GENERAL MILLING CORPORATION, G.R. No.

193723
Petitioner,
Present:

CARPIO, J.,*
- versus - VELASCO, JR., Chairperson,
LEONARDO-DE CASTRO,**
ABAD, and
MENDOZA, JJ.
SPS. LIBRADO RAMOS and REMEDIOS RAMOS,
Respondents. Promulgated:

July 20, 2011

x-----------------------------------------------------------------------------------------x

DECISION
VELASCO, JR., J.:

The Case

This is a petition for review of the April 15, 2010 Decision of the Court of Appeals (CA) in CA-G.R. CR-H.C. No. 85400 entitled Spouses Librado Ramos & Remedios
Ramos v. General Milling Corporation, et al., which affirmed the May 31, 2005 Decision of the Regional Trial Court (RTC), Branch 12 in Lipa City, in Civil Case No. 00-
0129 for Annulment and/or Declaration of Nullity of Extrajudicial Foreclosure Sale with Damages.

The Facts

On August 24, 1989, General Milling Corporation (GMC) entered into a Growers Contract with spouses Librado and Remedios Ramos (Spouses Ramos). Under the
contract, GMC was to supply broiler chickens for the spouses to raise on their land in Barangay Banaybanay, Lipa City, Batangas.[1] To guarantee full compliance,
the Growers Contract was accompanied by a Deed of Real Estate Mortgage over a piece of real property upon which their conjugal home was built. The spouses
further agreed to put up a surety bond at the rate of PhP 20,000 per 1,000 chicks delivered by GMC. The Deed of Real Estate Mortgage extended to Spouses Ramos
a maximum credit line of PhP 215,000 payable within an indefinite period with an interest of twelve percent (12%) per annum. [2]
The Deed of Real Estate Mortgage contained the following provision:
 WHEREAS, the MORTGAGOR/S has/have agreed to guarantee and secure the full and faithful compliance of [MORTGAGORS] obligation/s with the
MORTGAGEE by a First Real Estate Mortgage in favor of the MORTGAGEE, over a 1 parcel of land and the improvements existing thereon, situated in
the Barrio/s of Banaybanay, Municipality of Lipa City, Province of Batangas, Philippines, his/her/their title/s thereto being evidenced by Transfer
Certificate/s No./s T-9214 of the Registry of Deeds for the Province of Batangas in the amount of TWO HUNDRED FIFTEEN THOUSAND (P
215,000.00), Philippine Currency, which the maximum credit line payable within a x x x day term and to secure the payment of the same plus
interest of twelve percent (12%) per annum.

Spouses Ramos eventually were unable to settle their account with GMC. They alleged that they suffered business losses because of the negligence of GMC
and its violation of the Growers Contract.[3]

On March 31, 1997, the counsel for GMC notified Spouses Ramos that GMC would institute foreclosure proceedings on their mortgaged property. [4]

On May 7, 1997, GMC filed a Petition for Extrajudicial Foreclosure of Mortgage. On June 10, 1997, the property subject of the foreclosure was subsequently sold by
public auction to GMC after the required posting and publication. [5] It was foreclosed for PhP 935,882,075, an amount representing the losses on chicks and feeds
exclusive of interest at 12% per annum and attorneys fees. [6] To complicate matters, on October 27, 1997, GMC informed the spouses that its Agribusiness Division
had closed its business and poultry operations. [7]

On March 3, 2000, Spouses Ramos filed a Complaint for Annulment and/or Declaration of Nullity of the Extrajudicial Foreclosure Sale with Damages. They
contended that the extrajudicial foreclosure sale on June 10, 1997 was null and void, since there was no compliance with the requirements of posting and
publication of notices under Act No. 3135, as amended, or An Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real Estate
Mortgages. They likewise claimed that there was no sheriffs affidavit to prove compliance with the requirements on posting and publication of notices. It was
further alleged that the Deed of Real Estate Mortgage had no fixed term. A prayer for moral and exemplary damages and attorneys fees was also included in the
complaint.[8] Librado Ramos alleged that, when the property was foreclosed, GMC did not notify him at all of the foreclosure. [9]

During the trial, the parties agreed to limit the issues to the following: (1) the validity of the Deed of Real Estate Mortgage; (2) the validity of the extrajudicial
foreclosure; and (3) the party liable for damages.[10]

In its Answer, GMC argued that it repeatedly reminded Spouses Ramos of their liabilities under the Growers Contract. It argued that it was compelled to foreclose
the mortgage because of Spouses Ramos failure to pay their obligation. GMC insisted that it had observed all the requirements of posting and publication of notices
under Act No. 3135.[11]
The Ruling of the Trial Court
Holding in favor of Spouses Ramos, the trial court ruled that the Deed of Real Estate Mortgage was valid even if its term was not fixed. Since the duration of the
term was made to depend exclusively upon the will of the debtors-spouses, the trial court cited jurisprudence and said that the obligation is not due and payable
until an action is commenced by the mortgagee against the mortgagor for the purpose of having the court fix the date on and after which the instrument is
payable and the date of maturity is fixed in pursuance thereto. [12]
The trial court held that the action of GMC in moving for the foreclosure of the spouses properties was premature, because the latters obligation under their
contract was not yet due.

The trial court awarded attorneys fees because of the premature action taken by GMC in filing extrajudicial foreclosure proceedings before the obligation of the
spouses became due.

