EN BANC

REPUBLIC OF THE PHILIPPINES, Petitioner vs MARELYN TANEDO MANALO, Respondent

G.R. No. 221029
April 24, 2018
Peralta, J.

NATURE OF THE ACTION: Petition for cancellation of Entry of marriage in the Civil
Registry of San Juan, Metro Manila. This petition for review on certiorari under Rule 45 of
the Rules of Court (Rules) seeks to reverse and set aside the September 18, 2014
Decision and October 12, 2015 Resolution of the Court of Appeals (CA) in CA-G.R. CV
No. 100076.

FACTS: Marelyn Tanedo Manalo was previously married in the Philippines to a Japanese
national named Yoshino Minoro. A case for divorce was filed by the petitioner Manalo
in Japan and after due proceedings, a divorce decree dated December 6, 2011 was
rendered by the Japanese Court. Manalo filed a petition for cancellation of entry of
marriage in the civil registry of San Juan, Metro Manila, by virtue of a judgment of
divorce rendered by a japanese court and that she be allowed to return and use her
maiden surname, Manalo.

RTC denied the petition for lack of merit. It ruled that the divorce obtained by
Manalo in Japan should not be recognized based on Article 15 of the New Civil Code
which does not afford Filipinos the right to file for a divorce, whether they are in the
country or living abroad, whether married to a filipino or to foreigners or if they
celebrated they marriage in the Philippines or in another country and that unless
Filipinos are naturalized citizens of another country, Philippine laws shall have conrol
over issues related to Filipinos’ family rights and duties, together with the determination
of the condition and legal capacity to enter into contracts and civil relations including
marriages.

The Court of Appeals overturned the RTC decision and held that Article 26 of the
Family code of the Philippines is applicable even if it was Manalo who filed for Divorce
against her Japanese husband because the Decree they obtained makes the latter no
longer maried to the former, capacitating him to remarry; that the fact that it was
Manalo who filed the divorce case is inconsequetial. CA ruled that the meaning of the
law should be based on the intent of the lawmakers and in view of the legislative intent
behind Article 26, it would be the height of injustice to consider Manalo as still married
to the Japanese National, who in turn is no longer married to her.

ISSUE: Whether or not under Article 26 of the Family Code of the Philippines a Filipino
citizen has the capacity to remarry after initiating a divorce proceeding abroad and
obtaining a favorable judgment against his or her alien spouse.

HELD:

Yes, the Filipina spouse who initiated the divorce and has successfully obtained a
divorce decree against an alien spouse may remarry under Art. 26 of the Family Code
of the Philippines.

The Purpose of Article 26 (2) of the Family Code of the Philippines is to avoid the
absurd situation where the Filipino spouse remains married to the alien spouse who,
after a foreign divorce decree that is effective in the country where it was rendered is
no longer married to the Filipino spouse. Even if the word obtained should be
interpreted to mean that the divorce proceeding must be actually initiated by the alien
spouse, still the court will not follow the letter of the statute when to do so would depart
from the true intent of the legislature or would otherwise yield conclusions inconsistent
with the general purpose of the act. Indeed, where the interpretation of a statute
according to its exact and literal import would lead to mischievous results or
contravene the clear purpose of the legislature, it should be construed according to
the spirit and reason, disregarding as far as necessary the letter of the law. A statute
may, therefore be extended to cases not within the literal meaning of its terms, so long
as they come within its spirt or intent. Whether the filipino spouse initiated the foreign
divorce proceeding or not, a favorable decree dissolving the marriage bond and
capacitating his or her alien spouse to remarry will have the same result. Therefore, the
subject provision shall not make a distinction.

The petition for review on certiorari is DENIED.

 THIRD DIVISION
HEIRS OF JOSE MARIANO AND HELEN S. MARIANO, REPRESENTED BY DANILO DAVID S.
MARIANO, MARY THERESE IRENE S. MARIANO, MA. CATALINA SOPHIA S. MARIANO, JOSE
MARIO S. MARIANO, MA. LENOR S. MARIANO, MACARIO S. MARIANO AND HEIRS OF
ERLINDA MARIANO-VILLANUEVA, REPRESENTED IN THIS ACT BY IRENE LOURDES M.
VILLANUEVA THROUGH HER ATTORNEY-IN-FACT EDITHA S. SANTUYO AND BENJAMIN B.
SANTUYO v. CITY OF NAGA
G.R. No. 197743
March 12, 2018
TIJAM, J.:

NATURE OF THE ACTION: Action for Unlawful Detainer. This is a Petition for Review
on Certiorari, filed under Rule 45 of the Rules of Court, assailing the July 20, 2011
Amended Decision rendered by the Court of Appeals (CA) in CA-G.R. SP No. 90547
which reconsidered its March 7, 2011 Decision, annulling the June 20, 2005 Decision of
the Regional Trial Court (RTC), Branch 26 of Naga City in Civil Case No. RTC 2005-0030,
and reinstating the February 14, 2005 Decision of the Municipal Trial Court (MTC), Branch
1 of Naga City in Civil Case No. 12334 dismissing the ejectment case instituted by
petitioners.

FACTS: An action for unlawful detainer was filed by the herein petitioners before the
MTC against Naga City asking to vacate the subject property Blocks 25 and 26 (LRC)
Psd-9674, and to return possession thereof to them. They averred that there was no
donation of the subject property to the City as the obligation to donate on the part of
Macario and Gimenez, conditioned on the Subdivision undertaking the construction of
the City Hall therein, was abrogated when the City eventually awarded the
construction contract to Sabaria and that title to the property, which remained
registered in the names of Macario and Gimenez, was indefeasible and could not be
lost by prescription or be defeated by tax declarations. Futher, they contended that the
City was a builder in bad faith because it continued to construct the City Hall and
allowed other government agencies to build their offices on the subject property,
knowing that the donation had been aborted when the condition therefor was not
fulfilled.

The City countered that the donation actually took place, as evidenced by a
Deed of Donation dated August 16, 1954, making the City the owner and lawful
possessor of the subject property. The City also argued that since the property was
already occupied by several government offices for about 50 years, recovery thereof
was no longer feasible and the landowners may simply demand just compensation
from the City. The City further contended that the complaint was dismissible on the
grounds of laches and prescription. In any case, the City averred that it could not be
ejected from the premises as it possessed the rights of a builder in good faith.

The MTC ruled in favor of the City as it gave weight to the Deed of Donation.
However, set aside by the RTC ruling that since the subject land was titled under the
Torrens system in the name of Macario and Gimenez, the tax declaration in the City's
name could not prevail, and the property could not be subject of acquisitive
prescription. Thus, the City was a builder in bad faith. But was reversed by the Court of
Appeals in its amended decision.Hence, this case.

ISSUE: Whether or not Naga City is a builder in good faith as it acquired ownership thru
acquisitive prescription

RULING: No, Naga City is a builder in bad faith as it did not acquired ownership thru
acquisitive prescription.

The City has, for more than 50 years since the donation supposedly took place
on August 16, 1954, failed to secure title over the subject property in its name. If the City
had acquired ownership of the premises, it is incredible that it would fail to register the
donation and have the property titled in its name. That it would remain passive for such
length of time is confounding and does not serve to bolster its proprietary or possessory
claim to the property.

At the very least, the City should have caused the annotation of the alleged
Deed on TCT No. 671 immediately after August 16, 1954 or shortly thereafter. Such
inscription would have been binding on petitioners, as Macario and Irene's successors-
in-interest, as well as on third parties.

Indeed, title to the subject property remains registered in the names of Macario
and Gimenez. The alleged Deed of Donation does not appear to have been registered
and TCT No. 671 does not bear any inscription of said Deed.

The Court has consistently upheld the registered owners' superior right to possess
the property in unlawful detainer cases. A fundamental principle in land registration is
that the certificate of title serves as evidence of an indefeasible and incontrovertible
title to the property in favor of the. person whose name appears therein. It is conclusive
evidence as regards ownership of the land therein described, and the titleholder is
entitled to all the attributes of ownership of the property, including possession. Thus, the
Court has time and again reiterated the age-old rule that the person who has a Torrens
title over a parcel of land is entitled to possession thereof.

By law, one is considered in good faith if he is not aware that there exists in his
title or mode of acquisition any flaw which invalidates it. The essence of good faith lies
in an honest belief in the validity of one's right, ignorance of a superior claim, and
absence of intention to overreach another. By these standards, the City cannot be
deemed a builder in good faith.

The Petition is granted.

 FIRST DIVISION
AMERICAN POWER CONVERSION CORPORATION; AMERICAN POWER CONVERSION
SINGAPORE PTE. LTD.; AMERICAN POWER CONVERSION (A.P.C.), B.V.; AMERICAN POWER
CONVERSION (PHILS.) B.V.; DAVID W. PLUMER, JR.; GEORGE KONG; and ALICIA HENDY,
vs. JAYSON YU LIM
G.R. No. 214291
January 11, 2018
DEL CASTILLO, J.:

NATURE OF THE ACTION: This Petition for Review on Certiorari seeks to set aside the April
23, 2014 Decision of the Court of Appeals (CA) in CA-G.R SP No. 110142 setting aside
the June 17, 2008 Decision and June 10, 2009 Resolution of the National Labor Relations
Commission (NLRC) in NLRC LAC No. 10-002807-07 and reinstating the July 27, 2007
Decision of the Labor Arbiter, as well as the CA's September 11, 2014 Resolution denying
petitioners' Motion for Reconsideration.

