Heirs of Margarita Prodon vs. Heirs of Maximo S.

Alvarez and
Valentina Clave

G.R. No. 170604

September 2, 2013

Topic: Quieting of Title

Facts:

Respondents, in their Complaint for Quieting of Title and Damages

against Margarita Prodon averred the following:

1-‐that their parents, the late spouses Maximo S. Alvarez, Sr. and
Valentina Clave, were the registered owners of that parcel of land;
2-‐that their parents had been in possession of the property during
their lifetime; 3-‐that upon their parents’ deaths, they had
continued the possession of the property as heirs, paying the real
property taxes due thereon; 4-‐that they could not locate the owner’s
duplicate copy but original copy on file with the Register of Deeds
of Manila was intact; 5-‐that the original copy contained an entry
stating that the property had been sold to defendant Prodon subject
to the right of repurchase; and 6-‐that the entry had been maliciously
done by Prodon because the deed of sale with right to repurchase
covering the property did not exist. Consequently, they prayed that
the entry be cancelled, and that Prodon be adjudged liable for
damages.

Prodon’s Answer claimed that the late Maximo Alvarez, Sr. had
executed on September 9, 1975 the deed of sale with right to
repurchase; that the deed had been registered with the Register of
Deeds and duly annotated on the title; that the late Maximo
Alvarez, Sr. had been granted six months from September 9,
1975 within which to repurchase the property; and that she had
then become the absolute owner of the property due to its non- ‐
repurchase within the given 6-‐month period.

Issue: Is Prodon’s claim of ownership was already barred by laches?

Held: Yes, For an action to quiet title to prosper, two indispensable

requisites must concur, namely: (a) the plaintiff or complainant has a
legal or an equitable title to or interest in the real property subject
of the action; and (b) the deed, claim, encumbrance, or proceeding
claimed to be casting cloud on his title must be shown to be in
fact invalid or inoperative despite its prima facie appearance of
validity or legal efficacy. This case involves an action for quieting of
title, a common-‐law remedy for the removal of any cloud or doubt
or uncertainty on the title to real property by reason of any
instrument, record, claim, encumbrance, or proceeding that is
apparently valid or effective, but is, in truth and in fact, invalid,
ineffective, voidable, or unenforceable, and may be prejudicial to
said title. In such an action, the competent court is tasked to
determine the respective rights of the complainant and other claimants
to place things in their proper place and to make the one who
has no rights to said immovable respect and not disturb the other.
The action is for the benefit of both, so that he who has the
right would see every cloud of doubt over the property dissipated,
and he can thereafter fearlessly introduce any desired
improvements, as well as use, and even abuse the property. xxx

The action for quieting of title may be based on the fact that a
deed is invalid, ineffective, voidable, or unenforceable. The terms of
the writing may or may not be material to an action for quieting
of title, depending on the ground alleged by the plaintiff. For instance,
when an action for quieting of title is based on the unenforceability
of a contract for not complying with the Statute of Frauds, Article
1403 of the Civil Code specifically provides that evidence of the
agreement cannot be received without the writing, or a secondary
evidence of its contents. There is then no doubt that the Best
Evidence Rule will come into play. Her inaction was an index of the
falsity of her claim against the respondents.
ANNA MARIE L. GUMABON, v. PHILIPPINE NATIONAL BANK

G.R. No. 202514, July 25, 2016

Facts:

The case stemmed from the PNB's refusal to release Anna Marie's money in a
consolidated savings account and in two foreign exchange time deposits, evidenced by
Foreign Exchange Certificates of Time Deposit (FXCTD).

Anna Marie decided to consolidate the eight (8) savings accounts and to
withdraw P-2,727,235.85 from the consolidated savings account to help her sister's
financial needs. After withdrawals, the balance of her consolidated savings account
was P250,741.82.

On July 30, 2003, the PNB sent letters to Anna Marie to inform her that the PNB
refused to honor its obligation under FXCTD Nos. 993902 and 993992, and that the
PNB withheld the release of the balance of P-250,741.82 in the consolidated savings
account. According to the PNB, Anna Marie pre-terminated, withdrew and/or debited
sums against her deposits. On August 12, 2004, Anna Marie filed a complaint for
recovery of sum of money and damages before the RTC against the Philippine National
Bank (PNB) and the PNB Delta branch manager Silverio Fernandez

Issue:

Whether or not PNB is liable to the time deposit and the remaining bank deposit
of Anna Marie

Ruling:

Yes, PNB failed to establish the fact of payment to Anna Marie in FXCTD Nos.
993902 and 993992, and SA No. 6121200. It is a settled rule in evidence that the one
who alleges payment has the burden of proving it.

The PNB alleged that it had already paid the balance of the consolidated savings
account (SA No. 6121200) amounting to P-250,741.82. It presented the manager's
check to prove that Anna Marie purchased the check using the amounts covered by the
Gumabon's two savings accounts which were later part of Anna Marie's consolidated
savings account. The PNB also presented the miscellaneous ticket to prove Anna
Marie's withdrawal from the savings accounts.

The business of banking is imbued with public interest. The stability of banks
largely depends on the confidence of the people in the honesty and efficiency of banks.
In every case, the depositor expects the bank to treat his account with the utmost
fidelity, whether such account consists only of a few hundred pesos or of millions. The
bank must record every single transaction accurately, down to the last centavo, and as
promptly as possible. 

 
THERESITA, JUAN, ASUNCION, PATROCINIA, RICARDO, and GLORIA, all
surnamed DIMAGUILAvs. JOSE and SONIA A. MONTEIRO, G.R. No.
201011, January 27, 2014

Facts:

On July 5, 1993, respondent spouses, Jose and Sonia Monteiro, along with Jose,
Gerasmo, Elisa and Clarita Nobleza filed a Complaint for Partition and Damages before
the RTC against the Dimaguilas, together with the Borlazas, alleging that the parties
were co-owners and prayed for the partition of a residential house and lot in Laguna
covered by Tax Declaration No. 1453. The Monteiros anchored their claim on a Deed of
Sale executed in their favor by the heirs of Pedro Dimaguila.

The Dimaguilas argued that there was no co-ownership at all since the property had
long been partitioned to Perfecto and Vitaliano Dimaguila, with Perfecto becoming
owner of the southern half and Vitaliano owning the northern half. The defendants claim
that they are Vitaliano’s heirs and further averred that the Monteiro’s claim to the
property is null for they were not heirs of either Perfecto or Vitaliano.

Petitioners filed a Petition for Certiorari before the CA assailing the RTC’s orders which
denied several of their motions and the proceedings were suspended while such
petition was pending. The CA upheld the RTC’s orders and, upon resumption of
the proceedings, the spouses Monteiro filed their Motion for Leave to Amend and/or
Admit Amended Complaint which wasgranted by the RTC.

The Monteiros admitted in the amended complaint the defendants’ allegation of a

partition and aver that a third of Perfecto’s share was sold to them through a “Bilihan”;
and that, upon their attempt to take possession of that portion, they found that the
Dimaguilas were occupying it.

The Dimaguilas, in their answer to the amended complaint now contravened their
original answer that the subject property was actually divided into northern and southern
halves, replacing it with a division “into two and share and share alike.” This resulted to
an admission of a co-ownership, contrary to their original position. According to the
Dimaguilas, the “Bilihan” also violated Article 1485 of the Civil Code for not specifying
the metes and bounds of the property sold and that, even if it was specified, the sale
was still void since a co-owner can only sell his undivided share in the property.

The RTC ruled in favor of Spouses Monteiro after perusing evidence aliunde of a
cadastral map of Liliw, Laguna and a corresponding list of claimant as to show that the
propertyhad indeed been partitioned into southern and northern portions. The RTC
concluded that the
Dimaguilas were stopped from denying this partition and the “Bilihan” document was
regular and authentic absent any evidence to the contrary.
The Dimaguilas appealed their case to the CA which affirmed the trial court’s decision.
A motion for reconsideration was subsequently filed by the petitioners but it was denied,
hence, this appeal under Rule 45.
 
Issues:

1) Whether there was a partition of the subject property; and

2) Whether the 1/3 portion of the southern half of the subject property was sold to
therespondent spouses.

Ruling:
The petition is DENIED. Both aforementioned issues are answered in the affirmative.

The Supreme Court points out that to determine whether there was a partition and a
sale of the 1/3 portion of the property requires an evaluation of the evidence. This
entails a question of fact which is beyond the ambit of Rule 45 upon which this petition
is based. On this ground alone, the petition could be denied. However, the Supreme
Court delved into the concepts of evidence to put the case to rest.

Preponderance of evidence; definition

Spouses Monteiro, as plaintiffs in the original case, had the burden of proof to establish
their case by a preponderance of evidence, which is the weight, credit, and value of the
aggregate evidence on either side, synonymous with the term “greater weight of the
evidence.” Preponderance of evidence is evidence which is more convincing to the
court as worthy ofbelief than that which is offered in opposition thereto.

