailed documents. RENATO C.. No. Thus. Petitioners. VELASCO. Chairperson CERTIFIC ATION Pursuant to Section 13. CV No. T6358. theories.23 Notably. 38031.00. were intended to show the nullity of the previously signed documents.30." selling the subject property again to respondents Spouses Villarico. Del Rosario (petitioners) filed this Petition for Review1 assailing the Court of Appeals¶ (CA) Decision2 dated 30 June 2005 in CA-G. However. Del Rosario (Del Rosario). considered by a reviewing court.22 Thus. Petitioners contend that Primitiva could no longer mortgage the subject property to respondents Spouses Morte on March 28. (Pan Pacific) is engaged in contracting mechanical works on airconditioning system.R. they (respondents Spouses Villarico) had to execute Exhibit "G" selling back the subject property to Primitiva. including the assailed documents. Ricardo F. "G" and "H. 1977 (Exhibit "H"). he and his mother then affixed their signatures on Exhibit "E. Thus.622." executed between Primitiva and the Spouses Villarico. Primitiva executed Exhibit "H.R. Notary Public Abaño categorically declared that on the day the documents were executed." of no force and effect. as they cannot be raised for the first time at that late stage. Respondent Milagros Villarico provided the explanation for the execution of Exhibits "F. JR. dated August 30. 1974 (Exhibit "F"). petitioners failed to adduce any evidence in support of such claim. the sale did not push through. Article VIII of the Constitution and the Division Chairperson¶s Attestation. coupled with the fact that he read and understood the document. that Pan Pacific shall be entitled to a price adjustment in case of increase in labor costs and prices of JOSE CATRAL MENDOZA Associate Justice ATTEST ATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division.000. and RICARDO F.24 WHEREFORE.30. It bears stressing that petitioner Renato was one of the instrumental witnesses in the execution of Exhibit "E" and he testified that Notary Public Abaño had explained to him the reason why Exhibit "E" was executed. It had been established that petitioner Renato. On 24 November 1989. SO ORDERED.516. and in fact. 1979 which were the latest transactions between the parties.6 The Contract stipulated. DECISION CARPIO. I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. Branch 59 (RTC) by ordering Equitable PCI Bank5 (respondent) to pay petitioners P1.610. the CA modified the 12 April 1999 Decision4 of the Regional Trial Court of Makati City.: The Case Pan Pacific Service Contractors. likewise. issues and arguments not brought to the attention of the lower court need not be. which had not been paid.000. give money to Primitiva and his son petitioner Renato. As a rule. thus.000. As correctly found by the CA. thus. the total consideration for the whole project was P23. a document denominated as Pagpapawalang Saysay at Pagpapawalang Bisa ng mga Kasulatan (Exhibit "E"). increasing the loaned amount to P500. PUNO Chief Justice . Basic considerations of due process impel this rule.R. 1977 (Exhibit "G") where the subject property was sold back to Primitiva for the same amount of P33. entered into a contract of mechanical works (Contract) with respondent for P20.000. Associate Justice ANTONIO EDUARDO B. We are not persuaded. Pan Pacific. through its President. where Primitiva sold the subject property to the Spouses Villarico for P33. respondent Teofilo Morte had also given P200. The assailed Decision of the Court of Appeals." However. when they went to the house of Judge Teofilo Abejo. her husband Ruperto and Primitiva executed Exhibit "F. CV No. find no merit in petitioners' contention that Exhibit "C. 2002 in CA-G.00 to Primitiva when Exhibit "A" was executed. Milagros's testimony was corroborated by the fact that Primitiva executed on November 10.e. no question will be entertained on appeal unless it has been raised in the court below. Petitioners tried to show the fraudulent character of the assailed documents by alleging that several documents had earlier been executed between Primitiva and the respondents Spouses involving the subject property. REYNATO S.21 In fact. an instrumental witness to this document. Inc. and Ricardo F. INC. before he and his mother affixed their signatures on the documents. the co-owner of the other ½ undivided portion of the property covered by TCT No. 1977. DEL ROSARIO." "G" and "H. who bought the subject property without notice of the mortgage on the subject property.00. DIOSDADO M.015. Again. Thus. since the same was earlier sold by Primitiva to respondents Spouses Villarico on March 26. In the assailed decision. admitted that he read and understood and was satisfied with the explanation of Notary Public Abaño regarding the contents of the same. (the other half is the subject property) to ask his consent to the sale. CORONA Associate Justice Third Division. Pan Pacific and respondent also agreed on nine change orders for P2. together with the other documents. petitioner Renato admitted that Exhibit "A" was executed by his mother to restructure his mother's outstanding loan obligation to respondents Spouses Morte. 1977 (Exhibit "H"). 63966 as well as the Resolution3 dated 5 October 2005 denying the Motion for Reconsideration. he saw respondents.000. Moreover. the latter did not give his consent thereto as he wanted to buy the subject property.07 with interest at the legal rate of 12% per annum starting 6 May 1994 until the amount is fully paid." She testified that she. wherein she declared Exhibits "F. where Primitiva sold the subject property to the Spouses Villarico for P180. the documents executed on November 10. PERALTA Associate Justice WE CONCUR: RENATO C. to wit: Deed of Sale dated February 15. Points of law. 1979. the Spouses Morte and the Spouses Villarico. Deed of Sale dated February 14. the deed was not notarized.1avvphi1 Petitioners' argument that both documents were executed without valuable consideration deserves scant consideration.00.11 We.800. among others. EQUITABLE PCI BANK (formerly THE PHILIPPINE COMMERCIAL INTERNATIONAL BANK). i. Judge Abejo did not give his consent to such sale. was not raised in the trial court. NACHURA Associate Justice Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.410. Notably. As petitioner Renato was satisfied with such explanation." Finally. J. 2010 PAN PACIFIC SERVICE CONTRACTORS.
945. judgment is hereby rendered in favor of the plaintiffs and against the defendant as follows: 1. Pan Pacific alleged that the promissory note did not express the true agreement of the parties. Pan Pacific. Labor Indices of the Department of Labor and Employment.015. Pan Pacific¶s operational capital was becoming inadequate for the project. respondent was already estopped from disclaiming liability of at least P3. P50.28 of the "General Conditions for the Construction of PCIB Tower II Extension" (the escalation clause).903.07 to petitioners. On 26 May 1999. with respect to the principal amount due to petitioners. interests. TCGI Engineers recommended to respondent that the price adjustment should be pegged at P3. 2. 2.165.000. whether the RTC erred in deducting the amount of P126.13 Due to the extraordinary increases in the costs of labor and materials. which the CA correctly computed at P1. The project was completed in June 1992.07. the date when the complaint was filed. through Del Rosario.957. there is no longer any issue as to the principal amount of the unpaid balance on the price adjustment.52.000.730. respondent offered Pan Pacific a loan of P1.16 Respondent stood firm that it would not release any amount of the price adjustment to Pan Pacific but it would offset the price adjustment with Pan Pacific¶s outstanding balance of P3.17 and 70. Against its will and on the strength of respondent¶s promise that the price adjustment would be released soon. and damages against the respondent with the RTC of Makati City. representing the loan. Pan Pacific claimed a price adjustment of P5.10 In 1990.07. Petitioners claimed that the interest rate applicable should be the 18% bank lending rate. Aggrieved by the CA¶s Decision. Shipping Documents submitted by PPSCI. whether the RTC erred in declaring the promissory note void and in awarding moral and exemplary damages and attorney¶s fees in favor of petitioners and in dismissing its counterclaim. Ruling of the Court We grant the petition.07 in accordance with the escalation clause. petitioners partially appealed the RTC Decision to the CA. Pan Pacific maintained that the P1.516.858. Hence.516.000. there was really no consideration for the promissory note. On 12 April 1999. the dispositive portion of which reads: WHEREFORE. The only remaining issue is the interest rate applicable for respondent¶s delay in the payment of the balance of the price adjustment.97 from the balance of the adjusted price and in awarding only 12% annual interest on the amount due. was constrained to execute a promissory note in the amount of P1.957.20 On 26 July 2005. The CA removed the deduction of P126. with interest at the legal rate of 12% per annum starting 6 May 1994.9 Pursuant to the contract. On 5 April 1991.00 representing moral damages.15 Pan Pacific made several demands for payment on the price adjustment but respondent merely kept on promising to release the same. Therefore.111.8 million and P414. in awarding the unpaid balance of the price adjustment. Declaring the promissory note (Exhibit "B") null and void. Meanwhile. P100.957.67.00 representing exemplary damages. for lack of merit. Pan Pacific insisted that it would not have incurred the loan if respondent released the price adjustment on time. petitioners filed a complaint for declaration of nullity/annulment of the promissory note. the CA modified the RTC decision. To show goodwill. labor costs and prices of materials escalated.186.015. and With costs against the defendant. the PCIB Tower II extension building in Makati City.12 Pan Pacific contended that with this recommendation. 15 March 1991. Respondent¶s appointed project engineer.8 million as a requirement for the loan.942 as advance payments. In sum.903.01.12 materials under paragraphs 70. penalties and collection charges.8 million loan matured and respondent demanded payment plus interest and penalty.730. asked for a reduction in the price adjustment.19 On 23 May 1999. petitioners elevated the case before this Court. TCGI Engineers. until the amount is fully paid. in accordance with the escalation clause.00 as and for attorney¶s fees. with interest thereon at the legal rate of twelve (12%) percent per annum starting May 6. sum of money. the CA denied both motions.17 Pan Pacific refused the offsetting but agreed to receive the reduced amount of P3.97 because it represented the final payment on the basic contract price. . The P1. However.07 as recommended by the TCGI Engineers for the purpose of extrajudicial settlement. With respect to the petitioners.10 representing unpaid balance of the adjustment price. Pan Pacific also posted a surety bond.730. Price Index of the National Statistics Office. Respondent likewise filed a Motion for Reconsideration of the CA¶s decision. Branch 59. the RTC rendered its decision. Hence. the P1.14 Instead. SO ORDERED. TCGI Engineers based their evaluation of the price adjustment on the following factors: 1. 2. The Issue Petitioners submit this sole issue for our consideration: Whether the CA. instead of the bank loan rate of 18% compounded annually beginning September 1992. respondent withheld the payment of the price adjustment under the escalation clause despite Pan Pacific¶s repeated demands.8 million was released directly to laborers and suppliers and not a single centavo was given to Pan Pacific.11 On 28 April 1992. This Court notes that respondent did not appeal the decision of the CA. 1994. Pan Pacific commenced the mechanical works in the project site. Sub-clause 70. erred in fixing the interest rate at 12% instead of the 18% bank lending rate. petitioners filed a Motion for Partial Reconsideration seeking a reconsideration of the CA¶s Decision imposing the legal rate of 12%. In a Resolution dated 5 October 2005. PD 1594 and its Implementing Rules and Regulations as amended.548.8 million.18 On 6 May 1994. respondent appealed the entire RTC Decision for being contrary to law and evidence. Ordering the defendant to pay the plaintiffs the following amounts: a. Pan Pacific refused to pay the loan. Respondent accepted the project on 9 July 1992. In its decision dated 30 June 2005. the appeals of the parties with the CA are as follows: 1. P1. it is null and void from the beginning.226.8 million was to be considered as an advance payment on the price adjustment. less P1. Dismissing defendant¶s counterclaim.389.1 of the General Conditions of the Contract Documents. premises considered. With respect to respondent. the CA ordered respondent to pay P1. Pan Pacific reduced the price adjustment to P4. and P50. hence.
24 Specifically. hence. the Court maintains the legal rate of twelve percent per annum starting from the date of judicial demand. with a copy to the Owner.015. which respondent should have paid. and the promissory note charged an interest of 18%. other than under Sub-Clause 70.1. courts have no authority to alter a contract by construction or to make a new contract for the parties. Under Section 60.5 If any payment is delayed. In the event of the failure of the Owner to make payment within the times stated.6 of the Agreement and Section 60.10 of the General Conditions shows that the consent of the respondent is not needed for the imposition of interest at the current bank lending rate. respondent insists that under the provisions of 70. Hence.5 of the Agreement and Section 60. that part of the adjusted price demanded by plaintiffs was already disbursed as early as 28 February 1992 by defendant bank to their suppliers and laborers for their account. Upon respondent¶s failure to pay within the time provided (28 days).26 (Emphasis supplied) Petitioners thus submit that it is automatically entitled to the bank lending rate of interest from the time an amount is determined to be due thereto. and obligations.21 In this appeal. A review of Section 2.32 The escalation clause must be read in conjunction with Section 2. when the terms of an agreement have been reduced to writing. the literal meaning of its stipulations governs. or the introduction of any such State Statute. to wit: Anent the 18% interest rate compounded annually.10 of the General Conditions. regulation or bye-law (sic) which causes additional or reduced cost to the contractor.25 General Conditions 60. while it is true that the contract provides for an interest at the current bank lending rate in case of delay in payment by the Owner.10 Time for payment The amount due to the Contractor under any interim certificate issued by the Engineer pursuant to this Clause.29 We disagree.8. it is stipulated that any additional cost shall be determined by the Engineer and shall be added to the contract price after due consultation with the Owner.23 both of which provide for interest at the bank lending rate on any unpaid amount due under the contract. the respondent shall pay such liability to the petitioner within 28 days from issuance of the interim certificate. Although the contract provides for the period when the recommendation of the TCGI Engineers as to the price adjustment would be binding on the parties. which occurs upon any delay in payment. Petitioners further claim that there is nothing in the contract which requires the consent of the respondent to be given in order that petitioners can charge the bank lending rate. Unlike their request for price adjustment on the basic contract price. Thus. between the parties and their successors in interest. it is considered as containing all the terms agreed upon and there can be. respondent is estopped from contesting such fact. the CA already settled that petitioners consulted respondent on the imposition of the price adjustment. the Agreement22 and the General Conditions. . such additional or reduced cost shall.1 Increase or Decrease of Cost There shall be added to or deducted from the Contract Price such sums in respect of rise or fall in the cost of labor and/or materials or any other matters affecting the cost of the execution of the Works as may be determined. This is erroneous. Once the parties agree on the price adjustment after due consultation in compliance with the provisions of the escalation clause. It is settled that the agreement or the contract between the parties is the formal expression of the parties¶ rights. as one requiring a separate consent for the imposition of the stipulated interest. as petitioners have already proven their entitlement to the price adjustment. or. without prejudice to OWNER¶S recourse to any other remedy available under existing law. petitioners invoke Section 2. the CONTRACTOR may charge interest thereon at the current bank lending rates. after the date 28 days prior to the latest date of submission of tenders for the Contract there occur in the country in which the Works are being or are to be executed changes to any National or State Statute. Thus. and held respondent liable for the balance of P1. specifically mandates that no interest shall be due unless it has been expressly stipulated in writing. Respondent did not appeal from the decision of the CA. it was established.10 of the General Conditions which pertain to the time of payment. as petitioners never informed or sought the approval of respondent for such imposition. It is the best evidence of the intention of the parties.27 On the other hand. To unilaterally increase the interest rate of the adjusted price would be violative of the principle of mutuality of contracts.10 of the General Conditions as follows: Agreement 2. are not entitled to the imposition of 18% interest on the adjusted price. In these cases. be paid by the Owner to the Contractor within 28 days after such interim certificate has been delivered to the Owner. To provide a contrary interpretation. in the case of the Final Certificate referred to in Sub-Clause 60.31 In this case. However. the CA went beyond the intent of the parties by requiring respondent to give its consent to the imposition of interest before petitioners can hold respondent liable for interest at the current bank lending rate. subject to clause 47. herein respondent. Ordinance. When the terms of a contract are clear and leave no doubt as to the intention of the contracting parties. after due consultation with the Owner and Contractor.28 A perusal of the assailed decision shows that the CA made a distinction between the consent given by the owner of the project for the liability for the price adjustments.2 of the General Conditions. be determined by the Engineer and shall be added to or deducted from the Contract Price and the Engineer shall notify the Contractor accordingly. shall. and the consent for the imposition of the bank lending rate. within 56 days. the Owner shall pay to the Contractor interest at the rate based on banking loan rates prevailing at the time of the signing of the contract upon all sums unpaid from the date by which the same should have been paid. it necessarily follows that the bank lending interest rate of 18% shall be applied.07. Article 1956 of the Civil Code. 70. nonetheless. Decree. would render the intentions of the parties nugatory. It is only when the contract is vague and ambiguous that courts are permitted to resort to construction of its terms and determine the intention of the parties. no evidence of such terms other than the contents of the written agreement.30 The escalation clause of the contract provides: CHANGES IN COST AND LEGISLATION 70.13 The CA denied petitioners¶ claim for the application of the bank lending rate of 18% compounded annually reasoning. Decree or other Law or any regulation or byelaw (sic) of any local or other duly constituted authority. plaintiffs never informed nor sought the approval of defendant for the imposition of 18% interest on the adjusted price. Ordinance. Law. while the CA held that petitioners consulted respondent for price adjustment on the basic contract price. there being no prior consultation with the respondent regarding the additional cost to the basic contract price. petitioners allege that the contract between the parties consists of two parts. then it shall be liable to pay the stipulated interest. after such Final Certificate has been delivered to the Owner. The Court¶s duty is confined to the interpretation of the contract which the parties have made for themselves without regard to its wisdom or folly as the court cannot supply material stipulations or read into the contract words which it does not contain. petitioners. it naturally follows that respondent was never consulted or informed of the imposition of 18% interest rate compounded annually on the adjusted price. the said proviso does not authorize plaintiffs to unilaterally raise the interest rate without the other party¶s consent.516.2 Subsequent Legislation If. Thus.1 and 70. which refers to monetary interest. the agreement is in effect an amendment to the original contract.5 of the Agreement and Section 60. The provisions of this Sub-Clause are without prejudice to the Contractor¶s entitlement under Clause 69.1avvphi1 This is the logical interpretation of the agreement of the parties on the imposition of interest. however. and gives rise to the liability of respondent to pay the adjusted costs. or to any term of the Contract. duties. in the execution of the Contract. Therefore.
This is a consolidation of two separate petitions for review. Applicable Interest Rate Under Article 2209 of the Civil Code.. 74447. Respondents. judgment is hereby rendered decreeing the legal separation between petitioner and respondent. WINIFRED GOZON. Being the offending spouse. Furthermore. Absent any evidence of fraud. and WINIFRED GOZON.35 The written agreement entered into between petitioners and respondent provides for an interest at the current bank lending rate in case of delay in payment and the promissory note charged an interest of 18%. CV No. 5357. PUNO Chief Justice Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G. ABAD Associate Justice INTER-DIMENSIONAL REALTY. Finally.. ALFREDO GOZON. 169977 ROBERTO A..m. 12% per annum. the dispositive portion of which reads: WHEREFORE. No. ALFREDO GOZON.. the interest rate agreed upon is binding on them. INC. while the legal separation case was still pending. SO ORDERED. Alfredo failed to comply with these stipulations...34 It is only when the parties to a contract have failed to fix the rate of interest or when such amount is unwarranted that the Court will apply the 12% interest per annum on a loan or forbearance of money. Respondents. 5357. The conjugal partnership of gains of the spouses is hereby declared DISSOLVED and LIQUIDATED. despite repeated demands from Mario..07 with interest at the bank lending rate of 18% per annum starting 6 May 1994 until the amount is fully paid. (2) secure the approval of the Cavite RTC to exclude the property from the legal separation case. 2010 1992. INTER-DIMENSIONAL REALTY.. Petitioner. Gozon as her needs arises.1 assailing the 7 July 2005 Decision2 and the 30 September 2005 Resolution3 of the Court of Appeals in CA-G. then the damages payable will consist of payment of legal interest which is 6%. CARPIO Associate Justice WE CONCUR: ARTURO D.R. Article VIII of the Constitution. payment of additional interest at a rate equal to the regular monetary interest becomes due and payable.: I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. x . and (3) secure the removal of the notice of lis pendens pertaining to the said case and annotated on TCT No.14 Therefore. 5357. Metro Manila and is registered in the name of "Alfredo Gozon (Alfredo). Among the stipulations in the Agreement were that Alfredo would: (1) secure an Affidavit from Elvira that the property is Alfredo¶s exclusive property and to annotate the Agreement at the back of TCT No." On 23 December 1991. ELVIRA GOZON.015. although declared void by the lower courts because it did not express the real intention of the parties. the Cavite RTC rendered a decision6 in the legal separation case. respondent is deprived of his share in the net profits and the same is awarded to their child Winifred R.. the appropriate measure for damages in case of delay in discharging an obligation consisting of the payment of a sum of money is the payment of penalty interest at the rate agreed upon in the contract of the parties.-x G. SO ORDERED.000 sq. or in the case of loans or forbearances of money. In the absence of a stipulation of a particular rate of penalty interest. After paying the P5 million earnest money as partial payment of the purchase price. we GRANT the petition.R. said parties are required to mutually support their child Winifred R. Elvira filed a notice of lis pendens. This case involves a 30. undue influence or any vice of consent exercised by petitioners against the respondent. 5357. MARIO SIOCHI.. the Cavite RTC held that it is deemed conjugal property. Gozon whose custody is awarded to petitioner. Mario took possession of the property in September 1993. petitioners presented the promissory note36 prepared by respondent bank itself.R. Accordingly. No. I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. vs.. is substantial proof that the bank lending rate at the time of default was 18% per annum. CARPIO Associate Justice Chairperson CERTIFIC ATION Pursuant to Section 13. payment of monetary interest is allowed only if: (1) there was an express stipulation for the payment of interest.37 WHEREFORE.. the Agreement was annotated on TCT No.. On 31 August 1993. Alfredo and Mario Siochi (Mario) entered into an Agreement to Buy and Sell5 (Agreement) involving the property for the price of P18 million. On 2 January . However. Petitioner. RESOLUTION JOSE PORTUGAL PEREZ Associate Justice ATTEST ATION CARPIO.. married to Elvira Gozon (Elvira). CV No. Elvira filed with the Cavite City Regional Trial Court (Cavite RTC) a petition for legal separation against her husband Alfredo.4 The property is situated in Malabon. on 29 June 1994. The concurrence of the two conditions is required for the payment of monetary interest.33 We agree with petitioners¶ interpretation that in case of default..R.7 As regards the property. INC.. if no regular interest had been agreed upon by the contracting parties. On 6 September 1993. parcel of land (property) covered by TCT No.. and (2) the agreement for the payment of interest was reduced in writing. ANTONIO T.. On 22 August 1994. DEL CASTILLO Associate Justice REYNATO S. and the Division Chairperson¶s Attestation. This promissory note. We SET ASIDE the Decision and Resolution of the Court of Appeals in CA-G. 63966. Winifred MARIO SIOCHI. Meanwhile. the consent of the respondent is not needed in order to impose interest at the current bank lending rate. vs. petitioner Elvira Robles Gozon is entitled to live separately from respondent Alfredo Gozon without dissolution of their marriage bond. which was then annotated on TCT No.. Alfredo executed a Deed of Donation over the property in favor of their daughter.. and ELVIRA GOZON. To prove petitioners¶ entitlement to the 18% bank lending rate of interest..516. 169900 March 18. J. ANTONIO T.. 5357. BRION Associate Justice MARIANO C. GIL TABIJE. We ORDER respondent to pay petitioners P1..
10508 "in the name of Winifred Gozon" and M-10976 "in the name of InterDimensional Realty.00) as moral damages. Inc. with Preliminary Mandatory and Prohibitory Injunction and/or Temporary Restraining Order. thereafter.000. The Register of Deeds of Malabon. Plaintiff is hereby ordered to pay the defendant Elvira Robles-Gozon the price they had agreed upon for the sale of her one-half undivided share in the subject property.00) as exemplary damages. Winifred Gozon. 11. Metro Manila." and to restore Transfer Certificate of Title No. Alfredo. 5357 "in the name of Alfredo Gozon.15 Gozon (Winifred). Mario then filed with the Malabon Regional Trial Court (Malabon RTC) a complaint for Specific Performance and Damages.1 Two Million Pesos (P2.00) as moral damages. Winifred Gozon.11 Subsequently. Ordering defendant Elvira Robles-Gozon to sit with plaintiff to agree on the selling price of her undivided one-half share in the subject property. premises considered. without annotating the Agreement and the notice of lis pendens on TCT No. from entering and fencing the property. M-10976 to the Register of Deeds of Malabon. On 26 October 1994. Gil Tabije. 08. to execute and deliver a Deed of Absolute Sale over the same in favor of the plaintiff and to comply with all the requirements for registering such deed. 09. and 11. 5357 and issued TCT No. 12. Inter-Dimensional Realty. Metro Manila is hereby ordered to cancel Certificate of Title Nos. Defendants Alfredo Gozon.000.1 Eighteen Million Pesos (P18. 06. excluding the property and rights of defendant Elvira Robles-Gozon to the undivided one-half share in the conjugal property subject of this case.000.13 the dispositive portion of which reads: WHEREFORE. M-10508 and issued TCT No. married to Elvira Robles" with the Agreement to Buy and Sell dated 31 August 1993 fully annotated therein is hereby ordered. cancelled TCT No. the following: 11. in favor of defendant Inter-Dimensional Realty. within fifteen (15) days from the receipt of this DECISION. between plaintiff and defendant Alfredo Gozon is hereby approved. is hereby nullified and voided.000. sold the property to Inter-Dimensional Realty.00) as actual and compensatory damages.2 One Million Pesos (P1. jointly and severally the following: 12. Winifred Gozon and Gil Tabije are hereby ordered to pay the plaintiff.14 On appeal. 02. Inc. Thereafter. Defendants Alfredo Gozon and Winifred Gozon are hereby ordered to pay costs of suit.000. representing full payment for the property. 11.000.00) which constitute the amount the former received from the latter pursuant to their Deed of Absolute Sale dated 26 October 1994. through defendant Alfredo Gozon.6 The above awards are subject to set off of plaintiff¶s obligation in paragraph 9 hereof. executed by defendant Winifred Gozon. On the preliminary mandatory and prohibitory injunction: 1. 12. with legal interest therefrom.000.3 Five Hundred Thousand Pesos (P500.000. 10.2 One Million Pesos (P1.5 One Hundred Thousand Pesos (P100. the Court of Appeals affirmed the Malabon RTC¶s decision with modification.1 The same is hereby made permanent by: 1. 11. Enjoining defendants Alfredo Gozon. entered into by and between defendants Alfredo Gozon and Winifred Gozon is hereby nullified and voided. plaintiff is hereby ordered to pay defendant Alfredo Gozon the balance of Four Million Pesos (P4. The Register of Deeds of Malabon.000. judgment is hereby rendered as follows: 01. 12.1.00) as attorney¶s fees. M-1097612 to IDRI. to respect plaintiff¶s possession of the property. The dispositive portion of the Court of Appeals¶ Decision dated 7 July 2005 reads: . is hereby ordered to deliver its Transfer Certificate of Title No.4 One Hundred Thousand Pesos (P100.00) as exemplary damages.000. Inc. jointly and severally.2.000. 1. 04.000. 11.00) as attorney¶s fees.4 Four Hundred Thousand Pesos (P400. On 3 April 2001. Enjoining defendant InterDimensional Realty. M10508. the Malabon RTC rendered a decision. 1.3 Five Hundred Thousand Pesos (P500. and 12. The Deed of Donation dated 22 August 1994. SO ORDERED.000. The Agreement to Buy and Sell dated 31 August 1993.3.10 IDRI paid Alfredo P18 million. (IDRI) for P18 million. Defendant Alfredo Gozon is hereby ordered to deliver a Deed of Absolute Sale in favor of plaintiff over his one-half undivided share in the subject property and to comply with all the requirements for registering such deed. the Register of Deeds of Malabon cancelled TCT No. their agents. Annulment of Donation and Sale. 11. Inc.000. Inc.1 Enjoining defendants Alfredo Gozon. Inc. 13.. by virtue of a Special Power of Attorney9 executed in his favor by Winifred.1. Defendants Alfredo Gozon and Winifred Gozon are hereby ordered to pay InterDimensional Realty. The Deed of Absolute Sale dated 26 October 1994. Inc. Defendant Inter-Dimensional Realty. representatives and all persons acting in their behalf from any attempt of commission or continuance of their wrongful acts of further alienating or disposing of the subject property. Inc.1. 05. 07. and Gil Tabije. M105088 in the name of Winifred. Inter-Dimensional Realty.00) as litigation expenses.000.00) in his onehalf undivided share in the property to be set off by the award of damages in plaintiff¶s favor. 03.
