1. Buenviaje vs.

Salonga, 805 SCRA 369, October 05, 2016 - Obligations of a Co-

partner
https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/62464

FIRST DIVISION
[ G.R. No. 216023, October 05, 2016 ]
DR. RESTITUTO C. BUENVIAJE, PETITIONER, VS. SPOUSES JOVITO R. AND LYDIA B.
SALONGA, JEBSON HOLDINGS CORPORATION AND FERDINAND JUAT BAÑEZ,
RESPONDENTS.

DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari[1] are the Decision[2] dated November 29, 2013 and the
Resolution[3] dated December 15, 2014 of the Court of Appeals (CA) in CA-G.R. SP No. 93422, essentially upholding
the Decision[4] dated September 16, 2004 and the Resolution[5] dated January 25, 2005 of the Housing and Land Use
Regulatory Board (HLURB) Board of Commissioners (HLURB-BOC) which, inter alia: (a) ordered respondent Jebson
Holdings Corporation (Jebson) to comply with its obligations under the Contract to Sell it entered into with petitioner
Dr. Restituto C. Buenviaje (Buenviaje); (b) declared respondents Spouses Jovito R. Salonga and Lydia B. Salonga
(Sps. Salonga) not solidarily liable with Jebson and respondent Ferdinand Juat Banez (Banez) with regard to such
Contract to Sell; (c) rescinded the "swapping arrangement" entered into by Buenviaje, Jebson, and Bañez with regard
to the Contract to Sell; and (d) ordered Buenviaje to pay Sps. Salonga moral damages and attorney's fees in the
amounts of P50,000.00 and P25,000.00, respectively.

The Facts

On May 29, 1997, Jebson, an entity engaged in the real estate business, through its Executive Vice President,
Bañez, entered into a Joint Venture Agreement[6] (JVA) with Sps. Salonga. Under the JVA, Sps. Salonga, who owned
three (3) parcels of land with an area of 2,935 square meters situated in Tagaytay City, and covered by Transfer
Certificate of Title (TCT) No. T-9000, agreed for Jebson to construct thereon ten (10) high-end single detached
residential units, to be known as Brentwoods Tagaytay Villas (Brentwoods).[7] They likewise assumed to subdivide the
property into individual titles upon which Jebson shall assume the liability to pay their mortgage loan with the
Metropolitan Bank and Trust Company.[8]  On the other hand, Jebson undertook to construct the units at its own
expense, secure the building and development permits, and the license to sell from the HLURB, as well as the other
permits required. Out of the ten (10) units, seven (7) units, i.e., Units 3, 4, 5, 6, 8, 9, and 10, will belong to Jebson
while the remaining three (3) units, i.e., Units 1, 2, and 7, will correspond to Sps. Salonga's share.[9] The units
allocated to Sps. Salonga were to be delivered within six (6) months after Jebson's receipt of the down payment for
the units allocated to it.[10] Jebson was also allowed to sell its allocated units under such terms as it may deem fit,
subject to the condition that the price agreed upon was with the conformity of Sps. Salonga.[11]

On June 9, 1997, Jebson entered into a Contract to Sell[12] (subject CTS) with Buenviaje over Unit 5 for a total
consideration of P10,500,000.00, without the conformity of Sps. Salonga.[13] Out of the purchase price, P7,800,000.00
JEBSON and was paid through a "swapping arrangement," whereby Buenviaje conveyed to Jebson a house and lot located in
Garden Villas, Tagaytay valued at P5,800,000.00 (house and lot) and Tagaytay Highlands Golf share No. 0722 (golf
BUENVIAJE
share) worth P2,000,000.00 on July 1, 1997, while the remaining balance was paid periodically. An additional sum of
P125,000.00 for the retaining wall (P70,000.00) and air-conditioning system (P55,000.00) was likewise paid for by
Buenviaje.[14]

However, despite full payment of the contract price, Jebson was unable to complete Unit 5 in violation of its
JEBSON’s contractual stipulation to finish the same within twelve (12) months from the date of issuance of the building permit.
failure to Thus, in April 1999, Buenviaje formally demanded the immediate completion and delivery of Unit 5, to which Jebson
complete cited the 1997 financial crisis as the reason for the delay. Accordingly, Jebson asked to be given until the early part of
the year 2000 to complete the same but still failed to do so.[15]

On May 27, 2002, Buenviaje filed before the HLURB Regional Field Office IV (HLURB-RIV) a Complaint for Specific
Performance with Damages and Attorney's Fees, against Jebson, Bañez, and Sps. Salonga (respondents), praying
for the (a) completion of Unit 5, (b) partition and subdivision of the property, (c) delivery of the title to Unit 5, and (d)
payment of damages and attorney's fees. In the alternative, he prayed for the rescission of the subject CTS, and the
return of all payments made thereunder, with interest at 24% per annum (p.a.), as well as the house and lot, and golf
share pursuant to the "swapping arrangement."[16]

The complaint was consolidated with those filed by other parties, i.e., Beliz Realty and Development Corporation
(Beliz Realty) and Spouses George and Valentina Co (Sps. Co; collectively, complainants), who similarly entered into
contracts to sell with Jebson, and sought the completion of the units they purchased.[17]

In their defense, Jebson and Bañez claimed that they were ready to comply with all their contractual obligations but
were not able to secure the necessary government permits because Sps. Salonga stubbornly refused to cause the
consolidation of the parcels of land covered by TCT No. T-9000, and their partition into ten (10) individuallots.[18]

For their part, Sps. Salonga averred that they were not liable to the complainants since there was no privity of
contract between them, adding that the contracts to sell were unenforceable against them as they were entered into
by Jebson without their conformity, in violation of the JVA. They maintained that they were ready to cause the
subdivision and individual titling of the subject property. They also filed a cross-claim against Jebson for the latter's
failure to complete and deliver to them the three (3) units corresponding to their share in Brentwoods, and for
representing to the buyers that it owned the land where Brentwoods was located.[19]

The HLURB-RIV Ruling

In a Decision[20] dated December 5, 2002, the HLURB-RIV: (a) rescinded the respective contracts to sell entered into
by Jebson with the complainants; (b) found respondents solidarily liable for (i) the return of the payments made by the
complainants, with interest of 12% per annum (p.a.), and (ii) the payment of moral and exemplary damages,
attorney's fees, and litigation expenses; and (c) ordered respondents to (i) return to Buenviaje and Beliz Realty the
properties conveyed to Jebson through their respective "swapping arrangements," and (ii) pay an administrative fine
of P30,000.00 for violation of Sections 4, 5, 20, and 25 of Presidential Decree No. (PD) 957.[21]

The HLURB-RIV found that respondents were not legally authorized to sell Brentwoods as they have not secured the
necessary Registration Certificate and License to Sell. Furthermore, they failed to complete the construction of the
units as well as to deliver the units to the complainants on time, entitling the latter to the refund of their payments,
including interests. It further found Sps. Salonga solidarily liable with Jebson and Bañez as joint venture partners
liable to the general buying public.[22]

Aggrieved, Sps. Salonga appealed to the HLURB-BOC.[23]

The HLURB-BOC Ruling

In a Decision[24] dated September 16, 2004, the HLURB-BOC reversed and set aside the HLURB-RIV's ruling, and (a)
upheld the validity of the respective contracts to sell of Jebson with Buenviaje[25] and Beliz Realty; (b) rescinded the
"swapping arrangements" under the said CTS, and ordered Jebson and Bañez, jointly and severally, to return the
properties received thereunder to Buenviaje and Beliz Realty, who shall, in turn, pay the cash values thereof; (c)
fixing a period of six (6) months for the completion of the construction of Units 3, 5, 6 and 7; and (d) ordered the
complainants to pay respondents Sps. Salonga moral damages and attorney's fees.[26]

The HLURB-BOC held that there was no substantial breach but only a slight or casual one, which did not justify a
rescission of the contracts to sell, especially in view of the fact that the residential units covered by the said contracts
were already at their finishing stages. Considering the accomplishment level of the work done on the said units, and
further noting that the primary relief sought in the complaints of Buenviaje and Beliz Realty was specific performance,
the HLURB-BOC ruled that the proper remedy, instead, was to fix the period for completion of the concerned units.[27]

Nonetheless, it invalidated the "swapping arrangements" in the respective contracts to sell of Jebson with Buenviaje
and Beliz Realty, which allowed the use of non-cash assets as substantial downpayment, leaving Jebson with
insufficient funds to complete their units, and to construct and deliver the units allocated to Sps. Salonga who were
prejudiced thereby.[28]

It also found no basis to hold Sps. Salonga solidarily liable with Jebson and Bañez under the subject CTS,
considering that: (a) the JVA does not provide for solidarity for any act or omission of either party and, in fact,
expressly provides that Sps. Salonga shall be free of any liability from any third party as regards non-compliance with
HLURB Rules and Regulations;[29] (b) the legal obligation to procure the required development, permit, license to sell,
and certificate of registration from the HLURB devolved entirely and exclusively on Jebson and Bañez;[30] (c) Sps.
Salonga were not the ones in control of the project, but Bañez;[31] and (d) even assuming Sps. Salonga directly or
indirectly controlled Jebson, Section 40 of PD 957 exempts from its rule of solidary liability one who has acted in good
faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action.[32]

Buenviaje and complainants moved for reconsideration but the same were denied in a Resolution[33] dated January
25, 2005. Dissatisfied, Buenviaje elevated the matter to the Office of the President (OP).[34]

