OBLIGATIONS AND CONTRACTS CASES
[G.R. No. 136031. January 4, 2002]
JEFFERSON LIM, petitioner, vs. QUEENSLAND TOKYO
COMMODITIES, INC., respondent.
DECISION
QUISUMBING, J.:
Before us is a petition for review assailing the June 25, 1998, decision[1]
of the Court of Appeals in CA-G.R. CV No. 46495 which reversed and set
aside the decision of the Regional Trial Court of Cebu, Branch 24,
dismissing the complaint by respondent for a sum of money as well as
petitioners counterclaim.
Private respondent Queensland Tokyo Commodities, Incorporated
(Queensland, for brevity) is a duly licensed broker engaged in the trading
of commodities futures with full membership and with a floor trading right
at the Manila Futures Exchange, Inc..[2]
Sometime in 1992, Benjamin Shia, a market analyst and trader of
Queensland, was introduced to petitioner Jefferson Lim by Marissa
Bontia,[3] one of his employees. Marissas father was a former employee
of Lims father.[4]
Shia suggested that Lim invest in the Foreign Exchange Market, trading
U.S. dollar against the Japanese yen, British pound, Deutsche Mark and
Swiss Franc.
Before investing, Lim requested Shia for proof that the foreign exchange
was really lucrative. They conducted mock tradings without money
involved. As the mock trading showed profitability, Lim decided to invest
with a marginal deposit of US$5,000 in managers check. The marginal
deposit represented the advance capital for his future tradings. It was
made to apply to any authorized future transactions, and answered for
any trading account against which the deposit was made, for any loss of
whatever nature, and for all obligations, which the investor would incur
with the broker.[5]
Because respondent Queensland dealt in pesos only, it had to convert
US$5,000 in managers check to pesos, amounting to P125,000 since the
exchange rate at that time was P25 to US$1.00. To accommodate
petitioners request to trade right away, it advanced the P125,000 from its
own funds while waiting for the managers check to clear. Thereafter, a
deposit notice in the amount of P125,000 was issued to Queensland,
marked as Exhibit E. This was sent to Lim who received it as indicated by
his signature marked as Exhibit E-1. Then, Lim signed the Customers
Agreement, marked as Exhibit F, which provides as follows:
25. Upon signing of this Agreement, I shall deposit an initial margin either
by personal check, managers check or cash. In the case of the first, I
shall not be permitted to trade until the check has been cleared by my
bank and credited to your account. In respect of margin calls or additional
deposits required, I shall likewise pay them either by personal check,
managers check or cash. In the event my personal check is dishonored,
the company has the right without call or notice to settle/close my trading
account against which the deposit was made. In such event, any loss of
whatever nature shall be borne by me and I shall settle such loss upon
demand together with interest and reasonable cost of collection. However,
in the event such liquidation gives rise to a profit then such amount shall
be credited to the Company. The above notwithstanding, I am not relieved
of any legal responsibility as a result of my check being dishonored by my
bank.[6]
Petitioner Lim was then allowed to trade with respondent company which
was coursed through Shia by virtue of the blank order forms, marked as
Exhibits G, G-1 to G-13,[7] all signed by Lim. Respondent furnished Lim
with the daily market report and statements of transactions as evidenced
by the receiving forms, marked as Exhibits J, J-1 to J-4,[8] some of which
were received by Lim.
ESTOPPEL
During
the first day of trading or on October 22, 1992, Lim made a net profit of
P6,845.57.[9] Shia went to the office of Lim and informed him about it. He
was elated. He agreed to continue trading. During the second day of
trading or on October 23, 1992, they lost P44,465.[10]
Meanwhile, on October 22, 1992, respondent learned that it would take
seventeen (17) days to clear the managers check given by petitioner.
Hence, on October 23, 1992, at about 11:00 A.M., upon managements
request, Shia returned the check to petitioner who informed Shia that
petitioner would rather replace the managers check with a travelers
check.[11] Considering that it was 12:00 noon already, petitioner
requested Shia to come back at 2:00 P.M.. Shia went with petitioner to the
bank to purchase a travelers check at the PCI Bank, Juan Luna Branch at
2:00 P.M.. Shia noticed that the travelers check was not indorsed but Lim
told Shia that Queensland could sign the indorsee portion.[12] Because
Shia trusted the latters good credit rating, and out of ignorance, he
brought the check back to the office unsigned.[13] Inasmuch as that was
a busy Friday, the check was kept in the drawer of respondents
consultant. Later, the travelers check was deposited with Citibank.[14]
On October 26, 1992, Shia informed petitioner that they incurred a
floating loss of P44,695[15] on October 23, 1992. He told petitioner that
they could still recover their losses. He could unlock the floating loss on
Friday. By unlocking the floating loss, the loss on a particular day is
minimized.