FACTS: Respondent Jason Yu Lim was hired to serve a Country Manager of American
Power Conversion Philippine Sales Office which was not registered under SEC but doing
business in the Philippines and acts as a liaison office for American Power Conversion
Corporation (APCC), an American corporation. The respondent was promoted as
Regional Manager for APC North ASEAN, a division of APC ASEAN and reported directly
to Larry Truong, Country General Manager for the entire APC ASEAN and officer of
APCC. However, his remuneration is paid by a separate company in the Philippines,
APCP BV. Truong was not connected in any way with APCP BV which per its SEC
registration, is licensed to engage only in the manufacture of computer-related
products. In 2005, Truong was replaced by George Kong. Jason Yu Lim discovered
irregularities committed by Kong. Kong terminated Jason Lim and Mr. Shao on the
ground of redundancy in APCC. Jason Lim filed a complaint for illegal dismissal. Kong
contended that Jason is an employee of APCP BV and not of APCC. The Labor Arbiter
ruled in favor of Jason Lim. It was noted that after Jason Lim and Mr. Shao was
terminated, another person was hired to replace him who performed the same task.
This shows that the position was not really redundant. NLRC reversed the decision of
Labor arbiter finding that there was in fact redundancy. The CA overturned the
decision of NLRC and affirmed the ruling of the Labor Arbiter for the same reason.

ISSUE: Whether or not the petitioners are liable to the respondent being the
respondent’s employer.

RULING: To determine the existence of an employer-employee relationship, four

elements generally need to be considered, namely: (1) the selection and engagement
of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
power to control the employee's conduct. These elements or indicators comprise the
so-called 'four-fold' test of employment relationship. x x x

It would seem that all of the petitioners are for all practical purposes
respondent's employers. He was selected and engaged by APCC. His salaries and
benefits were paid by APCP BV. And he is under the supervision and control of APCS
and APC Japan. But of course, there is no such thing in legitimate employment
arrangements. This bizarre labor relation was made possible and necessary only by the
petitioners' common objective: to enable APCC to skirt the law. For all legal purposes,
APCC is respondent's employer. Therefore, this Court declares the subject redundancy
scheme a sham, the same being an integral part of petitioners' illegitimate scheme to
defraud the public - including respondent - and the State. It is null and void for being
contrary to law and public policy as it is in furtherance of an illegal scheme perpetrated
by APCC with the aid of its co-petitioners. Quae ab initio non valent, ex post facto
convalescere non possunt. Things that are invalid from the beginning are not made
valid by a subsequent act.
 It is true that the 'backwages' sought by an illegally dismissed employee may be
considered, by reason of its practical effect, as a 'money claim.' However, it is not the
principal cause of action in an illegal dismissal case but the unlawful deprivation of
one's employment committed by the employer in violation of the right of an employee.
Backwages is merely one of the reliefs which an illegally dismissed employee prays the
labor arbiter and the NLRC to render in his favor as a consequence of the unlawful act
committed by the employer. The award thereof is not private compensation or
damages but is in furtherance and effectuation of the public objectives of the Labor
Code. Even though the practical effect is the enrichment of the individual, the award
of backwages is not in redress of a private right, but rather, is in the nature of a
command upon the employer to make public reparation for his violation of the Labor
Code.

Under Article 2142 of the Civil Code, "[c]ertain lawful, voluntary and unilateral
acts give rise to the juridical relation of quasi-contract to the end that no one shall be
unjustly enriched or benefited at the expense of another."

There is unjust enrichment 'when a person unjustly retains a benefit to the loss of
another, or when a person retains money or property of another against the
fundamental principles of justice, equity and good conscience. The principle of unjust
enrichment requires two conditions: (1) that a person is benefited without a valid ba5is
or justification, and (2) that such benefit is derived at the expense of another.

The main objective of the principle against unjust enrichment is to prevent one
from enriching himself at the expense of another without just cause or consideration. x x
x

With the view taken of the case, it cannot be said that respondent may still be
reinstated to his former position, on account of strained relations. Besides, the Court
shall endeavor to determine the respective accountabilities of petitioners by way of
taxes and other possible liabilities proceeding from the manner that they conducted
business all these years. Hendy' s admission in her December 9, 2005 letter to
respondent about APCC's use of the latter's private bank account with which to
conduct its business and operations is certainly revealing, just as telling as the evidence
on record which suggests that APCC generated substantial revenue from its Philippine
operations. For this purpose, respondent's cooperation might be required by the
authorities. As a potential witness to the activities of petitioners, his security and safety
may not be guaranteed if he continues to work for the petitioners - not to mention that
any investigation into the matter might be jeopardized by his continued association
with petitioners.

Apparent from the Petition is petitioners' failure to question the monetary awards.
Perhaps they found no need to question the same, thinking that it is unnecessary to do
so with their full concentration devoted to defending the validity and propriety of their
redundancy scheme - which they must sincerely believe will stand the test of validity.
Understandably, if the scheme were upheld, respondent's monetary claims would
necessarily be struck down. Nonetheless, the Court observes that the Labor Arbiter
committed a patent error regarding one of the awards contained in the dispositive
portion of her Decision-which escaped the attention of the CA. This pertains to the
award of ₱45,771.50, covering vehicle insurance for the years 2006 and 2007, and
vehicle registration for the year 2006 - which should be deleted. It has no basis in fact
and in law.

The Petition is DENIED.

 THIRD DIVISION
H. VILLARICA PAWNSHOP, INC., HL VILLARICA PAWNSHOP, INC., HRV VILLARICA
PAWNSHOP, INC. AND VILLARICA PAWNSHOP, INC. VS. SOCIAL SECURITY COMMISSION,
SOCIAL SECURITY SYSTEM, ET AL.
G.R. NO. 228087
January 24, 2018
GESMUNDO, J.:

NATURE OF THE CASE: This is a petition for review on certiorari under Rule 45 of the Rules
of Court filed by petitioners H. Villarica Pawnshop, Inc., HL Villarica Pawnshop Inc.,
(petitioners) seeking to reverse and set aside the Decision dated February 26, 2016 and
Resolution dated November 2, 2016, of the Court of Appeals (CA) in CA-G.R. SP No.
140916, which affirmed the Resolution dated November 6, 2013, and order dated
January 21, 2015, of the Social Security Commission (SSC) denying petitioners’ claim for
refund.

FACTS: Petitioners are private corporations engaged in the pawnshop business and are
compulsorily registered with the Social Security System (SSS) under Republic Act (R.A.)
No. 8282 (Social Security Law of 1997). Petitioners paid their delinquent contributions
and accrued penalties with the different branches of the SSS. On January 7, 2010,
Congress enacted R.A. No. 9903, otherwise known as the Social Security Condonation
Law of 2009, which took effect on February 1, 2010. The said law offered delinquent
employers the opportunity to settle, without penalty, their accountabilities or overdue
contributions within six (6) months from the date of its effectivity. Petitioners thru its
President and General Manager Atty. Henry P. Villarica, sent separate Letters, all dated
to the different branches of the SSS seeking reimbursement of the penalties they paid.
SSC denied the claim ruling the petitioners have no unpaid obligations at the time of
the effectivity of the law and there can be no refund prior to the effectivity of such law.
CA affirmed the ruling of the SSC.

Petitioners argue that the last proviso of Section 4 of R. A. No. 9903 clearly
extends the benefit of the waiver" to employers who have settled their arrears before
the effectivity of the law, hence, to allow the refund of the corresponding penalties
paid; that the "equity provision" in Section 4 of R.A. No. 9903 should be interpreted to
include a refund of penalties already paid if such law is to be given any effect; and
that a refund should be allowed because there is no substantial distinction between
employers who paid their accrued penalties before and after the effectivity of the R.A.
No. 9903.

ISSUE: Whether or not the petitioners are entitled to condonation.

RULING: The petition is bereft of merit.

Sections 2 and 4 of the R.A. No. 9903 specifically provide:

Section 2. Condonation of Penalty. - Any employer who is delinquent or has not

remitted all contributions due and payable to the Social Security System (SSS), including
those with pending cases either before the Social Security Commission, courts or Office
of the Prosecutor involving collection of contributions and/or penalties, may within six
(6) months from the effectivity of this Act:

(a) remit said contributions; or

(b) submit a proposal to pay the same in installments,subject to the implementing rules
and regulations which the Social Security Commission may prescribe: Provided, That the
delinquent employer submits the corresponding collection lists together with the
remittance or proposal to pay installments: Provided, further, That upon approval and
payment in full or in installments of contributions due and payable to the SSS, all such
pending cases filed against the employer shall be withdrawn without prejudice to the
refiling of the case in the event the employer fails to remit in full the required delinquent
contributions or defaults in the payment of any installment under the approved
proposal.

Section 4. Ejfectivity of Condonation. - The penalty provided under Section 22 (a)

of Republic Act No. 8282 shall be condoned by virtue of this Act when and until all the
delinquent contributions are remitted by the employer to the SSS: Provided, That, in
case the employer fails to remit in full the required delinquent contributions, or defaults
in the payment of any installment under the approved proposal, within the availment
period provided in this Act, the penalties are deemed reimposed from the time the
contributions first become due, to accrue until the delinquent account is paid in full:
Provided,further, That for reason of equity, employers who settled arrears in
contributions before the eff ectivity of this Act shall likewise have their accrued
penalties waived.

Under R.A. No. 9903 and its IRR, an employer who is delinquent or has not
remitted all contributions due and payable to the SSS may avail of the condonation
program provided that the delinquent employer will remit the full amount of the unpaid
contributions or would submit a proposal to pay the delinquent contributions in
installment within the six ( 6)-month period set by law. Under Section 4 of R.A. No. 9903,
once an employer pays all its delinquent contributions within the six month period, the
accrued penalties due thereon shall be deemed waived. In the last proviso thereof,
those employers who have settled their delinquent contributions before the effectivity
of the law but still have existing accrued penalties shall also benefit from the
condonation program. In that situation, there is still something to condone because
there are existing accrued penalties at the time of the effectivity of the law. Section 1 (
d) of the IRR defines accrued penalties as those that refer to the unpaid three percent
(3%) penalty imposed upon any delayed remittance of contribution. Accordingly, R.A.
No. 9903 covers those employers who (1) have existing delinquent contributions and/or
(2) have accrued penalties at the time of its effectivity. Evidently, there is nothing in R.A.
No. 9903, particularly Section 4 thereof, that benefits an employer who has settled their
delinquent contributions and/or their accrued penalties prior to the effectivity of the
law. Once an employer pays all his delinquent contributions and accrued penalties
before the effectivity of R.A. No. 9903, it cannot avail of the condonation program
because there is no existing obligation anymore. It is the clear intent of the law to limit
the benefit of the condonation program to the delinquent employers. Also, the
provisions of R.A. No. 9903 and its IRR state that employers may be accorded the
benefit of having their accrued penalties waived provided that they either remit their
delinquent contributions or submit a proposal to pay their delinquencies in installments
(on the condition that there will be no default in subsequent payments) within the
"availment period" spanning six (6) months from R.A. No. 9903's effectivity. The Court
finds that employers who have paid their unremitted contributions and already settled
their delinquent contributions as well astheir corresponding penalties before R.A. No.
9903' s effectivity do not have a right to be refunded of the penalties already paid,
which shall be discussed in seriatim.