The OP's Ruling

In a Decision[35] dated November 30, 2005, the OP affirmed the ruling of the HLURB-BOC, finding: (a) no factual
basis to hold Sps. Salonga solidarily liable with Jebson, pointing out that under the JVA, Jebson, as the developer,
holds Sps. Salonga free from liability to third parties for non compliance with HLURB rules and regulations;[36] (b) the
contracts to sell between Jebson and the complainants to be unenforceable against Sps. Salonga whose conformity
thereto was not secured in violation of the JVA;[37] (c) the rescission of the contracts to sell was not the most
economical solution to the problem confronting the parties considering that the units have already reached the
finishing stage;[38] and (d) the rescission of the "swapping arrangements" entered into by Jebson and the buyers to be
proper.[39]

Complainants separately moved for reconsideration, all of which were denied in an Order[40] dated January 31, 2006.
Unperturbed, Buenviaje and Beliz Realty filed a petition for review before the CA.[41] However, in the course of the
proceedings, Beliz Realty withdrew all its claims against Sps. Salonga.[42]

The CA Ruling

In a Decision[43] dated November 29, 2013, the CA affirmed the OP ruling. It found that Jebson violated the terms of
the JVA when it failed to secure the pertinent government permits for the development of Brentwoods, and sold its
allocated units without the conformity of Sps. Salonga.[44]

Considering that the primary prayer of Buenviaje and Beliz Realty was for specific performance, i.e., the completion
of the construction of their units, which are almost finished, it ruled that the OP correctly (a) sustained the HLURB
Decision holding the rescission of the contracts to sell to be impractical; and (b) ordered that the said units be finished
and delivered to Buenviaje and Beliz Realty, rescinding only the "swapping arrangement" in their respective contracts
to sell with Jebson.[45] Anent Buenviaje's liability for moral damages and attorney's fees to Sps. Salonga, the CA
opined that the OP's in toto affirmation of the HLURB-BOC ruling is equivalent to an affirmation of the ratio of said
finding of liability, i.e., that Buenviaje connived with Jebson in diluting the cash portion of its payments to the prejudice
of the spouses.[46]

Buenviaje, Jebson, and Bañez, respectively filed their motions for reconsideration, but the same were denied by the
CA in a Resolution[47] dated December 15, 2014; hence, the present petition filed by Buenviaje.[48]

The Issues Before the Court

The essential issues for the Court's resolution are whether or not the CA correctly ruled that: (a) the grant of the
remedy of specific performance in Buenviaje's favor was proper under the prevailing circumstances of the case; (b)
Sps. Salonga are not solidarily liable with Jebson and Banez to Buenviaje for the completion of the construction and
delivery of the unit; (c) the "swapping arrangement" was invalid; and (d) Buenviaje is liable to Sps. Salonga for moral
damages and attorney's fees.

The Court's Ruling

The petition is partly meritorious.

I.

Specific performance and "rescission" (more accurately referred to as resolution) are alternative remedies

available to a party who is aggrieved by a counter-party's breach of a reciprocal obligation. This is provided for in
Article 1191 of the Civil Code, which partly reads:

Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him.

The injured party may choose between the fulfillment and the rescission of the obligation, with the payment
of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter
should become impossible.

x x x x (Emphasis supplied)

Specific performance is defined as "[t]he remedy of requiring exact performance of a contract in the specific form in
which it was made, or according to the precise terms agreed upon."[49] It pertains to "[t]he actual accomplishment of a
contract by a party bound to fulfill it."[50]

On the other hand, resolution is defined as the "unmaking of a contract for a legally sufficient reason x x
x."[51] "[Resolution] does not merely terminate the contract and release the parties from further obligations to each
other, but abrogates the contract from its inception and restores the parties to their original positions as if no contract
has been made. Consequently, mutual restitution, which entails the return of the benefits that each party may have
received as a result of the contract, is thus required."[52] Notably, resolution under Article 1191 of the Civil Code "will
not be permitted for a slight or casual breach, but only for such substantial and fundamental violations as would
defeat the very object of the parties in making the agreement. Ultimately, the question of whether a breach of contract
is substantial depends upon the attending circumstances."[53]

In this case, the HLURB-BOC, the OP, and the CA all pointed out that Buenviaje primarily prayed for the remedy of
specific performance - i.e., the completion of Unit 5, the subdivision of Sps. Salonga's property into individual lots per
unit, and the tum-over of Unit 5 as well as the subdivided lot portion allocated to such unit to him and only prayed for
the remedy of rescission as an alternative remedy.[54] Thus, it remains apparent that as between the two remedies
made available to him, Buenviaje, had, in fact, chosen the remedy of specific performance and therefore, ought to be
bound by the choice he had made. To add, "[t]he fundamental rule is that reliefs granted a litigant are limited to those
specifically prayed for in the complaint; other reliefs prayed for may be granted only when related to the specific
prayer(s) in the pleadings and supported by the evidence on record."[55] Hence, based on this postulate, the lower
tribunals could hardly be faulted for granting the proper relief in accordance with what Buenviaje himself had claimed.

Relatedly, it is observed that Buenviaje's alternative prayer for resolution is textually consistent with that portion of
Article 1191 of the Civil Code which states that an injured party "may also seek rescission, even after he has chosen
fulfillment, if the latter should become impossible." Nevertheless, the impossibility of fulfillment was not sufficiently
demonstrated in the proceedings conducted in this case. As the HLURB BOC pointed out, "[t]here is no finding that
specific performance has become impossible or that there are insuperable legal obstacles to the completion of the
constructed units so as to justify [resolution]."[56] In fact, as the CA contrarily remarked, Buenviaje's "main prayer [for
specific performance] x x x appears to be the more plausible course of action"[57] "[s]ince the units covered by the
disputed Contracts To Sell are almost finished, and [have] most likely [been] complete[d]."[58]

With these in mind, the CA therefore correctly upheld the directive for Jebson to comply with its obligations under the
subject CTS with Buenviaje as prayed for by the latter. Failing to show any cogent reason to hold otherwise,
Buenviaje can no longer recant his primary choice of relief. His prayer for resolution in the instant petition must
perforce fail.

II.

With the propriety of specific performance having been decreed, Buenviaje's claim to be restituted the alleged
purchase price of P10,625,000.00 - for which Sps. Salonga were claimed to be solidarily liable - thus, holds no basis.
As above-intimated, mutual restitution is the proper consequence of the remedy of resolution. It cannot arise - as it is,
in fact, theoretically incompatible - with the remedy of specific performance, which is the relief prayed for and
consequently, granted to the injured party herein.

In this relation, it is fitting to clarify that the obligations to be fulfilled, i.e., the completion of Unit 5, the subdivision of
Sps. Salonga's property into individual lots per unit, and the tum-over of Unit 5, as well as the subdivided lot portion
allocated to such unit, are obligations of Jebson to Buenviaje under the subject CTS dated June 1997. These
obligations are subsumed in the general provisions of Articles 3 and 4, which respectively read:

ARTICLE 3. POSSESSION

3.1. Upon execution of this contract and the payment of the amounts stated in Article 1.2 are in good standing and
the housing unit is completed hereof, the BUYER may take possession of the subject house and lot of this contract, in
the concept of a lessee or tenant until such time as the housing unit have been fully paid. BUYER's right of
possession shall continue so long as he complies with all the terms and conditions hereof.
 ARTICLE 4. TRANSFER OF OWNERSHIP

4.1 It is hereby agreed and understood that title to the above-described lot subject of this contract shall remain with
the SELLER and shall pass to and be transferred to the BUYER only upon complete payment by the BUYER of all his
obligations herein stipulated, at which time the SELLER agrees to execute a final Deed of Absolute Sale in favor of
the BUYER.[59]

In this case, it is undisputed that Sps. Salonga were not parties to the above-mentioned contract. Under Article
1311[60] of the Civil Code, it is a basic principle in civil law on relativity of contracts, that contracts can only bind the
parties who had entered into it and it cannot favor or prejudice third persons. Contracts take effect only between the
parties, their successors in interest, heirs and assigns. Thus, absent any privity of contract as to them, there is no
basis to hold Sps. Salonga liable for any of the obligations stated under the said contract to sell.

At this juncture, it should be further made clear that the imputation of joint or solidary liability against a particular
person- such as that insistently claimed against Sps. Salonga by Buenviaje first presupposes the existence of that
person's obligation. On the active side, the joint or solidary nature of an obligation is an aspect of demandability; it
pertains to the extent of a creditor's entitlement to demand fulfillment against any or all of his debtors under one
particular obligation. Based on case law, a solidary obligation is one in which each of the debtors is liable for the
entire obligation, and each of the creditors is entitled to demand the satisfaction of the whole obligation from any or all
of the debtors. On the other hand, a joint obligation is one in which each debtors is liable only for a proportionate part
of the debt, and the creditor is entitled to demand only a proportionate part of the credit from each debtor.[61]

As already mentioned, no source of obligation under the subject CTS can be traced to Sps. Salonga as they were
clearly non-parties thereto. Therefore, without such extant obligation, the possibility of holding them liable in
solidum with Jebson under the said contract is out of the question.