On October 27, 1992, Citibank informed respondent that the travelers
check could not be cleared unless it was duly signed by Lim, the original
purchaser of the travelers check. A Miss Arajo, from the accounting staff
of Queensland, returned the check to Lim for his signature, but the latter,
aware of his P44,465 loss, demanded for a liquidation of his account and
said he would get back what was left of his investment.[16] Meanwhile,
Lim signed only one portion of the travelers check, leaving the other half
blank. He then kept it.[17] Arajo went back to the office without it.
Respondent asked Shia to talk to petitioner for a settlement of his account
but petitioner refused to talk with Shia. Shia made follow-ups for more
than a week beginning October 27, 1992. Because petitioner disregarded
this request, respondent was compelled to engage the services of a
lawyer, who sent a demand letter[18] to petitioner. This letter went
unheeded. Thus, respondent filed a complaint[19] against petitioner,
docketed as Civil Case No. CEB-13737, for collection of a sum of money.
On April 22, 1994, the trial court rendered its decision, thus:
WHEREFORE, in view of all the foregoing, the complaint is dismissed
without pronouncement as to costs. The defendants counterclaim is
likewise dismissed.
SO ORDERED.[20]
On appeal by Queensland, the Court of Appeals reversed and set aside
the trial courts decision, with the following fallo:
WHEREFORE, the decision appealed from is hereby REVERSED AND
SET ASIDE, and another one is entered ordering appellee [Jefferson Lim]
to pay appellant the sum of P125,000.00, with interest at the legal rate
until the whole amount is fully paid, P10,000.00 as attorneys fees, and
costs.[21]
Petitioner herein filed a motion for reconsideration before the Court of
Appeals, which was denied in a resolution dated October 6, 1998.[22]
Dissatisfied, petitioner filed the instant recourse alleging that the appellate
court committed errors:
I - IN REVERSING THE DECISION OF THE RTC WHICH DISMISSED
RESPONDENTS COMPLAINT;
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 OBLIGATIONS AND CONTRACTS CASES
II - IN HOLDING THAT THE PETITIONER IS ESTOPPED IN
QUESTIONING THE VALIDITY OF THE CUSTOMERS AGREEMENT
AND FROM DENYING THE EFFECTS OF HIS CONDUCT;
III - IN NOT TAKING JUDICIAL NOTICE OF THE LETTER OF
RESPONDENT THAT THE SEC HAS ISSUED A CEASE AND DESIST
ORDER AGAINST THE MANILA INTERNATIONAL FUTURES
EXCHANGE COMMISSION AND ALL COMMODITY TRADERS
INCLUDING THE RESPONDENT.
Despite the petitioners formulation of alleged errors, we find that the main
issue is whether or not the appellate court erred in holding that petitioner
is estopped from questioning the validity of the Customers Agreement that
he signed.
The essential elements of estoppel are: (1) conduct of a party amounting
to false representation or concealment of material facts or at least
calculated to convey the impression that the facts are otherwise than, and
inconsistent with, those which the party subsequently attempts to assert;
(2) intent, or at least expectation, that this conduct shall be acted upon by,
or at least influence, the other party; and (3) knowledge, actual or
constructive, of the real facts.[23]
Here, it is uncontested that petitioner had in fact signed the Customers
Agreement in the morning of October 22, 1992,[24] knowing fully well the
nature of the contract he was entering into. The Customers Agreement
was duly notarized and as a public document it is evidence of the fact,
which gave rise to its execution and of the date of the latter.[25] Next,
petitioner paid his investment deposit to respondent in the form of a
managers check in the amount of US$5,000 as evidenced by PCI Bank
Managers Check No. 69007, dated October 22, 1992.[26] All these are
indicia that petitioner treated the Customers Agreement as a valid and
binding contract.