Defendant Alfredo Gozon shall return/deliver to plaintiff-appellant Siochi the amount of P5 Million which the latter paid as earnest money in consideration for the sale of the subject land. (3) The custody of the minor children shall be awarded to the innocent spouse. which must be availed of within five years from the date of the contract implementing such decision. is deprived of his share in the net profits and the same is awarded to Winifred. 63. shall be dissolved and liquidated. Since the disposition of the property occurred after the effectivity of the Family Code.16 The absence of the consent of one of the spouse renders the entire sale void. his or her share of the net profits of the community property or conjugal partnership property shall . 2001 of the RTC. Defendants Alfredo Gozon and Winifred Gozon are hereby ordered to pay defendantappellant IDRI jointly and severally the following: a) P100. In the absence of such authority or consent. Mario alleges that the Agreement should be treated as a continuing offer which may be perfected by the acceptance of the other spouse before the offer is withdrawn. Article 124 of the Family Code provides: Art.00 as moral damages. 4. is hereby given the option whether or not to dispose of her undivided share in the subject land. and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors. but if either spouse contracted said marriage in bad faith. that other spouse¶s written consent to the sale is still required by law for its validity. defendant Winifred Gozon.17 Even if the other spouse actively participated in negotiating for the sale of the property. In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties. SO ORDERED.00 as moral damages. being the offending spouse. However.000.00 as attorney¶s fees. The rest of the decision not inconsistent with this ruling stands. with whom Alfredo was separated in fact. Branch 74.000.00 as litigation expenses. the fact that the property was subsequently donated by Alfredo to Winifred and then sold to IDRI clearly indicates that the offer was already withdrawn. the applicable law is the Family Code. b) Defendant Alfredo Gozon¶s onehalf (½) undivided share has been forfeited in favor of his daughter. the assailed decision dated April 3. b) P100. Cavite. the husband¶s decision shall prevail. which shall be forfeited in accordance with the provisions of Article 43(2).16 WHEREFORE. whom the undivided one-half share of defendant Alfredo Gozon was awarded. (Emphasis supplied) In this case. As regards Mario¶s contention that the Agreement is a continuing offer which may be perfected by Elvira¶s acceptance before the offer is withdrawn. On the other hand. M-10976 over the property. The sale of the subject land by defendant Alfredo Gozon to plaintiff-appellant Siochi is declared null and void for the following reasons: a) The conveyance was done without the consent of defendantappellee Elvira Gozon. the other spouse may assume sole powers of administration. The termination of the subsequent marriage referred to in the preceding Article shall produce the following effects: xxx (2) The absolute community of property or the conjugal partnership. The decree of legal separation shall have the following effects: (1) The spouses shall be entitled to live separately from each other. Mario prays for the Court to direct Alfredo and Elvira to execute a Deed of Absolute Sale over the property upon his payment of P9 million to Elvira. the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person. b) P100. including the portion of the conjugal property pertaining to the spouse who contracted the sale. 43. Malabon is hereby AFFIRMED with MODIFICATIONS.000. and The offending spouse shall be disqualified from inheriting from the innocent spouse by intestate succession.18 The Agreement entered into by Alfredo and Mario was without the written consent of Elvira. However.00 as exemplary damages.000. based on the ruling of the Cavite RTC in the legal separation case. Art. Alfredo still cannot sell the property without the written consent of Elvira or the authority of the court. (2) The absolute community or the conjugal partnership shall be dissolved and liquidated but the offending spouse shall have no right to any share of the net profits earned by the absolute community or the conjugal partnership.000. as the case may be. the following: a) P100. subject to the recourse to the court by the wife for a proper remedy. Defendants Alfredo Gozon. the Agreement is entirely void. However. we disagree with the finding of the Court of Appeals that the one-half undivided share of Alfredo in the property was already forfeited in favor of his daughter Winifred. Winifred Gozon and Gil Tabije are hereby ordered to pay plaintiff-appellant Siochi jointly and severally. the disposition or encumbrance shall be void. This case involves the conjugal property of Alfredo and Elvira. d) P20. These powers do not include the powers of disposition or encumbrance which must have the authority of the court or the written consent of the other spouse. Branch 16. We find the petitions without merit. IDRI alleges that it is a buyer in good faith and for value. and c) P50. the sale is void. 124. provisions in favor of the offending spouse made in the will of the innocent spouse shall be revoked by operation of law. but the marriage bonds shall not be severed. Alfredo was the sole administrator of the property because Elvira. by virtue of the decision in the legal separation case rendered by the RTC.00 as attorney¶s fees. Thus. In his petition. Moreover. The Cavite RTC ruling finds support in the following provisions of the Family Code: Art.00 as exemplary damages. The Court of Appeals misconstrued the ruling of the Cavite RTC that Alfredo. IDRI prays that the Court should uphold the validity of IDRI¶s TCT No. 3. Thus. subject to the provisions of Article 213 of this Code. as sole administrator of the property. and e) The awards of actual and compensatory damages are hereby ordered deleted for lack of basis. 2. Without such consent or authority. c) P50.000.000. In case of disagreement. Since Elvira¶s conduct signified her acquiescence to the sale. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly.15 Only Mario and IDRI appealed the decision of the Court of Appeals. was unable to participate in the administration of the conjugal property. premises considered. as follows: 1. Defendant Winifred Gozon.
Besides. Mesa. and (2) We ORDER Alfredo Gozon and Winifred Gozon to pay Inter-Dimensional Realty. Article 102(4) of the Family Code provides that "[f]or purposes of computing the net profits subject to forfeiture in accordance with Article 43. Under Section 77 of Presidential Decree No.. No. the said profits shall be the increase in value between the market value of the community property at the time of the celebration of the marriage and the market value at the time of its dissolution. CV No. Sta. Under Article 12520 of the Family Code. Inc. We AFFIRM the 7 July 2005 Decision of the Court of Appeals in CAG. ANTONIO T.. non-sectarian. created under Commonwealth Act No.R. ANTONIO T.. GOLDEN HORIZON REALTY CORPORATION.1avvphi1 Nevertheless.R. Petitioner. 183612 March 15. CARPIO Associate Justice Chairperson CERTIFIC ATION Pursuant to Section 13. had IDRI been more prudent before buying the property. it would have known that the cancellation of the notice of lis pendens was highly irregular. with an area of 2.80 square meters.17 be forfeited in favor of the common children or.. Respondent.. (2). Article VIII of the Constitution. BRION Associate Justice MARIANO C.3 On May 4..19 the notice of lis pendens may be cancelled (a) upon order of the court. DEL CASTILLO Associate Justice JOSE PORTUGAL PEREZ Associate Justice ATTEST ATION I attest that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. we find it proper to reinstate the order of the Malabon RTC for the reimbursement of the P18 million paid by IDRI for the property. 110301 and 145470. 668. J. IDRI had actual knowledge of facts and circumstances which should impel a reasonably cautious person to make further inquiries about the vendor¶s title to the property. Petitioner. 184260 ROBERTO A.. we agree with the Court of Appeals in holding that IDRI is not a buyer in good faith. with legal interest computed from the finality of this Decision. the price to be negotiated and POLYTECHNIC UNIVERSITY OF THE PHILIPPINES..000) which was the amount paid by Inter-Dimensional Realty.. vs. file a verified petition for its cancellation.: The above-titled consolidated petitions filed under Rule 45 of the 1997 Rules of Civil Procedure. for the property. ABAD Associate Justice NATIONAL DEVELOPMENT COMPANY. Thus.R.. SO ORDERED. 182. 2004 of the Regional Trial Court (RTC) of Makati City.. In the early sixties.407 square meters for a period of ten (10) years. There was no court order for the cancellation of the lis pendens. GHRC as lessee was granted the "option to purchase the area leased. It is only Alfredo¶s share in the net profits which is forfeited in favor of Winifred. or (b) by the Register of Deeds upon verified petition of the party who caused the registration of the lis pendens. Act No. 92885. 1529. With regard to IDRI.. seek to reverse the Decision1 dated June 25. REYNATO S.. CARPIO Associate Justice WE CONCUR: ARTURO D. vs. in default of children." Clearly.. Neither did Elvira. if IDRI made further inquiries. The estate was popularly known as the NDC Compound and covered by Transfer Certificate of Title Nos.-x G.. it would have discovered that Alfredo¶s donation of the property to Winifred was without the consent of Elvira. non-profit educational institution created in 1978 by virtue of P. 84399 which affirmed the Decision2 dated November 25. among the effects of the decree of legal separation is that the conjugal partnership is dissolved and liquidated and the offending spouse would have no right to any share of the net profits earned by the conjugal partnership.000.D. 1977.. the children of the guilty spouse by a previous marriage or. x .. jointly and severally the Eighteen Million Pesos (P18. I certify that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division.owned and controlled corporation. As found by the RTC Malabon and the Court of Appeals.) No. 1978. The representative of IDRI testified that he knew about the existence of the notice of lis pendens on TCT No. as amended. if there are none. No. JR.. as amended by Com. Petitioner Polytechnic University of the Philippines (PUP) is a public. CV No. NDC had in its disposal a ten (10)hectare property located along Pureza St. Respondent. NDC entered into a Contract of Lease (C-33-77) with Golden Horizon Realty Corporation (GHRC) over a portion of the property.. In this case. 74447 with the following MODIFICATIONS: (1) We DELETE the portions regarding the forfeiture of Alfredo Gozon¶s one-half undivided share in favor of Winifred Gozon and the grant of option to Winifred Gozon whether or not to dispose of her undivided share in the property. the party who caused the registration of the lis pendens. Branch 144 in Civil Case No. a conjugal property cannot be donated by one spouse without the consent of the other spouse. the lis pendens was cancelled by the Register of Deeds upon the request of Alfredo. 1341. WHEREFORE. On September 7.R. also renewable upon mutual consent after the expiration of the ten (10)-year lease period. 2008 and Resolution dated August 22.. 5357 and the legal separation case filed before the Cavite RTC. and the Division Chairperson¶s Attestation.222. which was inadvertently omitted in the dispositive portion of the Court of Appeals¶ decision. (Emphasis supplied) Thus. Manila. 882238. DECISION VILLARAMA. 311 and Presidential Decree (P. No. the innocent spouse. 2008 of the Court of Appeals (CA) in CA-G. No.. a second Contract of Lease (C-12-78) was executed between NDC and GHRC covering 3.D. . Clearly.. Furthermore. IDRI could not feign ignorance of the Cavite RTC decision declaring the property as conjugal. (2) and 63. IDRI was not a buyer in good faith. The undisputed facts are as follows: Petitioner National Development Company (NDC) is a government. No. what is forfeited in favor of Winifred is not Alfredo¶s share in the conjugal partnership property but merely in the net profits of the conjugal partnership property. we DENY the petitions. renewable for another ten (10) years with mutual consent of the parties. PUNO Chief Justice Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G. In addition.. 2010 GOLDEN HORIZON REALTY CORPORATION. Inc.
It sustained the RTC¶s finding that the two (2) lease contracts were interrelated because each formed part of GHRC¶s industrial complex.5 On June 13. representatives. registered surveyor at the expense of private respondent FIRESTONE CERAMICS. and to enjoin the afore-mentioned defendants from prosecuting Civil Case No. SO ORDERED. After the completion of the industrial complex project. Accordingly. for which GHRC spent P5 million. GHRC filed in the RTC a complaint for specific performance. 2001. the plaintiff shall have six (6) months from receipt of the approved survey within which to exercise its right to purchase the leased property at P554. Inasmuch as the first contract of lease fixed the area of the leased premises at 2.60 hectares. GHRC wrote a letter to NDC indicating its exercise of the option to renew the lease for another ten (10) years. 214 is a nullity.74 per square meter. Honorable Executive Secretary Oscar Orbos and Judge Ernesto A.90118 hectares while the second contract placed it at 2.. PUP filed an ejectment case (Civil Case No.20 Both the RTC and the CA applied this Court¶s ruling in Polytechnic University of the Philippines v. The CA further agreed with the RTC¶s finding that there was an implied renewal of the lease upon the failure of NDC to act on GHRC¶s repeated requests for renewal of the lease contract. Firestone Ceramics. Court of Appeals) and 143590 (National Development Corporation v. Inc. C-33-77 and C-12-78 measuring 2. INC. 143513 (Polytechnic University of the Philippines v. A temporary restraining order was subsequently issued by the RTC enjoining PUP from prosecuting and Judge Francisco Brillantes. GHRC filed an Amended and/or Supplemental Complaint to include as additional defendants PUP.12 In its Second Amended and/or Supplemental Complaint. 1988. In the alternative. 134416 for ejectment. With costs against defendants NDC and PUP. 134416) before the Metropolitan Trial Court (MeTC) of Manila on January 14. GHRC contended that its existing right must still be respected by allowing it to purchase the leased premises.R..31-hectare property would automatically result in the cancellation of NDC¶s total obligation in favor of the National Government in the amount of P57.500. private respondent FIRESTONE CERAMICS. 1989.8 On February 20. and continuing to accept monthly rental payments from GHRC which was allowed to continue in possession of the leased premises. No. We thus decreed: WHEREFORE. to accommodate its growing student population. 2008. GHRC argued that Memorandum Order No. let a ground survey of the leased premises be immediately conducted by a duly licensed. claiming that as a purchaser pendente lite of a property subject of litigation it is entitled to intervene in the proceedings. industrialists and other businessmen thereby generating hundreds of jobs.64. the RTC issued a writ of preliminary injunction enjoining NDC and its attorneys. apart from being an infringement of the Constitutional prohibition against impairment of obligation of contracts. The RTC granted the said motion and directed PUP to file its Answer-in-Intervention.000.18 determined at the time the option to purchase is exercised.00 per square meter. SO ORDERED. Thereafter.18 NDC and PUP separately appealed the decision to the CA. PUP and another lessee of NDC. The case against defendant Executive Secretary is dismissed and this decision shall bind defendant Metropolitan Trial Court. the defendant PUP. Aquino issued Memorandum Order No. considering that GHRC is similarly situated as a lessee of NDC whose right of first refusal under the lease contract was violated by the sale of the property to PUP without NDC having first offered to sell the same to GHRC despite the latter¶s request for the renewal of the lease and/or to purchase the leased premises prior to the expiration of the second lease contract. shall have six (6) months from receipt of the approved survey within which to exercise its right to purchase the leased property at P1. the RTC rendered its decision upholding the right of first refusal granted to GHRC under its lease contract with NDC and ordering PUP to reconvey the said portion of the property in favor of GHRC. should the trial court adjudge the memorandum order as valid.17 On November 25. 1989.).13 Pre-trial was set but was suspended upon agreement of the parties to await the final resolution of a similar case involving NDC. 1989. PUP filed a motion to intervene as party defendant. INC. this Court rendered a decision in G.201. On October 21. Inc. in whose name the property is titled.193.407 and 3. 2004. The memorandum order cited the serious need of PUP.19 By Decision of June 25. and other improvements which shall automatically belong to the NDC as lessor upon the expiration of the lease period. the CA affirmed in toto the decision of the RTC. Sometime after September 1988.222. The CA also rejected the argument of NDC and PUP that even assuming that GHRC had the right of first refusal. INC. and the willingness of PUP to buy and of NDC to sell its property. 1988. GHRC sent another letter on August 12.407 square meters. GHRC was obliged to construct at its own expense buildings of strong material at no less than the stipulated cost. it was leased to various manufacturers.8 square meters respectively. The dispositive portion reads: WHEREFORE. premises considered.6 NDC still did not reply but continued to accept rental payments from GHRC and allowed the latter to remain in possession of the property. The defendant NDC is hereby further ordered to pay the plaintiff attorney¶s fees in the amount of P100. 1988. from proceeding with the ejectment case.R. Firestone Ceramics. considered the "Poor Man¶s University."4 Under the lease agreements. Branch 20 of Manila.11 Due to this development. (Firestone).. by a duly licensed and registered surveyor at the expense of the plaintiff within two months from receipt of this Decision and thereafter. and not to the first lease contract.15 which declared that the sale to PUP by NDC of the portion leased by Firestone pursuant to Memorandum Order No. ordering the transfer of the whole NDC Compound to the National Government. C12-78 covering 3. insisting that the latter¶s lease contract had already expired.14 On November 14. agents and any other persons assisting it from proceeding with the sale and disposition of the leased premises. As no response was received from NDC. damages with preliminary injunction and temporary restraining order. 143513 and G. GHRC introduced permanent improvements and structures as required by the terms of the contract. Court of Appeals (supra). then President Corazon C.7 In the meantime. is hereby ordered to reconvey the aforesaid property to the plaintiff in the exercise of its right of its option to buy or first refusal upon payment of the purchase price thereof. C-33-77 covering 2.9 On February 23.80 square meters. Nos." to expand its campus.00. for being violative of the writ of injunction issued by the trial court.R. 214 violated the right of first refusal granted to Firestone under its third lease contract with NDC.222. within two (2) months from the finality of the judgment in this case. 1991. 214 dated January 6. an encroachment on legislative functions and a bill of attainder. the petitions in G. The order of conveyance of the 10. such that . 143590 are DENIED. Its demand letter unheeded by GHRC. which in turn would convey the said property in favor of PUP at acquisition cost.16 The RTC resumed the proceedings and when mediation and pre-trial failed to settle the case amicably. reiterating its desire to renew the contract and also requesting for priority to negotiate for its purchase should NDC opt to sell the leased premises. which had already expired. GHRC discovered that NDC had decided to secretly dispose the property to a third party. which adjoins the NDC Compound. before the expiration of the ten (10)year period under the second lease contract. No.10 PUP also demanded that GHRC vacate the premises. And finally. in the exercise of its right of first refusal upon payment of the purchase price thereof. judgment is hereby rendered in favor of the plaintiff and against the defendants ordering the plaintiff to cause immediate ground survey of the premises subject of the leased contract under Lease Contract No. said right pertained only to the second lease contract. trial on the merits ensued. then pending before the RTC of Pasay City. both verbal and written. Jr. Reyes of the Manila MeTC. and petitioner Polytechnic University of the Philippines is ordered to reconvey the property to FIRESTONE CERAMICS.
in favor of petitioner PUP. That respondent was granted a right of first refusal under the second lease contract appears not to have been disputed by petitioners. so to speak.24 Petitioner NDC further faults the CA in sustaining the RTC¶s decision which erroneously granted respondent the option to purchase the leased premises at the rate of P554. to enter into such contract with the one to whom the option was granted. 1988. merely returning to the petitioner/transferor the cost of acquisition thereof. Henson dated 15 July 1988 addressed to Mr. Nos. which is the mere acquisition cost thereof. Lagonera. when the leased premises were conveyed to PUP. It was intended merely as a transfer of one (1) user of the National Government to another. Director and Special Assistant to Executive Secretary Catalino Macaraeg. one hundred and fifty (150) days from the signing of the contract (May 4. The provision entitling the lessee the option to purchase the leased premises is not deemed incorporated in the impliedly renewed contract because it is alien to the possession of the lessee. paragraph (b) of C-12-78.23 On its part. the same rate for which NDC sold the property to petitioner PUP and/or the National Government. usually inserted in lease contracts to give the lessee the first crack to buy the property in case the lessor decides to sell the same. therefore. that unlike in said cases. We rule in the affirmative. the impliedly renewed lease was only month-tomonth and not ten (10) years since the rentals are being paid on a monthly basis. 214. respondent adduced in evidence a letter of Antonio A.R. The CA should have applied the ruling in Dizon v.that is. Magsaysay22 that the lessee cannot any more exercise its option to purchase after the lapse of the one (1)-year period of the lease contract. while the object might be made determinate. if the latter should decide to use the option.271avvphi1 Upon the other hand. I. In no case should the rentals be increased by more than 100% of the original amount fixed." As regards the continued receipt of rentals by NDC and possession by the respondent of the leased premises. respondent¶s right of option to purchase the leased premises was not violated despite the impliedly renewed contract of lease with NDC. long after the expiration of C-33-77 and C-12-78 in September 1988. 214 under the premise that it shall. Rhoel Mabazza. 1988 without first offering to sell it to respondent and even when respondent communicated its desire to exercise the option to purchase granted to it under the lease contract. respondent can no longer exercise the option to purchase the leased premises when the same were conveyed to PUP pursuant to Memorandum Order No. a right of first refusal is a contractual grant. the exercise of the right of first refusal would be dependent not only on the owner¶s eventual intention to enter into a binding juridical relation with another but also on terms. not to enter into the principal contract with any other person during the period designated. be a sale and/or purchase from one (1) government agency to another.21 Petitioner PUP further contends that while it is conceded that there was an implied new lease between respondent and petitioner NDC after the expiration of the lease contracts. within that period. Only after the lessee has failed to exercise his right of first priority could the lessor sell the property to other buyers under the same terms and conditions offered to the lessee. 1978). Respondent cannot favorably invoke the decision in G. The second lease contract contained the following provision: III. cannot be extended to respondent as a private entity. nor was it a price a "willing seller" would demand and accept for parting with his real property. PUP in this case. or which gives to the owner of the property the right to sell or demand a sale. Jake C. 143513 and 143590 (Polytechnic University of the Philippines v. As testified to by their witnesses Leticia Cabantog and Atty. when respondent was allowed to continue staying in the leased premises under an implied renewal of the lease and without the right of refusal carried over to such month-tomonth lease. but of the first priority to buy the property in the event the owner sells the same. Aquino transferring the whole NDC Compound. with the National Government. 1988. in effect. not of the sale of a property. 214. or under. Magsaysay. Consequently. the same did not include the right of first refusal originally granted to respondent. Thus. What petitioners assail is the CA¶s erroneous conclusion that such right of refusal subsisted even after the expiration of the original lease period. respondent did not any more have any right of first refusal. that are yet to be firmed up. It must be noted that such consideration or rate was imposed by Memorandum Order No. Such benefit. 1989. Petitioner PUP argues that respondent¶s right to exercise the option to purchase had expired with the termination of the original contract of lease and was not carried over to the subsequent implied new lease between respondent and petitioner NDC. Petitioners thus maintain that no right of refusal was violated by the sale of the property in favor of PUP pursuant to Memorandum Order No. However. as held in Dizon v. as in this case. as provided in Art.26 It binds the party.19 business operations would be rendered useless and inoperative if the first contract were to be detached from the other. Lessee shall also have the option to purchase the area leased. Respondent thus timely exercised its option to purchase on August 12. the price to be negotiated and determined at the time the option to purchase is exercised. or on October 1.30 Records showed that during the hearing on the application for a writ of preliminary injunction. or under terms and conditions more favorable to the lessor. the lessor has the legal duty to the lessee not to sell the leased property to anyone at any price until after the lessor has made an offer to sell the property to the lessee and the lessee has failed to accept it. as similarly held in the afore-mentioned case of Polytechnic University of the Philippines v. It is a condition offered or contract by which the owner stipulates with another that the latter shall have the right to buy the property at a fixed price within a certain time. It does not in any way reflect the true and fair market value of the property. Petitioners¶ position is untenable. The provisions of C-33-77 and C-1278 clearly state that the lessee is granted the option "to renew for another ten (10) years with the mutual consent of both parties. it is obviously a mere right of refusal. [emphasis supplied] An option is a contract by which the owner of the property agrees with another person that the latter shall have the right to buy the former¶s property at a fixed price within a certain time. among others. there was no agreement or document to the effect that respondent¶s request for extension or renewal of the subject contracts of lease for another ten (10) years was approved by NDC. With the implicit renewal of the lease on a monthly basis. This letter was offered in evidence by respondent to prove the existence of documents as of that date and even prior to the expiration of the second lease contract or the lapse of the ten (10)year period counted from the effectivity of the rental payment -. Court of Appeals applies in this case involving another lessee of NDC who claimed that the option to purchase the portion leased to it was similarly violated by the sale of the NDC Compound in favor of PUP pursuant to Memorandum Order No. considering that NDC had been negotiating through the National Government for the sale of the property in favor of PUP as early as July 15. in a right of first refusal. with option to renew for another ten (10) years with the mutual consent of both parties. Hence. who has given the option. with the beneficiary. it is clear that NDC violated respondent¶s right of first . and. including the premises leased by respondent.29 As the option to purchase clause in the second lease contract has no definite period within which the leased premises will be offered for sale to respondent lessee and the price is made subject to negotiation and determined only at the time the option to buy is exercised. reviewing a proposed memorandum order submitted to President Corazon C. Court of Appeals) for the simple reason.25 The issue to be resolved is whether or not our ruling in Polytechnic University of the Philippines v.28 As distinguished from an option contract. the other terms of the original contract of lease which are revived in the implied new lease under Article 1670 of the Civil Code are only those terms which are germane to the lessee¶s right of continued enjoyment of the property leased. which incidentally appears only in the second lease contract and not in the first lease contract. or in compliance with certain terms and conditions. the contracts of lease of respondent with NDC were not mutually extended or renewed for another ten (10) years. Court of Appeals. When a lease contract contains a right of first refusal. including the price. 214 dated January 6. as appearing on its accounting books. It is mutually agreed by the parties that this Contract of Lease shall be in full force and effect for a period of ten (10) years counted from the effectivity of the payment of rental as provided under sub-paragraph (b) of Article I.74 per square meter. petitioner NDC assails the CA in holding that the contracts of lease were impliedly renewed for another ten (10)-year period. as the latter does not share the same pocket.
We then determined the proper rate at which the leased portion should be reconveyed to respondent by PUP. The consideration for the right is built into the reciprocal obligations of the parties. we also request for priority to negotiate for its purchase at terms and/or conditions mutually acceptable.37 [emphasis supplied] As we further ruled in the afore-cited case. 1978 contract embodied the option to renew the lease for another ten (10) years upon mutual consent and giving respondent the option to purchase the leased premises for a price to be negotiated and determined at the time such option was exercised by respondent. 214 itself declared that the transfer is "subject to such liens/leases existing [on the subject property].. C-33-77 & C-12-78 Dear Sir: This is further to our earlier letter dated June 13. Court of Appeals pointing out that the case of lessee Firestone Ceramics. Such right was expressly stated by NDC and FIRESTONE in par. in an effort to show that the leased premises can be used separately by respondent. 214 on January 6.. it is not correct for petitioners to insist that there was no consideration paid by FIRESTONE to entitle it to the exercise of the right. 1989 but the commencement of such negotiations as early as July 1988 when respondent¶s right of first refusal was still subsisting and the lease contracts still in force. In the instant case. 1989 which is prior to the issuance of Memorandum Order No. is different because the lease contract therein had not yet expired while in this case respondent¶s lease contracts have already expired and never renewed. we wish to inform you that since the start of our lease. the lessee.60 hectares to FIRESTONE prior to the sale in favor of PUP. Mayfair Theater. It is to be noted that Memorandum Order No. 1988. was interrelated to and inseparable from their first contract denominated as C-30-65 executed on 24 August 1965 and their second contract denominated as C-26-68 executed on 8 January 1969. As already mentioned. petitioner PUP. Puyat Avenue Makati.20 refusal. inasmuch as the stipulation is part and parcel of the contract of lease making the consideration for the lease the same as that for the option. to . It is in this context that we are requesting for the extension of the lease contract to prevent serious economic disruption and dislocation of the business concerns. The date of the expiration of the lease contract in said case is December 31. ANTONIO HENSON General Manager NATIONAL DEVELOPMENT COMPANY 377 Se(n). The lessee has a right that the lessor¶s first offer shall be in his favor. it was then implicit for NDC to have first offered the leased premises of 2. the right of first refusal is an integral and indivisible part of the contract of lease and is inseparable from the whole contract. as found by the courts a quo. or any extension thereof." Thus: . and that the two (2) lease contracts are distinct from each other. covering an area of 3. 1988 reiterating the request for renewing the lease for another ten (10) years and also the exercise of the option to purchase under the lease contract. and following an earlier ruling in Equatorial Realty Development. Inc.222. Under the premises. employ not less than 300 employees and contribute even foreign earnings."32 Perusal of the letter dated August 12. TIU HAN TENG President33 As to petitioners¶ argument that respondent¶s right of first refusal can be invoked only with respect to the second lease contract which expressly provided for the option to purchase by the lessee. an opportunity to recoup our investments and obtain a fair return thereof. Alejandro E. The structures built on the leased premises. is interrelated to and inseparable from the first contract over 2. who supervised the construction of the structures on the leased premises. Metro Manila REF: Contract of Lease Nos. which shall have the right of first option to purchase the leased premises subject to mutual agreement of both parties.36 In fine. Thus - Should the LESSOR desire to sell the leased premises during the term of this Agreement. Engr. respondent¶s lease contracts had already expired (September 1988) at the time said memorandum order was issued. 1988 becomes irrelevant since at the time of the negotiations of the sale to a third party. To prove that petitioner NDC had considered the leased premises as a single unit. nor to the subsequent letter of August 12. the reckoning point of the offer of sale to a third party was not the issuance of Memorandum Order No. As a backgrounder. and not in the first lease contract which contained no such clause. 214 on January 6. however. Petitioners submitted a sketch plan and pictures taken of the driveways. in view of the total amount of its investments in the property. Tinio. and a request at its best. fabricators and other businesses. Petitioner NDC in its memorandum contended that the CA erred in applying the ruling in Polytechnic University of the Philippines v. we have improved on the property by constructing bodega-type buildings which presently house all legitimate trading and manufacturing concerns. the matter of the right of refusal not having been carried over to the impliedly renewed month-to-month lease after the expiration of the second lease contract on October 21.38 the execution of such right consists in directing the grantor to comply with his obligation according to the terms at which he should have offered the property in favor of the grantee and at that price when the offer should have been made. thus: August 12. the contractual grant of a right of first refusal is enforceable.407 square meters. Consistent with their agreement. Your favorable consideration on our request will be very much appreciated. 1988 informing it of respondent¶s exercise of the option to renew and requesting to discuss further the matter with NDC.we now proceed to determine whether FIRESTONE should be allowed to exercise its right of first refusal over the property. as to entitle the respondent to exercise its option to purchase until October 1988 inasmuch as the May 4. Only if FIRESTONE failed to exercise its right of first priority could NDC lawfully sell the property to petitioner PUP. The option in this case was incorporated in the contracts of lease by NDC for the benefit of FIRESTONE which. Should the National Development Company opt to sell the property covered by said leases. Petitioner NDC did not bother to respond to respondent¶s letter of June 13.35 Respondent further presented the blueprint plan prepared by its witness. Petitioner NDC had dismissed these letters as "mere informative in nature. Thus. which are adjacent to each other. as well as provide ourselves. respondent¶s right of first refusal was still subsisting. It is a settled principle in civil law that when a lease contract contains a right of first refusal. very truly yours. Inc. 1988 formally advising your goodselves of our intention to exercise our option for another ten (10) years.34 Such was a desperate attempt to downplay the commercial purpose of respondent¶s substantial improvements which greatly contributed to the increased value of the leased premises. respondent submitted evidence showing that NDC issued only one (1) receipt for the rental payments for the two portions. Court of Appeals in the case of respondent who was similarly prejudiced by petitioner NDC¶s sale of the property to PUP. These business are substantial taxpayers. form part of an integrated system of a commercial complex leased out to manufacturers. 1988 HON.80 square meters. we sustain the RTC and CA in finding that the second contract. XV of their third contract denominated as A-10-78 executed on 22 December 1978 which. the lessor is under a legal duty to the lessee not to sell to anybody at any price until after he has made an offer to sell to the latter at a certain price and the lessee has failed to accept it. In contrast. v. 1989.. the CA was correct in declaring that there exists no justifiable reason not to apply the same rationale in Polytechnic University of the Philippines v. wanted to be assured that it would be given the first opportunity to buy the property at a price for which it would be offered. the LESSOR shall first give to the LESSEE.31 Such contention does not hold water. Gil J. Inc. belies such claim of petitioner NDC that it was merely informative. to show the building concept as a one-stop industrial site and integrated commercial complex.