Neither has Buenviaje persuasively argued that Sps. Salonga may be held solidarily liable pursuant to law, which is a
distinct source of obligation.[62] More particularly, Buenviaje attempts to establish that Section 40 of PD 957 as well as
Articles 1822 and 1824 of the Civil Code, are legal provisions which render Sps. Salonga solidarity liable together
with Jebson:

Section 40 of PD 957 reads:

Section 40. Liability of controlling persons. Every person who directly or indirectly controls any person liable under
any provision of this Decree or of any rule or regulation issued thereunder shall be liable jointly and severally with and
to the same extent as such controlled person unless the controlling person acted in good faith and did not directly or
indirectly induce the act or acts constituting the violation or cause of action.

In this case, records are bereft of any showing that Sps. Salonga had direct or indirect control over Jebson
throughout the course of the entire Brentwoods Project. In fact, even if it is assumed that they had some sort of
control over Jebson, it was not shown that they acted in bad faith and had a hand in inducing Jebson's acts from
which Buenviaje's cause of action arose. As such, the foregoing provision cannot be invoked to hold Sps. Salonga
solidarily liable with Jebson.

Similarly, there is no perceptible legal basis to hold them solidarily liable under Articles 1822 and 1824 of the Civil
Code. These provisions, which are found under Section 3, Chapter 2, Title IX, Book IV of the Civil Code on
Partnership, respectively state:

Article 1822. Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of
the partnership or with the authority of his co-partners, loss or injury is caused to any person, not being a partner in
the partnership, or any penalty is incurred, the partnership is liable therefor to the same extent as the partner so
acting or omitting to act.
Partnership
Provisions xxxx

Article 1824. All partners are liable solidarily with the partnership for everything chargeable to the partnership under
Articles 1822 and 1823.

Evidently, the foregoing legal provisions pertain to the obligations of a co-partner in the event that the partnership to
which he belongs is held liable. In this case, Buenviaje never dealt with any partnership constituted by and between
Jebson and Sps. Salonga. As previously mentioned, the subject CTS, which was the source of the obligations relative
to the completion and delivery of Unit 5, solely devolved upon the person of Jebson. As there was no partnership
privy to any obligation to which Buenviaje is a creditor, Articles 1822 and 1824 of the Civil Code do not apply.

While Jebson, as developer, and Sps. Salonga, as land owner, entered into a joint venture, which - based on case
law may be considered as a form of partnership,[63] the fact remains that their joint venture was never privy to any
obligation with Buenviaje; hence, liability cannot be imputed against the joint venture based on the same principle of
relativity as above mentioned. Besides, it should be pointed out that the JVA[64] between Jebson and Sps. Salonga
was limited to the construction of the residential units under the Brentwoods Project and that Jebson had the sole
hand in marketing the units allocated to it to third persons, such as Buenviaje. In fact, under the express terms of the
JVA, Jebson, as the developer, had even stipulated to hold Sps. Salonga free from any liability to third parties for
non-compliance with HLURB rules and regulations. As things stand, only Jebson should be held liable for its
obligations to Buenviaje under the subject CTS.

III.

Pursuant to Articles 1177[65] and 1313[66] of the Civil Code, creditors are given remedies whenever their debtors
perform acts or omissions or enter into contracts that tend to defraud the former of what is due them. Such remedy
comes in the form of rescission under Articles 1381(3)[67] in relation to Articles 1383[68] and 1384[69] of the Civil Code.
Rescission (as contemplated in Articles 1380 to 1389 of the Civil Code) is a remedy granted by law to the contracting
parties and even to third persons, to secure the reparation of damages caused to them by a contract, even if this
should be valid, by restoration of things to their condition at the moment prior to the celebration of the contract. It
implies a contract, which even if initially valid, produces a  lesion  or a pecuniary damage to someone.[70] In the
rescission by reason of lesion or economic prejudice, the cause of action is subordinated to the existence of that
prejudice, because it is the raison d 'etre as well as the measure of the right to rescind. Hence, where the defendant
makes good the damages caused, the action cannot be maintained or continued, as expressly provided in Articles
1383 and 1384.[71]

In this case, it must be recapitulated that under the JVA, Sps. Salonga are supposed to receive a total of three (3)
Brentwoods residential units from Jebson, who in turn, is obligated to construct these units at its own expense.
Jebson bound itself to deliver the same within six (6) months after receipt of the downpayment for the units allocated
to it. Meanwhile, Jebson through Bañez - entered into "swapping arrangements" with its buyers (among others,
Buenviaje), whereby it accepted various non-cash assets as suitable payments for the said units. Sps. Salonga
assailed the property swaps as they purportedly deprived the funding for the Brentwoods project to the tune of
P13,000,000.00. Specifically, they asked that the swapped properties be ordered returned to the buyers concerned
and that their values be paid in cash by the latter to be utilized for the completion of the corresponding units.[72] The
HLURB-BOC, which was later affirmed by the OP and then by the CA, found Sps. Salonga's supplication to be
meritorious, holding that the latter were prejudiced by the property swaps inasmuch as these arrangements ate up
more than 80% of the down payments which would have been utilized to complete the units. Moreover, it was
observed that the said arrangements were done without the conformity of Sps. Salonga as required in their JVA with
Jebson, and thus, were entered into to defraud them.[73] As a result, the HLURB-BOC ordered the rescission of the
"swapping arrangement" entered into by Jebson with Buenviaje and instead, ordered him to pay in cash the sum of
P7,200,000.00 as part of his down payment under the subject CTS.

After a careful study of this case, the Court, however, finds no basis to rescind the aforesaid "swapping
arrangement." Although the same was admittedly entered into by Jebson with Buenviaje without the conformity of
Sps. Salonga, the records do not support the HLURB-BOC's finding that this separate arrangement was entered into
in order to defraud Jebson's creditor under the JVA, i.e., Sps. Salonga, and hence, should not be rescinded. As aptly
observed by Justice Alfredo Benjamin S. Caguioa during the deliberations on this case, the act of Jebson in
accepting non-cash assets as suitable payments was a business decision made by it. While such may have been the
cause of Jebson's inability to timely complete the Brentwoods project (possibly due to the lack of immediate access to
liquid capital at that time), the soundness or unsoundness of that business decision is not enough for the Court to
conclude that the said swaps were entered into to defraud Sps. Salonga, notwithstanding the resulting "economic
prejudice" to them. As the records show, Jebson was, in fact, able to receive both cash and non cash asset payments
made by Buenviaje,[74] and hence, could have properly

managed the same to meet its obligations in light of its financial position. In Union Bank Philippines v. Sps. Ong,
[75]
 the Court explained the requirement of fraud relative to rescissible contracts under Article 1381 of the Civil Code:

Essentially, petitioner anchors its case on Article 1381 of the Civil Code which lists as among the rescissible contracts
"[T]hose undertaken in fraud of creditors when the latter cannot in any other manner collect the claim due them."
Contracts in fraud of creditors are those executed with the intention to prejudice the rights of creditors. They
should not be confused with those entered into without such mal-intent, even if, as a direct consequence thereof, the
creditor may suffer some damage. In determining whether or not a certain conveying contract is fraudulent,
what comes to mind first is the question of whether the conveyance was a bona fide transaction or a trick
and contrivance to defeat creditors. To creditors seeking contract rescission on the ground of fraudulent
conveyance rest the onus of proving by competent evidence the existence of such fraudulent intent on the
part of the debtor, albeit they may fall back on the disputable presumptions, if proper, established under Article 1387
of the Code.[76] (Emphases supplied)

Here, the onus of proving that the "swapping arrangement" was a fraudulent conveyance, or a trick and contrivance
to defeat creditor rights, was not sufficiently discharged by Sps. Salonga. Thus, absent such proof of fraud, the Court
concludes that the "swapping arrangement" was a bona fide transaction freely entered into between Jebson and
Buenviaje, and therefore, valid and binding. As such, the HLURB-BOC's directive to rescind the "swapping
arrangement" entered into by Jebson with Buenviaje and the consequent order for the latter to pay Jebson the sum of
P7,200,000.00 in cash as part of his down payment under the subject CTS, is hereby reversed. If at all, Sps.
Salonga's remedy is to compel Jebson to honor its obligations under its contract with them, and not the rescission of
the afore-discussed property swap, which is part and parcel of the consideration underlying the subject CTS between
Jebson and Buenviaje, a distinct and independent contract from the JVA altogether.

IV.