Admissions; contradiction
Section 4 of Rule 129 of the Rules of Court provides that an admission made by a party
in the course of the proceedings in the same case does not require proof, and may be
contradicted only by showing that it was made through palpable mistake. The
petitioners argue that such admission was the palpable mistake of their former counsel
in his rush to file the answer, a copy of which was not provided to them. This contention
is unacceptable. It is a purely self-serving claim unsupported by any iota of evidence.
Bare allegations, unsubstantiated by evidence, are not equivalent to proof.

Admissions; rendered conclusive through estoppels

Article 1431 of the Civil Code provides that through estoppel, an admission is rendered
conclusive upon the person making it, and cannot be denied or disproved as against the
person relying thereon. The respondent spouses had clearly relied on the petitioners’
admission and so amended their original complaint for partition to one for recovery of
possession of a portion of the subject property. Thus, the petitioners are now estopped
from denying or attempting to prove that there was no partition of the property.
Considering that an admission does not require proof, the admission of the petitioners
would actually be sufficient to prove the partition even without the documents presented
by the respondent spouses. If anything, the additional evidence they presented only
served to corroborate the petitioners’ admission.
 
Best Evidence Rule
Section 3(d) of Rule 130 of the Rules of Court provides that when the subject of inquiry
is the contents of a document, no evidence shall be admissible other than the original
document itself, except when the original is a public record in the custody of a public
officer or is recorded in a public office. Section 7 of the same Rule provides that when
the original of a document is in the custody of a public officer or is recorded in a public
office, its contents maybe proved by a certified copy issued by the public officer in
custody thereof. Section 24 of Rule132 provides that the record of public documents
may be evidenced by a copy attested by the officer having the legal custody or the
record.

Hearsay Rule
Section 44 of Rule 130 of the Rules of Court similarly provides that entries in official
records are an exception to the rule. The rule provides that entries in official records
made in the performance of the duty of a public officer of the Philippines, or by a person
in the performance of a duty specially enjoined by law, are prima facie evidence of the
facts the reinstated. The necessity of this rule consists in the inconvenience and
difficulty of requiring the official’s attendance as a witness to testify to the innumerable
transactions in the course of his duty. The document’s trustworthiness consists in the
presumption of regularity of the performance of official duty. Cadastral maps are the
output of cadastral surveys. The DENR is the department tasked to execute, supervise
and manage the conduct of cadastral surveys. It is, therefore, clear that the cadastral
map and the corresponding list of claimants qualify as entries in official records as they
were prepared by the DENR, as mandated by law. As such, they are exceptions to the
hearsay rule and are prima facie evidence of the facts stated therein.
G.R. No. 159288 October 19, 2004
JOHNSON LEE, petitioner,
vs.
PEOPLE OF THE PHILIPPINES and NEUGENE MARKETING, INC., respondents.

Facts:

NEUGENE Marketing, Inc. (NMI) was incorporated in 1978 with funds provided by the
Uy Family. One of the original incorporators, Eugenio Flores, Jr. assigned/divested
himself of his shares in favor of Sonny Moreno, 1,050 shares; Arsenio Yang, Jr., 700
shares and Charles O. Sy, 700 shares.

In 1987, the NMI sold and delivered to the Victorias Milling Company, Inc. (VMCI), in
Victorias, Negros Occidental, 77,500 pieces of empty white bags for the price of
565,750.00. NMI issued Charge Invoice No. 0809 dated June 11, 1987 to VMCI
covering said sale. VMCI again purchased 100,000 pieces of empty white bags from
NMI for 730,000.00 for which NMI issued Charge Invoice No. 0810. In payment of said
purchases from NMI, VMCI drew and issued two Bank of the Philippine Islands (BPI)
Checks: Check No. 068706 dated August 3, 1987 in the amount of 565,750.00 and
Check No. 068993 dated August 19, 1987 in the amount of 934,400.00. Both checks
were payable to the order of NMI.

On March 22, 1988, Johnson Lee, Sonny Moreno, Leoncio Tan and Nicanor Martin filed
a petition with the Securities and Investigation Clearing Department (SICD) of the
Commission praying, among other things, for the annulment or nullification of the
Certification of Filing of Resolution of Voluntary Dissolution of NMI for being contrary to
law and its by-laws.

In the meantime, the trustee wrote the petitioner, Johnson Lee, being the president of
the company, on March 8, 1988 requesting him to turn over to it the P1,500,150.00 he
received in payment of the empty bags sold by NMI to VCMI. However, he failed to do
so.

Due to nonpayment, a verified complaint for three (3) counts of estafa was filed against
the petitioner and Sonny Moreno with the City Prosecutor’s Office. Appended to the
complaint were photocopies of Charge Invoices, issued by NMI to VMCI.

To prove the loss due to destruction of the original copies of the charge invoices and
checks, as well as the authenticity and due execution thereof, the prosecution
presented Ban Hua Flores, who testified that she saw the two checks in the office of the
petitioner at the Singson Building, Plaza Moraga, Sta. Cruz, Manila. Sometime in 1987,
she went to the office of the VMCI and inquired if it still had copies of the two checks
and the clerk thereat informed her that it would be difficult to locate the checks as they
were stored in the bodega, where many other checks were kept. Flores also testified
that the signatures at the dorsal portion of the checks were those of the petitioner, the
President of NMI, with whom she had been working, and that he indorsed and
deposited the same on September 4, 1987 with the Solidbank, instead of the BPI Plaza
Cervantes branch in Manila, the official depository bank of NMI. According to Flores,
she was able to secure microfilm copies of the checks from Solidbank, and was sure
that the copies of the checks and invoices were faithful reproductions of the original
copies thereof.

Testifying for the prosecution in obedience to a subpoena issued by the court, Merlita
Bayaban, Manager for Corporate Affairs of VMCI, declared that the records section of
VMCI, which had custody of all checks and other corporate records, was near her office.
She testified that the checks, including their other records, were lost during the flood in
1985. She also testified on the Certification issued by Carolina Diaz, the Comptroller of
VMCI, confirming the loss of the two checks. She, however, admitted that she did not
see the original copies of the checks and that she was not a signatory thereto.

The RTC ruled in favor of the prosecution. The accused filed a motion for
reconsideration of the order, claiming that the prosecution failed to prove the
authenticity and due execution of the offered documents, a prerequisite to the
admission thereof as secondary evidence. They also filed a Motion for Leave to File a
Demurrer to Evidence. The trial court denied both motions.
The Court of Appeals affirmed the RTC Decision.

Issue:

Can the photocopies of invoices offered as secondary evidence be admitted without

proof of its loss or unavailability and execution of the original?

Held:

The rule applicable for this case is 130, Section 5 of the Revised Rules of Court:

When the original document is unavailable. – When the original document has
been lost or destroyed, or cannot be produced in court, the offeror, upon proof of
its execution or existence and the cause of its unavailability without bad faith on
his part, may prove its contents by a copy, or by a recital of its contents in some
authentic document, or by the testimony of witnesses in the order stated.

The court agreed with the petitioner that the Certification signed by Carolina Diaz was
inadmissible in evidence against him because of the failure of the prosecution to
present her as witness and to testify on said certification.

However, the records show that, in obedience to the subpoena duces tecum and ad
testificandum issued by the trial court directing the VMCI to produce the originals of the
checks and the charge invoices, Bayaban, the Manager for Corporate Affairs of VMCI,
testified that all its records, including the charge invoices and checks, were destroyed
seven years ago in a flash flood which occurred on November 28, 1995, and that such
loss/destruction was known to all the employees of VMCI, including herself.
Contrary to the claim of the petitioner, the prosecution adduced preponderant evidence
to prove the existence, the due execution and the authenticity of the said checks and
charge invoices consisting of the admission of no less than the petitioner in his counter-
affidavit. The petitioner admitted therein that he received the total amount of
P1,500,150.00 from VMCI in full payment of the delivery and sale of the empty bags by
NMI to VMCI and that the said amount was in the custody of the said corporation. The
decision of the Court of Appeals is affirmed.
LIWAYWAY VINZONS-CHATO versus HOUSE OF REPRESENTATIVES
ELECTORAL TRIBUNAL and ELMER E. PANOTES

GR. 199149 January 22, 2013

FACTS:

- consolidated cases involving the use of the picture images of ballots as the
equivalent of the original paper ballots for purposes of determining the true will of
the electorate in the District of Camarines Norte in the May 2010 elections
- Chato renewed her bid in the May 2010 elections as representative of the
Second Legislative District of Camarines Norte
- Chato lost to Panotes who was proclaimed the winner
- Chato filed an electoral protest before the HRET assailing the results in all the
160 clustered precincts
o Chato designated forty (40) pilot clustered precincts in which revision of
ballots shall be conducted
 showed a substantial discrepancy between the votes of the parties
per physical count vis-a-vis their votes per election returns
- Panotes moved for the suspension of the proceedings in the case, and praying
that a preliminary hearing be set in order to determine first the integrity of the
ballots and the ballot boxes used in the elections as certain irregularities in the
condition of the ballot boxes subject of the revision were apparent
- Resolution of HRET directed the copying of the picture image files of ballots
relative to the protest until completion
o decryption and copying proceeded as scheduled.
- canvassing before the Provincial Board of Canvassers was halted in order to wait
for the transmission of the results from the Municipal Board of Canvassers, which
could not be done until each and every clustered precinct was duly accounted
for.
- HRET
o issued the assailed Resolution denying Chato's Urgent Motion to Prohibit
the Use by Protestee of the Decrypted and Copied Ballot Images in the
Instant Case on the ground that she failed to show proof that the CF cards
used in the twenty (20) precincts with substantial variances were not
preserved or were violated
o declared that, although the actual ballots used in the May 10, 2010
elections are the best evidence of the will of the voters, the picture images
of the ballots are regarded as the equivalent of the original citing Rules on
Electronic Evidence
ISSUE:
 - Whether or not HRET the picture images of the ballots may be considered as the
“official ballots” or the equivalent of the original paper ballots which the voters
filled out.
DECISION:

- Petition DISMISSED for lack of merit

RATIONALE

- Term “official ballot” where AES is utilized is defined as the “paper ballot, whether
printed or generated by the technology applied, that faithfully captures or
represents the votes cast by a voter recorded or to be recorded in electronic form
- two types of AES identified
o (1) paper-based election system;
 type of AES that “use paper ballots, records and counts votes,
tabulates, consolidates/canvasses and transmits electronically the
results of the vote count.
o (2) direct recording electronic election system.
 uses electronic ballots, records, votes by means of a ballot display
provided with mechanical or electrooptical component that can be
activated by the voter, processes data by means of computer
programs, record voting data and ballot images, and transmits
voting results electronically
- the system captured the images of the ballots in encrypted format which, when
decrypted for verification, were found to be digitized representations of the ballots
cast
o picture images of the ballots, as scanned and recorded by the PCOS, are
likewise “official ballots” that faithfully captures in electronic form the votes
cast by the voter, as defined
 the printouts thereof are the functional equivalent of the paper
ballots filled out by the voters and, thus, may be used for purposes
of revision of votes in an electoral protest.
- The HRET having jurisdiction and has decided over the case, to substitute the
SC’s judgment to the findings of the HRET will constitute an intrusion into its
domain and a curtailment of its power to act of its own accord on its evaluation of
the evidentiary weight of testimonies presented before it.
SPOUSES RAMON and FELICISIMA DIOSO vs. SPOUSES TOMAS and LEONORA
CARDEÑOG.R. No. 150155 September 1, 2004

FACTS:
Petitioners filed a complaint for specific performance and/or easement of right of way
with damages and prayed that the respondents be directed to comply with or perform
their obligation under the Pinanumpaang Salaysay and grant the petitioners a right of
way, and to pay them damages. The respondents specifically denied the genuineness
and due execution of the Pinanumpaang Salaysay, alleging that it was falsified. The trial
court held that the petitioners’ evidence did not support their claim and noted that the
petitioners presented only a photocopy or machine copy of the purported document,
and, during the trial, failed to lay the foundation or prepare the basis for the admission of
secondary evidence to prove the contents thereof.

ISSUE:
Whether or not petitioners were able to establish the existence of the
PinanumpaangSalaysay by secondary evidence

RULING:
Yes. Section 3, Rule 130 of the Rules of Court, indeed, provides that when the subject
ofinquiry is the contents of a document, no evidence shall be admissible other than the
originaldocument itself. This rule, however, admits of exceptions, as Section 5 thereof
further states that “When the original document has been lost or destroyed, or cannot
be produced in court, the offer or, upon proof of its execution or existence and the
cause of its unavailability without bad faith on his part, may prove its contents by a copy,
or by a recital of its contents in some authentic document, or by the testimony of
witnesses in the order stated. Accordingly, the offeror of the secondary evidence is
burdened to satisfactorily prove the predicates thereof, namely: (1) the execution or
existence of the original; (2) the loss and destruction of the original or its non-production
in court; and (3) the unavailability of the original is not due to bad faith on the part of the
proponent/offeror. Proof of the due execution of the document and its subsequent loss
would constitute the basis for the introduction of secondary evidence. 23 In MCC
Industrial Sales Corporation v. Ssangyong Corporation, 24 it was held that where the
missing document is the foundation of the action, more strictness in proof is required
than where the document is only collaterally involved.

A perusal of the above document would readily show that it does not specify a
determinate subject matter. Nowhere does it provide a description of the property
subject of the sale, including its metes and bounds, as well as its total area. The Court
notes that while Julio, Jr. testified that the land subject of the sale consisted of 352
square meters, Exhibit "4," however, states that it’s more than 400 square meters.
Moreover, Exhibit "4" does not categorically declare the price certain in money. Neither
does it state the mode of payment of the purchase price and the period for its payment.

In Swedish Match, AB v. Court of Appeals, 37 the Court ruled that the manner of payment
of the purchase price was an essential element before a valid and binding contract of
sale could exist. Albeit the Civil Code does not explicitly provide that the minds of the
contracting parties must also meet on the terms or manner of payment of the price, the
same is needed, otherwise, there is no sale. 38 An agreement anent the manner of
payment goes into the price so much so that a disagreement on the manner of payment
is tantamount to a failure to agree on the price. 39 Further, in Velasco v. Court of
Appeals,40 where the parties already agreed on the object of sale and on the purchase
price, but not on how and when the downpayment and the installment payments were to
be paid, this Court ruled:

Such being the situation, it cannot, therefore, be said that a definite and firm sales
agreement between the parties had been perfected over the lot in question. Indeed, this
Court has already ruled before that a definite agreement on the manner of payment of
the purchase price is an essential element in the formation of a binding and enforceable
contract of sale. The fact, therefore, that the petitioners delivered to the respondent the
sum of ₱10,000.00 as part of the down-payment that they had to pay cannot be
considered as sufficient proof of the perfection of any purchase and sale agreement
between the parties herein under Art. 1482 of the new Civil Code, as the petitioners
themselves admit that some essential matter - the terms of payment - still had to be
mutually covenanted.41

The CA held that partial performance of the contract of sale- giving of a downpayment
coupled with the delivery of the res - took the oral contract out of the scope of the
Statute of Frauds. This conclusion arose from its erroneous finding that there was a
perfected contract of sale. The above disquisition, however, shows that there was none.
There is, therefore, no basis for the application of the Statute of Frauds. The application
of the Statute of Frauds presupposes the existence of a perfected contract. 42 As to the
delivery of the res, it does not appear to be a voluntary one pursuant to the purported
sale. If Julio, Jr. happened to be there, it was because his ancestors tenanted the land.
It must be noted that when Julio, Jr. built his house, Rogelio protested.

WHEREFORE, the petition is GRANTED. The assailed January 25, 2010 Decision and
the March 23, 2010 Resolution of the Court Appeals, in CA-G.R. CV No. 85258, are
REVERSED and SET ASIDE. The March 2, 2005 Decision of the Regional Trial Court
of Malolos, Bulacan, Branch 18, in Civil Case No. 280-M-2002, is REINSTATED.

SO ORDERED.
TAPAYAN vs. MARTINEZ

Sps. Marcelian Tapayan and Alice Tapayan Vs. Ponceda M. Martinez

G.R. No. 207786

January 30, 2017

Facts

The parties herein are relatives by affinity. Petitioner Alice Tapayan is the sister of Clark
Martinez's (Clark) wife. Clark is Respondent's son.

Respondent is the registered owner of a parcel of land situated along Pingol Street,
Ozamiz City, covered by Original Certificate of Title (OCT) No. P-1223 (Pingol
Property).4 Based on the records, it appears that two (2) mortgages were constituted
over this property - the first in favor of Philippine National Bank (PNB Mortgage ), and
the second in favor of Development Bank of the Philippines (DBP Mortgage).

The records further show that Respondent agreed to constitute the DBP Mortgage
upon Clark's request,7 and that, in order to release the Pingol Property from the PNB
Mortgage, the Petitioners and Respondent agreed to utilize a portion of the proceeds of
the DBP Loan to settle the remaining balance of Respondent's PNB Loan, then
amounting to Sixty-Five Thousand Three Hundred Twenty Pesos and 55/100
(₱65,320.55).

Subsequently, the parties herein executed a Deed of Undertaking dated August 29,
1998 (Deed of Undertaking) in reference to the DBP Mortgage. The DBP Loan was not
paid when it fell due.

On September 14, 1999, Respondent filed a complaint for Specific Performance with
Damages (Complaint) against Petitioners before the RTC. Respondent averred that
Petitioners used the proceeds of the DBP Loan exclusively for their own purposes,
13and that since Petitioners failed to pay the DBP Loan, she and her children were
constrained to pay DBP the sum of One Million One Hundred Eighty Thousand Two
Hundred Pesos and 10/100 (₱1,180,200.10) to save the Pingol Property from
foreclosure.After trial, the RTC rendered a decision dated September 28, 2009 in favor
of Respondent. CA rendered the assailed Decision denying the Petitioners' appeal.
Issue

The sole issue for this Court's resolution is whether the CA erred in affirming the R TC
Decision directing Petitioners to execute a mortgage over the Carangan Property in
favor of Respondent.