VILLARAMA. representing the total consideration of the sales. Only after the lessee-grantee fails to exercise its right under the same terms and within the period contemplated can the owner validly offer to sell the property to a third person. The Decision dated November 25. CV No. 84399. the checks were honored by BPI. rendering Suarez¶s available funds sufficient. the drawee bank for the sum of P19. C-33-77 and C-12-78 is hereby increased to P1. Article VIII of the 1987 Constitution. WHEREFORE. Suarez sent a letter to BPI demanding an apology and the reversal of the charges debited from his BANK OF THE PHILIPPINE ISLANDS. On 19 June 1997.41 We have further stressed that not even the avowed public welfare or the constitutional priority accorded to education. Branch 144 in Civil Case No.100. as affirmed by the Court of Appeals in its Decision dated June 25.21 whom the lessor NDC sold it in violation of respondent lessee¶s right of first refusal. JR. 76988. the lessee is in effect stating that it consents to lease the premises and to pay the price agreed upon provided the lessor also consents that.R. According to Garaygay. the payees of the five BPI checks that Suarez issued on 16 June 1997 presented the checks again.00 per square meter. REYNALD R. while on the other hand it admitted that the value of the property stood at P1.200 as penalty for the dishonor. 2008 in CA-G.129. should it sell the leased property.500. Hence. DECISION The Case This petition for review1 assails the Decision dated 30 November 20042 and Resolution dated 11 April 2005 of the Court of Appeals in CA-G.500.S. BERSAMIN Associate Justice CERTIFIC ATION Pursuant to Section 13. J. BPI allegedly confirmed the same-day crediting of the RCBC check. Suarez issued on the same day five checks of different amounts totaling P19. Suarez¶s client deposited a Rizal Commercial Banking Corporation (RCBC) check with a face value of P19.42 Clearly. the consideration for the lease includes the consideration for the grant of the right of first refusal. should be bound by such determination. While education may be prioritized for legislative and budgetary purposes. Since the stipulation forms part of the entire lease contract.. Suarez would issue checks to the sellers. but preferred not to deal directly with the land owners. on 16 June 1997. While Suarez was in the U. It appearing that the whole NDC compound was sold to PUP for P554. CV No. basic is the rule that a party to a contract cannot unilaterally withdraw a right of first refusal that stands upon valuable consideration. Associate Justice WE CONCUR: REYNATO S. Aware of the banking system¶s 3-day check clearing policy.100. 167750 March 15.500. vs. In entering into the contract. affirming the trial court's decision of 18 October 2002 and denying reconsideration. Suarez had a client who planned to purchase several parcels of land in Tagaytay City. Indeed. and neither disputed the P1.40 We have categorically ruled that it is not correct to say that there is no consideration for the grant of the right of first refusal if such grant is embodied in the same contract of lease.39 [emphasis supplied] In the light of the foregoing. we hold that respondent. Suarez¶s secretary further told him that the checks were dishonored despite an assurance from RCBC. it is doubtful if such importance can be used to confiscate private property such as the right of first refusal granted to a lessee of petitioner NDC. PUNO Chief Justice Chairperson TERESITA J. in BPI Pasong Tamo Branch to be credited to Suarez¶s current account in BPI Ermita Branch. 2004 of the Regional Trial Court of Makati City. In accordance with his client¶s instruction. Petitioner. 2010 Sometime in 1997. SUAREZ. Petronila Garaygay (Garaygay). I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. Relying on this confirmation.00 per square meter actual value of NDC¶s property at that time it was sold to PUP at P554. which more accurately reflects its true value at that time of the sale in favor of petitioner PUP. invoked by petitioner PUP in the Firestone case.129. LEONARDO-DE CASTRO Associate Justice CARPIO.00 per square meter. Subsequently.74 per square meter. it would have been more proper for the courts below to have ordered the sale of the property also at the same price. then. However. PUNO Chief Justice Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G. Respondent.74 per square meter.74 per square meter. Accordingly. Garaygay informed him that the five checks he issued were all dishonored by BPI due to insufficiency of funds and that his current account had been debited a total of P57. which was pegged by the RTC at P554. the price at which the leased premises should be sold to respondent in the exercise of its right of first refusal under the lease contract with petitioner NDC.R. that this amount had already been debited from the account of the drawer on 16 June 1997 and the RCBC check was fully funded.00 per square meter. the basis of the right of first refusal must be the current offer of the seller to sell or the offer to purchase of the prospective buyer. SO ORDERED. Suarez and his client made an arrangement such that Suarez¶s client would deposit the money in Suarez¶s BPI account and then. making it appear that he was the buyer of the lots. and any party for that matter. should be adjusted to P1. Since the RCBC check (which Suarez¶s client issued) had already been cleared by that time. As regards the payment of the purchase money.: LUCAS P.R. as duly considered by this Court in the Firestone case. Suarez (Suarez) is a lawyer who used to maintain both savings and current accounts with petitioner Bank of the Philippine Islands¶ (BPI) Ermita Branch from 1988 to 1997. Suarez transacted with the owners of the Tagaytay properties. In contracts of sale. would serve as license for us. the petitions are DENIED. to confirm from BPI whether the face value of the RCBC check was already credited to his account that same day of 16 June 1997. Suarez left for the United States (U. CONCHITA CARPIO MORALES Associate Justice . The Facts Respondent Reynald R.S. to destroy the sanctity of binding obligations. then we see no compelling reason to modify the holdings of the courts a quo that the leased premises be sold at that price.00 per square meter.3 Suarez instructed his secretary.100 for the purchase of the Tagaytay properties. MARTIN S. 88-2238.) for a vacation. No. which did not offer any amount to petitioner NDC. as follows: It now becomes apropos to ask whether the courts a quo were correct in fixing the proper consideration of the sale at P1. No pronouncement as to costs. the lessee shall be given the right to match the offered purchase price and to buy the property at that price.500.129. again.4 The next day. under the same terms as offered to the grantee. no reversible error was committed by the CA in sustaining respondent¶s contractual right of first refusal and ordering the reconveyance of the leased portion of petitioner NDC¶s property in its favor. since FIRESTONE never raised this as an issue. is hereby AFFIRMED with MODIFICATION in that the price to be paid by respondent Golden Horizon Realty Corporation for the leased portion of the NDC Compound under Lease Contract Nos.500. REYNATO S.
In short. Perforce. which affirmed the trial court¶s decision. However. 98574.] As the agent of the true buyers.00 as attorney¶s fees. if properly appreciated.200. but denied Suarez¶s claim for damages.100.9 The Court¶s Ruling The petition is partly meritorious. on the same day. His transaction with the would be sellers of the property in Tagaytay was aborted because the latter doubted his capacity to fulfill his obligation as buyer of their [properties. this petition. the instant appeal is DISMISSED. the dishonor of the your checks. was sullied on account of the dishonored checks by reason of DAIF. the former has offered to reverse these charges in order to mitigate the effects of the returned checks on the latter. which facts. Hence. of Makati is AFFIRMED in toto. Xavier P. BPI representatives asked another meeting with Suarez. It was on the basis of this confirmation which made plaintiffappellee issue five (5) checks in the amount of P19. the Court of Appeals ruled as follows: Contrary to its contention. with interest from date of first demand until full payment as actual damages. it was erroneous on the part of defendant-appellant bank to surmise that plaintiff-appellee would not suffer damages anyway for the dishonored checks for reasons of DAUD or DAIF because there was dishonor nonetheless. Suarez rejected BPI¶s offer. In its letter dated 28 July 1997 addressed to plaintiff-appellee.22 account. And despite RCBC¶s assurance that the aforementioned amount had already been debited from the account of the drawer bank. his reputation. It was duly proven that after his client deposited a check in the amount of P19. The decision dated 18 October 2002 of the Regional Trial Court. B. Suarez received a call from Fe Gregorius.7 The Court of Appeals denied BPI¶s motion for reconsideration in its 11 April 2005 Resolution. A closer look at the checks would indicate that intercalations were made marking the acronym DAIF thereon to appear as DAUD. The amount of P57. As a rule. Loinaz dated 02 July 1997 was referred to us for investigation and reply. Suarez insists that BPI was negligent in handling his account when BPI dishonored the checks he issued to . this Court is not a trier of facts. and The costs of litigation. to the mind of the court. still the fact that there was intercalation made in the said check cannot be denied. In both instances. Defendant-appellant bank also contends that plaintiffappellee is liable to pay the charges mandated by the Philippine Clearing House Rules and Regulations (PCHRR). and C. the BPI officers handed Suarez a letter.129. ATTORNEY¶S FEES AND COSTS OF LITIGATION.6 BPI appealed to the Court of Appeals. defendant-appellant bank still dishonored the five (5) checks for DAIF as reason when the various payees presented them for payment on 17 June 1997. would justify a different conclusion from the one reached in the assailed decision. BPI raised the following issues: A.00 to different payees. While plaintiff-appellee had been spared from any criminal prosecution. The sum of P3. Our investigation discloses that when the checks you issued against your account were received for clearing. BPI delivered to him the five checks which he issued on 16 June 1997. During the meeting. there are well. 4. Xavier Loinaz. The Court of Appeals¶ Ruling In affirming the trial court¶s decision. BPI offered to reverse the penalty charges which were debited from his account. the relevant text of which reads: Dear Atty. 3. we find that the lower courts misappreciated the evidence in this case. specifically the reason for the dishonor.000. The amount of P1. 22 while a check dishonored for reasons of DAUD would not.129.00."8 The Issues In its Memorandum. SO ORDERED. docketed as Civil Case No. Claiming that BPI mishandled his account through negligence. WHETHER [SUAREZ] IS LIABLE TO PAY THE SERVICE CHARGES IMPOSED BY THE PHILIPPINE CLEARING HOUSE CORPORATION. the checks you deposited were not yet cleared. It is basic in the law governing human relations that "no one shall be unjustly enriched at the expense of others. premises considered. thus: WHEREFORE. Makati City. The sum of P1. there is a dishonor nonetheless. The Regional Trial Court. defendant-appellant bank should return the amount of the service charges debited to plaintiff-appellee.10 Reviewing the records. Consequently. who requested a meeting with him to explain BPI¶s side. WHETHER [BPI] WAS NEGLIGENT IN HANDLING THE ACCOUNT OF [SUAREZ]. It was also proven that defendant-appellant bank through its employee inadvertently marked the dorsal sides of the checks as DAIF instead of DAUD. which was the direct result of defendant- appellant¶s negligence in handling his account. is tantamount to an admission on their (defendantappellant bank¶s employees) part that they have committed a blunder in handling plaintiff-appellee¶s account. Hence.00 by way of moral damages. plaintiff-appellee¶s evidence convincingly established the latter¶s entitlement to damages.recognized exceptions to this rule. If truly these charges were mandated by the PCHRR. A check dishonored for reasons of DAIF would unduly expose herein plaintiff-appellee to criminal prosecution for violation of B. defendant-appellant bank should not have attempted to renege on its act of debiting the charges to plaintiffappellee¶s account. he suffered humiliation. Branch 136 rendered judgment in favor of Suarez. This.000. it was confirmed through plaintiff-appellee¶s secretary by an employee of defendant-appellant bank that the aforesaid amount was. In reply. then manager of the BPI Ermita Branch. judgment is hereby rendered ordering defendant bank to pay the following amounts: 1. Suarez claimed that the checks were tampered with. 2. he had a lot of explaining to do with his client.5 Upon Suarez¶s request. already credited to his account.P.00 on 16 June 1997. however.000. the meeting did not transpire.00 as and for exemplary damages. Suarez sent another letter to BPI addressed to its president.100. prompting him to send another letter informing BPI of its act of falsification by making it appear that it marked the checks with "drawn against uncollected deposit (DAUD) and not "drawn against insufficient fund" (DAIF). The dispositive portion of the 30 November 2004 Decision of the Court of Appeals reads: WHEREFORE. We do not see much in your allegation that you have suffered damages just because the reason for the return was "DAIF" and not "DAUD". Suarez filed with the Regional Trial Court a complaint for damages.000. Suarez: Your letter to our President. Branch 136. one of which is when certain relevant facts were overlooked by the lower court. SO ORDERED. WHETHER [BPI] IS LIABLE TO PAY [SUAREZ] MORAL AND EXEMPLARY DAMAGES. Although the intercalation was obvious in the P12 million check. Thus. It bears to stress that there lies a big difference between a check dishonored for reasons of DAUD and a check dishonored for DAIF. However.
Suarez failed to prove that BPI confirmed the same-day crediting of the RCBC check. BPI mistakenly marked the dishonored checks with "drawn against insufficient funds (DAIF). PENALTY CHARGES ON RETURNED ITEMS 27. 27.129. BPI was not estopped from dishonoring the checks for inadequacy of available funds in Suarez¶s account since the RCBC check remained uncleared at that time. in the case of DAUD. is a condition in which a depositor¶s balance is inadequate for the bank to pay a check.00 nominal damages. Suarez nominal damages in the sum of P75.15 and disregard the banking industry¶s 3-day check clearing policy.161awph!1 Considering that there was no binding representation on BPI¶s part as regards the same-day crediting of the RCBC check. Suarez claims that BPI made a representation that he had sufficient available funds to cover the total value of his checks.1 A service charge of P600. the Court reminds BPI that its business is affected with public interest. CV No. had not yet been cleared. a same-day clearing of a P19. It must at all times maintain a high level of meticulousness and should guard against injury attributable to negligence or bad faith on its part.100 check requires approval of designated bank official or officials.00 for each check shall be levied against the DRAWER of any check or checks returned for any reason. ANTONIO T. DAUD does not expose the drawer to possible prosecution for estafa and violation of BP 22. on its face. Since BPI failed to exercise such diligence. testified that she was able to talk to a BPI male employee about the same-day crediting of the RCBC check. DAIF differs from DAUD. Moreover. Negligence is defined as "the omission to do something which a reasonable man. we award Suarez P75. except for the following: a) Account Closed c) Under Garnishment d) Spurious Check e) Documentary Stamps Missing (for foreign checks/drafts only) f) Post-Dated/Stale-Dated g) Validity Restricted h) Miscleared Items I) Deceased Depositor j) Violation of Clearing Rules and/or Procedures k) Lost by Presenting Bank while in transit to clearing as well as other exceptions which may be defined/circulated by PCHC from time to time.23 various payees on 16 June 1997. Thus. and deletes the award of all damages and fees.19 In other words.25 While the erroneous marking of DAIF. Garaygay. Hence. Now.17 However. there is no sufficient evidence to show that BPI conclusively confirmed the same-day crediting of the RCBC check which Suarez¶s client deposited late on 16 June 1997. was not the proximate cause of Suarez¶s claimed injury. pursuant to the Rules of the Philippine Clearing House Corporation. Suarez failed to establish that his claimed injury was proximately caused by the erroneous marking of DAIF on the checks. guided upon those considerations which ordinarily regulate the conduct of human affairs. Suarez points out that he relied on this confirmation for the issuance of his checks to the owners of the Tagaytay properties. Suarez is mistaken. SO ORDERED. WHEREFORE. Suarez failed to convincingly show his entitlement to such privilege. In other words."11 The question concerning BPI's negligence. Accordingly. Moreover. unbroken by any efficient intervening cause. and (4) the award of damages is predicated on any of the cases stated in Article 221921 of the Civil Code.13 Suarez¶s secretary. Suarez had no credit or bill purchase line with BPI which would qualify him to the exceptions to the 3-day check clearing policy. sufficient funds in his account. Clearly.000. produces the result complained of and without which would not have occurred. we find the same without any basis. on its face. or the doing of something which a prudent man and reasonable man could not do. Suarez is entitled to nominal damages27 to vindicate Suarez¶s right to such high degree of care and diligence.26 Suarez had a right to expect such high level of care and diligence from BPI. no negligence can be ascribed to BPI¶s dishonor of the checks precisely because BPI was justified in dishonoring the checks for lack of available funds in Suarez¶s account.22 In the present case. (3) the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant. Based on the records. Proximate cause has been defined as "any cause which. instead of DAUD. Suarez merely testified that he suffered humiliation and that the prospective consolidation of the titles to the Tagaytay properties did not materialize due to the dishonor of his checks. Suarez cannot recover compensatory damages for his own negligence.000. or that BPI assured Suarez that he had sufficient available funds in his account. On the award of actual damages. The Court SETS ASIDE the 30 November 2004 Decision and 11 April 2005 Resolution of the Court of Appeals in CA-G. and (2) establish that this particular male employee was authorized by BPI either to disclose any information regarding a depositor¶s bank account to a person other than the depositor over the telephone." DAUD means that the account has. Garaygay failed to (1) identify and name the alleged BPI employee.R. 76988. Considering that BPI legally dishonored the checks for being drawn against uncollected deposit.28 to wit: Sec. In essence. and not any bank official can grant such approval. In short. the Court GRANTS the petition in part. As BPI pointed out. The Court awards to respondent Reynald R. depends on whether BPI indeed confirmed the same-day crediting of the RCBC check¶s face value to Suarez¶s BPI account. does the erroneous marking of DAIF.18 DAIF. Suarez impresses upon this Court that BPI is estopped12 from dishonoring his checks since BPI confirmed the same-day crediting of the RCBC check deposit and assured the adequacy of funds in his account. sufficient funds but not yet available to the drawer because the deposit. whereas in DAIF.14 However. BPI was justified in debiting the penalty charges against Suarez¶s account. contrary to BPI¶s contention. while DAIF subjects the depositor to liability for such offenses. While BPI had the discretion to undertake the same-day crediting of the RCBC check.29 In view of the foregoing. give rise to BPI¶s liability for damages? The following are the conditions for the award of moral damages: (1) there is an injury ² whether physical. the Court deems it unnecessary to resolve the other issues raised in this case. despite the RCBC check deposit made to his account on the same day to cover the total amount of the BPI checks. which BPI belatedly rectified. Suarez had only himself to blame for his hurt feelings and the unsuccessful transaction with his client as these were directly caused by the justified dishonor of the checks. although it is not available yet at the time the check was drawn."23 There is nothing in Suarez¶s testimony which convincingly shows that the erroneous marking of DAIF on the checks proximately caused his alleged psychological or social injuries. usually a check. however. mental or psychological ² clearly sustained by the claimant. (2) the culpable act or omission is factually established. on the other hand. or to assure Garaygay that Suarez could issue checks totaling the face value of the RCBC check. " instead of "drawn against uncollected deposit (DAUD).24 not due to the erroneous marking of DAIF on his checks. in natural and continuous sequence. would do.20 It is clear therefore that. CARPIO Associate Justice WE CONCUR: b) No Account . the depositor lacks sufficient funds in his account to pay the check. the depositor has.00.
At the time of the takeover. it was not liable for the "additional costs" incurred by respondent as the subcontract clearly provided that the project was for the fixed lump-sum price of P44. Aggrieved. INC. and the Division Chairperson¶s Attestation. submitted to petitioner a proposal to undertake.390. due to the revisions in the designs of the roof ridge ventilation and crane beams.442.: MARIANO C. Laguna to petitioner Leighton Contractors Philippines. In a decision dated March 19. 1997. In 1997. It likewise presented the cost estimates in the progress report. On July 28.882. building foundation and structural steel works of its fibre cement plant project in Barangay Tatalon in San Isidro. The CIAC found that the subcontract was perfected when petitioner accepted respondent¶s proposal on July 15.882. 1997 progress report. respondent again asked petitioner to settle the "outstanding balance" of P12. Petitioner. (HJI) awarded the contract for site preparation.17 that is.442. 1997 progress report only to acknowledge its receipt. 1997. PUNO Chief Justice Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G. 1997. petitioner paid respondent 10% of the project cost amounting to P4. 1997. on the other hand. DEL CASTILLO Associate Justice ROBERTO A.009 kgs. 1997.132 kgs. Respondent submitted its weekly progress report including the progress billing. Petitioner refused to pay as the July 28.223. JOSE PORTUGAL PEREZ Associate Justice ATTEST ATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. No. The parties submitted the matter to the Construction Industry Arbitration Commission (CIAC) for arbitration. 2009. Notwithstanding the provisions of Clause 11(4)15 of the General Conditions of the Sub-contract. 2010 2. 1999. as subcontractor. the contract required respondent to finish the project within 20 weeks from the time petitioner was allowed access to the site on June 20. the cost of arbitration and attorney¶s fees.9 Petitioner communicated the said revisions to respondent on July 16. 1997 subcontract clearly stated that the sub-contract price was a fixed lump sum. To carry out complete structural steelworks11 outlined in the Sub-contract Lump Sum Price [of P44. respondent claimed that petitioner approved the cost estimates when Simon Bennett. 160972 March 9. No additional payments will be made to [respondent] for any errors in quantities that may be revealed during the Sub-contract period. 1997. Petitioner. 52090.24 ARTURO D. 1997 progress report.90.223. Hardie Jardin.008. Because respondent was unable to meet the project schedule. However.94. respondent CNP Industries.223. the construction of the structural steelworks5 of HJI¶s fibre cement plant project. Cabuyao.21 LEIGHTON CONTRACTORS PHILIPPINES. 2003 resolution3 of the Court of Appeals (CA) in CA-G.993. REYNATO S. Inc.19 respondent reiterated that the roof ridge ventilation and crane beams were not included in the scope of work and consequently were not part of the sub-contract price. J.909. CARPIO Associate Justice Chairperson CERTIFIC ATION Pursuant to Section 13. This proved that the said portions were "additional works" excluded from the fixed lump-sum price. respondent informed petitioner that. it did not re-negotiate the fixed lump-sum price with petitioner. Respondent argued that the proposal it submitted (accepted by petitioner on July 15. .909. Furthermore.343.69. Article VIII of the Constitution. xxx xxx xxx This petition for review on certiorari1 assails the May 31.. 1997. INC. respondent had already accomplished 86% of the project20 for which petitioner paid P42.. 2000 decision2 and November 20. Meanwhile. Respondent. ABAD Associate Justice DECISION (c) Special Conditions of the Sub-Contract. in a letter dated July 31.7 Respondent agreed and petitioner instructed it to commence work. Inc. of steel costing P13. the same were deemed "additional works" not included in the lump-sum price. It estimated the project to require 885. because the fabrication drawings for the roof ridge ventilation and crane beams had not yet been finalized then. vs. petitioner assailed the CIAC decision via a petition for review in the CA. Thus. I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. petitioner Moreover. Furthermore.4 On July 5. it incurred "additional costs" amounting to P13. asserted that the subcontract explicitly included the aforementioned works in the scope of work.422. petitioner revised the fabrication drawings of several of the structure¶s columns necessitating adjustments in the designs of roof ridge ventilation8 and crane beams.6 On July 15.364.R. signed the August 12. ANTONIO T. 1998. (emphasis supplied) 16 xxx xxx xxx Thereafter.909.R. on or before November 6. petitioner accepted respondent¶s proposal specifying that the project cost was for the fixed lump sum price of P44. of steel costing P44. 1997) excluded the roof ridge ventilation and crane beams as the fabrications drawings were "clouded" or had not been finalized when the subcontract was executed on July 28.23 the CIAC rendered judgment in favor of respondent and ordered petitioner to pay the balance of the contract price plus additional works. paid the billings.909]12 in accordance with the Main Drawing13 and Technical Specifications14 and in accordance with the Main Contract.22 The principal issue submitted thereto was whether the cost of the additional steel used for the roof ridge ventilation and crane beams was included in the fixed lump-sum price. 1997. On July 29.18 Thereafter. all of which are available on Site. 1997. asserting that the roof ridge ventilation and crane beams were excluded from the project cost.24 Aside from disputing the CIAC¶s interpretation of the sub-contract. Respondent estimated that the said revisions required an additional 8. BRION Associate Justice CORONA. petitioner took over the project on April 27.223. In its August 12. Inc. SP No. this Sub-contract is on a Fixed Lump Sum basis and is not subject to remeasurement. petitioner and respondent signed a subcontract10 providing: (B) Subcontract works. It likewise denied approving respondent¶s additional cost estimates as Bennett signed the August 12. It is the responsibility of [respondent] to derive his own quantities for the purpose of the Lump Sum Sub-contract price. Petitioner. petitioner¶s quantity surveyor. on the other hand. CNP INDUSTRIES.
36 Respondent. it is considered as containing all the terms agreed upon and there can be.40 By entering into a fixed lump-sum contract. P302-6200-S-405 and P302-6200-S-402. to determine whether the roof ridge ventilation and crane beams were included in the scope of work.33 This. embodied in Section 9. VELASCO.31 Thus.25 Drawing Nos.30 It. PERALTA Associate Justice JOSE CATRAL MENDOZA Associate Justice ATTEST ATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division.37 Moreover.: PRESBITERO J. 2010 RENATO C. the recovery of additional costs is governed by Article 1724 of the Civil Code. MENCHAVEZ. Hence. not Bennett. Bennett did not sign the subcontract for and in behalf of respondent but only as a witness. ARTHUR F. we find that the sub-contract was never modified. the CA dismissed the petition and affirmed the CIAC decision in toto. The absence of one or the other condition bars the recovery of additional costs. PUNO Chief Justice Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G. New judgment is hereby entered declaring that petitioner Leighton Contractors Philippines. 2000. CORONA Associate Justice Chairperson WE CONCUR: PRISMA CONSTRUCTION & DEVELOPMENT CORPORATION and ROGELIO S. The parties entered into a contract for a piece of work28 whereby petitioner engaged respondent as contractor to build and provide the necessary materials for the construction of the structural steel works of HJI¶s fiber cement plant for a fixed lump-sum price of P44. the May 31.39 The contractor estimates the project cost based on the scope of work and schedule and considers probable errors in measurement and changes in the price of materials. Associate Justice .223. presented the August 12. ANTONIO EDUARDO B. reference to the main drawing. Petitioners. compliance with the two requisites of Article 1724. CORONA Associate Justice Chairperson CERTIFIC ATION Pursuant to Section 13. respondent knew that Bennett was not authorized to order any changes in the scope of works or to approve the cost thereof. this recourse. The parol evidence rule. Article VIII of the Constitution.35 Settled is the rule that a claim for the cost of additional work arising from changes in the scope of work can only be allowed upon the: (1) written authority from the developer or project owner ordering or allowing the written changes in work and (2) written agreement of parties with regard to the increase in price or cost due to the change in work or design modification. 52090 affirming the March 19. by the very nature of a fixed lump-sum contract. a specific provision governing additional works. Concomitantly. The scope of work was defined in the subcontract as the completion of the structural steel works according to the main drawing. Furthermore. assuming arguendo that the said adjustments were indeed additional works. admits of exceptions such as when the parties subsequently modify the terms of their original agreement. in effect modifying the original agreement in the subcontract. is a condition precedent for the recovery.41 WHEREFORE. In this respect. Rule 130 of the Rules of Court29 holds that when the terms of an agreement have been reduced into writing.R. No.909. petitioner was not liable to pay for incremental cost since respondent did not observe the procedure mandated by Article 1724 of the Civil Code. It addressed all correspondences relating to the project to (petitioner¶s) project manager Michael Dent. 1997.27 Hence. technical specifications and main contract is necessary. vs. Since the roof ridge ventilation and crane beams were included in the scope of work.26 Petitioner moved for reconsideration but it was denied in resolution dated November 20. Inc. In contracts for a stipulated price like fixed lump-sum contracts.1avvphi1 In a fixed lump-sum contract. JR. The petition is meritorious. aside from respondent¶s failure to present the documents required by Article 1724 of the Civil Code.34 referred to the roof ridge ventilation and crane beams. respondent was presumed to have estimated the quantity of steel (the minimum and maximum amount) needed on the said portions when it made its formal offer on July 5. 1997 progress report signed by Bennett. 2003 resolution of the Court of Appeals in CA-G. according to petitioner and respondent. the project owner agrees to pay the contractor a specified amount for completing a scope of work involving a variety of unspecified items of work without requiring a cost breakdown. 2003. 1999 decision of the Construction and Industry Arbitration Commission are hereby REVERSED and SET ASIDE. Petitioner insists that it was not liable to pay for the increase in cost due to the adjustments in the design of the roof ridge ventilation and crane beams. However. Furthermore. REYNATO S. Respondent.25 In a decision dated May 31. petitioner was only liable to pay the stipulated subcontract price. technical specifications and the main contract. is not liable for the additional costs incurred by respondent CNP Industries. the said works were clearly included in the sub-contract works. Respondent therefore claims an exception to the parole evidence rule.R. respondent contends that when Bennett signed the August 12. The subcontract clearly defined the scope of work as the construction of the structural steel works and stated that it was for a fixed lump-sum price. 2000 decision and November 20. RENATO C. Neither the authority for the changes made nor the additional price to be paid therefor may be proved by any other evidence. however. NACHURA Associate Justice DECISION BRION. between the parties and their successors in interest. The main contract32 stated that the structural steel works included Petitioner therefore cannot be liable for the additional costs incurred by respondent. no evidence of such terms other than the contents of the written agreement. Inc. The sub-contract explicitly stated that the stipulated price was not subject to remeasurement. respondent undertook the risk of incurring a loss due to errors in measurement. likewise argued that the arbitral body disregarded Article 1724 of the Civil Code. SP No. Nevertheless. I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. SO ORDERED. 160545 March 9. DIOSDADO M. 1997 progress report. J. in this instance. petitioner approved the additional cost estimates. PANTALEON.38 Respondent was therefore aware of Bennett¶s lack of authority.