Moreover, we agree that, on petitioners part, there was misrepresentation
of facts. He replaced the managers check with an unendorsed travelers
check, instead of cash, while assuring Shia that respondent Queensland
could sign the indorsee portion thereof.[27] As it turned out, Citibank
informed respondent that only the original purchaser (i.e. the petitioner)
could sign said check. When the check was returned to petitioner for his
signature, he refused to sign. Then, as petitioner himself admitted in his
Memorandum,[28] he used the travelers check for his travel expenses.
[29]
More significantly, petitioner already availed himself of the benefits of the
Customers Agreement whose validity he now impugns. As found by the
CA, even before petitioners initial marginal deposit (in the form of the PCI
managers check dated October 22, 1992)[30] was converted into cash,
he already started trading on October 22, 1992, thereby making a net
profit of P6,845.57. On October 23, he continued availing of said
agreement, although this time he incurred a floating loss of P44,645.[31]
While he claimed he had not authorized respondent to trade on those
dates, this claim is belied by his signature affixed in the order forms,
marked as Exhibits G, G-1 to G-13.[32]
Clearly, by his own acts, petitioner is estopped from impugning the validity
of the Customers Agreement. For a party to a contract cannot deny the
validity thereof after enjoying its benefits without outrage to ones sense of
justice and fairness.
It appears that petitioners reason to back out of the agreement is that he
began sustaining losses from the trade. However, this alone is insufficient
to nullify the contract or disregard its legal effects. By its very nature it is
already a perfected, if not a consummated, contract. Courts have no
power to relieve parties from obligations voluntarily assumed, simply
because their contracts turned out to be disastrous or unwise
investments.[33] Notably, in the Customers Agreement, petitioner has
been forewarned of the high risk involved in the foreign currency
2
ESTOPPEL
investment as stated in the Risk Disclosure Statement,[34] located in the
same box where petitioner signed.
Further, petitioner contends that the Customers Agreement was rendered
nugatory because: (1) the marginal deposit he gave was in dollars and (2)
respondent allowed him to trade even before the US$5,000 managers
check was cleared. This contention is disingenuous to say the least, but
hardly meritorious.
Petitioner himself was responsible for the issuance of the US$5,000
managers check. It was he who failed to replace the managers check with
cash. He authorized Shia to start trading even before the US$5,000 check
had cleared. He could not, in fairness to the other party concerned, now
invoke his own misdeeds to exculpate himself, conformably with the basic
principle in law that he who comes to court must come with clean hands.
Contrary to petitioners contention, we also find that respondent did not
violate paragraph 14 of the Guidelines for Spot/Futures Currency Trading,
which provides:
14. DEPOSITS & PAYMENTS
All deposits, payments and repayments, etc. will be in Philippine
Currency. When a deposit with the Company is not in cash or bank draft,
such deposit will not take effect in the account concerned until it has been
confirmed NEGOTIABLE for payment by authorized management
personnel.[35]
Respondent claims it informed petitioner of its policy not to accept dollar
investment. For this reason, it converted the petitioners US$5,000
managers check to pesos (P125,000) out of respondents own funds to
accommodate petitioners request to trade right away.[36] On record, it
appears that petitioner agreed to the conversion of his dollar deposit to
pesos. [37]
Neither is there merit in petitioners contention that respondent violated the
Customers Agreement by allowing him to trade even if his managers
check was not yet cleared, as he had no margin deposit as required by
the Customers Agreement, viz:
5. Margin Receipt
A Margin Receipt issued by the Company shall only be for the purpose of
acknowledging receipt of an amount as margin deposit for Spot/Futures
Currency Trading. All checks received for the purpose of margin deposits
have to be cleared through such bank account as may be opened by the
Company before any order can be accepted.[38]
But as stated earlier, respondent advanced petitioners marginal deposit of
P125,000 out of its own funds while waiting for the US$5,000 managers
check to clear, relying on the good credit standing of petitioner. Contrary
to petitioners averment now, respondent had advanced his margin deposit
with his approval. Nowhere in the Guidelines adverted to by petitioner
was such an arrangement prohibited. Note that the advance was made
with petitioners consent, as indicated by his signature, Exhibit E-1,[39]
affixed in the deposit notice, Exhibit E,[40] sent to him by respondent. By
his failure to seasonably object to this arrangement and by affixing his
signature to the notice of deposit, petitioner is barred from questioning
said arrangement now.