In order that moral damages under Article 2219[77] of the Civil Code may be awarded, there must be pleading and
proof of moral suffering, mental anguish, fright and the like.[78] In Mahinay v. Velasquez,[79] the Court explained:

While no proof of pecuniary loss is necessary in order that moral damages may be awarded, the amount of indemnity
being left to the discretion of the court, it is nevertheless essential that the claimant should satisfactorily show
the existence of the factual basis of damages and its causal connection to defendant's acts. This is so
because moral damages, though incapable of pecuniary estimation, are in the category of an award designed to
compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer. In Francisco vs.
GSIS, the Court held that there must be clear testimony on the anguish and other forms of mental suffering.
Thus, if the plaintiff fails to take the witness stand and testify as to his/her social humiliation, wounded
feelings and anxiety, moral damages cannot be awarded. In Cocoland Development Corporation vs. National
labor Relations Commission, the Court held that "additional facts must be pleaded and proven to warrant the
grant of moral damages under the Civil Code, these being, x x x social humiliation, wounded feelings, grave
anxiety, etc. that resulted therefrom."[80] (Emphases and underscoring supplied)

As to attorney's fees, the general rule is that the same cannot be recovered as part of damages because of the policy
that no premium should be placed on the right to litigate. They are not to be awarded every time a party wins a suit.
The power of the court to award attorney's fees under Article 2208[81] of the Civil Code demands factual, legal, and
equitable justification. Even when a claimant is compelled to litigate with third persons or to incur expenses to protect
his rights, still attorney's fees may not be awarded where no sufficient showing of bad faith could be reflected in a
party's persistence in a case other than an erroneous conviction of the righteousness ofhis cause.[82]

In this case, the tribunals a quo grounded Buenviaje's liability for moral damages and attorney's fees to Sps. Salonga
on his alleged connivance with Jebson and Bañez in diluting the cash portion of his down payments to the prejudice
of Sps. Salonga. However, a judicious perusal of the record reveals that aside from Buenviaje's actual payment of
non-cash assets as part of the purchase price of Unit 5, no other evidence shows that such connivance exists. In the
absence of such proof, it cannot be concluded that Buenviaje had some ulterior purpose in paying non-cash assets
as part of the consideration. As the Court views it, Buenviaje honestly thought that he could partially pay the purchase
price of Unit 5 with the said non-cash assets amounting to P7,200,000.00 as anyway Jebson and Bañez accepted the
offer. "Good faith is always presumed, and upon him who alleges bad faith rests the burden of proof,"[83] which was
not overcome in this case.

Thus, there was no factual basis to declare Buenviaje liable to Sps. Salonga for moral damages and attorney's fees;
consequently, such awards must be deleted. While factual findings of quasi-judicial agencies, especially when
affirmed by the CA, are binding on the Court, such findings may be overturned when, inter alia, they are grounded on
mere speculation,[84] as in this instance.

WHEREFORE, the petition is PARTLY GRANTED. The Decision dated November 29, 2013 and the Resolution
dated December 15, 2014 of the Court of Appeals (CA) in CA-G.R. SP No. 93422 are
hereby AFFIRMED with MODIFICATION, DELETING the following directives: (a) the rescission of the "swapping
arrangement" entered into by respondent Jebson Holdings Corporation (Jebson) with petitioner Dr. Restituto C.
Buenviaje (Buenviaje) and the consequent order for the latter to pay Jebson the sum of P7,200,000.00 in cash as
part of his down payment under their Contract to Sell; and (b) the order for Buenviaje to pay respondents Spouses
Jovito R. Salonga and Lydia B. Salonga moral damages and attorney's fees in the amounts of P50,000.00 and
P25,000.00, respectively. The rest of theCA Decision STANDS.

SO ORDERED.
 2. Guy vs. Gacott, 780 SCRA 579, January 13, 2016 - Joint Obligation to third person
https://www.chanrobles.com/cralaw/2016januarydecisions.php?id=44

SECOND DIVISION
[ G.R. No. 206147, January 13, 2016 ]
MICHAEL C. GUY, PETITIONER, VS. ATTY. GLENN C. GACOTT, RESPONDENT.

DECISION
MENDOZA, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court filed by petitioner Michael C.
Guy (Guy), assailing the June 25, 2012 Decision[1] and the March 5, 2013 Resolution[2] of the Court of Appeals (CA) in
CA-G.R. CV No. 94816, which affirmed the June 28, 2009[3] and February 19, 2010[4] Orders of the Regional Trial
Court, Branch 52, Puerto Princesa City, Palawan (RTC), in Civil Case No. 3108, a case for damages. The assailed
RTC orders denied Guy's Motion to Lift Attachment Upon Personality[5] on the ground that he was not a judgment
debtor.

The Facts

It appears from the records that on March 3, 1997, Atty. Glenn Gacott (Gacott) from Palawan purchased two (2)
brand new transreceivers from Quantech Systems Corporation (QSC) in Manila through its employee Rey
Medestomas (Medestomas), amounting to a total of PI 8,000.00. On May 10, 1997, due to major defects, Gacott
personally returned the transreceivers to QSC and requested that they be replaced. Medestomas received the
returned transreceivers and promised to send him the replacement units within two (2) weeks from May 10, 1997.

Time passed and Gacott did not receive the replacement units as promised. QSC informed him that there were no
available units and that it could not refund the purchased price. Despite several demands, both oral and written,
Gacott was never given a replacement or a refund. The demands caused Gacott to incur expenses in the total
amount of P40,936.44. Thus, Gacott filed a complaint for damages. Summons was served upon QSC and
Medestomas, afterwhich they filed their Answer, verified by Medestomas himself and a certain Elton Ong (Ong). QSC
and Medestomas did not present any evidence during the trial.[6]

In a Decision,[7] dated March 16, 2007, the RTC found that the two (2) transreceivers were defective and that QSC
and Medestomas failed to replace the same or return Gacott's money. The dispositive portion of the decision reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff, ordering the defendants to jointly and severally
pay plaintiff the following:

1. Purchase price plus 6% per annum from March 3,1997 up to and until fully paid
-------------------------------------------------------- P 18,000.00
2. Actual Damages ----------------------------------- 40,936.44
3. Moral Damages -----------------------------------  75,000.00
4. Corrective Damages ----------------------------  100,000.00
5. Attorney's Fees ------------------------------------ 60,000.00
6. Costs.

SO ORDERED.

The decision became final as QSC and Medestomas did not interpose an appeal. Gacott then secured a Writ of
Execution,[8] dated September 26, 2007.

During the execution stage, Gacott learned that QSC was not a corporation, but was in fact a general partnership
registered with the Securities and Exchange Commission (SEC). In the articles of partnership,[9] Guy was appointed
as General Manager of QSC.

To execute the judgment, Branch Sheriff Ronnie L. Felizarte (Sheriff Felizarte) went to the main office of the
Department of Transportation and Communications, Land Transportation Office (DOTC-LTO), Quezon City, and
verified whether Medestomas, QSC and Guy had personal properties registered therein.[10] Upon learning that Guy
had vehicles registered in his name, Gacott instructed the sheriff to proceed with the attachment of one of the motor
vehicles of Guy based on the certification issued by the DOTC-LTO.[11]

On March 3, 2009, Sheriff Felizarte attached Guy's vehicle by virtue of the Notice of Attachment/Levy upon
Personalty[12] served upon the record custodian of the DOTC-LTO of Mandaluyong City. A similar notice was served
to Guy through his housemaid at his residence.

Thereafter, Guy filed his Motion to Lift Attachment Upon Personalty, arguing that he was not a judgment debtor and,
therefore, his vehicle could not be attached.[13] Gacott filed an opposition to the motion.

The RTC Order

On June 28, 2009, the RTC issued an order denying Guy's motion. It explained that considering QSC was not a
corporation, but a registered partnership, Guy should be treated as a general partner pursuant to Section 21 of the
Corporation Code, and he may be held jointly and severally liable with QSC and Medestomas. The trial court wrote:

All persons who assume to act as a corporation knowing it to be without authority to do so shall be liable as general
partners for all debts, liabilities and damages incurred or arising as a result thereof x x x. Where, by any wrongful act
or omission of any partner acting in the ordinary course of the business of the partnership x x x, loss or injury is
caused to any person, not being a partner in the partnership, or any penalty is incurred, the partnership is liable
therefore to the same extent as the partner so acting or omitting to act. All partners are liable solidarity with the
partnership for everything chargeable to the partnership under Article 1822 and 1823.[14]

Accordingly, it disposed:

WHEREFORE, with the ample discussion of the matter, this Court finds and so holds that the property of movant
Michael Guy may be validly attached in satisfaction of the liabilities adjudged by this Court against Quantech Co., the
latter being an ostensible Corporation and the movant being considered by this Court as a general partner therein in
accordance with the order of this court impressed in its decision to this case imposing joint and several liability to the
defendants. The Motion to Lift Attachment Upon Personalty submitted by the movant is therefore DENIED for lack of
merit.

SO ORDERED.[15]

Not satisfied, Guy moved for reconsideration of the denial of his motion. He argued that he was neither impleaded as
a defendant nor validly served with summons and, thus, the trial court did not acquire jurisdiction over his person; that
under Article 1824 of the Civil Code, the partners were only solidarily liable for the partnership liability under
exceptional circumstances; and that in order for a partner to be liable for the debts of the partnership, it must be
shown that all partnership assets had first been exhausted.[16]

On February 19, 2010, the RTC issued an order[17] denying his motion.

The denial prompted Guy to seek relief before the CA.

The CA Ruling

On June 25, 2012, the CA rendered the assailed decision dismissing Guy's appeal for the same reasons given by the
trial court. In addition thereto, the appellate court stated:

We hold that Michael Guy, being listed as a general partner of QSC during that time, cannot feign ignorance of the
existence of the court summons. The verified Answer filed by one of the partners, Elton Ong, binds him as a partner
because the Rules of Court does not require that summons be served on all the partners. It is sufficient that service
be made on the "president, managing partner, general manager, corporate secretary, treasurer or in-house counsel."
To Our mind, it is immaterial whether the summons to QSC was served on the theory that it was a corporation. What
is important is that the summons was served on QSC's authorized officer xxx.[18]

The CA stressed that Guy, being a partner in QSC, was bound by the summons served upon QSC based on Article
1821 of the Civil Code. The CA further opined that the law did not require a partner to be actually involved in a suit in
order for him to be made liable. He remained "solidarity liable whether he participated or not, whether he ratified it or
not, or whether he had knowledge of the act or omission."[19]

Aggrieved, Guy filed a motion for reconsideration but it was denied by the CA in its assailed resolution, dated March
5, 2013.