The RTC ruled, thus:

WHEREFORE, premises considered, judgment is rendered as follows:

1. The Extra-Judicial Foreclosure Proceedings under docket no. 0107-97 is hereby declared null and void;

2. The Deed of Real Estate Mortgage is hereby declared valid and legal for all intents and puposes;

3. Defendant-corporation General Milling Corporation is ordered to pay Spouses Librado and Remedios Ramos attorneys fees in the total
amount of P 57,000.00 representing acceptance fee of P30,000.00 and P3,000.00 appearance fee for nine (9) trial dates or a total appearance fee
of P 27,000.00;

4. The claims for moral and exemplary damages are denied for lack of merit.

IT IS SO ORDERED.[13]

The Ruling of the Appellate Court

On appeal, GMC argued that the trial court erred in: (1) declaring the extrajudicial foreclosure proceedings null and void; (2) ordering GMC to pay Spouses Ramos
attorneys fees; and (3) not awarding damages in favor of GMC.
The CA sustained the decision of the trial court but anchored its ruling on a different ground. Contrary to the findings of the trial court, the CA ruled that the
requirements of posting and publication of notices under Act No. 3135 were complied with. The CA, however, still found that GMCs action against Spouses Ramos
was premature, as they were not in default when the action was filed on May 7, 1997. [14]

The CA ruled:

In this case, a careful scrutiny of the evidence on record shows that defendant-appellant GMC made no demand to spouses Ramos for the full
payment of their obligation. While it was alleged in the Answer as well as in the Affidavit constituting the direct testimony of Joseph Dominise, the
principal witness of defendant-appellant GMC, that demands were sent to spouses Ramos, the documentary evidence proves otherwise. A perusal
of the letters presented and offered as evidence by defendant-appellant GMC did not demand but only request spouses Ramos to go to the office of
GMC to discuss the settlement of their account.[15]

According to the CA, however, the RTC erroneously awarded attorneys fees to Spouses Ramos, since the presumption of good faith on the part of GMC was not
overturned.

The CA disposed of the case as follows:

WHEREFORE, and in view of the foregoing considerations, the Decision of the Regional Trial Court of Lipa City, Branch 12, dated May 21, 2005 is
hereby AFFIRMED with MODIFICATION by deleting the award of attorneys fees to plaintiffs-appellees spouses Librado Ramos and Remedios Ramos.
[16]

Hence, We have this appeal.

The Issues

A. WHETHER [THE CA] MAY CONSIDER ISSUES NOT ALLEGED AND DISCUSSED IN THE LOWER COURT AND LIKEWISE NOT RAISED BY THE PARTIES
ON APPEAL, THEREFORE HAD DECIDED THE CASE NOT IN ACCORD WITH LAW AND APPLICABLE DECISIONS OF THE SUPREME COURT.

B. WHETHER [THE CA] ERRED IN RULING THAT PETITIONER GMC MADE NO DEMAND TO RESPONDENT SPOUSES FOR THE FULL PAYMENT OF
THEIR OBLIGATION CONSIDERING THAT THE LETTER DATED MARCH 31, 1997 OF PETITIONER GMC TO RESPONDENT SPOUSES IS TANTAMOUNT
TO A FINAL DEMAND TO PAY, THEREFORE IT DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS. [17]
 The Ruling of this Court
Can the CA consider matters not alleged?

GMC asserts that since the issue on the existence of the demand letter was not raised in the trial court, the CA, by considering such issue, violated the basic
requirements of fair play, justice, and due process.[18]

In their Comment,[19] respondents-spouses aver that the CA has ample authority to rule on matters not assigned as errors on appeal if these are indispensable or
necessary to the just resolution of the pleaded issues.

In Diamonon v. Department of Labor and Employment,[20] We explained that an appellate court has a broad discretionary power in waiving the lack of assignment of
errors in the following instances:

(a) Grounds not assigned as errors but affecting the jurisdiction of the court over the subject matter;

(b) Matters not assigned as errors on appeal but are evidently plain or clerical errors within contemplation of law;

(c) Matters not assigned as errors on appeal but consideration of which is necessary in arriving at a just decision and complete resolution of
the case or to serve the interests of a justice or to avoid dispensing piecemeal justice;

(d) Matters not specifically assigned as errors on appeal but raised in the trial court and are matters of record having some bearing on the
issue submitted which the parties failed to raise or which the lower court ignored;

(e) Matters not assigned as errors on appeal but closely related to an error assigned;

(f) Matters not assigned as errors on appeal but upon which the determination of a question properly assigned, is dependent.

Paragraph (c) above applies to the instant case, for there would be a just and complete resolution of the appeal if there is a ruling on whether the Spouses Ramos
were actually in default of their obligation to GMC.

Was there sufficient demand?

We now go to the second issue raised by GMC. GMC asserts error on the part of the CA in finding that no demand was made on Spouses Ramos to pay their
obligation. On the contrary, it claims that its March 31, 1997 letter is akin to a demand.

We disagree.

There are three requisites necessary for a finding of default. First, the obligation is demandable and liquidated; second, the debtor delays performance; and third,
the creditor judicially or extrajudicially requires the debtors performance. [21]

According to the CA, GMC did not make a demand on Spouses Ramos but merely requested them to go to GMCs office to discuss the settlement of their account. In
spite of the lack of demand made on the spouses, however, GMC proceeded with the foreclosure proceedings. Neither was there any provision in the Deed of Real
Estate Mortgage allowing GMC to extrajudicially foreclose the mortgage without need of demand.

Indeed, Article 1169 of the Civil Code on delay requires the following:

Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfilment
of their obligation.
However, the demand by the creditor shall not be necessary in order that delay may exist:

(1) When the obligation or the law expressly so declares; x x x

As the contract in the instant case carries no such provision on demand not being necessary for delay to exist, We agree with the appellate court that GMC should
have first made a demand on the spouses before proceeding to foreclose the real estate mortgage.

Development Bank of the Philippines v. Licuanan finds application to the instant case:

The issue of whether demand was made before the foreclosure was effected is essential. If demand was made and duly received by the
respondents and the latter still did not pay, then they were already in default and foreclosure was proper. However, if demand was not made, then
the loans had not yet become due and demandable. This meant that respondents had not defaulted in their payments and the foreclosure by
petitioner was premature. Foreclosure is valid only when the debtor is in default in the payment of his obligation.[22]

In turn, whether or not demand was made is a question of fact. [23] This petition filed under Rule 45 of the Rules of Court shall raise only questions of law. For a
question to be one of law, it must not involve an examination of the probative value of the evidence presented by the litigants or any of them. The resolution of the
issue must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the
question posed is one of fact. [24] It need not be reiterated that this Court is not a trier of facts. [25] We will defer to the factual findings of the trial court, because
petitioner GMC has not shown any circumstances making this case an exception to the rule.