The petition is DENIED.

 THIRD DIVISION
MARILOU PUNONGBAYAN-VISITACION v. PEOPLE OF THE PHILIPPINES AND CARMELITA P.
PUNONGBAYAN
G.R. No. 194214
January 10, 2018
MARTIRES, J.:

NATURE OF THE ACTION: This petition for review on certiorari seeks to reverse and set
aside the 30 January 2009 Decision and 18 October 2010 Resolution of the Court of
Appeals (CA) in CA-G.R. SP No. 77040 which affirmed the 12 May 2003 Judgment of the
Regional Trial Court, Branch 5, Iligan City (RTC).

FACTS: Petitioner Marilou Punongbayan-Visitacion (Visitacion) was the corporate

secretary and assistant treasurer of St. Peter's College of Iligan City. Acting on the
advice of her counsel, she wrote a letter to private respondent Carmelita P.
Punongbayan (Punongbayan)

Insulted, Punongbayan filed a Complaint for Libel against Visitacion. On 25

October 1999, the Office of the City Prosecutor of Iligan City issued a resolution
approving the filing of a case for libel against Visitacion.

The RTC convicted Visitacion of libel and disregarded Visitacion's defense of

good faith finding that her act of writing the disputed letter was motivated by hostility or
malice. Visitacion filed a petition for certiorari with a prayer for Temporary Restraining
Order and/or Writ of Preliminary injunction before the CA but the same was dismissed.
Visitacion moved for reconsideration but was denied. Hence, this petition.

ISSUE: Whether the court of appeals acted contrary to law when it, in effect, affirmed
the court a quo's imposition of moral damages upon petitioner in the excessive amount
of three million pesos (₱3,000,000.00)

RULING: Visitacion likewise assails the award of moral damages. She does not question
the basis for the award of moral damages per se but bewails the unjust amount set by
the trial court.

Moral damages is the amount awarded to a person to have suffered physical

suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar injury.It is given to ease the victim's
grief and suffering, and should reasonably approximate the extent of the hurt caused
and the gravity of the wrong done.

The RTC found Punongbayan entitled to moral damages because Visitacion's

libelous act caused her to suffer ridicule, sleepless nights, and moral damage. In Tulfo v.
People, the Court explained that moral damages can be recovered in cases of libel or
slander, viz:

It was the articles of Tulfo that caused injury to Atty. So, and for that Atty. So
deserves the award of moral damages. Justification for the award of moral damages is
found in Art. 2219 (7) of the Civil Code, which states that moral damages may be
recovered in cases of libel, slander, or any other form of defamation. As the cases
involved are criminal cases of libel, they fall squarely within the ambit of Art. 2219 (7).

Moral damages can be awarded even in the absence of actual or

compensatory damages. The fact that no actual or compensatory damage was
proven before the trial court does not adversely affect the offended party's right to
recover moral damages.
 For moral damages to be awarded, proof of pecuniary loss is unnecessary but
the factual basis of damages and its causal connection to the defendant's acts must
be satisfactorily established. In short, the complainant's injury should have been due to
the actions of the offending party.

Here, the evidence on record justify the award of moral damages to

Punongbayan. She was a high-ranking officer of an educational institution whom
Visitacion accused of criminal or improper conduct. Such accusations were not made
known only to the victim but also to other persons such as her staff and employees of a
bank the school had transactions with. Thus, Punongbayan's reputation was
besmirched and she was humiliated before her subordinates and other people. Clearly,
her reputation was tarnished after being accused of unsavory and questionable
behavior, primarily attributable to Visitacion's act of circulating the letter imputing
wrongdoing of Punongbayan.

In addition, it is noteworthy that in her present petition for review

on certiorari before the Court, Visitacion simply challenges the unreasonable amount of
moral damages awarded and prays for its reduction. By inference, she admits she had
caused Punongbayan injury, thus, the issue remains to be the amount of moral
damages warranted under the circumstances.

In Yuchengco v. The Manila Chronicle Publishing Corporation, the Court

explained that in awarding moral damages, the surrounding circumstances are
controlling factors but should always be commensurate to the perceived injury:

While there is no hard-and-fast rule in determining what would be a fair and

reasonable amount of moral damages, the same should not be palpably and
scandalously excessive. Moral damages are not intended to impose a penalty to the
wrongdoer, neither to enrich the claimant at the expense of the defendant.

In Philippine Journalists, Inc. (People's Journal) v. Thoenen, citing Guevarra v.

Almario, We noted that the damages in a libel case must depend upon the facts of the
particular case and the sound discretion of the court, although appellate courts were
"more likely to reduce damages for libel than to increase them." So it must be in this
case.

Moral damages are not a bonanza. They are given to ease the defendant's grief
and suffering. Moral damages should be reasonably approximate to the extent of the
hurt caused and the gravity of the wrong done. The Court, therefore, finds the award of
moral damages in the first and second cause of action in the amount of ₱2,000,000.00
and ₱25,000,000.00, respectively, to be too excessive and holds that an award of
₱1,000,000.00 and ₱10,000,000.00, respectively, as moral damages are more
reasonable.

With this in mind, the Court finds the award of ₱3,000,000.00 as moral damages to
be unwarranted. Such exorbitant amount is contrary to the essence of moral damages,
which is simply a reasonable recompense to the injury suffered by the one claiming it. It
was neither meant to punish the offender nor enrich the offended party. Thus, to
conform with the present circumstances, the moral damages awarded should be
equitably reduced to ₱500,000.00.

The petition is GRANTED.

 THIRD DIVISION
PEOPLE OF THE PHILIPPINES vs. JESUS EMPUESTO y SOCATRE
G.R. No. 218245
January 17, 2018
MARITRES, J.:

NATURE OF THE ACTION: This resolves the appeal of accused-appellant Jesus Empuesto
y Socatre (Empuesto) seeking the reversal and setting aside of the 5 September 2014
Decision1 of the Court of Appeals (CA) in CA-G.R. CEB CR HC No. 01680 which affirmed,
with modification as to the award of damages, the 23 July 2012 Decision of the
Regional Trial Court (RTC), Branch 52, Talibon, Bohol, finding him guilty of Rape under
Art. 266-A l(a) of the Revised Penal Code (RPC),as amended.

FACTS: That on or about the 3rd day of July 2005 in the Municipality of Danao, Province
of Bohol, Philippines, and within the jurisdiction of this Honorable Court, the above-
named accused with criminal intent, that is, carnal lecherous desire, with force, threat,
and intimidation, did then and there willfully, unlawfully, and feloniously have carnal
knowledge with victim AAA by inserting his penis into the vagina of the said victim
against her will and consent, to her damage and prejudice in the amount to be proved
during the trial. Acts committed contrary to law, that is, Art. 266-A 1 (a) of the Revised
Penal Code, as amended. When arraigned, accused-appellant pleaded not guilty,
hence, trial proceeded.

The RTC found the accused guilty of the crime of Rape and sentenced to pay
civil indemnity to the victim. The CA affirmed the decision of the RTC and found the
nned to award to the victim moral damages and exemplary damages with interest.

ISSUE: Whether or not the CA erred in awarding moral damages to the victim

RULING: Following the ruling in People v. Jugueta, the damages awarded to AAA must
be modified as follows: civil indemnity of ₱75,000.00; moral damages of ₱75,000.00; and
exemplary damages of ₱75,000.00. Accused-appellant shall further pay interest of
6% per annum on the civil indemnity and moral and exemplary damages reckoned
from the finality of this decision until full payment.

The appeal is DENIED.

 FIRST DIVISION
DEMOSTHENES R. ARBILON v. SOFRONIO MANLANGIT
G.R. No. 197920
January 22, 2018
TIJAM, J. (Contract to Sell)

NATURE OF THE ACTION: This is a petition for review on certiorari under Rule 45 of the
Rules of Court filed by Demosthenes R. Arbilon (petitioner) assailing the Decision dated
January 14, 2011 of the Court of Appeals (CA) in CA-G.R. CV No. 00038, which reversed
and set aside the Decision dated May 5, 2003 of the Regional Trial Court (RTC) of
Davao City, Branch 33 in Civil Case No. 27,498-99 dismissing the case filed by Sofronio
Manlangit (respondent) and ordering the return of the possession of the Atlas Copco
Compressor (compressor) to petitioner. Complaint for recovery of possession of
personal properties with writ of replevin and/or sum of money, with damages and
attorney's fees filed by respondent against petitioner.

FACTS:
In his complaint, respondent alleged that he purchased on credit one (1)
compressor and one (1) unit of Stainless Pump, 3 horsepower, single phase for
P200,000.00 and P65,000.00, respectively, from Davao Diamond Industrial Supply
(Davao Diamond). Respondent claimed that the compressor had been in the
possession of petitioner from November 1997 up to the time of the filing of the
complaint, that despite demand, petitioner failed to return the same to respondent.

In his Answer with Counterclaim, petitioner argued that the respondent is not the
owner of the compressor. Petitioner alleged that the ownership of the compressor was
never vested to respondent since the latter failed to pay the purchase price of
P200,000.00. Petitioner alleged that he voluntarily assumed the obligation to pay the
compressor to Davao Diamond in four installments as it was indispensable in the mining
operations of Double A.