Branch 73. the interest covers the six (6)-month period only and cannot be interpreted to apply beyond it.000. June 8.117. and no such stipulation exists. gathered from the records.00 in attorney¶s fees.R. Thus.13 In their Answer dated October 6.240.00 P40.. 1998. from Mr. on August 28. 1994 «««««««. 1994 «««««««. Menchavez (respondent).9 and as duly authorized by the Board of Directors of PRISMA.10 The petitioners failed to completely pay the loan within the stipulated six (6)month period. the CA modified the RTC Decision by imposing a 12% per annum interest. Philippine Currency. Arthur F. the petitioners admitted the loan of P1.. Even assuming that the loan is subject to 4% monthly interest. November 8.000.000. and thereafter. 1994 «««««««. 1997.000.000.000.000. the petitioners paid the following amounts to the respondent: January 8. 1994 ««««««««. or a total of P240. hereby acknowledge the receipt of ONE MILLION TWO HUNDRED FORTY THOUSAND PESOS (P1. was unreasonable and should be reduced to 12% per annum. Pantaleon issued a promissory note7 that states: I.006 P1. May 8. the President and Chairman of the Board of PRISMA. Rogelio S.000. Pantaleon. plus 4% monthly interest. 69627.000. Pantaleon (Pantaleon) (collectively. but modified the interest rate from 4% per month to 12% per annum. are briefly summarized below.8 and six (6) postdated checks corresponding to the schedule of payments. 1994 «««««««. On December 8. to which it applied a 4% monthly interest.526.000.00 P40.151.117. The CA found that the parties agreed to a 4% monthly interest principally based on the board resolution that authorized Pantaleon to transact a loan with an approved interest of not more than 4% per month.00 P40.00 to be paid within six (6) months. April 8.00 As of January 4.00 P40. 1994 ««««««« P40.16 The petitioners elevated the case to the CA via an ordinary appeal under Rule 41 of the Rules of Court. 2003 and the Resolution3 dated October 22.00 P40. the respondent filed a complaint for sum of money with the RTC to enforce the unpaid balance. computed from the filing of the complaint until finality of judgment. 1994 ««««««««.00 P158.108.5 under the following schedule of payments: To secure the payment of the loan.00 P40. The assailed CA Decision affirmed the Decision of the Regional Trial Court (RTC).240. 1997 «««««««.00 per month. 2000 finding that the respondent issued a check for P1.. 1993.240. 1994 ««««««««.000. 1994 ««««««« Total P40. representing a six-month loan payable according to the following schedule: January 4. the RTC ordered the petitioners to jointly and severally pay the respondent the amount of P3. FACTUAL BACKGROUND The facts of the case. computed from the filing of the complaint to full payment. P1. the petitioners had already paid a total of P1.15 1999 after considering the 4% monthly interest. From September 8.00 for a 6-month period.26 We resolve in this Decision the petition for review on certiorari1 filed by petitioners Prisma Construction & Development Corporation (PRISMA) and Rogelio S. March 8.117.00 per court appearance and costs of suit.526. February 8.526.000. with a monthly interest of P40. CV No. Antipolo City in Civil Case No.000. May 8.000. April 8.000. insisting that there was no express stipulation on the 4% monthly interest. or a total obligation of P1. but denied the stipulation on the 4% monthly interest.12 Thus. 2003 of the Former Ninth Division of the Court of Appeals (CA) in CA-G. obtained a P1. 1994 ««««««.00 The RTC rendered a Decision on October 27. Thus.772.526.000.00 as of February 11. THE CA RULING The checks corresponding to the above amounts are hereby acknowledged. The assailed CA Resolution denied the petitioners¶ Motion for Reconsideration. Pantaleon signed the promissory note in his personal capacity. Menchavez.000). The petitioners also point out the glaring inconsistency in the CA Decision. but merely an authorization for Pantaleon to perform certain acts. 1994 to January 4..17 After the CA's denial18 of their motion for reconsideration.00. the promissory note based on which the petitioners obtained the loan. and an integral part of.00 payable for six months..000. 1995«««««««.000.772. including the power to enter into a contract of loan.00 to respondent Arthur F.00 in favor of the petitioners for a loan that would earn an interest of 4% or P40. the respondent found that the petitioners still had an outstanding balance of P1.14 THE RTC RULING The CA decided the appeal on May 5. The expressed mandate of Article 1956 of the Civil Code is that interest due should be stipulated in writing. THE CASE FOR THE RESPONDENT The respondent counters that the CA correctly ruled that the loan is subject to a 4% monthly interest because the board resolution is attached to. 1997. 97-4552 that held the petitioners liable for payment of P3. P320. arguing that the interest was not provided in the promissory note.00 P40. THE PETITION The petitioners submit that the CA mistakenly relied on their board resolution to conclude that the parties agreed to a 4% monthly interest because the board resolution was not an evidence of a loan or forbearance of money. however.00 P40. P30. The appellate court.00 September 8.00 as of January 4.000.. The respondent further contends that the petitioners are estopped from assailing the 4% monthly P1. Pantaleon also denied that he made himself personally liable and that he made representations that the loan would be repaid within six (6) months. However. or 48% per annum. petitioners) who seek to reverse and set aside the Decision2 dated May 5.772.000.040. The CA affirmed the RTC¶s finding that PRISMA was a mere instrumentality of Pantaleon that justified the piercing of the veil of corporate fiction.040.228. 12% from finality until fully paid.. P30.240.00 P1.. February 8.117.000.000. It noted that the petitioners made several payments amounting to P1.19 the petitioners filed the present petition for review on certiorari under Rule 45 of the Rules of Court.000. 1997.004 loan from the respondent.00 plus 4% per month interest from February 11. noted that the interest of 4% per month.00 . 1994 «««««« October 8.00 that the RTC ordered them to pay includes the compounded 4% monthly interest.00 P600.. Pantaleon.00. but failed to consider that the amount of P3. March 8.000..000.000. 2003.364. 1995«««««. 1999 until fully paid. 1997.000. 1994 ««««««««. 1994 ««««««.0011 January 8. The RTC observed that PRISMA was a one-man corporation of Pantaleon and used this circumstance to justify the piercing of the veil of corporate fiction. which reduced the interest from 4% per month or 48% per annum to 12% per annum. but they were still indebted to the respondent for P3.00. June 8.
since they agreed to pay this interest on the principal amount under the promissory note and the board resolution. 12% per annum Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. since they agreed to pay the 4% monthly interest on the principal amount under the promissory note and the board resolution. for a total principal and interest amount of P1. for the total amount of P1. Salazar35 of 6% per month or 72% per annum interest on a P60. in Ruiz v. Medel finds no application in the present case where no other stipulation exists for the payment of any extra amount except a specific sum of P40.000. public order or public policy. Court of Appeals. plus attorney¶s fee equivalent to 25% of the amount due.00 loan. We disagree with the respondent¶s contention. Thus. In the absence of stipulation.000. amounting to P1.45 on the other hand.000. .00 per month corresponds only to the six (6)month period of the loan. Pantaleon. Additionally.000. as agreed upon by the parties in the promissory note. in his personal capacity and as authorized by the Board. the interest on the loan should be at the legal interest rate of 12% per annum.00. in Bulos.00.00. Quiño. We remand the case to the trial court for the actual computation of the total amount due.23 In turn.000. for a total obligation of P1. In the present case.000. simply authorizes Pantaleon to contract for a loan with a monthly interest of not more than 4%.33 Thus.000.22 It is only when the contract is vague and ambiguous that courts are permitted to resort to the interpretation of its terms to determine the parties¶ intent. v.000. or from January 8. the interest due should be that which may have been stipulated in writing. executed the promissory note quoted above.240. no cause exists to place the petitioners in estoppel. not to a 4% rate of interest payable within a six (6)-month period. 1999. unconscionable. Hao.20 When the terms of a contract are clear and leave no doubt as to the intention of the contracting parties.5% per month.500. iniquitous. clauses. Court of Appeals. Applying Medel.00 loan were required to pay an interest of 5. Jr.00 loan. 1994 to June 8. terms and conditions are not contrary to law.28 Crismina Garments. there is no allegation showing that petitioners were victims interest. The facts show that the parties agreed to the payment of a specific sum of money of P40. During this period. Court of Appeals:26 When the obligation is breached.000.240. the interest due shall itself earn legal interest from the time it is judicially demanded. Doctrine of Estoppel not applicable The respondent submits that the petitioners are estopped from disputing the 4% monthly interest beyond the sixmonth stipulated period. no reason exists to place the petitioners in estoppel. 30 Sps.000.00 per month was voluntarily agreed upon by the petitioners and the respondent. and in Chua v.00 per month for six months..27 Sulit v. Tiu. but no such rate of interest was stipulated in the promissory note. interest at the rate of 12% per annum shall apply. Yasuma. terms and conditions they have agreed to. the rate of interest shall be 12% per annum to be computed from default. Inc. the debtors in a P500. thereby rendering the stipulation null and void.38 of 7% interest per month or 84% per annum interest on a P15. 1993 to June 8. Thereafter. Timan. does the rate of interest apply to the 6-month payment period only or until full payment of the loan? OUR RULING We find the petition meritorious. Sps. 1994 up to June 8. the only limitation being that these stipulations. There is nothing from the records and.21 In such cases.000.00 for the six-month period.1avvphi1 Applying this provision. in fact. the loan of P1." (Emphasis supplied) We reiterated this ruling in Security Bank and Trust Co.36 of 3% per month or 36% per annum interest on a P3.39 of 4% per month or 48% per annum interest on a P2. contrary to morals.5% to be excessive. v. Nicdao25 that collection of interest without any stipulation in writing is prohibited by law. Br.000. exorbitant and hence. and (2) the agreement for the payment of interest was reduced in writing. Barrera v.00 per month for a period of six (6) months.27 The CA misapplied Medel v. 1994. RTC-Makati. computed as indicated above.000.000.000.00 per month for six months ± not a 4% rate of interest per month for six (6) months ± on a loan whose principal is P1.000. Inc.000. rather a fixed sum equivalent to this rate was agreed upon. Interest due should be stipulated in writing. we invalidated and reduced the stipulated interest in Spouses Solangon v. 61. Thereafter. Thus. from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. i.000. since it was not agreed upon. clauses.e.240. the terms of the loans were open-ended. barring them from raising their present defenses against a 4% per month interest after the six-month period of the agreement. which is the law between them. In Medel.000.000. 31 Yong v. v. no issue on the excessiveness of the stipulated amount of P40. It is a familiar doctrine in obligations and contracts that the parties are bound by the stipulations.00 loan shall be payable within six (6) months.44 what the petitioners agreed to was the payment of a specific sum of P40. We note that this agreed sum can be computed at 4% interest per month. courts have no authority to alter the contract by construction or to make a new contract for the parties. consistent with our ruling in Eastern Shipping Lines. in Arrofo v. Court of Appeals34 in finding that a 4% interest per month was unconscionable. Therefore. and it consists in the payment of a sum of money. we find that the interest of P40. v. Court of Appeals. we found the interest rate of 5.00 shall earn P40. a service charge of 2% per annum.00 loan. the stipulated interest rates were applied for an indefinite period. This resolution merely embodies the extent of Pantaleon¶s authority to contract and does not create any right or obligation except as between Pantaleon and the board. until the loan is fully paid.00 as of February 12. the payment of interest in loans or forbearance of money is allowed only if: (1) there was an express stipulation for the payment of interest.00 per month was ever put in issue by the petitioners. the P1. Jaucian.000. and a penalty charge of 1% per month. The amounts already paid by the petitioners during the pendency of the suit.40 of 7% and 5% per month for loans totalling P964. 29 Eastern Assurance and Surety Corporation v.772.00. as the court cannot supply material stipulations or read into the contract words the contract does not contain. the literal meaning of its stipulations governs.e. THE ISSUE The core issue boils down to whether the parties agreed to the 4% monthly interest on the loan." Under this provision. If so.. The concurrence of the two conditions is required for the payment of interest at a stipulated rate. Again.00 loan. We note that in all these cases. i. Article 1956 of the Civil Code specifically mandates that "no interest shall be due unless it has been expressly stipulated in writing.228. otherwise.000. they erred in finding that the parties agreed to a 4% interest. Lorenzo. Valdehueza24 and Ching v. in Imperial v. a court's duty is confined to the interpretation of the contract the parties made for themselves without regard to its wisdom or folly. the RTC and the CA misappreciated the facts of the case. the respondent issued a check for P1. as established by the record. a loan or forbearance of money.00 per month. as agreed by the parties.000. Court of Appeals. or from December 8. 1994.00 per month on the principal of a loan payable within six months. Furthermore. negate its application. Thus.00. Medel v. Under the promissory note. or from January 8.42 The payment of the specific sum of money of P40.000. compounded by the application of this interest beyond the promissory note¶s six (6)-month period.43 should be deducted from the total amount due.000. The board resolution. we held in Tan v. Catungal v.37 of 16% per month or 192% per annum interest on a P320. Piercing the corporate veil unfounded We find it unfounded and unwarranted for the lower courts to pierce the corporate veil of PRISMA.000. Court of Appeals not applicable of fraud when they entered into the agreement with the respondent. We cannot apply the doctrine of estoppel in the present case since the facts and circumstances.00 loan.41 they only assailed the application of a 4% interest rate. Taken in conjunction with the stipulated service charge and penalty. the loan shall earn an interest of P40. morals.32 and Sps. 1994.000.
. 1996..45 May 1996 to Feb 1997 On March 5. ABAD Associate Justice JOSE PORTUGAL PEREZ Associate Justice ATTEST ATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. World Class is the owner/developer of Global Business Tower (now Antel Global Corporate Center).R.: MARIANO C.717. or c) is used in alter ego cases.G.00 per month for six (6) months from December 8.424. Any portion of this loan.339.854. an office condominium project located on Julia Vargas Avenue and Jade Drive.272. automatically forfeit the reservation fee and other payments made by the buyer. the contract to sell pertaining to the entire 38th floor Penthouse unit and the parking slots would be executed upon the payment of thirty percent (30%) of the total purchase price.e. Inc. (GG Sportswear) seeks to reverse the December 19. but suggested the execution of a new Reservation Agreement to reflect the arrangement involving the replacement checks. the petitioner G. 1997. shall thereafter bear interest at 12% per annum. on May 15.7 GG Sportswear requested the return of the outstanding postdated checks it previously delivered to World Class because it (GG Sportswear) intended to replace these old checks with new ones from the corporation¶s new bank. Article VIII of the Constitution. such corporate officer cannot be made personally liable for corporate liabilities. protect a fraud. Let this case be REMANDED to the Regional Trial Court. fraudulent or unlawful act on the part of PRISMA to justify piercing its corporate veil. i. shall bear interest at 12% per annum from the finality of this Decision. Ortigas Center. in light of all the foregoing. but requested that World Class defer the deposit of the replacement checks for 90 days. 2010 60% Payment 20% Final Payment TOTAL PRICE 53. b) in fraud cases. INC. Respondent. REYNATO S.000. World Class acceded.272. Corp. Sportswear Mfg. Pasig City slated for completion on December 15. SO ORDERED. BRION Associate Justice Acting Chairperson CERTIFIC ATION Pursuant to Section 13.56 P 89. In a letter dated January 30. 2008 resolution2 of the Court of Appeals (CA) denying: (1) the rescission of its Reservation Agreement with the respondent. or (2) rescind and cancel the Agreement without the need of any court action and.28 The doctrine of piercing the corporate veil applies only in three (3) basic instances.624. The total amount due and unpaid. GG Sportswear.12 Duration P 1. WORLD CLASS PROPERTIES. Costs against the respondent. Branch 73.000. 2007 decision1 and the January 2. it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. we hereby REVERSE and SET ASIDE the Decision dated May 5.5 It also stipulated that all its provisions would be deemed incorporated in the contract to sell and other documents to be executed by the parties thereafter. DEL CASTILLO Associate Justice ROBERTO A.56 Based on the Agreement. with the retention of the other terms and conditions of the old Agreement.774. pre-selling price of P89.45 Upon turn-over G. DECISION BRION. The facts.69 17.854.9 World Class denied this request. 1993 as indicated in the promissory note. or a specific provision of law making a corporate officer liable.56 less: 500. WHEREFORE. or 21% of the total contract price. World Class Properties. After GG Sportswear paid the P500. NACHURA* Associate Justice G. the eight monthly installment payments amounted to a total of P19. SPORTSWEAR MFG. offered to purchase the 38th floor penthouse unit and 16 parking slots for 32 cars in World Class's condominium project for the discounted. namely: a) when the separate and distinct corporate personality defeats public convenience. ARTURO D.000.485. as culled from the records. contending that a deferment would delay the subsequent monthly installment payments. (World Class) and (2) a refund of the payments made pursuant to this Agreement.82. PUNO Chief Justice Republic of the Philippines SUPREME COURT Manila SECOND DIVISION Through its petition for review on certiorari. we see no competent and convincing evidence of any wrongful.924. The Agreement also specified that the failure of the buyer to pay any of the installments on the stipulated date would give the developer the right either to: (1) charge 3% interest per month on all unpaid receivables. CV No. as when the corporate fiction is used as a vehicle for the evasion of an existing obligation. the parties. Antipolo City for the proper computation of the amount due as herein directed.82 1. including accrued interests.R. or defend a crime. GG Sportswear delivered the replacement checks and paid the January 1997 installment payment which had been delayed by two months. unpaid as of the end of the sixmonth payment period. as follows:4 Item 20% Down Payment Amount to be paid P 17. GG Sportswear timely paid the installments due.00 reservation fee. a domestic corporation. and the Division Chairperson¶s Attestation.46 In the absence of malice. BRION Associate Justice Acting Chairperson WE CONCUR: ANTONIO EDUARDO B.47 In the present case.563. J. 1997. ARTURO D.8 GG Sportswear did not object to the execution of a new Reservation Agreement. 1998.485. 182720 March 2.48 With this statement of personal liability and in the absence of any representation on the part of PRISMA that the obligation is all its own because of its separate corporate identity. since it is a mere alter ego or business conduit of a person.000.G.742.6 From May to December 1996.624. World Class in turn issued a second Reservation . with due regard to the payments the petitioners have already remitted. No.50. While Pantaleon denied personal liability in his Answer. or where the corporation is so organized and controlled and its affairs so conducted as to make it merely an instrumentality.00 (Reservation Fee) P 17.792. are briefly summarized below. The petitioners¶ loan of P1.10 It likewise demanded that GG Sportswear immediately pay its overdue January 1997 installment to avoid the penalties Monthly Installment 11 provided in the Agreement. upon cancellation.000. CORP. conduit or adjunct of another corporation. including the stipulated monthly installments on the down payment and the balance on the purchase price. signed a Reservation Agreement (Agreement)3 that provides for the schedule of payments. 69627. Petitioner. 2003 of the Court of Appeals in CA-G..854. we see no occasion to consider piercing the corporate veil as material to the case. bad faith. vs. or when the corporate entity is used to justify a wrong. agency.924. where a corporation is essentially a farce. he made himself accountable in the promissory note "in his personal capacity and as authorized by the Board Resolution" of PRISMA.00 shall bear interest of P40.
000. Thus. the CA held that the OP erroneously based GG Sportswear¶s right to recovery of payments on Article 1416 of the Civil Code (as what the Arbiter¶s decision29 suggested). which are presented and decided in the regular course of the consideration of the case.50 paid by GG Sportswear with 6% legal interest thereon. after finding that World Class violated Sections 4 and 5 of P. The OP subsequently denied World Class¶s motion for reconsideration in its November 13. GG Sportswear could no longer demand rescission and refund under Sections 4 and 5 of P. he ordered World Class to refund the amount of P19. which entitles a plaintiff to recover the amounts paid under a contract that violates mandatory or prohibitory laws. a point expressly decided does not lose its value as a precedent because the disposition of the case is. it was necessary to consider another question. Under the Agreement. the Office of the President (OP) denied World Class¶s appeal by quoting extensively from the Arbiter¶s decision. (2) the complaint is an afterthought since GG Sportswear is suffering from financial difficulties. but the court actually decides all such points. 957 by entering into the Agreement without the required Certificate of Registration and License to Sell (CR/LS). in its decision28 of December 19. 1997.16 On June 10.18 World Class countered that: (1) it is not guilty of breach of contract since it is the petitioner that committed a breach. GG Sportswear filed a Complaint17 with the Housing and Land Use Regulatory Board (HLURB) claiming a refund of the installment payments made to World Class because it was dissatisfied with the completion date found in the Contract to Sell. expressly stating that "the absence of the certificate of registration and license to sell no longer existed at the time of the filing of the complaint and could no longer be used as basis to demand rescission. However. the issue of whether GG Sportswear was entitled to a refund on the ground that it did not have a CR/LS at the time the parties entered into the Agreement. it sent a letter14 to World Class. THE RULING OF THE COURT We find the petition devoid of merit. On the awarded refund.19 which period has not yet arrived. which it transmitted to GG Sportswear for the latter¶s conformity. the case as an authoritative precedent as to every point decided. which was a mere obiter dictum. The CA likewise denied GG Sportswear¶s motion for reconsideration. 2006 decision ± that the Agreement could no longer be rescinded because the CR/LS had already been issued at the time the complaint was filed ± cannot be considered a mere obiter dictum because it touched upon a matter squarely raised by World Class in its petition for review. the Board still awarded a refund in GG Sportswear¶s favor.717. where a case presents two (2) or more points.00. although only incidentally involved. by its own actions.24 In its decision25 of September 11.339. 2005. which granted World Class until December 1999 to complete the project. 957. 1998. World Class appealed to the HLURB Board of Commissioners (Board). He likewise found World Class administratively liable and ordered it to pay a fine of P10. GG Sportswear filed with this Court the present petition for review on certiorari. be regarded as dicta. owing to the disposal of the contention. on the particular point. With this ruling. On January 31. No.] The Board¶s pronouncement in its January 31. We explained the concept of an obiter dictum in Villanueva v.26 In its petition for review27 before the CA. 1996. Since World Class already had a CR/LS when GG Sportswear filed its complaint.22 Notwithstanding this pronouncement. since GG Sportswear had only paid 21% of the total contract price. 1997 be deposited on May 15.D. also. specifically. 1997 because it was experiencing financial difficulties. and (5) the petitioner was already in default when it filed the complaint and therefore came to court with unclean hands. the Contract to Sell would be executed only upon payment of thirty (30%) of the total value of the sale. it could not demand the execution of the Contract to Sell." Since GG Sportswear never appealed this finding. HLURB Arbiter Atty. the result reached might have been the same if the court had held. The Board reasoned that World Class had only until August 1998 to complete the project under its first License to Sell. nor can an additional reason in a decision. 957.21 He also implied that a refund is proper in this case under Article 1416 of the Civil Code.23 In essence.15 World Class countered that the provisional Contract to Sell it previously submitted to GG Sportswear expressly provided for the completion date (December 15. 957 and entitled a buyer to a refund of all payments made. or before the complaint was filed. GG Sportswear sent another letter informing World Class that the second Reservation Agreement was incomplete because it did not expressly provide the time of completion of the condominium unit. and this rule applies to all pertinent questions. (4) a refund is justified only in cases where the owner/developer fails to develop the project within the specified period of time under Presidential Decree (P. So. It explained that the OP should have given weight to the Board¶s modified finding that "the absence of the certificate of registration and license to sell no longer existed at the time of the filing of the complaint and could no longer be used as basis to demand rescission. In its Answer. or might have been. 2006 order. the Board modified the Arbiter¶s decision by ruling that the Agreement could no longer be rescinded for lack of a CR/LS because World Class had already been issued a License to Sell on August 1. reversed the OP decision and denied GG Sportswear¶s prayers for rescission of the Agreement and refund of the payments made. 1998) and insisted that GG Sportswear pay its overdue account. A decision which the case could have turned on is not regarded as obiter dictum merely because. The Board ruling that the Agreement could not be rescinded based on lack of a CR/LS had already attained finality. made on some other ground.) No. and one point should not be denied authority merely because another point was more dwelt on and more fully argued and considered. World Class. No. and to any statement as to matter on which the decision is predicated. it repackaged the project and had applied for and been issued a new License to Sell. nor does a decision on one proposition make statements of the court regarding other propositions dicta.D.D. otherwise than it did. and led up to the final conclusion. World Class also sent GG Sportswear a provisional Contract to Sell. it had already attained finality and must bind the OP. the Board reversed the Arbiter¶s ruling on this particular issue. When World Class rejected GG Sportswear¶s request.33 [emphasis supplied. by reason of other points in the case. As a consequence. 2007. requesting that its check dated April 24. On September 12. and to pay 10% of the principal amount as attorney¶s fees. or even though. Accordingly. San Vicente (Arbiter) rendered a decision20 rescinding the Agreement. The appellate court also found no merit in GG Sportswear¶s argument that it was entitled to rescind the Agreement and demand a refund because World Class failed to provide a Contract to Sell for the subject units. Dunstan T. even if the Board ultimately awarded a refund to GG Sportswear based entirely on .30 Hence. The CA. World Class essentially argued that the OP committed a grave abuse of discretion when it upheld the Board¶s ruling that GG Sportswear was entitled to a refund. 2006. No. GG Sportswear did not sign the second Reservation Agreement. (3) the petitioner¶s dissatisfaction with the expected date of completion of the unit as indicated in the proposed Contract to Sell is not a valid and sufficient ground for refund.29 Agreement. Court of Appeals32 by saying: It has been held that an adjudication on any point within the issues presented by the case cannot be considered as obiter dictum.31 claiming that the CA erred when: (1) it relied heavily on the Board¶s finding that the Agreement could no longer be rescinded because the CR/LS had already been issued at the time the complaint was filed.13 which stated that the condominium project would be ready for turnover to the buyer not later than December 15. and (2) it held that GG Sportswear was not entitled to the execution of a Contract to Sell because it had not yet paid 30% of the total value of the sale." This ruling became final when GG Sportswear chose not to file an appeal with the OP. the Board equated World Class¶s "incapability" to finish the project within the time specified in its first License to Sell with a developer¶s "failure to develop" a condominium project ± an omission sanctioned under P. brought forward after the case has been disposed of on one ground.D. and none of such points can be regarded as having the status of a dictum. any one of which is sufficient to determine the ultimate issue. impliedly admitted that it would be incapable of completing its project by this time. 2006. Instead.
not World Class. in case one of the obligors should not comply with what is incumbent upon him. the provisional Contract to Sell that accompanied the second Reservation Agreement explicitly provided that the condominium project would be ready for turnover no later than December 15. nowhere does GG Sportswear allege that the parties ever agreed upon an earlier completion date. standing alone. and provides that the buyer¶s installment payments shall not be forfeited in favor of the developer or owner if the latter fails to develop the subdivision or condominium project.] Upon the developer¶s failure to develop. Even if it had been unhappy with the completion date. GG Sportswear likewise has no legal basis to demand either the rescission of the Agreement or the refund of payments it made to World Class under the Agreement. Neither can GG Sportswear find recourse through P. Under these circumstances. be reimbursed the total amount paid including amortization interests but excluding delinquency interests. is not sufficient basis to rescind the Agreement. 1998. To recall. 957. [Emphasis supplied. substantially breached its obligations under the Agreement when it was remiss in the timely payment of its obligations. Notably. GG Sportswear cannot claim that it did not know the time-frame for the project¶s completion when it entered into the Agreement with World Class. on December 15. to our mind. 1998 (based on the provisional Contract to Sell). In the first place. maintaining that this lack of detail renders the Agreement void on the ground that the intention of the parties cannot be ascertained. even if we believe GG Sportswear¶s contention that it was dissatisfied with the completion date subsequently indicated in the provisional Contract to Sell. Unless the parties stipulated it. 957.D. the initial lack of a License to Sell is not a basis to cancel the Agreement and has in fact effectively been cured even if it may be considered an initial defect. no reason still exists to rescind the contract. the president of GG Sportswear and an experienced businessman. In other words. . The power to rescind obligations is implied in reciprocal ones. the OP had no jurisdiction to revert to the Arbiter¶s earlier declaration that the Agreement was void due to World Class¶s lack of a CR/LS. 1997. entitles the injured party to rescind the obligation. it was World Class. While GG Sportswear claims dissatisfaction with this completion date. at the time GG Sportswear filed its complaint on June 10. we cannot consider this dissatisfaction a breach so substantial as to render the Agreement rescissible. the Antel Global Corporate Center was still in the course of development37 and none of these projected completion dates had arrived. too. At the time GG Sportswear filed its complaint against World Class on June 10. Even if we apply Article 1191 of the Civil Code.1avvphi1 As a side note. to World Class of a first License to Sell up to August 1998 and a second License to Sell up to December 1999. World Class completed the project in August 1999. Even assuming that GG Sportswear was not aware of the exact completion date. it is absurd and unbelievable that Mr. We therefore find no reason for GG Sportswear to be dissatisfied with the indicated completion date. a finding that clearly contradicted the Board¶s final and executory ruling. was still a long way out. However. Moreover. which had the ground to demand the rescission of the Agreement. we note that the Agreement expressly provides that GG Sportswear shall be entitled to a Contract to Sell only upon its payment of at least 30% of the total contract price. The grant. World Class had not yet breached its obligation.D. Such buyer may. GG Sportswear had no basis to claim that World Class breached this obligation. and (b) the lack of a Contract to Sell. a buyer¶s cause of action against a developer for failure to develop ripens only when the developer fails to complete the project on the lapse of the completion period stated on the sale contract or the developer¶s License to Sell. any complaint for refund was premature. World Class makes much of the fact that the completion date is not indicated in the Agreement. we note that GG Sportswear signed the Agreement despite the Agreement¶s omission to expressly state a specific completion date. We disagree with this contention.36 Since GG Sportswear had only paid 21% of the total contract price. No.82.624. Also by this time. or on December 1999 (based on World Class¶s second License to Sell). which provides: Art. the completion date of the Antel Global Corporate Center was either in August 1998 (based on World Class's first License to Sell). Gidwani.34 Whether the breach is slight or substantial is largely determined by the attendant circumstances.35 GG Sportswear anchors its claim for rescission on two grounds: (a) its dissatisfaction with the completion date. Significantly. the date appearing on World Class¶s first License to Sell. No. 1998. a clear expression of the project¶s completion date. or the "Subdivision and Condominium Buyers¶ Protective Decree. In fact. GG Sportswear did not pay the succeeding installment dated April 1997 (presumably for February 1997) until it had filed its complaint in June 1997. 1998 completion date violates the completion date previously agreed upon by the parties. this ground. Thus. as well as the prerogative to secure the forfeiture of all the payments already made by GG Sportswear. 1191. or within the time period granted by the HLURB for the completion of the condominium project under the second License to Sell. Non-Forfeiture of Payments. This is a ploy we cannot accept. x x x x. the Board¶s ruling on the non-rescissible character of the Agreement is binding on the parties. not GG Sportswear.30 another ground. rendered the issue of World Class¶s failure to develop the condominium project moot and academic. with interest thereon at the legal rate. we are more inclined to believe World Class¶s contention that GG Sportswear¶s complaint was simply an attempt to evade its obligations to World Class under the Agreement. we cannot help but view with suspicion GG Sportswear¶s decision to question the second Reservation Agreement¶s lack of an express completion date as this question only came up after World Class had rejected GG Sportswear¶s request to defer the deposit of its check in light of the financial difficulties it was then encountering. Accordingly. On the second ground. There was no breach on the part of World Class to justify the rescission and refund. No. Under the Agreement. As to the first ground. or (2) to cancel the contract and demand a refund of all payments made. As World Class points out. it never alleged that the given December 15. World Class¶s obligation to execute a Contract to Sell had not yet arisen. A substantial breach of a reciprocal obligation. This completion. did not have an idea of the expected completion date of the condominium project before he bought the condominium units for P89. rescission is allowed only when the breach of the contract is substantial and fundamental to the fulfillment of the obligation. or two months after due date. we observe that GG Sportswear. 1997. Hence. World Class¶s obligation was to finish the project and turn over the purchased units to GG Sportswear on or before the completion date.D. the buyer may choose either: (1) to continue with the contract but suspend payments until the developer complies with its obligation to finish the project. 957 provides: Section 23." This law covers all sales and purchases of subdivision or condominium units. when GG Sportswear filed its complaint.38 Under this contractual term. or even August 1998. As we discussed above. Section 23 of P. This directly implies that a specific completion date was not a material consideration for GG Sportswear when it executed the Agreement. after due notice to the owner or developer. like failure to pay the price in the manner prescribed by the contract. the agreed completion date of December 15. unhappiness is a state of mind. GG Sportswear had already defaulted on its monthly installment payments to World Class. not a defect available in law as a basis to rescind a contract. undertaken while the case was pending before the Arbiter. As a last point on this topic. excluding delinquency interests. such that its January 1997 installment was paid only in March 1997. and rescission under this provision of the Civil Code was premature. at his option. Notably. desists from further payment due to the failure of the owner or developer to develop the subdivision or condominium project according to the approved plans and within the time limit for complying with the same. Consequently. Rescission of contracts of sale of commercial condominium units on installment is governed by P.272. No installment payment made by a buyer in a subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer when the buyer. served as a clear notice of when the project was to be completed.
