[G.R. No. 136031.
January 4, 2002] required, I shall likewise pay them either by personal check,
JEFFERSON LIM, petitioner, vs. QUEENSLAND TOKYO
COMMODITIES, INC., respondent.
DECISION
QUISUMBING, J.:
Before us is a petition for review assailing the June 25,
1998, decision[1] of the Court of Appeals in CA-G.R. CV No.
46495 which reversed and set aside the decision of the
Regional Trial Court of Cebu, Branch 24, dismissing the
complaint by respondent for a sum of money as well as
petitioners counterclaim.
Private respondent Queensland Tokyo Commodities,
Incorporated (Queensland, for brevity) is a duly licensed
broker engaged in the trading of commodities futures with
full membership and with a floor trading right at the Manila
Futures Exchange, Inc..[2]
Sometime in 1992, Benjamin Shia, a market analyst and
trader of Queensland, was introduced to petitioner
Jefferson Lim by Marissa Bontia,[3] one of his employees.
Marissas father was a former employee of Lims father.[4]
Shia suggested that Lim invest in the Foreign Exchange
Market, trading U.S. dollar against the Japanese yen, British
pound, Deutsche Mark and Swiss Franc.
Before investing, Lim requested Shia for proof that the
foreign exchange was really lucrative. They conducted mock
tradings without money involved. As the mock trading
showed profitability, Lim decided to invest with a marginal
deposit of US$5,000 in managers check. The marginal
deposit represented the advance capital for his future
tradings. It was made to apply to any authorized future
transactions, and answered for any trading account against
which the deposit was made, for any loss of whatever
nature, and for all obligations, which the investor would
incur with the broker.[5]
Because respondent Queensland dealt in pesos only, it had
to convert US$5,000 in managers check to pesos,
amounting to P125,000 since the exchange rate at that time
was P25 to US$1.00. To accommodate petitioners request
to trade right away, it advanced the P125,000 from its own
funds while waiting for the managers check to clear.
Thereafter, a deposit notice in the amount of P125,000 was
issued to Queensland, marked as Exhibit E. This was sent to
Lim who received it as indicated by his signature marked as
Exhibit E-1. Then, Lim signed the Customers Agreement,
marked as Exhibit F, which provides as follows:
25. Upon signing of this Agreement, I shall deposit an initial
margin either by personal check, managers check or cash. In
the case of the first, I shall not be permitted to trade until
the check has been cleared by my bank and credited to your
account. In respect of margin calls or additional deposits
managers check or cash. In the event my personal check is
dishonored, the company has the right without call or
notice to settle/close my trading account against which the
deposit was made. In such event, any loss of whatever
nature shall be borne by me and I shall settle such loss upon
demand together with interest and reasonable cost of
collection. However, in the event such liquidation gives rise
to a profit then such amount shall be credited to the
Company. The above notwithstanding, I am not relieved of
any legal responsibility as a result of my check being
dishonored by my bank.[6]
Petitioner Lim was then allowed to trade with respondent
company which was coursed through Shia by virtue of the
blank order forms, marked as Exhibits G, G-1 to G-13,[7] all
signed by Lim. Respondent furnished Lim with the daily
market report and statements of transactions as evidenced
by the receiving forms, marked as Exhibits J, J-1 to J-4,[8]
some of which were received by Lim.
During the first day of trading or on October 22, 1992, Lim
made a net profit of P6,845.57.[9] Shia went to the office of
Lim and informed him about it. He was elated. He agreed to
continue trading. During the second day of trading or on
October 23, 1992, they lost P44,465.[10]
Meanwhile, on October 22, 1992, respondent learned that
it would take seventeen (17) days to clear the managers
check given by petitioner. Hence, on October 23, 1992, at
about 11:00 A.M., upon managements request, Shia
returned the check to petitioner who informed Shia that
petitioner would rather replace the managers check with a
travelers check.[11] Considering that it was 12:00 noon
already, petitioner requested Shia to come back at 2:00
P.M.. Shia went with petitioner to the bank to purchase a
travelers check at the PCI Bank, Juan Luna Branch at 2:00
P.M.. Shia noticed that the travelers check was not indorsed
but Lim told Shia that Queensland could sign the indorsee
portion.[12] Because Shia trusted the latters good credit
rating, and out of ignorance, he brought the check back to
the office unsigned.[13] Inasmuch as that was a busy Friday,
the check was kept in the drawer of respondents
consultant. Later, the travelers check was deposited with
Citibank.[14]
On October 26, 1992, Shia informed petitioner that they
incurred a floating loss of P44,695[15] on October 23, 1992.
He told petitioner that they could still recover their losses.
He could unlock the floating loss on Friday. By unlocking the
floating loss, the loss on a particular day is minimized.
On October 27, 1992, Citibank informed respondent that
the travelers check could not be cleared unless it was duly
signed by Lim, the original purchaser of the travelers check.
A Miss Arajo, from the accounting staff of Queensland,
returned the check to Lim for his signature, but the latter,
aware of his P44,465 loss, demanded for a liquidation of his
account and said he would get back what was left of his
investment.[16] Meanwhile, Lim signed only one portion of
the travelers check, leaving the other half blank. He then
kept it.[17] Arajo went back to the office without it.
Respondent asked Shia to talk to petitioner for a settlement
of his account but petitioner refused to talk with Shia. Shia
made follow-ups for more than a week beginning October
27, 1992. Because petitioner disregarded this request,
respondent was compelled to engage the services of a
lawyer, who sent a demand letter[18] to petitioner. This
letter went unheeded. Thus, respondent filed a
complaint[19] against petitioner, docketed as Civil Case No.
CEB-13737, for collection of a sum of money.
On April 22, 1994, the trial court rendered its decision, thus:
WHEREFORE, in view of all the foregoing, the complaint is
dismissed without pronouncement as to costs. The
defendants counterclaim is likewise dismissed.
SO ORDERED.[20]
On appeal by Queensland, the Court of Appeals reversed
and set aside the trial courts decision, with the following
fallo:
WHEREFORE, the decision appealed from is hereby
REVERSED AND SET ASIDE, and another one is entered
ordering appellee [Jefferson Lim] to pay appellant the sum
of P125,000.00, with interest at the legal rate until the
whole amount is fully paid, P10,000.00 as attorneys fees,
and costs.[21]
Petitioner herein filed a motion for reconsideration before
the Court of Appeals, which was denied in a resolution
dated October 6, 1998.[22]
Dissatisfied, petitioner filed the instant recourse alleging
that the appellate court committed errors:
I - IN REVERSING THE DECISION OF THE RTC WHICH
DISMISSED RESPONDENTS COMPLAINT;
II - IN HOLDING THAT THE PETITIONER IS ESTOPPED IN
QUESTIONING THE VALIDITY OF THE CUSTOMERS
AGREEMENT AND FROM DENYING THE EFFECTS OF HIS
CONDUCT;
III - IN NOT TAKING JUDICIAL NOTICE OF THE LETTER OF
RESPONDENT THAT THE SEC HAS ISSUED A CEASE AND
DESIST ORDER AGAINST THE MANILA INTERNATIONAL
FUTURES EXCHANGE COMMISSION AND ALL COMMODITY
TRADERS INCLUDING THE RESPONDENT.
Despite the petitioners formulation of alleged errors, we
find that the main issue is whether or not the appellate
court erred in holding that petitioner is estopped from
questioning the validity of the Customers Agreement that
he signed.
The essential elements of estoppel are: (1) conduct of a
party amounting to false representation or concealment of
material facts or at least calculated to convey the
impression that the facts are otherwise than, and
inconsistent with, those which the party subsequently
attempts to assert; (2) intent, or at least expectation, that
this conduct shall be acted upon by, or at least influence,
the other party; and (3) knowledge, actual or constructive,
of the real facts.[23]
Here, it is uncontested that petitioner had in fact signed the
Customers Agreement in the morning of October 22,
1992,[24] knowing fully well the nature of the contract he
was entering into. The Customers Agreement was duly
notarized and as a public document it is evidence of the
fact, which gave rise to its execution and of the date of the
latter.[25] Next, petitioner paid his investment deposit to
respondent in the form of a managers check in the amount
of US$5,000 as evidenced by PCI Bank Managers Check No.
69007, dated October 22, 1992.[26] All these are indicia
that petitioner treated the Customers Agreement as a valid
and binding contract.
Moreover, we agree that, on petitioners part, there was
misrepresentation of facts. He replaced the managers check
with an unendorsed travelers check, instead of cash, while
assuring Shia that respondent Queensland could sign the
indorsee portion thereof.[27] As it turned out, Citibank
informed respondent that only the original purchaser (i.e.
the petitioner) could sign said check. When the check was
returned to petitioner for his signature, he refused to sign.
Then, as petitioner himself admitted in his
Memorandum,[28] he used the travelers check for his travel
expenses.[29]
More significantly, petitioner already availed himself of the
benefits of the Customers Agreement whose validity he
now impugns. As found by the CA, even before petitioners
initial marginal deposit (in the form of the PCI managers
check dated October 22, 1992)[30] was converted into cash,
he already started trading on October 22, 1992, thereby
making a net profit of P6,845.57. On October 23, he
continued availing of said agreement, although this time he
incurred a floating loss of P44,645.[31] While he claimed he
had not authorized respondent to trade on those dates, this
claim is belied by his signature affixed in the order forms,
marked as Exhibits G, G-1 to G-13.[32]
Clearly, by his own acts, petitioner is estopped from
impugning the validity of the Customers Agreement. For a
party to a contract cannot deny the validity thereof after
enjoying its benefits without outrage to ones sense of
justice and fairness.
It appears that petitioners reason to back out of the
agreement is that he began sustaining losses from the
trade. However, this alone is insufficient to nullify the
contract or disregard its legal effects. By its very nature it is
already a perfected, if not a consummated, contract. Courts
have no power to relieve parties from obligations
voluntarily assumed, simply because their contracts turned
out to be disastrous or unwise investments.[33] Notably, in
the Customers Agreement, petitioner has been forewarned
of the high risk involved in the foreign currency investment
as stated in the Risk Disclosure Statement,[34] located in
the same box where petitioner signed.
Further, petitioner contends that the Customers Agreement
was rendered nugatory because: (1) the marginal deposit
he gave was in dollars and (2) respondent allowed him to
trade even before the US$5,000 managers check was
cleared. This contention is disingenuous to say the least, but
hardly meritorious.
Petitioner himself was responsible for the issuance of the
US$5,000 managers check. It was he who failed to replace
the managers check with cash. He authorized Shia to start
trading even before the US$5,000 check had cleared. He
could not, in fairness to the other party concerned, now
invoke his own misdeeds to exculpate himself, conformably
with the basic principle in law that he who comes to court
must come with clean hands.
Contrary to petitioners contention, we also find that
respondent did not violate paragraph 14 of the Guidelines
for Spot/Futures Currency Trading, which provides:
14. DEPOSITS & PAYMENTS
All deposits, payments and repayments, etc. will be in
Philippine Currency. When a deposit with the Company is
not in cash or bank draft, such deposit will not take effect in
the account concerned until it has been confirmed
NEGOTIABLE for payment by authorized management
personnel.[35]
Respondent claims it informed petitioner of its policy not to
accept dollar investment. For this reason, it converted the
petitioners US$5,000 managers check to pesos (P125,000)
out of respondents own funds to accommodate petitioners
request to trade right away.[36] On record, it appears that
petitioner agreed to the conversion of his dollar deposit to
pesos. [37]
Neither is there merit in petitioners contention that
respondent violated the Customers Agreement by allowing
him to trade even if his managers check was not yet
cleared, as he had no margin deposit as required by the
Customers Agreement, viz:
5. Margin Receipt
A Margin Receipt issued by the Company shall only be for
the purpose of acknowledging receipt of an amount as
margin deposit for Spot/Futures Currency Trading. All
checks received for the purpose of margin deposits have to
be cleared through such bank account as may be opened by
the Company before any order can be accepted.[38]
But as stated earlier, respondent advanced petitioners
marginal deposit of P125,000 out of its own funds while
waiting for the US$5,000 managers check to clear, relying
on the good credit standing of petitioner. Contrary to
petitioners averment now, respondent had advanced his
margin deposit with his approval. Nowhere in the
Guidelines adverted to by petitioner was such an
arrangement prohibited. Note that the advance was made
with petitioners consent, as indicated by his signature,
Exhibit E-1,[39] affixed in the deposit notice, Exhibit E,[40]
sent to him by respondent. By his failure to seasonably
object to this arrangement and by affixing his signature to
the notice of deposit, petitioner is barred from questioning
said arrangement now.
Anent the last assigned error, petitioner faults the appellate
court for not taking judicial notice of the cease and desist
order against the Manila International Futures Exchange
Commission and all commodity traders including
respondent. However, we find that this issue was first
raised only in petitioners motion for reconsideration of the
Court of Appeals decision. It was never raised in the
Memorandum[41] filed by petitioner before the trial court.
Hence, this Court cannot now, for the first time on appeal,
pass upon this issue. For an issue cannot be raised for the
first time on appeal. It must be raised seasonably in the
proceedings before the lower court. Questions raised on
appeal must be within the issues framed by the parties and,
consequently, issues not raised in the trial court cannot be
raised for the first time on appeal.[42]
WHEREFORE, the instant petition is DENIED for lack of
merit. The decision of the Court of Appeals dated June 25,
1998, in CA-G.R. CV No. 46495 is AFFIRMED. Costs against
petitioner.
SO ORDERED.
HEIRS OF SALVADOR HERMOSILLA, namely: ADELAIDA H.
DOLLETON, RUBEN HERMOSILLA, LOLITA H. DE LA VEGA,
ERLINDA H. INOVIO, CELIA H. VIVIT, ZENAIDA H. ACHOY,
PRECILLA H. LIMPIAHOY, and EDGARDO HERMOSILLA,
Petitioners,
-versus-
Spouses JAIME REMOQUILLO and LUZ REMOQUILLO,
Respondents.