WHEREFORE, the petition is DENIED. The CA Decision in CA-G.R. CR-H.C. No. 85400 is AFFIRMED. SO ORDERED.

FACTS: General Milling Corporation (GMC) entered into a Growers Contract with spouses Librado and Remedios Ramos (Spouses Ramos). Under the contract, GMC
was to supply broiler chickens for the spouses to raise on their land. To guarantee full compliance, the Growers Contract was accompanied by a Deed of Real Estate
Mortgage over a piece of real property and a surety bond. Spouses Ramos eventually were unable to settle their account with GMC. The property was
extrajudicially foreclosed and GMC was the highest bidder. Spouses Ramos questioned the validity of the foreclosure proceedings. The CA found that GMC made no
demand to spouses Ramos for the full payment of their obligation. A perusal of the letters presented and offered as evidence by defendant-appellant GMC did not
demand but only request spouses Ramos to go to the office of GMC to discuss the settlement of their account.

ISSUE: Whether or not GMC made sufficient demand to the spouses Ramos to fulfill their obligation

RULING: No. There are three requisites necessary for a finding of default. First, the obligation is demandable and liquidated; second, the debtor delays
performance; and third, the creditorjudicially or extrajudicially requires the debtor's performance. Article 1169 of the Civil Code states that: those obligated to
deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation. However, the
demand by the creditor shall not be necessary in order that delay may exist, when the obligation or the law expressly so declares. The contract in the instant case
carries no such provision on demand not being necessary for delay to exist. GMC should have first made.a demand on the spouses before proceeding to foreclose
the real estate mortgage.

SPOUSES LUIGI M. GUANIO and

ANNA HERNANDEZ-GUANIO,
Petitioners, G.R. No. 190601
Present:

- versus CARPIO MORALES,

Chairperson, J.,
BRION,
BERSAMIN,
VILLARAMA, JR., and
SERENO, JJ.
MAKATI SHANGRI-LA HOTEL
and RESORT, INC., also doing
business under the name of Promulgated:
SHANGRI-LA HOTEL MANILA,
Respondent. February 7, 2011
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
 For their wedding reception on July 28, 2001, spouses Luigi M. Guanio and Anna Hernandez-Guanio (petitioners) booked at the Shangri-la Hotel Makati (the
hotel).

Prior to the event, Makati Shangri-La Hotel & Resort, Inc. (respondent) scheduled an initial food tasting. Petitioners claim that they requested the hotel to prepare
for seven persons the two of them, their respective parents, and the wedding coordinator. At the scheduled food tasting, however, respondent prepared for only
six.

Petitioners initially chose a set menu which included black cod, king prawns and angel hair pasta with wild mushroom sauce for the main course which
cost P1,000.00 per person. They were, however, given an option in which salmon, instead of king prawns, would be in the menu at P950.00 per person. They in fact
partook of the salmon.

Three days before the event, a final food tasting took place. Petitioners aver that the salmon served was half the size of what they were served during the initial
food tasting; and when queried about it, the hotel quoted a much higher price ( P1,200.00) for the size that was initially served to them. The parties eventually
agreed on a final price P1,150 per person.

A day before the event or on July 27, 2001, the parties finalized and forged their contract. [1]

Petitioners claim that during the reception, respondents representatives, Catering Director Bea Marquez and Sales Manager Tessa Alvarez, did not show up
despite their assurance that they would; their guests complained of the delay in the service of the dinner; certain items listed in the published menu were
unavailable; the hotels waiters were rude and unapologetic when confronted about the delay; and despite Alvarezs promise that there would be no charge for the
extension of the reception beyond 12:00 midnight, they were billed and paid P8,000 per hour for the three-hour extension of the event up to 4:00 A.M. the next
day.

Petitioners further claim that they brought wine and liquor in accordance with their open bar arrangement, but these were not served to the guests who were
forced to pay for their drinks.

Petitioners thus sent a letter-complaint to the Makati Shangri-la Hotel and Resort, Inc. (respondent) and received an apologetic reply from Krister Svensson, the
hotels Executive Assistant Manager in charge of Food and Beverage. They nevertheless filed a complaint for breach of contract and damages before the Regional
Trial Court (RTC) of MakatiCity.

In its Answer, respondent claimed that petitioners requested a combination of king prawns and salmon, hence, the price was increased to P1,200.00 per
person, but discounted at P1,150.00; that contrary to petitioners claim, Marquez and Alvarez were present during the event, albeit they were not permanently
stationed thereat as there were three other hotel functions; that while there was a delay in the service of the meals, the same was occasioned by the sudden
increase of guests to 470 from the guaranteed expected minimum number of guests of 350 to a maximum of 380, as stated in the Banquet Event Order (BEO);
[2]
and that Isaac Albacea, Banquet Service Director, in fact relayed the delay in the service of the meals to petitioner Luigis father, Gil Guanio.
Respecting the belated service of meals to some guests, respondent attributed it to the insistence of petitioners wedding coordinator that certain guests be served
first.

On Svenssons letter, respondent, denying it as an admission of liability, claimed that it was meant to maintain goodwill to its customers.

By Decision of August 17, 2006, Branch 148 of the Makati RTC rendered judgment in favor of petitioners, disposing as follows:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and against the defendant ordering the defendants to pay
the plaintiff the following:

1) The amount of P350,000.00 by way of actual damages;

2) The amount of P250,000.00 for and as moral damages;
3) The amount of P100,000.00 as exemplary damages;
4) The amount of P100,000.00 for and as attorneys fees.

With costs against the defendant.

SO ORDERED.[3]

In finding for petitioners, the trial court relied heavily on the letter of Svensson which is partly quoted below:

Upon receiving your comments on our service rendered during your reception here with us, we are in fact, very distressed. Right from minor issues
pappadums served in the soup instead of the creutons, lack of valet parkers, hard rolls being too hard till a major one slow service, rude and
arrogant waiters, we have disappointed you in all means.