Hence, the present petition raising the following

ISSUE

THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING THAT PETITIONER
GUY IS SOLIDARILY LIABLE WITH THE PARTNERSHIP FOR DAMAGES ARISING FROM THE BREACH OF
THE CONTRACT OF SALE WITH RESPONDENT GACOTT.[20]

Guy argues that he is not solidarity liable with the partnership because the solidary liability of the partners under
Articles 1822, 1823 and 1824 of the Civil Code only applies when it stemmed from the act of a partner. In this case,
the alleged lapses were not attributable to any of the partners. Guy further invokes Article 1816 of the Civil Code
which states that the liability of the partners to the partnership is merely joint and subsidiary in nature.

In his Comment,[21] Gacott countered, among others, that because Guy was a general and managing partner of QSC,
he could not feign ignorance of the transactions undertaken by QSC. Gacott insisted that notice to one partner must
be considered as notice to the whole partnership, which included the pendency of the civil suit against it.

In his Reply,[22] Guy contended that jurisdiction over the person of the partnership was not acquired because the
summons was never served upon it or through any of its authorized office. He also reiterated that a partner's liability
was joint and subsidiary, and not solidary.

The Court's Ruling

The petition is meritorious.

The service of summons was

flawed; voluntary appearance
cured the defect 

Jurisdiction over the person, or jurisdiction in personam - the power of the court to render a personal judgment or to
subject the parties in a particular action to the judgment and other rulings rendered in the action - is an element of
due process that is essential in all actions, civil as well as criminal, except in actions in rem or quasi in rem.
[23]
 Jurisdiction over the person of the plaintiff is acquired by the mere filing of the complaint in court. As the initiating
party, the plaintiff in a civil action voluntarily submits himself to the jurisdiction of the court. As to the defendant, the
court acquires jurisdiction over his person either by the proper service of the summons, or by his voluntary
appearance in the action.[24]

Under Section 11, Rule 14 of the 1997 Revised Rules of Civil Procedure, when the defendant is a corporation,
partnership or association organized under the laws of the Philippines with a juridical personality, the service of
summons may be made on the president, managing partner, general manager, corporate secretary, treasurer, or in-
house counsel. Jurisprudence is replete with pronouncements that such provision provides an exclusive
enumeration of the persons authorized to receive summons for juridical entities.[25]

The records of this case reveal that QSC was never shown to have been served with the summons through any of
the enumerated authorized persons to receive such, namely: president, managing partner, general manager,
corporate secretary, treasurer or in-house counsel. Service of summons upon persons other than those officers
enumerated in Section 11 is invalid. Even substantial compliance is not sufficient service of summons. The CA was
obviously mistaken when it opined that it was immaterial whether the summons to QSC was served on the theory that
it was a corporation.[27]

Nevertheless, while proper service of summons is necessary to vest the court jurisdiction over the defendant, the
same is merely procedural in nature and the lack of or defect in the service of summons may be cured by the
defendant's subsequent voluntary submission to the court's jurisdiction through his filing a responsive pleading such
as an answer. In this case, it is not disputed that QSC filed its Answer despite the defective summons. Thus,
jurisdiction over its person was acquired through voluntary appearance.

A partner must be separately

and distinctly impleaded before
he can be bound by a judgment

The next question posed is whether the trial court's jurisdiction over QSC extended to the person of Guy insofar as
holding him solidarity liable with the partnership. After a thorough study of the relevant laws and jurisprudence, the
Court answers in the negative.

Although a partnership is based on delectus personae or mutual agency, whereby any partner can generally
represent the partnership in its business affairs, it is non sequitur that a suit against the partnership is necessarily a
suit impleading each and every partner. It must be remembered that a partnership is a juridical entity that has a
distinct and separate personality from the persons composing it.[28]

In relation to the rules of civil procedure, it is elementary that a judgment of a court is conclusive and binding only
upon the parties and their successors-in-interest after the commencement of the action in court.[29] A decision
rendered on a complaint in a civil action or proceeding does not bind or prejudice a person not impleaded therein, for
no person shall be adversely affected by the outcome of a civil action or proceeding in which he is not a party.[30] The
principle that a person cannot be prejudiced by a ruling rendered in an action or proceeding in which he has not been
made a party conforms to the constitutional guarantee of due process of law.[31]

In Muñoz v. Yabut, Jr.,[32] the Court declared that a person not impleaded and given the opportunity to take part in the
proceedings was not bound by the decision declaring as null and void the title from which his title to the property had
been derived. The effect of a judgment could not be extended to non-parties by simply issuing an alias writ of
execution against them, for no man should be prejudiced by any proceeding to which he was a stranger.

In Aguila v. Court of Appeals[33] the complainant had a cause of action against the partnership. Nevertheless, it was
the partners themselves that were impleaded in the complaint. The Court dismissed the complaint and held that it
was the partnership, not its partners, officers or agents, which should be impleaded for a cause of action against the
partnership itself. The Court added that the partners could not be held liable for the obligations of the partnership
unless it was shown that the legal fiction of a different juridical personality was being used for fraudulent, unfair, or
illegal purposes.[34]

Here, Guy was never made a party to the case. He did not have any participation in the entire proceeding until his
vehicle was levied upon and he suddenly became QSC's "co-defendant debtor" during the judgment execution stage.
It is a basic principle of law that money judgments are enforceable only against the property incontrovertibly
belonging to the judgment debtor.[35] Indeed, the power of the court in executing judgments extends only to properties
unquestionably belonging to the judgment debtor alone. An execution can be issued only against a party and not
against one who did not have his day in court. The duty of the sheriff is to levy the property of the judgment debtor not
that of a third person. For, as the saying goes, one man's goods shall not be sold for another man's debts.[36]

In the spirit of fair play, it is a better rule that a partner must first be impleaded before he could be prejudiced by the
judgment against the partnership. As will be discussed later, a partner may raise several defenses during the trial to
avoid or mitigate his obligation to the partnership liability. Necessarily, before he could present evidence during the
trial, he must first be impleaded and informed of the case against him. It would be the height of injustice to rob an
innocent partner of his hard-earned personal belongings without giving him an opportunity to be heard. Without any
showing that Guy himself acted maliciously on behalf of the company, causing damage or injury to the complainant,
then he and his personal properties cannot be made directly and solely accountable for the liability of QSC, the
judgment debtor, because he was not a party to the case.

Further, Article 1821 of the Civil Code does not state that there is no need to implead a partner in order to be
bound by the partnership liability. It provides that:

Notice to any partner of any matter relating to partnership affairs, and the knowledge of the partner acting in
the particular matter, acquired while a partner or then present to his mind, and the knowledge of any other partner
who reasonably could and should have communicated it to the acting partner, operate as notice to or knowledge of
the partnership, except in the case of fraud on the partnership, committed by or with the consent of that partner.

[Emphases and Underscoring Supplied]

A careful reading of the provision shows that notice to any partner, under certain circumstances, operates as notice to
or knowledge to the partnership only. Evidently, it does not provide for the reverse situation, or that notice to the
partnership is notice to the partners. Unless there is an unequivocal law which states that a partner is automatically
charged in a complaint against the partnership, the constitutional right to due process takes precedence and a
partner must first be impleaded before he can be considered as a judgment debtor. To rule otherwise would be a
dangerous precedent, harping in favor of the deprivation of property without ample notice and hearing, which the
Court certainly cannot countenance.

Partners' liability is subsidiary

and generally joint; immediate levy
upon the property of a partner
cannot be made

Granting that Guy was properly impleaded in the complaint, the execution of judgment would be improper. Article
1816 of the Civil Code governs the liability of the partners to third persons, which states that:

Article 1816. All partners, including industrial ones, shall be liable pro rata with all their property and after all the
partnership assets have been exhausted, for the contracts which may be entered into in the name and for the
account of the partnership, under its signature and by a person authorized to act for the partnership. However, any
partner may enter into a separate obligation to perform a partnership contract.

[Emphasis Supplied]

This provision clearly states that,  first, the partners' obligation with respect to the partnership liabilities is subsidiary in
nature. It provides that the partners shall only be liable with their property after all the partnership assets have been
exhausted. To say that one's liability is subsidiary means that it merely becomes secondary and only arises if the one
primarily liable fails to sufficiently satisfy the obligation. Resort to the properties of a partner may be made only after
efforts in exhausting partnership assets have failed or that such partnership assets are insufficient to cover the entire
obligation. The subsidiary nature of the partners' liability with the partnership is one of the valid defenses against a
premature execution of judgment directed to a partner.

In this case, had he been properly impleaded, Guy's liability would only arise after the properties of QSC would have
been exhausted. The records, however, miserably failed to show that the partnership's properties were exhausted.
The report[37] of the sheriff showed that the latter went to the main office of the DOTC-LTO in Quezon City and verified
whether Medestomas, QSC and Guy had personal properties registered therein. Gaeott then instructed the sheriff to
proceed with the attachment of one of the motor vehicles of Guy.[38] The sheriff then served the Notice of
Attachment/Levy upon Personalty to the record custodian of the DOTC-LTO of Mandaluyong City. A similar notice
was served to Guy through his housemaid at his residence.

Clearly, no genuine efforts were made to locate the properties of QSC that could have been attached to satisfy the
judgment - contrary to the clear mandate of Article 1816. Being subsidiarily liable, Guy could only be held personally
liable if properly impleaded and after all partnership assets had been exhausted.

