ST. MARTIN POLYCLINIC, INC., Petitioner, v.

LWV CONSTRUCTION
CORPORATION, Respondent
G.R. No. 217426
December 04, 2017
Second Division
Perlas Bernabe, J.

Nature of the case:

Assailed in this petition for review on certiorari are the Decision dated July 11, 2014 and
the Resolution3 dated February 27, 2015 of the Court of Appeals (CA) in CA-G.R. SP No.
125451, which affirmed with modification the Decision4 dated December 15, 2011 and the Order
dated May 25, 2012 of the Regional Trial Court of Mandaluyong City, Branch 211 (RTC) in
SCA Case No. MC11-879 (Civil Case No. 21881), and thereby ordered herein petitioner St.
Martin Polyclinic, Inc. (petitioner) to pay respondent LWV Construction Corporation
(respondent) temperate damages in the amount of P50,000.00.

Facts:

On January 10, 2008, respondent referred prospective applicant Jonathan V. Raguindin

(Raguindin) to petitioner for a pre-deployment medical examination in accordance with the
instructions from GAMCA. After undergoing the required examinations, petitioner cleared
Raguindin and found him "fit for employment," as evidenced by a Medical Report dated January
11, 2008 (Medical Report).

Based on the foregoing, respondent deployed Raguindin to Saudi Arabia, allegedly

incurring expenses in the amount of P84,373.41.Unfortunately, when Raguindin underwent
another medical examination with the General Care Dispensary of Saudi Arabia (General Care
Dispensary) on March 24, 2008, he purportedly tested positive for HCV or the hepatitis C virus.
The Ministry of Health of the Kingdom of Saudi Arabia (Ministry of Health) required a re-
examination of Raguindin, which the General Care Dispensary conducted on April 28, 2008.
However, the results of the re-examination remained the same, i.e., Raguindin was positive for
HCV, which results were reflected in a Certification dated April 28, 2008 (Certification). An
undated HCV Confirmatory Test Report likewise conducted by the Ministry of Health affirmed
such finding, thereby leading to Raguindin's repatriation to the Philippines.

Claiming that petitioner was reckless in issuing its Medical Report stating that Raguindin
is "fit for employment" when a subsequent finding in Saudi Arabia revealed that he was positive
for HCV, respondent filed a Complaint for sum of money and damages against petitioner before
the Metropolitan Trial Court of Mandaluyong City, Branch 60 (MeTC). Respondent essentially
averred that it relied on petitioner's declaration and incurred expenses as a consequence. Thus,
respondent prayed for the award of damages in the amount of P84,373.41 representing the
expenses it incurred in deploying Raguindin abroad.

In its Answer with compulsory counterclaim, petitioner denied liability and claimed
that: first, respondent was not a proper party in interest for lack of privity of contract between
them; second, the MeTC had no jurisdiction over the case as it involves the interpretation and
implementation of a contract of employment; third, the action is premature as Raguindin has yet
to undergo a post-employment medical examination following his repatriation; and fourth, the
complaint failed to state a cause of action as the Medical Report issued by petitioner had already
expired on April 11, 2008, or three (3) months after its issuance on January 11, 2008.

The MeTC rendered judgment in favor of respondent and ordered petitioner to pay the
amount of P84,373.41 as actual damages, P20,000.00 as attorney's fees, and the costs of suit. the
RTC dismissed petitioner's appeal and affirmed the MeTC Decision in its entirety. Additionally,
the RTC pointed out that petitioner can no longer change the theory of the case or raise new
issues on appeal, referring to the latter's argument on the authentication of respondent's
documentary evidence. The CA affirmed the RTC Decision, with the modification deleting the
award of actual damages and instead, awarding temperate damages in the amount of P50,000.00

Issue:

Whether or not petitioner was negligent in issuing the Medical Report declaring
Raguindin "fit for employment" and hence, should be held liable for damages.

Ruling:

Yes. An action for damages due to the negligence of another may be instituted on the
basis of Article 2176 of the Civil Code, which defines a quasi-delict:

Article 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called a quasi-delict and is governed by the
provisions of this Chapter.

In this case, the courts a quo erroneously anchored their respective rulings on the
provisions of Articles 19, 20, and 21 of the Civil Code. This is because respondent did not
proffer (nor have these courts mentioned) any law as basis for which damages may be recovered
due to petitioner's alleged negligent act. In its amended complaint, respondent mainly avers that
had petitioner not issue a "fit for employment" Medical Report to Raguindin, respondent would
not have processed his documents, deployed him to Saudi Arabia, and later on - in view of the
subsequent findings that Raguindin was positive for HCV and hence, unfit to work - suffered
actual damages in the amount of P84,373.41. Thus, as the claimed negligent act of petitioner was
not premised on the breach of any law, and not to mention the incontestable fact that no pre-
existing contractual relation was averred to exist between the parties, Article 2176 - instead of
Articles 19, 20 and 21 - of the Civil Code should govern.

The records of this case show that the pieces of evidence mainly relied upon by
respondent to establish petitioner's negligence are: (a) the Certification61 dated April 28, 2008;
and (b) the HCV Confirmatory Test Report.62 However, these issuances only indicate the results
of the General Care Dispensary and Ministry of Health's own medical examination of Raguindin
finding him to be positive for HCV.

Notably, the examination conducted by the General Care Dispensary, which was later
affirmed by the Ministry of Health, was conducted only on March 24, 2008, or at least two (2)
months after petitioner issued its Medical Report on January 11, 2008. Hence, even assuming
that Raguindin's diagnosis for HCV was correct, the fact that he later tested positive for the same
does not convincingly prove that he was already under the same medical state at the time
petitioner issued the Medical Report on January 11, 2008.

In this regard, it was therefore incumbent upon respondent to show that there was already
negligence at the time the Medical Report was issued, may it be through evidence that show that
standard medical procedures were not carefully observed or that there were already palpable
signs that exhibited Raguindin's unfitness for deployment at that time. This is hardly the case
when respondent only proffered evidence which demonstrate that months after petitioner's
Medical Report was issued, Raguindin, who had already been deployed to Saudi Arabia, tested
positive for HCV and as such, was no longer "fit for employment".
 DEVELOPMENT BANK OF THE PHILIPPINES, Petitioner vs.
STA. INES MELALE FOREST PRODUCTS CORPORATION, RODOLFO CUENCA,
MANUEL TINIO, CUENCA INVESTMENT CORPORATION and UNIVERSAL
HOLDINGS CORPORATION, Respondents
G.R. No. 193068

And

NATIONAL DEVELOPMENT CORPORATION, Petitioner, vs.

STA. INES MELALE FOREST PRODUCTS CORPORATION, RODOLFO M.
CUENCA, MANUEL I. TINIO, CUENCA INVESTMENT CORPORATION and
UNIVERSAL HOLDINGS CORPORATION, Respondents.
G.R. No. 192099
February 1, 2017
Second Division
Leonen, J

Nature of the Case:

This resolves the consolidated Petitions for Review filed by the Development Bank of the
Philippines (DBP) and the National Development Corporation (NDC) assailing the Court of
Appeals Decision which affirmed the Decision by Regional Trial Court of Makati City.

Facts:

DBP guaranteed Galleon's foreign loans. In return, Galleon undertook to secure a first
mortgage on its five new vessels and two second-hand vessels.

On July 21, 1981, President Marcos issued Letter of Instructions addressed to the NDC,
DBP, and the Maritime Industry Authority. To acquire 100% of the shareholdings of Galleon
Shipping Corporation from its present owners. For the furtherance of the government’s policy to
provide a reliable liner service between the Philippines and its major trading partners

Sta. Ines, Cuenca, Tinio, Cuenca Investment, and Universal Holdings claimed that "DBP
can no longer go after [them] for any deficiency judgment [since] NDC had been subrogated [in
their place] as borrower[s], hence the Deed of Undertaking between [Sta. Ines, Cuenca
Investment, Universal Holdings, Cuenca, and Tinio and DBP] had been extinguished and
novated[.]"

Issue:

Whether or not the Memorandum of Agreement novated the Deed of Undertaking

executed between DBP and the shareholders of Galleon.

Rulings:

The Supreme Court ruled that there exist no novation in the present case. It should be
noted that in order to give novation its legal effect, the law requires that the creditor should
consent to the substitution of a new debtor. This consent must be given expressly for the reason
that, since novation extinguishes the personality of the first debtor who is to be substituted by
new one, it implies on the part of the creditor a waiver of the right that he had before the
novation, which waiver must be express under the principle that renuntiatio non
prcesumitur, recognized by the law in declaring that a waiver of right may not be performed
unless the will to waive is indisputably shown by him who holds the right. (Emphasis supplied)

The general rule is that, in the absence of an authority from the board of directors, no
person, not even the officers of the corporation, can validly bind the corporation." A corporation
is a juridical person, separate and distinct from its stockholders and members, having "powers,
attributes and properties expressly authorized by law or incident to its existence."

"A corporate officer or agent may represent and bind the corporation in transactions with
third persons to the extent that the authority to do so has been conferred upon him, and this
includes powers which have been intentionally conferred, and also such powers as, in the usual
course of the particular business, are incidental to, or may be implied from, the powers
intentionally conferred, powers added by custom and usage, as usually pertaining to the
particular officer or agent, and such apparent powers as the corporation has caused persons
dealing with the officer or agent to believe that it has conferred.

Aside from Ongpin being the concurrent head of DBP and NDC at the time the
Memorandum of Agreement was executed, there was no proof presented that Ongpin was duly
authorized by the DBP to give consent to the substitution by NDC as a co-guarantor of Galleon's
debts. Ongpin is not DBP, therefore, it is wrong to assume that DBP impliedly gave its consent
to the substitution simply by virtue of the personality of its Governor.

Novation is never presumed. The animus novandi, whether partial or total, "must appear
by express agreement of the parties, or by their acts which are too clear and unequivocal to be
mistaken."

There was no such animus novandi in the case at bar between DBP and respondents, thus,
respondents have not been discharged as Galleon's co-guarantors under the Deed of Undertaking
and they remain liable to DBP.
 SANTOS-YLLANA REALTY CORPORATION, Petitioner vs. SPOUSES RICARDO
DEANG and FLORENTINA DEANG, Respondents
G.R. No. 190043
June 21, 2017
Third Division
Velasco, Jr. J

Nature of the Case:

This petition for review under Rule 45 of the Rules of Court seeks to reverse the
Resolution of the Court of Appeals which found petitioner Santos-Yllana Realty Corporation
liable for damages to the respondents spouses Ricardo Deang and Florentina Deang.

Facts:

Respondents are a former lessee of petitioner since 1975. Due to the failure of respondent
to pay rent, petitioner filed a Complaint for Ejectment with Damages against respondents before
the MTC of Angeles City. MTC rendered a Decision based on a Compromise Agreement that the
parties executed.

Subsequently, the petitioner filed a Motion for Execution of the Decision due to
respondent' s failure to comply with the terms of the Compromise Agreement. Respondents
objected, alleging that the amount due to petitioner had already been paid in full. After resolving
the objections, the Angeles City MTC issued an Order granting the issuance of the Writ of
Execution and the same was accordingly issued.

Respondents moved to quash the Writ of Execution but Sheriff Allen Sicat (Sheriff Sicat)
of the Regional Trial Court (RTC) of Angeles City implemented the Writ of Execution and
padlocked respondents' stall. The stall, however, was ordered reopened by the MTC within the
same day due to the pendency of the Motion for Reconsideration.

Aggrieved by the implementation of the Writ of Execution, respondents filed a

Complaint for Damages with Prayer for Injunctive Relief against petitioner and Sheriffs Sicat
and Pangan before the Manila RTC, Branch 44, alleging that the Writ of Execution was illegally
implemented. RTC held that the enforcement of the Writ was tainted with malice and bad faith
on the part of petitioner and are jointly and severally liable for the damages with the Sheriff.

Issue:

Whether or not the CA erred in sustaining the moral and exemplary damages awarded,
including attorney’s fees, despite its finding that petitioner had no participation in the
implementation of the Writ of Execution.

Rulings:

No. The Supreme Court ruled in the negative. When the Petitioner clearly elected to
exercise its right under the afore stated provision; thus, its move to execute the MTC judgment
enjoys the disputable presumption under Sec. 3(ff), Rule 131 of the Revised Rules on Evidence
that it obeyed the applicable law and rules in doing so. As such, it was incumbent upon
respondents to overcome the aforestated presumption and to prove that petitioner abused its
rights and willfully intended to inflict damage upon them before they can claim damages from
the former. Otherwise, having the sole prerogative to move to execute the judgment, the
disputable presumption that petitioner is innocent of wrongdoing against respondents prevails.

A reading of the RTC's judgment shows that it was not conclusively proved that
petitioner committed bad faith or connived with the sheriffs in the implementation of the Writ.
 Moral damages are awarded to enable the injured party to obtain means, diversions, or
amusements that will serve to alleviate the moral suffering he has undergone, by reason of the
defendant's culpable action. For a claim for moral damages to prosper, the claimant must prove
that: (1) first, there must be an injury, whether physical, mental or psychological, clearly
sustained by the claimant; (2) second, there must be culpable act or omission factually
established; (3) third, the wrongful act or omission of the defendant is the proximate cause of the
injury sustained by the claimant; and (4) fourth, the award of damages is predicated on any of the
cases stated in Article 2219 of the Civil Code. The award of exemplary damages is proper only if
respondents showed their entitlement to moral, temperate or compensatory damages; yet, similar
to the moral damages claimed, respondents were not able to establish their entitlement. Anent the
liability of petitioners for attorney's fees and cost of suit, the same must similarly be deleted in
light of the reversal of judgment as to them.
 MANILA BULLETIN PUBLISHING CORPORATION AND RUTHER
BATUIGAS, Petitioners
vs. VICTOR A. DOMINGO AND THE PEOPLE OF THE PHILIPPINES, Respondents
G.R. No. 170341
July 5, 2017
Second Division
Martires, J.

Nature of the Case:

This is a petition for review under Rule 45 of the Rules of Court pleading that the Court
nullify and set aside the decision of the Court of Appeals affirming decision of the Regional Trial
Court in Civil Case No. 91- 02-23 and Criminal Case No. 91-03-159.
Petitioner, Batuigaswas a writer of the widely circulated tabloidTempo,published by the Manila
Bulletin.

Facts:

On 20 December 1990, Batuigas wrote an article in his Bull's Eye column in Tempo
titled "Crucial task for JoeCon's successor." The article dealt with the letter-complaint of the
Waray employees of the Department of Trade and Industry (DTI), Region VIII on the
"[m]ismanagement, low moral[e], improper decorum, gross inefficiency, nepotism, etc." in the
office. One of the public officials complained of was petitioner Regional Director Victor
Domingo (Domingo) who was accused of dereliction of official duties, among others. The
"JoeCon" referred to was the outgoing DTI Secretary, Jose Concepcion.

On 4 January 1991, Batuigas wrote in his column titled "A challenge to Sec.
Garrucho" about the alleged "lousy performance of Regional Director R.D. Domingo in DTI
Region 8," among others. Peter Garrucho was the newly appointed DTI Secretary who took over
from Jose Concepcion. Offended by these two articles, Domingo filed, on 18 January 1991, a
complaint for libel against Batuigas before the Provincial Prosecutor of Palo, Leyte.

On 7 February 1991, Domingo likewise filed a complaint for Damages before the
Regional Trial Court (RTC) of Palo, Leyte, against Batuigas and the Manila Bulletin. The
complaint, docketed as Civil Case No. 91-02-23, was raffled to the RTC, Branch 6, Palo, Leyte.
On 18 March 1991, the Provincial Prosecutor terminated the preliminary investigation with the
filing of an Information for Libel against Batuigas, viz:

That on or about the 20th day of December 1990, and the 4th day of January 1991, the
above-named accused, with malice afterthought and with intent to damage, ruin and discredit the
good name and reputation of one VICTOR A. DOMINGO of Tacloban City, Leyte, did then and
there willfully, unlawfully and feloniously wrote and published in the TEMPO Publication in
Manila, the following, to wit:

Issue:

Whether or not the petitioner is liable for damages.

Rulings:

No. The Court finds that there can be no civil liability in Civil Case No. 91-02-23
because no libel was committed. The 20 December 1990 article was not libelous because it was
only a fair and true report by Batuigas using the documents received by him thus relieving him
of criminal liability pursuant to Art. 354 (2) of the RPC. On the one hand, the privileged nature
of the 16 January1991 article and the failure of Domingo to discharge his burden of proving
actual malice on the part of Batuigas failed to support a finding that there was libel. Clearly,
there was no act that exists from which the civil liability may arise.
 Records cannot sustain a finding that Domingo was able to establish that Batuigas had
actual malice in writing this article. Batuigas testified that sometime in the latter part of 1990 and
until 1991, he received letters of complaint denouncing Domingo. Although Batuigas was not
able to present these letters during the hearing of these cases it can be rationally deduced that he
was in actual receipt of the complaints against the DTI Region VIII officials and employees
because he was able to cite the specifics of the grievances of the Waray employees in his 20
December 1990 article. Presumably, too, the letters that Batuigas received were those complaints
that had been dismissed by the CSC and the Office of the Ombudsman, and with the
corresponding resolutions evidencing the dismissal of these complaints having been presented by
Domingo during the hearing of the cases.

It was evident that the statements as to the "lousy performance" and "mismanagement" of
Domingo cannot be regarded to have been written with the knowledge that these were false or in
reckless disregard of whether these were false, bearing in mind that Batuigas had documentary
evidence to support his statements. Batuigas merely expressed his opinion based on the fact that
there were complaints filed against Domingo, among others. If the comment is an expression of
opinion, based on established facts, then it is immaterial that the opinion happens to be mistaken,
as long as it might reasonably be inferred from the facts.
 SPOUSES JESUS FERNANDO and ELIZABETH S. FERNANDO, Petitioners vs.
NORTHWEST AIRLINES, INC., Respondent
and
G.R. No. 212043 NORTHWEST AIRLINES, INC., Petitioner, vs.SPOUSES JESUS
FERNANDO and ELIZABETH S. FERNANDO, Respondents.
G.R. No. 212038
February 8, 2017
Second Division
Peralta, J.
.

Nature of the Case:

Before us are consolidated petitions for review on the Decision of the Court of
Appeals which affirmed the Decision of the Regional Trial Court finding Northwest Airlines,
Inc. liable for breach of contract of carriage.

Facts:

On January 29, 2002, the Fernandos were on their way back to the Philippines. They have
confirmed bookings on Northwest Airlines NW Flight No. 001 for Narita, Japan and NW 029 for
Manila. They checked in with their luggage at the LA Airport and were given their respective
boarding passes for business class seats and claim stubs for six (6) pieces of luggage. With
boarding passes, tickets and other proper travel documents, they were allowed entry to the
departure area and joined their business associates from Japan and the Philippines who attended
the Musical Instrument Trade Show in LA on January 17, 2002 and the Sports Equipment Trade
Show in Las Vegas on January 21 to 23, 2002. When it was announced that the plane was ready
for boarding, the Fernandos joined the long queue of business class passengers along with their
business associates.