M. 2003. at the time the contract was entered into. No. VILLAMAYOR and HERMINIO VILLAMAYOR. 2005. In PNB vs. With regard to P. without more. WHEREFORE. respectively. nothing therein provides for the nullification of a contract to sell in the event that the seller. JR. our ruling in Co Chien v. RESOLUTION ROBERTO A. 2003 was issued in favor of PS Bank. It is well-settled in this jurisdiction that the clear language of the law shall prevail.000.00 loan from respondent Philippine Savings Bank (PS Bank). 957 are provided for in Sections 38 and 39. Article VIII of the Constitution. PHILIPPINE SAVINGS BANK. the RTC of Quezon City. ROSANILA V.D.: In this Petition for Review on Certiorari. 190078 March 5. On a final note. issued an Order15 denying the motion for intervention and to stay the implementation of the writ. the Motion for Leave to Intervene can no longer be entertained. Costs against petitioner G. and MA. 118 SCRA 116 (1982).31 whether the Agreement between World Class and Sportswear should now be rescinded is a question we do not decide. They sought the nullification of the extrajudicial foreclosure sale for allegedly having been conducted in contravention of the procedural requirements prescribed in A. and the Division Chairperson¶s Attestation. 2002. the complaint of G. CARPIO Associate Justice Chairperson MARIANO C. to wit:16 The issuance of writ of possession being ministerial in character.) We see no reason to depart from this ruling.. we DENY the present petition for review on certiorari and AFFIRM the assailed CA Decision and Resolution dated December 19. CERTEZA.1 petitioners contend that the auction sale conducted by virtue of the extrajudicial foreclosure of the mortgage should be declared null and void for failure to comply with the twobidder rule. 99-10-05-0 (Re: Procedure in Extrajudicial Foreclosure of Real Estate Mortgages) and in violation of herein petitioners¶ right to due process. Adil. No. with all the buildings and improvements existing thereon. CARPIO Associate Justice Chairperson CERTIFIC ATION Pursuant to Section 13. Corp. 957.2 secured by two parcels of land. is not in and of itself sufficient to render a contract void..13 The petitioners filed their Reply14 arguing that the filing of their petition before the court where possession was requested was pursuant to Sec.9 attaching therein their Petition-in-Intervention10 pursuant to Sec. vs. ARTURO D. 2004. No. REYNATO S. on December 1. which was registered with the Registry of Deeds of Quezon City on March 25. Respondent. void. the implementation of such writ by the sheriff is likewise ministerial. is DISMISSED. while penalized under the law. JR. SO ORDERED. PS Bank opposed11 the motion citing Manalo v.R. DEL CASTILLO Associate Justice certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. We said: A review of the relevant provisions of P.3 Petitioners failed to pay their outstanding obligation despite demands hence PS Bank instituted on May 8. 2003. 2007 and January 2. 2008. which was granted in an Order8 dated September 21. 8 of Act No.D. This principle particularly enjoins strict compliance with provisions of law which are penal in nature. did not possess a certificate of registration and license to sell. Court of Appeals12 where we held that "(T)he issuance of an order granting the writ of possession is in essence a rendition of judgment within the purview of Section 2. 2003. it does not provide that the absence thereof will automatically render a contract. PUNO Chief Justice Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G. Factual Antecedents Petitioners obtained a P1. Ruling of the Regional Trial Court On March 3. Branch 217. ANTONIO T. JOSE PORTUGAL PEREZ Associate Justice ATTEST ATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. The lack of a Certificate of Registration/License to Sell merely subjects the developer to administrative sanctions. Rule 19 of the Rules of Court. Sta.G. petitioners filed an Omnibus Motion for Leave to Intervene and to Stay Issuance or Implementation of Writ of Possession.40 (Emphasis supplied. as this is not a matter before us." PS Bank also argued that with the issuance of the trial court¶s Order on September 21. Sportswear Mfg. 3135. 2010 During the auction sale conducted on February 18. CERTEZA. Lucia Realty & Development. 8 of Act No.6 During the period of redemption. Corp. Absent any specific sanction pertaining to the violation of the questioned provisions (Sections 4 and 5). PS Bank emerged as the sole and highest bidder. Sportswear Mfg. J. and so hold that the Arbiter erred in declaring the Agreement void due to the absence of a CR/LS at the time the Agreement was executed. it is hereby . after the period of redemption for the foreclosed property had already expired. On January 20.5 A corresponding Certificate of Sale dated February 20. The general penalties for the violation of any provisions in P.255. the same do not include the nullification of contracts that are otherwise validly entered. Petitioners. 2004. ABAD Associate Justice DEL CASTILLO. Accordingly. or when a penalty is provided for the violation thereof.39 that the requirements of Sections 4 and 5 of P. N-208706 and N-208770. 3135. xxxx The lack of certificate and registration.4 as amended. AND AMADA P. otherwise validly entered. for the benefit of the HLURB. covered by Transfer Certificate of Title Nos. the Supreme Court held that "once the writ of SPOUSES NORMAN K.D. an action for Extrajudicial Foreclosure of the Real Estate Mortgage pursuant to Act No. 3135. 957 are intended merely for administrative convenience in order to allow for a more effective regulation of the industry and do not go into the validity of the contract such that the absence thereof would automatically render the contract null and void.D. 2005. we choose to reiterate. the general penalties provided in the law shall be applied. As can clearly be seen in the cited provisions. BRION Associate Justice WE CONCUR: ANTONIO T. 957 reveals that while the law penalizes the selling of subdivision lots and condominium units without prior issuance of a Certificate of Registration and License to Sell by the HLURB. PS Bank filed an Ex-parte Petition7 for Writ of Possession with the Regional Trial Court (RTC) of Quezon City.G. Inc. The penalty imposed by the decree is the general penalty provided for the violation of any of its provisions.
the motion to intervene and to stay the implementation of the writ of possession is hereby denied. 2001. (2) there was no irregularity in the foreclosure sale. the creditor. and such redemption shall be governed by the provisions of sections four hundred and sixty-four to four hundred and sixty-six. On the other hand. whether x x x the court of appeals erred in ruling that there may be only one bidder in a foreclosure sale.M. 2005 imputing grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the trial court in denying their motion to intervene and to stay the implementation of the writ. 8791 (The General Banking Law of 2000) to Act No. 5. more importantly. paragraph 5 of A. premises considered. (3) the denial of the motion to intervene is proper. 2001 and August 7. 4.m.M. Neither Act No. The two-bidder rule is provided under P. as amended by the January 30. and shall be under the direction of the sheriff of the province. The requirement for at least two participating bidders provided in the original version of paragraph 5 of A. Sec. This is not only costly but. The dispositive portion of the said Decision reads:20 IN VIEW OF ALL THE FOREGOING. or a notary public of said municipality. between the hours of nine in the morning and four in the afternoon. 2001. It provides: Section 1. 99-10-05-0. Ruling of the Court of Appeals Petitioners filed a Petition for Certiorari with the Court of Appeals (CA) on June 8.21 Hence. sought the nullification of the February 18. (2) ceiling on sheriff¶s fees. 3135 and that it is impractical and burdensome. 6.m. or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold. requires that there must be at least two participating bidders in an auction sale. for the requirement that there must be at least two bidders is not as exigent as in the case of contracts for government infrastructure projects. may redeem the same at any time within the term of one year from and after the date of sale. The law governing cases of extrajudicial foreclosure of mortgage is Act No. inclusive. Hence. 3135. in its Decision19 dated May 8. In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to. No. we made the following pronouncements: It is contended that this requirement is now found in Act No. Velasco. Conduct of the extra-judicial foreclosure sale ± a. The Orders dated March 3. 3135. as amended by the Resolutions of January 30. 2005. 2005 in LR Case No. the private interest is predominant. x x x Thus. 2001. No auction sale shall be held unless there are at least two (2) participating bidders.31 Section 5(a) of the said circular states: Sec. 5. found that (1) the issuance of a writ of possession is a ministerial function. specifically on: (1) period of redemption of properties with respect to the change introduced by Republic Act No. The name/s of the bidder/s shall be reported by the sheriff or the notary public who conducted the sale to the Clerk of Court before the issuance of the certificate of sale. 1594 and its implementing rules with respect to contracts for government infrastructure projects because of the public interest involved. and (3) payment of filing fees prescribed in the Rules of Court in addition to sheriff¶s fees. 2001 Resolution. the provisions of the following sections shall govern as to the manner in which the sale and redemption shall be effected.18 The CA. this petition. the petition is ordered DISMISSED. and 4 p. The bidding shall be made through sealed bids which must be submitted to the Sheriff who shall conduct the sale between the hours of 9 a. may participate in the bidding and purchase under the same conditions as any other bidder. 99-10-05-0 now reads: 5. Petitioners allege that the contents of their Omnibus Motion together with the Petition-in-Intervention. Petitioners filed a motion for reconsideration but the motion was denied in the Order dated May 9.24 Thus: 5.29 Pursuant to A. No.281avvphi1 Subsequently. The observation is well taken. petitioners argue that A. Our Ruling The petition lacks merit. although entitled as such. No. therefore. No. When a sale is made under a special power inserted in or attached to any real estate mortgage hereafter made as security for the payment of money or the fulfillment of any other obligation. The names of the bidders shall be reported by the sheriff or the notary public who conducted the sale to the Clerk of Court before the issuance of the certificate of sale. the CA correctly ruled that it is no longer required to have at least two bidders in an extrajudicial foreclosure of mortgage." The Court found it gross error for the judge to have suspended the implementation of the writ of possession on a very dubious ground as "humanitarian reason. the then Court Administrator (now Associate Justice of this Court) Presbitero J.32 possession has been issued. 17 II. whether x x x the court of appeals erred in ruling that certiorari is not the proper remedy of a party in a writ of possession case." WHEREFORE.22 They further submit that the writ of possession is null and void because of patent irregularities in the conduct of the foreclosure sale. of the date of the . issued Circular No. Q-17376 (03) are affirmed. trustee. 2000. considering that not all auction sales are commercially attractive to prospective bidders. 99-10-05-0 which took effect on January 15.M. 2009. 2005 and May 9. otherwise the sale shall be postponed to another date.D. Petitioners filed a timely Motion for Reconsideration. 2003 extrajudicial foreclosure sale and the cancellation of both the certificate of sale and the writ of possession issued in favor of PS Bank.27 Hence. 2009. whether x x x the court of appeals erred in ruling that the denial of petitioners¶ motion to intervene is proper. in addition to his expenses. who shall be entitled to collect a fee of five pesos for each day of actual work performed.. 99-10-05-0. in the Resolution26 of the Supreme Court en banc dated January 30. Although there is a public interest in the regularity of extrajudicial foreclosure of mortgages.M. 7200230 dated January 22. 2002. Jr. which was denied by the CA in its Resolution dated October 20. If on the new date set for the sale there shall not be at least two bidders. 3135 nor the previous circulars issued by the Court governing extrajudicial foreclosures provide for a similar requirement.25 in so far as these are not inconsistent with the provisions of this Act. or other person authorized to act for the creditor.M. the sale shall then proceed. 2002 which became effective on April 22. his successors in interest or any judicial creditor or judgment creditor of said debtor. the new requirement will necessitate republication of the notice of auction sale in case only one bidder appears at the scheduled auction sale. Sec. 99-10-05-0 is not found in Act No. Issues Petitioners advance the following issues: I. No. the debtor. of the Code of Civil Procedure. 3135. III. it would render naught the binding effect of the publication of the originally scheduled sale. xxxx Sec. on August 7. At any sale. unless the contrary has been expressly provided in the mortgage or trust deed under which the sale is made. The sale shall be made at public auction. the justice or auxiliary justice of peace of the municipality in which such sale has to be made. whether or not provision for the same is made in the power.23 In support of their contention. The reason. the trial court has no alternative but to enforce the writ without delay. we further resolved other matters relating to A. and (4) certiorari is not the proper remedy. No.
Lozada did not pursue his appeal.Consequently.. The affected landowners appealed. During the pendency of the expropriation proceedings. which are also grounded on the supposed irregularity in the auction. it is no longer necessary for this Court to rule on the other issues presented by the petitioners. CARPIO Associate Justice Chairperson ARTURO D. directing the transfer of general aviation operations of the Lahug Airport to the Mactan International Airport before the end of 1990 and. LOZADA. Sr. A.00 per square meter. it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. 176625 : February 25. The antecedent facts and proceedings are as follows: Subject of this case is Lot No.Lozada received the amount of P3. with consequential damages by way of legal interest computed from November 16. 2007 of the Court of Appeals (CA) ( Cebu City). BRION ROBERTO A. SO ORDERED. the lots were already occupied by the U. requesting to repurchase the lots. 2009 are hereby AFFIRMED. CARPIO Associate Justice Chairperson. Army. Second Division CERTIFIC ATION Pursuant to Section 13. 88. ANTONIO T. Lot No. the Bureau of Aeronautics. LOZADA. The use of the word "bids" (in plural form) does not make it a mandatory requirement to have more than one bidder for an auction sale to be valid. CV No. and For Other Purposes. adjudged at P3. REYNATO S. The assailed Decision of the Court of Appeals dated May 8. 1947the time when the lot was first occupied by the MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY and AIR TRANSPORTATION OFFICE.The case was filed with the then Court of First Instance of Cebu. Aquino issued a Memorandum to the Department of Transportation. initiated by the Republic of the Philippines (Republic). and the HEIRS OF ROSARIO MERCADO. 4). 88-SWO-25042 (Lot No. entitled An Act Creating the Mactan-Cebu International Airport Authority.33 auction (Act 3135. Consequently. The property mortgaged shall be awarded to the party submitting the highest bid and in case of a tie. PUNO Chief Justice Republic of the Philippines SUPREME COURT Manila EN BANC G. the National Airport Corporation and then to the CAA. with an area of 1. JOSE P. MARIO M. then the policy of this Office is to give priority to the former owners subject to the approval of the President.Its original owner was Anastacio Deiparine when the same was subject to expropriation proceedings. BERNARDO L. with the other landowners. SR.) No. VICENTE LOZADA. GODINEZ. Article VIII of the Constitution. the closure of the Lahug Airport. SOCORRO CAFARO and ROSARIO LOZADA. Hence. Respondents. contacted then CAA Director Vicente Rivera. as per previous agreement. within five (5) days from notice.32 In view of the foregoing. The projected improvement and expansion plan of the old Lahug Airport. R-1881.It reiterated. 2006 and the Resolution cralaw dated February 7. Transferring Existing Assets of the Mactan International Airport and the Lahug Airport to the Authority. Sometime in 1990. Sec. DEL CASTILLO Associate Justice WE CONCUR: ANTONIO T. Third Branch. the assurance that should this Office dispose and resell the properties which may be found to be no longer necessary as an airport. the trial court rendered judgment in favor of the Republic and ordered the latter to pay Lozada the fair market value of Lot No. simple mistakes or omissions are not considered fatal to the validity of the notice and the sale made pursuant thereto". the Congress of the Philippines passed Republic Act (R. Petitioners. and set aside the Decision cralaw dated February 28. in CAG. 6958. represented by the then Civil Aeronautics Administration (CAA). WHEREFORE.00 by way of payment. located in Lahug. vs. upon such transfer. ABAD Associate Justice Associate Justice represented by MARCIA LOZADA GODINEZ.S. 99-10-05-0. airport. and the Division Chairperson¶s attestation. Payment of the winning bid shall be made either in cash or in managers check. 25057. MARCIA L. was not pursued. PEREZ Associate Justice ATTEST ATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. or to prevent it from bringing a fair price. however. . for the expansion and improvement of the Lahug Airport. J . FLORES.. 88 was transferred and registered in the name of the Republic under TCT No. to depreciate the value of the property. MARIANO C. pursuant to an established policy involving similar cases. On November 29. then President Corazon C. the instant petition is DENIED. 88 from Deiparine. however. the extra-judicial foreclosure sale conducted in this case is regular and valid. respondent Bernardo L.A. 88). the subsequent issuance of the writ of possession is likewise regular and valid. the Air Transportation Office (ATO). Lozada. No. no longer prescribes the requirement of at least two bidders for a valid auction sale. Twentieth Division..018. namely. 2009 and its Resolution dated October 20. an open bidding shall be conducted between the highest bidders. DOLORES GACASAN. seeking to reverse. VIRGINIA L. 1989. As early as 1947.M. 9045 was issued in Lozadas name.017 square meters.R.R. as amended.Pending appeal. Jr. acquired Lot No. Cebu City. more or less. No. 2010 DECISION NACHURA. Vesting the Authority with Power to Administer and Operate the Mactan International Airport and the Lahug Airport. 65796. Transfer Certificate of Title (TCT) No.They were turned over to the Surplus Property Commission. BERNARDO LOZADA. in Philippine currency. JR. and docketed as Civil Case No.Thereafter.Because of this promise. On December 29. We further held that "Except for errors or omissions in the notice of sale which are calculated to deter or mislead bidders. proposed a compromise settlement whereby the owners of the lots affected by the expropriation proceedings would either not appeal or withdraw their respective appeals in consideration of a commitment that the expropriated lots would be resold at the price they were expropriated in the event that the ATO would abandon the Lahug Airport. Lozada.: This is a petition for review on certiorari under Rule 45 of the Rules of Court. formerly CAA. annul. 1961.The CAA replied that there might still be a need for the Lahug Airport to be used as an emergency DC-3 airport.
(4) After the expansion. the parties stipulated on the following set of facts: (1) The lot involved is Lot No. the land becomes the absolute property of the expropriator. Lozada. Mactan-Cebu International Airport Authority legal assistant Michael Bacarisas. the property was transferred in the name of MCIAA. Marcia L. Lozada. a commercial area. x x x. Socorro L. 88 to respondents in the event that the property would no longer be needed for airport operations. in connection with its program for the improvement and expansion of the Lahug Airport. and against defendants Cebu-Mactan International Airport Authority (MCIAA) and Air Transportation Office (ATO): 1. 88 for the expansion of the Lahug Airport be aborted or abandoned.  In their Answer. either by the exercise of eminent domain or by purchase.. among others.The latter replied by giving as assurance that priority would be given to the previous owners. cralaw The old airport was converted into what is now known as the Ayala I. The petition should be denied. the parties entered into a compromise settlement to the effect that the subject property would be resold to the original owner at the same price when it was expropriated in the event that the Government abandons the Lahug Airport. the former owner retains no right in the land. situated in the City of Cebu. 88 covered by TCT No. 88 Psd821 (SWO-23803). this petition arguing that: (1) the respondents utterly failed to prove that there was a repurchase agreement or compromise settlement between them and the Government. 1999.Petitioners instead asserted that the judgment of condemnation was unconditional.ordering the Register of Deeds to effect the transfer of the Certificate of Title from defendant[s] to plaintiffs on Lot No. Bernardo L. then President Corazon C.Petitioners motion for reconsideration was. containing an area of One Thousand Seventeen (1. Godinez. Flores. Hence. 2006. Sr. (2) The property was expropriated among several other properties in Lahug in favor of the Republic of the Philippines by virtue of a Decision dated December 29. denied in the questioned CA Resolution dated February 7.Lot No. (f) The projected expansion and improvement of the Lahug Airport did not materialize. cralaw which declared that the Government acquires only such rights in expropriated parcels of land as may be allowed by the character of its title over the properties If x x x land is expropriated for a particular purpose. x x x. disposing as follows: WHEREFORE. being its former owners. represented by their attorney-in-fact Marcia Lozada Godinez. Cafaro and Rosario M. in the light of the foregoing. Gacasan. and 2. on June 4. 1989. Godinez. Cafaro and Rosario M. (i) Since the public purpose for the expropriation no longer exists. with the condition that when that purpose is ended or abandoned the property shall return to its former owner. Lozada. Lot No.  .Petitioners cite. Sr. Lozada. a province. namely. Gacasan. Bernardo M. or municipality. Aquino directed the Department of Transportation and Communication to transfer general aviation operations of the Lahug Airport to the Mactan-Cebu International Airport Authority and to close the Lahug Airport after such transfer[. and the public use may be abandoned. in support of this position. of course. Flores. Aquino. Mario M. 1996. more or less. 20357 in the name of defendant MCIAA and to issue a new title on the same lot in the name of Bernardo L. the decree of expropriation gives to the entity a fee simple title. (b) In the early 1960s. Petitioners anchor their claim to the controverted property on the supposition that the Decision in the pertinent expropriation proceedings did not provide for the condition that should the intended use of Lot No. petitioners interposed an appeal to the CA. unless there is some statutory provision to the contrary.The case was docketed as Civil Case No. Bernardo M. 9045.]  During trial. 88 became the site of a jail known as Bagong Buhay Rehabilitation Complex . (d) During the pendency of the appeal. Jr. therefore. Park. should CAA decide to dispose of the properties. Dolores L.. of course. the public purpose of the said expropriation (expansion of the airport) was never actually initiated. then. Lozada. as their lone witness. subject to the approval of the President. while a portion thereof was occupied by squatters.34 From the date of the institution of the expropriation proceedings up to the present. denying petitioners appeal and affirming in toto the Decision of the RTC. [and] (5) On November 29. unconditionally . and respondents were.  Aggrieved. No pronouncement as to costs. R-1881.T. Dolores L. but before trial on the merits. 1961 of the CFI of Cebu in Civil Case No. (c) A decision was rendered by the Court of First Instance in favor of the Government and against the land owners. the Republic sought to acquire by expropriation Lot No. namely: Vicente M. Virginia L. Socorro L. and the heirs of Rosario Mercado. upon payment of the expropriation price to plaintiffs. Sr. the CA rendered its assailed Decision dated February 28.Instead. 88. Sr. petitioners asked for the immediate dismissal of the complaint. After pretrial. Cebu City.If x x x land is expropriated for a public street and the expropriation is granted upon condition that the city can only use it for a public street. Cebu City. the Court hereby renders judgment in favor of the plaintiffs. R1881 was absolute and unconditional.The complaint substantially alleged as follows: (a) Spouses Bernardo and Rosario Lozada were the registered owners of Lot No. (2) the judgment in Civil Case No. realized. Fery v. Lozada. when the city abandons its use as a public street. 88 was subsequently transferred to the Republic of the Philippines (TCT No.ordering MCIAA and ATO to restore to plaintiffs the possession and ownership of their land. or the land . On October 22. or implemented. whether it be the State. Branch 57. the RTC rendered its Decision. the old airport was converted into a commercial complex. and in that case the nonuser does not have the effect of defeating the title acquired by the expropriation proceedings. 2007. Virginia L. not entitled to recover the expropriated property notwithstanding non-use or abandonment thereof. respondents presented Bernardo Lozada.If. the property would revert to respondents. among whom was Bernardo Lozada. giving title in fee simple to the Republic. Lozada. Thus. 88-SWO-25042 of the Banilad Estate. Branch 57. Vicente M. however. then. and the heirs of Rosario Mercado. (h) On November 29. (e) Title to Lot No. through a Memorandum to the Department of Transportation and Communications (DOTC). (g) Plaintiffs sought to repurchase their property from then CAA Director Vicente Rivera.They specifically denied that the Government had made assurances to reconvey Lot No. CEB-18823 and was raffled to the Regional Trial Court (RTC). and (3) the respondents claim of verbal assurances from government officials violates the Statute of Frauds. (3) The public purpose for which the property was expropriated was for the purpose of the Lahug Airport. likewise. then. Jr. when the purpose is terminated or abandoned the former owner reacquires the property so expropriated. while petitioners presented their own witness. upon the contrary. it returns to the former owner.After the filing of the necessary appellate briefs. When land has been acquired for public use in fee simple. 1989. of course. appealed therefrom. petitioners initiated a complaint for the recovery of possession and reconveyance of ownership of Lot No. Municipality of Cabanatuan . Lozada. 88. SO ORDERED. cancelling TCT No. 25057). the property must be returned to the plaintiffs. Marcia L.. Lozada.017) square meters. directed the transfer of general aviation operations at the Lahug Airport to the Mactan-Cebu International Airport Authority. then President Corazon C.
 As correctly found by the CA. factual findings of the trial court. we just believed in the government.However.35 may be devoted to a different use. and equity.  Contrary to the stance of petitioners.The condition not having materialized because the airport had been abandoned. cralaw It is well settled that the taking of private property by the Governments power of eminent domain is subject to two mandatory requirements: (1) that it is for a particular public purpose. the Court will presume that the Lahug Airport will continue to be in operation (emphasis supplied). he testified that government representatives verbally promised him and his late wife while the expropriation proceedings were on-going that the government shall return the property if the purpose for the expropriation no longer exists. cralaw On this note. that a compromise agreement was. failing which. This inference further implies two (2) things: (a) after the Lahug Airport ceased its undertaking as such and the expropriated lots were not being used for any airport expansion project. in no uncertain terms.Otherwise. the private property owner would be denied due process of law.Though Lozada is not part of the compromise agreement. in 1915. 916 and 920 as between the State and their former owners.Although Mactan Airport is being constructed. Mactan-Cebu International Airport Authority . on the question of whether respondents were able to establish the existence of an oral compromise agreement that entitled them to repurchase Lot No. he did not hire a lawyer.This Court notes that he was 89 years old when he testified in November 1997 for an incident which happened decades ago. Lake Shore & M.In such a case. the exercise of the power of eminent domain has become improper for lack of the required factual justification. the Decision in Civil Case No. we now expressly hold that the taking of private property.  cralaw McConihay v. the testimony of Lozada was based on personal knowledge as the assurance from the government was personally made to him. then the former owners.  he nevertheless adduced sufficient evidence to support his claim. where respondent therein offered testimonies which were hearsay in nature. Fery was not decided pursuant to our now sacredly held constitutional right that private property shall not be taken for public use without just compensation. which necessarily resulted in the abandonment of the particular public purpose for which the property was taken. Co. It bears stressing that both the RTC. there were no expropriation proceedings against his property in 1952 because the first notice of expropriation he received was in 1962. Court of Appeals. the CA declared Lozadas testimony is cogent. Cebu and the CA have passed upon this factual issue and have declared. x x x. respondent MCIAA has brought to our attention a significant and telling portion in the Decision in Civil Case No. it cannot now be doubted. in fact. these meaningful statements in the body of the Decision warrant the conclusion that the expropriated properties would remain to be so until it was confirmed that Lahug Airport was no longer in operation. it will be returned back. in the instant case.  cralaw and Reichling v. nevertheless. it is binding. this Court had ruled otherwise in Heirs of Timoteo Moreno and Maria Rotea v. and the judgment would violate the property owners right to justice. he is a competent witness capable of perceiving and making his perception known. if the latterdesires to reacquire the same. following American jurisprudence.The objection to his competency must be made before he has given any testimony or as soon as the incompetency becomes apparent. unlike in Mactan Cebu International Airport Authority v. we take this opportunity to revisit our ruling in Fery . petitioners herein.An octogenarian widowerretiree and a resident of Moon Park. though he could not name the government representatives who made the promise. the expropriator should commit to use the property pursuant to the purpose stated in the petition for expropriation filed. >California since 1974.In affirming the factual finding of the RTC to this effect. While in the trial in Civil Case No.Claiming that the municipality lost its right to the property taken since it did not pursue its public purpose.Accordingly.It was just a verbal promise. These requirements partake of the nature of implied conditions that should be complied with to enable the condemnor to keep the property expropriated.Still.As far as he could remember. respondent Cabanatuan constructed residential houses for lease on the area. if this particular purpose or intent is not initiated or not at all pursued.Lozada was firm that he was promised that the lot would be reverted to him once the public use of the lot ceases. the judgment of expropriation suffers an intrinsic flaw.. R-1881 validating our discernment that the expropriation by the predecessors of respondent was ordered under the running impression that Lahug Airport would continue in operation As for the public purpose of the expropriation proceeding.  cralaw all uniformly holding that the transfer to a third party of the expropriated real property. Then. the rights vis--vis the expropriated Lots Nos. particularly City of Fort Wayne v. This promise was made at the premises of the airport. Covington Lumber Co. which involved an expropriation suit commenced upon parcels of land to be used as a site for a public market. consequent to the Governments exercise of its power of eminent domain. if they so desire. subject to the return of the amount of just compensation received. cralaw thus Moreover.The Court cannot substitute its judgment for those of the said departments or agencies. the title of the expropriating agency being one of fee simple. fairness.. must be equitably adjusted. is not a ground for the recovery of the same by its previous owner. the particular public purpose for which the property will be devoted. Obviously.S. 88 should the operations of the Lahug Airport be abandoned. In light of these premises. RY. R-1881 [we] could have simply acknowledged the presence of public purpose for the exercise of eminent domain regardless of the survival of Lahug Airport. does not dismantle the credibility and truthfulness of his allegation. petitioner Juan Fery. and is peremptorily abandoned. the former owner of the lots expropriated. Verily.The minor lapses are immaterial.Based on the promise. it should file another petition for the new purpose. with the former undertaking to resell Lot No.Instead of putting up a public market. In the absence of such showing. It is up to the other departments of the Government to determine said matters.  Indeed. sought to recover his properties. it does not take away the actual usefulness and importance of the Lahug Airport: it is handling the air traffic both civilian and military. respondent Cabanatuan acquired a fee simple title to the lands in question.The fact that he could not supply the necessary details for the establishment of his assertions during cross-examination. entered into between the Government and respondents. may seek the reversion of the property. wherein it is apparent that the acquisition by the Republic of the expropriated lots was subject to the condition that the Lahug Airport would continue its operation. no evidence was adduced to show how soon is the Mactan Airport to be placed in operation and whether the Lahug Airport will be closed immediately thereafter. it is then incumbent upon the expropriator to return the said property to its private owner. especially when affirmed by the CA. Verily. is always subject to the condition that the property be devoted to the specific public purpose for which it was taken.If not. judgment was rendered in favor of the municipality. the trial court in its Decision chose not to do so but instead prefixed its finding of public purpose upon its understanding that Lahug Airport will continue to be in operation. and (b) the foregoing unmistakable declarations in the body of the Decision should merge with and become an intrinsic part of the fallo thereof which under the premises is clearly inadequate since the dispositive portion is not in accord with the findings as contained in the body thereof. or any reversion to the former owner. with respect to the element of public use. we rule in the affirmative. are binding and conclusive on this .He made it clear that the verbal promise was made in Lahug with other lot owners before the 1961 decision was handed down. namely. as he had admitted that. 88 to the latter if the improvement and expansion of the Lahug Airport would not be pursued. cralaw Even without the foregoing declaration. and (2) that just compensation be paid to the property owner. without any impairment of the estate or title acquired. Theodore Wright. His testimony on cross-examination destroyed neither his credibility as a witness nor the truthfulness of his words. as it would lack one indispensable element for the proper exercise of the power of eminent domain. the former owner should then be allowed to reacquire the expropriated property.Corollarily. but that When it will not be used as intended.  cralaw cited by petitioners. Branch 57.The decision of the competency of a witness rests primarily with the trial judge and must not be disturbed on appeal unless it is clear that it was erroneous. cralaw More particularly. R-1881 should be read in its entirety.From it aircrafts fly to Mindanao and Visayas and pass thru it on their flights to the North and Manila.