During the trial, respondent alleged that he was once a financier and operator
of a gold mine in Davao del Norte but when he ran out of funds, petitioner and Major
Efren Alcuizar (Alcuizar) took over the mining operations. When petitioner and Alcuizar
also ran out of funds, Lucia Sanchez Leanillo (Leanillo) became the financier of the
mining operations. It appears that Leanillo paid for the installments of the compressor
on account of a separate contract of sale entered into by Davao Diamond with her.

The RTC ruled in favor of the petitioner. It held, among others, that “when
[respondent] wrote the [Davao Diamond], that he was voluntarily surrendering the
compressor and the pump he effectively surrendered whatever rights and interest he
might have on the compressor and the pump. He was aware that he is no longer the
owner of the compressor. xx x x.

Upon appeal, the CA reversed the RTC. The CA held that the transaction
between respondent and Davao Diamond was a contract to sell since the stipulation in
the Sales Invoice shows that the goods listed in the invoice shall remain the property of
the seller until fully paid by the buyer. The CA further held that since Leanillo
undisputedly paid the installments on the compressor, the ownership over the
compressor was automatically vested on respondent. As such, the owner of the
compressor is respondent. Insofar as the payment of Leanillo is concerned, the CA held
that such payment is considered as a payment made by a third party without the
knowledge of the respondent, as such, Leanillo can recover the amount paid insofar as
the same has been beneficial to respondent.

ISSUE: Whether or not the CA erred when it ruled that respondent is the owner of the
compressor, hence entitled to its possession.
HELD:
To determine who has the better right to possession of the compressor,
examination of the contract between respondent and Davao Diamond is in order. The
CA is of the opinion that the contract between respondent and Davao Diamond is
merely a contract to sell, as such, mere delivery of the thing sold does not result to the
transfer of ownership to the buyer.

In a contract to sell, the seller explicitly reserves the transfer of title to the buyer
until the fulfillment of a condition, that is, the full payment of the purchase price. Title to
the property is retained by the seller until the buyer fully paid the price of the thing sold.

As found by the CA and undisputed by the respondent, the Sales Invoice No.
82911 covering the disputed compressor contained the following stipulation:

Note: It is hereby agreed that the goods listed to this invoice shall remain
the property of the seller until fully paid by the buyer. Failure of the buyer
to pay the goods as agreed upon, the seller may extra-judicially take
possession of the goods and dispose them accordingly.

While the sales invoice is not a formal contract to sell, the sales invoice is
nevertheless the best evidence of the transaction between the respondent and Davao
Diamond. Sales invoices are commonly recognized in ordinary commercial transactions
as valid between the parties and, at the very least, they serve as an acknowledgment
that a business transaction has in fact transpired. Thus, the moment respondent affixed
his signature thereon, he is bound by all the terms stipulated therein.

We therefore agree with the CA that the agreement between respondent and
Davao Diamond is a contract to sell. As such, the mere delivery of the compressor to
respondent does not make him the owner of the same.

Moreover, it must be considered that in view of the existing contract to sell

between respondent and Davao Diamond, the latter cannot simply sell the property to
petitioner. A contact to sell is a bilateral contract whereby the prospective seller, while
expressly reserving the ownership over the thing sold despite the delivery thereof to the
prospective buyer, binds himself to sell the property exclusively to the prospective buyer
upon full payment of the purchase price. Thus, in the absence of any revocation or
cancellation of the contract to sell with respondent, Davao Diamond cannot legally sell
the compressor to petitioner.

Nevertheless, the records of the case show that Leanillo paid the compressor in
behalf of respondent.

The above-mentioned circumstances indubitably show that Leanillo paid the

compressor not in her own right but in behalf of respondent. If indeed Davao Diamond
sold the compressor to Leanillo and that the latter paid the compressor in accordance
with her separate contract with Davao Diamond, such fact would have appeared in
the receipts. Sadly, that is not the case. There is nothing in the records that would
compel Us to declare that there is an independent contract of sale between Leanillo
and Davao Diamond.

Having ruled that Leanillo paid the compressor in behalf of respondent,

the latter has therefore complied with his obligation to fully pay thE compressor.
Ownership of the compressor can now legally pass to respondent. As such, the latter
has the right to possess the compressor since possession is an attribute of ownership.

The petition is DENIED.

 FIRST DIVISION
SPECIFIED CONTRACTORS & DEVELOPMENT, INC., AND SPOUSES ARCHITECT ENRIQUE O.
OLONAN AND CECILIA R. OLONAN, vs JOSE A. POBOCAN
G.R. No. 212472
January 11, 2018
TIJAM, J.

NATURE OF THE ACTION: This Petition for Review on Certiorari under Rule 45 urges this
Court to reverse and set aside the November 27, 2013 Decision and April 28, 2014
Resolution of the Court of Appeals (CA) in CA-G.R. CV No. 99994, and to affirm instead
the June 4, 2012 Order of the Regional Trial Court (RTC) of Quezon City, Branch 92, in
Civil Case No. Q-11-70338. The court a quo had granted the Motion to Dismiss of
Specified Contractors & Development Inc. (Specified Contractors), and Spouses
Architect Enrique O. Olonan and Cecilia R. Olonan (collectively referred to as
petitioners), thereby dismissing the action for specific performance filed by
respondentJose A. Pobocan. The dismissal of the case was subsequently set aside by
the CA in the assailed decision and resolution.

FACTS:
Respondent was employed by Specified Contractors until his retirement in March
2011, having his last position as president of Specified Contractors and its subsidiary as
well as executive assistant of its other subsidiaries and affiliates. Architect Olonan
allegedly agreed to give respondent one (1) unit for every building Specified
Contractors were able to construct as part of respondent's compensation package to
entice him to stay with the company. Pursuant to the alleged oral agreement,
Specified Contractors supposedly ceded, assigned and transferred Unit 708 of
Xavierville Square Condominium and Unit 208 of Sunrise Holiday Mansion Bldg. I (subject
units) in favor of respondent.

Respondent requested the execution of Deeds of Assignment or Deeds of Sale

over the subject units in his favor in view of his impending retirement but demand was
unheeded. He filed a Complaint praying that petitioners be ordered to execute and
deliver the appropriate deeds of conveyance. Petitioners interposed a Motion to
Dismiss denying the existence of the alleged oral agreement and argued that, even
assuming arguendo that there was such an oral agreement, the alleged contract is
unenforceable for being in violation of the statute of frauds, nor was there any written
document, note or memorandum showing that the subject units have in fact been
ceded, assigned or transferred to respondent. Moreover, assuming again that said
agreement existed, the cause of action had long prescribed because the alleged
agreements were supposedly entered into in 1994 and 1999 as indicated in
respondent's March 14, 2011 demand letter. RTC granted the motion to dismiss but CA
reversed upon appeal on the reason that there was allegedly partial performance of
the alleged obligation.

ISSUE: Whether or not the defense of prescription based on oral contract should be
reckoned from the agreement per se even if the object of the contract was not yet
existing.

RULING: YES.

As the Court has ascertained that the present suit is essentially for specific
performance - a personal action - over which the court a quo had jurisdiction, it was
therefore erroneous for it to have treated the complaint as a real action which
prescribes after 30 years under Article 1141 of the New Civil Code. In a personal action,
the plaintiff seeks the recovery of personal property, the enforcement of a contract, or
the recovery of damages. Real actions, on the other hand, are those affecting title to
or possession of real property, or interest therein. As a· personal action based upon an
oral contract, Article 1145 providing a prescriptive period of six years applies in this case
instead. The shorter period provided by law to institute an action based on an oral
contract is due to the frailty of human memory. Nothing prevented the parties from
reducing the alleged oral agreement into writing, stipulating the same in a contract of
employment or partnership, or even mentioning the same in an office memorandum
early on.

While the respondent's complaint was ingeniously silent as to when the alleged
oral agreement came about, his March 14, 2011 demand letter annexed to his
complaint categorically cites the year 1994 as when he and Architect Olonan allegedly
had an oral agreement to become "industrial partners" for which he would be given a
unit from every building they constructed. From this, Unit 208 of Sunrise Holiday Mansion I
was allegedly assigned to him. Then he went on to cite his resignation in October of
1997 and his re-employment with the company on December 1, 1999 for which he was
allegedly given Unit 803 of the Xavierville Square Condominium, substituted later on by
Unit 708 thereof.

The complaint for specific performance was instituted on November 21, 2011, or
17 years from the oral agreement of 1994 and almost 12 years after the December 1,
1999 oral agreement. Thus, the respondent's action upon an oral contract was filed
beyond the six-year period within which he should have instituted the same.
Respondent argued that the prescriptive period should not be counted from 1994
because the condominium units were not yet in existence at that time, and that the
obligation would have arisen after the units were completed and ready for occupancy.
Article 1347 of the New Civil Code is, however, clear that future things may be the
object of a contract. This is the reason why real estate developers engage in pre-selling
activities. But even if we were to entertain respondent's view, his right of action would
still be barred by the statute of limitations.

Condominium Certificate of Title (CCT) No. N-1834 732 for Unit 708 of Xavierville
Square Condominium, copy of which was annexed to the complaint, was issued on
September 11, 1997 or more than 13 years before· respondent's March 14, 2011
demand letter. CCT No. CT-61333 for Unit 208 of Sunrise Holiday Mansion Building I; also
annexed to the complaint, was issued on March 12, 1996 or 14 years before
respondent's March 14, 2011 demand letter. Indubitably, in view of the instant suit for
specific performance being a personal action founded upon an oral contract which
must be brought within six years from the accrual of the right, prescription had already
set in. The petition is GRANTED.
 SECOND DIVISION
MACTAN ROCK INDUSTRIES, INC. and ANTONIO TOMPAR vs BENFREI S. GERMO
G.R. No. 228799
January 10, 2018
PERLAS-BERNABE, J.