When the Fernandos reached the gate area where boarding passes need to be presented,
Northwest supervisor Linda Tang stopped them and demanded for the presentation of their paper
tickets (coupon type). They failed to present the same since, according to them, Northwest issued
electronic tickets (attached to the boarding passes) which they showed to the supervisor. In the
presence of the other passengers, Linda Tang rudely pulled them out of the queue. Elizabeth
Fernando explained to Linda Tang that the matter could be sorted out by simply verifying their
electronic tickets in her computer and all she had to do was click and punch in their Elite
Platinum World Perks Card number. But Linda Tang arrogantly told them that if they wanted to
board the plane, they should produce their credit cards and pay for their new tickets, otherwise
Northwest would order their luggage off-loaded from the plane. Exasperated and pressed for
time, the Fernandos rushed to the Northwest Airline Ticket counter to clarify the matter. They
were assisted by Northwest personnel Jeanne Meyer who retrieved their control number from her
computer and was able to ascertain that the Fernandos' electronic tickets were valid and they
were confirmed passengers on both NW Flight No. 001 for Narita Japan and NW 029 for Manila
on that day. On April 30, 2002, a complaint for damages was instituted by the Fernandos against
Northwest before the RTC, Branch 97, Quezon City. During the trial of the case, the Fernandos
testified to prove their claim. On the part of Northwest, Linda Tang-Mochizuki and Linda
Puntawongdaycha testified through oral depositions taken at the Office of the Consulate General,
Los Angeles City. The Northwest Manager for HR-Legal Atty. Cesar Veneracion was also
presented and testified on the investigation conducted by Northwest as a result of the letters sent
by Elizabeth Fernando and her counsel prior to the filing of the complaint before the RTC.

Issue:

Whether or not there was breach of contract of carriage

Rulings:

Yes. A contract is a meeting of minds between two persons whereby one agrees to give
something or render some service to another for a consideration. Undoubtedly, a contract of
carriage existed between Northwest and the Fernandos. They voluntarily and freely gave their
consent to an agreement whose object was the transportation of the Fernandos from LA to
Manila, and whose cause or consideration was the fare paid by the Fernandos to Northwest.

We held that when an airline issues a ticket to a passenger confirmed for a particular
flight on a certain date, a contract of carriage arises. The passenger then has every right to expect
that he would fly on that flight and on that date. If he does not, then the carrier it opens itself to a
suit for breach of contract of carriage.

When Northwest confirmed the reservations of the Fernandos, it bound itself to transport
the Fernandos on their flight on 29 January 2002. As the aggrieved party, the Fernandos only had
to prove the existence of the contract and the fact of its non-performance by Northwest, as
carrier, in order to be awarded compensatory and actual damages.

Therefore, having proven the existence of a contract of carriage between Northwest and
the Fernandos, and the fact of non-performance by Northwest of its obligation as a common
carrier, it is clear that Northwest breached its contract of carriage with the Fernandos. Thus,
Northwest opened itself to claims for compensatory, actual, moral and exemplary damages,
attorney's fees and costs of suit.
 SPOUSES JESUS FERNANDO and ELIZABETH S. FERNANDO, Petitioners vs.
NORTHWEST AIRLINES, INC., Respondent
G.R. No. 212043
and
NORTHWEST AIRLINES, INC., Petitioner, vs.SPOUSES JESUS FERNANDO and
ELIZABETH S. FERNANDO, Respondents.
G.R. No. 212038
February 8, 2017
Second Division
Peralta, J.

Nature of the Case:

Before us are consolidated petitions for review on the Decision of the Court of
Appeals which affirmed the Decision of the Regional Trial Court finding Northwest Airlines,
Inc. liable for breach of contract of carriage and damages.

Facts:

Sometime on December 20, 2001, Jesus Fernando arrived at the LA

Airport via Northwest Airlines Flight No. NW02 to join his family who flew earlier to the said
place for a reunion for the Christmas holidays. He was asked by the Immigration Officer to have
his return ticket verified and validated since the date reflected thereon. Instead the personnel of
the respondent merely glanced at his ticket without checking its status with the computer and
peremptorily said that the ticket has been used and could not be considered as valid. He
presented his Elite Platinum World Perks Card but the personnel refused to check the validity of
the ticket in the computer, instead, looked at Jesus Fernando with contempt, then informed the
Immigration Officer that the ticket is not valid.

The Immigration Officer brought Jesus Fernando to the interrogation room of the
Immigration and Naturalization Services (INS) where he was asked humiliating questions for
more than two (2) hours. When he was finally cleared by the Immigration Officer, he was
granted only a twelve (12)-day stay in the United States (US), instead of the usual six (6)
months. He further incurred other expenses due to the said incident.

The second incident happened on January 29, 2002, the Fernandos were on their way
back to the Philippines. When the Fernandos reached the gate area where boarding passes need
to be presented, Northwest supervisor Linda Tang stopped them and demanded for the
presentation of their paper tickets. They failed to present the same since Northwest issued
electronic tickets (attached to the boarding passes) which they showed to the supervisor. The
personnel rudely pulled them out of the queue. Elizabeth Fernando explained to Linda Tang that
the matter could be sorted out by simply verifying their electronic tickets in her computer and all
she had to do was click and punch in their Elite Platinum World Perks Card number. But Linda
Tang arrogantly told them that if they wanted to board the plane, they should produce their credit
cards and pay for their new tickets, otherwise Northwest would order their luggage off-loaded
from the plane. The Fernandos printed coupon tickets and rushe back to the boarding gates since
the plane was about to depart. But when the Fernandos reached the boarding gate, the plane had
already departed. Hence this petition.

Issue:

Whether Northwest is liable for the payment of moral damages and attorney's fees and
whether it is liable to pay more than that awarded by the RTC.
Rulings:

Yes. Passengers do not contract merely for transportation. They have a right to be
treated by the carrier's employees with kindness, respect, courtesy and due consideration. They
are entitled to be protected against personal misconduct, injurious language, indignities and
abuses from such employees. So it is, that any rule or discourteous conduct on the part of
employees towards a passenger gives the latter an action for damages against the carrier.

In requiring compliance with the standard of extraordinary diligence, a standard which is,
in fact, that of the highest possible degree of diligence, from common carriers and in creating a
presumption of negligence against them, the law seeks to compel them to control their
employees, to tame their reckless instincts and to force them to take adequate care of human
beings and their property.

Notably, after the incident, the Fernandos proceeded to a Northwest Ticket counter to
verify the status of the ticket and they were assured that the ticked remained unused and perfectly
valid. And, to avoid any future problems that may be encountered on the validity of the ticket, a
new ticket was issued to Jesus Fernando. The failure to promptly verify the validity of the ticket
connotes bad faith on the part of Northwest. Bad faith does not simply connote bad judgment or
negligence. It imports a dishonest purpose or some moral obliquity and conscious doing of a
wrong. It means breach of a known duty through some motive, interest or ill will that partakes of
the nature of fraud. A finding of bad faith entitles the offended party to moral damages.

Under Article 2220 of the Civil Code of the Philippines, an award of moral damages, in
breaches of contract, is in order upon a showing that the defendant acted fraudulently or in bad
faith. Clearly, in this case, the Fernandos are entitled to an award of moral damages. The purpose
of awarding moral damages is to enable the injured party to obtain means, diversion or
amusement that will serve to alleviate the moral suffering he has undergone by reason of
defendant's culpable action.
 SM SYSTEMS CORPORATION (formerly SPRINGSUN MANAGEMENT SYSTEMS
CORPORATION), Petitioner
vs OSCAR CAMERINO, EFREN CAMERINO, CORNELIO MANTILE, DOMINGO
ENRIQUEZ AND HEIRS OF NOLASCO DEL ROSARIO, Respondents
G.R. No. 178591
March 29, 2017
Third Division
Reyes, J.

Nature of the Case:

This is a petition for a Decision rendered by the Court of Appeals. The CA dismissed the
Petition for Certiorari SM Systems Corporation (SMS), formerly Springsun Management
Systems Corporation, seeking to set aside the Orders issued by the R TC invalidated the
compromise agreement entered into by and between SMS and four of the herein respondents and
the Heirs of Nolasco del Rosario.

Facts:

Victoria Homes, Inc. was the registered owner of the subject lots. Respondents were
farmers-tenants of Victoria Homes, cultivating and planting rice and com on the lots. Victoria
Homes sold them to SMS SM SYSTEMS CORPORATION. Springsun subsequently mortgaged
the subject lots to Banco Filipino Savings and Mortgage Bank (Banco Filipino) as security for its
various loans amounting to ₱ll,545,000.00. When Springsun failed to pay its loans, the mortgage
was foreclosed extra-judicially. At the public auction sale, the lots were sold to Banco Filipino,
being the highest bidder, but they were eventually redeemed by Springsun.

Respondents filed with the RTC a complaint against Springsun and Banco Filipino for
Temporary Restraining Order or, simply, an action for Redemption. On January 25, 2002, the
RTC rendered a decision in favor of respondents authorizing them to redeem the subject lots
from SMS. On appeal to the CA, the appellate court affirmed the RTC decision. On August 20,
2005, [SMS] and [the farmers] (except [Oscar]) executed a document, denominated
as Kasunduan, wherein the latter agreed to receive ₱300,000.00 each from the SMS, as
compromise settlement. SMS then filed a Motion to Hold Execution in Abeyance on the Ground
of Supervening Event.

On September 7, 2005, the RTC denied motion and the Kasunduan separately entered
into by are hereby disapproved. Aggrieved SMS elevated the matter to the CA. The CA
concluded that the compromise agreement could not novate the Court's earlier Decision because
only four out of five parties executed the agreement.

Issue:

Whether or not the Kasunduan effectively novated the judgment obligation.

Rulings:

Yes. The Court, thus, finds no compelling grounds to invalidate the compromise
agreements.In Heirs of Servando Franco v. Spouses Gonzales, the Court discussed novation in
this wise:A novation arises when there is a substitution of an obligation by a subsequent one that
extinguishes the first, either by changing the object or the principal conditions, or by substituting
the person of the debtor, or by subrogating a third person in the rights of the creditor: For a valid
novation to take place, there must be, therefore: (a) a previous valid obligation; (b) an agreement
of the parties to make .a new contract; (c) an extinguishment of the old contract; and (d) a valid
new contract.
 In short, the new obligation extinguishes the prior agreement only when the substitution
is unequivocally declared, or the old and the new obligations are incompatible on every point. A
compromise of a final judgment operates as a novation of the judgment obligation upon
compliance with either of these two conditions.In the case at bar, SMS' obligation to allow
redemption of the three parcels of land was superseded by the terms of the compromise
agreements executed with the four farmers. SMS' new obligation consisted of the payment of
₱300,000.00 each to the four farmers, who, in turn, waived their redemption rights. Novation,
thus, arose as the old obligation became incompatible with the new.

The Court also notes that Oscar, the farmer who did not execute a compromise agreement
with SMS, filed before the RTC a Manifestation and Motion, dated September 15, 2006,
indicating that "he has no plans, as he is in no financial position, to exercise the right of
redemption" granted to him.
 G.R. No. 189218 OUR LADY OF LOURDES HOSPITAL, Petitioner vs
SPOUSES ROMEO AND REGINA CAPANZANA, Respondents
G.R. No. 189218
March 22, 2017
First Division
Sereno, CJ.

Nature of the Case:

We resolve the instant Petition for Review on Certiorari assailing the Decision and
Resolution rendered by the Court of Appeals (CA), Second Division, in CA-G.R. CV No. 89030.

Facts:

Regina was scheduled for her third caesarean section (C-section) on 2 January 1998.
However, a week earlier, on 26 December 1997, she went into active labor and was brought to
petitioner hospital for an emergency C-section. She first underwent a preoperative physical
examination by Dr. Miriam Ramos (Dr. Ramos) and Dr. Milagros Joyce Santos, (Dr. Santos) the
same attending physicians in her prior childbirths. She was found fit for anesthesia after she
responded negatively to questions about tuberculosis, rheumatic fever, and cardiac diseases. On
that same day, she gave birth to a baby boy. When her condition stabilized, she was discharged
from the recovery room and transferred to a regular hospital room.

At 2:30 a.m. the following day, or 13 hours after her operation, Regina who was then
under watch by her niece, Katherine L. Balad (Balad), complained of a headache, a chilly
sensation, restlessness, and shortness of breath. She asked for oxygen and later became cyanotic.
After undergoing an x-ray, she was found to be suffering from pulmonary edema. She was
eventually transferred to the Intensive Care Unit, where she was hooked to a mechanical
ventilator. The impression then was that she was showing signs of amniotic fluid embolism.

On 2 January 1998, when her condition still showed no improvement, Regina was
transferred to the Cardinal Santos Hospital. The doctors thereat found that she was suffering
from rheumatic heart disease mitral stenosis with mild pulmonary hypertension, which
contributed to the onset of fluid in her lung tissue (pulmonary edema). This development resulted
in cardiopulmonary arrest and, subsequently, brain damage. Regina lost the use of her speech,
eyesight, hearing and limbs. She was discharged, still in a vegetative state, on 19January 1998.

Respondent spouses Capanzana filed a complaint for damages against petitioner hospital,
along with co-defendants: Dr. Miriam Ramos, an obstetrician/gynecologist; Dr. Milagros Joyce
Santos, an anesthesiologist; and Jane Does, the nurses on duty stationed on the second floor of
petitioner hospital on 26-27 December 1997.

RTC held Drs and nurses liable. CA ruled that petitioner hospital should be held liable
based on the doctrine of corporate responsibility. It was found that while there was evidence to
prove that petitioner hospital showed diligence in its selection and hiring processes, there was no
evidence to prove that it exercised the required diligence in the supervision of its nurses. Also,
the appellate court ruled that the non-availability of an oxygen unit on the hospital floor, a fact
that was admitted, constituted gross negligence on the part of petitioner hospital. The CA
stressed that, as borne out by the records, there was only one tank in the ward section of 27 beds.
It said that petitioner hospital should have devised an effective way for the staff to properly and
timely respond to a need for an oxygen tank in a situation of acute distress.

Issue:

Whether or not the hospital is liable for damages against the petitioner
Rulings:

Yes. The Court has emphasized that a higher degree of caution and an exacting standard
of diligence in patient management and health care are required of a hospital's staff, as they deal
with the lives of patients who seek urgent medical assistance. It is incumbent upon nurses to take
precautions or undertake steps to safeguard patients under their care from any possible injury that
may arise in the course of the latter's treatment and care.

The Court further notes that the immediate response of the nurses was especially
imperative, since Regina herself had asked for oxygen. They should have been prompted to
respond immediately when Regina herself expressed her needs, especially in that emergency
situation when it was not easy to determine with certainty the cause of her breathing difficulty.
Indeed, even if the patient had not asked for oxygen, the mere fact that her breathing was labored
to an abnormal degree should have impelled the nurses to immediately call the doctor and to
administer oxygen.

In this regard, both courts found that there was a delay in the administration of oxygen to
the patient, caused by the delayed response of the nurses of petitioner hospital. They committed a
breach of their duty to respond immediately to the needs of Regina, considering her precarious
situation and her physical manifestations of oxygen deprivation.

The court affirm the findings of the courts below that the negligent delay on the part of
the nurses was the proximate cause of the brain damage suffered by Regina.
 PHILIPPINE PORTS AUTHORITY (PPA), represented by Oscar M. Sevilla, General
Manager, Benjamin B. Cecilio, Assistant Manager for Operations, and Sisali B. Arap, Port
Manager, Petitioner vs NASIPIT INTEGRATED ARRASTRE AND STEVEDORING
SERVICES, INC. (NIASSI), represented by Ramon Calo, Respondent
G.R. No. 214864
March 22, 2017
First Division
Caguiao, J.

Nature of the Case:

This is a Petition for Review on Certiorari filed under Rule 45 of the Rules of Court
against the Amended Decision rendered by the Court of Appeals seeking to compel the latter to
formally execute the 10-year cargo-handling contract awarded in NIASSI's favor.

Facts:

Sometime in November 2000, PPA, through its Pre-qualification, Bids and Awards
Committee (PBAC) accepted bids for a 10-year contract to operate as the sole cargo handler at
the port of Nasipit, Agusan del Norte (Nasipit Port). Subsequently, PBAC issued Resolution No.
005-2000 recommending that the 10-year cargo-handling contract be awarded to NIASSI as the
winning bidder.

However, instead of formally executing a written contract, NIASSI requested PPA to

issue a Hold-Over Authority (HOA) in its favor, in view of CASCOR's pending protest. PPA
granted NIASSI's request and issued a HOA dated August 1, 2001, effective until October 31,
2001, "or until such time a cargo handling contract shall have been awarded, whichever comes
first. Meanwhile, the Office of the Government Corporate Counsel (OGCC) issued Opinion No.
028, series of2002 on February 7, 2002 (OGCC Opinion) which confirmed the authority of PP A
to bid out the cargo-handling contract and affirmed the validity of the award in NIASSI's favor.
Despite this, the HOA was subsequently extended several times upon NIASSI' s request. While
the exact number of extensions and their particulars cannot be ascertained from the records, the
last extension of the HOA appears to have been issued on October 13, 2004, for a term of six
months.

However, barely two months after the last extension of the HOA, PPA, through its
Assistant General Manager for Operations, Benjamin B. Cecilio (Cecilio), issued a letter dated
December 6, 2004 revoking the extension. In said letter, Cecilio advised NIASSI that PPA
received numerous complaints regarding the poor quality of its services due to the use of
inadequately maintained equipment. Cecilio further relayed that PPA would take over the cargo-
handling services at the Nasipit Port beginning December 10, 2004. It was not extended but
NIASSI has been operating as the cargo handler since the reinstatement of the preliminary
mandatory injunction. It is estimated that NIASSI has been operating for 12 years, 3 months and
15 days.

For its part, PPA argued, among others, that NIASSI was not entitled to the issuance of
the injunctive writ because it had no legal right to continue providing cargo-handling services at
Nasipit Port, considering that PPA has no existing cargo-handling contract with NIASSI.PPA
concludes that it can no longer be compelled to formally execute a contract with NIASSI upon
finality of the Amended Decision, since the term of the perfected contract already expired on
January 3, 2011, 10 years after PPA received notice of NIASSI's conformity to the Notice of
Award.The HOA and its subsequent extensions constituted partial fulfillment thereof.

Issue:
Whether or not the cargo handling contract was perfected.
Ruling:

Yes. The factual findings of the CA in respect of the perfected cargo-handling contract in
the injunction proceedings became conclusive upon finality of this Court's decision affirming the
same. When NIASSI received and signed the "conforme" portion [of the Notice of Award], there [was]
already [a] meeting of minds between the parties as to the object and cause of the cargo handling contract,
including the terms and duration thereof.

To NIASSI, the cargo-handling contract was a valid and binding agreement, and it was
thus bound by the concomitant rights and obligations arising therefrom.

It bears emphasizing that PPA assumed the management and operations of the cargo-
handling services at Nasipit Port on two separate instances- first, by virtue of its letter dated
December 6, 2004 revoking the last extension of the HOA, and second, by virtue of the April
2005 RTC Order lifting the preliminary mandatory injunction granted in NIASSI's favor. The
IO-year term of the perfected contract must be deemed interrupted during the periods when PPA
assumed management and control over NIASSI's cargo-handling operations.

Clearly, the 10-year term of the perfected contract had already expired, leaving the R TC
with nothing to enforce.

Finally, it bears stressing that PPA issued the Notice of Award on December 21, 2000. To
compel PPA to formally execute a 10-year cargo-handling contract at this time on the basis of
conditions prevailing nearly two decades ago would certainly be unreasonable and iniquitous.
 UNITED ALLOY PHILIPPINES CORPORATION, SPOUSES DAVID C. CHUA AND
LUTEN CHUA, Petitioners, v.UNITED COCONUT PLANTERS BANK, Respondent.
G.R. No. 175949
January 30, 2017
Second Divsion
Peralta, J.