Second, Article 1816 provides that the partners' obligation to third persons with respect to the partnership liability
is pro rata or joint. Liability is joint when a debtor is liable only for the payment of only a proportionate part of the debt.
In contrast, a solidary liability makes a debtor liable for the payment of the entire debt. In the same vein, Article 1207
does not presume solidary liability unless: 1) the obligation expressly so states; or 2) the law or nature
requires solidarity. With regard to partnerships, ordinarily, the liability of the partners is not solidary.[39] The joint
liability of the partners is a defense that can be raised by a partner impleaded in a complaint against the partnership.

In other words, only in exceptional circumstances shall the partners' liability be solidary in nature. Articles 1822, 1823
and 1824 of the Civil Code provide for these exceptional conditions, to wit:

Article 1822. Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of
the partnership or with the authority of his co-partners, loss or injury is caused to any person, not being a partner in
the partnership, or any penalty is incurred, the partnership is liable therefor to the same extent as the partner so
acting or omitting to act.

Article 1823. The partnership is bound to make good the loss:

(1)  Where one partner acting within the scope of his apparent authority receives money or property of a third person
and misapplies it; and

(2) Where the partnership in the course of its business receives money or property of a third person and the money or
property so received is misapplied by any partner while it is in the custody of the partnership.
Article 1824. All partners are liable solidarity with the partnership for everything chargeable to the partnership under
Articles 1822 and 1823.

[Emphases Supplied]

In essence, these provisions articulate that it is the act of a partner which caused loss or injury to a third person that
makes all other partners solidarity liable with the partnership because of the words "any wrongful act or omission of
any partner acting in the ordinary course of the business, " "one partner acting within the scope of his apparent
authority" and "misapplied by any partner while it is in the custody of the partnership." The obligation is solidary
because the law protects the third person, who in good faith relied upon the authority of a partner, whether such
authority is real or apparent.[40]

In the case at bench, it was not shown that Guy or the other partners did a wrongful act or misapplied the money or
property he or the partnership received from Gacott. A third person who transacted with said partnership can hold the
partners solidarity liable for the whole obligation if the case of the third person falls under Articles 1822 or 1823.
[41]
 Gacott's claim stemmed from the alleged defective transreceivers he bought from QSC, through the latter's
employee, Medestomas. It was for a breach of warranty in a contractual obligation entered into in the name and for
the account of QSC, not due to the acts of any of the partners. For said reason, it is the general rule under Article
1816 that governs the joint liability of such breach, and not the exceptions under Articles 1822 to 1824. Thus, it was
improper to hold Guy solidarity liable for the obligation of the partnership.

Finally, Section 21 of the Corporation Code,[42] as invoked by the RTC, cannot be applied to sustain Guy's liability.
The said provision states that a general partner shall be liable for all debts, liabilities and damages incurred by an
ostensible corporation. It must be read, however, in conjunction with Article 1816 of the Civil Code, which governs the
liabilities of partners against third persons. Accordingly, whether QSC was an alleged ostensible corporation or a duly
registered partnership, the liability of Guy, if any, would remain to be joint and subsidiary because, as previously
stated, all partners shall be liable pro rata with all their property and after all the partnership assets have been
exhausted for the contracts which may be entered into in the name and for the account of the partnership.

WHEREFORE, the petition is GRANTED. The June 25, 2012 Decision and the March 5, 2013 Resolution of the Court
of Appeals in CA-G.R. CV No. 94816 are hereby REVERSED and SET ASIDE. Accordingly, the Regional Trial Court,
Branch 52, Puerto Princesa City, is ORDERED TO RELEASE Michael C. Guy's Suzuki Grand Vitara subject of the
Notice of Levy/Attachment upon Personalty.

SO ORDERED.
[42]
 All persons who assume to act as a corporation knowing it to be without authority to do so shall be liable as
general partners for all debts, liabilities and damages incurred or arising as a result thereof: Provided, however, That
when any such ostensible corporation is sued on any transaction entered by it as a corporation or on any tort
committed by it as such, it shall not be allowed to use as a defense its lack of corporate personality.
 3. GSIS Family Bank v. BPI Family Bank, 771 SCRA 284 (2015)
https://www.chanrobles.com/cralaw/2015septemberdecisions.php?id=759

THIRD DIVISION

G.R. No. 175278, September 23, 2015

GSIS FAMILY BANK - THRIFT BANK [FORMERLY COMSAVINGS BANK,

INC.], Petitioner, v. BPI FAMILY BANK, Respondent.

DECISION

JARDELEZA, J.:

This is a Petition for Review on Certiorari filed by GSIS Family Bank — Thrift Bank1 assailing the
Court of Appeals Decision2 dated March 29, 2006 (Decision) and Resolution3 dated October 23,
2006 which denied petitioner's petition for review of the Securities and Exchange Commission
Decision dated February 22, 2005 (SEC En Banc Decision). The SEC En Banc Decision4 prohibited
petitioner from using the word "Family" as part of its corporate name and ordered petitioner to delete
the word from its name.5

Facts

Petitioner was originally organized as Royal Savings Bank and started operations in 1971. Beginning
1983 and 1984, petitioner encountered liquidity problems. On July 9, 1984, it was placed under
receivership and later temporarily closed by the Central Bank of the Philippines. Two (2) months
after its closure, petitioner reopened and was renamed Comsavings Bank, Inc. under the
management of the Commercial Bank of Manila. 6

In 1987, the Government Service Insurance System (GSIS) acquired petitioner from the Commercial
Bank of Manila. Petitioner's management and control was thus transferred to GSIS.7 To improve its
marketability to the public, especially to the members of the GSIS, petitioner sought Securities and
Exchange Commission (SEC) approval to change its corporate name to "GSIS Family Bank, a Thrift
Bank."8 Petitioner likewise applied with the Department of Trade and Industry (DTI) and Bangko
Sentral ng Pilpinas (BSP) for authority to use "GSIS Family Bank, a Thrift Bank" as its business
name. The DTI and the BSP approved the applications. 9 Thus, petitioner operates under the
corporate name "GSIS Family Bank - a Thrift Bank," pursuant to the DTI Certificate of Registration
No. 741375 and the Monetary Board Circular approval. 10

Respondent BPI Family Bank was a product of the merger between the Family Bank and Trust
Company (FBTC) and the Bank of the Philippine Islands (BPI).11 On June 27, 1969, the Gotianum
family registered with the SEC the corporate name "Family First Savings Bank," which was amended
to "Family Savings Bank," and then later to "Family Bank and Trust Company." 12 Since its
incorporation, the bank has been commonly known as "Family Bank." In 1985, Family Bank merged
with BPI, and the latter acquired all the rights, privileges, properties, and interests of Family Bank,
including the right to use names, such as "Family First Savings Bank," "Family Bank," and "Family
Bank and Trust Company." BPI Family Savings Bank was registered with the SEC as a wholly-
owned subsidiary of BPI. BPI Family Savings Bank then registered with the Bureau of Domestic
Trade the trade or business name "BPI Family Bank," and acquired a reputation and goodwill under
the name.13chanroblesvirtuallawlibrary

Proceedings before the SEC

Eventually, it reached respondent's attention that petitioner is using or attempting to use the name
"Family Bank." Thus, on March 8, 2002, respondent petitioned the SEC Company Registration and
Monitoring Department (SEC CRMD) to disallow or prevent the registration of the name "GSIS
Family Bank" or any other corporate name with the words "Family Bank" in it. Respondent claimed
exclusive ownership to the name "Family Bank," having acquired the name since its purchase and
merger with Family Bank and Tmst Company way back 1985. 14 Respondent also alleged that
through the years, it has been known as "BPI Family Bank" or simply "Family Bank" both locally and
internationally. As such, it has acquired a reputation and goodwill under the name, not only with
clients here and abroad, but also with correspondent and competitor banks, and the public in
general.15

Respondent prayed the SEC CRMD to disallow or prevent the registration of the name "GSIS Family
Bank" or any other corporate name with the words "Family Bank" should the same be presented for
registration. Respondent likewise prayed the SEC CRMD to issue an order directing petitioner or any
other corporation to change its corporate name if the names have already been registered with the
SEC.16

The SEC CRMD was thus confronted with the issue of whether the names BPI Family Bank and
GSIS Family Bank are confusingly similar as to require the amendment of the name of the latter
corporation.