G.R. No. 167320
Present:
QUISUMBING, Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
Promulgated:
January 30, 2007
x---------------------------------------------
-----------x
DECISION
CARPIO MORALES, J.:
Petitioners Heirs of Salvador Hermosilla, namely: Adelaida
H. Dolleton, Ruben Hermosilla, Lolita H. de la Vega, Erlinda
H. Inovio,[1] Celia[2] H. Vivit, Zenaida H. Achoy, Precilla[3]
H. Limpiahoy, and Edgardo Hermosilla, assail the Court of
Appeals Decision[4] dated September 29, 2004 which
reversed the trial courts decision in their favor and
accordingly dismissed their complaint.
Subject of the controversy is a 65-square meter portion of a
lot located in Poblacion, San Pedro, Laguna.
On August 31, 1931, the Republic of the Philippines
acquired through purchase the San Pedro Tunasan
Homesite.
Apolinario Hermosilla (Apolinario), who was occupying a lot
in San Pedro Tunasan Homesite until his death in 1964,
caused the subdivision of the lot into two, Lot 12 with an
area of 341 square meters, and Lot 19 with an area of 341
square meters of which the 65 square meters subject of this
controversy form part.
On April 30, 1962, Apolinario executed a Deed of
Assignment transferring possession of Lot 19 in favor of his
grandson, herein respondent Jaime Remoquillo (Jaime). As
the Land Tenure Administration (LTA) later found that Lot
19 was still available for disposition to qualified applicants,
Jaime, being its actual occupant, applied for its acquisition
before the LTA on May 10, 1963.
On July 8, 1963, Apolinario conveyed Lot 12 to his son
Salvador Hermosilla (Salvador), Jaimes uncle.
Salvador later filed an application to purchase Lot 12 which
was awarded to him by the defunct Land Authority on
December 16, 1971.
On February 10, 1972, Jaime and his uncle Salvador forged
a Kasunduan ng Paglipat Ng Karapatan sa Isang Lagay na
Lupang Solar (Kasunduan) whereby Jaime transferred
ownership of the 65 square meters (the questioned
property) in favor of Salvador.
After Apolinario died, his daughter Angela Hermosilla filed a
protest before the Land Authority, which became the
National Housing Authority (NHA),[5] contending that as an
heir of the deceased, she is also entitled to Lots 12 and 19.
By Resolution of June 10, 1981, the NHA dismissed the
protest.
The NHA later awarded on March 16, 1986 Lot 19 to Jaime
for which he and his wife were issued a title, Transfer
Certificate of Title No. T-156296, on September 15, 1987.[6]
On May 25, 1992, petitioners filed an action for Annulment
of Title on the ground of fraud with damages against Jaime
and his spouse, together with the Register of Deeds, before
the Regional Trial Court (RTC) of Bian, Laguna, alleging that
by virtue of the Kasunduan executed in 1972, Jaime had
conveyed to his uncle Salvador the questioned propertypart
of Lot 19 covered by TCT No. T-156296 which was issued in
1987.
By Decision[7] of May 11, 1999, the RTC of Bian, Laguna,
Branch 25, found the Kasunduan a perfected contract of
sale, there being a meeting of the minds upon an identified
object and upon a specific price, and that ownership over
the questioned property had already been transferred and
delivered to Salvador.
On the alleged failure of consideration of the Kasunduan,
the trial court held that the same did not render the
contract void, but merely allowed an action for specific
performance. The dispositive portion of the trial courts
Decision reads:
WHEREFORE, judgment is hereby rendered declaring
plaintiffs as co-owners of the 65 square meters of the 341
square meters covered by TCT T-156296, registered in the
name of defendants. The Court hereby directs the Register
of Deeds of Laguna, Calamba Branch, to cancel said Transfer
Certificate of Title, and in lieu thereof, to issue another [to]
plaintiffs [as] co-owners of the above portion.
No pronouncement as to costs.
SO ORDERED.[8] (Underscoring supplied)
The Court of Appeals, reversing the decision of the trial
court, held that the Kasunduan was void because at the
time of its execution in 1972, the Republic of the Philippines
was still the owner of Lot 19, hence, no right thereover was
transmitted by Jaime who was awarded the Lot in 1986, and
consequently no right was transmitted by Salvador through
succession to petitioners. And it found no evidence of fraud
in Jaimes act of having Lot 19, including the questioned
property, registered in his and his wifes name in 1987.
At all events, the appellate court held that the action had
prescribed, it having been filed in 1992, more than four
years from the issuance to Jaime and his wife of the
Transfer Certificate of Title.
Hence, the present petition for review on certiorari.
Petitioners argue that the application of the law on
prescription would perpetrate fraud and spawn injustice,
they citing Cometa v. Court of Appeals;[9] and that at any
rate, prescription does not lie against a co-owner. Cometa
involves a different factual milieu concerning the right of
redemption, however. And petitioners contention that
prescription does not lie against a co-owner fails because
only the title covering the questioned property, which
petitioners claim to solely own, is being assailed.
While this Court finds that the action is, contrary to the
appellate courts ruling, not barred by the statute of
limitations, it is still dismissible as discussed below.
Albeit captioned as one for Annulment of Title, the
Complaint ultimately seeks the reconveyance of the
property.
From the allegations of the Complaint, petitioners seek the
reconveyance of the property based on implied trust. The
prescriptive period for the reconveyance of fraudulently
registered real property is 10 years, reckoned from the date
of the issuance of the certificate of title,[10] if the plaintiff is
not in possession, but imprescriptible if he is in possession
of the property.
An action for reconveyance based on an implied trust
prescribes in ten years. The ten-year prescriptive period
applies only if there is an actual need to reconvey the
property as when the plaintiff is not in possession of the
property. However, if the plaintiff, as the real owner of the
property also remains in possession of the property, the
prescriptive period to recover the title and possession of
the property does not run against him. In such a case, an
action for reconveyance, if nonetheless filed, would be in
the nature of a suit for quieting of title, an action that is
imprescriptible.[11] (Emphasis and underscoring supplied)
It is undisputed that petitioners houses occupy the
questioned property and that respondents have not been in
possession thereof.[12] Since there was no actual need to
reconvey the property as petitioners remained in
possession thereof, the action took the nature of a suit for
quieting of title, it having been filed to enforce an alleged
implied trust after Jaime refused to segregate title over Lot
19. One who is in actual possession of a piece of land
claiming to be the owner thereof may wait until his
possession is disturbed or his title is attacked before taking
steps to vindicate his right.[13] From the body of the
complaint, this type of action denotes imprescriptibility.
As priorly stated, however, when the Kasunduan was
executed in 1972 by Jaime in favor of Salvador petitioners
predecessor-in-interest Lot 19, of which the questioned
property forms part, was still owned by the Republic. Nemo
dat quod non habet.[14] Nobody can give what he does not
possess. Jaime could not thus have transferred anything to
Salvador via the Kasunduan.
Claiming exception to the rule, petitioners posit that at the
time the Kasunduan was executed by Jaime in 1972, his
application which was filed in 1963 for the award to him of
Lot 19 was still pending, hence, the Kasunduan transferred
to Salvador Jaimes vested right to purchase the same, in
support of which they cite a law on estoppel, Art. 1434 of
the Civil Code, which provides that [w]hen a person who is
not the owner of a thing sells or alienates and delivers it
and later, the seller or grantor acquires title thereto, such
title passes by operation of law to the buyer or grantee.[15]
Petitioners reliance on Article 1434 of the Civil Code does
not lie. The principles of estoppel apply insofar as they are
not in conflict with the provisions of the Civil Code, the
Code of Commerce, the Rules of Court and special laws.[16]
Land Authority Administrative Order No. 4 (1967), RULES
AND REGULATIONS GOVERNING DISPOSITION OF THE
LAGUNA SETTLEMENT PROJECT IN SAN PEDRO, LAGUNA,
proscribes the conveyance of the privilege or preference to
purchase a land from the San Pedro Tunasan project before
it is awarded to a tenant or bona fide occupant, thus:
SEC. 6. Privilege of Preference to Purchase Intransferable;
Waiver or Forfeiture Thereof. From the date of acquisition
of the estate by the Government and before issuance of the
Order of Award, no tenant or bona fide occupant in whose
favor the land may be sold shall transfer or encumber the
privilege or preference to purchase the land, and any
transfer or encumbrance made in violation hereof shall be
null and void: Provided, however, That such privilege or
preference may be waived or forfeited only in favor of the
Land Authority . . .[17] (Italics in the original, emphasis and
underscoring supplied)
Petitioners insistence on any right to the property under the
Kasunduan thus fails.
[T]he transfer became one in violation of law (the rules of
the PHHC being promulgated in pursuance of law have the
force of law) and therefore void ab initio. Hence, appellant
acquired no right over the lot from a contract void ab initio,
no rights are created. Estoppel, as postulated by petitioner,
will not apply for it cannot be predicated on an illegal act. It
is generally considered that as between the parties to a
contract, validity cannot be given to it by estoppel if it is
prohibited by law or is against public policy.[18] (Emphasis
and underscoring supplied)

Petitioners go on to postulate that if the Kasunduan is void,
it follows that the 1962 Deed of Assignment executed by
Apolinario in favor of Jaime is likewise void to thus deprive
the latter of any legal basis for his occupation and
acquisition of Lot 19.
Petitioners position fails. Petitioners lose sight of the fact
that, as reflected above, Jaime acquired Lot 19 in his own
right, independently of the Deed of Assignment.
In another vein, since the property was previously a public
land, petitioners have no personality to impute fraud or
misrepresentation against the State or violation of the
law.[19] If the title was in fact fraudulently obtained, it is
the State which should file the suit to recover the property
through the Office of the Solicitor General. The title
originated from a grant by the government, hence, its
cancellation is a matter between the grantor and the
grantee.[20]
At all events, for an action for reconveyance based on fraud
to prosper, the plaintiff must prove by clear and convincing
evidence not only his title to the property but also the fact
of fraud. Fraud is never presumed. Intentional acts to
deceive and deprive another of his right, or in some manner
injure him must be specifically alleged and proved by the
plaintiff by clear and convincing evidence.[21] Petitioners
failed to discharge this burden, however.
WHEREFORE, the petition is, in light of the foregoing
ratiocination, DENIED.
SO ORDERED.
ACCESSORIES SPECIALIST INC., a.k.a. ARTS 21 CORPORATION,
and TADAHIKO HASHIMOTO,
Petitioners,
Vs.
ERLINDA B. ALABANZA, for and in behalf of her deceased
husband, JONES B. ALABANZA,
Respondent.
G.R. No. 168985
Present:
QUISUMBING, J.,*
YNARES-SANTIAGO,
Chairperson,
AUSTRIA-MARTINEZ,
NACHURA, and
REYES, JJ.
Promulgated:
July 23, 2008
x-------------------------------------------------------------------------------
-----x
DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari under
Rule 45 of the Rules of Court assailing the Decision[1] dated
April 15, 2005 and the Resolution[2] dated July 12, 2005 of
the Court of Appeals (CA) in CA-G.R. SP No. 84206.
The Facts
The facts of the case, as narrated in the Decision of the CA:
On September 27, 2002, private respondent Erlinda B.
Alabanza (Erlinda, for brevity), for and in behalf of her
husband Jones B. Alabanza (Jones, for brevity) filed a
complaint against petitioners Accessories Specialists, Inc.
(ASI, for brevity) also known as ARTS 21 Corporation, and
Tadahiko Hashimoto for non-payment of salaries,
separation pay, and 13th month pay.
In her position paper, respondent Erlinda alleged, among
others, that her husband Jones was the Vice-President,
Manager and Director of ASI. Jones rendered outstanding
services for the petitioners from 1975 to October 1997. On
October 17, 1997, Jones was compelled by the owner of
ASI, herein petitioner Tadahiko Hashimoto, to file his
involuntary resignation on the ground that ASI allegedly
suffered losses due to lack of market and incurred several
debts caused by a slam in the market. At the time of his
resignation, Jones had unpaid salaries for eighteen (18)
months from May 1995 to October 1997 equivalent to
P396,000.00 and US$38,880.00. He was likewise not paid
his separation pay commensurate to his 21 years of service
in the amount of P462,000.00 and US$45,360.00 and 13th
month pay amounting to P33,000.00. Jones demanded
payment of his money claims upon resignation but ASI
informed him that it would just settle first the money claims
of the rank- and-file employees, and his claims will be paid
thereafter. Knowing the predicament of the company, Jones
patiently waited for his turn to be paid. Several demands
were made by Jones but ASI just kept on assuring him that
he will be paid his monetary claims. Jones died on August 5,
2002 and failed to receive the same.
On the other hand, the petitioners contend that Jones
voluntarily resigned on October 31, 1997. Thus, Erlindas
cause of action has already prescribed and is forever barred
on the ground that under Article 291 of the Labor Code, all
money claims arising from an employer-employee
relationship shall be filed within three (3) years from the
time the cause of action accrues. Since the complaint was
filed only on September 27, 2002, or almost five (5) years
from the date of the alleged illegal dismissal of her husband
Jones, Erlindas complaint is now barred.

On September 14, 2003, Labor Arbiter Reynaldo V. Abdon
rendered a decision ordering the petitioners to pay Erlinda
the amount of P693,000.00 and US$74,040.00 or its
equivalent in peso or amounting to a total of P4,765,200.00
representing her husbands unpaid salaries, 13th month pay,
and separation pay, and five [percent] (5%) on the said total
award as attorneys fees.
On October 10, 2003, the petitioners filed a notice of
appeal with motion to reduce bond and attached thereto
photocopies of the receipts for the cash bond in the
amount of P290,000.00, and appeal fee in the amount of
P170.00.
On January 15, 2004, public respondent NLRC issued an
order denying the petitioners motion to reduce bond and
directing the latter to post an additional bond, and in case
the petitioners opted to post a surety bond, the latter were
required to submit a joint declaration, indemnity agreement
and collateral security within ten (10) days from receipt of
the said order, otherwise their appeal shall be dismissed.
The pertinent portion of such order reads:
After a review however of respondents-appellants['] instant
motion, We find that the same does not proffer any valid or
justifiable reason that would warrant a reduction of the
appeal bond. Hence, the same must be denied.