Nature of the Case:

This petition for review on certiorari seeking the reversal and setting aside of the
Decision and Resolution of the Court of Appeals (CA), dated September 21, 2006 and December
11, 2006, respectively, in CA-G.R. CV No. 81079. The assailed Decision affirmed the Decision
of the Regional Trial Court (RTC) of Makati City, Branch 135, in Civil Case No. 01-1332, while
the questioned Resolution denied petitioners' Motion for Reconsideration.

Facts:

Petitioner corporation, UNIALLOY, applied for and was granted a credit accommodation
by United Coconut Planters Bank (UCPB) evidenced by a Credit Agreement. Part of
UNIALLOY's obligation under the Credit Agreement was secured by a Surety Agreement, dated
December 18, 2000, executed by UNIALLOY Chairman, Jakob Van DerSluis, UNIALLOY
President, David Chua and his spouse, Luten Chua, and one Yang Kim Eng. Six (6) Promissory
Notes, were later executed by UNIALLOY in UCPB's favor.

In addition, as part of the consideration for the credit accommodation, UNIALLOY and
UCPB also entered into a "lease-purchase" contract wherein the former assured the latter that it
will purchase several real properties which UCPB co-owns with the Development Bank of the
Philippines. Subsequently, UNIALLOY failed to pay its loan obligations. As a result, UCPB
filed against UNIALLOY, the spouses Chua, Yang and Van DerSluis an action for Sum of
Money with Prayer for Preliminary Attachment on August 27, 2001. Consequently, UCPB also
unilaterally rescinded its lease-purchase contract with UNIALLOY.

On the other hand, on even date, UNIALLOY filed against UCPB, UCPB Vice-President
Robert Chua and Van DerSluis a complaint for Annulment and/or Reformation of Contract with
Damages, with Prayer for a Writ of Preliminary Injunction or Temporary Restraining Order.
UNIALLOY contended that Van DerSluis, in cahoots with UCPB Vice-President Robert Chua,
committed fraud, manipulation and misrepresentation to obtain the subject loan for their own
benefit. UNIALLOY prayed, among others, that three (3) of the six (6) Promissory Notes it
executed be annulled or reformed or that it be released from liability thereon.

Issue:

Whether or not herein petitioners, together with their co-defendants bound themselves
jointly and severally with UNIALLOY, to pay the latter's loan obligations with UCPB.

Rulings:

Yes. As ruled upon by both the RTC and the CA, UNIALLOY failed to pay its
obligations under the above promissory notes and that herein petitioner Spouses Chua, together
with their co-defendants Van DerSluis and Yang freely executed a Surety Agreement whereby
they bound themselves jointly and severally with UNIALLOY, to pay the latter's loan
obligations with UCPB. Petitioners do not deny their liability under the above quoted Surety
Agreement as based on the pertinent portion of the surety agreement.

As correctly held by both the RTC and the CA, Article 1159 of the Civil Code expressly
provides that "[o]bligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith." The RTC as well as the CA found nothing
which would justify or excuse petitioners from non-compliance with their obligations under the
contract they have entered into. Thus, it becomes apparent that petitioners are merely attempting
to evade or, at least, delay the inevitable performance of their obligation to pay under the Surety
Agreement and the subject promissory notes which were executed in respondent's favor.

The Court notes, however, that the interest rates imposed on the subject promissory notes
were made subject to review and adjustment at the sole discretion and under the exclusive will of
UCPB.
 Moreover, aside from the Consolidated Statement of Account attached to the demand
letters addressed to petitioner spouses Chua and their co-defendants, no other competent
evidence was shown to prove the total amount of interest due on the above promissory notes. In
fact, based on the attached Consolidated Statement of Account, UCPB has already imposed a
24% interest rate on the total amount due on respondents' peso obligation for a short period of six
months. Settled is the rule that any contract which appears to be heavily weighed in favor of one
of the parties so as to lead to an unconscionable result is void.19 Any stipulation regarding the
validity or compliance of the contract which is left solely to the will of one of the parties, is
likewise, invalid.

The Court, thus, finds it proper to modify the interest rates imposed on respondents'
obligation. The total amount owing to UCPB as set forth in this Decision shall further earn legal
interest at the rate of 6% per annum from its finality until full payment thereof, this interim
period being deemed to be by then an equivalent to a forbearance of credit.

Finally, pursuant to the parties' Credit Agreement as well as the subject Promissory
Notes, respondents are also liable to pay a penalty charge at the rate of 1% per month or 12% per
annum.
 SPOUSES AMADO O. IBAÑEZ and ESTHER R. IBAÑEZ, Petitioners
vs.
JAMES HARPER as Representative of the Heirs of FRANCISCO MUÑOZ, SR., the
REGISTER OF DEEDS OF MANILA and the SHERIFF OF MANILA, Respondents
G.R. No. 194272
February 15, 2017
Third Division
Jardeleza, J.

Nature of the Case:

This is an Amended Petition for Review on Certiorari assailing the Decision dated
October 29, 2009 and Resolution dated September 29, 2010 of the Court of Appeals (CA) in CA-
G.R. SP No. 98623. The CA set aside the Orders dated August 11,2006 and February 20,
2007 and reinstated the Order dated March 24, 2006 of the Regional Trial Court (RTC) of
Manila, Branch 40, in Civil Case No. 97-86454.

Facts:

Sometime in October 1996, spouses Amado and Esther Ibañez (spouses Ibañez)
borrowed from Francisco E. Muñoz, Sr. (Francisco), Consuelo Estrada (Consuelo) and Ma.
Consuelo E. Muñoz (Ma. Consuelo) the amount of ₱1,300,000, payable in three months, with
interest at the rate of 3% a month. On October 14, 1996, the spouses Ibanez issued a Promissory
Note binding themselves jointly and severally.

As security, on October 1 7, 1996, the spouses Ibañez executed a Deed of Real Estate
Mortgage. The mortgage contained the same terms as the promissory note. It further stipulated
that Ma. Consuelo and Consuelo shall have the right to immediately foreclose the mortgage upon
the happening of the following events: (1) filing by the mortgagor of any petition for insolvency
or suspension of payment; and/or (2) failure of the mortgagor to perform or comply with any
covenant, agreement, term or condition of the mortgage.

On September 23, 1997, alleging that the conditions of the mortgage have been violated
since November 17, 1996 and that all check payments were dishonored by the drawee, Ma.
Consuelo and Consuelo applied for foreclosure of the real estate mortgage. Spouses Ibañez filed
in the RTC of Manila a Complaint for injunction and damages with prayers for writ of
preliminary injunction and temporary restraining order.

On June 11, 2002, the parties filed a Joint Motion for Approval of Amended Compromise
Agreement which was granted and adopted as "hatol". However, the defendants failed to comply
with the agreement and during the period to do so Francisco died. His heirs then substituted him.
Aggrieved by the Regional Trial Court order, the heirs of Francisco, identified as Maria C.
Muñoz, Angelina M. Crocker and Maria Elena M. Webster and represented by James Harper,
filed before the CA a Petition for Certiorari under Rule 65 of the Revised Rules of Court. They
assailed the Orders dated August 11, 2006 and February 20, 2007 of the trial court and clarified
that contrary to the findings of the trial court, they are pushing for the execution of the Amended
Compromise Agreement. The heirs are of the view that since the spouses Ibañez have not
complied with any of the foregoing stipulations, the December 16, 1997 status quo order of the
trial court should already be lifted.

The CA ruled that the Amended Complaint and the Hatol identified Francisco, Ma.
Consuelo and Consuelo as the creditors and the parties who were supposed to receive the
proceeds of the Amended Compromise Agreement. Since the Deed of Assignment was executed
only in favor of Ma. Consuelo and Consuelo, the loan obligation of the spouses Ibañez to
Francisco remained unsettled. The heirs of Francisco thus retain the right to invoke paragraph 2.5
of the Compromise Agreement which provides for the lifting of the trial court's status quo order.
The CA disagreed that there was no valid substitution of parties and noted from the records that
the RTC was notified of Francisco's death on June 29, 2006.

Issues:

Whether or not the obligation created in the amended compromise agreement and hatol is
solidary thus payment made to Ma. Consuelo and Consuelo discharged the obligation with
respect to Francisco.
Ruling:

No. A compromise agreement is a contract whereby the parties, make reciprocal

concessions to avoid a litigation or put an end to one already commenced. In a compromise, the
parties adjust their difficulties in the manner they have agreed upon, disregarding the possible
gain in litigation and keeping in mind that such gain is balanced by the danger of losing. It
encompasses the objects stated, although it may include other objects by necessary implication.
It is binding on the contractual parties, being expressly acknowledged as a juridical agreement
between them, and has the effect and authority of res judicata.

Here, the spouses Ibañez agreed to pay Francisco, Ma. Consuelo and Consuelo the total
amount of ₱3,000,000, with the initial payment of ₱2,000,000 to be sourced from the proceeds of
a GSIS loan and secured by the spouses Ibanez while the remaining balance of ₱l,000,000 to be
paid one year from the date of the Amended Compromise Agreement.

As correctly identified by the CA, the Amended Compromise Agreement clearly refers to
the spouses Ibañez as plaintiffs and Francisco, Consuelo and Ma. Consuelo as the defendants
they covenanted to pay. There is nothing in the Hatol, and the Amended Compromise Agreement
it is based on, which shows a declaration that the obligation created was solidary.

In any case, solidary obligations cannot be inferred lightly. They must be positively and
clearly expressed. Articles 1207 and 1208 of the Civil Code provide:

Art. 1207. The concurrence of two or more creditors or of two or more debtors in one and
the same obligation does not imply that each one of the former has a right to demand, or that
each one of the latter is bound to render, entire compliance with the prestations. There is a
solidary liability only when the obligation expressly so states, or when the law or the nature of
the obligation requires solidarity.
Art. 1208. If from the law, or the nature or the wording of the obligations to which the
preceding article refers the contrary does not appear, the credit or debt shall be presumed to be
divided into as many equal shares as there are creditors or debtors, the credits or debts being
considered distinct from one another, subject to the Rules of Court governing the multiplicity of
suits.
In this case, given that solidarity could not be inferred from the agreement, the
presumption under the law applies-the obligation is joint.

As defined in Article 1208, a joint obligation is one where there is a concurrence of

several creditors, or of several debtors, or of several debtors, or of several creditors and debtors,
by virtue of which each of the creditors has a right to demand, and each of the debtors is bound
to render compliance with his proportionate part of the prestation which constitutes the object of
the obligation. Each debtor answers only for a part of the whole liability and to each obligee
belongs only a part of the correlative rights as it is only in solidary obligations that payment
made to any one of the solidary creditors extinguishes the entire obligation. This means that
Francisco, Ma. Consuelo and Consuelo are each entitled to equal shares in the ₱3,000,000 agreed
upon in the Amended Compromise Agreement and that payment to Consuelo and Ma. Consuelo
will not have the effect of discharging the obligation with respect to Francisco.
ILOILO JAR CORPORATION, Petitioner vs. COMGLASCO CORPORATION AGUILA
GLASS, Respondent
G.R. No. 219509
January 18, 2017
Second Division
Mendoza, J.

Nature of the Case:

This petition for review on certiorari seeks to reverse and set aside a decision from of
Court of Appeals.

Facts:

Petitioner Iloilo Jar Corporation as lessor, and respondent Comglasco as lessee, entered
into a lease contract over a portion of a warehouse building, for a period of three (3) years or
until August 15, 2003.

On December 1, 2001, Comglasco requested for the pre-termination of the lease effective
on the same date. Iloilo Jar, however, rejected the request on the ground that the pre-termination
of the lease contract was not stipulated therein. Despite the denial of the request for pre-
termination, Comglasco still removed all its stock, merchandise and equipment from the leased
premises on January 15, 2002. From the time of the withdrawal of the equipment, and
notwithstanding several demand letters, Comglasco no longer paid all rentals accruing from the
said date. On September 14, 2003, Iloilo Jar sent a final demand letter to Comglasco, but it was
again ignored. Consequently, Iloilo Jar filed a civil action for breach of contract and damages
before the RTC on October 10, 2003.

On June 28, 2004, Comglasco filed its Answer and raised an affirmative defense, arguing
that by virtue of Article 1267 of the Civil Code (Article 1267), it was released from its obligation
from the lease contract. It explained that the consideration thereof had become so difficult due to
the global and regional economic crisis that had plagued the economy. Likewise, Comglasco
admitted that it had removed its stocks and merchandise but it did not refuse to pay the rentals
because the lease contract was already deemed terminated. Further, it averred that though it
received the demand letters, it did not amount to a refusal to pay the rent because the lease
contract had been pre-terminated in the first place.

Iloilo Jar insisted that Comglasco cannot rely on Article 1267 because it does not apply to lease
contracts, which involves an obligation to give, and not an obligation to do.

Issue:

Whether or not Article 1267 of the Civil Code is applicable to obligation to give therefor
making Comglasco's claim that it was released from the lease agreement because the lease
contact was terminated due to economic circumstances is proper under the said article.

Rulings:

Comglasco's position fails to impress because Article 1267 applies only to obligations to
do and not to obligations to give. Thus, in Philippine National Construction Corporation v. Court
of Appeals, the Court expounded:

Petitioner cannot, however, successfully take refuge in the said article, since it is
applicable only to obligations "to do," and not to obligations "to give." An obligation "to do"
includes all kinds of work or service; while an obligation "to give" is a prestation which consists
in the delivery of a movable or an immovable thing in order to create a real right, or for the use
of the recipient, or for its simple possession, or in order to return it to its owner.

The obligation to pay rentals or deliver the thing in a contract of lease falls within the
prestation "to give"; xxx

The principle of rebus sic stantibus neither fits in with the facts of the case. Under this
theory, the parties stipulate in the light of certain prevailing conditions, and once these conditions
cease to exist, the contract also ceases to exist. xxx
 This article, which enunciates the doctrine of unforeseen events, is not, however, an
absolute application of the principle of rebus sic stantibus, which would endanger the security of
contractual relations. The parties to the contract must be presumed to have assumed the risks of
unfavorable developments. It is therefore only in absolutely exceptional changes of
circumstances that equity demands assistance for the debtor.

Considering that Comglasco' s obligation of paying rent is not an obligation to do, it

could not rightfully invoke Article 1267 of the Civil Code. Even so, its position is still without
merit as financial struggles due to an economic crisis is not enough reason for the courts to grant
reprieve from contractual obligations.
In COMGLASCO Corporation/Aguila Glass v. Santos Car Check Center Corporation, the Court
ruled that the economic crisis which may have caused therein petitioner's financial problems is
not an absolute exceptional change of circumstances that equity demands assistance for the
debtor. It is noteworthy that Comglasco was also the petitioner in the abovementioned case,
where it also involved Article 1267 to pre-terminate the lease contract.

Thus, the RTC was correct in ordering Comglasco to pay the unpaid rentals because the
affirmative defense raised by it was insufficient to free it from its obligations under the lease
contract. In addition, Iloilo Jar is entitled to attorney's fees because it incurred expenses to
protect its interest. The trial court, however, erred in awarding exemplary damages and litigation
expenses.
 MAKILITO B. MAHINAY, Petitioner vs. DURA TIRE & RUBBER INDUSTRIES, INC.,
Respondent
G.R. No. 194152
June 5, 2017
Second Division
Leonen, J.

Nature of the Case:

This resolves a Petition for Review on Certiorari directly filed before this Court, assailing
the Judgment on the Pleadings dated April 13, 2010 and Order dated September 2, 2010 rendered
by Branch 20 of the Regional Trial Court of Cebu City in Civil Case No. CEB-33639.

Facts:

A parcel of land under the name of A&A Swiss International Commercial, Inc was
mortgaged to Dura Tire and Rubber Industries, Inc as security for credit purchases to be made by
Move Overland Venture and Exploring, Inc. Under the mortgage agreement, Dura Tire was
given the express authority to extrajudicially foreclose the property should Move Overland fail to
pay its credit purchases.

On June 5, 1992, A&A Swiss sold the property to Mahinay for the sum of ₱540,000.00.9
In the Deed of Absolute Sale, Mahinay acknowledged that the property had been previously
mortgaged by A&A Swiss to Dura Tire, holding himself liable for any claims that Dura Tire may
have against Move Overland. On August 21, 1994, Mahinay wrote Dura Tire, requesting a
statement of account of Move Overland's credit purchases. Mahinay sought to pay Move
Overland's obligation to release the property from the mortgage. Dura Tire, however, ignored
Mahinay's request.
For Move Overland's failure to pay its credit purchases, Dura Tire applied for
extrajudicial foreclosure of the property on January 6, 1995. Mahinay protested the impending
sale and filed a third-party claim before the Office of the Provincial Sheriff of Cebu.

Despite the protest, Sheriff proceeded with the sale and issued a Certificate of Sale in
favor of Dura Tire, the highest bidder at the sale.

Subsequently, Mahinay's appeal was dismissed by the Court of Appeals and held that Mahinay
had no right to question the foreclosure of the property. Mahinay, as "substitute mortgagor," was
fully aware that the property he purchased from A&A Swiss was previously mortgaged to Dura
Tire to answer for Move Overland's obligation. Considering that Move Overland failed to pay for
its credit purchases, Dura Tire had every right to foreclose the property.

Dura Tire counters that nothing prevented Mahinay from exercising his right of
redemption within one (1) year from the registration of the Certificate of Sale.57 Dura Tire
argues that Mahinay'sfiling of an action for annulment of foreclosure sale did not toll the running
of the redemption period because the law does not allow its extension. Since the one (1)-year
period of redemption already lapsed, Dura Tire maintains that Mahinay can no longer redeem the
property at the bid price paid by the purchaser.

Issue:

Whether or not the one (1)-year period of redemption was tolled when Mahinay filed his
Complaint for annulment of foreclosure sale.

Ruling:

Yes. The period to redeem a property sold in an extrajudicial foreclosure sale is not
extendible. A pending action to annul the foreclosure sale does not toll the running of the one (1)
year period of redemption under Act No. 3135. Contrary to Mahinay's claim, his right to redeem
the mortgaged property did not arise from the Court of Appeals' "judicial declaration" that he
was a "substitute mortgagor" of A&A Swiss. By force of law, specifically, Section 6 of Act No.
3135, Mahinay's right to redeem arose when the mortgaged property was extrajudicially
foreclosed and sold at public auction.

The "date of the sale" referred to in Section 6 is the date the certificate of sale is
registered with the Register of Deeds. This is because the sale of registered land does not '"take
effect as a conveyance, or bind the land' until it is registered."

The right of redemption being statutory, the mortgagor may compel the purchaser to sell
back the property within the one (1 )-year period under Act No. 3135. If the purchaser refuses to
sell back the property, the mortgagor may tender payment to the Sheriff who conducted the
foreclosure sale. Here, Mahinay should have tendered payment to Sheriff Laurel instead of
insisting on directly paying Move Overland's unpaid credit purchases to Dura Tire.

Since the period of redemption is fixed, it cannot be tolled or interrupted by the filing of
cases to annul the foreclosure sale or to enforce the right of redemption. "To rule otherwise ...
would constitute a dangerous precedent. A likely offshoot of such a ruling is the institution of
frivolous suits for annulment of mortgage intended merely to give the mortgagor more time to
redeem the mortgaged property."