Anent the last assigned error, petitioner faults the appellate court for not
taking judicial notice of the cease and desist order against the Manila
International Futures Exchange Commission and all commodity traders
including respondent. However, we find that this issue was first raised
only in petitioners motion for reconsideration of the Court of Appeals
decision. It was never raised in the Memorandum[41] filed by petitioner
before the trial court. Hence, this Court cannot now, for the first time on
appeal, pass upon this issue. For an issue cannot be raised for the first
time on appeal. It must be raised seasonably in the proceedings before
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 OBLIGATIONS AND CONTRACTS CASES
the lower court. Questions raised on appeal must be within the issues
framed by the parties and, consequently, issues not raised in the trial
court cannot be raised for the first time on appeal.[42]
WHEREFORE, the instant petition is DENIED for lack of merit. The
decision of the Court of Appeals dated June 25, 1998, in CA-G.R. CV No.
46495 is AFFIRMED. Costs against petitioner.
SO ORDERED.
HEIRS OF SALVADOR HERMOSILLA, namely: ADELAIDA H.
DOLLETON, RUBEN HERMOSILLA, LOLITA H. DE LA VEGA,
ERLINDA H. INOVIO, CELIA H. VIVIT, ZENAIDA H. ACHOY, PRECILLA
H. LIMPIAHOY, and EDGARDO HERMOSILLA,
Petitioners,
-versus-
Spouses JAIME REMOQUILLO and LUZ REMOQUILLO,
Respondents.
G.R. No. 167320
Present:
QUISUMBING, Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
Promulgated:
January 30, 2007
x----------------------------------------------------
----x
DECISION
CARPIO MORALES, J.:
Petitioners Heirs of Salvador Hermosilla, namely: Adelaida H. Dolleton,
Ruben Hermosilla, Lolita H. de la Vega, Erlinda H. Inovio,[1] Celia[2] H.
Vivit, Zenaida H. Achoy, Precilla[3] H. Limpiahoy, and Edgardo
Hermosilla, assail the Court of Appeals Decision[4] dated September 29,
2004 which reversed the trial courts decision in their favor and
accordingly dismissed their complaint.
Subject of the controversy is a 65-square meter portion of a lot located in
Poblacion, San Pedro, Laguna.
On August 31, 1931, the Republic of the Philippines acquired through
purchase the San Pedro Tunasan Homesite.
Apolinario Hermosilla (Apolinario), who was occupying a lot in San Pedro
Tunasan Homesite until his death in 1964, caused the subdivision of the
lot into two, Lot 12 with an area of 341 square meters, and Lot 19 with an
area of 341 square meters of which the 65 square meters subject of this
controversy form part.
On April 30, 1962, Apolinario executed a Deed of Assignment transferring
possession of Lot 19 in favor of his grandson, herein respondent Jaime
Remoquillo (Jaime). As the Land Tenure Administration (LTA) later found
that Lot 19 was still available for disposition to qualified applicants, Jaime,
being its actual occupant, applied for its acquisition before the LTA on May
10, 1963.
On July 8, 1963, Apolinario conveyed Lot 12 to his son Salvador
Hermosilla (Salvador), Jaimes uncle.
Salvador later filed an application to purchase Lot 12 which was awarded
to him by the defunct Land Authority on December 16, 1971.
ESTOPPEL
On
February 10, 1972, Jaime and his uncle Salvador forged a Kasunduan ng
Paglipat Ng Karapatan sa Isang Lagay na Lupang Solar (Kasunduan)
whereby Jaime transferred ownership of the 65 square meters (the
questioned property) in favor of Salvador.
After Apolinario died, his daughter Angela Hermosilla filed a protest before
the Land Authority, which became the National Housing Authority (NHA),
[5] contending that as an heir of the deceased, she is also entitled to Lots
12 and 19. By Resolution of June 10, 1981, the NHA dismissed the
protest.
The NHA later awarded on March 16, 1986 Lot 19 to Jaime for which he
and his wife were issued a title, Transfer Certificate of Title No. T-156296,
on September 15, 1987.[6]
On May 25, 1992, petitioners filed an action for Annulment of Title on the
ground of fraud with damages against Jaime and his spouse, together
with the Register of Deeds, before the Regional Trial Court (RTC) of Bian,
Laguna, alleging that by virtue of the Kasunduan executed in 1972, Jaime
had conveyed to his uncle Salvador the questioned propertypart of Lot 19
covered by TCT No. T-156296 which was issued in 1987.