NATURE OF THE ACTION: Assailed in this petition for review on certiorari are the Decision
dated August 8, 2016 and the Resolution dated October 14, 2016 of the Court of
Appeals (CA) in CA-G.R. CV No. 104431, which affirmed the Decision dated January 14,
2015 of the Regional Trial Court of Muntinlupa City, Branch 276 (RTC) in Civil Case No.
11-029, finding petitioners Mactan Rock Industries, Inc. (MRII) and Antonio Tompar
(Tompar) solidarily liable to pay respondent Benfrei S. Germo (Germo) the amount of
P4,499,412.84 plus interest, damages, and attorney's fees.

FACTS:
MRII, a domestic corporation engaged in supplying water, through its President
Tompar, entered into a Technical Consultancy Agreement (TCA) with Germo, whereby
the parties agreed, inter alia, that: (a) Germo shall stand as MRII' s marketing consultant
who shall take charge of negotiating, perfecting sales, orders, contracts, or services of
MRII, but there shall be no employer-employee relationship between them; and (b)
Germo shall be paid on a purely commission basis, including a monthly allowance of
P5,000.00.

During the effectivity of the TCA, Germo successfully negotiated and closed with
International Container Terminal Services, Inc. (ICTSI) a supply contract of 700 cubic
meters of purified water per day. Accordingly, MRII commenced supplying water to
ICTSI and in tum, the latter religiously paid MRII the corresponding monthly fees but MRII
allegedly never paid Germo his rightful commissions. Initially, Germo filed a complaint
before the NLRC but the same was dismissed for lack of jurisdiction due to the absence
of employer-employee relationship between the parties. He then filed a civil case
before the RTC but the same was dismissed without prejudice to its re-filing. Hence,
Germo filed the instant complaint praying that MRII and Tompar be made to pay him
unpaid commissions with legal interest from the time they were due until fully paid.

ISSUE: Whether or not MRII and Tompar should be held solidarily liable to the unpaid
commissions with legal interest to Germo.

HELD:
NO. As to the merits of the case, the courts a quo correctly found that: (a)
Germo entered into a valid and binding TCA with MRII where he was engaged as a
marketing consultant; (b) aside from the P5,000.00 monthly allowance, Germo was
going to be paid on a purely commission basis; ( c) during the effectivity of the TCA
and in the performance of his duties as marketing consultant of MRII, Germo
successfully brokered MRII' s contract of services with ICTSI, obviously resulting in
revenues in MRII's favor; (d) despite the foregoing and demands from Germo, MRII
refused to pay Germo's rightful commission fees; and (e) MRII's refusal to pay Germo
resulted or at the very least, contributed to Germo's financial hardships. In light of the
foregoing, the courts a quo correctly found MRII liable to Germo for the various
monetary obligations as stated in their respective rulings. Time and again, it has been
consistently held that the factual findings of the trial court, especially when affirmed by
the CA, deserve great weight and respect and will not be disturbed on appeal unless it
appears that there are facts of weight and substance that were overlooked or
misinterpreted and that would materially affect the disposition of the case; none of
which are present insofar as this matter is concerned.

Be that as it may, the Court finds that the courts a quo erred in concluding that
Tompar, in his capacity as then-President/CEO of MRII, should be held solidarily liable
with MRII for the latter's obligations to Germo. It is a basic rule that a corporation is a
juridical entity which is vested with legal and personality separate and distinct from
those acting for and in behalf of, and from the people comprising it. As a general rule,
directors, officers, or employees of a corporation cannot be held personally liable for
the obligations incurred by the corporation, unless it can be shown that such
director/officer/employee is guilty of negligence or bad faith, and that the same was
clearly and convincingly proven. Thus, before a director or officer of a corporation can
be held personally liable for corporate obligations, the following requisites must concur:
(1) the complainant must allege in the complaint that the director or officer assented to
patently unlawful acts of the corporation, or that the officer was guilty of gross
negligence or bad faith; and (2) the complainant must clearly and convincingly prove
such unlawful acts, negligence or bad faith. In this case, Tompar's assent to patently
unlawful acts of the MRII or that his acts were tainted by gross negligence or bad faith
was not alleged in Germo' s complaint, much less proven in the course of trial.
Therefore, the deletion of Tompar's solidary liability with MRII is in order.

Petition is PARTLY GRANTED.

 FIRST DIVISION
ROLANDO DE ROCA vs. EDUARDO C. DABUY AN, JENNIFER A. BRANZUELA, JENNYL YN A.
RI CARTE, and HERMINIGILDO F. SABANATE
G.R. No. 215281
March 5, 2018
DEL CASTILLO, J.:

NATURE OF THE ACTION: This Petition for Review on Certiorari seeks to set aside the June
19, 2014 Decision and October 28, 2014 Resolution of the Court of Appeals (CA)
dismissing the Petition for Certiorari in CA-G.R. SP No. 127974 and denying herein
petitioner's Motion for Reconsideration, respectively.

FACTS:
Private respondents filed a complaint for illegal dismissal against "RAF Mansion
Hotel Old Management and New Management and Victoriano Ewayan”. Private
respondents submitted their position paper while petitioner filed his motion to dismiss on
the ground of lack of jurisdiction. He alleged that while he was the owner of RAF
Mansion Hotel building, the same was being leased by Victoriano Ewayan., the owner
of Oceanics Travel and Tour Agency. Petitioner claims that Ewayan was the employer
of private respondents. Consequently, he asserted that there was no employer-
employee relationship between him and private respondents and the labor arbiter had
no jurisdiction. The labor arbiter rendered a decision directing petitioner, among others,
to pay backwages and other monetary award to private respondents stating that
respondents obviously failed to controvert the allegations by the complainants in their
Position Papers accompanied with supporting evidence. NLRC dismissed the case and
upon appeal, CA dismissed the petition.

ISSUE: Whether or not the petitioner as deemed new manager of the hotel would bind
him in the Contract of Employment entered into between the employees and old
manager.

RULING:
NO.

All throughout the proceedings, petitioner has insisted that he was not the
employer of respondents; that he did not hire the respondents, nor pay their salaries,
nor exercise supervision or control over them, nor did he have the power to terminate
their services. In support of his claim, he attached copies of a lease agreement - a
Contract of Lease of a Building- executed by him and Oceanic Tours and Travel
Agency (Oceanic) represented by Ewayan through his attorney-in- fact Marilou
Buenafe. The agreement would show that petitioner was the owner of a building called
the RAF Mansion Hotel in Roxas Boulevard, Baclaran, Parañaque City; that on
September 25, 2007, Oceanic agreed to lease the entire premises of RAF Mansion
Hotel, including the elevator, water pump, airconditioning units, and existing furnishings
and all items found in the hotel and included in the inventory list attached to the lease
agreement, except for certain portions of the building where petitioner conducted his
personal business and which were leased out to other occupants, including a bank;
that the lease would be for a period of five years, or from October 15, 2007 up to
October 15, 2012; that the monthly rental would be ₱450,000.00; and that all expenses,
utilities, maintenance, and taxes - except real property truces - incurred and due on the
leased building would be for the lessee's account.

As correctly observed by petitioner, such belated attempt to implead him in the

labor case must be seen as an afterthought. Moreover, the fact that respondents
recognize petitioner as embodying the "new management" of RAF Mansion Hotel
betrays an admission on their part that he had no hand in the "old management" of the
hotel under Ewayan, during which they were hired and maintained as hotel employees
- meaning that petitioner was never considered as Ewayan's partner and co-employer;
respondents merely viewing petitioner as the subsequent manager taking over from
Ewayan, which bolsters petitioner’s allegation that Ewayan had absconded and left
respondents without recourse other than to implead him as the "new management"
upon whom the obligation to settle the claims abandoned by Ewayan now fell.

"Contracts take effect only between the parties, their assigns and heirs, except in
case where the lights and obligations arising from the contract are not transmissible by
their nature, or by stipulation or by provision of law." The contract of employment
between respondents, on the one hand, and Oceanic and Ewayan on the other, is
effective only between them; it does not extend to petitioner, who is not a party
thereto. His only role is as lessor of the premises which Oceanic leased to operate as a
hotel; he cannot be deemed as respondent's employer - not even under the pretext
that he took over as the "new management" of the hotel operated by Oceanic. There
simply is no truth to such claim.

Thus, to allow respondents to recover their monetary claims from petitioner

would necessarily result in their unjust enrichment.

Petition is GRANTED.
 THIRD DIVISION
UNITED COCONUT PLANTERS BANK vs SPOUSES WALTER UY AND LILY UY
GR. No. 204039
January 10, 2018
MARTIRES, J.

NATURE OF THE CASE:This petition for review on certiorari seeks to reverse and set aside
the 23 May 2012 Decision and the 18 October 2012 Resolution of the Court of
Appeals (CA) in CA-G.R. SP No. 118534 which affirmed with modification the 24 March
2010 Decision of the Office of the President (OP).

FACTS:
Prime Town Property Group, Inc and E. Ganzon Inc. and E. Ganzon Inc. were the
joint developers of the Kiener Hills. In 1997, spouses Uy entered into a Contract to Sell
with PPGI for a unit in Kiener Hills. PPGI and UCPB executed a MOA and Sale of
Receivables and Assignment of Rights and Interests where PPGI transferred the right to
collect the receivables of the buyers, which included respondents, of units in Kiener Hills.
Parties entered into the said agreement as PPGI’s partial settlement of its loan with
UCPB. HLURB received respondent's complaint for sum of money and damages against
PPGI and UCPB claiming that in spite of their full payment of the purchase price, PPGI
failed to complete the construction of their units in Kiener Hills. HLURB Regional Office
found respondents entitled to a refund in view of PPGI’s failure to complete the
construction of their units but found UCPB not solidarily liable with PPGI. HLURB Board
reversed the RO’s decision and held UCPB solidarily liable with PPGI being the latter’s
successor in interest. OP affirmed decision of the HLURB Board. On appeal, CA affirmed
with modification.

ISSUE: Whether or not by virtue of the Memorandum of Agreement entered by parties

UCPB and PPGI, they are made solidarily liable to Spouses Uy.

RULING:
NO.