88. he may demand the reconveyance of the property to him. 88 to respondents. which in this case runs from the time petitioners comply with their obligation to respondents. 2007 Resolution are AFFIRMEDwith MODIFICATIONas follows: 1. the fact of Lozadas eventual conformity to the appraisal of Lot No. 88 do not conclusively establish that respondents absolutely parted with their property. and while the inclusion of this pronouncement in the judgment of condemnation would have been ideal.Petitioners are ENTITLED to keep whatever fruits and income they may have obtained from Lot No. to be computed from the time petitioners comply with their obligation to reconvey Lot No. and respondents need not account for the interests that the amounts they received as just compensation may have earned in the meantime. are echoed in Art. 3. a trust by virtue of law is established. the Statute of Frauds. 88. 2.The February 28. at the same time. Although the symmetry between the instant case and the situation contemplated by Art. with respect to the debtor. affirming the October 22. Branch 87.By reason of such assurance made in their favor. one that is akin to the implied trust referred to in Art. such precision is not absolutely necessary nor is it fatal to the cause of petitioners herein. respondents. the provision is undoubtedly applicable. In constructive trusts. and its February 7. 88 may be enforced based on a constructive trust constituted on the property held by the government in favor of the former. and. 88.  In this case. 88. Following Article 1187 cralaw of the Civil Code. viz. . 88. 1190 of the Civil Code.Of course.Respondents are ORDERED to return to petitioners the just compensation they received for the expropriation of Lot No. the arrangement is temporary and passive in which the trustees sole duty is to transfer the title and possession over the property to the plaintiffbeneficiary. 2006 Decision of the Court of Appeals.No costs. as well as the monetary value of their services in managing it to the extent that respondents were benefited thereby. the case is REMANDED to the Regional Trial Court. respondent MCIAA and petitioners over Lots Nos. SO ORDERED. The predicament of petitioners involves a constructive trust. petitioners would be denied the use of their properties upon a state of affairs that was not conceived nor contemplated when the expropriation was authorized. : Mactan-Cebu International Airport Authority is correct in stating that one would not find an express statement in the Decision in Civil Case No. are laid down in the preceding article shall be applied to the party who is bound to return x x x.If the fulfillment of the obligation is offered by the grantor when it becomes due. 88 and his seeking the correction of a clerical error in the judgment as to the true area of Lot No. 88. A petition for certiorari under Rule 45 of the Rules of Court contemplates only questions of law and not of fact. particularly because of the oral promise made to them. the court will exercise its discretion in deciding what acts are required of the plaintiff-beneficiary as conditions precedent to obtaining such decree and has the obligation to reimburse the trustee the consideration received from the latter just as the plaintiff-beneficiary would if he proceeded on the theory of rescission. only for the purpose of receiving evidence on the amounts that respondents will have to pay petitioners in accordance with this Courts decision. upon the fulfillment of said conditions. Constructive trusts are fictions of equity which are bound by no unyielding formula when they are used by courts as devices to remedy any situation in which the holder of legal title may not in good conscience retain the beneficial interest. respondents relied on the same by not pursuing their appeal before the CA.However. responsibilities or liabilities assumed or contracted by him thereby.To our mind. suffice it to state that the Statute of Frauds operates only with respect to executory contracts. 88. cannot apply. invoked by petitioners to bar the claim of respondents for the reacquisition of Lot No. the return or repurchase of the condemned properties of petitioners could be readily justified as the manifest legal effect or consequence of the trial courts underlying presumption that Lahug Airport will continue to be in operation when it granted the complaint for eminent domain and the airport discontinued its activities. In light of the foregoing modifications. plus legal interest to be computed from default. shall return to each other what they have received x x x In case of the loss. Cebu City. the petition is DENIED. 916 and 920. as creditors. and the monetary value of his services in managing the property to the extent that plaintiff-beneficiary will secure a benefit from his acts. the rationale thereof being as follows: In executory contracts there is a wide field for fraud because unless they be in writing there is no palpable evidence of the intention of the contracting parties.36 Court and may not be reviewed. Branch 57. if a contract has been totally or partially performed. as part of the process of restitution. As regards the position of petitioners that respondents testimonial evidence violates the Statute of Frauds. in this case.  On the matter of the repurchase price. our ruling in Heirs of Timoteo Moreno is instructive. In accordance with Article 1190 cralaw of the Civil Code vis--vis Article 1189. evade the obligations. the wronged party seeking the aid of a court of equity in establishing a constructive trust must himself do equity. Accordingly.For. The right of respondents to repurchase Lot No. the government can be compelled by petitioners to reconvey the parcels of land to them. petitioners conveyed Lots No. cralaw WHEREFORE. 1454 is not perfect. as explained by an expert on the law of trusts: The only problem of great importance in the field of constructive trust is to decide whether in the numerous and varying fact situations presented to the courts there is a wrongful holding of property and hence a threatened unjust enrichment of the defendant.The statute has precisely been enacted to prevent fraud.On this note. 1454 of the Civil Code. the trustee may also be paid the necessary expenses he may have incurred in sustaining the property.In the good judgment of the court. 88. and does not apply to contracts which have been completely or partially performed. which is a natural consequence of nature and time. contrary to the claim of petitioners.Respondents are ORDERED to pay petitioners the necessary expenses the latter incurred in maintaining Lot No. which is a natural consequence of nature and time. for it would enable the defendant to keep the benefits already delivered by him from the transaction in litigation. do not have to pay. these acts were simply meant to cooperate with the government. in the case of default. Cebu City. plus legal interest. petitioners may keep whatever income or fruits they may have obtained from Lot No. R-1881 to the effect that the [condemned] lot would return to [the landowner] or that [the landowner] had a right to repurchase the same if the purpose for which it was expropriated is ended or abandoned or if the property was to be used other than as the Lahug Airport. the improvement shall inure to the benefit of the creditor x x x. deterioration or improvement of the thing. which provides that (i)f a thing is improved by its nature. The rights and obligations between the constructive trustee and the beneficiary. This omission notwithstanding. the appreciation in value of Lot No. while petitioners are obliged to reconvey Lot No. the oral compromise settlement having been partially performed. failing to keep its bargain. the provisions which. 1999 Decision of the Regional Trial Court. the parties. When the conditions have for their purpose the extinguishment of an obligation to give.Moreover. 88 to them. If an absolute conveyance of property is made in order to secure the performance of an obligation of the grantor toward the grantee. as well as the appreciation in value of Lot No.Respondents are also ENTITLED to keep whatever interests the amounts they received as just compensation may have earned in the meantime.No doubt. cralaw Not one of the exceptions to this rule is present in this case to warrant a reversal of such findings. Respondents must likewise pay petitioners the necessary expenses they may have incurred in maintaining Lot No. otherwise. his fixed costs for improvements thereon. plus the monetary value of their services to the extent that respondents were benefited thereby. the latter must return to the former what they received as just compensation for the expropriation of the property. and 4. In the case at bar. or by time. 916 and 920 to the government with the latter obliging itself to use the realties for the expansion of Lahug Airport. the exclusion of parol evidence would promote fraud or bad faith.
946. Rico Shipping.054 leaving a balance of P115. the debtors failed and refused to pay on due date. (2) LotNo. Cad-237. P-2324.00 as penalty charge. which reversed the Decision cralaw dated 21 September 2003 of the Regional Trial Court (RTC) of Cagayan de ROBERTO A.500 starting on 23 January 1980. III On the third cause of action: (a) The sum ofP115. the land thereby acquired shall be inalienableand shall not be subject to encumbrance for a period offive (5) years from the date of this patent. P-2325 and P-2326 were issued covering Free Patent Nos. and (2) To pay the costs of suit. the debtors obtained a third loan from MBTC in the amount of P50.D. [X-1] 10526 and [X-1] 10527. JOSE PORTUGAL PEREZ Associate Justice JOSE CATRAL MENDOZA Associate Justice CERTIFIC ATION The Facts MARIANO C. I hereby certify that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. with 16% interest and 2% credit evaluation and supervision fee per annum . CORONA METROPOLITAN BANK AND TRUST COMPANY. PERALTA* Associate Justice LUCAS P. J. in their own personal capacity and as solidary obligors (the three parties collectively known as the debtors).Under the note. Associate Justice Petitioner. respectively. [X-1] 10525. VILLARAMA. DEL CASTILLO Associate Justice MARTIN S. BERSAMIN Court is a petition for review on certiorari  Before the Associate Justice assailing the Decision cralaw dated 21 August cralaw 2003 and Resolution cralaw dated 13 February 2004 of the Court of Appeals (CA) in CA-G. MBTC filed a complaint for sum of money against the debtors with the RTC of Manila. Meanwhile. JR. with an area of 888 square meters. REYNATO S. Branch 4.946.00 with interest thereon at the rate of 1% per annum from date of filing of the complaint until fully paid. computed from date of filing of the complaint.On the due date. Inc. 43926. Associate Justice DECISION ARTURO D. Associate Justice Pursuant to Section 13. VIRAY and to his heirs and assigns forever. CV No. 763. the RTC of Manila rendered a judgment in favor of MBTC. No. NACHURA Associate Justice WE CONCUR: Republic of the Philippines SUPREME COURT Manila SECOND DIVISION REYNATO S. 141. Viray (Viray). Cagayan de Oro City. all situatedin Barangay Bulua. Article VIII of the Constitution. BRION Associate Justice The Case CARPIO. with 16% interest and 2% credit evaluation and supervision fee per annum . : RESITA J.: ONCHITA CARPIO MORALES Associate Justice PRESBITERO J. ABAD Oro Associate Justice City. PUNO Chief Justice ANTONIO T. 91-309. payable on 2 November 1981. cralaw The dispositive portion of the decision states: WHEREFORE. (b) The sum equivalent to 1% per month of the sum of P115. 121 as amended by P.000 payable on 14 November 1981. 26277. 26276. the debtors again failed to pay the loan despite demands to pay by MBTC. Misamis Oriental. represented by its President. units or institutions.Written across the face of the OCTs were the following: x x x To have and to hold said tract of land. VIRAY. which provide that except in favor of the Government or any of its branches. 122 and 124 of Commonwealth Act No. Original Certificate of Title (OCT) Nos. and shall not be liable for the satisfaction of any debt contracted prior to the expiration of said periodx x x.00 as attorneys fees.37 ANTONIO EDUARDO B. obtained two separate loans from petitioner Metropolitan Bank and Trust Company (MBTC) in the total amount of P250. with 15% interest and 2% credit evaluation and supervision fee per annum . Cad-237 with an area of 886 square meters. Cad-237 with an area of 500 square meters. together with respondent Edgardo D. No.The debtors executed a promissory note promising to pay in four semi-annual installments of P62. II On the second cause of action: (a) The sum ofP50. cralaw G. the debtors made a total payment of P134. (b) The sum equivalent to 1% per month of the principal sum as penalty charge. computed from date of filing of the complaint.000.The two loans were subsequently renewed and secured by one promissory note. Respondent. computed likewise from the filing of the complaint. the government issued Free Patents in favor of Viray over three parcels of land (lots) designated as(1) Lot No. Misamis Oriental. 119. VELASCO.. On 3 September 1981. vs. as amended. IV (1) The sum ofP15. in Civil Case No.000 with interest thereon at the rate of 16% per annum from date of filing of the complaint until fully paid. the debtors executed another promissory note and obtained a loan from MBTC in the amount of P50. 162218 : February 25.R. 26275.Again. PUNO Chief Justice On 7 July 1979. LEONARDO-DE CASTRO Associate Justice (on official leave) DIOSDADO M. subject to the provisions of Sections 118. JR. Erlinda Viray-Jarque. with the appurtenances thereunto of right belonging unto the said EDGARDO D.000.R. on 29 December 1982. EDGARDO D. 2010 RENATO C.000 with interest thereon at the rate of 16% per annum from date of filing of the complaint until fully paid.000. (b) The sum equivalent to 1% per month of the principal obligation as penalty charge. and (3) LotNo. cralaw On 28 April 1983. judgment is hereby rendered ordering defendants to pay jointly and severally plaintiff the following: I On the first cause of action: (a) The sum ofP50. SO ORDERED. CARPIO Associate Justice On 5 June 1981. . Branch 23. TheOCTs containing the free patents were registered with the Registry of Deeds of Cagayan de Oro City on 18 January 1983.946 which remained unpaid despite demands by MBTC.
T-59172 and T-59173 in the name of defendant-appellee Metrobank. The law clearly provides that lands which have been acquired under free patent or homestead shall not be encumbered or alienated within five years from the date of issuance of the patent or be liable for the satisfaction of any debt contracted prior to the expiration of the period. the RTC of Cagayan de Oro City rendered its decision in favor of MBTC. because the provision of law does not say that the debt referred to therein should be contracted before the five-year prohibitory period but before the expiration of the five-year prohibitory period. T-59172 and T-59173. Likewise. On 21 September 1993. or involuntarily. lands acquired under free patent or homestead provisions shall not be subject to encumbrance or alienation from the date of the approval of the application and for a term of five years from and after the date of issuance of the patent and grant. Accordingly. Pacific Commercial Company and Sheriff of Nueva Ecija. what is material is that the debt must be contracted before or prior to the expirationof the five-year prohibitory . cralaw Viray filed an appeal with the CA alleging that the RTC of Cagayan de Oro City committed reversible error in ruling solely on the issue of redemption instead of the issue of validity of the auction sale. 5 June 1981 and 3 September 1981. Branch 23. P-2325 and P2326 and issued in MBTCs name TransferCertificate of Title (TCT) Nos.This argument is weakest on two points. units. P-2324. or instruction. as in the case of an ordinary sale. without prejudice to his continuing obligation to pay the judgment debt. such as that effected through levy on the property and consequent sale at public auction. In Artates v. the instant petition.In both instances. based on facts and jurisprudence. the decision appealed from is hereby REVERSED.38 On 6 March 1984. transfer. the former never attempted to show interest in redeeming the properties. cralaw we held that a civil obligation cannot be enforced against.T. which approval shall not be denied except on constitutional and legal grounds. Viray filed an action for annulment of sale against the sheriff and MBTC with the RTC of Cagayan de Oro City. the execution sale of the lots occurred less than two years after the date of the issuance of the patents. Section 118 of CA 141 states: SECTION 118. cralaw The dispositive portion states: Wherefore. Misamis Oriental. the three loans were obtained on separate dates 7 July 1979. the sheriff executed a Deed of Final Conveyanceto MBTC. On 30 July 1991. whether voluntary or not. it is immaterial that the satisfaction of the debt by the encumbrance or alienation of the land grant was made voluntarily. Nos. cralaw MBTC filed a Motion for Reconsideration which was denied in a Resolution dated 13 February 2004. SO ORDERED. the City Sheriff of Cagayan de Oro sold the lots at public auctionin favor of MBTC as the winning bidder. ruled in favor of petitioner ordering the debtors.Further.The dispositive portion states: WHEREFORE. or conveyance of any homestead after five years and before twenty-five years after issuance of title shall be valid without the approval of the Secretary of Agriculture and Natural Resources.Firstly. cralaw respectively. Urbi . 141 (CA 141) or the Public Land Act. to pay jointly and severally certain amounts of money. Nos. or several years before the free patents on the lots were issued by the government to respondent on 29 December 1982. maintains that the express prohibition in Section 118 of CA 141 does not qualify or distinguish whether the debt was contracted prior to the date of the issuance of the free patent or within five years following the date of such issuance. 2874 (now Section 118 of CA 141). or satisfied out of. the sheriffs deed of final conveyance and the TCT's issued by the Register of Deeds. The Courts Ruling The petition lacks merit. made within the five-year prohibition period. respondent asserts that Section 118 of CA 141 absolutely prohibits any and all sales. and therefore such right has prescribed. Section 118 of CA 141 provides that the lots comprising the free patents shall not be made liable for the payment of any debt until the period of five years expires. in a Decision dated 28 April 1983. the Auction Sale by the Sheriff of the then lots of plaintiff covered by [free] patents to satisfy the judgment in favor of Defendant Bank is considered valid.The public auction conducted by the sheriff on the lots owned by respondent occurred on 12 October 1984. T-59171. or corporations. any debt contracted before or after the five-year prohibitory period is definitely not covered by the law. and plaintiff-appellant Edgardo Viray is declared entitled to the return and possession of the three (3) parcels of land covered by O. The Issue The main issue is whether the auction sale falls within the five-year prohibition period laid down in Section 118 of CA 141. As correctly observed by the CA in the present case: It is argued by defendant-appellee.While plaintiff had until April 2. and expenses connected therewith. regardless of the dates when the loans were incurred. Except in favor of the Government or any of its branches. P-2324.T. including respondent. pursuant to the writ of execution. T-59171. the sheriff issued a Certificate of Sale to MBTC.)This simply means that it is not material whether the debt is contracted before the five-year prohibitory period.Defendant Bank therefore is declared as the lawful transferee of the three (3) lots now covered by Titles in the name of Defendant Bank. in view of the foregoing considerations.The next day. P-2325 and P-2326. nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of said period.The CA ruled that the auction sale conducted by the sheriff was null and void ab initio since the sale was made during the five-year prohibition period in violation of Section 118 of Commonwealth Act No. cralaw Viray sought the declaration of nullity of the execution sale. the Register of Deeds of Cagayan de Oro City is ordered to cancel TCT Nos. In the present case. Petitioner MBTC insists that the five-year prohibition period against the alienation or sale of the property provided in Section 118 of CA 141 does not apply to an obligation contracted before the grant or issuance of the free patent or homestead.  cralaw we held that to subject the land to the satisfaction of debts would violate Section 116 of Act No. P-2325 and P-2326 in the name of plaintiff-appellant Edgardo Viray. being the lis mota  cralaw of the action.On 12 October 1984. the RTC of Manila issued a writ of execution over the lots owned by Viray. the sale of the homestead lot acquired by the patentee less than five years before the obligation accrued even if the sale is involuntary. of lands acquired under free patent or homestead.In this case. and to restore O. The Ruling of the Court of Appeals On 21 August 2003.(Defendantappellee deliberately omitted the word expiration to suit its defense. SO ORDERED. associations. P-2324. in Beach v. the appellate court reversed the decision of the RTC of Cagayan de Oro City. that the debt referred to in the law must have been contracted within the five-year prohibitory period. For a period of five years or from 29 December 1982 up to 28 December 1987. 1991 to redeem the property. the sheriffs certificate of sale.The alienation or sale stated in the law pertains to voluntary sales and not to forced or execution sales.C. Hence. No alienation. on the other hand.This clearly falls within the five-year prohibition period provided in the law.C.For purposes of complying with the law.The RTC of Manila. but the improvements or crops on the land may be mortgaged or pledged to qualified persons. Respondent Viray. cralaw On 23 August 1990. No pronouncement as to costs. however. the law would have been violated.The Register of Deeds of Cagayan de Oro City cancelled OCT Nos.
in Civil Case No. Article VIII of the Constitution.493. PEREZ Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. In so ruling. the plaintiff was constrained to refer the matter to its legal counsel. premises considered. In her Answer with Compulsory Counterclaim. ABAD Associate Justice JOSE P. CENTURY CANNING CORPORATION. 000. while it is true that the debt in this case was contracted prior to the five-year prohibitory period. On April 28. PUNO Chief Justice LOLITA REYES doing business under the name and style. x x x cralaw It must be emphasized that the main purpose in the grant of a free patent or homestead is to preserve and keep in the family of the homesteader that portion of public land which the State has given to him so he may have a place to live with his family and become a happy citizen and a useful member of the society.00. let judgment be rendered in favor of defendant's counterclaim. Respondent. 66863.191. CARPIO Associate Justice G. cralaw The provision that nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of the five-year period is mandatory cralaw and any sale made in violation of such provision is void cralaw and produces no effect whatsoever. we DENY the petition. Century Canning Corporation. CV No. and accordingly filed the instant case in Court after the defendant failed to comply and satisfy the demand letter to pay. Section 118 of CA 141. Pasig City. Branch 267.: Before us is a Petition for Review on Certiorari seeking the reversal of the Decision1 dated September 16. The facts as gathered by the Court a quo are as follows: In the subject case. SOLID BROTHERS WEST MARKETING. the instant complaint is hereby ordered DISMISSED. cralaw we held that the conservation of a family home is the purpose of homestead laws. the later returned some unsold Century tuna canned goods. 67975.R.00 and attorney's fees in the amount of P20. SO ORDERED. x x x And secondly. supra . 2010 ARTURO D. REYNATO S. due to the constant and diligent efforts exerted by the representatives of the plaintiff to collect the alleged unpaid obligations of the defendant. it is not within the competence of any citizen to barter away what public policy by law seeks to preserve. Urbi. the spirit of free citizenship.000. The antecedent facts as found by the Court of Appeals are as follows: Plaintiff corporation. which reversed and set aside the Decision2 of the Regional Trial Court (RTC). the feeling of interest in public affairs. CV No. J. No.R. who consequently sent a demand letter. are cultivated and fostered more readily when the citizen lives permanently in his own home. with a sense of its protection and durability. the same is of no consequence. Accordingly. cralaw In Jocson v.63 as the unsettled account of defendant Reyes. However. just like what transpired in this case. It also found that petitioner's signature did not appear in the five sales invoices presented by respondent where the former acknowledged Republic of the Philippines SUPREME COURT Manila .27.Clearly. therefore. Century Tuna. the same failed to pay as she refused to pay her unsettled accounts in the total amount of P787. Defendant Lolita Reyes is a businesswoman doing business under the name and style Solid Brothers West Marketing. and thus promote general welfare.000. and the DivisionChairperson¶s Attestation.The policy of the state is to foster families as the foundation of society. DECISION PERALTA. DEL CASTILLO Associate Justice ROBERTO A. is engaged in the business of manufacturing. Petitioner. is predicated on public policy. And when the defendant's obligation to pay became due and demandable. cralaw WHEREFORE. The prayer for counterclaim of defendant in the form of moral damages. and distribution of canned goods. exemplary damages in the amount of P25. 165377 THIRD DIVISION February 16. ANTONIO T. the value of which at P323.4 SO ORDERED. true. We AFFIRM the Decision dated 21 August 2003 and Resolution dated 13 February 2004 of the Court of Appeals in CA-G. particularly. Soriano . the RTC found that respondent failed to substantiate its allegations that petitioner is liable to pay a certain sum of money. the dispositive portion of which reads: WHEREFORE.The sentiment of patriotism and independence. and plaintiff Century Canning Corporation is directed to pay defendant Lolita Reyes moral damages in the amount of P50. 43926.Its violation gives rise to the cancellation of the grant and the reversion of the land and its improvements to the government at the instance of the latter. Plaintiff Century Canning Corporation tried to establish the fact that defendant Lolita Reyes had applied for and was granted "credit line" from the former thereby allowing the latter to allegedly obtain and secure Century tuna canned goods. defendant averred that she has no transaction with the plaintiff for the purchase of the alleged canned goods in question. WE CONCUR: ANTONIO T. Quezon City. 2000.3 Trial thereafter ensued. exemplary damages. That because of the refusal of the defendant to satisfactorily and completely settle her unpaid account. 2004 of the Court of Appeals (CA) in CA-G.39 period from the date of the issuance and approval of the patent or grant. I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division.R. It based its conclusion on the fact that petitioner's signature in the Credit Application Form submitted by respondent was significantly different from the signature appearing in petitioner's COMELEC voter's identification card (ID) and her Community Tax Certificate (CTC) which she proffered to be her usual. for as held in Artates vs. and genuine signature. processing. and attorney's fees is hereby granted.64 was deducted from the principal obligation thereby leaving the amount of P463. such indebtedness has to be reckoned from the date said obligation was adjudicated and decreed by the court.00 as well as to pay the costs of the suit. vs.697. CARPIO Associate Justice Chairperson CERTIFICATION Pursuant to Section 13. inasmuch as she is not engaged in the canned goods business but in auto airconditioning. the RTC rendered its decision. parts and car accessories in Banaue. BRION Associate Justice MARIANO C.
. was significantly different from the signature in the CTC and voter's ID that petitioner claimed to show her usual and genuine signature. The RTC dismissed respondent's complaint. Respondent filed its appeal with the CA. On September 16. and that the statement of account where the amount of P323. where it made a remark that "as far as the strokes. The RTC did not give credence to the testimonial as well as the documentary evidence presented by respondent for being self-serving. was not formally offered as part of respondent's evidence. the CA granted the appeal. since the observation "as far as the strokes.64 was deducted was merely based on the credit memo. and the fact that the goods were received by Delumen because he was petitioner's general manager was not established.697. he immediately brought the said Order to petitioner and was assured by the latter that she would have her lawyer attend to and take care for him".9 In civil cases. it means that the testimony of one side is more believable than that of the other side. that this statement proved that petitioner and Delumen knew each other. Petitioner contends that the CA misquoted or misapplied the remarks made by the RTC during the trial of the case. that there was also no showing that respondent requested or asked for Delumen's authority to transact or receive the goods on petitioner's behalf inasmuch as the amount involved was of considerable value. as he was a vital witness to the case. and that the RTC should have required Delumen's testimony."11 Notably. and no copy of the same was sent to the petitioner. but as far as the strokes were concerned. the factual findings of the Court of Appeals are contrary to those of the RTC. the dispositve portion of which reads: WHEREFORE. she would not have entertained respondent's officers and would not have offered settlement and returned the goods. we find it proper to review the evidence. and Delumen was not even presented during the trial. the appeal is hereby GRANTED. but she also presented documents showing her genuine signature.14 she offered no objection to this exhibit. that petitioner even tried to settle her indebtedness through monthly installments until such time that the debt was fully paid. such admission belies her allegation in her Answer with compulsory counterclaim that she had no transaction with respondent for the purchase of the canned goods. relying on the statement of account which was self-serving. premises considered."16 In effect. The Court is not a trier of facts.e. the CA found that the RTC's conclusion that petitioner's signature in the Credit application form was different from her signature in the CTC and voter's ID was contrary to the RTC's observation during the September 9. the party having the burden of proof must establish his case by preponderance of evidence.18 . and its genuineness and authenticity were not established. which respondent's witness did not prepare himself. Hence.8 In this case. There was no evidence that the goods were received by petitioner. except by mere denial. he stated that "when he saw on his desk the RTC Order of December 27. She argues that contrary to the CA finding that she never refuted the existence and authenticity of the credit application form.17 as well as her testimony on direct examination that she did not know respondent. petitioner admitted the purpose for which Exhibit "L" was offered. which was marked as respondent's Exhibit "L. Petitioner contended that the Comment on Motion to Cite in Contempt of Court submitted by Delumen. She also claimed that the CA's finding that Delumen was acting on her behalf was not established by competent evidence during the trial of the case. and not between petitioner's alleged signatures in the credit application form and her community tax certificate and voter's ID. that the fact that Delumen was acting for and on petitioner's behalf was not controverted. jurisprudence has recognized several exceptions to this rule. as it found that the signature appearing in the credit application form." The CA found that in the credit application form. the CA found that such conclusion was contrary to the RTC's observation made during the trial. and that the probability of truth is on one side than on the other. that petitioner even returned some of the goods previously delivered to her to reduce her accountabilities. as even the sales invoices did not bear her signatures.7 However. who testified that they had previously met with petitioner when they attempted to collect her unpaid accounts. that she not only denied her signature in the credit application form. its jurisdiction being limited to reviewing only errors of law that may have been committed by the lower courts. she categorically denied having executed the same by claiming that the signature appearing therein was not hers. alleged to be that of petitioner.1avvphi1 This is a factual issue. in the same Comment.10 or that evidence that is of greater weight or is more convincing than that which is in opposition to it. if she did not transact with the latter. The CA gave credence to the respondent's witnesses. The CA noted that in Delumen's Comments on Motion to Cite him in Contempt of Court. that the existence and authenticity of both documents were never refuted by petitioner. directing him to pay a fine of P1. It is a basic rule in evidence that each party to a case must prove his own affirmative allegations by the degree of evidence required by law. that the testimonies of these witnesses belied petitioner's defense that she never transacted business with respondent. because. i. petitions for review under Rule 45 of the Rules of Civil Procedure filed before this Court may only raise questions of law.00 as form of wastage fee. that the CA erred in concluding that petitioner returned some of the canned goods to respondent. We still affirm the CA's reversal of the RTC decision. as the only evidence submitted by respondent to prove the authority of Delumen was the credit application form. Thus. 1999 hearing. that said credit application form has no probative value for being self-serving.5 In reversing the RTC." While the CA's finding on this matter was erroneous. except Exhibit "L. there seemed to be a similarity. thus.15 In fact. Petitioner filed her appellee's brief. However. It awarded damages to petitioner taking into consideration the mental anguish she suffered by reason of the case and for being forced to litigate to protect her right. which the CA claimed to have proven the fact that petitioner and Delumen knew each other. but the RTC opted to forego with the same. While petitioner denies having any transaction with respondent regarding the sale and delivery to her of respondent's canned goods. because signatures sometimes differed in size.13 In petitioner's Objections/Comment to respondent's offer of evidence. The assailed decision of the Regional Trial Court is REVERSED and SET ASIDE and the defendantappellee held liable for the amount claimed by the plaintiff-appellant. It does not mean absolute truth. where petitioner's certificate of registration of business name was attached. and respondent filed a Reply thereto. 1999 hearing. since a reading of the transcript of stenographic notes of the September 9. that there was no explicit authority such as a written document showing the appointment of a certain Oscar Delumen as petitioner's authorized representative to transact business and/or receive canned goods for and on petitioner's behalf. 1999. shows that the RTC was comparing petitioner's signatures in her voter's ID and her CTC with her signature in the Verification in her Answer. a certain Oscar Delumen represented himself as petitioner's former sales operations manager.6 As a general rule.000. rather. a review of the evidence shows otherwise. one of the documents she submitted to respondent to be a distributor of the latter's products. The CA concluded that the positive declarations of respondent's witnesses could not be overturned by petitioner's general denial that she never transacted business with respondent. petitioner prayed that the other exhibits be denied admission for the purpose for which they were offered. when the latter said that "there seems to be a similarity in strokes because a signature sometimes differs on the size. Records show that respondent submitted a certificate of registration of business name under petitioner's name and with her photo. they seemed to be the same. 2004. We find no merit in the petition.40 receipt of the delivered canned good. this petition where petitioner raises the issue that: THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN GRANTING RESPONDENT'S APPEAL AND HOLDING PETITIONER LIABLE TO PAY RESPONDENT'S CLAIM. The issue presented before Us is whether the CA correctly found that petitioner was liable to pay respondent's claim. when the alleged observation regarding the similarity in strokes was made by the RTC. there seems to be a similarity" refers to that between petitioner's signature appearing in her community tax certificate and the verification in her answer. and also for the purpose of contradicting petitioner's allegation that she had no transaction with respondent. respondent's formal offer of evidence12 stated that the purpose of Exhibit "L" was to show that petitioner had submitted such certificate as one of her supporting documents in applying as a distributor of respondent's products.