With Mahinay failing to redeem the property within the one (1)-year period of
redemption, his right to redeem had already lapsed. As discussed, the pendency of an action to
annul the foreclosure sale or to enforce the right to redeem does not toll the running of the period
of redemption. The trial court correctly dismissed the Complaint for judicial declaration of right
to redeem.

All told, the trial court correctly dismissed Mahinay's Complaint for judicial declaration
of right to redeem. To grant the Complaint would have extended the period of redemption for
Mahinay, in contravention of the fixed one (1)-year period provided in Act No. 3135.
 SPS. ROBERTO ABOITIZ AND MARIA CRISTINA CABARRUS, Petitioners
vs. SPS. PETER L. PO AND VICTORIA L. PO, Respondents
G.R. No. 208450
June 5, 2017
Second Division
Leonen, J.

Nature of the Case:

This resolves two (2) Petitions for Review on Certiorari assailing the Court of Appeals
October 31, 2012 Decision and its June 17, 2013 Resolution in CA-G.R. CV No. 03803. The
assailed decision affirmed the Regional Trial Court's Decision, which declared the spouses Peter
Po and Victoria Po (Spouses Po) as the rightful owners of the parcel of land. However, the Court
of Appeals ruled that respondents Jose Maria Moraza (Jose), spouses Ernesto Aboitiz (Ernesto),
and Isabel Aboitiz (Isabel) were innocent buyers in good faith whose titles were entitled to
protection. The assailed resolution denied the Motion for Partial Reconsideration of the spouses
Roberto Aboitiz and Maria Cristina Cabarrus (Spouses Aboitiz).

Facts:

This case involves a parcel of land located in Cabancalan, Mandaue City, initially
registered under the name of Roberto Aboitiz. This parcel of land originally belonged to the late
Mariano Seno. On July 31, 1973, Mariano executed a Deed of Absolute Sale in favor of his son,
Ciriaco Seno. On May 5, 1978, Ciriaco sold the two (2) lots to Victoria Po (Victoria). The parties
executed a Deed of Absolute Sale. On July 15, 1982, Mariano died and was survived by his five
(5) children.

In 1990, Peter Po discovered that Ciriaco "had executed a quitclaim dated August 7, 1989
renouncing his interest in favor of Roberto. In the quitclaim, Ciriaco stated that he was "the
declared owner of Lot Nos. 2835 and 2807. The Spouses Po confronted Ciriaco. By way of
remedy, Ciriaco and the Spouses Po executed a Memorandum of Agreement dated June 28, 1990
in which Ciriaco agreed to pay Peter the difference between the amount paid by the Spouses Po
as consideration for the entire property and the value of the land the Spouses Po were left with
after the quitclaim. However, also in 1990, Lot No. 2835 was also sold to Roberto. The Mariano
Heirs, including Ciriaco, executed separate deeds of absolute sale in favor of Roberto.
Thereafter, Roberto immediately developed the lot as part of a subdivision called North Town
Homes. On April 19, 1993, Roberto filed an application for original registration of Lot No. 2835,
the trial court granted the issuance of Original Certificate of Title No. 0-887 in the name of
Roberto. The lot was immediately subdivided with portions sold to Ernesto and Jose.

On November 19, 1996, the Spouses Po filed a complaint to recover the land and to
declare nullity of title with damages.

The Spouses Aboitiz appealed to the Court of Appeals. The Court of Appeals, in its
Decision dated October 31, 2012, partially affirmed the trial court decision, declaring the
Spouses Po as the rightful owner of the land. However, it ruled that the titles issued to
respondents Jose, Ernesto, and Isabel should be respected.

The Court of Appeals discussed the inapplicability of the rules on double sale and the
doctrine of buyer in good faith since the land was not yet registered when it was sold to the
Spouses Po. However, it ruled in favor of the Spouses Po on the premise that registered property
may be reconveyed to the "rightful or legal owner or to the one with a better right if the title was
wrongfully or erroneously registered in another person's name." The Court of Appeals held that
the Mariano Heirs were no longer the owners of the lot at the time they sold it to Roberto in 1990
because Mariano, during his lifetime, already sold this to Ciriaco in 1973.

It found that the Deed of Absolute Sale between Ciriaco and the Spouses Po was duly
notarized and was thus presumed regular on its face. Their Memorandum of Agreement did not
cancel or rescind the Deed of Absolute Sale but rather strengthened their claim that they "entered
into a contract of sale. "It likewise ruled that, contrary to the assertion of the Spouses Aboitiz,
there was no showing that Ciriaco merely held the property in trust for the Mariano Heirs.It held
that the action of the Spouses Po had not yet prescribed because their complaint in 1996 was
within the 10-year prescriptive period as the title in favor of the Spouses Aboitiz was issued in
1994. However, the Court of Appeals ruled that the certificates of title of Jose, Ernesto, and
Isabel were valid as they were innocent buyers in good faith.
Issue:

Whether or not the action of Spouses Po is barred by prescription.

Rulings:

No. The Spouses Po's action has not prescribed. Under Presidential Decree No. 1529
(Property Registration Decree), the owner of a property may avail of legal remedies against a
registration procured by fraud:

SECTION 53. Presentation of Owner's Duplicate Upon Entry of New Certificate. - ...

In all cases of registration procured by fraud, the owner may pursue all his legal and
equitable remedies against the parties to such fraud without prejudice, however, to the rights of
any innocent holder for value of a certificate of title ...

Article 1456 of the Civil Code provides that a person acquiring a property through fraud
becomes an implied trustee of the property's true and lawful owner.

An implied trust is based on equity and is either (i) a constructive trust, or (ii) a resulting
trust. A resulting trust is created by implication of law and is presumed as intended by the
parties. A constructive trust is created by force of law such as when a title is registered in favor
of a person other than the true owner. The implied trustee only acquires the right "to the
beneficial enjoyment of the property." legal title remains with the true owner.

Art. 1456 of the Civil Code provides:

Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of
law, considered a trustee of an implied trust for the benefit of the person from whom the property
comes.

Thus, it was held that when a party uses fraud or concealment to obtain a certificate of
title of property, a constructive trust is created in favor of the defrauded party. Constructive trusts
are "created by the construction of equity in order to satisfy the demands of justice and prevent
unjust enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of
confidence, obtains or holds the legal right to property which he ought not, in equity and good
conscience, to hold."

When property is registered in another's name, an implied or constructive trust is created

by law in favor of the true owner. The action for reconveyance of the title to the rightful owner
prescribes in 10 years from the issuance of the title.

Thus, the law creates a trust in favor of the property's true owner.

The prescriptive period to enforce this trust is 10 years from the time the right of action
accrues. It is now well-settled that the prescriptive period to recover property obtained by fraud
or mistake, giving rise to an implied trust under Art. 1456 of the Civil Code, is 10 years pursuant
to Art. 1144. This ten year prescriptive period begins to run from the date the adverse party
repudiates the implied trust, which repudiation takes place when the adverse party registers the
land.

Considering that the Spouses Po's complaint was filed on November 19, 1996, less than
three (3) years from the issuance of the Torrens title over the property on April 6, 1994, it is well
within the 10-year prescriptive period imposed on an action for reconveyance.
 GEORGIA OSMEÑA-JALANDONI, Petitioner
vs. CARMEN A. ENCOMIENDA, Respondent
G.R. No. 205578
March 1, 2017
Second Division
Peralta, J.

Nature of the Case:

This is an appeal from the Decision of the Court of Appeals, Cebu City (CA) dated
March 29, 2012 and its Resolutiondated December 19, 2012 in CA-G.R. CV No. 01339 which
set aside the Decisionof the Cebu Regional Trial Court (RTC), Branch 57, dated January 9, 2006,
dismissing respondent Carmen Encomienda's claim for sum of money.

Facts:

Encomienda narrated that she met petitioner Georgia Osmeña-Jalandoni in Cebu on

October 24, 1995, when the former was purchasing a condominium unit and the latter was the
real estate broker. Thereafter, Encomienda and Jalandoni became close friends. On March 2,
1997, Jalandoni called Encomienda to ask if she could borrow money for the search and rescue
operation of her children in Manila, who were allegedly taken by their father, Luis Jalandoni. All
in all, Encomienda spent around ₱3,245,836.02 and $6,638.20 for Jalandoni.

When Jalandoni came back to Cebu on July 14, 1997, she never informed Encomienda.
Encomienda then later gave Jalandoni six (6) weeks to settle her debts. Despite several demands,
no payment was made. Jalandoni insisted that the amounts given were not in the form of loans.
When they had to appear before the Barangay for conciliation, no settlement was reached.
Hence, Encomienda filed a complaint. She impleaded Luis as a necessary party, being Georgia's
husband.

For her defense, Jalandoni claimed that there was never a discussion or even just an
allusion about a loan. She confirmed that Encomienda would indeed deposit money in her bank
account and pay her bills in Cebu. But when asked, Encomienda would tell her that she just
wanted to extend some help and that it was not a loan. When Jalandoni returned to Cebu,
Encomienda wanted to fetch her at the airport but the former refused. This allegedly made
Encomienda upset, causing her to eventually demand payment for the amounts originally
intended to be gratuitous.

Issue:

Whether or not Encomienda is entitled to be reimbursed for the amounts she

defrayed for Jalandoni considering that she claimed they were given without her knowledge.

Rulings:

No. It must be stressed, however, that the trial court merely found that no documentary
evidence was offered showing Jalandoni's authorization or undertaking to pay the expenses. But
the second paragraph of Article 1236 of the Civil Code provides:

Whoever pays for another may demand from the debtor what he has paid, except that if
he paid without the knowledge or against the will of the debtor, he can recover only insofar as
the payment has been beneficial to the debtor.

Clearly, Jalandoni greatly benefited from the purportedly unauthorized payments. Thus,
even if she asseverates that Encomienda's payment of her household bills was without her
knowledge or against her will, she cannot deny the fact that the same still inured to her benefit
and Encomienda must therefore be consequently reimbursed for it.

The RTC likewise harped on the fact that if Encomienda really intended the amounts to
be a loan, normal human behavior would have prompted at least a handwritten acknowledgment
or a promissory note the moment she parted with her money for the purpose of granting a loan.
This would be particularly true if the loan obtained was part of a business dealing and not one
extended to a close friend who suddenly needed monetary aid. In fact, in case of loans between
friends and relatives, the absence of acknowledgment receipts or promissory notes is more
natural and real. Contracts are binding between the parties, whether oral or written. The law is
explicit that contracts shall be obligatory in whatever form they may have been entered into,
provided all the essential requisites for their validity are present.

The principle of unjust enrichment finds application in this case. Unjust enrichment exists
when a person unfairly retains a benefit to the loss of another, or when a person retains money or
property of another against the fundamental principles of justice, equity, and good conscience.
There is unjust enrichment under Article 22 of the Civil Code when (1) a person is unjustly
benefited, and (2) such benefit is derived at the expense of or with damages to another. The
principle of unjust enrichment essentially contemplates payment when there is no duty to pay,
and the person who receives the payment has no right to receive it. The CA is then correct when
it ruled that allowing Jalandoni to keep the amounts received from Encomienda will certainly
cause an unjust enrichment on Jalandoni' s part and to Encomienda's damage and prejudice.
 WILLIAM C. LOUH, JR. and IRENE L. LOUH, Petitioners
vs BANK OF THE PHILIPPINE ISLANDS, Respondent
G.R. No. 225562
March 8, 2017
Third Division
Reyes, J.

Nature of the Case:

Before the Court is the instant petition for review on certiorarifiled by William C. Louh,
Jr. (William) and Irene L. Louh (Irene) (collectively, the Spouses Louh) to assail the
Decisionand Resolution,dated August 11, 2015 and May 23, 2016, respectively, of the Court of
Appeals (CA) in CA-G.R. CV No. 100754.

Facts:

The herein respondent, Bank of the Philippine Islands (BPI), issued a credit card in
William's name, with Irene as the extension card holder. Pursuant to the terms and conditions of
the cards' issuance, 3.5% finance charge and 6% late payment charge shall be imposed monthly
upon unpaid credit availments.

The Spouses Louh made purchases from the use of the credit cards and paid regularly
based on the amounts indicated in the Statement of Accounts. However, they were remiss in their
obligations starting October 14, 2009 prompting BPI to send written demand letters. By
September 14, 2010, they owed BPI the total amount of ₱533,836.27. Despite repeated verbal
and written demands, the Spouses Louh failed to pay BPI. BPI filed before the Regional Trial
Court of Makati City a Complaint for Collection of a Sum of Money.
On July 24, 2012, the RTC issued an Order declaring the Spouses Louh in default and
setting BPI's ex-parte presentation of evidence on August 7, 2012. The Branch Clerk of Court
thereafter submitted a Commissioner's Report. On November 29, 2012, the RTC rendered a
Decision which ordered the Spouses Louh to solidarily pay BPI (1) P533,836.27 plus 12%
finance and 12% late payment annual charges starting from August 7, 2010 until full payment,
and (2) 25% of the amount due as attorney's fees, plus ₱l,000.00 per court hearing and ₱8,064.00
as filing or docket fees; and (3) costs of suit.17

The RTC explained that BPI had adduced preponderant evidence proving that the
Spouses Louh had in fact availed of credit accommodations from the use of the cards. However,
the RTC found the 3.5% finance and 6% late payment monthly chargesimposed by BPI as
iniquitous and unconscionable. Hence, both charges were reduced to 1 % monthly. Anent the
award of attorney's fees equivalent to 25% of the amount due, the RTC found the same to be
within the terms of the parties' agreement.

Aggrieved, the spouses before the Court alleged the computations did not show the
specific amounts pertaining to the principal, interests and penalties. They point out that since
their credit limit was only ₱326,000.00, it is evident that the amount of ₱533,836.27 demanded
by BPI included unconscionable charges.

Issue:

Whether or not the interest rate imposed and attorney’s fee awarded are unconscionable
and can be equitable reduced by the Court.

Rulings:

Be that as it may, the Court finds excessive the principal amount and attorneys fees
awarded by the RTC and CA. A modification of the reckoning date relative to the computation
of the charges is in order too. In Macalinao, where BPI charged the credit cardholder of 3.25%
interest and 6% penalty per month, and 25% of the total amount due as attorney's fees, the Court
unequivocally declared that:

This is not the first time that this Court has considered the interest rate of 36% per annum
as excessive and unconscionable. We held in Chua vs. Timan:
 The stipulated interest rates of 7% and 5% per month imposed on respondents' loans must
be equitably reduced to 1% per month or 12% per annum. We need not unsettle· the principle we
had affirmed in a plethora of cases that stipulated interest rates of 3% per month and higher are
excessive, iniquitous, unconscionable and exorbitant. Such stipulations are void for being
contrary to morals, if not against the law. While C.B. Circular No. 905-82, which took effect on
January 1, 1983, effectively removed the ceiling on interest rates for both secured and unsecured
loans, regardless of maturity, nothing in the said circular could possibly be read as granting carte
blanche authority to lenders to raise interest rates to levels which would either enslave their
borrowers or lead to a hemorrhaging of their assets. x xx

Since the stipulation on the interest rate is void, it is as if there was no express contract
thereon. Hence, courts may reduce the interest rate as reason and equity demand. The same is
true with respect to the penalty charge. x xx Pertinently, Article 1229 of the Civil Code states:

Art. 1229. The judge shall equitably reduce the penalty when the principal obligation has
been partly or irregularly complied with by the debtor. Even if there has been no performance,
the penalty may also be reduced by the courts if it is iniquitous or unconscionable. x x xx

x xx [T]he stipulated penalty charge of 3% per month or 36% per annum, in addition to regular
interests, is indeed iniquitous and unconscionable.

Thus, in Macalinao, the Court reduced both the interest and penalty charges to 12% each,
and the attorney's fees to ₱l0,000.00.

In MCMP Construction Corp. v. Monark Equipment Corp., the creditor cumulatively

charged the debtor 60% annually as interest, penalty and collection fees, and 25% of the total
amount due as attorney's fees. The Court similarly found the rates as exorbitant and
unconscionable; hence, directed the reduction of the annual interest to 12%, penalty and
collection charges to 6%, and attorney's fees to 5%. The Court explained that attorney's fees are
in the nature of liquidated damages, which under Article 2227 of the New Civil Code, "shall be
equitably reduced if they are iniquitos or unconscionable.
 PHILIPPINE NATIONAL BANK, Petitioner
vs LILIBETH S. CHAN, Respondent
G.R. No. 206037
March 13, 2017
First Division
Del Castillo, J.

Nature of the Case:

We resolve the Petition for Review on Certiorari under Rule 45 of the Rules of Court,
assailing the May 28, 2012 Decisionand the February 21, 2013 Resolutionof the Court of
Appeals (CA) in CA-G.R. SP No. 98112.

Facts:

Respondent Lilibeth S. Chan owns a three-story commercial building located along A.

Linao Street, Paco, On May 10, 2000, she leased said commercial building to petitioner
Philippine National Bank for a period of five years. When the lease expired, PNB continued to
occupy the property on a month-to-month basis. PNB vacated the premises on March 23, 2006.

Meanwhile, on January 22, 2002, respondent obtained a ₱l,500,000.00 loan from PNB
which was secured by a Real Estate Mortgage constituted over the leased property. In addition,
respondent executed a Deed of Assignment over the rental payments in favor of PNB.

The amount of the respondent's loan was subsequently increased to ₱7,500,000.00.

Consequently, PNB and the respondent executed an "Amendment to the Real Estate Mortgage
by Substitution of Collateral" on March 31, 2004, where the mortgage over the leased property
was released and substituted by a mortgage over a parcel of land located in Paco, Manila,
covered by TCT No. 209631.8

On August 26, 2005, respondent filed a Complaint for Unlawful Detainer before the
Metropolitan Trial Court (MeTC). In its defense, PNB claimed that it applied the rental proceeds
from October 2004 to January 15, 2005 as payment for respondent's outstanding loan which
became due and demandable in October 2004. As for the monthly rentals from January 16, 2005
to February 2006, PNB explained that it received a demand letter from a certain Lamberto Chua
(Chua) who claimed to be the new owner of the leased property and requested that the rentals be
paid directly to him.

The MeTC held a hearing on April 25, 2006 where the parties agreed to apply the rental
proceeds from October 2004 to January 15, 2005 to the respondent's outstanding loan. PNB, too,
consigned the amount of ₱l,348,643.92, representing rentals due from January 16, 2005 to
February 2006, with the court on May 31, 2006.

In the Court of Appeals ruling, as regards the payment of legal interest, the CA noted that
PNB merely opened a non-drawing savings account wherein it deposited the monthly rentals
from January 16, 2005 to February 2006. Such deposit of the rentals in a savings account,
however, is not the consignation contemplated by law. Thus, the CA found PNB liable to pay the
6% legal interest rate prescribed under Article 2209 of the Civil Code for having defaulted in the
payment of its monthly rentals to the respondent.

Issue:

Whether or not PNB improperly consigned the disputed rental payments with the Office
of the Clerk of Court of the MeTC of Manila making PNB liable to pay legal interest prescribed
under Article 2209 Civil Code.

Rulings:

No.Consignation is the act of depositing the thing due with the court or judicial
authorities whenever the creditor cannot accept or refuses to accept payment. It generally
requires a prior tender of payment.

Under Article 1256 of the Civil Code, consignation alone is sufficient even without a
prior tender of payment a) when the creditor is absent or unknown or does not appear at the place
of payment; b) when he is incapacitated to receive the payment at the time it is due; c) when,
without just cause, he refuses to give a receipt; d) when two or more persons claim the same
right to collect; and e) when the title of the obligation has been lost.