Indeed, we feel as strongly as you do that the services you received were unacceptable and definitely not up to our standards. We understand that
it is our job to provide excellent service and in this instance, we have fallen short of your expectations. We ask you please to accept our profound
apologies for causing such discomfort and annoyance. [4] (underscoring supplied)
The trial court observed that from the tenor of the letter . . . the defendant[-herein respondent] admits that the services the plaintiff[-herein petitioners] received
were unacceptable and definitely not up to their standards. [5]

On appeal, the Court of Appeals, by Decision of July 27, 2009,[6] reversed the trial courts decision, it holding that the proximate cause of petitioners injury was an
unexpected increase in their guests:

x x x Hence, the alleged damage or injury brought about by the confusion, inconvenience and disarray during the wedding reception may not be
attributed to defendant-appellant Shangri-la.

We find that the said proximate cause, which is entirely attributable to plaintiffs-appellants, set the chain of events which resulted in the alleged
inconveniences, to the plaintiffs-appellants. Given the circumstances that obtained, only the Sps. Guanio may bear whatever consequential
damages that they may have allegedly suffered.[7] (underscoring supplied)

Petitioners motion for reconsideration having been denied by Resolution of November 18, 2009, the present petition for review was filed.

The Court finds that since petitioners complaint arose from a contract, the doctrine of proximate cause finds no application to it:
The doctrine of proximate cause is applicable only in actions for quasi-delicts , not in actions involving breach of contract. x x x The
doctrine is a device for imputing liability to a person where there is no relation between him and another party. In such a case, the obligation is
created by law itself. But, where there is a pre-existing contractual relation between the parties, it is the parties themselves who create the
obligation, and the function of the law is merely to regulate the relation thus created. [8] (emphasis and underscoring supplied)

What applies in the present case is Article 1170 of the Civil Code which reads:

Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence or delay, and those who in any manner
contravene the tenor thereof, are liable for damages.

RCPI v. Verchez, et al. [9] enlightens:

In culpa contractual x x x the mere proof of the existence of the contract and the failure of its compliance justify, prima facie, a
corresponding right of relief. The law, recognizing the obligatory force of contracts, will not permit a party to be set free from liability for any kind
of misperformance of the contractual undertaking or a contravention of the tenor thereof. A breach upon the contract confers upon the injured
party a valid cause for recovering that which may have been lost or suffered. The remedy serves to preserve the interests of the promissee that
may include his expectation interest, which is his interest in having the benefit of his bargain by being put in as good a position as he would
have been in had the contract been performed, or his reliance interest, which is his interest in being reimbursed for loss caused by reliance on
the contract by being put in as good a position as he would have been in had the contract not been made; or his restitution interest, which is his
 interest in having restored to him any benefit that he has conferred on the other party. Indeed, agreements can accomplish little, either for their
makers or for society, unless they are made the basis for action. The effect of every infraction is to create a new duty, that is, to make
RECOMPENSE to the one who has been injured by the failure of another to observe his contractual obligation unless he can show extenuating
circumstances, like proof of his exercise of due diligence x x x or of the attendance of fortuitous event, to excuse him from his ensuing
liability. (emphasis and underscoring in the original; capitalization supplied)

The pertinent provisions of the Banquet and Meeting Services Contract between the parties read:

4.3 The ENGAGER shall be billed in accordance with the prescribed rate for the minimum guaranteed number of persons contracted for,
regardless of under attendance or non-appearance of the expected number of guests, except where the ENGAGER cancels the Function in
accordance with its Letter of Confirmation with the HOTEL. Should the attendance exceed the minimum guaranteed attendance, the ENGAGER shall
also be billed at the actual rate per cover in excess of the minimum guaranteed attendance.

xxxx

4.5. The ENGAGER must inform the HOTEL at least forty eight (48) hours before the scheduled date and time of the Function of any change
in the minimum guaranteed covers. In the absence of such notice, paragraph 4.3 shall apply in the event of under attendance. In case the
actual number of attendees exceed the minimum guaranteed number

by ten percent (10%), the HOTEL shall not in any way be held liable for any damage or inconvenience which may be caused
thereby. The ENGAGER shall also undertake to advise the guests of the situation and take positive steps to remedy the same.
[10]
(emphasis, italics and underscoring supplied)

Breach of contract is defined as the failure without legal reason to comply with the terms of a contract. It is also defined as the [f]ailure, without legal
excuse, to perform any promise which forms the whole or part of the contract. [11]

The appellate court, and even the trial court, observed that petitioners were remiss in their obligation to inform respondent of the change in the expected
number of guests.The observation is reflected in the records of the case. Petitioners failure to discharge such obligation thus excused, as the above-quoted
paragraph 4.5 of the parties contract provide, respondent from liability for any damage or inconvenience occasioned thereby.

As for petitioners claim that respondent departed from its verbal agreement with petitioners, the same fails, given that the written contract which the
parties entered into the day before the event, being the law between them.
 Respecting the letter of Svensson on which the trial court heavily relied as admission of respondents liability but which the appellate court brushed aside,
the Court finds the appellate courts stance in order. It is not uncommon in the hotel industry to receive comments, criticisms or feedback on the service it delivers.
It is also customary for hotel management to try to smooth ruffled feathers to preserve goodwill among its clientele.

Kalalo v. Luz holds:[12]

Statements which are not estoppels nor judicial admissions have no quality of conclusiveness, and an opponent whose admissions have been
offered against him may offer any evidence which serves as an explanation for his former assertion of what he now denies as a fact.