i. the decision dated September 16. and that to reduce her debt..32 that after deducting the amount of the returned canned goods. xxxx 3. PERALTA Associate Justice WE CONCUR: RENATO C.63.e. he presented to petitioner the statement of account where the amount of the returned goods was deducted. which was petitioner's previous residence prior to her transfer to Banaue. he clarified that the amount of P323. Chairperson CERTIFIC ATION Pursuant to Section 13. she should not have entertained respondent's collecting officers and should not have offered settlement or returned some of the canned goods.24 that in one of his visits to petitioner. NACHURA Associate Justice JOSE CATRAL MENDOZA Associate Justice ATTEST ATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. While petitioner denies having received the canned goods and knowing Delumen. the interest due should be that which may have been stipulated in writing. Eliseo's death sometime in October 1997 was confirmed by petitioner. No. Such entries include the residential address at 132 Zamora Street. WHEREFORE. When the judgment of the court awarding a sum of money becomes final and executory. CAMBRIDGE ELECTRONICS CORPORATION. appears as petitioner's operations manager. We agree with the CA when it said that if indeed petitioner did not transact with respondent.31 that he told her that he would still have to ask the approval of their credit and collection department. 2004 of the Court of Appeals in CA-G.29 Manuel Conti Uy. the entries19 therein show informations whose veracity even admitted by petitioner. testified that petitioner was their former customer who failed to pay the purchases and deliveries covered by five sales invoices.27 On re-direct. this interim period being deemed to be by then an equivalent to a forbearance of credit.36 to wit: 1.e.493.34 Notably. Such amount must be paid with legal interest from the filing of the complaint on June 25. Uy then came back with Navarez and.20 and shows Eliseo Dy as authorized signatory of two bank accounts.e.28 and that the statement of account was prepared by a clerk and approved by him. When the obligation is breached. respondent's former Credit and Collection Supervisor. thus. REYNATO S. CORONA Associate Justice Chairperson PRESBITERO J. on cross examination.R. with his signature affixed thereto. 1998. the testimonies of Navarez and Uy that they met with her several times. petitioner did not even rebut. whether the case falls under paragraph 1 or paragraph 2. asked him to just pull out the remaining unsold goods for application to her total indebtedness. vs. i.. We have held that denial. whom petitioner admitted on cross-examination to be her live-in partner for 23 years. the latter offered to pay P50. CORONA Associate Justice Third Division.493. petitioner.35 We find that respondent has sufficiently established petitioner's liability in the amount of P463. testified that he met petitioner several times when he presented to her the five unpaid sales invoices30 that. and that Uy even allowed few days to pass before going to petitioner's place to collect so as to give petitioner time to comfort herself. the interest due shall itself earn legal interest from the time it is judicially demanded. Petitioner. in one instance.26 that the transaction regarding the returned goods was contained in three credit memos. if unsubstantiated by clear and convincing evidence. in Uy's testimony. DECISION CORONA. The sales invoices were signed by Delumen. above. is a negative and self-serving evidence that has no weight in law and cannot be given greater evidentiary value over the testimony of credible witnesses who testified on affirmative matters. Petitioner claims that there was no evidence showing that she received the canned goods delivered by respondent.41 Although petitioner denies her signature in the credit application form. Associate Justice B. shall be 12% per annum from such finality until its satisfaction. The testimonies of respondent's witnesses were further bolstered by the absence of any motive on their part to falsely testify against petitioner. RENATO C. Quezon City.63. a few days after Eliseo's death. as the sales invoices evidencing such delivery were not signed by her. 67975 is hereby AFFIRMED.R. which served as the bases for the amount deducted from petitioner's debt. Caloocan. Court of Appeals. and talked with her regarding the collection of her indebtedness and the pull-out of the canned goods.697. but petitioner still refused to pay.: .25 Navarez. testified that he was the one who personally received the canned goods that petitioner returned. ANTONIO EDUARDO VELASCO. initiated the pull-out of the goods. Article VIII of the Constitution and the Division Chairperson's Attestation. i.21 Notable also is the fact that the tax account number appearing in the credit application form was the same tax account number stated in petitioner's CTC. respondent presented two witnesses who categorically declared and positively identified petitioner as the person whom they met several times in her store and residence for the purpose of collecting her unpaid obligations with respondent. her operations manager. from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.64 was the amount of the returned canned goods which was reflected as deductions in the statement of account. v. As held in the landmark case of Eastern Shipping Lines. a loan or forbearance of money. PUNO Chief Justice Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G. the remaining balance was P463. as he was there in the store when the goods were pulled out. DIOSDADO M. in the presence of petitioner. Furthermore. SO ORDERED. which she presented to reflect her true and usual signature.000. George Navarez.. who was with Eliseo Dy who could not speak because of a throat infection. 2010 RONILO SORREDA. either in her direct testimony or in rebuttal.33 and when he made another visit.00 a month as partial settlement of her total indebtedness with respondent. the rate of interest shall be 12% per annum to be computed from default. I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. In the absence of stipulation. petitioner even returned some of the canned goods delivered to her. Inc. respondent's Regional Sales Manager. J.22 It was also in the credit application form where the name of Oscar Delumen. Petitioner's defense consists of denial. 172927 February 11. the rate of legal interest. and it consists in the payment of a sum of money. he also mentioned Eliseo's death. JR. until fully paid. their testimonies are hereby accorded full faith and credit.1 Respondent.23 that he knew petitioner since he had met her several times when he was collecting her unpaid obligations. In fact. CV No.
As such. fire and promote.22 In this instance. petitioner filed a petition for certiorari16 in the CA questioning the NLRC¶s finding of non-existence of the contract of perpetual employment. While the Constitution recognizes the primacy of labor.24 An absolute and unqualified employment for life in the mold of petitioner¶s concept of perpetual employment is contrary to public policy and good customs. and renders inutile the basic precepts of labor relations. breach of contract.13 Both petitioner and respondent appealed to the NLRC. Only words of encouragement were offered but not perpetual employment.21 A labor arbiter may only take cognizance of a case and award damages where the claim for such damages arises out of an employeremployee relationship. in a decision dated March 9. On November 16. officers of respondent company called him to a meeting with his common-law wife. that the case was based on illegal dismissal and that reinstatement and payment of backwages were the proper reliefs. Moreover. SP No. This case rests on the issue of whether the labor arbiter had the jurisdiction to take cognizance thereof. Furthermore. On May 8. The motion for reconsideration of petitioner was denied. the issue no longer fell under the jurisdiction of the labor arbiter and NLRC.4 The CA affirmed the resolution5 of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. petitioner insisted that there was a perfected contract of perpetual employment and that respondent was liable to pay him damages. father and cousin. 1999. The NLRC agreed with respondent. 1999). 2005 decision3 of the Court of Appeals (CA) in CA-G. such waiver should not be contrary to law. 2001. Respondent denied that it extended regular employment to petitioner. it is the Regional Trial Court which has jurisdiction. Instead of giving him employment.15 Aggrieved. We note. Moreover. based on petitioner¶s allegations in his position paper. He stated that the positive declaration of the witnesses (common-law wife.20 the Court reiterated that where no employer-employee relationship exists between the parties. Petitioner sued for compensatory damages because of the accident that befell him. questions or disputes arising out of this relationship fell under the jurisdiction of the labor arbiter. As the contract for per-project employment had already expired. Jurisdiction over the subject matter of a complaint is determined by the allegations of the complaint. a liability to the employer.R. stating that the labor arbiter decided the case on an issue that was never raised (i. Consequently. Even assuming arguendo that the labor arbiter had the jurisdiction to decide the case. public order. 77303 and its resolution denying reconsideration.19 In Pioneer Concrete Philippines. public policy. from the period May 8. aside from the self-serving claim of petitioner. Thus.9 He claimed that respondent failed to comply with the terms of the contract of perpetual employment which was perfected in June 1999 when he was called to a meeting by management. however. Cavite a complaint8 for illegal dismissal (later changed to breach of contract). after he recovered from his injury. the Court cannot countenance petitioner¶s claim that a contract of perpetual employment was ever constituted. was not cognizable by the labor courts but by the regular courts.1avvphi1 However. Petitioner insists on a right to be employed again in respondent company and seeks a determination of the existence of a new and separate contract that established that right. that petitioner filed the case only when respondent refused to rehire him. Petitioner claimed that the labor arbiter erred in finding that he was a regular employee. petitioner filed in the Regional Arbitration Branch of the NLRC of Dasmariñas. There he was assured a place in the company as a regular employee for as long as the company existed and as soon as he fully recovered from his injury. Petitioner moved for reconsideration but the motion was denied. it also recognizes the critical role of private enterprise in nation-building and the prerogatives of management. 1999 to October 8. Thus it has been consistently held that the determination of the existence of a contract as well as the payment of damages is inherently civil in nature. The CA dismissed the petition for lack of merit. thus. as it unjustly forbids the employer from terminating the services of an employee despite the existence of a just or valid cause. petitioner. the present dispute is neither rooted in the aforestated contract nor is it one inherently linked to it. It likewise compels the employer to retain an employee despite the attainment of the statutory retirement age. Moreover. In his position paper. whether respondent corporation was bound thereby and 3. 028156-01 declaring that petitioner Ronilo Sorreda was not a regular employee of respondent Cambridge Electronics Corporation. asked for the reversal of the labor arbiter¶s decision based on grave abuse of discretion for assuming jurisdiction over the case. petitioner reported for work. We affirm the Court of Appeals. petitioner met an accident in which his left arm was crushed by a machine and had to be amputated. 2. morals or good customs. In September 1999. his cause of action was based on an alleged second contract of employment separate and distinct from the perproject employment contract. he raised the following issues: 1. there was no concrete proof to establish the existence of . his case is within the jurisdiction not of the labor arbiter but of the regular courts.17 The CA concluded that the NLRC did not commit any reversible error in finding that the labor arbiter had no jurisdiction over the case.7 Petitioner claimed that. A contract of perpetual employment deprives management of its prerogative to decide whom to hire. the testimonies of petitioner¶s witnesses were declared self-serving and thus insufficient to prove the contract of perpetual employment.11 moral12 and exemplary damages and attorney¶s fees for default or breach of contract.10 He prayed that respondent be made to pay compensatory.6 Five weeks into the job (on June 15. petitioner was hired by respondent as a technician for a period of 5 months at minimum wage. father and cousin) present at the meeting and the parole evidence rule was enough to support the petitioner¶s claim. the labor arbiter ruled that petitioner was employed by respondent for an indefinite period of employment (that is.) He ordered petitioner¶s reinstatement and the payment of backwages. Todaro. he was neither illegally dismissed nor entitled to reinstatement and backwages. While management may validly waive it prerogatives. they made him sign a memorandum of resignation to formalize his separation from the company in the light of the expiration of his five-month contract. The labor arbiter held that he had jurisdiction to hear and decide the case as it involved the employer-employee relationship of the contending parties. The NLRC and the CA were therefore correct in ruling that the labor arbiter erroneously took cognizance of the case. was clearly a per-project employee of private respondent. 1999.e. on regular status. Respondent. petitioner failed to prove grave abuse of discretion in the NLRC¶s exercise of its quasi-judicial function. v. worse. Moreover. and the Labor Code or any labor statute or collective bargaining agreement is not needed to resolve any issue raised by them.. the employment status of petitioner). this petition. on the other hand.23 While there was an employer-employee relationship between the parties under their five-month per-project contract of employment. He ruled that petitioner who had been employed on a per-project basis became a regular employee by virtue of the contract of perpetual employment. shortly after his release from the hospital. whether there was a valid agreement or contract of perpetual employment perfected between the parties concerned. Inc. whether [petitioner] has a cause of action for damages against respondent based on the contract. petitioner¶s principal cause of action. moral damages and exemplary damages as well as attorney¶s fees. Thus. even if the employee has became a "non-performing asset" or. claiming a lack of causal connection between the alleged breach of contract and their employer-employee relationship. it assailed the labor arbiter¶s jurisdiction over the case. resulting in an employer-employee relationship.14 It found that petitioner was not a regular employee. 1999.18 Thus.42 This petition2 seeks to reverse and set aside the May 26.
m.00 P1. vs.00 ± babayaran sa paglagda ng kasulatang ito.000. Ang babayaran ni MOVIDO na capital gains tax ay hanggang sa ISANG DAANG PISO (P100.400.00) bawat metro cuadrado o sa kabuuang halaga na WALONG MILYON AT APAT NA RAANG LIBONG PISO (P8. Na ipinagkakasundo ni MOVIDO na ipagbili kay PASTOR ang 21. na ito ay lalong mailalarawan ng tulad ng sumusunod: xxx VALENTIN MOVIDO. WHEREFORE. bayad sa nagsasaka ng nasabing lupa. Na ipinagkasundoni MOVIDO na ipagbili kay PASTOR ang kanyang lupa lupa sa Paliparan. LUIS REYES PASTOR. Such stance is contrary to the consensuality principle of contracts as well as to the management prerogative of respondent company to choose its employees. respondent alleged that he and petitioner executed a kasunduan sa bilihan ng lupa where the latter agreed to sell a parcel of land located in Paliparan. I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division.400. No. sampu ng komisyon ng mga ahente. Petitioner. ± babayaran sa loob ng tatlong (3) buwan mula sa petsa ng ikapitong bayad. Article VIII of the Constitution.00 P1. Na si MOVIDO ang tunay at ganap na mayari ng isang (1) parselang lupa sa Paliparan. The agreement read: xxx RENATO C. 2010 2.00).000 metro cuadrado humigit-kumulang. T-362995. Cavite with an area of some 21. MENDOZA Associate Justice P1.000 sq. Na si MOVIDO ang magbabayad ng lahat ng gastos tungkol sa bilihang ito tulad ng capital gains tax.000. the petition is hereby DENIED. P500. the purchase price would be lowered to P200/sq.R. m. registration fees. P1.731 sq. 000. if a Napocor power line traversed the subject lot. CORONA Associate Justice Chairperson CERTIFIC ATION Pursuant to Section 13. 000. Dasmariñas. 000. PUNO Chief Justice Republic of the Philippines SUPREME COURT Manila THIRD DIVISION Costs against petitioner.00 . Cavite. J. na ang nasabing lupa sakop ng TRANSFER CERTIFICATE OF TITLE No. 000.00 ATTEST ATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. 362995 at P400/sq. ang kalahati ng lahat ng kanyang naibayad ay mapopornada sa kapakanan ni MOVIDO at ang kasulatang ito ay mawawalan ng bisa. JR. praying that petitioner Valentin Movido1 be compelled to cause the survey of a parcel of land subject of their contract to sell. Na ang 1. selyo dokumentaryo. ± babayaran sa loob ng tatlong (3) buwan mula sa petsa ng ikaanim na bayad. CORONA Associate Justice Chairperson WE CONCUR: CORONA. Dasmariñas. beyond the distance of 15 meters on both sides from the center of the power line while the portion within a distance of 15 meters on both sides from the center of the power line would not be paid.731 metro cuadrado. substituted by MARGINITO MOVIDO. 4. 5. m. na hindi kasama sa bilihang ito ay nasasakop ni Leonardo Cuevas. It provided that. In particular. Respondent. humigitkumulang. Cavite na may sukat na P500.00 P1. ± babayaran sa loob ng tatlong (3) buwan mula sa petsa ng ikaapat na bayad. na ito ay ipapasukat at ipapahiwalay ni MOVIDO sa kabuuan ng nasabing lupa bago matapos ang huling bayad ng bilihang ito. 3.000.00 P2.2 Respondent further alleged that another kasunduan was later executed supplementing the kasunduan sa bilihan ng lupa. Dasmariñas. Cavite.43 such agreement. Petitioner cannot validly force respondent to enter into a permanent employment contract with him.00 ± Kabuuan. G. ± babayaran sa loob ng tatlong (3) buwan mula sa petsa ng ikalawang bayad. NACHURA Associate Justice Respondent Luis Reyes Pastor filed a complaint for specific performance in the Regional Trial Court (RTC) of Imus.000.000. ± babayaran sa loob ng tatlong (3) buwan mula sa petsa ng unang bayad. si MOVIDO ay lalagda sa kaukulang kasulatan ng ganap na bilihan (Deed of Absolute Sale) ng lupang dito ay tinutukoy. DECISION February 11. Na kung si PASTOR ay hindi makabayad sa balance sa takdang panahon. ± babayaran sa loob ng tatlong (3) buwan mula sa petsa ng ikatlong bayad. 1. 000. Na kasabay ng pagbabayad ng huling bayad. ± babayaran sa loob ng tatlong (3) buwan mula sa petsa ng ikalimang bayad. ng lupang nakalarawan sa dakong taas sa halagang APAT NA RAANG PISO (P400.000. Associate Justice ANTONIO EDUARDO B.000. na ang nasabing halaga ay babayaran ni PASTOR kay MOVIDO ng gaya ng sumusunod: P8. 000.000. transfer tax. VELASCO.00) lamang.400. out of the 22. m. PERALTA Associate Justice JOSE C. 172279 SO ORDERED RENATO C. 000. In his complaint. the kasunduan provided: xxx 1. 6.00 DIOSDADO M. covered by Transfer Certificate of Title (TCT) No.: PRESBITERO J. REYNATO S.
attributing to the doubtful ones that sense that may result from all of them taken jointly. Under the kasunduan sa bilihan ng lupa. they then executed the kasunduan. He likewise claims that the failure of respondent to pay the 7th and 8th installments of the purchase price gave petitioner the right to rescind the contract. upon complete payment by respondent. is also not conditioned on the payment of any installment.4 million in which case Marginito will be ordered to immediately conduct the survey of the property and thereafter to refund to respondent the excess of the amount paid. On the other hand. Hence. clearly spell out in full the respective rights and obligations of the parties. It also ordered the rescission of the kasunduan sa bilihan ng lupa as well as the forfeiture of 50% of the amount already paid by respondent (but ordered petitioner to return to respondent 50% of the amount already paid).4 million stated in the kasunduan sa bilihan ng lupa.10 In this connection. for P400/sq. respondent may be ordered to pay his remaining balance in the kasunduan sa bilihan ng lupa representing the 7th and 8th installments or the amount of P3.4 million). m.8 We find no such substantial or material breach. petitioner alleged that the original negotiation for the sale of his property involved the entire area of 22. Petitioner and respondent would not have entered into either of the agreements if they did not intend to be bound or governed by them. the CA¶s application of a reduced price in the absence of a survey was without factual or legal basis. Thus. He was willing and ready to pay the balance of the purchase price but due to petitioner¶s refusal to have the property surveyed despite incessant demands.731 sq. that portion of the land that is traversed by a Napocor power line. After hearing. On appeal. Prudence dictates that the second option is better as it will prevent further conflict between the parties. On the other hand. The RTC also directed respondent to pay petitioner P50. the CA ordered respondent to pay the heirs of petitioner the balance of the purchase price in the amount of P2. respondent cannot be deemed to have committed a serious breach. we adopt the second option. Thus. at ang bahagi ng lupa na pumakabila sa linya ng kuryente mula sa Paliparan Road at hihigit ng LABING LIMANG (15) METRO mula sa kailaliman ng linya ng kuryente ay pababayaran ni MOVIDO kay PASTOR sa halagang DALAWANG DAANG PISO bawat metro kwadrado. Marginito Movido (the substitute of petitioner) should execute the necessary deed of absolute sale in favor of respondent and comply with petitioner¶s other obligations under the kasunduan sa bilihan ng lupa. which was first executed by the parties.400. a reading of the kasunduan sa bilihan ng lupa and the kasunduan would readily reveal that payment of the purchase price does not depend on the survey of the property.9 Their proper construction must be one that gives effect to all. particularly the provisions of the kasunduan. both contracts. Due to respondent¶s failure to fulfill his obligations. Petitioner himself admitted that he had this obligation. petitioner is obligated to conduct the survey on or before the due date of the last installment. if there is a way of reconciling them. under the kasunduan sa bilihan ng lupa. taken together. T-362995. Corollary to this. He. respondent was not in default as petitioner never made a demand for payment. Petitioner also charged respondent with delay in paying several installments due and did not pay the 7th installment in the amount of P1 million. It is true that respondent failed to pay the 7th and 8th installments of the purchase price.6 Hence. Marginito may be ordered to have the property surveyed first within a reasonable period and thereafter respondent will have to pay his corresponding balance (which. This was allegedly a material breach because they agreed that the survey of the property would only be done after respondent would have paid the 7th installment. the Court of Appeals (CA)5 reversed the RTC and held that the kasunduan sa bilihan ng lupa was the first document executed by the parties. his unpaid balance could not be determined with certainty. will be less than P3. the CA erred when it proceeded to determine the remaining balance of respondent by applying a reduced rate on certain portions of the property. After respondent personally inspected the property.796. portion that is excluded from the contract as well as the portions covered by the kasunduan which will be subject to reduction of the purchase price. Second. It unduly infringed on the parties¶ liberty to contract. ang bahagi ng lupa na hindi hihigit sa layo ng LABING LIMANG (15) METRO mula sa kailaliman ng linya ng kuryente ay hindi pababayaran ni MOVIDO kay PASTOR. Their stipulations must therefore be interpreted together.44 22731 metro kwadrado at sakop ng Transfer Certificate of Title No. 2.3 (italics supplied) Respondent likewise claimed that petitioner undertook to cause the survey of the property in order to determine the portion affected by the Napocor power line. the kasunduan sa bilihan ng lupa and the kasunduan should both be given effect rather than be declared conflicting. was willing to reimburse 50% of whatever respondent had paid him so far. the RTC dismissed the complaint of respondent for lack of merit and/or cause of action. 1993. As the kasunduan pertains to a special area of the agreement.731 sq. Misguided Search For Priority In Time The issue of which of the two contracts was first executed by the parties is immaterial to the resolution of this case. the two agreements actually constitute a single contract pertaining to the sale of a land to respondent by petitioner. However. First. the kasunduan refers to a particular or specific matter. More importantly. even independent of the time of their execution but. The CA also ordered that. the survey should be done before the date of the last installment. In the first place. both contracts were executed and notarized on the same day.000 sq. for a total sum of P8. naturally.1avvphi1 Moreover. as respondent was not sure whether a Napocor power line traversed the property. m. however. Lastly. If respondent pays a higher amount without the property being surveyed first (compared to what he is liable to pay after the survey of the property) it will not be a problem because the excess of the amount paid can easily be refunded to him.000 attorney¶s fees and costs of suit. Indeed.. the purchase price should be paid whether or not the property is surveyed.e. m. the RTC4 ruled in favor of petitioner and held that the kasunduan preceded the kasunduan sa bilihan ng lupa. Thus. December 6. Marginito Movido¶s motion for reconsideration did not have its desired result. Thus. The survey of the property is important only insofar as the right of respondent to the reduction of the purchase price is concerned. petitioner claimed that he had no choice except to rescind the kasunduan sa bilihan ng lupa. In fact. Indeed. i. the survey could have been done anytime after the execution of the agreement. There are two options to resolve this impasse. Na kanilang napagkasunduan na kung sakali na ang lupang tinutukoy ay pumailalim sa linya ng kuryente ng NAPOCOR. In other words.7 where he insists that it was the kasunduan. a final agreement²the kasunduan sa bilihan ng lupa²was executed where the area to be sold was 21. not the kasunduan sa bilihan ng lupa. Such would be the plain application of the provisions of the kasunduan. In his answer. taken together. considering the circumstances of the instant case. petitioner cannot successfully reject respondent¶s demand for petitioner to perform his obligation to have the property surveyed. Petitioner simply has to do it. respondent alleged that he already paid petitioner P5 million out of the original purchase price of P8. However. the CA disregarded the agreement of the parties that petitioner should first cause the survey of the subject property in order to determine the area excluded from the sale and the portion traversed by the Napocor power line. m. the kasunduan sa bilihan ng lupa contains the general terms and conditions of the agreement of the parties. In the first place. Impropriety Of Rescission Rescission is only allowed when the breach is so substantial and fundamental as to defeat the object of the parties in entering into the contract. The final agreement also listed a schedule of payments of the purchase price and included a penalty clause in case of default. On the other hand. it constitutes an exception to the general provisions of the . the survey of the property to determine the metes and bounds of the 1.4 million. not the kasunduan. this petition for review on certiorari. In effect.