For consignation to be valid, the debtor must comply with the following requirements
under the law:

1) there was a debt due;

2) valid prior tender of payment, unless the consignation was made because of some legal cause
provided in Article 1256;

3) previous notice of the consignation has been given to the persons interested in the
performance of the obligation;

4) the amount or thing due was placed at the disposal of the court; and,

5) after the consignation had been made, the persons interested were notified thereof

"Failure in any of the requirements is enough ground to render a consignation

ineffective."

In the present case, the records show that: first, PNB had the obligation to pay respondent
a monthly rental of ₱l16,788.44, amounting to ₱l,348,643.92, from January 16, 2005 to March
23, 2006;47 second, PNB had the option to pay the monthly rentals to respondent or to apply the
same as payment for respondent's loan with the bank, but PNB did neither; third, PNB instead
opened a non-drawing savings account at its Paco Branch under Account No. 202- 565327-3,
where it deposited the subject monthly rentals, due to the claim of Chua of the same right to
collect the rent; and fourth, PNB consigned the amount of Pl,348,643.92 with the Office of the
Clerk of Court of the MeTC of Manila on May 31, 2006.

Note that PNB's deposit of the subject monthly rentals in a non-drawing savings account
is not the consignation contemplated by law, precisely because it does not place the same at the
disposal of the court. Consignation is necessarily judicial; it is not allowed in venues other than
the courts. Consequently, PNB's obligation to pay rent for the period of January 16, 2005 up to
March 23, 2006 remained subsisting, as the deposit of the rentals cannot be considered to have
the effect of payment.

Given its belated consignment of the rental proceeds in court, PNB clearly defaulted in
the payment of monthly rentals to the respondent for the period January 16, 2005 up to March
23, 2006, when it finally vacated the leased property, As such, it is liable to pay interest in
accordance with Article 2209 of the Civil Code.
 WERR CORPORATION INTERNATIONAL, Petitioner
vs. HIGHLANDS PRIME INC., Respondent
G.R. No. 187543
February 8, 2017
Third Division
Jardeleza, J.

Nature of the Case:

These are consolidated petitionsseeking to nullify the Court of Appeals' (CA) February 9,
2009 Decision and April 16, 2009 Resolutionin CA-G.R. SP No. 105013. The CA modified the
August 11, 2008 Decision of the Construction Industry Arbitration Commission (CIAC) in CIAC
Case No. 09-2008.

Facts:

Highlands Prime, Inc. (HPI) and Werr Corporation International (Werr) are domestic
corporations engaged in property development and construction, respectively. For the
construction of 54 residential units contained in three clusters of five-storey condominium
structures, known as "The Horizon-Westridge Project," in Tagaytay. The project was not
completed on the last extension given. Thus, HPI terminated its contract with Werr.

Not having received any payment, Werr filed a Complaint for arbitration against HPI
before the CIAC to recover the ₱14,834,926.71 representing the balance of its retention money.
In its Answer, HPI countered that it does not owe Werr because the balance of the retention
money answered for the payments made to suppliers and for the additional costs and expenses
incurred after termination of the contract. By way of counterclaim, HPI prayed for the payment
of liquidated damages

After due proceedings, the CIAC rendered its Decision on August 11, 2008 where it
granted Werr's claim for the balance of the retention money and arbitration costs. It also granted
HPI's claim for liquidated damages in the amount of ₱2,535,059.0l equivalent to 9.327 days of
delay, but denied its counterclaim for damages, attorney's fees, and litigation expenses.

The CIAC further ruled that Werr incurred only 9.327 days of delay. Citing Article
137629 of the Civil Code and considering the failure of the Agreement to state otherwise, it
applied the industry practice in the construction industry that liquidated damages do not accrue
after achieving substantial compliance. While according to the CA, delay should be computed
from October 27, 2006 until termination of the contract on November 28, 2006, or 33 days, since
the contract prevails over the industry practice.

Werr argues that the CA erred in modifying the CIAC decision on the amount of
liquidated damages and arbitration costs. It insists that the appellate court disregarded Articles
1234, 1235, and 1376 of the Civil Code and the industry practice. On the other hand, HPI argues
that Werr was unjustly enriched when the CA disallowed HPI' s recovery of the amounts it paid
to suppliers.

Issue:

Whether or not the industry practice of computing liquidated damages only up to

substantial completion of the project applies in the computation of liquidated damages.
Consequently, whether delay should be computed until termination of the contract or until
substantial completion of the project.

Rulings:

We reject this claim of Werr and find that while this industry practice may supplement
the Agreement, Werr cannot benefit from it.

At the outset, we do not agree with the CA that industry practice be rejected because
liquidated damages are provided in the Agreement, autonomy of contracts prevails, and industry
practice is completely set aside. Contracting parties are free to stipulate as to the terms and
conditions of the contract for as long as they are not contrary to law, morals, good customs,
public order or public policy. Corollary to this rule is that laws are deemed written in every
contract. Deemed incorporated into every contract are the general provisions on obligations and
interpretation of contracts found in the Civil Code. The Civil Code provides:

Art. 1234. If the obligation has been substantially performed in good faith, the obligor
may recover as though there had been a strict and complete fulfillment, less damages suffered by
the obligee.

Art. 1376. The usage or custom of the place shall be borne in mind in the interpretation of
the ambiguities of a contract, and shall fill the omission of stipulations which are ordinarily
established.

In previous cases, we applied these provisions in construction agreements to determine

whether the project owner is entitled to liquidated damages. We held that substantial completion
of the project equates to achievement of 95% project completion which excuses the contractor
from the payment of liquidated damages.

Considering the foregoing, it: was error for the CA to immediately dismiss the
application of industry practice on the sole ground that there is an existing agreement as to
liquidated damages. As expressly stated under Articles 1234 and 1376, and in jurisprudence, the
construction industry's prevailing practice may supplement any ambiguities or omissions in the
stipulations of the contract.

In this case, clause 41.5 of the Agreement is undoubtedly a valid stipulation. However,
while clause 41.5 requires payment of liquidated damages if there is delay, it is silent as to the
period until when liquidated damages shall run. The Agreement does not state that liquidated
damages is due until termination of the project; neither does it completely reject that it is only
due until substantial completion of the project. This omission in the Agreement may be
supplemented by the provisions of the Civil Code, industry practice, and the CIAP Document
No. 102. Hence, the industry practice that substantial compliance excuses the contractor from
payment of liquidated damages applies to the Agreement.

Nonetheless, we find that Werr cannot benefit from the effects of substantial compliance.
Here, there is no dispute that Werr failed to prove that it completed 95% of the project before or
at the time of the termination of the contract. As found by CIAC, it failed to present evidence as
to what accomplishment it achieved from the time of the last billing until the termination of the
contract. What was admitted as accomplishment at the last billing is 93.18%. For this reason,
even if we adopt the rule that no liquidated damages shall run after the date of substantial
completion of the project, Werr cannot claim benefit for it failed to meet the condition precedent,
i.e., the contractor has successfully proven that it actually achieved 95% completion rate.

More importantly, Werr failed to show that it is the construction industry's practice to
project the date of substantial completion of a project, and to compute the period of delay based
on the rate in past progress billings just as what the CIAC has done. Consequently, the CIAC
erred when it assumed that Werr continued to perform works, and if it did, that it performed
them at the rate of accomplishment of the previous works in the absence of evidence.
 SPOUSES ROMEO PAJARES and IDA T. PAJARES, Petitioners
vs. REMARKABLE LAUNDRY AND DRY CLEANING, represented by ARCHEMEDES
G. SOLIS, Respondent
G.R. No. 212690
February 20, 2017
First Division
Del Castillo, J.

Nature of the Case:

Assailed in this Petition for Review on Certiorari on the Decision of the Court of Appeals
that set aside the Order of the RTC, Branch 17, Cebu City dismissing Civil Case No. CEB-39025
for lack of jurisdiction.

Facts:

On September 3, 2012, Remarkable Laundry and Dry Cleaning (respondent) filed a

Complaint denominated as "Breach of Contract and Damages" against spouses Romeo and Ida
Pajares (petitioners) before the RTC, which was docketed as Civil Case No. CEB-39025.
Respondent alleged that it entered into a Remarkable Dealer Outlet Contract with petitioners
whereby the latter, acting as a dealer outlet, shall accept and receive items or materials for
laundry which are then picked up and processed by the former in its main plant or laundry outlet;
that petitioners violated Article IV (Standard Required Quota & Penalties) of said contract,
which required them to produce at least 200 kilos of laundry items each week, when, on April
30, 2012, they ceased dealer outlet operations on account of lack of personnel; that respondent
made written demands upon petitioners for the payment of penalties imposed and provided for in
the contract, but the latter failed to pay; and, that petitioners' violation constitutes breach of
contract.
Issue:

Whether or not the respondent complaint although denominated as one for breach of
contract which will give rise to either specific performance or rescission, is essentially one for
simple payment of damages.

Rulings:

No. Respondent's complaint denominated as one for "'Breach of Contract &Damages" is

neither an action for specific performance nor a complaint for rescission of contract.

Breach of contract may give rise to an action for specific performance or rescission of
contract. It may also be the cause of action in a complaint for damages filed pursuant to Art.
1170 of the Civil Code. In the specific performance and rescission of contract cases, the subject
matter is incapable of pecuniary estimation, hence jurisdiction belongs to the Regional Trial
Court (RTC). In the case for damages, however, the court that has jurisdiction depends upon the
total amount of the damages claimed.

The Court grants the Petition. The RTC was correct in categorizing Civil Case No. CEB-
39025 as an action for damages seeking to recover an amount below its jurisdictional limit. In
ruling that respondent's Complaint is incapable of pecuniary estimation and that the RTC has
jurisdiction, the CA comported itself with the following ratiocination:

A case for breach of contract is a cause of action either for specific performance or
rescission of contracts. An action for rescission of contract, as a counterpart of an action for
specific performance, is incapable of pecuniary estimation, and therefore falls under the
jurisdiction of the RTC.

Without, however, determining whether, from the four corners of the Complaint,
respondent actually intended to initiate an action for specific performance or an action for
rescission of contract. Specific performance is ''the 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. It is the actual accomplishment of a contract by a party bound to fulfill it." Rescission of
contract under Article 1191 of the Civil Code, on the other hand, is a remedy available to the
obligee when the obligor cannot comply with what is incumbent upon him. It is predicated on a
breach of faith by the other party who violates the reciprocity between them. Rescission may also
refer to a remedy granted by law to the contracting parties and sometimes even to third persons
in order to secure reparation of damages caused them by a valid contract; by means of restoration
of things to their condition in which they were prior to the celebration of the contract.

An analysis of the factual and material allegations in the Complaint shows that there is
nothing therein which would support a conclusion that respondent's Complaint is one for specific
performance or rescission of contract. It should be recalled that the principal obligation of
petitioners under the Remarkable Laundry Dealership Contract is to act as respondent's dealer
outlet. Respondent, however, neither asked the RTC to compel petitioners to perfom such
obligation as contemplated in said contract nor sought the rescission thereof.

The Complaint's body, heading, and relief are bereft of such allegation. In fact, neither
phrase appeared on or was used in the Complaint when, for purposes of clarity, respondent's
counsels, who are presumed to be learned in law, could and should have used any of those
phrases to indicate the proper designation of the Complaint. To the contrary, respondent's
counsels designated the Complaint as one for "Breach of Contract & Damages," which is a
misnomer and inaccurate. This erroneous notion was reiterated in respondent's Memorandum
wherein it was stated that "the main action is one for a breach of contract." There is no such thing
as an "action for breach of contract." Rather, "breach of contract is a cause of action, but not the
action or relief itself” Breach of contract may be the cause of action in a complaint for specific
performance or rescission of contract, both of which are incapable of pecuniary estimation and,
therefore, cognizable by the RTC.
 JOHN E.R. REYES and MERWIN JOSEPH REYES, Petitioners
vs. ORICO DOCTOLERO, ROMEO AVILA, GRANDEUR SECURITY AND SERVICES
CORPORATION, and MAKATI CINEMA SQUARE, Respondents.
G.R. No. 185597
August 2, 2017
Third Division
Jardeleza, J.

Nature of the Case:

This is a petition for review on certiorari 1 under Rule 45 of the Rules of Court
challenging the Decision2 dated July 25, 2008 and the Resolution3 dated December 5, 2008 of
the Court of Appeals (CA) in CA-G.R. CV No. 88101.

Facts:

The case arose from an altercation between respondent OricoDoctolero, a security guard
of respondent Grandeur Security and Services Corporation and petitioners John E.R. Reyes and
Merwin Joseph Reyes in the parking area of respondent Makati Cinema Square. The respondents
shot the petitioners but both parties alleged different version of the incident.

Petitioners filed with the Regional Trial Court a complaint for damages against
respondents Doctolero and Avila and their employer Grandeur, charging the latter with
negligence in the selection and supervision of its employees. They likewise impleaded MCS on
the ground that it was negligent in getting Grandeur's services. In their complaint, petitioners
prayed that respondents be ordered, jointly and severally, to pay them actual, moral, and
exemplary damages, attorney's fees and litigation costs.
Respondents Doctolero and Avila failed to file an answer despite service of summons
upon them. Thus, they were declared in default in an Order dated December 12, 1997.

For its part, Grandeur asserted that it exercised the required diligence in the selection and
supervision of its employees. It likewise averred that the shooting incident was caused by the
unlawful aggression of petitioners who took advantage of their "martial arts" skills.

On the other hand, MCS contends that it cannot be held liable for damages simply
because of its ownership of the premises where the shooting incident occurred. It argued that the
injuries sustained by petitioners were caused by the acts of respondents Doctolero and Avila, for
whom respondent Grandeur should be solely responsible.

On January 18, 1999, the RTC rendered judgment against respondents Doctolero and
Avila, finding them responsible for the injuries sustained by petitioners. In reconsidering its
Decision, the RTC held that it re-evaluated the tacts and the attending circumstances of the
present case and was convinced that Grandeur has sufficiently overcome the presumption of
negligence. It gave credence to the testimony of Grandeur's witness, Eduardo Ungui, the head of
the Human Resources Department (HRD) of Grandeur, as regards the various procedures in its
selection and hiring of security guards.

Issue:

Whether Grandeur and MCS may be held vicariously liable for the damages caused by
respondents Doctolero and Avila to petitioners John and Mervin Reyes.

Rulings:

No. As a general rule, one is only responsible for his own act or omission.This general
rule is laid down in Article 2176 of the Civil Code, which provides:
Art. 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called a quasi-delict and is governed by the
provisions of this Chapter.
The law, however, provides for exceptions when it makes certain persons liable for the
act or omission of another. One exception is an employer who is made vicariously liable for the
tort committed by his employee under paragraph 5 of Article 2180. Here, although the employer
is not the actual tortfeasor, the law makes him vicariously liable on the basis of the civil law
principle of pater familias for failure to exercise due care and vigilance over the acts of one's
subordinates to prevent damage to another.

It must be stressed, however, that the above rule is applicable only if there is an
employer-employee relationship. This employer-employee relationship cannot be presumed but
must be sufficiently proven by the plaintiff. The plaintiff must also show that the employee was
acting within the scope of his assigned task when the tort complained of was committed. It is
only then that the defendant, as employer, may find it necessary to interpose the defense of due
diligence in the selection and supervision of employees. In the absence of such relationship,
vicarious liability under Article 2180 of the Civil Code cannot be applied. We find no employer-
employee relationship between MCS and respondent guards. The guards were merely assigned
by Grandeur to secure MCS' premises pursuant to their Contract of Guard Services. Thus, MCS
cannot be held vicariously liable for damages caused by these guards' acts or omissions. Neither
can it be said that a principal-agency relationship existed between MCS and Grandeur.

On the other hand, paragraph 5 of Article 2180 of the Civil Code may be applicable to
Grandeur, it being undisputed that respondent guards were its employees. When the employee
causes damage due to his own negligence while performing his own duties, there arises the juris
tantum presumption that the employer is negligent, rebuttable only by proof of observance of the
diligence of a good father of a family. The "diligence of a good father" referred to in the last
paragraph of Article 2180 means diligence in the selection and supervision of employees.

Here, both the RTC and the CA found that Grandeur was able to sufficiently prove,
through testimonial and documentary evidence, that it had exercised the diligence of a good
father of a family in the selection and hiring of its security guards. As testified to by its HRD
head Ungui, and corroborated by documentary evidence including clearances from various
government agencies, certificates, and favorable test results in medical and psychiatric
examinations.
The question of diligent supervision, however, depends on the circumstances of
employment. Ordinarily, evidence demonstrating that the employer has exercised diligent
supervision of its employee during the performance of the latter's assigned tasks would be
enough to relieve him of the liability imposed by Article 2180 in relation to Article 2176 of the
Civil Code.

Considering all the evidence borne by the records, we find that Grandeur has sufficiently
exercised the diligence of a good father of a family in the selection and supervision of its
employees. Hence, having successfully overcome the legal presumption of negligence, it is
relieved of liability from the negligent acts of its employees, respondents Doctolero and Avila.
 PIONEER INSURANCE and SURETY CORPORATION, Petitioner
vs. APL CO. PTE. LTD., Respondent.
G.R. No. 226345
August 2, 2017
Second Division
Mendoza, J.

Nature of the Case:

Petition for review on certiorari seeks to reverse and set aside the May 26, 2016 Decision
1 and August 8, 2016 Resolution 2 of the Court of Appeals (CA) in CA-G.R. SP No. 143912,
which reversed the November 3, 2015 Decision3 of the Regional Trial Court, Branch 137,
Makati City {RTC). The RTC affirmed in toto the March 9, 2015 Decision4 of the Municipal
Trial Court, Branch 65, Makati City (MTC).

Facts:

January 13, 2012, the shipper, Chillies Export House Limited, turned over to respondent
APL Co. Pte. Ltd. 250 bags of chili pepper for transport from the port of Chennai, India, to
Manila. The shipment was loaded on board MN Wan Hai 262. In tum, BSFIL Technologies,
Inc., as consignee, insured the cargo with petitioner Pioneer Insurance and Surety Corporation.

On February 2, 2012, the shipment arrived at the port of Manila and was temporarily
stored at North Harbor, Manila. On February 6, 2012, the bags of chili were withdrawn and
delivered to BSFIL. Upon receipt thereof, it discovered that 76 bags were wet and heavily
infested with molds. The shipment was declared unfit for human consumption and was
eventually declared as a total loss. As a result, BSFIL made a formal claim against APL and
Pioneer Insurance. The latter hired an independent insurance adjuster, which found that the
shipment was wet because of the water which seeped inside the container van APL provided.
Pioneer Insurance paid BSFIL Pl 95,505.65 after evaluating the claim. Having been subrogated
to all the rights and cause of action of BSFIL, Pioneer Insurance sought payment from APL, but
the latter refused. This prompted Pioneer Insurance to file a complaint for sum of money against
APL.

The RTC concurred with the MTC. It agreed that APL was presumed to have acted
negligently because the goods were damaged while in its custody. In addition, the RTC stated
that under the Carriage of Goods by Sea Act (COOSA), lack of written notice shall not prejudice
the right of the shipper to bring a suit within one year after delivery of the goods. Further, the
trial court stated that the shorter prescriptive period set in the Bill of Lading could not apply
because it is contrary to the provisions of the COGSA. Its May 26, 2016 decision, the CA
reversed the decisions of the trial courts and ruled that the present action was barred by
prescription. The appellate court noted that under Clause 8 of the Bill of Lading, the carrier shall
be absolved from any liability unless a case is filed within nine (9) months after the delivery of
the goods. It explained that a shorter prescriptive period may be stipulated upon, provided it is
reasonable. The CA opined that the nine-month prescriptive period set out in the Bill of Lading
was reasonable and provided a sufficient period of time within which an action to recover any
loss or damage arising from the contract of carriage may be instituted.