By Decision[7] of May 11, 1999, the RTC of Bian, Laguna, Branch 25,
found the Kasunduan a perfected contract of sale, there being a meeting
of the minds upon an identified object and upon a specific price, and that
ownership over the questioned property had already been transferred and
delivered to Salvador.
On the alleged failure of consideration of the Kasunduan, the trial court
held that the same did not render the contract void, but merely allowed an
action for specific performance. The dispositive portion of the trial courts
Decision reads:
WHEREFORE, judgment is hereby rendered declaring plaintiffs as co-
owners of the 65 square meters of the 341 square meters covered by
TCT T-156296, registered in the name of defendants. The Court hereby
directs the Register of Deeds of Laguna, Calamba Branch, to cancel said
Transfer Certificate of Title, and in lieu thereof, to issue another [to]
plaintiffs [as] co-owners of the above portion.
No pronouncement as to costs.
SO ORDERED.[8] (Underscoring supplied)
The Court of Appeals, reversing the decision of the trial court, held that
the Kasunduan was void because at the time of its execution in 1972, the
Republic of the Philippines was still the owner of Lot 19, hence, no right
thereover was transmitted by Jaime who was awarded the Lot in 1986,
and consequently no right was transmitted by Salvador through
succession to petitioners. And it found no evidence of fraud in Jaimes act
of having Lot 19, including the questioned property, registered in his and
his wifes name in 1987.
At all events, the appellate court held that the action had prescribed, it
having been filed in 1992, more than four years from the issuance to
Jaime and his wife of the Transfer Certificate of Title.
Hence, the present petition for review on certiorari.
Petitioners argue that the application of the law on prescription would
perpetrate fraud and spawn injustice, they citing Cometa v. Court of
Appeals;[9] and that at any rate, prescription does not lie against a co-
owner. Cometa involves a different factual milieu concerning the right of
redemption, however. And petitioners contention that prescription does
not lie against a co-owner fails because only the title covering the
questioned property, which petitioners claim to solely own, is being
assailed.
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 OBLIGATIONS AND CONTRACTS CASES
While this Court finds that the action is, contrary to the appellate courts
ruling, not barred by the statute of limitations, it is still dismissible as
discussed below.
Albeit captioned as one for Annulment of Title, the Complaint ultimately
seeks the reconveyance of the property.
From the allegations of the Complaint, petitioners seek the reconveyance
of the property based on implied trust. The prescriptive period for the
reconveyance of fraudulently registered real property is 10 years,
reckoned from the date of the issuance of the certificate of title,[10] if the
plaintiff is not in possession, but imprescriptible if he is in possession of
the property.
An action for reconveyance based on an implied trust prescribes in ten
years. The ten-year prescriptive period applies only if there is an actual
need to reconvey the property as when the plaintiff is not in possession of
the property. However, if the plaintiff, as the real owner of the property
also remains in possession of the property, the prescriptive period to
recover the title and possession of the property does not run against him.
In such a case, an action for reconveyance, if nonetheless filed, would be
in the nature of a suit for quieting of title, an action that is imprescriptible.
[11] (Emphasis and underscoring supplied)
It is undisputed that petitioners houses occupy the questioned property
and that respondents have not been in possession thereof.[12] Since
there was no actual need to reconvey the property as petitioners
remained in possession thereof, the action took the nature of a suit for
quieting of title, it having been filed to enforce an alleged implied trust
after Jaime refused to segregate title over Lot 19. One who is in actual
possession of a piece of land claiming to be the owner thereof may wait
until his possession is disturbed or his title is attacked before taking steps
to vindicate his right.[13] From the body of the complaint, this type of
action denotes imprescriptibility.
As priorly stated, however, when the Kasunduan was executed in 1972 by
Jaime in favor of Salvador petitioners predecessor-in-interest Lot 19, of
which the questioned property forms part, was still owned by the
Republic. Nemo dat quod non habet.[14] Nobody can give what he does
not possess. Jaime could not thus have transferred anything to Salvador
via the Kasunduan.