Thus. his heirs and assigns that certain real estate together with the buildings and other improvements existing thereon. petitioner undertook to cause the survey of the property in order to determine the portion excluded from the sale. PERALTA Associate Justice JOSE C.500 as partial payment. situated in [Barrio] Mayamot.500) with REAL SAVINGS AND LOAN. CORONA Associate Justice Chairperson WE CONCUR: DECISION PRESBITERO J. CORONA Associate Justice Chairperson CERTIFIC ATION Pursuant to Section 13. JR. petitioner failed to perform his obligation. Consequently. Because respondent was a licensed real estate broker. Luis Reyes Pastor should thereafter pay the balance of the purchase price.4 Cainta. However. The July 18. The perfection of a contract of sale depended on RSLAI¶s approval of the assumption of mortgage. MENDOZA Associate Justice Antipolo. Branch 74.. Despite repeated demands by respondent.5 Respondent likewise informed RSLAI of her agreement with petitioner for her . NACHURA Associate Justice CORONA. the RTC concluded that she knew that the validity of the sale was subject to a condition. rendering the keys he gave her useless. I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. 1993. Under both the kasunduan sa bilihan ng lupa and the kasunduan. Rizal. 1993. RENATO C. Antipolo. 170405 RENATO C. Petitioner. on the other hand. she was informed that petitioner had already paid the amount due and had taken back the certificates of title. handed the keys to the properties and wrote a letter informing RSLAI of the sale and authorizing it to accept payment from respondent and release the certificates of title. Petitioner. BENITA T. reflecting as purchase price the amount actually paid by the latter. Costs against petitioner. particularly on the purchase price for that portion. on the other hand. respondent learned that petitioner again sold the same properties to one Leona Viloria after March 10. as well as the portion traversed by the Napocor power line. the condition did not arise.45 kasunduan sa bilihan ng lupa. that RSLAI approve the assumption of mortgage). transfer and convey in a manner absolute and irrevocable. the receipt whereof is hereby acknowledged from [RESPONDENT] to the entire satisfaction of [PETITIONER]. however. petitioner fraudulently deprived her of the properties. he no longer had the right to sell the same to Viloria. declaration of nullity of the second sale and damages6 against petitioner and Viloria in the Regional Trial Court (RTC) of Antipolo. Respondent persistently contacted petitioner but her efforts proved futile.000 attorney¶s fees and the cost of suit. VELASCO. vs. J. That upon full payment of [respondent] of the amount of FOUR HUNDRED FIFTEEN THOUSAND FIVE HUNDRED (P415. Rizal to respondent Benita T. Philippine currency.000). In a decision dated August 27. 1993. ATTEST ATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division.e. Petitioner. said [PETITIONER] does hereby sell.R. CV No.R. de Leon sold three parcels of land2 with improvements situated in February 2. Inasmuch as respondent did apply for a loan from RSLAI. petitioner and respondent executed a notarized deed of absolute sale with assumption of mortgage3 stating: xxx xxx xxx to assume petitioner¶s outstanding loan. Thereafter. the petition is hereby DENIED. Since RSLAI did not allow respondent to assume petitioner¶s obligation. respondent undertook repairs and made improvements on the properties. RSLAI required her to undergo credit investigation. respondent gave petitioner P415. Incorporated (RSLAI). G.7 the RTC dismissed the complaint for lack of cause of action and ordered respondent to pay petitioner P100. WHEREFORE. REYNATO S. Rizal« (emphasis supplied) xxx xxx xxx SO ORDERED.1 million). Thus. 2010 RAYMUNDO S. he made a counter-claim for damages as respondent filed the complaint allegedly with gross and evident bad faith. Respondent thus proceeded to RSLAI to inquire about the credit investigation. DIOSDADO M. She claimed that since petitioner had previously sold the properties to her on March 10. considering that there was a breach on the part of petitioner (and no material breach on the part of respondent). P20. PUNO Chief Justice Republic of the Philippines SUPREME COURT Manila THIRD DIVISION That for and in consideration of the sum of ONE MILLION ONE HUNDRED THOUSAND PESOS (P1. he cannot properly invoke his right to rescind the contract. 2005 decision of the Court of Appeals in CA-G. the RTC held that the sale was never perfected. respondent filed a complaint for specific performance. Pursuant to this deed. ONG. petitioner Raymundo S.: On March 10. That [respondent] shall assume payment of the outstanding loan of SIX HUNDRED EIGHTY FOUR THOUSAND FIVE HUNDRED PESOS (P684. As these properties were mortgaged to Real Savings and Loan Association. unto said [RESPONDENT]. [petitioner] shall execute and sign a deed of assumption of mortgage in favor of [respondent] without any further cost whatsoever.000 moral damages.1 Respondent. He claimed that since the transaction was subject to a condition (i. Subsequently. Furthermore. Specialibus derogat generalibus. DE LEON. Article VIII of the Constitution. On June 18. Rizal under the following terms and conditions: 1. insisted that respondent did not have a cause of action against him and consequently prayed for the dismissal of the complaint. Marginito should execute the kasulatan ng ganap na bilihan ng lupa (deed of absolute sale) in favor of Luis Reyes Pastor. Associate Justice ANTONIO EDUARDO B. Luis Reyes Pastor is hereby authorized to have it done with the cost of the survey charged to Marginito Movido. Ong. they only entered into a contract to sell. 2. 1999. 1993 and changed the locks. after which. No. the sale was not perfected and he could freely dispose of the properties. 67207 is AFFIRMED with the MODIFICATION that Marginito Movido is ordered to cause the survey of the subject lot within a period of three months in order to determine the excluded portion of the sale and the portion traversed by the Napocor power line. If he fails to do so.
and. if it should be movable property. Petitioner.20 However. with the balance15 payable directly to RSLAI (on behalf of petitioner) within a reasonable time. Moreover. 2003 contract executed by the parties did not impose any condition on the sale and held that the parties entered into a contract of sale. A purchaser in good faith is one who buys the property of another without notice that some other person has a right to.16 Nothing in said instrument implied that petitioner reserved ownership of the properties until the full payment of the purchase price. the condition never materialized. such property and pays a full and fair price for the same at the time of such purchase. This case involves a double sale as the disputed properties were sold validly on two separate occasions by the same seller to the two different buyers in good faith. The CA found that the March 10. the said condition was considered fulfilled as petitioner prevented its fulfillment by paying his outstanding obligation and taking back the certificates of title without even notifying respondent. It likewise ordered respondent to reimburse petitioner P715.1 million. Respondent.10 Hence.9 the CA upheld the sale to respondent and nullified the sale to Viloria. Since respondent¶s obligation to assume petitioner¶s outstanding balance with RSLAI became impossible without her fault. Contract of Sale or Contract to Sell? The RTC and the CA had conflicting interpretations of the March 10. not the perfection thereof nor the transfer of ownership. Article 1544 of the Civil Code provides: Article 1544. he also authorized RSLAI to receive payment from respondent and release his certificates of title to her. The RTC ruled that it was a contract to sell while the CA held that it was a contract of sale. of determining whether respondent was a purchaser in good faith. the seller conveys ownership of the property to the buyer upon the perfection of the contract. Respondent was not aware of any interest in or a claim on the properties other than the mortgage to RSLAI which she undertook to assume. because petitioner surreptitiously paid his outstanding obligation and took back her certificates of title. (emphasis supplied) This provision clearly states that the rules on double or multiple sales apply only to purchasers in good faith. the ownership shall pertain to the person who in good faith was first in the possession. on the part of the buyer. the terms and conditions of the deed only affected the manner of payment. Petitioner moved for reconsideration but it was denied in a resolution dated November 11. she is deemed to have fully complied with the condition of the payment of the remainder of the purchase price. that is. even assuming arguendo that the agreement of the parties was subject to the condition that RSLAI had to approve the assumption of mortgage. Viloria bought the properties from petitioner after the latter sold them to . The buyer does not acquire ownership of the property until he fully pays the purchase price. Moreover. According to her agreement with petitioner. not the immediate transfer of ownership (upon the execution of the notarized contract) from petitioner as seller to respondent as buyer. the approval by RSLAI of respondent¶s assumption of mortgage. on the other hand.17 On the contrary. to the person who presents the oldest title. Respondent purchased the properties.13 The deed executed by the parties (as previously quoted) stated that petitioner sold the properties to respondent "in a manner absolute and irrevocable" for a sum of P1.21 The law requires. On this account. a contract to sell is subject to a positive suspensive condition.12 On the other hand. 2005.14 With regard to the manner of payment. it required respondent to pay P415. Should the buyer default in the payment of the purchase price. Consequently. it declared the second sale void. the said condition is considered fulfilled pursuant to Article 1186 of the Civil Code. it was a contract of sale the parties entered into. For this reason. in the absence thereof.000 moral damages and P15. because petitioner no longer owned the properties when he sold them to Viloria. Furthermore. this petition. Article 1266 of the Civil Code provides: Article 1266. petitioner himself rendered respondent¶s obligation to assume petitioner¶s indebtedness to RSLAI impossible to perform. was ordered to deliver the certificates of titles to respondent and pay her P50. 1993 deed. Article 1186 of the Civil Code provides: Article 1186. on the other hand. 2005. Should it be immovable property. Settled is the rule that the seller is obliged to transfer title over the properties and deliver the same to the buyer. asserts that they entered into a contract of sale as petitioner already conveyed full ownership of the subject properties upon the execution of the deed.000 exemplary damages. In a contract of sale. because petitioner himself willfully prevented the condition vis-à-vis the payment of the remainder of the purchase price.18 In this regard. it found petitioner liable for moral and exemplary damages for fraudulently depriving respondent of the properties. Void Sale Or Double Sale? Petitioner sold the same properties to two buyers. Was respondent a purchaser in good faith? Yes. lack of notice of a defect in the title of the seller and payment in full of the fair price at the time of the sale or prior to having notice of any defect in the seller¶s title. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment. the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. or before he has notice of some other person¶s claim or interest in the property. the seller can only sue for damages. In a decision dated July 22. However. petitioner executed a notarized deed of absolute sale in favor of respondent. the seller may either sue for the collection thereof or have the contract judicially resolved and set aside. We modify the decision of the CA.11 with the sole issue being whether the parties entered into a contract of sale or a contract to sell.8 asserting that the court a quo erred in dismissing the complaint. it disqualifies any purchaser in bad faith. Petitioner insists that he entered into a contract to sell since the validity of the transaction was subject to a suspensive condition. first to respondent and then to Viloria on two separate occasions. Because RSLAI did not allow respondent to assume his (petitioner¶s) obligation. Otherwise stated. If the same thing should have been sold to different vendees. For purposes. she was released from the said obligation.46 Aggrieved. the execution of a notarized deed of sale is equivalent to the delivery of a thing sold. Consequently. Should there be no inscription. Moreover. Consequently.250 (or the amount he paid to RSLAI). Article 1498 of the Civil Code19 provides that. the said terms and conditions pertained to the performance of the contract. or an interest in. if the buyer defaults in the payment thereof. In this instance. the ownership shall be transferred to the person who may have first taken possession thereof in good faith. Clearly. The totality of petitioner¶s acts clearly indicates that he had unqualifiedly delivered and transferred ownership of the properties to respondent. Needless to say. therefore. Moreover.500 in cash to petitioner upon the execution of the deed. knowing they were encumbered only by the mortgage to RSLAI. there was no sale. provided there is good faith. In this connection. respondent had the obligation to assume the balance of petitioner¶s outstanding obligation to RSLAI. the second sale was not void for the sole reason that petitioner had previously sold the same properties to respondent. respondent informed RSLAI of the sale and of her assumption of petitioner¶s obligation. the CA erred. The debtor in obligations to do shall be released when the prestation become legally or physically impossible without the fault of the obligor. as a rule. The non-payment of the price is therefore a negative resolutory condition. not only did petitioner turn over the keys to the properties to respondent. respondent appealed to the Court of Appeals (CA).
SP. Costs against petitioner. respondent took actual possession and exercised control thereof by making repairs and improvements thereon. Moreover. J. Associate Justice DECISION PERALTA . Respondent was therefore a purchaser in good faith. the deed itself provided that the assumption of mortgage "was without any further cost whatsoever. Article VIII of the Constitution and the Division Chairperson¶s Attestation. On November 15. PNCC SKYWAY CORPORATION. SO ORDERED. Respondent PNCC Skyway Corporation is a corporation duly organized and operating under and by virtue of the laws of the Philippines. CORONA Associate Justice Chairperson WE CONCUR: President. Nonetheless. she would be unjustly enriched at the expense of petitioner.15 working days 10-15 years of service 16 working days 16-20 years of service 17 working days 21-25 years of service 18 working days 26 and above years of service . All expenses of security guard in securing/renewing their licenses shall be for their personal account." ARTICLE XXI Section 6. Thus. 1993. 2002. RENE SORIANO. In this instance. must deliver the certificates of title to respondent. PERALTA Associate Justice ATTEST ATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division. [b] The company shall schedule the vacation leave of employees during the year taking into consideration the request of preference of the employees. Article 1544 of the Civil Code provides that when neither buyer registered the sale of the properties with the registrar of deeds. Philippine National Police or his duly authorized representative. the July 22. respondent must pay petitioner P684. ANTONIO T." Petitioner. We likewise affirm the award of damages. 2005 resolution of the Court of Appeals in CA-G. respondent¶s obligation to pay it subsisted. the rules on double sale are applicable. The factual antecedents are as follows: Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers' Organization (PSTMSDWO) is a labor union duly registered with the Department of Labor and Employment (DOLE). NACHURA Associate Justice DIOSDADO M. For this reason. petitioner delivered the properties to respondent when he executed the notarized deed22 and handed over to respondent the keys to the properties. Petitioner.R. Otherwise. Any guard who fails to renew his security guard license should be placed on forced leave until such time that he can present a renewed security license.19 working days. Clearly. securing/renewing their license must apply for a leave of absence and/or a change of schedule. WHEREFORE. 2010 PNCC SKYWAY TRAFFIC MANAGEMENT AND SECURITY DIVISION WORKERS ORGANIZATION (PSTMSDWO). while the condition as to the payment of the balance of the purchase price was deemed fulfilled. respectively. THIRD DIVISION [a] Regular Employees covered by the bargaining unit who have completed at least one  year of continuous service shall be entitled to vacation leave with pay depending on the length of service as follows: 1-9 years of service .500. 59748 are hereby AFFIRMED with MODIFICATION insofar as respondent Benita T.500 representing the balance of the purchase price as provided in their March 10. Therefore. Ong is ordered to pay petitioner Raymundo de Leon P684. 2004 and August 11. CARPIO Associate Justice ANTONIO EDUARDO B. vs.R. No. This is because the provisions. PUNO Chief Justice Republic of the Philippines SUPREME COURT Manila G. Guards. No. which annulled and set aside the Decision and Order of the Voluntary Arbitrator dated July 12. petitioner and respondent entered into a Collective Bargaining Agreement (CBA) incorporating the terms and conditions of their agreement which included vacation leave and expenses for security license provisions. represented by its . Vacation Leave. VELASCO. on the other hand. the amount stated in the deed. 1993 agreement. respondent became the lawful owner of the properties. 2005 decision and November 11. JR. to perform his duties as security guard. The pertinent provisions of the CBA relative to vacation leave and sick leave are as follows: ARTICLE VIII VACATION LEAVE AND SICK LEAVE Section 1.: Before this Court is a Petition for Review on C ertiorari under Rule 45 of the Rules of Court seeking to set aside the Decision1cralaw and the Resolution2cralaw of the Court of Appeals (CA) in CA-G. RENATO C. the one who took prior possession of the properties shall be the lawful owner thereof.47 respondent. CORONA Associate Justice Chairperson CERTIFIC ATION Pursuant to Section 13. terms and conditions of the contract constitute the law between the parties. CV No. REYNATO S. 171231 : February 17. 87069. Security License All covered employees must possess a valid License [Security Guard License] issued by the Chief. Respondent. the sale was perfected and consummated on March 10.R. Hence. (emphasis supplied) [c] Any unused vacation leave shall be converted to cash and shall be paid to the employees on the first week of December each year. RENATO C. 2004. PRESBITERO J. I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court¶s Division.
Section 6. it can be relaxed under the rule of substantial compliance. which was conferred as early as October 2005. The resolution provides in part that: WHEREAS. 2006.10cralaw while the Petition for Review had long been filed on February 27. HRD SUBJECT : Leave Balances as of January 01. it is not jurisdictional.48 In a Memorandum dated December 29. the undersigned may consider the re-scheduling of the SVL upon the written request of concerned TMSD personnel at least 30 days before the scheduled SVL. on October 22. although it is obligatory. In the said memorandum. II THE HONORABLE PUBLIC RESPONDENT ERRED IN OVERSEEING THE CONVERSION ASPECT OF THE UNUSED LEAVE. However. the voluntary arbitrator has no authority to interpret the same beyond what was expressly written. It alleged that the authority of Rene Soriano to represent the union was only conferred on June 30. 2004 to all TMSD personnel. It opined that the unilateral scheduling of the employees' vacation leave was done to avoid the monetization of their vacation leave in December 2004. Rene Soriano did not possess the required authority at the time the petition was filed on February 27. Rescheduling will be evaluated taking into consideration the TMSDs operational requirement. respondent filed a Petition for Certiorari with Prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction with the CA. one day and two hours in anticipation of the later schedule. All other claims are dismissed for lack of merit. the dispositive portion of which reads: WHEREFORE. x x x. 2004. 2004. The CA ruled that since the provisions of the CBA were clear. shall be under the discretion of the union members entitled thereto. and the management to convert them into cash all the leaves which the management compelled them to use. Thereafter. Before considering the merits of the petition. not merely speculative.8cralaw annulling and setting aside the decision and order of the voluntary arbitrator. We shall first address the objection based on technicality raised by respondent.5cralaw addressed to all department heads.9cralaw Hence. in a meeting duly called for October 2005 . the instant petition assigning the following errors: I WITH ALL DUE RESPECT. Rene Soriano. as this practice is detrimental to an orderly judicial procedure. Not being jurisdictional. it is suggested that the leave balances as of to date be given preferential scheduling. this Court has relaxed. was clothed with authority to file the petition on February 27. 2006. It insisted that the individual members of the union have the right to schedule their vacation leave. Respondent filed a motion for reconsideration. The voluntary arbitrator issued a Decision dated July 12. under justifiable circumstances. This requirement is simply a condition affecting the form of pleadings. the rule requiring the submission of such certification considering that. 2004. The petitioner countered that the Board Resolution11cralaw dated June 30. Truly. 2006.12cralaw . so as to Petitioner also demanded that the expenses for the required in-service training of its member security guards. The 17 days (15 days SVL plus 2-day-off) scheduled vacation leave (SVL) with pay for the year 2004 had been published for everyone to take a vacation with pay which will be our opportunity to enjoy quality time with our families and perform our other activities requiring our personal attention and supervision. For failure to settle the issue amicably. Thus. 2003. to file a petition before the Supreme Court. 2004. the Union decided to file a Motion for Reconsideration and if the said motion be denied. With respect to the certification of non-forum shopping. 2006. declaring that: a) The scheduling of all vacation leaves under Article VIII. Swapping of SVL schedule is allowed on a one-on-one basis by submitting a written request at least 30 days before the actual schedule of SVL duly signed by the concerned parties. Respondent alleged that the petition was fatally defective due to the lack of authority of its union president. as a requirement for the renewal of their license. to sign the certification and verification against forum shopping on petitioner's behalf. 2004 We are furnishing all the departments the leave balances of their respective staff as of January 01. Aggrieved.3cralaw respondent's Head of the Traffic Management and Security Department (TMSD) published the scheduled vacation leave of its TMSD personnel for the year 2004. This was allegedly apparent in the memorandum issued by the Head HRD. 2005. Petitioner filed a motion for reconsideration. Heads FROM : Head. verification is only a formal. or are true and correct. the Head of the TMSD issued a Memorandum4 cralaw dated January 9. and the CA rendered a Decision dated October 4. be shouldered by the respondent. The purpose of requiring verification is to secure an assurance that the allegations in the petition have been made in good faith. However. However. SO ORDERED. which the voluntary arbitrator denied in the Order7cralaw dated August 11. cralaw 6 have them monitor and program the schedule of such leave. shall not be their personal account but that of the company. THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS [THIRTEENTH DIVISION] ERRED IN HOLDING THAT: A) THE MANAGEMENT HAS THE SOLE DISCRETION TO SCHEDULE THE VACATION LEAVE OF HEREIN PETITIONER. it has been held that the certification requirement is rooted in the principle that a party-litigant shall not be allowed to pursue simultaneous remedies in different fora. Due to the disagreement between the parties. (Emphasis supplied) Thus. the respondent did not accede to petitioner's demands and stood firm on its decision to schedule all the vacation leave of petitioner's members. requirement. not a jurisdictional. 2006 merely reiterated the authority given to the union president to represent the union. the union president. premises all considered. Please consider the leave credit they earned each month [1-2-0] . petitioner elevated the matter to the DOLE-NCMB for preventive mediation. and non-compliance therewith does not necessarily render it fatally defective. B) THE MANAGEMENT IS NOT LIABLE FOR THE IN-SERVICETRAINING OF THE SECURITY GUARDS. the parties agreed to submit the issue before the voluntary arbitrator. thereof. As we are targeting the zero conversion comes December 2004. which the CA denied through a Resolution dated January 23. Petitioner objected to the implementation of the said memorandum. 2006 by virtue of a board resolution. which provides: FOR : All Dept. 2004 DATE : January 9. b) To pay the expenses for the in-servicetraining of the company security guards. as a requirement for renewal of licenses. it was provided that: SCHEDULED VACATION LEAVE WITH PAY. representing the union.
18cralaw It is a mere concession or act of grace of the employer and not a matter of right on the part of the employee.16cralaw In fine. on its face. Put another way. the grant to management of the right to schedule vacation leaves ensures that there would always be enough people manning and servicing the toll ways. Third. WMC Resources International Pty. the employer is given the leeway to impose conditions on the entitlement to and commutation of the same. the literal meaning of its stipulation shall prevail." In the case at bar. CA. Although the preferred vacation leave schedule of petitioner's members should be given priority. which in turn assures the public plying the same orderly and efficient toll way service. v. Thus. and (5) an Employment Specialist in a labor case. thus curing any defects thereof. Section 1 (b) gives the management the final say regarding the vacation leave schedule of its employees. Of course. (Lepanto). Indeed. being the president of the union. security and convenience. Petitioner also requested the respondent to provide and/or shoulder the expenses for the in-service training of their members as a requirement for the renewal of the security guards' license. the passing on June 30. 2006. Thus. we ruled that a personnel officer who signed the petition but did not attach the authority from the company is authorized to sign the verification and non-forum shopping certificate. where union members may wittingly or unwittingly choose to have a vacation. but certainly. The rationale applied in the foregoing cases is to justify the authority of corporate officers or representatives of the corporation to sign the verification or certificate against forum shopping. Respondent did not accede to the union's request invoking the CBA provision which states that all expenses of security guards in securing /renewing their license shall be for their personal account. no basis for the Voluntary Arbitrator to interpret the subject provision relating to the schedule of vacation leaves as being subject to the discretion of the union members. 2006 of a Board Resolution authorizing him to represent the union is deemed a ratification of his prior execution. The only concession given under the subject clause was that the company should take into consideration the preferences of the employees in scheduling the vacations. however. in Novelty Philippines. We rule that Rene Soriano has sufficient authority to sign the verification and certification against forum shopping for the following reasons: First . the resolution dated June 30. Stated differently. as the grant of vacation leave is not a standard of law. any vacation leave credits left unscheduled by the employer. respondent argued that Article VIII. we upheld the validity of a verification signed by an "employment specialist" who had not even presented any proof of her authority to represent the company. the same may result in significantly crippling the number of key employees of the petitioner manning the toll ways on holidays and other peak seasons. Court of Appeals. The provisions of the CBA must be respected since its terms and conditions constitute the law between the parties.14cralaw We now go to the merits of the case. being the law between the parties. the president of the union was duly authorized to represent the union and to file a case on its behalf.49 In Cagayan Valley Drug Corporation v.13cralaw We said that: In a slew of cases. such as having the option to schedule the same. The rule is that where the language of a contract is plain and unambiguous. As to the issue on vacation leaves. Indeed. being "in a position to verify the truthfulness and correctness of the allegations in the petition. . or any scheduled vacation leave that was not enjoyed by the employee upon the employer's directive. and in Lepanto Consolidated Mining Company v. 2005. 2006 was merely a reiteration of the authority given to the Union President to file a case before this Court assailing the CBA violations committed by the management. the contract must be taken to mean that which. as a matter of right. (2) the President of a corporation. we have recognized the authority of some corporate officers to sign the verification and certification against forum shopping. There is simply nothing in the CBA which grants the union members this right. 2006. Ratification in agency is the adoption or confirmation by one person of an act performed on his behalf by another without authority. compliance therewith is mandated by law. of the verification and certificate of non-forum shopping. While the above cases do not provide a complete listing of authorized signatories to the verification and certification required by the rules. Galan. In Mactan-Cebu International Airport Authority v. the same has no merit. 17cralaw this Court held that the CBA during its lifetime binds all the parties. unless some good reason can be assigned to show that the words used should be understood in a different sense. In Faculty Association of Mapua Institute of Technology (FAMIT) v." The word shall in this instance connotes an imperative command. Section 1 (b) of the CBA categorically provides that the scheduling of vacation leave shall be under the option of the employer. we have held that the following officials or employees of the company can sign the verification and certification without need of a board resolution: (1) the Chairperson of the Board of Directors. Commissioner of Internal Revenue . the determination of the sufficiency of the authority was done on a case to case basis. that their request be automatically granted by the respondent. as it deems fit. its meaning should be determined without reference to extrinsic facts or aids. 2006. the contested provision of the CBA is clear and unequivocal. In the absence of such right and in view of the mandatory provision in the CBA giving respondent the right to schedule the vacation leave of its employees. which was previously conferred during a meeting held on October 5.15cralaw In the case at bar. they cannot demand. As correctly found by the CA: The words of the CBA were unequivocal when it provided that "The company shall schedule the vacation leave of employees during the year taking into consideration the request of preference of the employees. On the other hand. There is. (4) Personnel Officer. it can be inferred that even prior to the filing of the petition before Us on February 27. the latter can compel its employees to exhaust all their vacation leave credits. we ruled that the Chairperson of the Board and President of the Company can sign the verification and certificate against non-forum shopping even without the submission of the board's authorization. as the public using the skyway system should be assured of its safety. thus. (3) the General Manager or Acting General Manager. where the language of a written contract is clear and unambiguous.. In sum. Soriano has no authority to file the petition on February 27. assuming that Mr. since the grant of vacation leave is a prerogative of the employer. it purports to mean. but a prerogative of management. but the same is not controlling. Rene Soriano is in a position to verify the truthfulness and correctness of the allegations in the petition. Petitioner insisted that their union members have the preference in scheduling their vacation leave. the CBA must be strictly adhered to and respected if its ends have to be achieved. if union members were given the unilateral discretion to schedule their vacation leaves. CA. if the terms of a CBA are clear and leave no doubt upon the intention of the contracting parties.19cralaw Thus. the concession never diminished the positive right of management to schedule the vacation leaves in accordance with what had been agreed and stipulated upon in the CBA. Article VIII. In the grant of vacation leave privileges to an employee. we recognized the authority of a general manager or acting general manager to sign the verification and certificate against forum shopping. the multitude or scarcity of personnel manning the tollways should not rest upon the option of the employees. Ltd. If the petitioners were given the exclusive right to schedule their vacation leave then said right should have been incorporated in the CBA. in Pfizer v. Respondent may take into consideration the employees' preferred schedule. on the grant of vacation leaves. The petitioner further argued that any doubts or ambiguity in the interpretation of the CBA should be resolved in favor of the laborer. The parties cannot be allowed to change the terms they agreed upon on the ground that the same are not favorable to them. Along that line. Inc. on February 27. and from that language alone. The preference requested by the employees is not controlling because respondent retains its power and prerogative to consider or to ignore said request. it is well within the power and authority of an employer to impose certain conditions. Second . The intention of the parties must be gathered from that language. It must be noted the grant to management of the right to schedule vacation leaves is not without good reason. there being nothing to show a different intention.
the vacation leave privilege was not intended to serve as additional salary."22cralaw The supremacy of the law over contracts is explained by the fact that labor contracts are not ordinary contracts. "They are so impressed with public interest that labor contracts must yield to the common good x x x. Where the quality of training is better served by centralization. it is incorrect to award payment of the cash equivalent of vacation leaves that were already used and enjoyed by the employees. In service training. To attain this end. Since it is the primary responsibility of operators of company security forces to maintain and upgrade the standards of efficiency. dated October 4. the voluntary arbitrator has licensed unjust enrichment in favor of the petitioner and caused undue financial burden on the respondent. It would seem that petitioner's goal in relentlessly arguing that its members preferred vacation leave schedule should be given preference is not allowed to them to avail themselves of their respective vacation leave credits at all but. We find the petition meritorious. The Decision and Resolution of the Court of Appeals. to convert these into cash. the relations between capital and labor are not merely contractual.24cralaw Hence. If the intent of the law were to impose upon individual employees the cost of training. To give the employees the option not to consume it with the aim of converting it to cash at the end of the year would defeat the very purpose of vacation leave. company security force and private security agencies upon prior authority shall conduct-in-service training at least two (2) weeks duration for their organic members by increments of at least two percent (2%) of their total strength. Further. Associate Justice ANTONIO EDUARDO B.25cralaw Respondent never controverted the said allegation and is thus deemed to have admitted the same. Thus." A reading of the provision would reveal that it encompasses all possible expenses a security guard would pay or incur in order to secure or renew his license. it should not be taken to mean that provisions agreed upon in the CBA are absolutely beyond the ambit of judicial review and nullification. NACHURA Associate Justice JOSE CATRAL MENDOZA Associate Justice ATTEST ATION . as stated. such provisions may very well be voided. Chua Lo Tan . the CFSD Directors may activate a training staff from local talents to assist. petitioner alleged that prior to the inking of the CBA. In the present case. Responsibility for Training and Progressive Development. The cost of training shall be prorated among the participating agencies/private companies . . following the aforementioned CBA provision. In Cuajo v. Article XXI. Section 12. therefore.23cralaw However. clauses. This purpose is manifest in the Memorandum dated January 9. performance and competence of their personnel. must be converted to cash. 2006. and respondent company is directed to reimburse its security guards for the expenses incurred. WHEREFORE. DIOSDADO M. However. its terms should be implemented as they are written. the intent of the law to impose upon the employer the obligation to pay for the cost of its employees training is manifested in the aforementioned law's provision that Where the quality of training is better served by centralization.a. The cost of inservice training of the respondent company's security guards shall be at the expense of the respondent company. 5487 provides the following: Section 17. it was the respondent company providing for the inservice training of the guards. All private security personnel shall be re-trained at least once very two years. since a contract is the law between the parties. they are imbued with public interest and therefore are subject to the police power of the state. JR. the CSFD Directors may activate a training staff from local talents to assist. The law mandates prorating of expenses because it would be impracticable and unfair to impose the burden of expenses suffered by all participants on only one participating agency or company. and to supervise and conduct appropriate training requirements. there are. the expenses for the same must be on the personal account of the employee.R. specifically Article 1306 of the Civil Code. and not merely to give him additional salary and bounty. Although it is a rule that a contract freely entered into between the parties should be respected.(Emphasis ours. the Court cannot tolerate this. Further. However. discipline. each duly licensed private security agency and company security force shall establish a staff position for training and appoint a training officer whose primary functions are to determine the training needs of the agency/guards in relation to the needs of the client/ market/ industry. respectively. discipline and competence of security guards and detectives.20cralaw We said that the purpose of a vacation leave is to afford a laborer a chance to get a much-needed rest to replenish his worn-out energy and acquire a new vitality to enable him to efficiently perform his duties. as provided in the CBA. there is here no room for interpretation. public order. Since the CBA is clear and unambiguous. but as a non-monetary benefit. or public policy. On this point. 200421cralaw addressed to all TMSD Personnel which provides that: SCHEDULED VACATION LEAVE WITH PAY The 17 days (15 days SVL plus 2-Day-Off) scheduled vacation leave (SVL) with pay for the year 2004 had been published for everyone to take a vacation with pay which will be our opportunity to enjoy quality time with our families and perform our other activities requiring our personal attention and supervision.) Accordingly. certain exceptions to the rule. or public policy. CORONA Associate Justice Chairperson PRESBITERO J. By directing the conversion to cash of all utilized and paid vacation leaves. Evidently. The cost of training shall be pro-rated among the participating agencies/private companies. Inservice training is a requirement for the renewal of a security guard's license. PERALTA Associate Justice WE CONCUR: RENATO C. and the company that has its own security forces shall shoulder the entire cost for such training. good customs. This case is remanded to the voluntary arbitrator for the computation of the expenses incurred by the security guards for their in-service training. terms and conditions as they may deem convenient. the provision on the pro-rating of expenses would not have found print in the law. 2005 and January 23. All security officer must undergo in-service training at least once every two (2) years preferably two months before his or her birth month. This rule of construction does not benefit petitioners because. the 1994 Revised Rules and Regulations Implementing Republic Act No. discipline. Section 6 of the CBA provides that " All expenses of security guards in securing /renewing their licenses shall be for their personal account . performance and competence of their personnel. It is the primary responsibility of all operators private security agency and company security forces to maintain and upgrade the standards of efficiency. This brings Us to the issue of who is accountable for the in-service training of the security guards. however. To maintain and/or upgrade the standard of efficiency. It can be gleaned from the said provision that cost of training shall be pro-rated among participating agencies and companies if the training is best served by centralization. If the provisions in the CBA run contrary to law. it follows that the expenses to be incurred therein shall be for the personal account of the company. Moreover. No. VELASCO.50 due to exigencies of the service. provided they are not contrary to law. it follows that if there is no centralization. there can be no pro-rating. SP. the petition is PARTIALLY GRANTED. which provides: The contracting parties may establish such stipulations. morals. public morals. inapplicable to the present case. instead. in CA-G. SO ORDERED.26cralaw Implicit from respondent's actuations was its acknowledgment of its legally mandated responsibility to shoulder the expenses for in-service training. Petitioner's contention that labor contracts should be construed in favor of the laborer is without basis and. 87069 is MODIFIED.
Chairperson CERTIFIC ATION Pursuant to Section 13. Article VIII of the Constitution. it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.51 I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. REYNATO S. PUNO Chief Justice . RENATO C. CORONA Associate Justice Third Division.
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