With that said, the Court still finds that the CA did not err in ruling that UCPB was
only jointly, and not solidarily liable to PPGI against respondents. In Spouses Choi v.
UCPB (Spouses Choi), the Court had definitely ruled on UCPB 's liability to the purchasers
of Kiener Hills, viz:

The primordial issue to be resolved is whether, under the Agreement

between Primetown and UCPB, UCPB assumed the liabilities and obligations of
Primetown under its contract to sell with Spouses Choi.

An assignment of credit has been defined as an agreement by virtue of

which the owner of a credit, known as the assignor, by a legal cause -such as
sale, dation in payment or exchange or donation -and without need of the
debtor's consent, transfers that credit and its accessory rights to another, known
as the assignee, who acquires the power to enforce it to the same extent as the
assignor could have enforced it against the debtor. In every case, the
obligations between assignor and assignee will depend upon the judicial relation
which is the basis of the assignment. An assignment will be construed in
accordance with the rules of construction governing contracts generally, the
primary object being always to ascertain and carry out the intention of the
parties. This intention is to be derived from a consideration of the whole
instrument, all parts of which should be given effect, and is to be sought in the
words and language employed.

In the present case, the Agreement between Primetown and UCPB

provided that Primetown, in consideration of P748,000,000.00, "assigned,
 transferred, conveyed and set over unto [UCPB] all Accounts Receivables
accruing from [Primetown's Kiener] ... together with the assignment of all its rights,
titles, interests and participation over the units covered by or arising from the
Contracts to Sell from which the Accounts Receivables have arisen."

The Agreement further stipulated that "x x x this sale/assignment is limited

to the Receivables accruing to [Primetown] from the [b]uyers of the
condominium units in x x x [Kiener] and the corresponding Assignment of Rights
and Interests arising from the pertinent Contract to Sell and does not include
except for the amount not exceeding 30,000,000.00, Philippine currency, either
singly or cumulatively any and all liabilities which [Primetown] may have
assumed under the individual Contract to Sell." (emphasis omitted)

Considering that UCPB-is a· mere assignee of the rights and receivables

under the Agreement, UCPB did not assume the obligations and liabilities of
Primetown under its contract to sell with Spouses Choi.

In Liam v. UCPB, the Court maintained its position that the transaction between
PPGI and UCPB was merely an assignment of credit. Hence, what was transferred to
UCPB was only the right to collect PPGI's receivables from the purchases of Kiener Hills
and not the obligation to complete the said condominium project. Thus:

The provisions of the foregoing agreements between PPGI and UCPB are
clear, explicit and unambiguous as to leave no doubt about their objective of
executing an assignment of credit instead of subrogation. The MOA and the
Deed of Sale/Assignment clearly state that UCPB became an assignee of PPGI's
outstanding receivables of its condominium buyers. The Court perceives no
proviso or any extraneous factor that incites a contrary interpretation. Even the
simultaneous and subsequent acts of the parties accentuate their intention to
treat their agreements as assignment of credit.

The CA was therefore correct in ruling that the agreement between PPGI and
UCPB was an assignment of credit. UCPB acquired PPGI's right to demand, collect and
receive Liam's outstanding balance; UCPB was not subrogated into PPGl's place as
developer under the Contract to Sell.
 FIRST DIVISION
RAMON E. REYES and CLARA R. PASTOR Petitioners, vs BANCOM DEVELOPMENT CORP,
Respondent.
GR 190286
January 11, 2018
SERENO, C.J.
NATURE OF THE ACTION:

Before this Court is a Petition for Review on Certiorari filed by Ramon E. Reyes and
Clara R. Pastor seeking to reverse the Decision and the Resolution of the Court of
Appeals (CA) in CA-G.R. CV No. 45959. The CA affirmed the ruling of the Regional Trial
Court (RTC) holding petitioners jointly and severally liable to respondent Bancom
Development Corporation (Bancom) as guarantors of certain loans obtained by
Marbella Realty, Inc. (Marbella)

FACTS:
A Continuing Guarantywas executed in favor of respondent Bancom by the
Reyes Group. In the instrument, the Reyes Group agreed to guarantee the full and due
payment of obligations incurred by Marbella under an Underwriting Agreement with
Bancom. These obligations included certain Promissory Notes issued by Marbella in
favor of Bancom on 24 May 1979 for the aggregate amount of P2,828, 140.32.It appears
that Marbella was unable to pay back the notes at the time of their maturity. It issued a
set of replacement Promissory Notesbut again defaulted on the payment of this second
set of notes, leading to the execution of a third set and finally a fourth set.Because of
Marbella's continued failure to pay back the loan despite repeated demands, Bancom
filed a Complaint for Sum of Money with a prayer for damages; sought payment of the
total sum of P4,300,247.35, was instituted against (a) Marbella as principal debtor; and
(b) the individuals comprising the Reyes Group as guarantors of the loan.

In their defense, Marbella and the Reyes Group argued that they had been
forced to execute the Promissory Notes and the Continuing Guaranty against their will.
They also alleged that the foregoing instruments should be interpreted in relation to
earlier contracts pertaining to the development of a condominium project known as
Marbella II. The developments were cited by Marbella and the Reyes group in support
of the allegation that Bancom took advantage of their resultant financial distress.
Marbella II contracts were entered into by Bancom, Reyes Group as owners of parcel of
land and Fereit Realty Development Corporation as construction developer and
project manager.

RTC held Marbella and the Reyes Group solidarily liable to Bancom. CA denied
the appeal citing the undisputed fact that Marbella and the Reyes Group had failed to
comply with their obligations under the Promissory Notes and the guaranty. Only
petitioners filed a Motion for Reconsideration of the CA Decision.

ISSUE: Whether or not petitioners are liable to Bancom for the payment of the loan
amounts indicated on the Promissory Notes issued by Marbella.

RULING:
YES.

On the merits of the claim, we affirm the finding of the CA on the liability of
petitioners. Having executed a Continuing Guaranty in favor of Bancom, petitioners are
solidarily liable with Marbella for the payment of the amounts indicated on the
Promissory Note.

The obligations of Marbella and the Reyes Group under the Promissory Notes and
the Continuing Guaranty, respectively, are plain and unqualified. Under the notes,
Marbella promised to pay Bancom the amounts stated on the maturity dates
indicated. The Reyes Group, on the other hand, agreed to become liable if any of
Marbella's guaranteed obligations were not duly paid on the due date. There is
absolutely no support for the assertion that these agreements were not meant to be
binding.

We also note that even if the other agreements referred to by petitioners are
taken into account, the result would be the same. They would still be deemed liable,
since the two contracts they cited only establish the following premises: (a) Fereit took
on the responsibility of causing the release of certain receivables from State Financing;
(b) Marbella assumed the performance of the obligation of Fereit after the latter failed
to fulfill its duty; ( c) Bancom would grant Marbella additional financing for that
purpose, with the obligation to be paid within three years; and ( d) Fereit would
reimburse Marbella for the expenses the latter would incur as a result of this assumption
of the obligation

It is evident from the foregoing provisions that Bancom extended additional

financing to Marbella on the condition that the loan would be paid upon maturity. It is
equally clear that the latter obligated itself to pay the stated amount to Bancom
without any condition. The unconditional tenor of the obligation of Marbella to pay
Bancom for the loan amount, plus interest and penalties, is likewise reflected in the
Promissory Notes issued in favor of the latter. Marbella, in turn, was granted the right to
collect reimbursement from Fereit, an entirely distinct entity. While it was averred that
Bancom had complete control of Fereit's assets and activities, we note that no
sufficient evidence was presented in support of this assertion.

As to petitioners, the Continuing Guaranty evidently binds them to pay Bancom

the amounts indicated on the original set of Promissory Notes, as well as any and all
instruments issued upon the renewal, extension, amendment or novation thereof. The
Court notes that the final set of Promissory Notes issued by Marbella in this case reflect
the total amount of P3,002,333.84. The CA and the RTC thus ordered the payment of
P4,300,247.35, which represents the principal amount and all interest and penalty
charges as of 19 May 1981, or the date of demand. We affirm this ruling with the
modification that petitioners are liable to pay Bancom the following amounts: (a)
P4,300,247.35; (b) interest accruing on the principal sum of P3,002,333.84 (and not the
entire amount of P4,300,247.35), from 19 May 1981, the date of demand, at the rates
identified below; 55 and ( c) penalties accrued in relation thereto, with legal interest
from maturity date until fully paid.

The Petition for Review is hereby DENIED.

 THIRD DIVISION
YOLANDO B. PANERIO alias JOHN "Yolly" LABOR and ALEX (JOJO) F. ORTEZA,
Respondent YOLANDO B. PANERIO, Accused-Appellant
G.R. No. 205440
January 15, 2018
MARTIRES, J.

NATURE OF THE ACTION:On appeal is the 24 February 2011 Decision of the Court of
Appeals (CA) in CA-G.R. CR-H.C. No. 00707-MIN, which affirmed with modification the 4
February 2009 Decision of the Regional Trial Court of Davao City, Branch 12, in Criminal
Case No. 22,247-91, finding accused-appellant Yolando B. Panerio alias John
"Yolly" (Panerio) and accused Alex (Jojo) F. Orteza (Orteza) guilty beyond reasonable
doubt of the crime of Murder, defined and penalized under Article 248 of the Revised
Penal Code (RPC).

FACTS:
Panerio and Orteza were charged with the crime of murder committed upon the
person of one Elesio. The RTC found Panerio and Orteza guilty beyond reasonable
doubt of the crime of murder to suffer the penalty of RECLUSION PERPETUA and to pay
the heirs of Elesio jointly and severally the sum of Fifty Thousand (₱50,000.00) Pesos as
civil indemnity and Fifty Thousand (₱50,000.00) Pesos, as moral damages.

The CA affirmed with modification the 4 February 2009 RTC decision. The With
respect to the civil aspect of the case, the appellate court deemed it proper to further
award temperate damages in the amount of ₱30,000.00, and exemplary damages in
the amount of ₱25,000.00, considering that the qualifying circumstance of treachery
attended the commission of the felony.

ISSUE: Whether or not exemplary damages may be awarded to the aggrieved party
despite no proof of qualifying circumstance of treachery.