Issue:

Whether or not the nine months prescriptive period stipulated in the Bill of landing as
agreed upon by the parties is valid and shall be the basis in considering the prescriptive period
instead of the one year prescriptive stated by the law to which the parties may bring an action
against each other.

Rulings:

Yes. It is true that in Philippine American General Insurance Co., Inc. v. Sweet Lines,
Inc. (Philippine American), the Court recognized that stipulated prescriptive periods shorter than
their statutory counterparts are generally valid because they do not affect the liability of the
carrier but merely affects the shipper's remedy. The CA, nevertheless, erred in applying
Philippine American in the case at bench as it does not fall squarely with the present
circumstances.
 It is elementary that a contract is the law between the parties and the obligations it carries
must be complied with in good faith. In Norton Resources and Development Corporation v. All
Asia Bank Corporation, the Court reiterated that when the terms of the contract are clear, its
literal meaning shall control, to wit:

The cardinal rule in the interpretation of contracts is embodied in the first paragraph of
Article 1370 of the Civil Code: 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. 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.

After a closer persual of the the Bill of Lading, the Court finds that its provisions are
clear and unequivocal leaving no room for interpretation. In the Bill of Lading, it was
categorically stated that the carrier shall in any event be discharged from all liability whatsoever
in respect of the goods, unless suit is brought in the proper forum within nine (9) months after
delivery of the goods or the date when they should have been delivered.

The same, however, is qualified in that when the said nine-month period is contrary to
any law compulsory applicable, the period prescribed by the said law shall apply. The present
case involves lost or damaged cargo. It has long been settled that in case of loss or damage of
cargoes, the one-year prescriptive period under the COGSA applies.
 Delfin Domingo Dadis, Petitioner vs. Spouses Magtanggol De Guzman and Nora Q. De
Guzman, and The Register of Deeds of Talavera, Nueva Ecija, Respondent
G.R. No. 206008
June 7, 2017
Second Division
Peralta, J.

Nature of the Case:

This petition for review on certiorari under Rule 45 of the Rules of Court (Rules) seeks to
annul the July 30, 2012 Decision and February 13, 2013 Resolution of the Court of
Appeals (CA) in CA-G.R. CV No. 87784, which reversed and set aside the November 10, 2005
Decision3 and January 25, 2006 Order4 of Regional Trial Court (RTC), Branch 33, Guimba,
Nucva Ecija, and, in effect, dismissed the complaint filed by petitioner.

Facts:

Petitioner Delfin Domingo Dadis (Delfin) filed a Complaint for reconveyance and
damages against respondents Spouses De Guzman (Magtanggol). Delfin alleged, among others,
that: he and his deceased wife, Corazon PajarillagaDadis (Corazon), were the registered owners
of a parcel of land; their daughter, Marissa P. Dadis (Marissa), entered into a contract of real
estate mortgage (REM) over the subject property in favor of Magtanggol to secure a loan
obligation; 7 the Spouses De Guzman made it appear that Marissa was authorized by the Spouses
Dadis by virtue of a Special Power of Attorney (SPA); the SPA was a forged document because
it was never issued by him or Corazon as the signatures contained therein are not theirs,
especially so since he was in the United States of America (USA) at the time.

In their Answer with Motion to Dismiss, the Spouses De Guzman stated that: they have
no knowledge as regards the supposed falsity of the SPA presented by Marissa and Corazon at
the time the latter pleaded to accommodate them into entering a mortgage contract; they have no
knowledge that Delfin was not in the Philippines at the time of the execution of the SPA, which,
as a duly-notarized document, was presumed to have been done regularly; and they were in good
faith from the time the property was mortgaged until it was foreclosed and they were able to help
Delfin's family, who was financially distressed at the time.

After trial, the RTC established that Delfin was not in the Philippines, thus, he could not
have signed the SPA authorizing Marissa to mortgage the property. Without his written consent,
the mortgage is void since such act is not merely an act of administration but of ownership or
dominion on the part of Corazon. The CA reversed and set aside the RTC Decision. It conceded
that, as found by the RTC and undisputed by the parties, the SPA had been forged. As to the
issue of whether Magtanggol is a mortgagee in good faith and for value, it resolved in the
affirmative and noted that the purported SPA bears the signatures of both Corazon Pajarillaga-
Dadis and the plaintiff-appellee Delfin Domingo Dadis, the registered owners of the property
subject of the real estate mortgage and that it was duly notarized.

Issue:

Whether Magtanggol is a mortgagee in good faith.

Ruling:

No. Cavite Development Bank v. Spouses Lim explained the doctrine of mortgagee in
good faith in this wise:
There is, however, a situation where, despite the fact that the mortgagor is not the owner
of the mortgaged property, his title being fraudulent, the mortgage contract and any foreclosure
sale arising therefrom are given effect by reason of public policy. This is the doctrine of "the
mortgagee in good faith" based on the rule that all persons dealing with the property covered by
a Torrens Certificate of Title, as buyers or mortgagees, are not required to go beyond what
appears on the face of the title. The public interest in upholding the indefeasibility of a certificate
of title, as evidence of lawful ownership of the land or of any encumbrance thereon, protects a
buyer or mortgagee who, in good faith, relied upon what appears on the face of the certificate of
title.

The doctrine of mortgagee in good faith presupposes that the mortgagor, who is not the
rightful owner of the property, has already succeeded in obtaining a Torrens title over the
property in his or her name and that, after obtaining the said title, he or she succeeds in
mortgaging the property to another who relies on what appears on the said title.

In this case, Marissa is undoubtedly not the registered owner of the subject lot; and the
certificate of title was in the name of her parents at the time of the mortgage transaction. She
merely acted as the attorney-in-fact of Corazon and Delfin by virtue of the falsified SPA. The
protection accorded by law to mortgagees in good faith cannot be extended to mortgagees of
properties that are not yet registered with the RD or registered but not under the mortgagor's
name.

When the mortgagee does not directly deal with the registered owner of the real property,
like an attorney-in-fact of the owner, it is incumbent upon the mortgagee to exercise greater care
and a higher degree of prudence in dealing with such mortgagor.
 REMEDIOS V. GEÑORGA, Petitioner vs.
HEIRS OF JULIAN MELITON, Represented by ROBERTO MELITON as Attorney-in-
Fact, IRENE MELITON, HENRY MELITON, ROBERTO MELITON,
HAIDE* MELITON, and MARIA FE MELITON ESPINOSA, Respondents
G.R. No 224515
July 3, 2017
First Division
Perlas-Bernabe, J

Nature of the Case:

This is a Petition for Review on certiorari assailing Decision of the Court of Appeals
which affirmed the Decision of the Regional Trial Court of Naga City directing petitioner and/or
the Register of Deeds of Naga City to deliver or surrender possession of the owner's duplicate
copy of Transfer Certificate to respondents.

Facts:

Julian and other respondents all surnamed Meliton are the registered owners of a
identified as Lot No. 1095-C located in Concepcion Pequeña, Naga City. During his lifetime,
Julian sold a portion of the subject land to Geñorga who took possession and introduced
improvements on the portions respectively sold to them. However, Julian failed to surrender the
owner's duplicate copy of TCT which led the petitioner to file a Petition for the surrender for the
said copy.

The petitioner obtained a favorable decision from RTC of Naga City ordering the
administratrix of the estate of Julian to surrender possession thereof enter the deed of sale and to
issue the corresponding certificates of title after compliance with the requirements of the law. It
further held that should the holder fail or refuse to comply with the court's directive: (a) TCT No.
8027 shall be declared null and void; and (b) the RD-Naga shall issue a new certificate of title in
lieu thereof, enter the deeds of sale, and issue certificates of title in favor of the buyers.
The administratix failed to comply.In an Order dated October 2, 2008, the RTC declared TCT
No. 8027 null and void, resulting in the issuance of a new one, bearing annotations of the buyers'
adverse claims. The new owner's duplicate copy of TCT No. 8027 (subject owner's duplicate
title) was given to petitioner in 2009. On April 22, 2013, respondents filed a Complaint against
petitioner alleging that they are entitled to the possession thereof as registered owners, and
suffered damages as a consequence of its unlawful withholding, compelling them to secure the
services of counsel to protect their interests.

In her Answer, petitioner averred that she and the other buyers are in the process of
completing all the requirements for the registration of the sales in their favor, and have paid the
estate taxes thereon. They had likewise caused the survey of the land but the first geodetic
engineer they hired to conduct the same failed to deliver his services, prompting them to file a
complaint against him, and to hire another geodetic engineer. Considering that their possession
of the subject owner's duplicate title was by virtue of a court decision, and for the legitimate
purpose of registering the sales in their favor and the issuance of titles in their names, they
should be allowed to retain possession until the completion of the requirements therefor. The
said title was eventually submitted to the RD-Naga on September 13, 2013.

Issue:

Whether or not the petitioner has the obligation to surrender and delivery of possession of
the subject owner's duplicate title to respondents

Rulings:
 Yes. The Supreme Court ruled in the affirmative.Preliminarily, it is well to point out that
the subject land was an undivided co-owned property when Julian sold different portions thereof
to various persons.However, a perusal of the pertinent deeds of absolute sale reveals that definite
portions of the subject land were eventually sold, and the buyers took possession and introduced
improvements thereon, declared the same in their names, and paid the realty taxes thereon, all
without any objection from respondents who never disputed the sales in favor of the buyers.
Consequently, the Court finds that there is, in this case, a partial factual partition or termination
of the co-ownership, which entitles the buyers to the segregation of their respective portions, and
the issuance of new certificates of title in their names upon compliance with the requirements of
law.

Records show that the subject owner's duplicate title had already been surrendered to the
RD-Naga on September 13, 2013, and some of the buyers had secured Certificates Authorizing
Registration and paid the corresponding fees for the registration of the sales in their favor.
Nonetheless, while the rights of the buyers over the portions respectively sold to them had
already been recognized by the RTC of Naga City in its July 17, 1998 Decision in Civil Case No.
RTC '96-3526 which had attained finality on September 10, 2006, there is no showing that the
other affected buyers have similarly complied with the necessary registration requirements.

Notably, from the time petitioner received possession of the subject owner's duplicate
title in 2009, a considerable amount of time had passed until she submitted the same to the RD-
Naga on September 13, 2013. But even up to the time she filed the instant petition before the
Court on May 6, 2016, she failed to show any sufficient justification for the continued failure of
the concerned buyers to comply with the requirements for the registration of their respective
deeds of sale and the issuance of certificates of title in their names to warrant a preferential right
to the possession of the subject owner's duplicate title as against respondents who undisputedly
own the bigger portion of the subject land. Consequently, the Court finds no reversible error on
the part of the CA in affirming the RTC Decision directing petitioner or the RD-Naga to deliver
or surrender the subject owner's duplicate title to respondents.

Moreover, it bears to stress that the function of a Register of Deeds with reference to the
registration of deeds is only ministerial in nature. Thus, the RD-Naga cannot be expected to
retain possession of the subject owner's duplicate title longer than what is reasonable to perform
its duty. In the absence of a verified and approved subdivision plan and technical description
duly submitted for registration on TCT No. 8027, it must return the same to the presenter, in this
case, petitioner who, as aforesaid, failed to establish a better right to the possession of the said
owner's duplicate title as against respondents.

As a final point, it must, however, be clarified that the above-pronounced delivery or surrender is
without prejudice to the rights of the concerned buyers who would be able to subsequently
complete the necessary registration requirements and thereupon, duly request the surrender of the
subject owner's duplicate title anew to the RD-Naga.
 SPS. ROBERTO ABOITIZ AND MARIA CRISTINA CABARRUS, Petitioners
vs. SPS. PETER L. PO AND VICTORIA L. PO, Respondents
G.R. No. 208450
June 5, 2017
Second Division
Leonen, J.

Nature of the Case:

The Petitions were filed under Rule 45 of the Rules of Court. This resolves two (2)
Petitions for Review on Certiorari assailing the Court of Appeals' October 31, 2012 Decision and
its June 17, 2013 Resolution in CA-G.R. CV No. 03803. The assailed decision affirmed the
Regional Trial Court's Decision, which declared the spouses Peter Po and Victoria Po (Spouses
Po) as the rightful owners of the parcel of land. However, the Court of Appeals ruled that
respondents Jose Maria Moraza (Jose), spouses Ernesto Aboitiz (Ernesto), and Isabel Aboitiz
(Isabel) were innocent buyers in good faith whose titles were entitled to protection. The assailed
resolution denied the Motion for Partial Reconsideration of the spouses Roberto Aboitiz and
Maria Cristina Cabarrus (Spouses Aboitiz).
.

Facts:

This case involves a parcel of land located in Cabancalan, Mandaue City, initially
registered under the name of Roberto Aboitiz. This parcel of land originally belonged to the late
Mariano Seno. On July 31, 1973, Mariano executed a Deed of Absolute Sale in favor of his son,
Ciriaco Seno. On May 5, 1978, Ciriaco sold the two (2) lots to Victoria Po (Victoria). The parties
executed a Deed of Absolute Sale. On July 15, 1982, Mariano died and was survived by his five
(5) children.
In 1990, Peter Po discovered that Ciriaco "had executed a quitclaim dated August 7, 1989
renouncing his interest in favor of Roberto. In the quitclaim, Ciriaco stated that he was "the
declared owner of Lot Nos. 2835 and 2807.

The Spouses Po confronted Ciriaco. By way of remedy, Ciriaco and the Spouses Po
executed a Memorandum of Agreement dated June 28, 1990 in which Ciriaco agreed to pay
Peter the difference between the amount paid by the Spouses Po as consideration for the entire
property and the value of the land the Spouses Po were left with after the quitclaim. However,
also in 1990, Lot No. 2835 was also sold to Roberto. The Mariano Heirs, including Ciriaco,
executed separate deeds of absolute sale in favor of Roberto. Thereafter, Roberto immediately
developed the lot as part of a subdivision called North Town Homes. On April 19, 1993, Roberto
filed an application for original registration of Lot No. 2835, the trial court granted the issuance
of Original Certificate of Title No. 0-887 in the name of Roberto. The lot was immediately
subdivided with portions sold to Ernesto and Jose.

On November 19, 1996, the Spouses Po filed a complaint to recover the land and to
declare nullity of title with damages.

The Spouses Aboitiz appealed to the Court of Appeals. The Court of Appeals, in its
Decision dated October 31, 2012, partially affirmed the trial court decision, declaring the
Spouses Po as the rightful owner of the land. However, it ruled that the titles issued to
respondents Jose, Ernesto, and Isabel should be respected.

The Court of Appeals discussed the inapplicability of the rules on double sale and the
doctrine of buyer in good faith since the land was not yet registered when it was sold to the
Spouses Po. However, it ruled in favor of the Spouses Po on the premise that registered property
may be reconveyed to the "rightful or legal owner or to the one with a better right if the title was
wrongfully or erroneously registered in another person's name." The Court of Appeals held that
the Mariano Heirs were no longer the owners of the lot at the time they sold it to Roberto in 1990
because Mariano, during his lifetime, already sold this to Ciriaco in 1973.

It found that the Deed of Absolute Sale between Ciriaco and the Spouses Po was duly
notarized and was thus presumed regular on its face. Their Memorandum of Agreement did not
cancel or rescind the Deed of Absolute Sale but rather strengthened their claim that they "entered
into a contract of sale. "It likewise ruled that, contrary to the assertion of the Spouses Aboitiz,
there was no showing that Ciriaco merely held the property in trust for the Mariano Heirs.It held
that the action of the Spouses Po had not yet prescribed because their complaint in 1996 was
within the 10-year prescriptive period as the title in favor of the Spouses Aboitiz was issued in
1994. However, the Court of Appeals ruled that the certificates of title of Jose, Ernesto, and
Isabel were valid as they were innocent buyers in good faith.

Issue:

Whether or not the respondents Jose Maria Moraza, Ernesto Aboitiz, and Isabel Aboitiz
are innocent purchasers in good faith.

Rulings:

Respondents Jose, Ernesto, and Isabel cannot be deemed purchasers in bad faith. Despite
these findings, the Spouses Po cannot recover the property. Respondents Jose, Ernesto, and
Isabel are innocent purchasers for value.

An innocent purchaser for value refers to the buyer of the property who pays for its full
and fair price without or before notice of another person's right or interest in it. He or she buys
the property believing that "the seller is the owner and could transfer the title to the property. The
Spouses Po argue that respondents Jose, Ernesto, and Isabel are not innocent purchasers for value
because the tax declaration over the property has the following annotation:

This tax declaration is also declared in the name of Mrs. Victoria Lee Po, married to Peter
Po under tax dee. no. 0634-A so that one may be considered a duplicate to the other. However, if
a property is registered, the buyer of a parcel of land is not obliged to look beyond the transfer
certificate of title to be considered a purchaser in good faith for value.

In this case, there is no showing that respondents Jose, Ernesto, and Isabel had any
knowledge of the defect in the title. Considering that the annotation that the Spouses Po are
invoking is found in the tax declaration and not in the title of the property, respondents Jose,
Ernesto, and Isabel cannot be deemed purchasers in bad faith.
MANUEL L. BAUTISTA, SPOUSES ANGEL SAHAGUN and CARMELITA BAUTISTA,
and ANIANO L. BAUTISTA, Petitioners vs MARGARITO L. BAUTISTA, Respondent
G.R. No. 202088
March 8, 2017
Second Division
Peralta, J.

Nature of the Case:

Assailed in this petition for review on certiorari filed by petitioners Manuel L. Bautista,
Spouses Angel Sahagun and Carmelita Bautista, and Aniano L. Bautista before this Court is the
Decisiondated March 6, 2012 and Resolutiondated May 25, 2012 of the Court of
Appeals (CA) which reversed the Decisiondated February 16, 2009 of the Regional Trial
Court (RTC) of San Pablo City, Branch 32, declaring that the subject property covered by
Transfer Certificate of Title (TCT) No. T-59882 is exclusively owned by respondent Margarito
L. Bautista (Margarito).

Facts:

The present case stemmed from a Complaint for Partition and Accounting with Prayer for
Temporary Restraining Order and/or Writ of Preliminary Injunction filed by the petitioners
against Margarito and the other defendants over several properties allegedly co-owned by them,
which included the subject property.

The Bautista siblings - Margarito, Manuel L. Bautista, Carmelita Bautista Sahagun

(Carmelita), Aniano L. Bautista (Aniano), Florencia Bautista de Villa (Florencia), and Ester
Bautista Cabrera (Ester) - established a lending business through a common fund from the
proceeds of the sale of a parcel of coconut land they inherited from their mother ConsorciaLantin
Bautista.

Amelia V. Mendoza obtained a loans from Florencia, and secured the same with a real
estate mortgage over a 25,518-square-meter parcel of land she owned. Subsequently, on April
12, 1999, Amelia and Florencia executed another Kasulatan ng Pagdaragdag ng Sanla in the
amount of ₱57,500.00. Florencia, thereafter, received the owner's duplicate copy of TCT No. T-
2371, which she, in turn, entrusted to Carmelita when she went overseas.