Respondents Catering Director, Bea Marquez, explained the hotels procedure on receiving and processing complaints, viz:

ATTY. CALMA:
Q You mentioned that the letter indicates an acknowledgement of the concern and that there was-the first letter there was an acknowledgment of
the concern and an apology, not necessarily indicating that such or admitting fault?
A Yes.
Q Is this the letter that you are referring to?
If I may, Your Honor, that was the letter dated August 4, 2001, previously marked as plaintiffs exhibits, Your Honor. What is the procedure of the
hotel with respect to customer concern?
A Upon receipt of the concern from the guest or client, we acknowledge receipt of such concern, and as part of procedure in service industry
particularly Makati Shangri-la we apologize for whatever inconvenience but at the same time saying, that of course, we would go through
certain investigation and get back to them for the feedback with whatever concern they may have.
Q Your Honor, I just like at this point mark the exhibits, Your Honor, the letter dated August 4, 2001 identified by the witness, Your Honor, to be
marked as Exhibit 14 and the signature of Mr. Krister Svensson be marked as Exhibit 14-A. [13]
xxxx
Q In your opinion, you just mentioned that there is a procedure that the hotel follows with respect to the complaint, in your opinion was this
procedure followed in this particular concern?
A Yes, maam.
Q What makes you say that this procedure was followed?
A As I mentioned earlier, we proved that we did acknowledge the concern of the client in this case and we did emphatize from the client and
apologized, and at the same time got back to them in whatever investigation we have.
Q You said that you apologized, what did you apologize for?
 A Well, first of all it is a standard that we apologize, right? Being in the service industry, it is a practice that we apologize if there is any
inconvenience, so the purpose for apologizing is mainly to show empathy and to ensure the client that we are hearing them out and that
we will do a better investigation and it is not in any way that we are admitting any fault.[14](underscoring supplied)

To the Court, the foregoing explanation of the hotels Banquet Director overcomes any presumption of admission of breach which Svenssons letter might
have conveyed.
The exculpatory clause notwithstanding, the Court notes that respondent could have managed the situation better, it being held in high esteem in the hotel
and service industry. Given respondents vast experience, it is safe to presume that this is not its first encounter with booked events exceeding the guaranteed
cover. It is not audacious to expect that certain measures have been placed in case this predicament crops up. That regardless of these measures, respondent still
received complaints as in the present case, does not amuse.
Respondent admitted that three hotel functions coincided with petitioners reception. To the Court, the delay in service might have been avoided or
minimized if respondent exercised prescience in scheduling events. No less than quality service should be delivered especially in events which possibility of
repetition is close to nil. Petitioners are not expected to get married twice in their lifetimes.
In the present petition, under considerations of equity, the Court deems it just to award the amount of P50,000.00 by way of nominal damages to
petitioners, for the discomfiture that they were subjected to during to the event. [15] The Court recognizes that every person is entitled to respect of his dignity,
personality, privacy and peace of mind.[16] Respondents lack of prudence is an affront to this right.

WHEREFORE, the Court of Appeals Decision dated July 27, 2009 is PARTIALLY REVERSED. Respondent is, in light of the foregoing discussion, ORDERED
to pay the amount of P50,000.00 to petitioners by way of nominal damages.

SO ORDERED.
FACTS: For their wedding reception, petitioners booked at the Shangri-la Hotel Makati. Petitioners claim that during the reception, their guests complained at the
delay in the service of the dinner; certain items listed in the published menu were unavailable; and the hotel waiters were rude and unapologetic when confronted
about the delay. Petitioners filed a complaint for breach of contract and damages before the RTC of Makati City. Respondent however avers that while there was a
delay in the service of the meals, the same was occasioned by the sudden increase of guests to 470 from the guaranteed expected minimum number of guests of
350 to a maximum of 380. The Court of Appeals held that the proximate cause of petitioners' injury was an unexpected increase in their guests.

ISSUE: Whether or not the doctrine of proximate cause applies to actions involving breach of contract

RULING: No. The doctrine of proximate cause is applicable only in actions for quasi-delicts. The doctrine is a device for imputing liability to a person where there is
no relation between him and another party. In such a case, the obligation is created by law itself. But, where there is a pre-existing contractual relation between the
parties, it is the parties themselves who create the obligation, and the function of the law is merely to regulate the relation thus created. In culpa contractual, the
mere proof of the existence of the contract and the failure
 G.R. No. 176008
METROPOLITAN BANK and TRUST
COMPANY, substituted by MERIDIAN (SPV-
AMCI) CORPORATION,
Petitioner,

- versus -

INTERNATIONAL EXCHANGE BANK,

Respondent. G.R. No. 176131

x--------------------------------------------x

CHUAYUCO STEEL MANUFACTURING,

August 10, 2011

Petitioner,

- versus -

INTERNATIONAL EXCHANGE BANK (now

UNION BANK OF THE PHILIPPINES),

Respondent.
PERALTA, J.:
Before the Court are two consolidated petitions for review on certiorari under Rule 45 of the Rules of Court, both of which are seeking the reversal and setting
aside of the Decision1and Resolution2 of the Court of Appeals (CA) dated May 5, 2006 and December 22, 2006, respectively, in CA-G.R. SP No. 00549-MIN which
annulled and set aside the Orders dated September 6, 2004 and February 14, 2005, the Resolution dated March 15, 2005 and the Joint Resolution dated June 8,
2005 of the Regional Trial Court (RTC) of Misamis Oriental, Branch 17 in Civil Case Nos. 2004-197 and 2004-200.
The pertinent factual and procedural antecedents of the case are as follows:

Sacramentoeel Corporation (SSC) is a business entity engaged in manufacturing and producing steel and steel products, such as cold rolled coils and galvanized
sheets, in its own steel manufacturing plant located at Tagoloan, Misamis Oriental.

For the purpose of increasing its capital, SSC entered into a Credit Agreement with herein respondent International Exchange Bank (IEB) on September 10, 2001
wherein the latter granted the former an omnibus credit line in the amount of P60,000,000.00, a loan of P20,000,000.00 and a subsequent credit line with a limit
of P100,000,000.00.
As security for its loan obligations, SSC executed five separate deeds of chattel mortgage constituted over various equipment found in its steel
manufacturing plant. The deeds of mortgage were dated September 17, 2001, February 26, 2003, April 16, 2003, May 25, 2004 and June 7, 2004.