RULING:
YES.

After careful review of the records of the case, the Court is convinced of
Panerio's failure to prove that he acted in self-defense when he and Orteza killed Elesio.

Although the guilt of Panerio and Orteza for the death of Elesio is unquestioned,
the Court is of the considered view that the accused may only be convicted of
homicide, not murder. The prosecution failed to prove that the crime was committed
with treachery or with any other qualifying circumstance.

In the absence of any qualifying aggravating circumstance, the crime

committed by Panerio and Orteza is Homicide, the penalty for which is reclusion
temporal as provided in Article 249 of the RPC. Considering that there is neither
aggravating nor mitigating circumstances, the penalty should be imposed in its
medium period pursuant to Article 64(1) of the RPC.

In People v. Jugueta, the Court summarized the amounts of damages which

may be awarded for different crimes. In said case, the Court held that for the crime of
homicide, the following amounts may be awarded: (1) ₱50,000.00, as civil indemnity;
and (2) ₱50,000.00, as moral damages. Further, the Court deems it proper to delete the
awards of exemplary and temperate damages considering that no aggravating
circumstance attended the felony. Although exemplary damages, being corrective in
nature, may be awarded even if in the absence of aggravating circumstance, the
Court sees no reason for such award in this case.
 SECOND DIVISION
JOSEPHINE P. DELOS REYES AND JULIUS C. PERALTA, REPRESENTED BY THEIR ATTORNEY-IN-
FACT, J.F. JAVIER D. PERALTA, v. MUNICIPALITY OF KALIBO, AKLAN, ITS SANGGUNIANG
BAYAN AND MAYOR RAYMAR A. REBALDO
G.R. No. 214587
February 26, 2018
PERALTA, J. (Accretion)

NATURE OF THE CASE: This is a petition for review seeking to annul and set aside the
Decision of the Court of Appeals (CA) Cebu, Nineteenth (19th) Division, dated
September 28, 2012, and its Resolution dated August 28, 2014 in CA-G.R. CEB-CV No.
00700 which reversed and set aside the Decision of the Regional Trial Court (RTC),
Branch 6 of Kalibo, Aklan on February 22, 2005 in Civil Case No. 5440, thereby declaring
the subject properties as part of public land.

FACTS:

Lot No. 2076 of the Kalibo Cadastre, with a total area of 101,897 square meters
(sq.m.), was covered by Original Certificate of Title (OCT) No. 24435 RO-831, and
registered in the name of Ana O. Peralta. Upon her demise, her property passed on to
her brother, Jose Peralta, who caused registration of the same in his name under
Transfer Certificate of Title (TCT) No. T-5547, issued on January 13, 1975. Jose later had
the property divided into Lots 2076-A and 2076-B, and sold the latter portion. Lot 2076-A,
on the other hand, remained in Jose's name and was registered under TCT No. 6166 on
November 17, 1975.

In the meantime, allegedly through accretion, land was added to Lot No. 2076.
Said area was first occupied by and declared for taxation purposes (Tax Declaration
No. 6466) in the name of Ambrocio Ignacio in 1945. He was the Peraltas' tenant, but he
later executed a Quitclaim of Real Property in Jose's favor for the amount of P70.44 on
March 14, 1955. When Jose died, Lot 2076-A, together with the supposed area of
accretion, was transferred to his son, Juanito Peralta. While TCT T-13140 was issued for
Lot 2076-A on September 1, 1983, the area of accretion was apportioned and
registered under Tax Declaration Nos. 21162-A, 21163-A, 21164-A, and 21165-A in the
names of siblings Juanito, Javier Peralta, Josephine delos Reyes, and Julius Peralta.
Subsequently, Juanito likewise died.

On the other hand, the Municipality of Kalibo, through its then Mayor Diego
Luces and the members of its Sangguniang Bayan, sought to convert more or less four
(4) hectares of said area of accretion into a garbage dumpsite. On November 10, 1992,
Juanito, in his capacity as his siblings' representative, opposed said project in a letter.
For failure to get a favorable response from the mayor's office, he wrote a formal
protest to the Secretary of the Department of Environment and Natural Resources
(DENR) on October 2, 1997.

Despite the Peraltas' opposition, the Municipality of Kalibo continued the project
under the justification that the contested property is actually part of the public domain.
Moreover, the DENR's Environmental Compliance Certificate (ECC) showed that the
project would not harm the dumpsite's neighboring areas, including the water systems.
Thus, the municipality built a retaining wall on the property facing the Aklan river in
1996. More of the structures were built on the area from 1997 to 1998. Later, the area
was enclosed with a perimeter fence.

On January 26, 1998, the Peraltas filed a Complaint4 for quieting of title over the
two (2) portions of accretion declared in their names for taxation purposes.

The Peraltas' prayer for an injunctive writ against the construction of the
dumpsite was denied, but on February 22, 2005, the RTC of Kalibo, ruled in their favor.
Undaunted, the Municipality of Kalibo brought the matter to the CA Cebu. On
September 28, 2012, the CA granted its appeal and reversed the assailed RTC ruling.

The Peraltas then filed a Motion for Reconsideration, but the same was denied in a
Resolution dated August 28, 2014. Hence, the instant petition.

ISSUE: Whether or not the CA committed an error when it reversed the RTC, which
declared the subject parcels of land as accretion and not part of the public domain.

HELD:

No. Article 457 of the Civil Code of the Philippines, under which the Peraltas
claim ownership over the disputed parcels of land, provides:

Art. 457. To the owners of lands adjoining the banks of rivers belong the accretion which
they gradually receive from the effects of the current of the waters.

Accretion is the process whereby the soil is deposited along the banks of rivers. The
deposit of soil, to be considered accretion, must be: (a) gradual and imperceptible; (b)
made through the effects of the current of the water; and (c) taking place on land
adjacent to the banks of rivers.

Here, Ignacio characterized the land in question as swampy and its increase in size as
the effect of the change of the shoreline of the Visayan Sea, and not through the
gradual deposits of soil coming from the river or the sea. Also, Baltazar Gerardo, the
Officer-in-Charge of the Community Environment and Natural Resources Office of the
Bureau of Lands, found upon inspection in 1987 that the subject area was
predominantly composed of sand rather than soil.One of the plaintiffs, Javier, also
testified that in 1974 or 1976, the Visayan Sea was around one (1) kilometer from the
land in question, and in 2003, the distance already became around three (3)
kilometers, giving the impression that the increment was actually the result of additional
area of sand deposits left by the sea when it had receded, and not by gradual deposits
of soil or sediment caused by the action of water. In addition, the DENR has remained
firm and consistent in classifying the area as land of the public domain for being part of
either the Visayan Sea of the Sooc Riverbed and is reached by tide water. Further, the
Sheriffs Report dated July 13, 1998 shows that when he conducted an ocular inspection
of the area, part of it was reached by the tide. At around 11:30 a.m., he was able to
measure the deepest portion of the high tide at around nineteen (19) inches, and its
wideness at five (5) meters near the concrete wall.
 SECOND DIVISION
SPOUSES ABRAHAM AND MELCHORA ERMINO , petitioners, vs. GOLDEN VILLAGE
HOMEOWNERS ASSOCIATION, INC., represented by LETICIA * C. INUKAI, respondent.
G.R. No. 180808
August 15, 2018
CAGUIOA, J. (Negligence/Damages)

NATURE OF THE ACTION: Before the Court is a Petition for Review on Certiorari 1 (Petition)
under Rule 45 of the Rules of Court led by petitioners, Spouses Abraham and Melchora
Ermino (Spouses Ermino) assailing the Decision dated October 9, 2007 of the Court of
Appeals (CA) in CA-G.R. CV No. 00044. The CA modifed the Decision dated December
30, 2003 of the Regional Trial Court, Branch 24, Cagayan de Oro City (RTC) which found
both E.B. Villarosa & Partners Co., Ltd. (E.B. Villarosa) and Golden Village Homeowners
Association, Inc. (GVHAI) liable for damages to Spouses Ermino by absolving GVHAI of
any liability.

FACTS:

Spouses Ermino are residents of Alco Homes, a subdivision located beside

Golden Village Subdivision (Golden Village) in Barangay Carmen, Cagayan de Oro
City. On days prior to August 12, 1995 and September 10, 1995, there was continuous
heavy rain which caused a large volume of water to fall from the hilltop subdivision to
the subdivisions below. The volume of water directly hit Spouses Ermino's house and
damaged their fence, furniture, appliances and car. Spouses Ermino filed a complaint
for damages against E.B. Villarosa, the developer of Hilltop City Subdivision, and GVHAI.
The Hilltop City Subdivision is found at the upper portion of Alco Homes, making it a
higher estate, while Golden Village is located beside Alco Homes, which makes both
Alco Homes and Golden Village lower estates vis-à-vis Hilltop City Subdivision. Spouses
Ermino blamed E.B. Villarosa for negligently failing to observe Department of
Environment and Natural Resources rules and regulations and to provide retaining walls
and other flood control devices which could have prevented the softening of the earth
and consequent inundation. They likewise claimed that GVHAI committed a wrongful
act in constructing the concrete fence which diverted the flow of water to Alco Homes,
hence, making it equally liable to Spouses Ermino. Spouses Ermino prayed that E.B.
Villarosa and GVHAI be made jointly and severally liable in the amount of P500,000.00
as actual damages, P400,000.00 as moral damages and P100,000.00 as exemplary
damages. They likewise prayed for attorney's fees and litigation costs and expenses.
E.B. Villarosa argued that the location of the house of Spouses Ermino is located at the
lower portion of the Dagong Creek and is indeed flooded every time there is a heavy
downpour, and that the damage was further aggravated by GVHAI's construction of
the concrete fence. It contended, however, that the damage was due to a fortuitous
event. Meanwhile, GVHAI averred that the construction of the concrete fence was in
the exercise of its proprietary rights and that it was done in order to prevent outsiders
from using the steel grille from entering the subdivision. It likewise asserted that they
"should not be made inutile and lame-duck recipients of whatever waters and/or
garbage" that come from AlcoHomes. GVHAI attributed sole liability on E.B. Villarosa for
having denuded Hilltop City Subdivision and for its failure to provide precautionary
measures. Only GVHAI appealed to the CA. Thus, the trial court's decision attained its
finality as regards E.B. Villarosa. The CA reversed the RTC's Decision and found no
liability on the part of GVHAI. Spouses Ermino rely on Articles 20 and 21 of the Civil Code

ISSUE: Whether or not there is negligence on the part of GVHAI.