WHEREFORE, respondents-appellants are hereby ordered
to post a cash or surety bond in the amount equivalent to
the monetary award of Four Million Seven Hundred Sixty-
Five Thousand and Two Hundred Pesos (P4,765,200.00)
granted in the appealed Decision (less the Two Hundred
and Ninety Thousand Pesos [P290,000.00] cash bond
already posted), and joint declaration, indemnity agreement
and collateral security in case respondents-appellants opted
to post a surety bond, as required by Art. 223 of the Labor
Code as amended and Section 6, Rule VI of the NLRC New
Rules of Procedure as amended within an unextendible
period of ten (10) calendar days from receipt of this Order;
otherwise, the appeal shall be dismissed for non-perfection
thereof.
SO ORDERED.
On February 19, 2004, the petitioners moved for a
reconsideration of the said order. However, the public
respondent in its resolution dated March 18, 2004 denied
the same and dismissed the appeal of the petitioners, thus:
The reduction of appeal bond is not a matter of right but
rests upon our sound discretion. Thus, after We denied
respondents-appellants['] Motion to Reduce [B]ond, they
should have immediately complied with our 15 January
2004 Order directing them to post an additional cash or
surety bond in the amount equivalent to the judgment
award less the cash bond already posted within the
extended period of ten (10) days. In all, respondents had
twenty (20) days, including the ten (10)-day period,
prescribed under Article 223 of the Labor Code and under
Section 6, Rule VI of the NLRC New Rules of Procedure,
within which to post a cash or surety bond. To seek a
reconsideration of our 15 January 2004 order is tantamount
to seeking another extension of the period within which to
perfect an appeal, which is however, not allowed under
Section 7, Rule VI of the NLRC Rule. x x x
xxxx
WHEREFORE, premises considered, the Motion for
Reconsideration filed by respondents-appellants is hereby
DENIED and the instant appeal DISMISSED for non-
perfection thereof.
SO ORDERED.
On April 22, 2004, the aforesaid resolution became final and
executory. Thus, herein private respondent Erlinda filed a
motion for execution.
On May 31, 2004, the petitioners filed an opposition to the
said motion for execution. On June 11, 2004, Labor Arbiter
Reynaldo Abdon issued an order directing the issuance of a
writ of execution.[3]
On May 28, 2004, petitioners filed a petition for certiorari
under Rule 65 of the Rules of Court before the CA and
prayed for the issuance of a temporary restraining order
(TRO) and a writ of preliminary injunction. On June 30,
2004, the CA issued a TRO directing the respondents, their
agents, assigns, and all persons acting on their behalf to
refrain and/or cease and desist from executing the Decision
dated September 14, 2003 and Resolution dated March 18,
2004 of the Labor Arbiter (LA).
On April 15, 2005, the CA issued the assailed Decision
dismissing the petition. Petitioner filed a motion for
reconsideration. On July 12, 2005, the CA issued the
assailed Resolution denying the motion for reconsideration
for lack of merit.
On September 8, 2005, petitioners posted the instant
petition presenting the following grounds in support of their
arguments: 1) the cause of action of respondent has already
prescribed; 2) the National Labor Relations Commission
(NLRC) gravely abused its discretion when it dismissed the
appeal of petitioners for failure to post the complete
amount of the appeal bond; and 3) the monetary claim was
resolved by the LA with uncertainty.
The Issues
The following are the issues that should be resolved in
order to come up with a just determination of the case:
I. Whether the cause of action of respondents has already
prescribed;
II. Whether the posting of the complete amount of the
bond in an appeal from the decision of the LA to the NLRC is
an indispensable requirement for the perfection of the
appeal despite the filing of a motion to reduce the amount
of the appeal bond; and
III. Whether there were sufficient bases for the grant of the
monetary award of the LA to the respondent.
The Ruling of the Court
We resolve to deny the petition.
I employees claims on a mere technicality, especially when it
Petitioners aver that the action of the respondents for the
recovery of unpaid wages, separation pay and 13th month
pay has already prescribed since the action was filed almost
five years from the time Jones severed his employment
from ASI. Jones filed his resignation on October 31, 1997,
while the complaint before the LA was instituted on
September 29, 2002. Petitioners contend that the three-
year prescriptive period under Article 291[4] of the Labor
Code had already set-in, thereby barring all of respondents
money claims arising from their employer-employee
relations.
Based on the findings of facts of the LA, it was ASI which
was responsible for the delay in the institution of the
complaint. When Jones filed his resignation, he immediately
asked for the payment of his money claims. However, the
management of ASI promised him that he would be paid
immediately after the claims of the rank-and-file employees
had been paid. Jones relied on this representation.
Unfortunately, the promise was never fulfilled even until
the time of Jones death.
In light of these circumstances, we can apply the principle
of promissory estoppel, which is a recognized exception to
the three-year prescriptive period enunciated in Article 291
of the Labor Code.
Promissory estoppel may arise from the making of a
promise, even though without consideration, if it was
intended that the promise should be relied upon, as in fact
it was relied upon, and if a refusal to enforce it would
virtually sanction the perpetration of fraud or would result
in other injustice.[5] Promissory estoppel presupposes the
existence of a promise on the part of one against whom
estoppel is claimed. The promise must be plain and
unambiguous and sufficiently specific so that the court can
understand the obligation assumed and enforce the
promise according to its terms.[6]
In order to make out a claim of promissory estoppel, a party
bears the burden of establishing the following elements: (1)
a promise was reasonably expected to induce action or
forbearance; (2) such promise did, in fact, induce such
action or forbearance; and (3) the party suffered detriment
as a result.[7]
All the requisites of promissory estoppel are present in this
case. Jones relied on the promise of ASI that he would be
paid as soon as the claims of all the rank-and-file employees
had been paid. If not for this promise that he had held on to
until the time of his death, we see no reason why he would
delay filing the complaint before the LA. Thus, we find
ample justification not to follow the prescriptive period
imposed under Article 291 of the Labor Code. Great
injustice will be committed if we will brush aside the
was petitioners own action that prevented respondent from
interposing the claims within the required period.[8]
II
Petitioners argue that the NLRC committed grave abuse of
discretion in dismissing their appeal for failure to post the
complete amount of the bond. They assert that they cannot
post an appeal bond equivalent to the monetary award
rendered by the LA due to financial incapacity. They say that
strict enforcement of the NLRC Rules of Procedure[9] that
the appeal bond shall be equivalent to the monetary award
is oppressive and would have the effect of depriving
petitioners of their right to appeal.[10]
Article 223 of the Labor Code mandates that in case of a
judgment of the LA involving a monetary award, an appeal
by the employer to the NLRC may be perfected only upon
the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission, in
the amount equivalent to the monetary award in the
judgment appealed from.
The posting of a bond is indispensable to the perfection of
an appeal in cases involving monetary awards from the
decision of the LA.[11] The intention of the lawmakers to
make the bond a mandatory requisite for the perfection of
an appeal by the employer is clearly limned in the provision
that an appeal by the employer may be perfected "only
upon the posting of a cash or surety bond." The word "only"
makes it perfectly plain that the lawmakers intended the
posting of a cash or surety bond by the employer to be the
essential and exclusive means by which an employer's
appeal may be perfected. The word "may" refers to the
perfection of an appeal as optional on the part of the
defeated party, but not to the compulsory posting of an
appeal bond, if he desires to appeal. The meaning and the
intention of the legislature in enacting a statute must be
determined from the language employed; and where there
is no ambiguity in the words used, then there is no room for
construction.[12]
The filing of the bond is not only mandatory but also a
jurisdictional requirement that must be complied with in
order to confer jurisdiction upon the NLRC.[13] Non-
compliance therewith renders the decision of the LA final
and executory.[14] This requirement is intended to assure
the workers that if they prevail in the case, they will receive
the money judgment in their favor upon the dismissal of the
employer's appeal. It is intended to discourage
employers from using an appeal to delay or evade their
obligation to satisfy their employees' just and lawful
claims.[15]
In the instant case, the failure of petitioners to comply with
the requirement of posting a bond equivalent in amount to
the monetary award is fatal to their appeal. Section 6 of the
New Rules of Procedure of the NLRC mandates, among
others, that no motion to reduce bond shall be entertained
except on meritorious grounds and upon the posting of a
bond in a reasonable amount in relation to the monetary
award. The NLRC has the full discretion to grant or deny
their motion to reduce the amount of the appeal bond. The
finding of the NLRC that petitioners did not present
sufficient justification for the reduction thereof is generally
conclusive upon this Court absent a showing that the denial
was tainted with bad faith.
Furthermore, we would like to reiterate that appeal is not a
constitutional right, but a mere statutory privilege. Thus,
parties who seek to avail themselves of it must comply with
the statutes or rules allowing it. Perfection of an appeal in
the manner and within the period permitted by law is
mandatory and jurisdictional. The requirements for
perfecting an appeal must, as a rule, be strictly followed.
Such requirements are considered indispensable
interdictions against needless delays and are necessary for
the orderly discharge of the judicial business. Failure to
perfect the appeal renders the judgment of the court final
and executory. Just as a losing party has the privilege to file
an appeal within the prescribed period, so does the winner
also have the correlative right to enjoy the finality of the
decision.[16]
III
The propriety of the monetary award of the LA is already
binding upon this Court. As we have repeatedly pointed out,
petitioners failure to perfect their appeal in the manner and
period required by the rules makes the award final and
executory. Petitioners stance that there was no sufficient
basis for the award of the payment of withheld wages,
separation pay and 13th month pay must fail. Such matters
are questions of facts requiring the presentation of
evidence. Findings of facts of administrative and quasi-
judicial bodies, which have acquired expertise on specific
matters, are accorded weight and respect by the Court.
They are deemed final and conclusive, unless compelling
reasons are presented for us to digress therefrom.
WHEREFORE, in view of the foregoing, the petition is
DENIED for lack of merit. The Decision dated April 15, 2005
and the Resolution dated July 12, 2005 of the Court of
Appeals in CA-G.R. SP No. 84206 are hereby AFFIRMED.
SO ORDERED.
G.R. Nos. 159017-18 March 9, 2011
PAULINO S. ASILO, JR., Petitioner,
vs.
THE PEOPLE OF THE PHILIPPINES and Spouses VISITACION
AND CESAR C. BOMBASI, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 159059
VICTORIA BUETA VDA. DE COMENDADOR, IN
REPRESENTATION OF DEMETRIO T. COMENDADOR,
Petitioner,
vs.
VISITACION C. BOMBASI AND CESAR C. BOMBASI,
Respondents.
DECISION
PEREZ, J.:
At bench are appeals by certiorari1 from the Decision2 of
the Fourth Division of the Sandiganbayan; (1) finding
Demetrio T. Comendador3 (Mayor Comendador) and
Paulino S. Asilo, Jr.4 guilty beyond reasonable doubt of
violation of Sec. 3(e) of Republic Act No. 3019; (2)
dismissing the cases against accused Alberto S. Angeles;5
(3) ordering the defendants Municipality of Nagcarlan,
Laguna, Demetrio T. Comendador and Paulino S. Asilo, Jr. to
pay the plaintiffs now respondents Visitacion C. Bombasi
(Visitacion) and Cesar C. Bombasi damages; and (4)
dismissing the cases against the spouses Alida and Teddy
Coroza6 and Benita and Isagani Coronado.7
The factual antecedents of the case are:
On 15 March 1978, Private Respondent Visitacion’s late
mother Marciana Vda. De Coronado (Vda. De Coronado)
and the Municipality of Nagcarlan, Laguna (represented by
the then Municipal Mayor Crisostomo P. Manalang) entered
into a lease contract whereby the Municipality allowed the
use and enjoyment of property comprising of a lot and a
store located at the corner of Coronado and E. Fernandez
Sts. at Poblacion, Nagcarlan, Laguna, in favor of the
respondent’s mother for a period of twenty (20) years
beginning on 15 March 1978 until 15 March 1998,
extendible for another 20 years.8
The lease contract provided that the late Vda. De Coronado
could build a firewall on her rented property which must be
at least as high as the store; and in case of modification of
the public market, she or her heir/s would be given
preferential rights.
Visitacion took over the store when her mother died
sometime in 1984.9 From then on up to January 1993,
Visitacion secured the yearly Mayor’s permits.10
Sometime in 1986, a fire razed the public market of
Nagcarlan. Upon Visitacion’s request for inspection on 15
May 1986, District Engineer Marcelino B. Gorospe (Engineer
Gorospe) of the then Ministry of Public Works and
Highways,11 Regional Office No. IV-A, found that the store
of Visitacion remained intact and stood strong. This finding
of Engineer Gorospe was contested by the Municipality of
Nagcarlan.
The store of Visitacion continued to operate after the fire
until 15 October 1993.
On 1 September 1993, Visitacion received a letter12 from
Mayor Comendador directing her to demolish her store
within five (5) days from notice. Attached to the letter were
copies of Sangguniang Bayan Resolution No. 15613 dated
30 August 1993 and a Memorandum issued by Asst.
Provincial Prosecutor Marianito Sasondoncillo of Laguna.
The relevant provisos of the Resolution No. 156 states that:
NOW THEREFORE, be it RESOLVED, as it hereby resolved to
authorize Hon. Demetrio T. Comendador to enforce and
order the Coronado’s to demolish the building constructed
on the space previously rented to them in order to give way
for the construction of a new municipal market building.
RESOLVED FURTHER, to authorize Demetrio T.
Comendador, Honorable Mayor of Nagcarlan to file an
Unlawful Detainer Case with damages for the expenses
incurred due to the delay in the completion of the project if
the Coronado’s continuously resists the order.
On 3 September 1993, Visitacion wrote a reply letter to
Mayor Comendador saying that: (1) the lease contract was
still existing and legally binding; (2) she was willing to vacate
the store as long as same place and area would be given to
her in the new public market; and (3) in case her proposals
are not acceptable to Mayor Comendador, for the latter to
just file an unlawful detainer case against her pursuant to
Sangguniang Bayan Resolution No. 156. Pertinent portions
of the letter read:
x x x With all due respect to the resolution of the Municipal
Council and the opinion rendered by the Laguna Asst.