Ruling

As a rule, only questions of law may be raised in petitions filed under Rule 45,36 subject
only to recognized exceptions, namely:

(1) when the findings are grounded entirely on speculation, surmises or conjectures; (2)
when the inference made is manifestly mistaken, absurd or impossible; (3) when there
is grave abuse of discretion; (4) when the judgment is based on a misapprehension of
facts; (5) when the findings of facts are conflicting; (6) when in making its findings the
Court of Appeals went beyond the issues of the case, or its findings are contrary to the
admissions of both the appellant and the appellee; (7) when the findings are contrary to
the trial court; (8) when the findings are conclusions without citation of specific evidence
on which they are based; (9) when the facts set forth in the petition as well as in the
petitioner's main and reply briefs are not disputed by the respondent; (10) when the
findings of fact are premised on the supposed absence of evidence and contradicted by
the evidence on record; and (11) when the Court of Appeals manifestly overlooked
certain relevant facts not disputed by the parties, which, if properly considered, would
justify a different conclusion.

The Court holds that no misapprehension of facts was committed by both the RTC and
the CA so as to justify deviation from their findings, except only as to the RTC's finding
regarding the amount that Petitioners are bound to reimburse to Respondent.
SPS. SALVADOR ABELLA AND ALMA ABELLA v. SPS. ROMEO ABELLA AND ANNIE
ABELLA, GR No. 195166, 2015-07-08

Facts:

In their Complaint, petitioners alleged that respondents obtained a loan from them in the
amount of P500,000.00. The loan was evidenced by an acknowledgment receipt dated
March 22, 1999 and was payable within one (1) year. Petitioners added that
respondents were able to pay a... total of P200,000.00—P100,000.00 paid on two
separate occasions—leaving an unpaid balance of P300,000.00. Respondents alleged
that the amount involved did not pertain to a loan they obtained from petitioners but was
part of the capital for a joint venture involving the lending of money.

Respondents further alleged that the one year averred by petitioners was... not a
deadline for payment but the term within which they were to return the money placed by
petitioners should the joint venture prove to be not lucrative. They claimed that the
entire amount of P500,000.00 was disposed of in accordance with their agreed terms
and... conditions and that petitioners terminated the joint venture, prompting them to
collect from the joint venture's borrowers. They were, however, able to collect only to
the extent of P200,000.00; hence, the P300,000.00 balance remained unpaid.

The Court of Appeals noted that while the acknowledgement receipt showed that
interest was to be charged, no particular interest rate was specified at the time
respondents were making interest payments of 2.5% per month, these interest
payments were invalid for not being properly stipulated by the parties... noted that
interest in the concept of actual or compensatory damages accrues only from the time
that demand (whether judicial or extrajudicial) is made. It reasoned... that since
respondents received petitioners' demand letter only on July 12, 2002, any interest in
the concept of actual or compensatory damages due should be reckoned only from
then. Thus, the payments for the 2.5% monthly interest made after the perfection of the
loan in 1999... but before the demand was made in 2002 were invalid.

Petitioners insist that respondents'... consistent payment of interest in the year following
the perfection of the loan showed that interest at 2.5% per month was properly agreed
upon despite its not having been expressly stated in the acknowledgment receipt. They
add that during the proceedings before the Regional Trial Court, respondents admitted
that interest was due on the loan. Respondents entered into a simple loan or mutuum,
rather than a joint venture, with petitioners.
This is to acknowledge receipt of the Amount of Five Hundred Thousand (P500,000.00)
Pesos from Mrs. Alma R. Abella, payable within one (1) year from date hereof with
interest.

Issues:

First, whether interest accrued on respondents' loan from petitioners, If so, at what rate?

Second, whether petitioners are liable to reimburse respondents for the Litter's
supposed excess payments and for interest.

Ruling:

respondents were indebted to the extent of P500,000.00... this indebtedness was to be

paid within one (1) year... the indebtedness was subject to interest.

Thus, the trial court concluded that respondents obtained a simple loan, although they
later invested its proceeds in a lending enterprise

Since petitioners' charging of interest was invalid, the Court of Appeals reasoned that all
payments respondents made by way of interest should be deemed payments for the
principal amount of P500,000.00.

The Court of Appeals further noted that respondents made a total payment of
P648,500.00, which, as against the principal amount of P500,000.00, entailed an
overpayment of P148,500.00.

"If the terms of a contract are clear and leave no doubt upon the intention of the
contracting parties,... the literal meaning of its stipulations shall control."... pplying this,
the loan obtained by respondents from petitioners is deemed subjected to conventional
interest at the rate of 12% per annum, the legal rate of interest at the time the parties
executed their agreement. Moreover, should conventional interest still be due... as of
July 1, 2013, the rate of 12% per annum shall persist as the rate of conventional
interest.

The imposition of an unconscionable rate of interest on a money debt, even if knowingly

and voluntarily assumed, is immoral and unjust. It is tantamount to a repugnant
spoliation and an iniquitous deprivation of property, repulsive to the common sense of
man. It has... no support in law, in principles of justice, or in the human conscience nor
is there any reason whatsoever which may justify such imposition as righteous and as
one that may be sustained within the sphere of public or private morals.
The imposition of an unconscionable interest rate is void ab initio for being "contrary to
morals, and the law.

It ought not be a supine mechanism for the creditor's unjust enrichment at the expense
of another.

Thus, by June 21, 2002, respondents had not only fully paid the principal and all the
conventional interest that had accrued on their loan. By this date, they also overpaid
P3,379.17. Moreover, while hypothetically, interest on conventional interest would not
have run from July 31, 2002, no such interest accrued since there was no longer any
conventional interest due from respondents by then.

DIRECTED to jointly and severally... reimburse respondents Spouses Romeo and

Annie Abella the amount of P3,379.17, which respondents have overpaid.

A legal interest of 6% per annum shall likewise be imposed on the total judgment award
from the finality of this Decision until its full satisfaction.

SO ORDERED.

Principles:

Article 1956 of the Civil Code, which requires interest to be stipulated in writing for it to
be due.

Applying the principle of solutio indebiti,... Article 1956 of the Civil Code spells out the
basic rule that "[n]o interest shall be due unless it has been expressly stipulated in
writing."

"In a loan or forbearance of money, according to the Civil Code, the interest due should
be that stipulated in writing, and in the absence thereof, the rate shall be 12% per
annum."[36]

"In a loan or forbearance of money, the interest due should be that stipulated in writing,
and in... the absence thereof the rate shall be 12% per annum."

Section 1. The rate of interest for the loan or forbearance of any money, goods or
credits and the rate allowed in judgments, in the absence of an express contract as to
such rate of interest, shall be six percent (6%) per annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for
Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for
Non-Bank Financial Institutions are hereby amended accordingly.

Thus, from the foregoing, in the absence of an express stipulation as to the rate of
interest that would govern the parties, the rate of legal interest for loans or forbearance
of any money, goods or credits and the rate allowed in judgments shall no longer be
twelve percent

(12%) per annum — as reflected in the case of Eastern Shipping Lines and Subsection
X305.1 of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and
4303P.1 of the Manual of Regulations for Non-Bank Financial Institutions, before its
amendment by BSP-MB

Circular No. 799 — but will now be six percent (6%) per annum effective July 1, 2013. It
should be noted, nonetheless, that the new rate could only be applied prospectively and
not retroactively. Consequently, the twelve percent (12%) per annum legal interest shall
apply... only until June 30, 2013. Come July 1, 2013 the new rate of six percent (6%)
per annum shall be the prevailing rate of interest when applicable.[

Article 1956 of the Civil Code, read in light of established jurisprudence, prevents the
application of any interest rate other than that specifically provided for by the parties in
their loan document or, in lieu of it, the legal rate. Here, as the contracting parties...
failed to make a specific stipulation, the legal rate must apply. Moreover, the rate that
petitioners adverted to is unconscionable. The conventional interest due on the principal
amount loaned by respondents from petitioners is held to be 12% per annum.

Art. 2212. Interest due shall earn legal interest from the time it is judicially demanded,
although the obligation may be silent upon this point.

Article 2154. If something is received when there is no right to demand it, and it was
unduly delivered through mistake, the obligation to return it arises.

The quasi-contract of solutio indebiti harks back to the ancient principle that no one
shall enrich himself unjustly at the expense of another. It applies where (1) a payment is
made when there exists no binding relation between the payor, who has no duty to...
pay, and the person who received the payment, and (2) the payment is made through
mistake, and not through liberality or some other cause.

petitioners... are now bound by a quasi-contractual obligation to return any and all
excess payments delivered by respondents. Art. 2159. Whoever in bad faith accepts an
undue payment, shall pay legal interest if a sum of money is involved, or shall be liable
for fruits received or which should have been received if the thing produces fruits.
Sp. Salvador & Alma Abella v. Sp. Romeo & Annie Abella

G.R. 195166 JULY 8, 2015

Credit Transactions: When does interest legally accrue from a loan from petitioners, and
if so, how is the interest rate computed?