On November 28, 2002, Amelia allegedly sold the subject property to Margarito through
a Kasulatan ng BilihangTuluyan for ₱500,000.00 and, likewise, cancelled the ₱l,085,000.00 loan
through another "Cancellation and Discharge of Mortgage." On the same date, Florencia filed a
Petition for the Issuance of a Second Owner's Duplicate of TCT No. T-2371 before the RTC of
San Pablo City, Branch 29. She alleged that she was the mortgagee of the subject property, and
that she could not locate, despite diligent search, the owner's duplicate title in her possession,
which she misplaced sometime in September 2002.16 Florencia also executed a Special Power of
Attorney in favor of Margarito to represent her in the proceedings.

Petitioners tried to oppose the issuance, but on January 30, 2003, the RTC granted the
petition and TCT No. T-59882 was later issued in the name of Margarito. On January 12, 2004,
petitioners registered an Adverse Claim over the Sta. Monica property, which was annotated on
TCT No. T-59882.20

Failing to settle their differences, petitioners subsequently instituted a Complaint for

Partition and Accounting with Prayer for Temporary. Petitioners averred that Margarito and the
others refused to heed their oral and written demands for the partition of the properties they co-
owned, which included the Sta. Monica property. For his part, Margarito asseverated that he
exclusively owns the property in controversy since he used his personal funds in purchasing the
land.

On February 16, 2009, the RTC ruled in favor of the petitioners and declared, among
other things, that the Sta. Monica property was commonly owned by the siblings.

Aggrieved, Margarito elevated the case before the CA. In a Decision dated March 6,
2012, the CA reversed and set aside the decision of the RTC. The CA concluded that petitioners
failed to establish that they are -owners of the Sta. Monica property. It held that the TCT under
Margarito's name was an indefeasible and incontrovertible title to the property and has more
probative weight than the blank Kasulatan adduced by the petitioners. Consequently, petitioners'
action for partition and accounting cannot be acted upon because they failed to prove that they
are co-owners of the Sta. Monica property.

Issue:

Whether or not amelia conveyed to Margaritothe subject land in dispute as evidenced by

his Transfer Certificate of Title granting him exclusive ownership.

Rulings:

Yes. It is elementary that he who alleges a fact has the burden of proving it and a mere
allegation is not evidence. It appears that Margarito's evidence of exclusive ownership are the
certificate of title, the tax declarations pertaining thereto, his bank deposits, and other mortgage
contracts involving different mortgagors. Despite all these, Margarito failed to prove that Amelia
conveyed the Sta. Monica property exclusively in his name. It is also quite intriguing why he did
not even bother to present the testimony of Amelia or of Florencia, who could have enlightened
the court about their transactions. In addition, We find it incredible that a property, which
secured a loan roughly over a million pesos, would be sold for considerably less than that
amount or for only ₱550,000.00.

As for the TCT No. T-59882 in the name of Margarito, like in the case at bar, although a
certificate of title is the best proof of ownership of a piece of land, the mere issuance of the same
in the name of any person does not foreclose the possibility that the real property may be under
co-ownership with persons not named in the certificate or that the registrant may only be a
trustee or that other parties may have acquired interest subsequent to the issuance of the
certificate of title. The principle that a trustee who puts a certificate of registration in his name
cannot repudiate the trust by relying on the registration is one of the well-known limitations upon
a title.
There is an implied trust when a property is sold and the legal estate is granted to one
party but the price is paid by another for the purpose of having the beneficial interest of the
property. This is sometimes referred to as a purchase money resulting trust, the elements of
which are: (a) an actual payment of money, property or services, or an equivalent, constituting
valuable consideration; and (b) such consideration must be furnished by the alleged beneficiary
of a resulting trust.

A trust, which derives its strength from the confidence one reposes on another especially
between families, does not lose that character simply because of what appears in a legal
document. From the foregoing, this Court finds that an implied resulting trust existed among the
parties. The pieces of evidence presented demonstrate their intention to acquire the Sta. Monica
property in the course of their business, just like the other properties that were also the subjects
of the partition case and the compromise agreement they entered into. Although the Sta. Monica
property was titled under the name of Margarito, the surrounding circumstances as to its
acquisition speak of the intent that the equitable or beneficial ownership of the property should
belong to the Bautista siblings.
 Manuel C. Ubas, Sr., Petitioner vs. Wilson Chan, Respondent
G.R. No. 215910
February 6, 2017
First Division
Perlas-Bernabe, J.

Nature of the action:

This is a petition for review on certiorari assailing the Decision of the Court of Appeals
(CA) dismissing the complaint filed by petitioner Manuel C. Ubas, Sr. (petitioner) for lack of
cause of action.

Facts:
Petitioner alleged that respondent, "doing business under the name and style of
UNIMASTER," was indebted to him in the amount of ₱1,500,000.00, representing the price of
boulders, sand, gravel, and other construction materials allegedly purchased by respondent from
him for the construction of the Macagtas Dam in Macagtas, Catarman, Northern Samar. Further,
he averred that respondent had issued three (3) bank checks, payable to "CASH" in the amount
of ₱500,000.00 but when petitioner presented the subject checks for encashment, the same were
dishonored due to a stop payment order.

Respondent filed an Answer with Motion to Dismiss, seeking the dismissal of the case on
the following ground, among others: the complaint states no cause of action, considering that the
checks do not belong to him but to Unimasters Conglomeration, Inc. (Unimasters).

The Regional Trial Court (RTC) ruled that petitioner had a cause of action against
respondent. At the outset, it observed that petitioner's demand letter - which clearly stated the
serial numbers of the checks, including the dates and amounts thereof - was not disputed by
respondent.

The CA reversed and set aside the RTC's ruling, dismissing petitioner's complaint on the
ground of lack of cause of action. It held that respondent was not the proper party defendant in
the case, considering that the drawer of the subject checks was Unimasters, which, as a corporate
entity, has a separate and distinct personality from respondent.

Issue:
Whether or not the CA erred in dismissing petitioner's complaint for lack of cause of
action.

Ruling:

Yes, the CA erred in dismissing petitioner's complaint for lack of cause of action.

Although the checks were under the account name of Unimasters, it should be
emphasized that the manner or mode of payment does not alter the nature of the obligation. The
source of obligation, as claimed by petitioner in this case, stems from his contract with
respondent. When they agreed upon the purchase of the construction materials on credit for the
amount of ₱1,500,000,00, the contract between them was perfected . Therefore, even if corporate
checks were issued for the payment of the obligation, the fact remains that the juridical tie
between the two (2) parties was already established during the contract's perfection stage and,
thus, does not preclude the creditor from proceeding against the debtor during the contract's
consummation stage.

That a privity of contract exists between petitioner and respondent is a conclusion amply
supported by the averments and evidence on record in this case. First, the Court observes that
petitioner was consistent in his account that he directly dealt with respondent in his personal and
not merely his representative capacity. Moreover, the demand letter, which was admitted by
respondent, was personally addressed to respondent and not to Unimasters as represented by the
latter. Also, petitioner explained that he delivered the construction materials to respondent absent
any written agreement due to his trust on the latter.

Jurisprudence holds that "in a suit for a recovery of sum of money, as here, the plaintiff-
creditor [(petitioner in this case)] has the burden of proof to show that defendant [(respondent in
this case)] had not paid [him] the amount of the contracted loan. However, it has also been long
established that where the plaintiff-creditor possesses and submits in evidence an instrument
showing the indebtedness, a presumption that the credit has not been satisfied arises in [his]
favor. Thus, the defendant is, in appropriate instances, required to overcome the said
presumption and present evidence to prove the fact of payment so that no judgment will be
entered against him."34 This presumption stems from Section 24 of the NIL, which provides that:

Section 24. Presumption of Consideration. - Every negotiable instrument is

deemed prima facie to have been issued for a valuable consideration; and every person whose
signature appears thereon to have become a party thereto for value.
 Dasmariñas T. ArcainaAndMagnani T. Banta, Petitioners vs. Noemi L. Ingram,
Represented By Ma. Nenette L. Archinue, Respondent
G.R. No. 196444
February 15, 2017
Third Division
Jardeleza, J.

Nature of the action:

This is a case for recovery of ownership and title to real property, possession and
damages with preliminary injunction filed by the respondent Noemi against the petitioners.

Facts:
Arcaina is the owner of a parcel of land. Her attorney-in-fact, Banta, entered into a
contract with Ingram for the sale of the property. Banta represented that the property has an area
of more or less 6,200 aquare meters (sq.m.) per the tax declaration covering it. The contract price
was ₱1,860,000.00, with Ingram making installment payments for the property. Ingram still had
an obligation to pay the remaining balance in the amount of ₱145,000.00.

Subsequently, Ingram caused the property to be surveyed and discovered that the lot has
an area of 12,000 sq. m. Upon learning of the actual area of the property, Banta allegedly insisted
that the difference of 5,800 sq. m. remains unsold. This was opposed by Ingram who claims that
she owns the whole lot by virtue of the sale; he then instituted the recovery case.

The Municipal Circuit Trial Court (MCTC) dismissed the complaint and declared that,
for Ingram to be awarded the excess 5,800 sq. m. portion of the property, she should have
presented evidence that she paid for the surplus area consistent with Article 1540 of the Civil
Code.

The Regional Trial Court (RTC) reversed and set aside the Order of the MCTC. The RTC
found that neither of the parties presented competent evidence to prove the property's actual area.
Hence, the RTC concluded that the area of the lot as shown by the boundaries indicated in the
deeds of sale is only 6,200 sq. m. more or less. In addition, the RTC held that Article 1542,
which covers sale of real estate in lump sum, applies in this case. Having apparently sold the
entire lot for a lump sum, Arcaina, as the vendor, is obligated to deliver all the land included in
the boundaries of the property, regardless of whether the real area should be greater or smaller
than what is recited in the deeds of sale.

The Court of Appeals (CA) agreed with the RTC that the sale was made for a lump sum
and not on a per-square-meter basis. The CA explained that in case of conflict between the area
and the boundaries of a land subject of the sale, the vendor is obliged to deliver to the vendee
everything within the boundaries. This is in consonance with Article 1542 of the Civil Code.
Petitioners now assail the CA' s declaration that the sale of the property was made for a lump
sum.
Petitioners insist that they sold the property on a per-square-meter basis, at the rate of
₱300.00 per sq. m. Since the sale was on a per-square-meter basis, petitioners argue that it is
Article 1539, and not Article 1542 of the Civil Code, which governs.

Issues:

Whether or not the sale in this case a sale for a lump sum? And if this is a sale for a lump
sum, should the excess area then be awarded to Respondents?
Ruling:

Yes. In Del Prado v. Spouses Caballero, we were confronted with facts analogous to the
present petition. Pending the issuance of the Original Certificate of Title (OCT) in their name,
Spouses Caballero sold a parcel of land to Del Prado. The contract of sale stated both the
property's boundaries and estimated area of more or less 4,000 sq. m. Later, when the OCT was
issued, the technical description of the property appeared to be 14,457 sq. m., more or less. Del
Prado alleged that Spouses Caballero were bound to deliver all that was included in the
boundaries of the land since the sale was made for a lump sum. Although, we agreed with Del
Prado that the sale partakes of the nature of a lump sum contract, we did not apply Article 1542.
In holding that Del Prado is entitled only to the area stated in the contract of sale, we explained:

The Court, however, clarified that the rule laid down in Article 1542 is not hard and fast
and admits of an exception. It held:

"A caveat is in order, however. The use of "more or less" or similar words in designating
quantity covers only a reasonable excess or deficiency. A vendee of land sold in gross or with the
description "more or less" with reference to its area does not thereby ipso facto take all risk of
quantity in the land.

In a contract of sale of land in a mass, the specific boundaries stated in the contract must
control over any other statement, with respect to the area contained within its boundaries.

Black's Law Dictionary defines the phrase "more or less" to mean:

"About; substantially; or approximately; implying that both parties assume the risk of any
ordinary discrepancy. The words are intended to cover slight or unimportant inaccuracies in
quantity, Carter v. Finch, 186 Ark. 954, 57 S.W.2d 408; and are ordinarily to be interpreted as
taking care of unsubstantial differences or differences of small importance compared to the
whole number of items transferred."

In a lump sum contract, a vendor is generally obligated to deliver all the land covered
within the boundaries, regardless of whether the real area should be greater or smaller than that
recited in the deed. However, in case there is conflict between the area actually covered by the
boundaries and the estimated area stated in the contract of sale, he/she shall do so only when the
excess or deficiency between the former and the latter is reasonable.

Applying Del Prado to the case before us, we find that the difference of 5,800 sq. m. is
too substantial to be considered reasonable.

Further, at the time of the sale, Ingram and petitioners did not have knowledge of the
actual area of the land within the boundaries of the property. It is undisputed that before the
survey, the parties relied on the tax declaration covering the lot, which merely stated that it
measures more or less 6,200 sq. m. Thus, when petitioners offered the property for sale and when
Ingram accepted the offer, the object of their consent or meeting of the minds is only a 6,200 sq.
m. property.
 Spring Homes Subdivision Co., Inc., Spouses Pedro L. Lumbres and Rebecca T.Roaring,
Petitioners vs. Spouses Pedro Tablada, Jr. and ZenaidaTablada, Respondents
G.R. No. 200009
January 23, 2017
Second Division
Peralta, J.

Nature of the action:

This is a petition for review on certiorari seeking to reverse and set aside the Decision of
the Court of Appeals (CA) which ruled that ownership over the subject lot was acquired by the
Respondents.

Facts:

Petitioners, Spouses Pedro L. Lumbres and Rebecca T. Roaring, (Spouses Lumbres)

entered into a Joint Venture Agreement with Spring Homes Subdivision Co., Inc., through its
chairman, the late Mr. Rolando B. Pasic, for the development of several parcels of land. The
Spouses Lumbres transferred the titles to the parcels of land in the name of Spring Homes.

Spring Homes entered into a Contract to Sell with respondents, Spouses Pedro Tablada,
Jr. and ZenaidaTablada, (Spouses Tablada) for the sale of a parcel of land. The Spouses Lumbres
filed with the RTC of Calamba City a complaint for Collection of Sum of Money, Specific
Performance and Damages with prayer for the issuance of a Writ of Preliminary Attachment
against Spring Homes for its alleged failure to comply with the terms of the Joint Venture
Agreement. Spring Homes executed a Deed of Absolute Sale in favor of the Spouses Tablada.
The title over the subject property, however, remained with Spring Homes for its failure to cause
the cancellation of the TCT and the issuance of a new one in favor of the Spouses Tablada.

The Spouses Lumbres and Spring Homes entered into a Compromise Agreement wherein
Spring Homes conveyed the subject property, as well as several others, to the Spouses Lumbres.
The Spouses Lumbres started collecting deficiency payments from the subdivision lot buyers.
When no payment was received, the Spouses Lumbres caused the cancellation of the Contract to
Sell previously executed by Spring Homes in favor of the Spouses Tablada. the Spouses
Lumbres and Spring Homes executed a Deed of Absolute Sale over the subject property, and as a
result, a new title was issued in the name of the Spouses Lumbres.

The Spouses Lumbres filed an ejectment suit of their own before the Municipal Trial
Court in Cities (MTCC) of Calamba City demanding that the Spouses Tablada vacate the subject
property and pay rentals due thereon. The MTCC, however, dismissed the suit, ruling that the
Spouses Lumbres registered their title over the subject property in bad faith. Such ruling was
reversed by the Regional Trial Court (RTC) which found that there was no valid deed of absolute
sale between the Spouses Tablada and Spring Homes. Nevertheless, the CA, on appeal, agreed
with the MTCC and reinstated the decision thereof.

Issue:

Whether or not Spouses Lumbres acquired ownership over the property in good faith
which is not in accord with established facts, law and jurisprudence.

Ruling:

No. The principle of primus tempore, potior jure (first in time, stronger in right) gains
greater significance in case of a double sale of immovable property. Thus, the Court has
consistently ruled that ownership of an immovable property which is the subject of a double sale
shall be transferred: (1) to the person acquiring it who in good faith first recorded it in the
Registry of Property; (2) in default thereof, to the person who in good faith was first in
possession; and (3) in default thereof, to the person who presents the oldest title, provided there
is good faith. The requirement of the law then is two-fold: acquisition in good faith and
registration in good faith. Good faith must concur with the registration - that is, the registrant
must have no knowledge of the defect or lack of title of his vendor or must not have been aware
of facts which should have put him upon such inquiry and investigation as might be necessary to
acquaint him with the defects in the title of his vendor. If it is shown that a buyer was in bad
faith, the alleged registration they have made amounted to no registration at all.

Here, the first buyers of the subject property, the Spouses Tablada, were able to take said
property into possession but failed to register the same because of Spring Homes' unjustified
failure to deliver the owner's copy of the title whereas the second buyers, the Spouses Lumbres,
were able to register the property in their names. But while said the Spouses Lumbres
successfully caused the transfer of the title in their names, the same was done in bad faith. As
correctly observed by the Court in Spouses Lumbres v. Spouses Tablada, 56 the Spouses
Lumbres cannot claim good faith since at the time of the execution of their Compromise
Agreement with Spring Homes, they were indisputably and reasonably informed that the subject
lot was previously sold to the Spouses Tablada. They were also already aware that the Spouses
Tablada had constmcted a house thereon and were in physical possession thereof. They cannot,
therefore, be permitted to freely claim good faith on their part for the simple reason that the First
Deed of Absolute Sale between Spring Homes and the Spouses Tablada was not annotated at the
back of the subject property's title. It is beyond the Court's imagination how spouses Lumbres
can feign ignorance to the first sale when the records clearly reveal that they even made
numerous demands on the Spouses Tablada to pay, albeit erroneously, an alleged balance of the
purchase price.

Accordingly, in order for the Spouses Lumbres to obtain priority over the Spouses
Tablada, the law requires a continuing good faith and innocence or lack of knowledge of the first
sale that would enable their contract to ripen into full ownership through prior registration.59 But
from the very beginning, the Spouses Lumbres had already known of the fact that the subject
property had previously been sold to the Spouses Tablada, by virtue of a valid Deed of Absolute
Sale. In fact, the Spouses Tablada were already in possession of said property and had even
constructed a house thereon. Clearly then, the Spouses Lumbres were in bad faith the moment
they entered into the second Deed of Absolute Sale and thereafter registered the subject property
in their names. For this reason, the Court cannot, therefore, consider them as the true and valid
owners of the disputed property and permit them to retain title thereto.

.
 Paradigm Development Corporation of the Philippines, Petitioner vs. Bank of the
Philippine Islands, Respondent
G.R. No. 191174
June 7, 2017
Third Division
Reyes, J., J.

Nature of the action:

This is a Petition for Review on Certiorari assailing the Decision of the Court of Appeals
(CA) which granted respondent Bank of the Philippine Islands’ (BPI) appeal and accordingly
dismissed the complaint filed by petitioner Paradigm Development Corporation of the
Philippines (PDCP).

Facts:

Sengkon Trading (Sengkon), a sole proprietorship, obtained a loan from Far East Bank
and Trust Company (FEBTC) under a credit facility. FEBTC again granted Sengkon another
credit facility. Two real estate mortgage (REM) contracts were executed by PDCP’s President to
partially secure Sengkon's obligations under this Credit Line.

Sengkon defaulted in the payment of its loan obligations. FEBTC demanded payment
from PDCP. Negotiations were put on hold because BPI acquired FEBTC and assumed the rights
and obligations of the latter.