Subsequently, SSC defaulted in the payment of its obligations. IEB's demand for payment went unheeded. On July 7, 2004, the IEB filed with the RTC
of Misamis Oriental an action for injunction for the purpose of enjoining SSC from taking out the mortgaged equipment from its premises. The case was docketed
as Civil Case No. 2004-197. Thereafter, IEB filed a Supplemental Complaint praying for the issuance of a writ of replevin or, in the alternative, for the payment of
SSC's outstanding obligations and attorney's fees.3

On the other hand, on July 18, 2004, SSC filed with the same RTC of Misamis Oriental a Complaint for annulment of mortgage and specific performance for the
purpose of compelling the IEB to restructure SSC's outstanding obligations. SSC also prayed for the issuance of a Temporary Restraining Order (TRO) and writ of
preliminary injunction to prevent IEB from taking any steps to dispossess SSC of any equipment in its steel manufacturing plant as well as to restrain it from
foreclosing the mortgage on the said equipment.4 The RTC issued a TRO. The case was docketed as Civil Case No. 2004-200 and was subsequently consolidated
with Civil Case No. 2004-197.

On July 23, 2004, the RTC issued an Order 5 granting IEB's application for the issuance of a writ of replevin. However, upon agreement of the parties, the
implementation of the said writ was held in abeyance pending the trial court's resolution of the other incidents in the said case. 6 The RTC also directed that there
shall be no commercial operation without court approval. 7

On August 26, 2004, the IEB filed a petition for extrajudicial foreclosure of chattel mortgage.

SSC opposed IEB's petition and prayed for the issuance of a writ of preliminary injunction.
On September 6, 2004, the RTC issued an Order disposing as follows:

WHEREFORE, let a Writ of preliminary injunction be issued restraining defendant iBank [IEB], the Sheriff, his agents and other person/s acting in
their behalf as agents privies or representative[s] in whatever capacity, from conducting foreclosure, whether judicial or extrajudicial, of any
properties subject of the controversy and are further directed not to take any steps that will, in effect, dispossess plaintiff [SSC] of any of its
machineries and equipment in its steel manufacturing plant pending determination of the case. Let a bond (cash or surety) of Five Hundred
Thousand (P500,000.00) Pesos be posted by the plaintiff Sacramento Steel Corporation as required by law.

SO ORDERED.8

Meanwhile, on August 30, 2004, SSC entered into a Capacity Lease Agreement with herein petitioner Chuayuco Steel Manufacturing Corporation (CSMC) which
allowed the latter to lease and operate the former's cold rolling mill and galvanizing plant for a period of five years.

On October 21, 2004, herein petitioner Metropolitan Bank and Trust Company (Metrobank) filed a motion for intervention contending that it has legal interest in the
properties subject of the litigation between IEB and SSC because it is a creditor of SSC and that the mortgage contracts between IEB and SSC were entered into to
defraud the latter's creditors.9Metrobank prayed for the rescission of the chattel mortgages executed by SSC in favor of IEB.

On January 21, 2005, CSMC filed an Omnibus Motion for intervention and for allowance to immediately operate the cold rolling mill and galvanizing plant of SSC
contending that its purpose in intervening is to seek the approval of the court to operate the said plant pursuant to the Capacity Lease Agreement it entered into
with SSC.10 IEB filed its Opposition to the said Motion.11

On February 14, 2005, the RTC issued an Order 12 admitting the motions for intervention filed by CSMC and Metrobank.

On March 15, 2005, the RTC issued a Resolution, the dispositive portion of which reads, thus:

WHEREFORE, premises considered, the motion to operate the machineries pendente lite is hereby GRANTED based on law and equity as soon as
practicable. This is without prejudice on the part of the I-bank [IEB] to assert the enforcement of the proposed schedule of payment submitted by
SSC to the Court (Exh. A Motion for Early Resolution, 2/16/2005 hearing) and to continually post their security guards unless withdrawn.

SO ORDERED.13

On June 8, 2005, the RTC issued a Joint Resolution 14 reiterating its admission of CSMC's motion for intervention and directing the latter to file its complaint-in-
intervention.
On August 25, 2005, IEB filed a petition for certiorari, prohibition and mandamus with the CA assailing the RTC Orders dated September 6, 2004 and February 14,
2005, Resolution dated March 15, 2005 and Joint Resolution dated June 8, 2005. 15

On May 5, 2006, the CA rendered its presently assailed Decision which disposed of the case as follows:

WHEREFORE, the petition is hereby GRANTED. The questioned Orders dated September 6, 2004, February 14, 2005, March 15, 2005 and June 8,
2005 issued by public respondent RTC, Branch 17, Misamis Oriental, presided by Hon. Florencia D. Sealana-Abbu in Civil Case Nos. 2004-197 and
2004-200 are hereby ANNULLED and SET ASIDE. Public respondent is hereby DIRECTED to turn-over the mortgaged properties covered by the writ
of replevin to petitioner I-Bank for the eventual foreclosure thereof.

SO ORDERED.16

Metrobank, CSMC and SSC filed their respective motions for reconsideration, but these were all denied by the CA in its Resolution dated December 22, 2006.

Hence, the instant petitions for review on certiorari.

In G.R. No. 176008, petitioner Metrobank submits the following issues:

(A) WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT PETITIONER'S COMPLAINT-IN-INTERVENTION IS
AN ACCION PAULIANA, A SUBSIDIARY ACTION, WHICH PRESUPPOSES AN UNSATISFIED JUDGMENT, WHICH UNSATISFIED JUDGMENT IS ABSENT IN
THE CASE AT BAR.

(B) WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT THE TRIAL COURT COMMITTED GRAVE ABUSE OF
DISCRETION IN ALLOWING PETITIONER'S COMPLAINT-IN-INTERVENTION. 17

In G.R. No. 176131, petitioner CSMC raises the following grounds:

I. THE HONORABLE COURT ERRED IN NOT PASSING UPON THE ISSUE THAT HEREIN RESPONDENT IBANK IS GUILTY OF FORUM-SHOPPING.

II. THE HONORABLE COURT ERRED IN NOT RULING THAT HEREIN RESPONDENT IBANK'S FAILURE TO FILE A MOTION FOR RECONSIDERATION TO THE
ORDER DATED 08 JUNE 2005 IS FATAL TO ITS PETITION.