FACTS:

This is a petition for Review on Certiorari under Rule 45 of the Rules of Court seeking
the reversal of a CA decision denying the MR of the petitioners that ordered petitioners
to pay respondents ¬148,500.00 (plus interest), which was the amount respondents
supposedly overpaid for a loan they took out from the petitioners.

Petitioners alleged that respondents obtained a loan from them in the amount of
¬500,000.00. The loan was evidenced by an acknowledgment receipt dated March 22,
1999 and was payable within one (1) year. Petitioners added that respondents were
able to pay a total of ¬200,000.00—¬100,000.00 paid on two separate occasions—
leaving an unpaid balance of ¬300,000.00. On July 31, 2002, petitioners Sp. Salvador
and Alma Abella filed a complaint for sum of money and damages with prayer for
preliminary attachment against respondents Sp. Romeo and Annie Abella before the
RTC of Kalibo.

In their defense, respondents alleged that the amount involved did not pertain to a loan
they obtained from petitioners but was part of the capital for a joint venture involving the
lending of money.

In the December 28, 2005, the RTC ruled in favor of petitioners. It noted that the terms
of the acknowledgment receipt executed by respondents clearly showed that: (a)
respondents were indebted to the extent of ¬500,000.00; (b) this indebtedness was to
be paid within one (1) year; and (c) the indebtedness was subject to interest. Thus, the
trial court concluded that respondents obtained a simple loan, although they later
invested its proceeds in a lending enterprise. The RTC adjudged respondents solidarily
liable to petitioners.

On respondents’ appeal, the Court of Appeals ruled that while respondents had indeed
entered into a simple loan with petitioners, respondents were no longer liable to pay the
outstanding amount of ¬300,000. The CA reasoned that the loan could not have earned
interest, whether as contractually stipulated interest or as interest in the concept of
actual or compensatory damages. As to the loan’s not having earned stipulated
interest, the Court of Appeals anchored its ruling on Article 1956 of the Civil Code,
which requires interest to be stipulated in writing for it to be due, noting that while the
acknowledgement receipt showed that interest was to be charged, no particular interest
rate was specified. Thus, at the time respondents were making interest payments of
2.5% per month, these interest payments were invalid for not being properly stipulated
by the parties.

ISSUE(s):

First, W/N interest accrued on respondents’ loan from petitioners and at what rate.

Second, W/N petitioners are liable to reimburse respondents for the latter’s supposed
excess payments and for interest.

HELD:

Respondents’ claims, as articulated in their testimonies before the trial court, cannot
prevail over the clear terms of the document attesting to the relation of the parties: “If
the terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall control.”

Articles 1933 and 1953 of the Civil Code provide the guideposts that determine if a
contractual relation is one of simple loan or mutuum:

Art. 1933. By the contract of loan, oneof the parties delivers to another, either
something not consumable so that the latter may use the same for a certain time and
return it, in which case the contract is called a commodatum; or money or other
consumable thing, upon the condition that the same amount of the same kind and
quality shall be paid, in which case the contract is simply called a loan or mutuum.
Commodatum is essentially gratuitous. Simple loan may be gratuitous or with a
stipulation to pay interest. In commodatum the bailor retains the ownership of the thing
loaned, while in simple loan, ownership passes to the borrower.

Art. 1953. A person who receives a loan of money or any other fungible thing acquires
the ownership thereof, and is bound to pay to the creditor an equal amount of the same
kind and quality.

Although the nature of the contractual relation between petitioners and respondents is
already settled, controversy persists over respondents’ duty to pay conventional
interest, i.e., interest as the cost of borrowing money. Article 1956 of the Civil Code
spells out the basic rule that “[n]o interest shall be due unless it has been expressly
stipulated in writing.” On the matter of interest, the text of the acknowledgment receipt
is simple, plain, and unequivocal. It attests to the contracting parties’ intent to subject to
interest the loan extended by petitioners to respondents. The controversy, however,
stems from the acknowledgment receipt’s failure to state the exact rate of interest.
Jurisprudence is clear about the applicable interest rate if a written instrument fails to
specify a rate, where in Sp. Toring v. Sp. Olan, the SC clarified the effect of Article 1956
of the Civil Code and noted that the legal rate of interest (then at 12%) is to apply: “In a
loan or forbearance of money, according to the Civil Code, the interest due should be
that stipulated in writing, and in the absence thereof, the rate shall be 12% per annum.”

However, in the intervening decision in Nacar v. Gallery Frames, the recognized legal
rate of interest has been reduced to 6% per annum, subject to Nacar’s qualification on
prospective application effective 1 July 2013.

As respondents made an overpayment, the principle of solutio indebiti as provided by

Article 2154 of the Civil Code applies: If something is received when there is no right to
demand it, and it was unduly delivered through mistake, the obligation to return it arises.

As respondents had already fully paid the principal and all conventional interest that had
accrued, they were no longer obliged to make further payments. Any further payment
they made was only because of a mistaken impression that they were still due.
Accordingly, petitioners are now bound by a quasi-contractual obligation to return any
and all excess payments delivered by respondents. Article 2159 of the Civil Code
provides:

Art. 2159. Whoever in bad faith accepts an undue payment, shall pay legal interest if a
sum of money is involved, or shall be liable for fruits received or which should have
been received if the thing produces fruits. He shall furthermore be answerable for any
loss or impairment of the thing from any cause, and for damages to the person who
delivered the thing, until it is recovered.

The SC held Petitioners Sp. Salvador and Alma Abella jointly and severally to reimburse
respondents Sp. Romeo and Annie Abella the amount of P3,379.17, which respondents
have overpaid at a legal interest of 6% per annum to be imposed on the total judgment
award from the finality of the Decision until its full satisfaction.
Sps Paras v. Kimwa Corp April 8, 2015

SPOUSES BONIFACIO AND LUCIA PARAS, Petitioners, v. KIMWA

CONSTRUCTION AND DEVELOPMENT CORPORATION, Respondent.

Facts:

 Lucia Paras was "concessionaire of a sand and gravel permit at Kabulihan,

Toledo City

 Kimwa is a "construction firm that sells concrete aggregates to contractors and

haulers in Cebu."

 They entered into a contract "Agreement for Supply of Aggregates" (Agreement)

where 40,000 cubic meters of aggregates were "allotted" by Lucia as supplier to
Kimwa. Kimwa was to pick up the allotted aggregates at Lucia's permitted area in
Toledo City at P240.00 per truckload.

 *see full Agreement in the appendix

 Pursuant to the Agreement, Kimwa hauled 10,000 cubic meters of aggregates.

Sometime after this, however, Kimwa stopped hauling aggregates.

 Claiming that in so doing, Kimwa violated the Agreement, Lucia, joined by her
husband, Bonifacio, filed the Complaint for breach of contract with damages
that is now subject of this Petition.

 Petitioners’ complaint:

o Kimwa wanted to be assured of the 40,000 cubic meters of aggregates

o Lucia countered that her concession area was due to be rechanneled on

May 15, 1995, when her Special Permit expires.

o Because of this, Lucia emphasized that shse would be willing to enter into
a contract with Kimwa ONLY IF Kimwa promises to haul all 40,000 cubic
meters before May 15, 1995

o Kimwa then assured Lucia that it would take only two to three months for it
to completely haul the aggregates (This was in December, meaning all the
aggregates would be hauled by February or March)

o Hence, they entered into the Agreement.

o Within a few days, Kimwa was able to haul 10,000 cubic meters, but after
that allegedly transferred to another concessionaire named Remedios
dela Torre, in violation of the Agreement

o Demand letters unheeded, hence the action

 Respondent’s Answer:

o Kimwa alleged that it never committed to obtain 40,000 cubic meters of

aggregates from Lucia.

o It argued that the controversial quantity of 40,000 cubic meters

represented only an upper limit or the maximum quantity that it could haul.

o Denied making a commitment to haul 40,000 in two to three months

o Denied that the first haul took only a few days, alleged that it took weeks

o Denied transferring to another concessionaire

o Asserted that the Agreement articulated the parties' true intent that 40,000
cubic meters was a maximum limit and that May 15, 1995 was never set
as a deadline.

o Invoking the Parol Evidence Rule, it insisted that Spouses Paras

were barred from introducing evidence which would show that the
parties had agreed differently.

 RTC ruled for petitioners

o The Agreement stipulated that the allotted aggregates were set aside
exclusively for Kimwa.

o It was contrary to human experience for Kimwa to have entered into an

Agreement with Lucia without verifying the latter's authority as a
concessionaire.

o Considering that the Special Permit granted to Lucia (petitioners' Exhibit

"A" before the trial court) clearly indicated that her authority was good for
only six (6) months from November 14, 1994, the trial court noted that
Kimwa must have been aware that the 40,000 cubic meters of aggregates
allotted to it must necessarily be hauled by May 15, 1995.
 o As it failed to do so, it was liable to Spouses Paras for the total sum of
P720,000.00, the value of the 30,000 cubic-meters of aggregates that
Kimwa did not haul, in addition to attorney's fees and costs of suit.