Upon verification with the Registry of Deeds, PDCP discovered that FEBTC extra-
judicially foreclosed the first and second mortgage without notice to it as mortgagor and sold the
mortgaged properties to FEBTC as the lone bidder. Thereafter, the corresponding Certificate of
Sale was registered. PDCP filed a Complaint for Annulment of Mortgage, Foreclosure,
Certificate of Sale and Damages. PDCP alleged that FEBTC assured it that the mortgaged
properties will only secure the Credit Line sub-facility of the Omnibus Line. With this
understanding, PDCP President allegedly agreed to sign on two separate dates a pro-forma and
blank REM. PDCP, however, claimed that it had no intent to be bound under the second REM,
which was not intended to be a separate contract, but only a means to reduce registration
expenses. According to PDCP, when FEBTC registered both REMs, even if the intent was only
to register one, the validity of both REMs was vitiated by lack of consent. PDCP claims that said
intent is supported by the fact that the REMs were constituted merely as "partial security" for
Sengkon's obligations and therefore there was really no intent to be bound under both - but only
in one - REM.

The RTC rendered its Decision nullifying the REMs and the foreclosure proceedings.
The CA reversed the RTC's ruling. The CA found PDCP’s contentions incredible for the
following reasons: (i) the fact that PDCP surrendered the titles to the mortgaged properties to
FEBTC only shows that PDCP intended to mortgage all of these properties; (ii) if it were true
that FEBTC assured PDCP that it would be registering only one of the two REMs in order to
reduce registration expenses, then each of the two REMs should have covered the four properties
but it was not. On the contrary, the four properties were spread out with one REM covering one
of the four properties and the other REMs covering the remaining three properties; and (iii)
PDCP never complained to FEBTC regarding the registration of the two REMs even after it
discovered the same.

Issues:

(1) Whether or not the validity of both Real estate mortgage was vitiated by lack of
consent.
(2) Whether or not the foreclosure proceedings are valid
Ruling:

(1) No. To begin with, the registration of the REM contract is not essential to its validity
under Article 2085. In relation thereto, Article 2125 of the Civil Code reads:

Article 2125. In addition to the requisites stated in Article 2085, it is indispensable, in

order that a mortgage may be validly constituted, that the document in which it appears be
recorded in the Registry of Property. If the instrument is not recorded, the mortgage is
nevertheless binding between the parties.

Hence, even assuming that the parties indeed agreed to register only one of the two
REMs, the subsequent registration of both REMs did not affect an already validly executed REM
if there was no other basis for the declaration of its nullity. That the REMs were intended merely
as "partial security" does not make PDCP's argument more plausible because as aptly observed
by the CA, the PDCP's act of surrendering all the titles to the properties to FEBTC clearly
establishes PDCP' s intent to mortgage all of the four properties in favor of FEBTC to secure
Sengkon's obligation under the Credit Line.

PDCP's Amended Complaint is essentially premised on the supposed fraud employed on

it by FEBTC consisting of the latter's assurances that the REMs it already signed would not be
registered. In Solidbank Corporation v. Mindanao Ferroalloy Corporation, the Court discussed
the nature of fraud that would annul or avoid a contract, thus:

Fraud refers to all kinds of deception - whether through insidious machination,

manipulation, concealment or misrepresentation- that would lead an ordinarily prudent person
into error after taking the circumstances into account. In contracts, a fraud known as
dolocausante or causal fraud is basically a deception used by one party prior to or simultaneous
with the contract, in order to secure the consent of the other. Needless to say, the deceit
employed must be serious. In contradistinction, only some particular or accident of the obligation
is referred to by incidental fraud or doloincidente, or that which is not serious in character and
without which the other party would have entered into the contract anyway.

In the present case, even if FEBTC represented that it will not register one of the REMs,
PDCP cannot disown the REMs it executed after FEBTC reneged on its alleged promise. As
earlier stated, with or without the registration of the REMs, as between the parties thereto, the
same is valid and PDCP is already bound thereby. The signature of PDCP's President coupled
with its act of surrendering the titles to the four properties to FEBTC is proof that no fraud
existed in the execution of the contract. Arguably at most, FEBTC's act of registering the
mortgage only amounted to doloincidentewhich is not the kind of fraud that avoids a contract.

(2) No. FEBTC's failure to comply with its contractual obligation to send notice to PDCP
of the foreclosure sale is fatal to the validity of the foreclosure proceedings. In Metropolitan
Bank v. Wong, the Court ruled that while as a rule, personal notice to the mortgagor is not
required, such notice may be subject of a contractual stipulation, the breach of which is sufficient
to nullify the foreclosure sale. Precisely, the purpose of the foregoing stipulation is to apprise
respondent of any action which petitioner might take on the subject property, thus according him
the opportunity to safeguard his rights.

Thus, we restate: the general rule is that personal notice to the mortgagor in extrajudicial
foreclosure proceedings is not necessary and posting and publication will suffice. Sec. 3 of Act
3135 governing extra-judicial foreclosure of [REMs], as amended by Act 4118, requires only
posting of the notice of sale in three public places and the publication of that notice in a
newspaper of general circulation. The exception is when the parties stipulate that personal notice
is additionally required to be given the mortgagor. Failure to abide by the general rule, or its
exception, renders the foreclosure proceedings null and void.
 Teodorico A. Zaragoza, Petitioner vs. Iloilo Santos Truckers, Inc., Respondent
G.R. No. 224022
June 28, 2017
First Division
Perlas-Bernabe, J.

Nature of the action:

Assailed petition for review on certiorari of the Decision of the Court of Appeals (CA)
ruling that petitioner Teodorico A. Zaragoza (petitioner) could not eject respondent Iloilo Santos
Truckers, Inc. (respondent) from the leased premises as the latter complied with its obligation to
pay monthly rent thru consignation.

Facts:

Petitioner Teodorico A. Zaragoza (petitioner) bought a 3,058-square meter (sq. m.)

parcel of land from his parents. Petitioner claimed that unknown to him, his father leased a
1,000-sq. m. portion of the land to respondent Iloilo Santos Truckers, Inc. This notwithstanding,
petitioner allowed the lease to subsist.

Petitioner claimed that when his father died, respondent stopped paying rent. Respondent
maintained that it was willing to pay rent, but was uncertain as to whom payment should be
made as it received separate demands from Florentino's heirs, including petitioner. Thus,
respondent filed an interpleader case.

The Regional Trial Court (RTC) dismissed the action for interpleader, but at the same
time, stating that respondent may avail of the remedy of consignation in order to do away with
unnecessary expenses and delay.

Respondent informed petitioner that it had consigned the aggregate amount of

₱521,396.89. This notwithstanding, petitioner sent respondent a letter stating that granting
without conceding the propriety of consignation, the same did not extinguish the latter's
obligation to pay rent because the amount consigned was insufficient to cover the unpaid rentals
plus interests from February 2007 to May 2011. Petitioner demanded that respondent pay said
amount and at the same time, vacate the subject land within fifteen (15) days from receipt of the
letter. Respondent reiterated that it had already paid rent by consigning the amount representing
monthly rentals from February 2007 to March 2011.

As his demands went unheeded, petitioner filed a suit for unlawful detainer against
respondent before the Municipal Trial Court in Cities (MTCC). The MTCC ruled in petitioner's
favor, and accordingly, ordered respondent to: (a) vacate the subject land; and (b) pay petitioner
back rentals. The MTCC found that petitioner's complaint properly makes out a case for
unlawful detainer as it alleged that respondent defaulted in its rental payments from February
2007 to May 2011. Further, the MTCC opined that respondent's consignation with RTC is void,
and thus, did not serve to release respondent from paying its obligation to pay rentals. The RTC
reversed and set aside the MTCC and ruled that respondent's consignation of the rental amounts
was proper. The CA affirmed the RTC. It held, inter alia, that while petitioner's complaint for
unlawful detainer sufficiently states a cause of action on its face, petitioner, however, failed to
substantiate his allegation that respondent violated the terms and conditions of the lease contract
by intentionally failing to pay the monthly rentals.

Issue:
Whether or not the CA correctly ruled that petitioner could not eject respondent from the
subject land as the latter fully complied with its obligation to pay monthly rent thru consignation.
Ruling:

No. In Spouses Manzanilla v. Waterfields Industries Corporation, the Court discussed the
requisites of an unlawful detainer suit in instances where there is a subsisting lease contract
between the plaintiff-lessor and defendant-lessee, to wit:

For the purpose of bringing an unlawful detainer suit, two requisites must concur: (1)
there must be failure to pay rent or comply with the conditions of the lease, and (2) there must be
demand both to pay or to comply and vacate. The first requisite refers to the existence of the
cause of action for unlawful detainer, while the second refers to the jurisdictional requirement of
demand in order that said cause of action may be pursued. Implied in the first requisite, which is
needed to establish the cause of action of the plaintiff in an unlawful detainer suit, is the
presentation of the contract of lease entered into by the plaintiff and the defendant, the same
being needed to establish the lease conditions alleged to have been violated. Thus, in Bachrach
Corporation v. Court of Appeals [(357 Phil. 483, 492 [1998])], the Court held that the evidence
needed to establish the cause of action in an unlawful detainer case is (1) a lease contract and (2)
the violation of that lease by the defendant.

In other words, for an unlawful detainer suit to prosper, the plaintiff-lessor must show
that: first, initially, the defendant-lessee legally possessed the leased premises by virtue of a
subsisting lease contract; second, such possession eventually became illegal, either due to the
latter's violation of the provisions of the said lease contract or the termination thereof; third, the
defendant-lessee remained in possession of the leased premises, thus, effectively depriving the
plaintiff-lessor enjoyment thereof; and fourth, there must be a demand both to pay or to comply
and vacate and that the suit is brought within one (1) year from the last demand.

Thus, the crux of the controversy is whether or not the second requisite has been
satisfied, that is, whether or not respondent violated the terms and conditions of the lease
contract, specifically with regard to the payment of monthly rentals. The amount consigned with
RTC represents monthly rentals only for the period of February 2007 to March 2011, which is
two (2) whole months short of what was being demanded by petitioner.

It appears that even assuming arguendo that respondent's consignation of its monthly
rentals with RTC was made in accordance with law, it still failed to comply with its obligation
under the lease contract to pay monthly rentals. It is apparent that at the time petitioner filed the
unlawful detainer suit respondent was not updated in its monthly rental payments, as there is no
evidence of such payment for the months of April, May, and even June 2011. Irrefragably, said
omission constitutes a violation of the lease contract on the part of respondent.

Considering that all the requisites of a suit for unlawful detainer have been complied
with, petitioner is justified in ejecting respondent from the subject land.
 Kabisig Real Wealth Dev., Inc. and Fernando C. Tio, Petitioners vs. Young Builders
Corporation, Respondent
G.R. No. 212375
January 25, 2017
Second Division
Peralta, J.

Nature of the Case:

This is a Petition for Review assailing the Court of Appeals' (CA) Decision ordering the
petitioners to pay the respondent for the services rendered by the latter.

Facts:

Kabisig Real Wealth Dev., Inc. (Kabisig), through Ferdinand Tio (Tio), contracted the
services of Young Builders Corporation (Young Builders) to supply labor, tools, equipment, and
materials for the renovation of its building. Young Builders then finished the work and billed
Kabisig for P4,123,320.95. However, despite numerous demands, Kabisig failed to pay. It
contended that no written contract was ever entered into between the parties and it was never
informed of the estimated cost of the renovation. Thus, Young Builders filed an action for
Collection of Sum of Money against Kabisig.

The Regional Trial Court (RTC) of Cebu City rendered a Decision finding for Young
Builders, ordering the defendants to pay plaintiff P4,123,320.95 representing the value of
services rendered and materials used in the renovation.

The appellate court affirmed the RTC Decision, with modification, ordering the defedants
therein to pay the plaintiff Young Builders Corporation Two Million Four Hundred Thousand
(₱2,400,000.00) Pesos as TEMPERATE DAMAGES for the value of services, rendered and
materials used in the renovation of defendants-appellants building.

Issue:

Whether or not Kabisig is liable to Young Builders for the damages.

Ruling:

Yes. Under the Civil Code, a contract is a meeting of minds, with respect to the other, to
give something or to render some service. Under Article 1318, for a contract to be valid, it must
have the following essential elements: (1) consent of the contracting parties; (2) object certain,
which is the subject matter of the contract; and (3) cause of the obligation which is established.
Consent must exist, otherwise, the contract is nonexistent. Consent is manifested by the meeting
of the offer and the acceptance of the thing and the cause, which are to constitute the contract. By
law, a contract of sale, is perfected at the moment there is a meeting of the minds upon the thing
that is the object of the contract and upon the price. Indeed, it is a consensual contract which is
perfected by mere consent.

Kabisig's claim as to the absence of a written contract between it and Young Builders
simply does not hold water. It is settled that once perfected, a contract is generally binding in
whatever form, whether written or oral, it may have been entered into, provided the
aforementioned essential requisites for its validity are present. Article 1356 of the Civil Code
provides:

Art. 1356. Contracts shall be obligatory in whatever form they may have been entered
into, provided all the essential requisites for their validity are present.
 There is nothing in the law that requires a written contract for the agreement in question
to be valid and enforceable. Also, the Court notes that neither Kabisig nor Tio had objected to
the renovation work, until it was already time to settle the bill.

For an injured party to recover actual damages, however, he is required to prove the
actual amount of loss with reasonable degree of certainty premised upon competent proof and on
the best evidence available. Here, the evidence reveals that Young Builders failed to submit any
competent proof of the specific amount of actual damages being claimed. The documents
submitted by Young Builders either do not bear the name of Kabisig or Tio, their conformity, or
signature, or do not indicate in any way that the amount reflected on its face actually refers to the
renovation project.

Notwithstanding the absence of sufficient proof, Young Builders still deserves to be

recompensed for actually completing the work. In the absence of competent proof on the amount
of actual damages, the courts allow the party to receive temperate damages. Temperate or
moderate damages, which are more than nominal but less than compensatory damages, may be
recovered when the court finds that some pecuniary loss has been suffered but its amount cannot,
from the nature of the case, be proved with certainty.

To determine the compensation due and to avoid unjust enrichment from resulting out of
a fulfilled contract, the principle of quantum meruit may be used. Under this principle, a
contractor is allowed to recover the reasonable value of the services rendered despite the lack of
a written contract. The measure of recovery under the principle should relate to the reasonable
value of the services performed. The principle prevents undue enrichment based on the equitable
postulate that it is unjust for a person to retain any benefit without paying for it. Being predicated
on equity, said principle should only be applied if no express contract was entered into, and no
specific statutory provision was applicable. The principle of quantum meruit justifies the
payment of the reasonable value of the services rendered and should apply in the absence of an
express agreement on the fees.

Under the established circumstances, the total amount of ₱2,400,000.00 which the CA
awarded is deemed to be a reasonable compensation under the principle of quantum meruit since
the renovation of Kabisig's building had already been completed in 2001.
Delfin C. Gonzales, Jr., Petitioner vs. Magdaleno M. Peña, Alabang Country Club, Inc., and
Ms. Arsenia Vera, Respondents
G.R. No. 214303
January 30, 2017
First Division
Sereno, CJ.

Nature of the Case:

This is a Petition for Review on Certiorari assailing the Omnibus Resolution and
resolution of the Regional Trial Court, (RTC) of Makati City which denied the prayer of
petitioner Delfin C. Gonzales, Jr. to be restored as owner of the shares issued by respondent
Alabang Country Club, Inc. (ACCI).

Facts:

In its Decision, the RTC of Bago City adjudged petitioner liable to respondent
Magdaleno M. Peña for the payment of the agency’s fees and damages amounting to ₱28.5
million. Petitioner, together with his co-petitioners in that case, appealed the Decision, while
Peña moved for execution pending appeal of this ruling. The grant of that motion resulted in the
sale to Peña of petitioner’s ACCI shares. Through a private sale, he was able to sell and transfer
the subject shares to respondent Arsenia Vera.

The Court issued a Decision entitled Urban Bank, Inc. v. Peña which vacated with
finality the Decision of the RTC of Bago City. Considering that the Decision of the RTC of Bago
City had been completely vacated and declared null and void, this Court held that the
concomitant execution pending appeal was likewise null and without effect. Thus, we held that
Urban Bank and its officers and directors, including petitioner herein, were entitled to the full
restoration of their ownership and possession of all properties that were executed pending appeal,
such as the subject shares.

The restitution proceedings were raffled to the RTC of Makati City, Branch 65.
Thereafter, petitioner moved for execution, seeking restoration of his actual ACCI shares. The
ACCI countered that the club shares petitioner was claiming could no longer be returned to him,
because they had already been transferred by Peña to Vera.

In its Omnibus Resolution, the RTC concluded that Peña's private sale of the shares to
Vera was valid, given that the latter was an innocent purchaser for value. As such, Vera could
not be charged with knowledge of the controversy involving the ACCI shares. Considering the
validity of the sale, the trial court held that the actual restitution of the property to petitioner was
no longer possible. Applying paragraph (b) of the above-quoted dispositive portion of the
Decision, it directed Peña to pay for the value of the property instead.

Aggrieved, petitioner came directly to this Court and asked for the reversal of the ruling
of the trial court's ruling, as well as for the cancellation of the shares in the name of Vera.
Petitioner points out that Peña obtained the property at a public auction that has been declared
void by this Court. He then asserts that Vera, as successor-in-interest, has no right over those
shares.

Issue:

Whether or not the RTC faithfully complied with our directive to restore to Urban Bank
and the latter's officers their properties illegally obtained by Peña.
Ruling:

No. Indeed, the RTC did not comply with our ruling in Urban Bank when it refused to
restore to petitioner the actual ownership of his club shares on the mere pretext that these had
already been sold by Peña to his successor-in-interest.

There is no factual dispute that Peña acquired the ACCI shares of petitioner by virtue of a
winning bid in an execution sale that had already been declared by this Court, with finality, as
null and void. In no uncertain terms, we declared that the "concomitant execution pending appeal
is likewise without any effect. x xx. Consequently, all levies, garnishment and sales executed
pending appeal are declared null and void, with the concomitant duty of restitution x xx."

Void transactions do not produce any legal or binding effect, and any contract directly
resulting from that illegality is likewise void and inexistent. Therefore, Peña could not have been
a valid transferee of the property. As a consequence, his successor-in-interest, Vera, could not
have validly acquired those shares. Neither was the RTC correct in its characterization of the
actual restitution of the ACCI shares to petitioner as "impossible." For the obligation to be
considered impossible under Article 1266 of the Civil Code, its physical or legal impossibility
must first be proven.

Here, the RTC did not make any finding on whether or not it was physically impossible
to effect the actual restitution of the property. On the other hand, petitioner correctly points out
that since the shares are movable by nature, the same can be transferred back to Gonzalez, Jr. by
recording the transaction in the stock and transfer book of the club.

As regards legal impossibility, the RTC appears to have jumped to the conclusion that
because of the perfected sale of the shares to Vera, petitioner can no longer claim actual
restitution of the property.

The Court itself settled that Peña acquired the properties by virtue of a null and void
execution sale. In effect, his buyers acquired no better title to the goods than he had. By virtue of
Article 1505, the true owners of the goods are definitely not legally precluded from claiming the
ownership of their actual properties.
 Civil Law Review 2
Case Digests

(January 2017 – January 2018)

Atty. Crisostomo A. Uribe

Macabangon, Jalalin A.
Class. No. 13
2017-0503
Sunday Class
1:00 -5:00 PM

MAY 6, 2018