The SEC CRMD declared that upon the merger of FBTC with the BPI in 1985, the latter acquired the
right to the use of the name of the absorbed corporation. Thus, BPI Family Bank has a prior right to
the use of the name Family Bank in the banking industry, arising from its long and extensive
nationwide use, coupled with its registration with the Intellectual Property Office (IPO) of the name
"Family Bank" as its trade name. Applying the rule of "priority in registration" based on the legal
maxim first in time, first in right, the SEC CRMD concluded that BPI has the preferential right to the
use of the name "Family Bank." More, GSIS and Comsavings Bank were then fully aware of the
existence and use of the name "Family Bank" by FBTC prior to the latter's merger with BPI. 17

The SEC CRMD also held that there exists a confusing similarity between the corporate names BPI
Family Bank and GSIS Family Bank. It explained that although not identical, the corporate names
are indisputably similar, as to cause confusion in the public mind, even with the exercise of
reasonable care and observation, especially so since both corporations are engaged in the banking
business.18

In a decision19 dated May 19, 2003, the SEC CRMD said,  cralawlawlibrary

PREMISES CONSIDERED respondent GSIS FAMILY BANK is hereby directed to refrain from using
the word "Family" as part of its name and make good its commitment to change its name by deleting
or dropping the subject word from its corporate name within [thirty (30) days] from the date of actual
receipt hereof.20
chanroble slaw

Petitioner appealed21 the decision to the SEC En Banc, which denied the appeal, and upheld the
SEC CRMD in the SEC En Banc Decision.22 Petitioner elevated the SEC En Banc Decision to the
Court of Appeals, raising the following issues:
chanRoblesvirtualLawlibrary

1. Whether the use by GSIS Family Bank of the words "Family Bank" is deceptively and
confusingly similar to the name BPI Family Bank;
 2. Whether the use by Comsavings Bank of "GSIS Family Bank" as its business constitutes
unfair competition;
3. Whether BPI Family Bank is guilty of forum shopping;
4. Whether the  approval  of the  DTI  and the BSP of petitioner's application to use the name 
GSIS  Family Bank constitutes  its authority to the lawful and valid use of such trade name or
trade mark;
5. Whether the application of respondent BPI Family Bank for the exclusive use of the name
"Family Bank," a generic name, though not yet approved by IPO of the Bureau of Patents,
has barred the GSIS Family Bank from using such trade mark or name. 23

Court of Appeals Ruling

The Court of Appeals ruled that the approvals by the BSP and by the DTI of petitioner's application
to use the name "GSIS Family Bank" do not constitute authority for its lawful and valid use. It said
that the SEC has absolute jurisdiction, supervision and control over all corporations. 24 The Court of
Appeals held that respondent was entitled to the exclusive use of the corporate name because of its
prior adoption of the name "Family Bank" since 1969.25 There is confusing similarity in the corporate
names because "[c]onfusion as to the possible association with GSIS might arise if we were to allow
Comsavings Bank to add its parent company's acronym, 'GSIS' to 'Family Bank.' This is true
especially considering both companies belong to the banking industry. Proof of actual confusion
need not be shown. It suffices that confusion is probably or likely to occur." 26 The Court of Appeals
also ruled out forum shopping because not all the requirements of litis pendentia are present.27

The dispositive portion of the decision read, cralawlawlibrary

WHEREFORE, the instant petition for review is hereby DISMISSED for lack of merit.28 chanroble slaw

After its Motion for Reconsideration was denied,29 petitioner brought the decision to this Court via a
Petition for Review on Certiorari.30

Issues in the Petition

Petitioner raised the following issues in its petition: chanRoblesvirtualLawlibrary

I. The Court of Appeals gravely erred in affirming the  SEC Resolution finding the word
"Family" not generic despite its unregistered status with the IPO of the Bureau of Patents
and the use by GSIS-Family Bank in its corporate name of the words "[F]amily [B]ank" as
deceptive and [confusingly similar] to the name BPI Family Bank;31

II. The Court of Appeals gravely erred when it ruled that the respondent is not guilty of forum
shopping despite the filing of three (3) similar complaints before the DTI and BSP and with
the  SEC  without  the  requisite  certification  of non-forum shopping attached thereto;32

III. The Court of Appeals gravely erred when it completely disregarded the opinion of the Banko
Sentral ng Pilipinas that the use by the herein petitioner of the trade name GSIS Family Bank
- Thrift Bank is not similar or does not deceive or likely cause any deception to the
public.33
 Court's Ruling

We uphold the decision of the Court of Appeals.

Section 18 of the Corporation Code provides,

Section 18. Corporate name. - No corporate name may be allowed by the Securities and Exchange
Commission if the proposed name is identical or deceptively or confusingly similar to that of any
existing corporation or to any other name already protected by law or is patently deceptive,
confusing or contrary to existing laws. When a change in the corporate name is approved, the
Commission shall issue an amended certificate of incorporation under the amended name. chanrobleslaw

In Philips Export B.V. v. Court of Appeals,34 this Court ruled that to fall within the prohibition of the
law on the right to the exclusive use of a corporate name, two requisites must be proven, namely: chanRoblesvirtualLawlibrary

(1) that the complainant corporation acquired a prior right over the use of such
corporate name; and
(2) the proposed name is either
(a) identical or
(b) deceptive or confusingly similar to that of any existing corporation or to
any other name already protected by law; or
(c) patently deceptive, confusing or contrary to existing law. 35

These two requisites are present in this case. On the first requisite of a prior right, Industrial
Refractories Corporation of the Philippines v. Court of Appeals (IRCP case)36 is instructive. In that
case, Refractories Corporation of the Philippines (RCP) filed before the SEC a petition to compel
Jurisprudence Industrial Refractories Corporation of the Philippines (IRCP) to change its corporate name on the
ground that its corporate name is confusingly similar with that of RCP's such that the public may be
confused into believing that they are one and the same corporation. The SEC and the Court of
Appeals found for petitioner, and ordered IRCP to delete or drop from its corporate name the word
"Refractories." Upon appeal of IRCP, this Court upheld the decision of the CA.

Applying the priority of adoption rule to determine prior right, this Court said that RCP has acquired
the right to use the word "Refractories" as part of its corporate name, being its prior registrant. In
arriving at this conclusion, the Court considered that RCP was incorporated on October 13, 1976
and since then continuously used the corporate name "Refractories Corp. of the Philippines."
Meanwhile, IRCP only started using its corporate name "Industrial Refractories Corp. of the
Philippines" when it amended its Articles of Incorporation on August 23, 1985. 37

In this case, respondent was incorporated in 1969 as Family Savings Bank and in 1985 as BPI
Family Bank. Petitioner, on the other hand, was incorporated as GSIS Family - Thrift Bank only in
2002,38 or at least seventeen (17) years after respondent started using its name. Following the
precedent in the IRCP case, we rule that respondent has the prior right over use of the corporate
name.

The second requisite in the Philips Export case likewise obtains on two points: the proposed name is
(a) identical or (b) deceptive or confusingly similar to that of any existing corporation or to any other
name already protected by law.

On the first point (a), the words "Family Bank" present in both petitioner and respondent's corporate
name satisfy the requirement that there be identical names in the existing corporate name and the
proposed one. Respondent cannot justify its claim under Section 3 of the Revised Guidelines in the
Approval of Corporate and Partnership Names,39 to wit: cralawlawlibrary

3. The name shall not be identical, misleading or confusingly similar to one already registered by
another corporation or partnership with the Commission or a sole proprietorship registered with the
Department of Trade and Industry.

If the proposed name is similar to the name of a registered firm, the proposed name must contain at
least one distinctive word different from the name of the company already registered. chanrobleslaw

Section 3 states that if there be identical, misleading or confusingly similar name to one already
registered by another corporation or partnership with the SEC, the proposed name must contain at
least one distinctive word different from the name of the company already registered. To show
contrast with respondent's corporate name, petitioner used the words "GSIS" and "thrift." But these
are not sufficiently distinct words that differentiate petitioner's corporate name from respondent's.
While "GSIS" is merely an acronym of the proper name by which petitioner is identified, the word
"thrift" is simply a classification of the type of bank that petitioner is. Even if the classification of the
bank as "thrift" is appended to petitioner's proposed corporate name, it will not make the said
corporate name distinct from respondent's because the latter is likewise engaged in the banking
business.

This Court used the same analysis in Ang mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus, H.S.K.
sa Bansa ng Pilipinas, Inc. v. Iglesia ng Dios Kay Cristo Jesus, Haligi at Suhay ng Katotohanan 40 In
that case, Iglesia ng Dios Kay Cristo Jesus filed a case before the SEC to compel Ang mga Kaanib
sa Iglesia ng Dios Kay Kristo Hesus to change its corporate name, and to prevent it from using the
same or similar name on the ground that the same causes confusion among their members as well
as the public. Ang mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus claimed that it complied with
SEC Memorandum Circular No. 14-2000 by adding not only two, but eight words to their registered
name, to wit: "Ang Mga Kaanib" and "Sa Bansang Pilipinas, Inc.," which effectively distinguished it
from Iglesia ng Dios Kay Cristo Jesus. This Court rejected the argument, thus: cralawlawlibrary

The additional words "Ang Mga Kaanib" and "Sa Bansang Pilipinas, Inc." in petitioner's name are, as
correctly observed by the SEC, merely descriptive of and also referring to the members, or kaanib,
of respondent who are likewise residing in the Philippines. These words can hardly serve as an
effective differentiating medium necessary to avoid confusion or difficulty in distinguishing petitioner
from respondent. This is especially so, since both petitioner and respondent corporations are using
the same acronym - H.S.K.; not to mention the fact that both are espousing religious beliefs and
operating in the same place. xxx41 chanrobleslaw

On the second point (b), there is a deceptive and confusing similarity between petitioner's proposed
name and respondent's corporate name, as found by the SEC.42 In determining the existence of
confusing similarity in corporate names, the test is whether the similarity is such as to mislead a
person using ordinary care and discrimination. 43 And even without such proof of actual confusion
between the two corporate names, it suffices that confusion is probable or likely to occur. 44

Petitioner's corporate name is "GSIS Family Bank—A Thrift Bank" and respondent's corporate name
is "BPI Family Bank." The only words that distinguish the two are "BPI," "GSIS," and "Thrift." The first
two words are merely the acronyms of the proper names by which the two corporations identify
themselves; and the third word simply describes the classification of the bank. The overriding
consideration in determining whether a person, using ordinary care and discrimination, might be
misled is the circumstance that both petitioner and respondent are engaged in the same business of
banking. "The likelihood of confusion is accentuated in cases where the goods or business of one
corporation are the same or substantially the same to that of another corporation."45