Provincial Prosecutor, it is my considered view, however,
arrived at after consultation with my legal counsel, that our
existing lease contract is still legally binding and in full force
and effect. Lest I appear to be defiant, let me reiterate to
you and the council that we are willing to vacate the said
building provided that a new contract is executed granting
to us the same space or lot and the same area. I believe that
our proposal is most reasonable and fair under the
circumstance. If you are not amenable to the said proposal,
I concur with the position taken by the Council for you to
file the appropriate action in court for unlawful detainer to
enable our court to finally thresh out our
differences.141avvphi1
On 15 September 1993, Asst. Provincial Prosecutor
Florencio Buyser sent a letter to Visitacion ordering her to
vacate the portion of the public market she was occupying
within 15 days from her receipt of the letter; else, a court
action will be filed against her.
On 11 October 1993, the Sangguniang Bayan of Nagcarlan,
Laguna issued Resolution No. 183 authorizing Mayor
Comendador to demolish the store being occupied by
Visitacion using legal means. The significant portion of the
Resolution reads:
Kung kaya ang Sangguniang Bayan ay buong pagkakaisang
IPINASIYA: Ang pagbibigay kapangyarihan kay Kgg. Demetrio
T. Comendador na ipagiba ang anumang istrakturang
nagiging sagabal sa mabilis at maayos na pagbabangon ng
pamilihang bayan.15
On 14 October 1993, Municipal Administrator Paulino S.
Asilo, Jr. (Asilo) also sent a letter16 to Visitacion informing
her of the impending demolition of her store the next day.
Within the same day, Visitacion wrote a reply letter17 to
Asilo, alleging that there is no legal right to demolish the
store in the absence of a court order and that the
Resolutions did not sanction the demolition of her store but
only the filing of an appropriate unlawful detainer case
against her. She further replied that if the demolition will
take place, appropriate administrative, criminal and civil
actions will be filed against Mayor Comendador, Asilo and
all persons who will take part in the demolition.
On 15 October 1993, Mayor Comendador relying on the
strength of Sangguniang Bayan Resolution Nos. 183 and 156
authorized the demolition of the store with Asilo and
Angeles supervising the work.
Engineer Winston Cabrega (Engineer Cabrega), a licensed
civil engineer, estimated the cost of the demolished
property as amounting to P437,900.0018
On 19 August 1994, Visitacion, together with her husband
Cesar Bombasi (Spouses Bombasi) filed with the Regional
Trial Court of San Pablo City, Laguna a Civil Case19 for
damages with preliminary injunction against the
Municipality of Nagcarlan, Laguna, Mayor Demetrio T.
Comendador, Paulino S. Asilo, Jr., and Alberto S. Angeles.
The complaint was soon after amended to include the
Spouses Benita and Isagani Coronado and Spouses Alida and
Teddy Coroza as formal defendants because they were then
the occupants of the contested area.
The spouses prayed for the following disposition:
1. RESTRAINING or ENJOINING defendant Municipality and
defendant Municipal Mayor from leasing the premises
subject of lease Annex "A" hereof, part of which is now
occupied by PNP Outpost and by the Municipal Collectors’
Office, and the equivalent adjacent area thereof, and to
cause the removal of said stalls;
2. UPHOLDING the right of plaintiffs to occupy the
equivalent corner area of the leased areas being now
assigned to other persons by defendants Municipality
and/or by defendant Municipal Mayor, and to allow
plaintiffs to construct their stalls thereon;
3. MAKING the injunction permanent, after trial;
4. ORDERING defendants to pay plaintiffs, jointly and
severally, the following –
(a) P437,900.00 for loss of building/store and other items
therein;
(b) P200,000.00 for exemplary damages;
(c) P200,000.00 for moral damages;
(d) P30,.00 for attorney’s fees and P700.00 for every
attendance of counsel in court.
5. GRANTING further reliefs upon plaintiffs as justice and
equity may warrant in the premises.20
Spouses Bombasi, thereafter, filed a criminal complaint21
against Mayor Comendador, Asilo and Angeles for violation
of Sec. 3(e) of Republic Act No. 3019 otherwise known as
the "Anti-Graft and Corrupt Practices Act" before the Office
of the Ombudsman. On 22 February 1996, an
Information22 against Mayor Comendador, Asilo and
Angeles was filed, which reads:
That on or about October 15, 1993, at Nagcarlan, Laguna,
Philippines, and within the jurisdiction of this Honorable
Court, the above-named accused, all public officers,
accused Demetrio T. Comendador, being then the
Municipal Mayor, accused Paulino S. Asilo, Jr. being then
the Municipal Administrator and accused Alberto S. Angeles
being then the Municipal Planning and Development
Coordinator, all of the Municipality of Nagcarlan, Laguna,
committing the crime herein charged in relation to, while in
the performance and taking advantage of their official
functions, conspiring and confederating with each other,
and with evident bad faith, manifest partiality or through
gross inexcusable negligence, did then and there willfully,
unlawfully, criminally cause the demolition of a public
market stall leased by the municipal government in favor of
one Visitacion Coronado-Bombasi without legal or
justifiable ground therefor, thus, causing undue injury to
the latter in the amount of PESOS: FOUR HUNDRED THIRTY
SEVEN THOUSAND AND NINE HUNDRED ONLY
(P437,900.00).
Upon their arraignments, all the accused entered their
separate pleas of "Not Guilty."
On 4 March 1997, the Sandiganbayan promulgated a
Resolution ordering the consolidation of Civil Case No. SP-
4064 (94)23 with Criminal Case No. 23267 pending before
the Third Division pursuant to Section 4, Presidential Decree
No. 1606, which pertinently reads:
Any provision of law or Rules of Court to the contrary
notwithstanding, the criminal action and the corresponding
civil action for the recovery of civil liability arising from the
offense charged shall at all times be simultaneously
instituted with, and jointly determined in the same
proceeding by the Sandiganbayan or the appropriate
courts, the filing of the criminal action being deemed to
necessarily carry with it the filing of the civil action, and no
right to reserve the filing of such civil action separately from
the criminal action shall be recognized; Provided, however,
that where the civil action had heretofore been filed
separately but judgment therein has not yet been rendered,
and the criminal case is hereafter filed with the
Sandiganbayan or the appropriate court, said civil action
shall be transferred to the Sandiganbayan or the
appropriate court as the case may be, for consolidation and
joint determination with the criminal action, otherwise the
separate civil action shall be deemed abandoned.24
During the pendency of the case, Alberto S. Angeles died on
16 November 1997. Accordingly, the counsel of Angeles
filed a motion to drop accused Angeles. On 22 September
1999, the Third Division of Sandiganbayan issued an
Order25 DISMISSING the case against Angeles. The
germane portion of the Order reads:
In view of the submission of the death certificate of
accused/defendant Alberto S. Angeles, and there being no
objection on the part of the Public Prosecutor, cases against
deceased accused/defendant Angeles only, are hereby
DISMISSED.
The death of Mayor Comendador followed on 17
September 2002. As a result, the counsel of the late Mayor
filed on 3 March 2003 a Manifestation before the
Sandiganbayan informing the court of the fact of Mayor
Comendador’s death.
On 28 April 2003, the Sandiganbayan rendered a decision,
the dispositive portion of which reads as follows:
WHEREFORE, premises considered, judgment is hereby
rendered as follows:
In Criminal Case No. 23267, the court finds accused
Demetrio T. Comendador and Paulino S. Asilo, Jr. guilty
beyond reasonable doubt of violation of Sec. 3(e) of
Republic Act. No. 3019 as amended, and in the absence of
aggravating and mitigating circumstances, applying the
Indeterminate Sentence Law, said accused are sentenced to
suffer the indeterminate penalty of 6 years and 2 months
imprisonment as minimum to 10 years and 1 day as
maximum.
The order of the court dated September 22, 1999
dismissing the cases against the accused Alberto S. Angeles,
who died on November 16, 1997 is hereby reiterated.
In Civil Case No. 4064, defendants Municipality of
Nagcarlan, Laguna, Demetrio T. Comendador and Paulino S.
Asilo, Jr. are hereby ordered jointly and severally to pay
plaintiff P437,900.00 as actual damages for the destruction
of the store; P100,000.00 as moral damages; P30,000.00 as
attorney’s fees, and to pay the cost of the suit. The prayer
for exemplary damages is denied as the court found no
aggravating circumstances in the commission of the crime.
In view of this court’s finding that the defendant spouses
Alida and Teddy Coroza are lawful occupants of the subject
market stalls from which they cannot be validly ejected
without just cause, the complaint against them is dismissed.
The complaint against defendant spouses Benita and Isagani
Coronado is likewise dismissed, it appearing that they are
similarly situated as the spouses Coroza. Meanwhile,
plaintiff Visitacion Bombasi is given the option to accept
market space being given to her by the municipality, subject
to her payment of the appropriate rental and permit fees.
The prayer for injunctive relief is denied, the same having
become moot and academic.
The compulsory counterclaim of defendant Comendador is
likewise denied for lack of merit.26
Within the same day, Asilo, through his counsel, filed a
Motion for Reconsideration27 of the Decision alleging that
there was only an error of judgment when he complied with
and implemented the order of his superior, Mayor
Comendador. He likewise alleged that there is no liability
when a public officer commits in good faith an error of
judgment. The Sandiganbayan, on its Resolution28 dated 21
July 2003 denied the Motion for Reconsideration on the
ground that good faith cannot be argued to support his
cause in the face of the court’s finding that bad faith
attended the commission of the offense charged. The Court
further explained that the invocation of compliance with an
order of a superior is of no moment for the "demolition
[order] cannot be described as having the semblance of
legality inasmuch as it was issued without the authority and
therefore the same was patently illegal."29
The counsel for the late Mayor also filed its Motion for
Reconsideration30 on 12 May 2003 alleging that the death
of the late Mayor had totally extinguished both his criminal
and civil liability. The Sandiganbayan on its Resolution31
granted the Motion insofar as the extinction of the criminal
liability is concerned and denied the extinction of the civil
liability holding that the civil action is an independent civil
action.
Hence, these Petitions for Review on Certiorari.32
Petitioner Asilo argues that in order to sustain conviction
under Sec. 3(e) of Republic Act No. 3019 or "The Anti-Graft
and Corrupt Practices Act," the public officer must have
acted with manifest partiality, evident bad faith or gross
negligence. He also contended that he and his co-accused
acted in good faith in the demolition of the market and,
thereby, no liability was incurred.
On the other hand, Petitioner Victoria argues that the death
of Mayor Comendador prior to the promulgation of the
decision extinguished NOT ONLY Mayor Comendador’s
criminal liability but also his civil liability. She also asserted
good faith on the part of the accused public officials when
they performed the demolition of the market stall. Lastly,
she contended that assuming arguendo that there was
indeed liability on the part of the accused public officials,
the actual amount of damages being claimed by the
Spouses Bombasi has no basis and was not duly
substantiated.
Liability of the accused public officials
under Republic Act No. 3019
Section 3(e) of Republic Act No. 3019 provides:
In addition to acts or omissions of public officers already
penalized by existing law, the following shall constitute
corrupt practices of any public officer and are hereby
declared to be unlawful:
xxxx
(e) Causing any undue injury to any party, including the
Government, or giving any private party any unwarranted
benefits, advantage or preference in the discharge of his
official, administrative or judicial functions through manifest
partiality, evident bad faith or gross inexcusable negligence.
This provision shall apply to officers and employees of
offices or government corporations charged with the grant
of licenses or permits or other concessions.
The elements of the offense are as follows: (1) that the
accused are public officers or private persons charged in
conspiracy with them; (2) that said public officers commit
the prohibited acts during the performance of their official
duties or in relation to their public positions; (3) that they
caused undue injury to any party, whether the Government
or a private party; (4) OR that such injury is caused by giving
unwarranted benefits, advantage or preference to the other
party; and (5) that the public officers have acted with
manifest partiality, evident bad faith or gross inexcusable
negligence.33
We sustain the Sandiganbayan in its finding of criminal and
civil liabilities against petitioner Asilo and petitioner Mayor
Comendador as here represented by his widow Victoria
Bueta.
We agree with the Sandiganbayan that it is undisputable
that the first two requisites of the criminal offense were
present at the time of the commission of the complained
acts and that, as to the remaining elements, there is
sufficient amount of evidence to establish that there was an
undue injury suffered on the part of the Spouses Bombasi
and that the public officials concerned acted with evident
bad faith when they performed the demolition of the
market stall.
Causing undue injury to any party, including the
government, could only mean actual injury or damage
which must be established by evidence.34
In jurisprudence, "undue injury" is consistently interpreted
as "actual." Undue has been defined as "more than
necessary, not proper, [or] illegal;" and injury as "any wrong
or damage done to another, either in his person, rights,
reputation or property [that is, the] invasion of any legally
protected interest of another." Actual damage, in the
context of these definitions, is akin to that in civil law.35
It is evident from the records, as correctly observed by the
Sandiganbayan, that Asilo and Mayor Comendador as
accused below did not deny that there was indeed damage
caused the Spouses Bombasi on account of the demolition.
We affirm the finding that:
xxx. Clearly, the demolition of plaintiff’s store was carried
out without a court order, and notwithstanding a
restraining order which the plaintiff was able to obtain. The
demolition was done in the exercise of official duties which
apparently was attended by evident bad faith, manifest
partiality or gross inexcusable negligence as there is nothing
in the two (2) resolutions which gave the herein accused
the authority to demolish plaintiff’s store.
"Evident bad faith" connotes not only bad judgment but
also palpably and patently fraudulent and dishonest
purpose to do moral obliquity or conscious wrongdoing for
some perverse motive or ill will.36 [It] contemplates a state
of mind affirmatively operating with furtive design or with
some motive or self-interest or ill will or for ulterior
purposes.37
It is quite evident in the case at bar that the accused public
officials committed bad faith in performing the demolition.