HELD:

NO. When GVHAI decided to construct the concrete fence, it could not have
reasonably foreseen any harm that could occur to Spouses Ermino. Any prudent person
exercising reasonable care and caution could not have envisaged such an outcome
from the mere exercise of a proprietary act.

Indeed, the act of replacing the steel grille gate with a concrete fence
was within the legitimate exercise of GVHAI's proprietary rights over its property.

Malice or bad faith, at the core of Articles 20 and 21 of the Civil Code, implies a
conscious and intentional design to do a wrongful act for a dishonest purpose or moral
obliquity

The test of negligence is stated in Picart v. Smith, Jr.:

“The test by which to determine the existence of negligence in a particular

case may be stated as follows: Did the defendant in doing the alleged
negligent act use that reasonable care and caution which an ordinarily
prudent person would have used in the same situation? If not, then he is
guilty of negligence.”

The law recognizes in the owner the right to enjoy and dispose of a thing, without
other limitations than those established by law. Article 430 of the Civil Code provides
that "(e)very owner may enclose or fence his land or tenements by means of walls,
ditches, live or dead hedges, or by any other means without detriment to servitudes
constituted thereon."
 SECOND DIVISION
SPOUSES FRANCISCO ONG and BETTY LIM ONG, and SPOUSES JOSEPH ONG CHUAN and
ESPERANZA ONG CHUAN, petitioners, vs. BPI FAMILY SAVINGS BANK, INC., respondent.
G.R. No. 208638
January 24, 2018
REYES, JR., J. (Perfection- Contract of Loan)

NATURE OF THE ACTION: This is a Petition for Review under Rule 45 of the Rules of Court,
as amended, seeking to reverse and set aside the Decision dated January 31, 2013 and
Resolution dated August 16, 2013 of the Court of Appeals (CA) in CA-G.R. CV No.
92348.

FACTS:

Petitioners are engaged in the business of printing under the name and style
"Melbros Printing Center”. Sometime in December 1996, Bank of Southeast Asia's (BSA)
managers visited petitioners' office and discussed the various loan and credit facilities
offered by their bank. In view of petitioners' business expansion plans and the
assurances made by BSA's managers, they applied for the credit facilities offered by the
latter. Sometime 1997, they executed a real estate mortgage over their property in
favor of BSA as security for a P15M term loan and P5M credit line or a total of P20M.
Thus, with regard to the term loan, only P10, 444,271.49 was released by BSA, while with
regard to the P5M credit line, only P3M was released. BSA promised to release the
remaining P2M conditioned upon the payment of the P3M initially released to
petitioners. Petitioners acceded to the condition and paid the P3M in full. However, BSA
still refused to release the P2M. Petitioners then refused to pay the amortizations due on
their term loan. Later on, BPI Family Savings Bank (BPI) merged with BSA, thus, acquired
all the latter's rights and assumed its obligations. BPI filed a petition for extrajudicial
foreclosure of the Real estate mortgage for petitioners' default in the payment of their
term loan. In order to enjoin the foreclosure, petitioners instituted an action for
damages with Temporary Restraining Order and Preliminary Injunction against BPI
praying for P23,570,881.32 as actual damages; P1,000,000.00 as moral damages;
P500,000.00 as attorney's fees, litigation expenses and costs of suit. The RTC ruled in
favor of the petitioners, however BPI appeal before the CA. The CA reversed the
decision of the lower court and ruled in favor of BPI. Hence, this petition.

ISSUE: Whether there was already an existing and binding contract between Petitioners
and BSA with regard to the Omnibus Credit Line.

HELD:

Yes. As a rule, a contract is perfected upon the meeting of the minds of the two
parties.It’sperfected by mere consent, that is, from the moment that there is a meeting
of the offer and acceptanceupon the thing and the cause that constitute the contract
.In the case of Spouses Palada v. Solidbank Corporation, et al., this Court held that
under Article 1934 of the Civil Code, a loan contract is perfected only upon the delivery
of the object of the contract. In that case, although therein petitioners applied for a P3,
000,000.00 loan, only the amount of P1,000,000.00 was approved by therein respondent
bank because petitioners became collaterally deficient.
Nonetheless, the loan contract was deemed perfected on March 17, 1997, the date wh
en petitioners received the P1, 000,000.00 loan,which was the object of the contract
and the date when the REM was constituted over the property. Applying this to the
case at bench, there is no iota of doubt that when BSA approved and released the
P3,000,000.00 out of the original P5,000,000.00 credit facility, the contract
was perfected.

The petition is hereby GRANTED.

 FIRST DIVISION
VILLA CRISTA MONTE REALTY & DEVELOPMENT CORPORATION , petitioner, vs. EQUITABLE
PCI BANK (now known as BANCO DE ORO UNIBANK, INC.), and the EX-OFFICIO SHERIFF
OF QUEZON CITY and/or HIS DEPUTY or AUTHORIZED REPRESENTATIVES , respondents.
G.R. No. 208336
November 21, 2018
BERSAMIN, J (Contracts/Interest)

NATURE OF THE ACTION: This appeal has been taken by the borrower (petitioner) to
seek the review and reversal of the adverse decision promulgated on February 21,
2013, whereby the Court of Appeals (CA) affirmed the judgment rendered on April 7,
2009 by the Regional Trial Court (RTC), Branch 216, in Quezon City in Civil Case No. Q-
01-43677.

FACTS: In 1994, Villa Crista Monte Realty Corporation, engaged in the business of real
estate development, acquired from Alfonso Lim a parcel of land located at Old Balara,
Quezon City with a land area of 80,000 square meters (8 hectares) and intended to
develop in into a residential subdivision. After putting up a clubhouse, appellant
Corporation eventually purchased the adjoining 13.5-hectare land, consolidating its
ownership over the 21.5 hectares of land. Appellant then executed a Real Estate
Mortgage over the 80 hectares of land as security for the credit line of P 80 Million
applied and granted by Equitable PCI Bank .In 1995, appellant subdivided the
mortgaged parcel of land into 174lots, each covered by a separate certificate of title.
Appellant applied for an additional P50 Million credit line from the E-PCIB, mortgaged
41 lots as securities for the credit accommodation and asked for the release of the
remaining 133 titles from the earlier mortgage. E-PCIB granted the request provided
that the mortgage contract would be amended to conform to the changes in the
amount of credit line and mortgaged properties, appellant agreed. The latter obtained
the amount of credit line on various occasions from March 20, 1987 to August 15,
1997, each amount was covered by a promissory note. E-PCIB wrote to appellant
informing it of the increased interest rates ranging from 21% to 36% anchored on the
uniform provision in the promissory notes.

Appellant defaulted on its obligations amounting to P129,700,000.00 prompting

E-PCIB to initiate foreclosure proceedings. Respondent Sheriff scheduled auction of the
lots which led to the filing for the nullification of the promissory notes and the mortgage
agreements with prayer for injunctive relief. The auction sale still proceeded where E-
PCIB emerged as the highest bidder. Appellant then filed a supplemental complaint
with the RTC of Quezon City assailing the said auction sale and the amount claimed
therein as well as praying for the nullification of the titles under the name of E-PCIB.
Appellant contended that the increases in the interest rates were not discussed by both
parties; that the mortgage and its amendment were contrary to law and public policy;
that E-PCIB prematurely initiated the foreclosure proceedings; and a claim for
reparation of damages and attorney’s fees. E-PCIB countered that appellant has no
cause of action and appellant likewise voluntarily agreed to the monthly re-pricing
interest. E-PCIB maintained that it merely complied with the provisions of the Promissory
Notes. On 2009, RTC rendered judgment in favour of E-PCIB. Petitioner, appellant herein,
appealed to the CA. However, CA affirmed the judgment of the RTC.

ISSUE: Whether or not the promissory notes bound appellant.

HELD:

Yes. The SC ruled that the real estate mortgage and promissory notes
were valid, as well as the foreclosure proceedings. The provision found in the promissory
notes is commonly known as the escalation clause, which refers to the stipulation
allowing increases in the interest rates agreed upon by the contracting parties. It is
validly stipulated in commercial contracts. The escalation clause is not void per se, the
clause would only be void if it violates the principle of mutuality of contracts wherein it
grants the creditor an unbridled right to adjust the interest independently and deprive
the debtor of the right to assent to an important modification in the agreement. A de-
escalation clause is an indispensable requisite to the validity of the escalation clause in
the contract. No express de-escalation clause was stipulated in the promissory notes,
yet its absence did not invalidate the repricing of the interest rates. The repricing
notices indicated that on some occasions, the bank had reduced or adjusted
the interest rates downward. Despite the absence of the corresponding de-escalation
clause, the actual grant by the respondent of the decreases in the interest rates
rendered inexistent the evil of inequality sought to be thwarted. There was mutuality of
contracts between petitioner and respondent, the former’s president signed the
promissory notes and was aware of the certain provision on the interest rates. The
respondent nonetheless accorded the petitioner the notice of any repricing of the
interest rates despite being not obliged, this is in order to give the petitioner the option
to reject the repricing or has implemented the downward repricing.

The contract of adhesion is not invalid per se but is as binding as any contract.
The petitioner drew the amount of credit line on various occasions and thus was
afforded the opportunity to discuss or negotiate the interest rates. There was no
showing by the petitioner that it had been placed at any disadvantage. Respondent
bank readily acceded to the request of the petitioner for the release of some lots. Also,
the petitioner’s President, trained and experienced in the field of business, functioned
without duress or force in signing the various promissory notes and allied agreement on
petitioner’s behalf. Hence, the petitioner for review on certiorari was denied.