Respondent alleged that upon seeing a Comsavings Bank branch with the signage "GSIS Family
Bank" displayed at its premises, some of the respondent's officers and their clients began asking
questions. These include whether GSIS has acquired Family Bank; whether there is a joint
arrangement between GSIS and Family Bank; whether there is a joint arrangement between BPI
and GSIS regarding Family Bank; whether Comsavings Bank has acquired Family Bank; and
whether there is there an arrangement among Comsavings Bank,  GSIS, BPI,  and Family Bank
regarding BPI Family Bank and GSIS Family Bank.46 The SEC made a finding that "[i]t is not a
remote possibility that the public may entertain the idea that a relationship or arrangement indeed
exists between BPI and GSIS due to the use of the term 'Family Bank' in their corporate names." 47

Findings of fact of quasi-judicial agencies, like the SEC, are generally accorded respect and even
finality by this Court, if supported by substantial evidence, in recognition of their expertise on the
specific matters under their consideration, more so if the same has been upheld by the appellate
court, as in this case.48

Petitioner cannot argue that the word "family" is a generic or descriptive name, which cannot be
appropriated exclusively by respondent. "Family," as used in respondent's corporate name, is not
generic. Generic marks are commonly used as the name or description of a kind of goods, such as
"Lite" for beer or "Chocolate Fudge" for chocolate soda drink. Descriptive marks, on the other hand,
convey the characteristics, function, qualities or ingredients of a product to one who has never seen
it or does not know it exists, such as "Arthriticare" for arthritis medication.49

Under the facts of this case, the word "family" cannot be separated from the word "bank." 50 In
asserting their claims before the SEC up to the Court of Appeals, both petitioner and respondent
refer to the phrase "Family Bank" in their submissions. This coined phrase, neither being generic nor
descriptive, is merely suggestive and may properly be regarded as arbitrary. Arbitrary marks are
"words or phrases used as a mark that appear to be random in the context of its use. They are
generally considered to be easily remembered because of their arbitrariness. They are original and
unexpected in relation to the products they endorse, thus, becoming themselves
distinctive."51 Suggestive marks, on the other hand, "are marks which merely suggest some quality
or ingredient of goods, xxx The strength of the suggestive marks lies on how the public perceives the
word in relation to the product or service."52

In Ang v. Teodoro,53 this Court ruled that the words "Ang Tibay" is not al descriptive term within the
meaning of the Trademark Law but rather a fanciful or coined phrase. 54 In so ruling, this Court
considered the etymology and meaning of the Tagalog words, "Ang Tibay" to determine whether
they relate to the quality or description of the merchandise to which respondent therein applied them
as trademark, thus: cralawlawlibrary

We find it necessary to go into the etymology and meaning of the Tagalog words "Ang Tibay" to
determine whether they are a descriptive term, i.e., whether they relate to the quality or description
of the merchandise to which respondent has applied them as a trade-mark. The word "ang" is a
definite article meaning "the" in English. It is also used as an adverb, a contraction of the word
"anong" (what or how). For instance, instead of saying, "Anong ganda!" ("How beautiful!"), we
ordinarily say, "Ang ganda!" Tibay is a root word from which are derived the verb magpatibay (to
strengthen); the nouns pagkamatibay (strength, durability), katibayan (proof, support,
strength), katibaytibayan (superior strength); and the adjectives matibay (strong, durable, lasting),
napakatibay (very strong), kasintibay or magkasintibay (as strong as, or of equal strength). The
phrase "Ang Tibay" is an exclamation denoting admiration of strength or durability. For instance, one
who tries hard but fails to break an object exclaims, "Ang tibay!" ("How strong!") It may also be used
in a sentence thus, "Ang tibay ng sapatos mo!" ("How durable your shoes are!") The phrase "ana
tibay" is never used adjectively to define or describe an object. One does not say, "ang tibay
sapatos" or "sapatos ang tibay" to mean "durable shoes," but "matibay na sapatos" or "sapatos na
matibay."

From all of this we deduce that "Ang Tibay" is not a descriptive term within the meaning of the
Trade-Mark Law but rather a fanciful or coined phrase which may properly and legally be
appropriated as a trade-mark or trade-name, xxx55  (Underscoring supplied). chanrobleslaw

The word "family" is defined as "a group consisting of parents and children living together in a
household" or "a group of people related to one another by blood or marriage." 56Bank, on the other
hand, is defined as "a financial establishment that invests money deposited by customers, pays it out
when requested, makes loans at interest, and exchanges currency."57 By definition, there can be no
expected relation between the word "family" and the banking business of respondent. Rather, the
words suggest that respondent's bank is where family savings should be deposited. More, as in
the Ang case, the phrase "family bank" cannot be used to define an object.

Petitioner's argument that the opinion of the BSP and the certificate of registration granted to it by
the DTI constitute authority for it to use "GSIS Family Bank" as corporate name is also untenable.

The enforcement of the protection accorded by Section 18 of the Corporation Code to corporate
names is lodged exclusively in the SEC. The jurisdiction of the SEC is not merely confined to the
adjudicative functions provided in Section 5 of the SEC Reorganization Act, 58 as amended.59 By
express mandate, the SEC has absolute jurisdiction, supervision and control over all
corporations.60 It is the SEC's duty to prevent confusion in the use of corporate names not only for
the protection of the corporations involved, but more so for the protection of the public. It has
authority to de-register at all times, and under all circumstances corporate names which in its
estimation are likely to generate confusion.61

The SEC62 correctly applied Section 18 of the Corporation Code, and Section 15 of SEC
Memorandum Circular No. 14-2000, pertinent portions of which provide: cralawlawlibrary

In implementing Section 18 of the Corporation Code of the Philippines (BP 69), the following revised
guidelines in the approval of corporate and partnership names are hereby adopted for the
information and guidance of all concerned: chanRoblesvirtualLawlibrary

xxx

15. Registrant corporations or partnership shall submit a letter undertaking to change their corporate
or partnership name in case another person or firm has acquired a prior right to the use of the said
firm name or the same is deceptively or confusingly similar to one already registered unless this
undertaking is already included as one of the provisions of the articles of incorporation or partnership
of the registrant.
chanroble slaw

The SEC, after finding merit in respondent's claims, can compel petitioner to abide by its
commitment "to change its corporate name in the event that another person, firm or entity has
acquired a prior right to use of said name or one similar to it." 63

Clearly, the only determination relevant to this case is that one made by the SEC in the exercise of
its express mandate under the law. The BSP opinion invoked by petitioner even acknowledges that
"the issue on whether a proposed name is identical or deceptively similar to that of any of existing
corporation is matter within the official jurisdiction and competence of the SEC." 64
Judicial notice65 may also be taken of the action of the IPO in approving respondent's registration of
the trademark "BPI Family Bank" and its logo on October 17, 2008. The certificate of registration of a
mark shall be prima facie evidence of the validity of the registration, the registrant's ownership of the
mark, and of the registrant's exclusive right to use the same in connection with the goods or services
and those that are related thereto specified in the certificate. 66

Finally, we uphold the Court of Appeals' finding that the issue of forum shopping was belatedly
raised by petitioner and, thus, cannot anymore be considered at the appellate stage of the
proceedings. Petitioner raised the issue of forum shopping for the first time only on
appeal.67 Petitioner argued that the complaints filed by respondent did not contain certifications
against non-forum shopping, in violation of Section 5, Rule 7 of the Rules of Court. 68

In S.C. Megaworld Construction and Development Corporation vs. Parada, 69 this Court said that
objections relating to non-compliance with the verification and certification of non-forum shopping
should be raised in the proceedings below, and not for the first time on appeal. In that case, S.C.
Megaworld argued that the complaint for collection of sum of money should have been dismissed
outright by the trial court on account of an invalid non-forum shopping certification. It alleged that the
Special Power of Attorney granted to Parada did not specifically include an authority for the latter to
sign the verification and certification of non-forum shopping, thus rendering the complaint defective
for violation of Sections 4 and 5 of Rule 7 of the Rules of Court. On motion for reconsideration of the
decision of the Court of Appeals, petitioner raised for the first time, the issue of forum shopping. The
Court ruled against S.C. Megaworld, thus: cralawlawlibrary

It is well-settled that no question will be entertained on appeal unless it has been raised in the
proceedings below. Points of law, theories, issues and arguments not brought to the attention of the
lower court, administrative agency or quasi-judicial body, need not be considered by a reviewing
court, as they cannot be raised for the first time at that late stage. Basic considerations of fairness
and due process impel this rule. Any issue raised for the first time on appeal is barred by
estoppel.70chanroble slaw

In this case, the fact that respondent filed a case before the DTI was made known to petitioner 71 long
before the SEC rendered its decision. Yet, despite its knowledge, petitioner failed to question the
alleged forum shopping before the SEC. The exceptions to the general rule that forum shopping
should be raised in the earliest opportunity, as explained in the cited case of Young v. Keng
Seng,72 do not obtain in this case.

WHEREFORE, the petition is DENIED. The decision of the Court of Appeals dated March 29, 2006
is hereby AFFIRMED.

SO ORDERED. chanroble svirtuallawlibrary