 CA reversed

o Faulted the trial court for basing its findings on evidence presented which
were supposedly in violation of the Parol Evidence Rule

o Said that the Agreement in no way obligated respondent to haul all 40,000
cubic meters before May 15, 1995

W/N respondent is liable for failing to haul 30,000 cubic meters of aggregates from
petitioner Lucia Paras' permitted area by May 15, 1995 – YES

Held:

Section 9. Evidence of written agreements. — When the terms of an agreement have

been reduced to writing, it is considered as containing all the terms agreed upon and
there can be, between the parties and their successors in interest, no evidence of such
terms other than the contents of the written agreement.

However, a party may present evidence to modify, explain or add to the terms of written
agreement if he puts in issue in his pleading:chanroblesvirtuallawlibrary

(a) An intrinsic ambiguity, mistake or imperfection in the written agreement;

(b) The failure of the written agreement to express the true intent and agreement of the
parties thereto;
(c) The validity of the written agreement; or
(d) The existence of other terms agreed to by the parties or their successors in interest
after the execution of the written agreement.
The term "agreement" includes wills.

 Parol Evidence Rule: "forbids any addition to, or contradiction of, the terms of a
written agreement by testimony or other evidence purporting to show that
different terms were agreed upon by the parties, varying the purport of the written
contract."

 Rationale:

o  In choosing to reduce their agreement into writing, they are deemed to
have done so meticulously and carefully, employing specific — frequently,
even technical — language as are appropriate to their context.
 o oral testimony . . . coming' from a party who has an interest in the outcome
of the case, depending exclusively on human memory, is not as reliable as
written or documentary evidence. Spoken words could be notoriously
unreliable unlike a written contract which speaks of a uniform language.

 Abella v. CA:

o Without any doubt, oral testimony as to a certain fact, depending as it

does exclusively on human memory, is not as reliable as written or
documentary evidence. "I would sooner trust the smallest slip of paper for
truth," said Judge Limpkin of Georgia, "than the strongest and most
retentive memory ever bestowed on mortal man." This is especially true in
this case where such oral testimony is given by a party to the case who
has an interest in its outcome, and by a witness who claimed to have
received a commission from the petitioner.

 BUT IN THIS CASE!!!!!

o The above is only a GENERAL RULE.

o As long as a party puts into issue any of the 4 exceptions mentioned in

the rule, a party may present evidence to modify, explain or add to the
terms of the agreement.

o It is equally imperative that the parol evidence sought to be

introduced points to the conclusion proposed by the party
presenting it.

o That is, it must be relevant, tending to "induce belief in [the] existence" of

the flaw, true intent, or subsequent extraneous terms averred by the party
seeking to introduce parol evidence.

 PNR v. CFI Albay:

o "if the defendant set up the affirmative defense that the contract
mentioned in the complaint does not express the true agreement of the
parties, then parol evidence is admissible to prove the true agreement of
the parties”

 Hence, TWO THINGS must be established for parol evidence to be

admitted:
 o (1) that the existence of any of the four (4) exceptions has been put
in issue in a party's pleading or has not been objected to by the
adverse party

o (2) the parol evidence sought to be presented serves to form the

basis of the conclusion proposed by the presenting party.

 COURT OF APPEALS SERIOUSLY ERRED.

o without even accounting for the exceptions provided by Rule 130, Section
9, the Court of Appeals immediately concluded that whatever evidence
petitioners Spouses Paras presented was in violation of the Parol
Evidence Rule.

 SC: Petitioners already alleged in their Complaint the imperfection of the

Agreement, as well as its failure to state the true intent of the parties.
Respondent, through its Answer, responded to these allegations. Thus this falls
under one of the exceptions in Rule 130 Sec 9.

o It is true that petitioners Spouses Paras' Complaint does not specifically

state words and phrases such as "mistake," "imperfection," or "failure to
express the true intent of the parties."

o Nevertheless, it is evident that the crux of petitioners Spouses Paras'

Complaint is their assertion that the Agreement "entered into on 6
December 1994 or thereabouts" was founded on the parties'
supposed understanding that the quantity of aggregates allotted in favor
of respondent Kimwa must be hauled by May 15, 1995

 Considering how the Agreement's mistake, imperfection, or supposed failure to

express the parties' true intent was successfully put in issue in petitioners
Spouses Paras' Complaint (and even responded to by respondent Kimwa in its
Answer), this case falls under the exceptions provided by Rule 130, Section 9 of
the Revised Rules on Evidence. Accordingly, the testimonial and documentary
parol evidence sought to be introduced by petitioners Spouses Paras, which
attest to these supposed flaws and what they aver to have been the parties' true
intent, may be admitted and considered.

 RE: breach of contract

o In the Pre-Trial Order issued by the RTC, respondent admitted being

issued a copy of petitioner’s Special Permit
 o Having been admittedly furnished a copy of this Special Permit,
respondent Kimwa was well aware that a total of only about 40,000 cubic
meters of aggregates may be extracted by petitioner Lucia from the
permitted area, and that petitioner Lucia Paras' operations cannot extend
beyond May 15, 1995, when the Special Permit expires.

o The condition that the Special Permit shall be valid for only six (6) months
from November 14, 1994 lends credence to petitioners Spouses Paras'
assertion that, in entering into the Agreement with respondent Kimwa,
petitioner Lucia Paras did so because of respondent Kimwa's promise that
hauling can be completed by May 15, 1995.

 Bound as she was by the Special Permit, petitioner Lucia Paras

needed to make it eminently clear to any party she was
transacting with that she could supply aggregates only up to May
15, 1995 and that the other party's hauling must be completed by
May 15, 1995. She was merely acting with due diligence, for
otherwise, any contract she would enter into would be negated; any
commitment she would make beyond May 15, 1995 would make
her guilty of misrepresentation

o Evidence supports petitioners Spouses Paras' position that respondent

Kimwa was obliged to haul 40,000 cubic meters of aggregates on or
before May 15, 1995. As it admittedly hauled only 10,000 cubic meters,
respondent Kimwa is liable for breach of contract in respect of the
remaining 30,000 cubic meters.

WHEREFORE, the Petition is GRANTED. The assailed Decision dated July 4, 2005 and
Resolution dated February 9, 2006 of the Court of Appeals Special 20th Division in CA-
G.R. CV No. 74682 are REVERSED and SET ASIDE. The Decision of Branch 55 of the
Regional Trial Court, Mandaue City dated May 16, 2001 in Civil Case No. MAN-2412 is
REINSTATED.
[ G.R. No. 162523, November 25, 2009 ]

NORTON RESOURCES AND DEVELOPMENT CORPORATION, PETITIONER, VS.

ALL ASIA BANK CORPORATION,* RESPONDENT.

DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of
Civil Procedure, seeking the reversal of the Court of Appeals (CA) Decision [2] dated
November 28, 2002 which set aside the Decision [3] of the Regional Trial Court (RTC) of
Davao City, Branch 14, dated August 27, 1999.

The Facts

Petitioner Norton Resources and Development Corporation (petitioner) is a domestic

corporation engaged in the business of construction and development of housing
subdivisions based in Davao City, while respondent All Asia Bank Corporation
(respondent), formerly known as Banco Davao-Davao City Development Bank, is a
domestic banking corporation operating in Davao City.

On April 13, 1982, petitioner applied for and was granted a loan by respondent in the
amount of Three Million Eight Hundred Thousand Pesos (P3,800,000.00) as evidenced
by a Loan Agreement.[4] The loan was intended for the construction of 160 housing units
on a 3.9 hectare property located in Matina Aplaya, Davao City which was subdivided
by petitioner per Subdivision Sketch Plan. [5] To speed up the processing of all
documents necessary for the release of the funds, petitioner allegedly offered
respondent a service/commitment fee of P320,000.00 for the construction of 160
housing units, or at P2,000.00 per unit. The offer having been accepted, both parties
executed a Memorandum of Agreement [6] (MOA) on the same date.

As guarantor, the Home Financing Corporation (HFC), a government entity tasked to

encourage lending institutions to participate in the government's housing programs,
extended security coverage obligating itself to pay the said loan upon default of
petitioner. Out of the loan proceeds in the amount of P3,800,000.00, respondent
deducted in advance the amount of P320,000.00 as commitment/service fee.

Unfortunately, petitioner was only able to construct 35 out of the 160 housing units
proposed to be constructed under the contract. In addition, petitioner defaulted in the
payment of its loan obligation. Thus, respondent made a call on the unconditional cash
guarantee of HFC. In order to recover from HFC, respondent assigned to HFC its
interest over the mortgage by virtue of a Deed of Assignment [7] on August 28, 1983
coupled with the delivery of the Transfer Certificate of Title.

As of August 2, 1983, the outstanding obligation of petitioner amounted to

P3,240,757.99. HFC paid only P2,990,757.99, withholding the amount of P250,000.00.
Upon payment, HFC executed a Deed of Release of Mortgage [8] on February 14, 1984,
thereby canceling the mortgage of all properties listed in the Deed of Assignment.
Respondent made several demands from HFC for the payment of the amount of
P250,000.00 but HFC continued to withhold the same upon the request of petitioner.
Thus, respondent filed an action to recover the P250,000.00 with the RTC, Branch 15,
of Davao City, docketed as Civil Case No. 17048. [9] On April 13, 1987, said RTC
rendered a Decision[10] in favor of respondent, the dispositive portion thereof reads as
follows:

IN VIEW WHEREOF, judgment is hereby rendered as follows:

1. The defendant shall return to the plaintiff the P250,000.00 with legal interest to be
computed from April 12, 1984 until fully paid.