III. THE HONORABLE COURT ERRED IN RULING THAT THE ORDER OF JUDGE SEALANA-ABBU ADMITTING THE INTERVENTION OF HEREIN PETITIONER
CSMC IS WITHOUT LEGAL BASIS.18
In a Manifestation and Motion dated September 26, 2007, petitioner Metrobank manifested that it no longer has any interest in pursuing the instant case as the
loan obligation owed by SSC to it has been sold by the latter to a corporation known as Meridian (SPV-AMC) Corporation (Meridian). Accordingly, Metrobank prayed
that it be substituted by Meridian as petitioner in the instant case. 19

In a Resolution20 dated November 12, 2007, this Court granted Metrobank's Motion.
At the outset, the Court takes note that no arguments or questions were raised by petitioners with respect to the September 6, 2004 Order and March 15, 2005
Resolution of the RTC which were annulled by the CA. Hence, the only issues left for resolution in the instant petition are whether or not petitioners Metrobank and
CSMC may be allowed to intervene in Civil Case Nos. 2004-197 and 2004-200.

The Court will dwell first on the issues raised by Metrobank in G.R. No. 176008.

In its first assigned error, Metrobank contends that the CA erred in ruling that its Complaint-in-Intervention is in the nature of an accion pauliana.

The Court does not agree.

A perusal of Metrobank's Complaint-in-Intervention would show that its main objective is to have the chattel mortgages executed by SSC in favor of IEB rescinded.
This is clearly evident in its prayer, which reads as follows:

WHEREFORE, premises considered, it is respectfully prayed unto the Honorable Court that judgment be rendered:

(1) RESCINDING the chattel mortgages executed by Defendants Sacramento and Delmo in favor of
Defendant Ibank dated May 25, 2004 and June 7, 2004, respectively;

(2) Ordering defendants Sacramento, Delmo and Ibank to pay, jointly and severally, Plaintiff-Intervenor the amounts of:

(A) P500,000.00, as and by way of exemplary damages;

(B) P500,000.00, as and by way of attorney's fees; and
(C) Costs of suit.

Other reliefs as may be just and equitable under the premises are likewise prayed for.

x x x x21
Under Article 1381 of the Civil Code, an accion pauliana is an action to rescind contracts in fraud of creditors. 22

However, jurisprudence is clear that the following successive measures must be taken by a creditor before he may bring an action for rescission of an allegedly
fraudulent contract: (1) exhaust the properties of the debtor through levying by attachment and execution upon all the property of the debtor, except such as are
exempt by law from execution; (2) exercise all the rights and actions of the debtor, save those personal to him (accion subrogatoria); and (3) seek rescission of the
contracts executed by the debtor in fraud of their rights (accionpauliana).23 It is thus apparent that an action to rescind, or an accion pauliana, must be of last
resort, availed of only after the creditor has exhausted all the properties of the debtor not exempt from execution or after all other legal remedies have been
exhausted and have been proven futile.24

It does not appear that Metrobank sought other properties of SSC other than the subject lots alleged to have been transferred in fraud of creditors. Neither is there
any showing that Metrobank subrogated itself in SSC's transmissible rights and actions. Without availing of the first and second remedies, Metrobank simply
undertook the third measure and filed an action for annulment of the chattel mortgages. This cannot be done. Article 1383 of the New Civil Code is very explicit
that the right or remedy of the creditor to impugn the acts which the debtor may have done to defraud them is subsidiary in nature. 25 It can only be availed of in
the absence of any other legal remedy to obtain reparation for the injury. 26 This fact is not present in this case. No evidence was presented nor even an allegation
was offered to show that Metrobank had availed of the abovementioned remedies before it tried to question the validity of the contracts of chattel mortgage
between IEB and SSC.
Metrobank also contends that in order to apply the concept of, and the rules pertaining to, accion pauliana, the subject matter must be a conveyance, otherwise
valid, which is undertaken in fraud of creditors. Metrobank claims that since there is no conveyance involved in the contract of chattel mortgage between SSC and
IEB, which Metrobank seeks to rescind, the CA erred in ruling that the latter's Complaint-in-Intervention is an accion pauliana.

The Court is not persuaded.

In the instant case, the contract of chattel mortgage entered into by and between SSC and IEB involves a conveyance of patrimonial benefit in favor of the latter as
the properties subject of the chattel mortgage stand as security for the credit it extended to SSC. In a very recent case involving an action for the rescission of a
real estate mortgage,27 while this Court found that some of the elements of accion pauliana were not present, it found that a mortgage contract involves the
conveyance of a patrimonial benefit.
In sum, Metrobank may not be allowed to intervene and pray for the rescission of the chattel mortgages executed by SSC in favor of IEB. The remedy being sought
by Metrobank is in the nature of an accion pauliana which, under the factual circumstances obtaining in the present case, may not be allowed. Based on the
foregoing, the Court finds no error in the ruling of the CA that the RTC committed grave abuse of discretion in allowing Metrobank's intervention.

The Court will now proceed to resolve the issues raised by petitioner CSMC in G.R. No. 176131.

Firstly, CSMC contends that IEB was forum shopping when it filed a petition for certiorari with the CA seeking, among others, the enjoinment of the commercial
operation of the subject machineries and equipment when its Opposition 28 to the implementation of the Capacity Lease Agreement between SSC and CSMC is still
pending determination by the RTC.

The Court does not agree.