First, there can be no merit in the contention that
respondents’ structure is a public nuisance. The abatement
of a nuisance without judicial proceedings is possible if it is
nuisance per se.38 Nuisance per se is that which is nuisance
at all times and under any circumstance, regardless of
location and surroundings.39 In this case, the market stall
cannot be considered as a nuisance per se because as found
out by the Court, the buildings had not been affected by the
1986 fire. This finding was certified to by Supervising Civil
Engineer Wilfredo A. Sambrano of the Laguna District
Engineer Office.40 To quote:
An inspection has been made on the building (a commercial
establishment) cited above and found out the following:
1. It is a two-storey building, sketch of which is attached.
2. It is located within the market site.
3. The building has not been affected by the recent fire.
4. The concrete wall[s] does not even show signs of being
exposed to fire.41
Second, the Sangguniang Bayan resolutions are not enough
to justify demolition. Unlike its predecessor law,42 the
present Local Government Code43 does not expressly
provide for the abatement of nuisance.44 And even
assuming that the power to abate nuisance is provided for
by the present code, the accused public officials were under
the facts of this case, still devoid of any power to demolish
the store. A closer look at the contested resolutions reveals
that Mayor Comendador was only authorized to file an
unlawful detainer case in case of resistance to obey the
order or to demolish the building using legal means. Clearly,
the act of demolition without legal order in this case was
not among those provided by the resolutions, as indeed, it
is a legally impossible provision.
Furthermore, the Municipality of Nagcarlan, Laguna, as
represented by the then Mayor Comendador, was placed in
estoppel after it granted yearly business permits45 in favor
of the Spouses Bombasi. Art. 1431 of the New Civil Code
provides that, through estoppel, an admission or
representation is rendered conclusive upon the person
making it, and cannot be denied or disproved as against the
person relying thereon. The representation made by the
municipality that the Spouses Bombasi had the right to
continuously operate its store binds the municipality. It is
utterly unjust for the Municipality to receive the benefits of
the store operation and later on claim the illegality of the
business.
The bad faith of the petitioners completes the elements of
the criminal offense of violation of Sec. 3(e) of Republic Act
No. 3019. The same bad faith serves as the source of the
civil liability of Asilo, Angeles, and Mayor Comendador.
It must be noted that when Angeles died on 16 November
1997, a motion to drop him as an accused was filed by his
counsel with no objection on the part of the prosecution.
The Sandiganbayan acted favorably on the motion and
issued an Order dismissing all the cases filed against
Angeles. On the other hand, when Mayor Comendador died
and an adverse decision was rendered against him which
resulted in the filing of a motion for reconsideration by
Mayor Comendador’s counsel, the prosecution opposed the
Motion specifying the ground that the civil liability did not
arise from delict, hence, survived the death of the accused.
The Sandiganbayan upheld the opposition of the
prosecution which disposition was not appealed.
We note, first off, that the death of Angeles and of Mayor
Comendador during the pendency of the case extinguished
their criminal liabilities.
We now hold, as did the Sandiganbayan that the civil
liability of Mayor Comendador survived his death; and that
of Angeles could have likewise survived had it not been for
the fact that the resolution of the Sandiganbayan that his
death extinguished the civil liability was not questioned and
lapsed into finality.
We laid down the following guidelines in People v.
Bayotas:46
Death of the accused pending appeal of his conviction
extinguishes his criminal liability as well as the civil liability
based solely thereon. As opined by Justice Regalado, in this
regard, "the death of the accused prior to final judgment
terminates his criminal liability and only the civil liability
directly arising from and based solely on the offense
committed, i.e., civil liability ex delicto in senso strictiore."
Corollarily, the claim for civil liability survives
notwithstanding the death of (the) accused, if the same
may also be predicated on a source of obligation other than
delict. Article 1157 of the Civil Code enumerates these
other sources of obligation from which the civil liability may
arise as a result of the same act or omission:
a) Law
b) Contracts
c) Quasi-contracts
d) Acts or omissions punished by law; and
e) Quasi-delicts. (Emphasis ours)
Where the civil liability survives, as explained [above], an
action for recovery therefore may be pursued but only by
way of filing a separate civil action47 and subject to Section
1, Rule 111 of the 1985 Rules on Criminal Procedure as
amended. This separate civil action may be enforced either
against the executor/administrator or the estate of the
accused, depending on the source of obligation upon which
the same is based as explained above.
Finally, the private offended party need not fear a forfeiture
of his right to file this separate civil action by prescription, in
cases where during the prosecution of the criminal action
and prior to its extinction, the private-offended party
instituted together therewith the civil action. In such case,
the statute of limitations on the civil liability is deemed
interrupted during the pendency of the criminal case,
conformably with provisions of Article 1155 of the New Civil
Code, which should thereby avoid any apprehension on a
possible privation of right by prescription.
Upon death of the accused pending appeal of his
conviction, the criminal action is extinguished inasmuch as
there is no longer a defendant to stand as the accused; the
civil action instituted therein for recovery of civil liability ex
delicto is ipso facto extinguished, grounded as it is on the
criminal.48
The New Civil Code provisions under the Chapter, Human
Relations, were cited by the prosecution to substantiate its
argument that the civil action based therein is an
independent one, thus, will stand despite the death of the
accused during the pendency of the case.
On the other hand, the defense invoked Section 4 of
Presidential Decree No. 1606, as amended by Republic Act
No. 8249, in support of its argument that the civil action
was dependent upon the criminal action, thus, was
extinguished upon the death of the accused. The law
provides that:
Any provision of law or the Rules of Court to the contrary
notwithstanding, the criminal action and the corresponding
civil action for the recovery of civil liability arising from the
offense charged shall at all times be simultaneously
instituted with, and jointly determined in the same
proceeding by, the Sandiganbayan, the filing of the criminal
action being deemed to necessarily carry with it the filing of
the civil action, and no right to reserve the filing of such
action shall be recognized. (Emphasis ours)
We agree with the prosecution.
Death of Mayor Comendador during the pendency of the
case could have extinguished the civil liability if the same
arose directly from the crime committed. However, in this
case, the civil liability is based on another source of
obligation, the law on human relations.49 The pertinent
articles follow:

Art. 31 of the Civil Code states:
When the civil action is based on an obligation not arising
from the act or omission complained of as a felony, such
civil action may proceed independently of the criminal
proceedings and regardless of the result of the latter.
And, Art. 32(6) states:
Any public officer or employee, or any private individual,
who directly or indirectly obstructs, defeats, violates or in
any manner impedes or impairs any of the following rights
and liberties of another person shall be liable to the latter
for damages:
(6) The right against deprivation of property without due
process of law;
xxxx
In any of the cases referred to in this article, whether or not
the defendant's act or omission constitutes a criminal
offense, the aggrieved party has a right to commence an
entirely separate and distinct civil action for damages, and
for other relief. Such civil action shall proceed
independently of any criminal prosecution (if the latter be
instituted), and may be proved by a preponderance of
evidence.
As held in Aberca v. Ver:
It is obvious that the purpose of the above codal provision
[Art. 32 of the New Civil Code] is to provide a sanction to
the deeply cherished rights and freedoms enshrined in the
Constitution. Its message is clear; no man may seek to
violate those sacred rights with impunity. x x x.50
Indeed, the basic facts of this case point squarely to the
applicability of the law on human relations. First, the
complaint for civil liability was filed way AHEAD of the
information on the Anti-Graft Law. And, the complaint for
damages specifically invoked defendant Mayor
Comendador’s violation of plaintiff’s right to due process.
Thus:
xxxx
In causing or doing the forcible demolition of the store in
question, the individual natural defendants did not only act
with grave abuse of authority but usurped a power which
belongs to our courts of justice; such actuations were done
with malice or in bad faith and constitute an invasion of the
property rights of plaintiff(s) without due process of law.
xxxx
The Court is in one with the prosecution that there was a
violation of the right to private property of the Spouses
Bombasi. The accused public officials should have accorded
the spouses the due process of law guaranteed by the
Constitution and New Civil Code. The Sangguniang Bayan
Resolutions as asserted by the defense will not, as already
shown, justify demolition of the store without court order.
This Court in a number of decisions51 held that even if
there is already a writ of execution, there must still be a
need for a special order for the purpose of demolition
issued by the court before the officer in charge can destroy,
demolish or remove improvements over the contested
property.52 The pertinent provisions are the following:
Before the removal of an improvement must take place,
there must be a special order, hearing and reasonable
notice to remove. Section 10(d), Rule 39 of the Rules of
Court provides:
(d) Removal of improvements on property subject of
execution. – When the property subject of execution
contains improvements constructed or planted by the
judgment obligor or his agent, the officer shall not destroy,
demolish or remove said improvements except upon special
order of the court, issued upon motion of the judgment
obligee after due hearing and after the former has failed to
remove the same within a reasonable time fixed by the
court.
The above-stated rule is clear and needs no interpretation.
If demolition is necessary, there must be a hearing on the
motion filed and with due notices to the parties for the
issuance of a special order of demolition.53
This special need for a court order even if an ejectment case
has successfully been litigated, underscores the
independent basis for civil liability, in this case, where no
case was even filed by the municipality.
The requirement of a special order of demolition is based
on the rudiments of justice and fair play. It frowns upon
arbitrariness and oppressive conduct in the execution of an
otherwise legitimate act. It is an amplification of the
provision of the Civil Code that every person must, in the
exercise of his rights and in the performance of his duties,
act with justice, give everyone his due, and observe honesty
and good faith.54
Notably, the fact that a separate civil action precisely based
on due process violations was filed even ahead of the
criminal case, is complemented by the fact that the
deceased plaintiff Comendador was substituted by his
widow, herein petitioner Victoria who specified in her
petition that she has "substituted him as petitioner in the
above captioned case." Section 1, Rule III of the 1985 Rules
in Criminal Procedure mentioned in Bayotas is, therefore,
not applicable. Truly, the Sandiganbayan was correct when
it maintained the separate docketing of the civil and
criminal cases before it although their consolidation was
erroneously based on Section 4 of Presidential Decree No.
1606 which deals with civil liability "arising from the offense
charged."
We must, however, correct the amount of damages
awarded to the Spouses Bombasi.
To seek recovery of actual damages, it is necessary to prove
the actual amount of loss with a reasonable degree of
certainty, premised upon competent proof and on the best
evidence obtainable.55 In this case, the Court finds that the
only evidence presented to prove the actual damages
incurred was the itemized list of damaged and lost items56
prepared by Engineer Cabrega, an engineer commissioned
by the Spouses Bombasi to estimate the costs.
As held by this Court in Marikina Auto Line Transport
Corporation v. People of the Philippines,57
x x x [W]e agree with the contention of petitioners that
respondents failed to prove that the damages to the terrace
caused by the incident amounted to P100,000.00. The only
evidence adduced by respondents to prove actual damages
claimed by private respondent were the summary
computation of damage made by Engr. Jesus R. Regal, Jr.
amounting to P171,088.46 and the receipt issued by the BB
Construction and Steel Fabricator to private respondent for
P35,000.00 representing cost for carpentry works, masonry,
welding, and electrical works. Respondents failed to present
Regal to testify on his estimation. In its five-page decision,
the trial court awarded P150,000.00 as actual damages to
private respondent but failed to state the factual basis for
such award. Indeed, the trial court merely declared in the
decretal portion of its decision that the "sum of
P150,000.00 as reasonable compensation sustained by
plaintiff for her damaged apartment." The appellate court,
for its part, failed to explain how it arrived at the amount of
P100,000.00 in its three-page decision. Thus, the appellate
court merely declared:
With respect to the civil liability of the appellants, they
contend that there was no urgent necessity to completely
demolish the apartment in question considering the nature
of the damages sustained as a result of the accident.
Consequently, appellants continue, the award of
P150,000.00 as compensation sustained by the plaintiff-
appellee for her damaged apartment is an unconscionable
amount.
Further, in one case,58 this Court held that the amount
claimed by the respondent-claimant’s witness as to the
actual amount of damages "should be admitted with
extreme caution considering that, because it was a bare
assertion, it should be supported by independent
evidence." The Court further said that whatever claim the
respondent witness would allege must be appreciated in
consideration of his particular self-interest.59 There must
still be a need for the examination of the documentary
evidence presented by the claimants to support its claim
with regard to the actual amount of damages.
The price quotation made by Engineer Cabrega presented
as an exhibit60 partakes of the nature of hearsay evidence
considering that the person who issued them was not
presented as a witness.61 Any evidence, whether oral or
documentary, is hearsay if its probative value is not based
on the personal knowledge of the witness but on the
knowledge of another person who is not on the witness
stand. Hearsay evidence, whether objected to or not, has
no probative value unless the proponent can show that the
evidence falls within the exceptions to the hearsay evidence
rule.62 Further, exhibits do not fall under any of the
exceptions provided under Sections 37 to 47 of Rule 130 of
the Rules of Court.
Though there is no sufficient evidence to award the actual
damages claimed, this Court grants temperate damages for
P200,000.00 in view of the loss suffered by the Spouses
Bombasi. Temperate damages are awarded in accordance
with Art. 2224 of the New Civil Code when the court finds
that some pecuniary loss has been suffered but its amount
cannot, from the nature of the case, be proven with
certainty. The amount of temperate or moderated damages
is usually left to the discretion of the courts but the same
should be reasonable, bearing in mind that the temperate
damages should be more than nominal but less than
compensatory.63 Without a doubt, the Spouses Bombasi
suffered some form of pecuniary loss in the impairment of
their store. Based on the record of the case,64 the
demolished store was housed on a two-story building
located at the market’s commercial area and its concrete
walls remained strong and not affected by the fire.
However, due to the failure of the Spouses Bombasi to
prove the exact amount of damage in accordance with the
Rules of Evidence,65 this court finds that P200,000.00 is the
amount just and reasonable under the circumstances.
WHEREFORE, the instant appeal is DENIED. Accordingly, the
Decision of the Sandiganbayan dated 28 April 2003 is
hereby AFFIRMED WITH MODIFICATION. The Court affirms
the decision finding the accused Paulino S. Asilo, Jr. and
Demetrio T. Comendador guilty of violating Section 3(e) of
Republic Act No. 3019. We declare the finality of the
dismissal of both the criminal and civil cases against Alberto
S. Angeles as the same was not appealed. In view of the
death of Demetrio T. Comendador pending trial, his criminal
liability is extinguished; but his civil liability survives. The
Municipality of Nagcarlan, Paulino Asilo and Demetrio T.