2. The defendant shall pay the plaintiff fifty thousand pesos (P50,000.00) as attorney's
fees and P7,174.82 as collection expenses.

3. The defendant shall pay the costs of this suit.

SO ORDERED.[11]

HFC appealed to the CA which, in turn, sustained the decision of the RTC. The CA
decision became final and executory.

However, on February 22, 1993, petitioner filed a Complaint [12] for Sum of Money,
Damages and Attorney's Fees against respondent with the RTC, docketed as Civil Case
No. 21-880-93. Petitioner alleged that the P320,000.00 commitment/service fee
mentioned in the MOA was to be paid on a per-unit basis at P2,000.00 per unit.
Inasmuch as only 35 housing units were constructed, petitioner posited that it was only
liable to pay P70,000.00 and not the whole amount of P320,000.00, which was
deducted in advance from the proceeds of the loan. As such, petitioner demanded the
return of P250,000.00, representing the commitment fee for the 125 housing units left
unconstructed and unduly collected by respondent.

In its Answer,[13] respondent denied that the P320,000.00 commitment/service fee

provided in the MOA was broken down into P2,000.00 per housing unit for 160 units.
Moreover, respondent averred that petitioner's action was already barred by res
judicata considering that the present controversy had already been settled in a previous
judgment rendered by RTC, Branch 15, of Davao City in Civil Case No. 17048.

The RTC's Ruling

After trial on the merits, the RTC rendered a Decision [14] on August 27, 1999 in favor of
petitioner. It held that the amount of P320,000.00, as commitment/service fee provided
in the MOA, was based on the 160 proposed housing units at P2,000.00 per unit. Since
petitioner was able to construct only 35 units, there was overpayment to respondent in
the amount of P250,000.00. Thus, the RTC disposed of the case in this wise:

THE FOREGOING CONSIDERED, judgment is hereby rendered for the plaintiff and
against the defendant ordering the said defendant:

1. To pay the plaintiff the amount of TWO HUNDRED FIFTY THOUSAND PESOS
(P250,000.00) with interest at the legal rate reckoned from February 22, 1993, the date
of the filing of the plaintiff's complaint until the same shall have been fully paid and
satisfied;

2. To pay the plaintiff the sum of THIRTY THOUSAND PESOS (P30,000.00)

representing litigation expenses;

3. To pay the plaintiff the sum of SIXTY TWO THOUSAND FIVE HUNDRED PESOS
(P62,500.00) as and for attorney's fees; and

4. To pay the costs.

SO ORDERED.[15]
Aggrieved, respondent appealed to the CA. [16]

The CA's Ruling

On November 28, 2002, the CA reversed the ruling of the RTC. The CA held that from
the literal import of the MOA, nothing was mentioned about the arrangement that the
payment of the commitment/service fee of P320,000.00 was on a per unit basis valued
at P2,000.00 per housing unit and dependent upon the actual construction or
completion of said units. The CA opined that the MOA duly contained all the terms
agreed upon by the parties.

Undaunted, petitioner filed a Motion for Reconsideration [17] which was, however, denied
by the CA in its Resolution [18] dated February 13, 2004.

Hence, this Petition which raised the following issues:

1. WHETHER OR NOT THE MEMORANDU[M] OF AGREEMENT (MOA)

REFLECTS THE TRUE INTENTION OF THE PARTIES[;]

2. WHETHER OR NOT HEREIN PETITIONER IS ENTITLED TO RECOVER THE

AMOUNT OF TWO HUNDRED [FIFTY] THOUSAND PESOS REPRESENTING
THE ONE HUNDRED TWENTY FIVE (125) UNCONSTRUCTED HOUSING
UNITS AT TWO THOUSAND PESOS (PHP. 2,000.00) EACH AS AGREED [;
 AND]

3. WHETHER OR NOT VICTOR FACUNDO AS THE VICE PRESIDENT AND

GENERAL MANAGER AT THE TIME THE AFOREMENTIONED MOA WAS
EXECUTED, WAS AUTHORIZED TO ENTER INTO [AN] AGREEMENT AND TO
NEGOTIATE THE TERMS AND CONDITIONS THEREOF TO THEIR
CLIENTELE.[19]

Our Ruling

The instant Petition is bereft of merit.

Our ruling in Benguet Corporation, et al. v. Cesar Cabildo [20] is instructive:

The cardinal rule in the interpretation of contracts is embodied in the first paragraph of
Article 1370 of the Civil Code: "[i]f the terms of a contract are clear and leave no doubt
upon the intention of the contracting parties, the literal meaning of its stipulations shall
control." This provision is akin to the "plain meaning rule" applied by Pennsylvania
courts, which assumes that the intent of the parties to an instrument is "embodied in the
writing itself, and when the words are clear and unambiguous the intent is to be
discovered only from the express language of the agreement." It also resembles the
"four corners" rule, a principle which allows courts in some cases to search beneath the
semantic surface for clues to meaning. A court's purpose in examining a contract is to
interpret the intent of the contracting parties, as objectively manifested by them. The
process of interpreting a contract requires the court to make a preliminary inquiry as to
whether the contract before it is ambiguous. A contract provision is ambiguous if it is
susceptible of two reasonable alternative interpretations. Where the written terms of the
contract are not ambiguous and can only be read one way, the court will interpret the
contract as a matter of law. If the contract is determined to be ambiguous, then the
interpretation of the contract is left to the court, to resolve the ambiguity in the light of
the intrinsic evidence.

In our jurisdiction, the rule is thoroughly discussed in Bautista v. Court of Appeals:

The rule is that where the language of a contract is plain and unambiguous, its meaning
should be determined without reference to extrinsic facts or aids. The intention of the
parties must be gathered from that language, and from that language alone. Stated
differently, where the language of a written contract is clear and unambiguous, the
contract must be taken to mean that which, on its face, it purports to mean, unless some
good reason can be assigned to show that the words should be understood in a
different sense. Courts cannot make for the parties better or more equitable agreements
than they themselves have been satisfied to make, or rewrite contracts because they
operate harshly or inequitably as to one of the parties, or alter them for the benefit of
one party and to the detriment of the other, or by construction, relieve one of the parties
from the terms which he voluntarily consented to, or impose on him those which he did
not.[21]

Moreover, Section 9, Rule 130 of the Revised Rules of Court clearly provides:

SEC. 9. Evidence of written agreements. -- When the terms of an agreement have been
reduced to writing, it is considered as containing all the terms agreed upon and there
can be, between the parties and their successors in interest, no evidence of such terms
other than the contents of the written agreement.

However, a party may present evidence to modify, explain or add to the terms of the
written agreement if he puts in issue in his pleading:

(a) An intrinsic ambiguity, mistake, or imperfection in the written agreement;

(b) The failure of the written agreement to express the true intent and agreement of the
parties thereto;

(c) The validity of the written agreement; or

(d) The existence of other terms agreed to by the parties or their successors in interest
after the execution of the written agreement.

The "parol evidence rule" forbids any addition to or contradiction of the terms of a
written instrument by testimony or other evidence purporting to show that, at or before
the execution of the parties' written agreement, other or different terms were agreed
upon by the parties, varying the purport of the written contract. When an agreement has
been reduced to writing, the parties cannot be permitted to adduce evidence to prove
alleged practices which, to all purposes, would alter the terms of the written agreement.
Whatever is not found in the writing is understood to have been waived and abandoned.
[22]
 None of the above-cited exceptions finds application in this case, more particularly
the alleged failure of the MOA to express the true intent and agreement of the parties
concerning the commitment/service fee of P320,000.00.