Forum shopping has been defined as an act of a party, against whom an adverse judgment has been rendered in one forum, of seeking and possibly getting a
favorable opinion in another forum, other than by appeal or a special civil action for certiorari, or the institution of two or more actions or proceedings
grounded on the same cause on the supposition that one or the other court would make a favorable disposition. 29

Forum shopping exists when two or more actions involve the same transactions, essential facts and circumstances, and raise identical causes of action,
subject matter, and issues.30Still another test of forum shopping is when the elements of litis pendencia are present or where a final judgment in one case will
amount to res judicata in another whether in the two or more pending cases, there is an identity of (a) parties (or at least such parties as represent the same
interests in both actions); (b) rights or causes of action, and (c) reliefs sought. 31

In the instant case on the one hand, IEB's Opposition questions the legality and seeks to prevent the implementation of the Capacity Lease Agreement between
CSMC and SSC which, in essence, authorizes CSMC to operate the subject machineries pendente lite. On the other hand, the petition for certiorari filed by IEB
assails and seeks to nullify, among others, the March 15, 2005 and June 8, 2005 Orders of the RTC allowing SSC to operate the subject machineries pendente lite. It
is, thus, clear that there is no identity of subject matter, cause of action and reliefs sought in IEB's Opposition filed with the RTC and in its petition for certiorari filed
with the CA. Hence, IEB is not guilty of forum shopping.

Secondly, CSMC argues that IEB's failure to file a motion for reconsideration of the RTC Order dated June 8, 2005 is fatal to its petition for certiorari filed with the
CA.

The Court is not persuaded.

While the general rule is that before certiorari may be availed of, petitioner must have filed a motion for reconsideration of the act or order complained of, the
Court has dispensed with this requirement in several instances. 32 Thus, a previous motion for reconsideration before the filing of a petition for certiorari is
necessary unless: (i) the issue raised is one purely of law; (ii) public interest is involved; (iii) there is urgency; (iv) a question of jurisdiction is squarely raised before
and decided by the lower court; and (v) the order is a patent nullity. 33 In the instant case, the Court agrees with the CA that there is no need for such motion
because the issue regarding the applicability of the rule on intervention raised by IEB in its petition for certiorari filed with the CA, insofar as the June 8, 2005 Order
of the RTC is concerned, is one purely of law.

The foregoing notwithstanding, the Court finds that the CA erred in ruling that the allowance of CSMC's motion for intervention is improper. CSMC's intervention
should be allowed.
The purpose of intervention is to enable a stranger to an action to become a party in order for him to protect his interest and for the court to settle all conflicting
claims.34 Intervention is allowed to avoid multiplicity of suits more than on due process considerations. 35 To warrant intervention under Rule 19 of the Rules of Court,
two requisites must concur: (1) the movanthas a legal interest on the matter in litigation; and (2) intervention must not unduly delay or prejudice the adjudication
of the rights of the parties, nor should the claim of the intervenorbe capable of being properly decided in a separate proceeding. 36

In the present case, CSMC, being a lessee of the subject properties, has a legal interest therein. The RTC correctly held, thus:

Under the Rules of Court, intervention is permissive and maybe permitted by the Court when the applicant shows facts which satisfy the
requirements of the law authorizing intervention. (Firestone Ceramics Inc. vs. CA 313 SCRA 522) Records of the case showed that on August 30,
2004, an agreement was finalized and entered into by applicant Chuayuco and defendant/plaintiff Sacramento Steel Corporation whereby the
former shall lease and make use of the machineries of Sacramento Steel under the Capacity Lease Agreement (CLA). One of the terms and
condition[s] under [the] CLA was for the monthly lease payments to take effect upon signing of the contract. A person seeking to intervene in a suit
must show that he has legal interest which must be actual and material, direct and immediate. He must show that he will either gain or lose by
direct legal operation and effect of a judgment. (Hrs. of Nicolas Orosa vs. Migrino 218 SCRA 311) The Court finds that Chuayuco had a constituted
and sufficient legal interest in the machineries subject of the litigation which is actual and material. Any disposition of the case will adversely affect
the standing of the intervenor.37

Moreover, considering that CSMC's interest is limited only to the operation of the subject machineries pursuant to its lease contract with SSC, its intervention would
not unduly delay or prejudice the adjudication of the rights of SSC and IEB. CSMC's intervention should be treated as one pro interesse suo which is a mode of
intervention in equity wherein a stranger desires to intervene for the purpose of asserting a property right in the res, or thing, which is the subject matter of the
litigation, without becoming a formal plaintiff or defendant, and without acquiring control over the course of a litigation, which is conceded to the main actors
therein.38

Lastly, the Court does not agree with the CA when it ruled that the applicable provision is Rule 3, Section 19 (erroneously cited as Section 20) of the Rules of Court
on transfer of interest and substitution of parties. Being a mere lessee of the subject properties, CSMC is a stranger insofar as the dispute between SSC and IEB is
concerned. The action filed by IEB against SSC is an action for the payment or satisfaction of the loans incurred by the latter, which includes a possible foreclosure
of the subject properties given as security for the said loans. CSMC may not be considered a successor, and may not be substituted in place of SSC, insofar as
these loans are concerned. If any, what has been transferred to CSMC is only the right of SSC to operate the subject equipment and machineries which it owns. As
such, SSC may not be removed as defendant because its interest in the subject properties remains, being the owner thereof.

WHEREFORE, the assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 00549-MIN are AFFIRMED with MODIFICATION. The February 14,
2005 Order of the Regional Trial Court of Misamis Oriental, Branch 17, is MODIFIED by denying Metrobank's Motion for Intervention, while the Joint Resolution of the
same trial court, dated June 8, 2005, reiterating its admission of CSMC's Motion for Intervention and directing the latter to file its complaint-in-intervention,
is REINSTATED.
SO ORDERED.
of its compliance justify, prima facie, a corresponding right of relief. A breach upon the contractconfers upon the injured party a valid cause for recovering that
which may have been lost or suffered. The Court deems it just to award the amount of Php50,000.00 by way of nominal damages to petitioners, for the
discomfiture that they were subjected to during the event. The Court recognizes that every person is entitled to respect of his dignity, personality, privacy and
peace of mind. Respondent's lack of prudence is an affront to this right.