Comendador, as substituted by Victoria Bueta Vda. De
Comendador, are hereby declared solidarily liable to the
Spouses Bombasi for temperate damages in the amount of
P200,000.00 and moral damages in the amount of
P100,000.00.
Costs against the petitioners-appellants.
SO ORDERED.
PRISMA CONSTRUCTION & DEVELOPMENT CORPORATION
and ROGELIO S. PANTALEON,
Petitioners,
vs
ARTHUR F. MENCHAVEZ ,
Respondent.
G.R. No. 160545
Present:
*NACHURA, J.,
BRION, Acting Chairperson,
DEL CASTILLO,
ABAD, and
PEREZ, JJ.
Promulgated:
March 9, 2010
x-------------------------------------------------------------------------------
-----------x
DECISION
BRION, J.:
We resolve in this Decision the petition for review on
certiorari[1] filed by petitioners Prisma Construction &
Development Corporation (PRISMA) and Rogelio S.
Pantaleon (Pantaleon) (collectively, petitioners) who seek to
reverse and set aside the Decision[2] dated May 5, 2003
and the Resolution[3] dated October 22, 2003 of the
Former Ninth Division of the Court of Appeals (CA) in CA-
G.R. CV No. 69627. The assailed CA Decision affirmed the
Decision of the Regional Trial Court (RTC), Branch 73,
Antipolo City in Civil Case No. 97-4552 that held the
petitioners liable for payment of P3,526,117.00 to
respondent Arthur F. Menchavez (respondent), but
modified the interest rate from 4% per month to 12% per
annum, computed from the filing of the complaint to full
payment. The assailed CA Resolution denied the petitioners
Motion for Reconsideration.
FACTUAL BACKGROUND
The facts of the case, gathered from the records, are briefly
summarized below.
On December 8, 1993, Pantaleon, the President and
Chairman of the Board of PRISMA, obtained a
P1,000,000.00[4] loan from the respondent, with a monthly
interest of P40,000.00 payable for six months, or a total
obligation of P1,240,000.00 to be paid within six (6)
months,[5] under the following schedule of payments:
January 8, 1994 . P40,000.00
February 8, 1994 ... P40,000.00
March 8, 1994 ... P40,000.00
April 8, 1994 . P40,000.00
May 8, 1994 .. P40,000.00
June 8, 1994 P1,040,000.00[6]
Total P1,240,000.00
To secure the payment of the loan, Pantaleon issued a
promissory note[7] that states:
I, Rogelio S. Pantaleon, hereby acknowledge the receipt of
ONE MILLION TWO HUNDRED FORTY THOUSAND PESOS
(P1,240,000), Philippine Currency, from Mr. Arthur F.
Menchavez, representing a six-month loan payable
according to the following schedule:
January 8, 1994 . P40,000.00
February 8, 1994 ... P40,000.00
March 8, 1994 ... P40,000.00
April 8, 1994 . P40,000.00
May 8, 1994 .. P40,000.00
June 8, 1994 P1,040,000.00
The checks corresponding to the above amounts are hereby
acknowledged.[8]
and six (6) postdated checks corresponding to the schedule
of payments. Pantaleon signed the promissory note in his
personal capacity,[9] and as duly authorized by the Board of
Directors of PRISMA.[10] The petitioners failed to
completely pay the loan within the stipulated six (6)-month
period.
From September 8, 1994 to January 4, 1997, the petitioners
paid the following amounts to the respondent:
September 8, 1994 P320,000.00
October 8, 1995.P600,000.00
November 8, 1995.....P158,772.00
January 4, 1997 P30,000.00[11]
As of January 4, 1997, the petitioners had already paid a
total of P1,108,772.00. However, the respondent found that
the petitioners still had an outstanding balance of
P1,364,151.00 as of January 4, 1997, to which it applied a
4% monthly interest.[12] Thus, on August 28, 1997, the
respondent filed a complaint for sum of money with the
RTC to enforce the unpaid balance, plus 4% monthly
interest, P30,000.00 in attorneys fees, P1,000.00 per court
appearance and costs of suit.[13]
In their Answer dated October 6, 1998, the petitioners
admitted the loan of P1,240,000.00, but denied the
stipulation on the 4% monthly interest, arguing that the
interest was not provided in the promissory note. Pantaleon
also denied that he made himself personally liable and that
he made representations that the loan would be repaid
within six (6) months.[14]
THE RTC RULING
The RTC rendered a Decision on October 27, 2000 finding
that the respondent issued a check for P1,000,000.00 in
favor of the petitioners for a loan that would earn an
interest of 4% or P40,000.00 per month, or a total of
P240,000.00 for a 6-month period. It noted that the
petitioners made several payments amounting to
P1,228,772.00, but they were still indebted to the
respondent for P3,526,117.00 as of February 11,[15] 1999
after considering the 4% monthly interest. The RTC
observed that PRISMA was a one-man corporation of
Pantaleon and used this circumstance to justify the piercing
of the veil of corporate fiction. Thus, the RTC ordered the
petitioners to jointly and severally pay the respondent the
amount of P3,526,117.00 plus 4% per month interest from
February 11, 1999 until fully paid.[16]
The petitioners elevated the case to the CA via an ordinary
appeal under Rule 41 of the Rules of Court, insisting that
there was no express stipulation on the 4% monthly
interest.
THE CA RULING
The CA decided the appeal on May 5, 2003. The CA found
that the parties agreed to a 4% monthly interest principally
based on the board resolution that authorized Pantaleon to
transact a loan with an approved interest of not more than
4% per month. The appellate court, however, noted that
the interest of 4% per month, or 48% per annum, was
unreasonable and should be reduced to 12% per annum.
The CA affirmed the RTCs finding that PRISMA was a mere
instrumentality of Pantaleon that justified the piercing of
the veil of corporate fiction. Thus, the CA modified the RTC
Decision by imposing a 12% per annum interest, computed
from the filing of the complaint until finality of judgment,
and thereafter, 12% from finality until fully paid.[17]
After the CA's denial[18] of their motion for
reconsideration,[19] the petitioners filed the present
petition for review on certiorari under Rule 45 of the Rules
of Court.
THE PETITION
The petitioners submit that the CA mistakenly relied on
their board resolution to conclude that the parties agreed
to a 4% monthly interest because the board resolution was
not an evidence of a loan or forbearance of money, but
merely an authorization for Pantaleon to perform certain
acts, including the power to enter into a contract of loan.
The expressed mandate of Article 1956 of the Civil Code is
that interest due should be stipulated in writing, and no
such stipulation exists. Even assuming that the loan is
subject to 4% monthly interest, the interest covers the six
(6)-month period only and cannot be interpreted to apply
beyond it. The petitioners also point out the glaring
inconsistency in the CA Decision, which reduced the interest
from 4% per month or 48% per annum to 12% per annum,
but failed to consider that the amount of P3,526,117.00
that the RTC ordered them to pay includes the
compounded 4% monthly interest.
THE CASE FOR THE RESPONDENT
The respondent counters that the CA correctly ruled that
the loan is subject to a 4% monthly interest because the
board resolution is attached to, and an integral part of, the
promissory note based on which the petitioners obtained
the loan. The respondent further contends that the
petitioners are estopped from assailing the 4% monthly
interest, since they agreed to pay the 4% monthly interest
on the principal amount under the promissory note and the
board resolution.
THE ISSUE
The core issue boils down to whether the parties agreed to
the 4% monthly interest on the loan. If so, does the rate of
interest apply to the 6-month payment period only or until
full payment of the loan?
OUR RULING
We find the petition meritorious.
Interest due should be stipulated in writing; otherwise, 12%
per annum
Obligations arising from contracts have the force of law
between the contracting parties and should be complied
with in good faith.[20] When the terms of a contract are
clear and leave no doubt as to the intention of the
contracting parties, the literal meaning of its stipulations
governs.[21] In such cases, courts have no authority to alter
the contract by construction or to make a new contract for
the parties; a court's duty is confined to the interpretation
of the contract the parties made for themselves without
regard to its wisdom or folly, as the court cannot supply
material stipulations or read into the contract words the
contract does not contain.[22] It is only when the contract is
vague and ambiguous that courts are permitted to resort to
the interpretation of its terms to determine the parties
intent.
In the present case, the respondent issued a check for
P1,000,000.00.[23] In turn, Pantaleon, in his personal
capacity and as authorized by the Board, executed the
promissory note quoted above. Thus, the P1,000,000.00
loan shall be payable within six (6) months, or from January
8, 1994 up to June 8, 1994. During this period, the loan shall
earn an interest of P40,000.00 per month, for a total
obligation of P1,240,000.00 for the six-month period. We
note that this agreed sum can be computed at 4% interest
per month, but no such rate of interest was stipulated in
the promissory note; rather a fixed sum equivalent to this
rate was agreed upon.
Article 1956 of the Civil Code specifically mandates that no
interest shall be due unless it has been expressly stipulated
in writing. Under this provision, the payment of interest in
loans or forbearance of money is allowed only if: (1) there
was an express stipulation for the payment of interest; and
(2) the agreement for the payment of interest was reduced
in writing. The concurrence of the two conditions is
required for the payment of interest at a stipulated rate.
Thus, we held in Tan v. Valdehueza[24] and Ching v.
Nicdao[25] that collection of interest without any
stipulation in writing is prohibited by law.
Applying this provision, we find that the interest of
P40,000.00 per month corresponds only to the six (6)-
month period of the loan, or from January 8, 1994 to June
8, 1994, as agreed upon by the parties in the promissory
note. Thereafter, the interest on the loan should be at the
legal interest rate of 12% per annum, consistent with our
ruling in Eastern Shipping Lines, Inc. v. Court of Appeals:[26]
When the obligation is breached, and it consists in the
payment of a sum of money, i.e., a loan or forbearance of
money, the interest due should be that which may have
been stipulated in writing. Furthermore, the interest due
shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of
interest shall be 12% per annum to be computed from
default, i.e., from judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil Code.
(Emphasis supplied)
We reiterated this ruling in Security Bank and Trust Co. v.
RTC-Makati, Br. 61,[27] Sulit v. Court of Appeals,[28]
Crismina Garments, Inc. v. Court of Appeals,[29] Eastern
Assurance and Surety Corporation v. Court of Appeals,[30]
Sps. Catungal v. Hao,[31] Yong v. Tiu,[32] and Sps. Barrera v.
Sps. Lorenzo.[33] Thus, the RTC and the CA misappreciated
the facts of the case; they erred in finding that the parties
agreed to a 4% interest, compounded by the application of
this interest beyond the promissory notes six (6)-month
period. The facts show that the parties agreed to the
payment of a specific sum of money of P40,000.00 per
month for six months, not to a 4% rate of interest payable
within a six (6)-month period.
Medel v. Court of Appeals not applicable
The CA misapplied Medel v. Court of Appeals[34] in finding
that a 4% interest per month was unconscionable.
In Medel, the debtors in a P500,000.00 loan were required
to pay an interest of 5.5% per month, a service charge of 2%
per annum, and a penalty charge of 1% per month, plus
attorneys fee equivalent to 25% of the amount due, until
the loan is fully paid. Taken in conjunction with the
stipulated service charge and penalty, we found the interest
rate of 5.5% to be excessive, iniquitous, unconscionable,
exorbitant and hence, contrary to morals, thereby
rendering the stipulation null and void.
Applying Medel, we invalidated and reduced the stipulated
interest in Spouses Solangon v. Salazar[35] of 6% per month
or 72% per annum interest on a P60,000.00 loan; in Ruiz v.
Court of Appeals,[36] of 3% per month or 36% per annum
interest on a P3,000,000.00 loan; in Imperial v. Jaucian,[37]
of 16% per month or 192% per annum interest on a
P320,000.00 loan; in Arrofo v. Quio,[38] of 7% interest per
month or 84% per annum interest on a P15,000.00 loan; in
Bulos, Jr. v. Yasuma,[39] of 4% per month or 48% per
annum interest on a P2,500,000.00 loan; and in Chua v.
Timan,[40] of 7% and 5% per month for loans totalling
P964,000.00. We note that in all these cases, the terms of
the loans were open-ended; the stipulated interest rates
were applied for an indefinite period.
Medel finds no application in the present case where no
other stipulation exists for the payment of any extra
amount except a specific sum of P40,000.00 per month on
the principal of a loan payable within six months.
Additionally, no issue on the excessiveness of the stipulated
amount of P40,000.00 per month was ever put in issue by
the petitioners;[41] they only assailed the application of a
4% interest rate, since it was not agreed upon.
It is a familiar doctrine in obligations and contracts that the
parties are bound by the stipulations, clauses, terms and
conditions they have agreed to, which is the law between
them, the only limitation being that these stipulations,
clauses, terms and conditions are not contrary to law,
morals, public order or public policy.[42] The payment of
the specific sum of money of P40,000.00 per month was
voluntarily agreed upon by the petitioners and the
respondent. There is nothing from the records and, in fact,
there is no allegation showing that petitioners were victims
of fraud when they entered into the agreement with the
respondent.
Therefore, as agreed by the parties, the loan of
P1,000,000.00 shall earn P40,000.00 per month for a period
of six (6) months, or from December 8, 1993 to June 8,
1994, for a total principal and interest amount of
P1,240,000.00. Thereafter, interest at the rate of 12% per
annum shall apply. The amounts already paid by the
petitioners during the pendency of the suit, amounting to
P1,228,772.00 as of February 12, 1999,[43] should be
deducted from the total amount due, computed as
indicated above. We remand the case to the trial court for
the actual computation of the total amount due.
Doctrine of Estoppel not applicable
The respondent submits that the petitioners are estopped
from disputing the 4% monthly interest beyond the six-
month stipulated period, since they agreed to pay this
interest on the principal amount under the promissory note
and the board resolution.
We disagree with the respondents contention.