In this case, paragraph 4 of the MOA plainly states:

4. That the CLIENT offers and agrees to pay a commitment and service fee of THREE
HUNDRED TWENTY THOUSAND PESOS (P320,000.00), which shall be paid in two
(2) equal installments, on the same dates as the first and second partial releases of the
proceeds of the loan.[23]

As such, we agree with the findings of the CA when it aptly and judiciously held, to wit:
Unmistakably, the testimonies of Antonio Soriano and Victor Facundo jibed in material
points especially when they testified that the P320,000.00 commitment/service fee
mentioned in Paragraph 4 of Exhibit "B" is not to be paid in lump sum but on a per unit
basis valued at P2,000.00 per housing unit. But a careful scrutiny of such testimonies
discloses that they are not in accord with the documentary evidence on record. It must
be stressed that both Antonio Soriano and Victor Facundo testified that the P320,000.00
commitment/service fee was arrived at by multiplying P2,000.00, the cost per housing
unit; by 160, the total number of housing units proposed to be constructed by the
[petitioner] as evidenced by a certain subdivision survey plan of [petitioner] marked as
Exhibit "C."

x x x x

Looking closely at Exhibit "C," noticeable are the date of survey of the subdivision which
is May 15-31, 1982 and the date of its approval which is June 25, 1982, which dates are
unmistakably later than the execution of the Loan Agreement (Exhibit "A") and Exhibit
"B" which was on April 13, 1982. With these dates, we cannot lose sight of the fact that
it was impossible for Victor Facundo to have considered Exhibit "C" as one of the
documents presented by [petitioner] to support its proposal that the commitment/service
fee be paid on a per unit basis at P2,000.00 a unit. x x x.

x x x x

To stress, there is not even a slim possibility that said blue print (referring to Exhibit "C")
was submitted to [respondent] bank during the negotiation of the terms of Exhibit "B"
and was made the basis for the computation of P320,000.00 commitment/service fee.
As seen on its face, Exhibit "C" was approved in a much later date than the execution of
Exhibit "B" which was on April 13, 1982. In addition, as viewed from the foregoing
testimony, no less than Victor Facundo himself admitted that there were only 127
proposed housing units instead of 160. Considering these factual milieus, there is
sufficient justification to discredit the stance of [petitioner] that Exhibit "B" was not
reflective of the true intention or agreement of the parties. Paragraph 4 of Exhibit "B" is
clear and explicit in its terms, leaving no room for different interpretation. Considering
the absence of any credible and competent evidence of the alleged true and real
intention of the parties, the terms of Paragraph 4 of Exhibit "B" remains as it was
written. Therefore, the payment of P320,000.00 commitment/service fee mentioned in
Exhibit "B" must be paid in lump sum and not on a per unit basis. Consequently, we rule
that [petitioner] is not entitled to the return of P250,000.00. [24]

The agreement or contract between the parties is the formal expression of the parties'
rights, duties and obligations. It is the best evidence of the intention of the parties. Thus,
when the terms of an agreement have been reduced to writing, it is considered as
containing all the terms agreed upon and there can be no evidence of such terms other
than the contents of the written agreement between the parties and their successors in
interest. [25] Time and again, we have stressed the rule that a contract is the law
between the parties, and courts have no choice but to enforce such contract so long as
it is not contrary to law, morals, good customs or public policy. Otherwise, courts would
be interfering with the freedom of contract of the parties. Simply put, courts cannot
stipulate for the parties or amend the latter's agreement, for to do so would be to alter
the real intention of the contracting parties when the contrary function of courts is to give
force and effect to the intention of the parties. [26]

Finally, as correctly observed by respondent, petitioner's claim that the MOA is a

contract of adhesion was never raised by petitioner before the lower courts. Settled is
the rule that points of law, theories, issues, and arguments not adequately brought to
the attention of the trial court need not be, and ordinarily will not be, considered by a
reviewing court. They cannot be raised for the first time on appeal. To allow this would
be offensive to the basic rules of fair play, justice and due process. [27]

A contract of adhesion is defined as one in which one of the parties imposes a ready-
made form of contract, which the other party may accept or reject, but which the latter
cannot modify. One party prepares the stipulation in the contract, while the other party
merely affixes his signature or his "adhesion" thereto, giving no room for negotiation and
depriving the latter of the opportunity to bargain on equal footing. [28] It must be borne in
mind, however, that contracts of adhesion are not invalid per se. Contracts of adhesion,
where one party imposes a ready-made form of contract on the other, are not entirely
prohibited. The one who adheres to the contract is, in reality, free to reject it entirely; if
he adheres, he gives his consent. [29]

All told, we find no reason to disturb, much less, to reverse the assailed CA Decision.

WHEREFORE, the instant Petition is DENIED and the assailed Court of Appeals

Decision is AFFIRMED. Costs against petitioner.

SO ORDERED.

Corona, (Chairperson), Chico-Nazario, Velasco, Jr., and Peralta, JJ., concur.

 G.R. No. 107372 January 23, 1997
RAFAEL S. ORTAÑES, petitioner,
vs.
THE COURT OF APPEALS, OSCAR INOCENTES AND ASUNCION LLANES
INOCENTES, respondents.
FACTS
 The herein  respondents sold to petitioner two (2) parcels of registered land in Quezon
City for a consideration of P35,000.00 and P20,000.00, respectively. The first deed of absolute
sale covering Transfer Certificate of Title (TCT) No. 258628 and the second deed absolute sale
covering TCT. No. 243273. Private respondents received the payments for the above-
mentioned lots, but failed to deliver the titles to petitioner. On April 9, 1990 the latter demanded
from the former the delivery of said titles.  3 Private respondents, however, refused on the ground
that the title of the first lot is in the possession of another person,  4 and petitioner's acquisition of
the title of the other lot is subject to certain conditions.
The petitioner sued private respondents for specific performance before the RTC. In their
answer with counterclaim private respondents merely alleged the existence of the following oral
conditions 5 which were never reflected in the deeds of sale: 6
3.3.2 Title to the other property (TCT No. 243273) remains with the defendants (private
respondents) until plaintiff (petitioner) shows proof that all the following requirements have been
met:
(i) Plaintiff will cause the segregation of his right of way amounting to 398 sq. m.;
(ii) Plaintiff will submit to the defendants the approved plan for the segregation;
(iii) Plaintiff will put up a strong wall between his property and that of defendants' lot to
segregate his right of way;
(iv) Plaintiff will pay the capital gains tax and all other expenses that may be incurred by reason
of sale. . .
During trial, private respondent orally testified that the sale was subject to the
above conditions, 7 although such conditions were not incorporated in the deeds of sale.
Despite petitioner's timely objections on the ground that the introduction of said oral
conditions was barred by the parol evidence rule, the lower court still admitted them and
eventually dismissed the complaint as well as the counterclaim. On appeal, the Court of
Appeals (CA) affirmed the court a quo.
ISSUE
Whether or not the parol evidence is admissible to establish the alleged oral conditions-
precedent to a contract of sale even if the deeds of sale are silent on the four(4)
conditions presented by the herein respondent?
RULING
NO. The parol evidence herein introduced is inadmissible on the following grounds;
 First, private respondents' oral testimony on the alleged conditions, coming from a party
who has an interest in the outcome of the case, depending exclusively on human
memory, is not as reliable as written or documentary evidence.  8 Spoken words could be
notoriously unreliable unlike a written contract which speaks of a uniform
language. 9 Thus, under the general rule in Section 9 of Rule 130  10 of the Rules of
Court, when the terms of an agreement were reduced to writing, as in this case, it is
deemed to contain all the terms agreed upon and no evidence of such terms can be
admitted other than the contents
Secondly, the  argument of the private respondents rely on the case of Land Settlement
Development, Co. vs. Garcia Plantation 14 where the Court ruled that a condition precedent to a
contract may be established by parol evidence. However, the material facts of that case are
different from this case. In the former, the contract sought to be enforced  15 expressly stated that
it is subject to an agreement containing the conditions-precedent which were proven through
parol evidence. While the deeds of sale in this case, made no reference to any pre-conditions or
other agreement.
Third, the parol evidence herein sought to be introduced would vary, contradict or defeat the
operation of a valid instrument, 16 hence, contrary to the rule that:
The parol evidence rule forbids any addition to . . . the terms of a written instrument by
testimony purporting to show that, at or before the signing of the document, other or different
terms were orally agreed upon by the parties. 17
Although parol evidence is admissible to explain the meaning of a contract, "it cannot serve the
purpose of incorporating into the contract additional contemporaneous conditions which are not
mentioned at all in the writing unless there has been fraud or mistake."  18 No such fraud or
mistake exists in this case.
Fourth, we disagree with private respondents' argument that their parol evidence is admissible
under the exceptions provided by the Rules, specifically, the alleged failure of the agreement to
express the true intent of the parties. Such exception obtains only in the following instance:
[W]here the written contract is so ambiguous or obscure in terms that the contractual intention of
the parties cannot be understood from a mere reading of the instrument. In such a case,
extrinsic evidence of the subject matter of the contract, of the relations of the parties to each
other, and of the facts and circumstances surrounding them when they entered into the contract
may be received to enable the court to make a proper, interpretation of the instrument. 19
In this case, the deeds of sale are clear, without any ambiguity, mistake or imperfection, much
less obscurity or doubt in the terms thereof.
Fifth, we are not persuaded by private respondents' contention that they "put in issue by
the pleadings" the failure of the written agreement to express the true intent of the
parties. Record shows 20 that private respondents did not expressly plead that the deeds
of sale were incomplete or that it did not reflect the
 21
intention  of the buyer (petitioner) and the seller (private respondents). Such issue
must be, "squarely presented." 22 Private respondents merely alleged that the sale was
subject to four (4) conditions which they tried to prove during trial by parol
evidence. 23 Obviously, this cannot be done, because they did not plead any of the
exceptions mentioned in the parol evidence rule.  24 Their case is covered by the general
rule that the contents of the writing are the only repository of the terms of the
agreement.
ACCORDINGLY, the appealed decision is REVERSED and the records of this case
REMANDED to the trial court for proper disposition in accordance with this ruling.
SO ORDERED