We cannot apply the doctrine of estoppel in the present
case since the facts and circumstances, as established by
the record, negate its application. Under the promissory
note,[44] what the petitioners agreed to was the payment
of a specific sum of P40,000.00 per month for six months
not a 4% rate of interest per month for six (6) months on a
loan whose principal is P1,000,000.00, for the total amount
of P1,240,000.00. Thus, no reason exists to place the
petitioners in estoppel, barring them from raising their
present defenses against a 4% per month interest after the
six-month period of the agreement. The board
resolution,[45] on the other hand, simply authorizes
Pantaleon to contract for a loan with a monthly interest of
not more than 4%. This resolution merely embodies the
extent of Pantaleons authority to contract and does not
create any right or obligation except as between Pantaleon
and the board. Again, no cause exists to place the
petitioners in estoppel.
Piercing the corporate veil unfounded
We find it unfounded and unwarranted for the lower courts
to pierce the corporate veil of PRISMA.
The doctrine of piercing the corporate veil applies only in
three (3) basic instances, namely: a) when the separate and
distinct corporate personality defeats public convenience,
as when the corporate fiction is used as a vehicle for the
evasion of an existing obligation; b) in fraud cases, or when
the corporate entity is used to justify a wrong, protect a
fraud, or defend a crime; or c) is used in alter ego cases, i.e.,
where a corporation is essentially a farce, since it is a mere
alter ego or business conduit of a person, or where the
corporation is so organized and controlled and its affairs so
conducted as to make it merely an instrumentality, agency,
conduit or adjunct of another corporation.[46] In the
absence of malice, bad faith, or a specific provision of law
making a corporate officer liable, such corporate officer
cannot be made personally liable for corporate
liabilities.[47]
In the present case, we see no competent and convincing
evidence of any wrongful, fraudulent or unlawful act on the
part of PRISMA to justify piercing its corporate veil. While
Pantaleon denied personal liability in his Answer, he made
himself accountable in the promissory note in his personal
capacity and as authorized by the Board Resolution of
PRISMA.[48] With this statement of personal liability and in
the absence of any representation on the part of PRISMA
that the obligation is all its own because of its separate
corporate identity, we see no occasion to consider piercing
the corporate veil as material to the case.
WHEREFORE, in light of all the foregoing, we hereby
REVERSE and SET ASIDE the Decision dated May 5, 2003 of
the Court of Appeals in CA-G.R. CV No. 69627. The
petitioners loan of P1,000,000.00 shall bear interest of
P40,000.00 per month for six (6) months from December 8,
1993 as indicated in the promissory note. Any portion of
this loan, unpaid as of the end of the six-month payment
period, shall thereafter bear interest at 12% per annum.
The total amount due and unpaid, including accrued
interests, shall bear interest at 12% per annum from the
finality of this Decision. Let this case be REMANDED to the
Regional Trial Court, Branch 73, Antipolo City for the proper
computation of the amount due as herein directed, with
due regard to the payments the petitioners have already
remitted. Costs against the respondent.
SO ORDERED.
[G.R. NO. 165938 : November 25, 2009]
ROGELIO DIZON, Petitioner, v. PHILIPPINE VETERANS BANK,
Respondent.
DECISION
PERALTA, J.:
Assailed in the present Petition for Review on Certiorari
under Rule 45 of the Rules of Court is the Resolution1 of the
Court of Appeals (CA) in CA-G.R. CV No. 72856, dated
August 25, 2003, which dismissed herein petitioner's
appeal, and its Resolution2 dated November 2, 2004
denying petitioner's motion for reconsideration.
The undisputed facts are as follows:
Herein petitioner Rogelio Dizon and his wife Corazon were
the owners of three parcels of land located in Angeles City,
Pampanga covered by Transfer Certificate of Title (TCT) Nos.
T-12567, T-35788 and T-29117-R (3793). On September 26,
1979, the Spouses Dizon mortgaged these lots to herein
respondent Philippine Veterans Bank (PVB) as security for a
credit accommodation which they obtained from PVB. The
Spouses Dizon failed to pay their obligation. As a
consequence, PVB extrajudicially foreclosed the mortgage
and was able to acquire the subject properties at public
auction conducted on December 8, 1983. Subsequently, a
Certificate of Sale was issued in favor of PVB which was
registered with the Register of Deeds of Angeles City on
November 22, 1984.
Sometime in June 1986, PVB filed with the Regional Trial
Court (RTC) of Angeles City a Petition for the Issuance of
Owner's Duplicate Certificate of Title covering the subject
lots. The case was docketed as L.R.C. CAD. CASE NO. A-124-
91. Apparently, for failure of PVB to prosecute the case for
an unreasonable length of time, the petition was dismissed
without prejudice.
On July 26, 1999, PVB filed anew with the RTC of Angeles
City a Petition for Issuance of Owner's Duplicate Copy of
Transfer Certificate of Title over the same parcels of land.
The case was docketed as L.R.C. Case No. A-124-1024.
Herein petitioner opposed the petition.
On November 16, 1999, PVB filed with the RTC of Angeles
City an ex-parte petition for the issuance of a writ of
possession. The case was docketed as Cad. Case No. A-124-
1057. On February 19, 2002, the RTC rendered judgment in
favor of PVB. On appeal, however, the CA reversed the
decision of the RTC and dismissed PVB's petition for the
issuance of a writ of possession. The CA Decision became
final and executory on January 14, 2004.
Meanwhile, after due proceedings in L.R.C. Case No. A-124-
1024, the RTC rendered judgment granting the petition of
PVB. The dispositive portion of the RTC Decision, dated
August 6, 2001, reads as follows:
WHEREFORE, the Register of Deeds of Angeles City is
directed to issue another owner's duplicate copies of T.C.T.
Nos. T-12567, 29117 (3793) and 35788 in favor of
petitioner Philippine Veterans Bank, which shall contain a
memorandum of the fact that they be issued in place of the
lost ones but shall, in all respect, be entitled to like faith and
credit as the original duplicates and shall thereafter be
regarded as such for all purposes of Pres. Decree No. 1529,
after the petitioner shall have complied with all the
mandatory requirements of the law on the matter.
SO ORDERED.3
Feeling aggrieved, Rogelio filed an appeal with the CA. On
August 25, 2003, the CA issued the presently assailed
Resolution dismissing Rogelio's appeal for his failure to file
his appellant's brief.
Rogelio filed a motion for reconsideration, but the same
was denied by the CA in a subsequent Resolution dated
November 2, 2004.
Hence, the present petition based on the following grounds:
I. Whether or not the questioned second Petition for
Issuance of Owner's Duplicate copy of Transfer Certificate
of Title Nos. T-12567, 2917 (3793), 5788 in lieu of lost
owner's copy filed by the Petitioner-Appellee on July 26,
1999, after more than sixteen (16) years after the
Foreclosure Sale sometime in December 8, 1983 is barred
by prescription;
II. Whether or not the three (3) defective, fictitious and/or
fake Owner's duplicate certificates of title attached in the
dismissed original petition filed on June 1986 when it was
the Respondent Bank (petitioner therein) itself which
placed the remarks on the upper right corner of the titles
the phrase: ALLEGEDLY FAKE in our possession presented as
collaterals are similar to the three (3) certified true copies
of the original certificates of title on file at the Register of
Deeds of Angeles City attached in the second Petition and
marked as Annexes "A", "B" and "C" thereof respectively;
III. Whether or not Atty. Ma. Rosario A. Sabalburo, Head of
Assets Recovery Department of the PVB, has committed the
crime of perjury in her Sworn Affidavit of Loss that she
executed on July 23, 1999, by presenting as pieces of
evidence the copies of the original certificates of title
secured from the Register of Deeds of Angeles City and not
the machine copies of the owner's duplicate certificates of
title that were found in their file as claimed or true xerox
copies from RTC BR. 62;
IV. Whether or not the documentary bases (the three
certified copies of title issued by the Register of Deeds of
Angeles City only last November 16, 1999 which were duly
verified by Mr. Ronnie Vergara and Mr. Herminio Manalang,
the records officer and Vault Keeper, respectively of the
said Office, used in the Respondent Bank's second Petition
are the very same copies of the said collaterals having the
same annotations and encumbrances making them as the
true and faithful reproductions of the titles used in the
Bank's first Petition filed by the Petitioner on June 19, 1986.
(Emphasis supplied.)4
The petition lacks merit.
With respect to the first issue, petitioner contends that the
petition filed by respondent bank has prescribed, citing
Article 1142 of the Civil Code which states that "[a]
mortgage action prescribes in ten years."
It is true that, under Article 1142 of the Civil Code, an action
to enforce a right arising from a mortgage should be
enforced within ten (10) years from the time the right of
action accrues; otherwise, it will be barred by prescription
and the mortgage creditor will lose his rights under the
mortgage.5 It is clear that the actions referred to under
Article 1142 of the Civil Code are those that necessarily
arise from a mortgage. In the present case, however, PVB's
petition for the issuance of an owner's duplicate certificate
of title already arises from its right as the owner of the
subject properties and no longer as a mortgagee. The
mortgage contract respondent entered into with petitioner
had already been foreclosed, the properties sold and the
sale in favor of PVB registered with the Register of Deeds of
the Province of Cagayan. Hence, since the petition filed by
PVB is not a mortgage action, the provisions of Article 1142
of the Civil Code do not apply.
In any case, Presidential Decree (PD) No. 1529, otherwise
known as the Property Registration Decree, the law that
specifically governs petitions for the replacement of lost
duplicate certificates of title, does not provide for any
limitation or period for filing the said petition. The silence of
the law on this matter can only be interpreted to mean that
there is no intention to provide a prescriptive period for
filing this petition.
As to the second issue, petitioner anchors his opposition to
the petition filed by PVB on the contention that the titles,
which he presented to the bank as evidence that the
subject properties were used as security for the loan he and
his wife incurred with the said bank, were genuine but were
later on altered by the bank's officials and employees with
whom he allegedly entered a deal in order to have his loan
approved. Petitioner claims that this altered and spurious
titles were the ones presented by PVB in its first petition
filed with the RTC in June 1986. However, these allegations
remain unsubstantiated. They are self-serving statements
which are not supported by any evidence whatsoever. It is
settled that one who alleges a fact has the burden of
proving it and mere allegation is not evidence.6 The
established fact remains that petitioner and his wife were
the ones who submitted to PVB the authentic owner's copy
of the titles over the subject properties and that these
copies were lost.ςηαñrοblεš νιr†υαl lαω
lιbrαrÿ
The Court cannot follow the logic in petitioner's arguments
considering that, in the first place, he and his wife were the
ones who submitted the titles to PVB. Now that PVB seeks
to obtain a duplicate copy of the titles covering the subject
properties which it legally acquired, petitioner has made a
complete turnaround and now assails the authenticity of
these titles which he and his wife used to obtain their loan.
Nonetheless, petitioner is estopped from doing so.
Settled is the rule that a person, who by his deed or conduct
has induced another to act in a particular manner, is barred
from adopting an inconsistent position, attitude or course
of conduct that thereby causes loss or injury to the latter.7
The doctrine of estoppel is based upon the grounds of
public policy, fair dealing, good faith and justice, and its
purpose is to forbid one to speak against his own act,
representations, or commitments to the injury of one to
whom they were directed and who reasonably relied
thereon.8
Article 1431 of the Civil Code states that "[t]hrough
estoppel an admission or representation is rendered
conclusive upon the person making it, and cannot be denied
or disproved as against the person relying thereon."
The essential elements of estoppel are: (1) conduct of a
party amounting to false representation or concealment of
material facts or at least calculated to convey the
impression that the facts are otherwise than, and
inconsistent with, those which the party subsequently
attempts to assert; (2) intent, or at least expectation, that
this conduct shall be acted upon by, or at least influence,
the other party; and (3) knowledge, actual or constructive,
of the real facts.9
In the present case, petitioner may not renege on his own
acts and representations to the prejudice of respondent
bank, which has relied on them. Since petitioner entered
into a binding contract on his own volition using the titles
which he now assails, he is therefore estopped from
questioning the authenticity of these documents which
paved the way for the consummation of the contract from
which he derived benefit.
Other than to harass the respondent, the Court is at a loss
as to what petitioner really desires to achieve in opposing
the respondent bank's petition. The Court agrees with
respondent's observation that petitioner's actuations are
demonstrative of his desperate attempt to cling on to the
subject properties despite the fact that he has lost them by
reason of foreclosure due to his failure to pay his
obligations and his subsequent inability to redeem them
during the period allowed by law.
Coming to the third and fourth issues, petitioner calls on
the Court to resolve issues of fact. Settled is the rule that a
Petition for Review on Certiorari filed with this Court under
Rule 45 of the Revised Rules of Court shall raise only
questions of law.10 This Court is not a trier of facts. It is not
its function to analyze or weigh evidence. The jurisdiction of
this Court over cases brought to it is limited to the review
and rectification of errors allegedly committed by the lower
courts.11 While there are exceptions to this rule,12 the
Court finds that the present case does not fall under any of
them.
In any case, what petitioner is trying to impress upon the
Court in the third and fourth issues is that PVB is concealing
the fact that the alleged spurious copies of the subject TCTs
were not actually lost. However, the Court gives full faith
and credence to the finding of the RTC that the owner's
duplicate copies in the possession of PVB were, in fact, lost.
This is consistent with the settled rule that appellate courts
should not, unless for strong and cogent reasons, reverse
the findings of fact of trial courts.13 This is so because trial
judges are in a better position to examine real evidence and
at a vantage point to observe the actuation and the
demeanor of the witnesses.14 In the instant case, the Court
finds no sufficient reason to depart from the above findings
of the RTC.
Petitioner further questions PVB's submission of the
certified true copies of the TCTs covering the subject
properties, which were taken from the files of the Register
of Deeds of Angeles City. However, PVB has sufficiently
explained that it is only submitting evidence to prove that it
complied with the jurisdictional requirement under Section
10915 of PD No. 1529, which directs a person applying for
the issuance of another duplicate certificate of title to file a
sworn statement with the concerned Register of Deeds of
the fact of loss or destruction of the original owner's
duplicate copy of the subject TCT.
It bears to emphasize that in a petition for the issuance of a
second owner's duplicate copy of a certificate of title in
replacement of a lost one, the only questions to be resolved
are: whether or not the original owner's duplicate copy has
indeed been lost and whether the petitioner seeking the
issuance of a new owner's duplicate title is the registered
owner or other person in interest.16
The first question is factual and, in the present case, the
RTC had already made a finding that the original owner's
duplicate copy of the subject TCTs had indeed been lost. In
this respect, the Court finds no cogent reason to depart
from the findings of the RTC as discussed earlier.
As to the second question, there is no dispute that PVB has
an interest over the subject properties having acquired the
same at public auction.
In sum, there is no doubt as to the identity of the subject
properties. There is neither any dispute with respect to the
fact that petitioner and his wife mortgaged these properties
to PVB and that they subsequently failed to pay their
obligations to the latter. Nor is there any issue as to the
validity of the foreclosure proceedings as well as the
auction sale conducted and PVB's subsequent acquisition of
the subject properties.
Hence, on the basis of the foregoing, the Court finds that
the RTC committed no error in granting PVB's petition for
the issuance of an owner's duplicate copy of certificates of
title covering the subject properties.
WHEREFORE, the petition is DENIED. The Resolutions dated
August 25, 2003 and November 2, 2004, respectively, of the
Court of Appeals in CA-G.R. CV No. 72856, are AFFIRMED.
SO ORDERED.
G.R. No. 193453 June 5, 2013
SPOUSES RUBIN AND PORTIA HOJAS, Petitioners,
vs.
PHILIPPINE AMANAH BANK AND RAMON KUE, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari assailing the July
28, 2010 Decision1 of the Court of Appeals (CA), in CA-G.R.
CV No. 55722, which affirmed the May 27, 1996 Decision of
the Regional Trial Court, Branch 13, Zamboanga City (RTC),
dismissing Civil Case No. 1028 (3952), an action for
"Determination of True Balance of Mortgage, Debt,
Annulment/Setting
Aside of Extrajudicial Foreclosure of Mortgage and
Damages, with Prayer for Preliminary Injunction."
The petitioners, Spouses Rubin and Portia Hojas
(petitioners), alleged that on April 11, 1980, they secured a
loan from respondent Philippine Amanah Bank (PAB) in the
amount of P450,000.00; that this loan was secured by a
mortgage, covering both personal and real properties; that
from May 14, 1981 to June 27, 1986, they made various
payments amounting to P486,162.13; that PAB, however,
did not properly credit their payments; that based on the
summary of payments furnished by PAB to them on
February 24, 1989, only 13 payments were credited,
erroneously amounting to P317,048.83; that PAB did not
credit the payment they made totaling P165,623.24; and
that, in the statement of their account as of October 17,
1984, PAB listed their total payment as ₱412,211.54 on the
principal, and P138,472.09 as 30% interest, all amounting to
P550,683.63, despite the fact that at that time, petitioners
had already paid the total sum of P486,162.13.2
Petitioners further averred that for failure to pay the loan,
PAB applied for the extrajudicial foreclosure of the
mortgaged real properties of petitioners with the Ex-Officio
Sheriff; that consequently, a Notice of Extrajudicial
Foreclosure was issued on January 12, 1987 setting the
foreclosure sale on April 21, 1987 and, stating therein the
mortgage debt in the sum of P450,000.00; and that, in the
public auction conducted, PAB acquired said real property.3
It was further alleged that on March 9, 1988, through the
intervention of then Senator Aquilino Pimentel, Farouk A.
Carpizo (Carpizo), the OICPresident of PAB, wrote Roberto
Hojas (Roberto), petitioners’ son, informing him that
although the one-year redemption period would expire on
April 21, 1988, by virtue of the bank’s incentive scheme, the
redemption period was extended until December 31, 1988;
that despite said letter from the OIC-President, the OIC of
the Project Development Department of PAB wrote Rubin
Hojas that the real properties acquired by PAB would be
sold in a public bidding before the end of August, 1988; that
on November 4, 1988, a public bidding was conducted; that
in the said bidding, the mortgaged properties were awarded
to respondent Ramon Kue (Kue); that subsequently, they
received a letter from the OIC of the Project Development
Department, dated January 3, 1989, informing them that
they had fifteen (15) days from receipt within which to
vacate the premises; that Kue then sent another letter,
dated January 31, 1989, informing them that he had already
acquired the said property and that they were requested to
vacate the premises within fifteen (15) days from receipt
thereof;4 and that because of this development, on May 7,
1991, petitioners filed an action for "Determination of True
Balance of Mortgage Debt, Annulment/Setting Aside of
Extrajudicial Foreclosure of Mortgage and Damages, with
Prayer for Preliminary Injunction" against PAB.5
On May 27, 1996, the RTC dismissed petitioners’ complaint.
It ruled, among others, that: 1) PAB was not guilty of bad
faith in conducting the extrajudicial foreclosure as it, at one
time, even suspended the conduct of the foreclosure upon
the request of petitioners, who, nevertheless, failed to exert
effort to settle their accounts; 2) because petitioners failed
to redeem their properties within the period allowed, PAB
became its absolute owner and, as such, it had the right to
sell the same to Kue, who acquired the property for value
and in good faith; and 3) the subsequent foreclosure and
auction sale having been conducted above board and in
accordance with the requisite legal procedure, collusion
between PAB and Kue was certainly alien to the issue.6
Aggrieved, petitioners filed an appeal assailing the May 27,
1996 RTC Decision. They asserted that the March 9, 1988
Letter of Carpizo to Roberto Hojas extended the
redemption period from April 21 to December 31, 1988.
Considering that they had relied on Carpizo’s
representation, PAB violated the principle of estoppel when
it conducted the public sale on November 4, 1988.7 Their
basis was the portion of said letter which stated:
xxxx
As the Bank has adopted an incentive scheme whereby
payments are liberalized to give chances to former owners
to repossess their properties, we suggest that you advise
your parents to drop by at our Zamboanga Office so they
can avail of this rare privilege which shall be good only up to
December 31, 1988. (Emphasis supplied)8
The CA was not sympathetic with petitioners’ position. It
held that the period of redemption was never extended.
The date "December 31, 1988" was not an extension of the
redemption period. It was merely the last day for the
availment of the liberalized payment for the repossession of
foreclosed assets under PAB’s incentive scheme. PAB,
through said letter, did not make an unqualified
representation to petitioners that it had extended the
redemption period. As such, PAB could not be said to have
violated the principle of estoppel when it conducted a
public sale on November 4, 1988.9 Thus, the dispositive
portion of the CA decision reads:
ACCORDINGLY, the instant appeal is DENIED. The Decision
dated May 27, 1996, of the Regional Trial Court, 9th Judicial
Region, Branch No. 13 of Zamboanga City, in Civil Case No.
1028 (3952), is AFFIRMED.
SO ORDERED.10
Undaunted, petitioners filed the present petition for review.
It postulated the sole issue:
WHETHER OR NOT THE CA ERRED IN NOT HOLDING PAB TO
HAVE VIOLATED THE PRINCIPLE OF ESTOPPEL WHEN THE
LATTER CONDUCTED THE NOVEMBER 4, 1988 PUBLIC SALE.
Petitioners reiterated their argument that the November 4,
1988 public sale by PAB was violative of the principle of
estoppel because said bank made it appear that the one-
year redemption period was extended. As such, when PAB
sold the property before said date, they suffered damages
and were greatly prejudiced.11 They also argued that since
they manifested their interest in availing of the said
"incentive scheme," PAB should have, at the very least,
waited until December 31, 1988, before it sold the subject
foreclosed property in a public auction.12
On the other hand, PAB explains that the purpose of the
"incentive scheme" was to give previous owners the chance
to redeem their properties on easy payment term basis,
through condonation of some charges and penalties and
allowing payment by installment based on their proposals
which may be acceptable to PAB. Therefore, the March 9,
1988 Letter of Carpizo was an invitation for petitioners to
submit a proposal to PAB.13 It was not meant to extend the
one-year redemption period.
As early as August 11, 1988, PAB wrote petitioners
informing them of the scheduled public bidding. After
receipt of the letter, petitioners went to PAB to signify their
willingness to avail of the said incentive scheme. They,
however, failed to submit a proposal. In fact, PAB did not
hear from petitioners again. As such, the respondent sold
the subject property in a public sale on November 4,
198814 PAB cited the RTC’s finding that although the
petitioners manifested their intention to avail of the
incentive scheme desire alone was not sufficient.
Redemption is not a matter of intent but involved making
the proper payment or tender of the price of the land
within the specified period.15
The petition is bereft of merit.
Through estoppel, an admission or representation is
rendered conclusive upon the person making it, and cannot
be denied or disproved as against the person relying on
it.16 This doctrine is based on the grounds of public policy,
fair dealing, good faith, and justice and its purpose is to
forbid one to speak against his own act, representations or
commitments to the injury of one to whom they were
directed and who reasonably relied on it.17 Thus, in order
for this doctrine to operate, a representation must have
been made to the detriment of another who relied on it. In
other words, estoppel would not lie against one who, in the
first place, did not make any representation.
In this case, a perusal of the letter, on which petitioners
based their position that the redemption period had been
extended, shows otherwise. Pertinent portions of the said
letter read:
xxxx
Our records show that the above account has already been
foreclosed by the bank. However, the borrowers concerned
can still exercise the one (1) year right of redemption over
the foreclosed properties until April 21, 1988.
As the Bank has adopted an incentive scheme whereby
payments are liberalized to give chances to former owners
to repossess their properties, we suggest that you advise
your parents to drop by at our Zamboanga Office so they
can avail of this rare privilege which shall be good only up to
December 31, 1988. [Emphases and Underscoring
Supplied]18
As correctly held by the RTC and upheld by the CA, the date
"December 31, 1988" refers to the last day when owners of
foreclosed properties, like petitioners, could submit their
payment proposals to the bank. The letter was very clear. It
was about the availment of the liberalized payment scheme
of the bank. On the last day for redemption, the letter was
also clear. It was April 21, 1988. It was never extended.
The opportunity given to the petitioners was to avail of the
liberalized payment scheme which program would expire
on December 31, 1988. As explained by Abraham Iribani
(Iribani), the OIC of the Project Development Department of
PAB, it was to give a chance to previous owners to
repossess their properties on easy term basis, possibly by
condonation of charges and penalties and payment on
instalment. The letter of Carpizo was an invitation to the
petitioners to come to the bank with their proposal. It
appears that the petitioners could not come up with a
proposal acceptable to the bank.
For said reason, the mortgaged property was included in
the list of mortgaged properties that would be sold through
a scheduled public bidding. Thus, on August 11, 1988,
Iribani wrote the petitioners about the scheduled bidding.
In response, the petitioners told Iribani that they would go
Manila to explain their case. They did not, however, return
even after the public bidding. In this regard, the CA was
correct when it wrote:
Here, there is no estoppel to speak of. The letter does not
show that the Bank had unqualifiedly represented to the
Hojases that it had extended the redemption period to
December 31, 1988. Thus, the Hojases have no basis in
positing that the public sale conducted on November 4,
1988 was null and void for having been prematurely
conducted.19
Moreover, petitioners’ allegation that they had signified
their intention to avail of the incentive scheme (which they
have equated to their intention to redeem the property),
did not amount to an exercise of redemption precluding the
bank from making the public sale.20 In the case of China
Banking Corporation v. Martir,21 this Court expounded on
what constitutes a proper exercise of the right of
redemption, to wit:
The general rule in redemption is that it is not sufficient
that a person offering to redeem manifests his desire to do
so. The statement of intention must be accompanied by an
actual and simultaneous tender of payment. This
constitutes the exercise of the right to repurchase.
In several cases decided by the Court where the right to
repurchase was held to have been properly exercised, there
was an unequivocal tender of payment for the full amount
of the repurchase price. Otherwise, the offer to redeem is
ineffectual. Bona fide redemption necessarily implies a
reasonable and valid tender of the entire repurchase price,
otherwise the rule on the redemption period fixed by law
can easily be circumvented.
Moreover, jurisprudence also characterizes a valid tender of
payment as one where the full redemption price is
tendered. Consequently, in this case, the offer by
respondents on July 24, 1986 to redeem the foreclosed
properties for ₱1,872,935 and the subsequent consignation
in court of P1,500,000 on August 27, 1986, while made
within the period of redemption, was ineffective since the
amount offered and actually consigned not only did not
include the interest but was in fact also way below the
P2,782,554.66 paid by the highest bidder/purchaser of the
properties during the auction sale.
In Bodiongan vs. Court of Appeals, we held:
In order to effect a redemption, the judgment debtor must
pay the purchaser the redemption price composed of the
following: (1) the price which the purchaser paid for the
property; (2) interest of 1% per month on the purchase
price; (3) the amount of any assessments or taxes which the
purchaser may have paid on the property after the
purchase; and (4) interest of 1% per month on such
assessments and taxes x x x.
Furthermore, Article 1616 of the Civil Code of the
Philippines provides:
The vendor cannot avail himself of the right to repurchase
without returning to the vendee the price of the sale x x x.
It is not difficult to understand why the redemption price
should either be fully offered in legal tender or else validly
consigned in court. Only by such means can the auction
winner be assured that the offer to redeem is being made in
good faith.1âwphi1
Respondents' repeated requests for information as regards
the amount of loan availed from the credit line and the
amount of redemption, and petitioner's failure to accede to
said requests do not invalidate the foreclosure.
Respondents can find other ways to know the redemption
price. For one, they can examine the Certificate of Sale
registered with the Register of Deeds to verify the purchase
price, or upon the filing of their complaint, they could have
moved for a computation of the redemption price and
consigned the same to the court. At any rate, whether or
not respondents '"were diligent in asserting their
willingness to pay is irrelevant. Redemption within the
period allowed by law is not a matter of intent but a
question of payment or valid tender of the full redemption
price within said period.

Even the complaint instituted by respondents cannot aid

their plight because the institution of an action to annul a
foreclosure sale does not suspend the running of the
redemption period. (Underscoring supplied)22

In the case at bench, the record is bereft of concrete

evidence that would show that, aside from the fact that
petitioners manifested their intention to avail of the
scheme, they were also ready to pay the redemption price.
Hence, as they failed to exercise their right of redemption
and failed to take advantage of the liberalized incentive
scheme, PAB was well within its right to sell its property in a
public sale.

WHEREFORE, the petition is DENIED.

SO ORDERED.