Claiming exception to the rule, petitioners posit that at the time the
Kasunduan was executed by Jaime in 1972, his application which was
filed in 1963 for the award to him of Lot 19 was still pending, hence, the
Kasunduan transferred to Salvador Jaimes vested right to purchase the
same, in support of which they cite a law on estoppel, Art. 1434 of the
Civil Code, which provides that [w]hen a person who is not the owner of a
thing sells or alienates and delivers it and later, the seller or grantor
acquires title thereto, such title passes by operation of law to the buyer or
grantee.[15]
Petitioners reliance on Article 1434 of the Civil Code does not lie. The
principles of estoppel apply insofar as they are not in conflict with the
provisions of the Civil Code, the Code of Commerce, the Rules of Court
and special laws.[16]
Land Authority Administrative Order No. 4 (1967), RULES AND
REGULATIONS GOVERNING DISPOSITION OF THE LAGUNA
SETTLEMENT PROJECT IN SAN PEDRO, LAGUNA, proscribes the
conveyance of the privilege or preference to purchase a land from the
San Pedro Tunasan project before it is awarded to a tenant or bona fide
occupant, thus:
SEC. 6. Privilege of Preference to Purchase Intransferable; Waiver or
Forfeiture Thereof. From the date of acquisition of the estate by the
Government and before issuance of the Order of Award, no tenant or
bona fide occupant in whose favor the land may be sold shall transfer or
encumber the privilege or preference to purchase the land, and any
ESTOPPEL
transfer
or encumbrance made in violation hereof shall be null and void: Provided,
however, That such privilege or preference may be waived or forfeited
only in favor of the Land Authority . . .[17] (Italics in the original, emphasis
and underscoring supplied)
Petitioners insistence on any right to the property under the Kasunduan
thus fails.
[T]he transfer became one in violation of law (the rules of the PHHC being
promulgated in pursuance of law have the force of law) and therefore void
ab initio. Hence, appellant acquired no right over the lot from a contract
void ab initio, no rights are created. Estoppel, as postulated by petitioner,
will not apply for it cannot be predicated on an illegal act. It is generally
considered that as between the parties to a contract, validity cannot be
given to it by estoppel if it is prohibited by law or is against public policy.
[18] (Emphasis and underscoring supplied)
Petitioners go on to postulate that if the Kasunduan is void, it follows that
the 1962 Deed of Assignment executed by Apolinario in favor of Jaime is
likewise void to thus deprive the latter of any legal basis for his occupation
and acquisition of Lot 19.
Petitioners position fails. Petitioners lose sight of the fact that, as reflected
above, Jaime acquired Lot 19 in his own right, independently of the Deed
of Assignment.
In another vein, since the property was previously a public land,
petitioners have no personality to impute fraud or misrepresentation
against the State or violation of the law.[19] If the title was in fact
fraudulently obtained, it is the State which should file the suit to recover
the property through the Office of the Solicitor General. The title originated
from a grant by the government, hence, its cancellation is a matter
between the grantor and the grantee.[20]
At all events, for an action for reconveyance based on fraud to prosper,
the plaintiff must prove by clear and convincing evidence not only his title
to the property but also the fact of fraud. Fraud is never presumed.
Intentional acts to deceive and deprive another of his right, or in some
manner injure him must be specifically alleged and proved by the plaintiff
by clear and convincing evidence.[21] Petitioners failed to discharge this
burden, however.
WHEREFORE, the petition is, in light of the foregoing ratiocination,
DENIED.
SO ORDERED.
ACCESSORIES SPECIALIST INC., a.k.a. ARTS 21 CORPORATION,
and TADAHIKO HASHIMOTO,
Petitioners,
Vs.
ERLINDA B. ALABANZA, for and in behalf of her deceased husband,
JONES B. ALABANZA,
Respondent.
G.R. No. 168985
Present:
QUISUMBING, J.,*
YNARES-SANTIAGO,
Chairperson,
AUSTRIA-MARTINEZ,
NACHURA, and
REYES, JJ.
Promulgated:
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 OBLIGATIONS AND CONTRACTS CASES
July 23, 2008
x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the
Rules of Court assailing the Decision[1] dated April 15, 2005 and the
Resolution[2] dated July 12, 2005 of the Court of Appeals (CA) in CA-G.R.
SP No. 84206.
The Facts
The facts of the case, as narrated in the Decision of the CA:
On September 27, 2002, private respondent Erlinda B. Alabanza (Erlinda,
for brevity), for and in behalf of her husband Jones B. Alabanza (Jones,
for brevity) filed a complaint against petitioners Accessories Specialists,
Inc. (ASI, for brevity) also known as ARTS 21 Corporation, and Tadahiko
Hashimoto for non-payment of salaries, separation pay, and 13th month
pay.
In her position paper, respondent Erlinda alleged, among others, that her
husband Jones was the Vice-President, Manager and Director of ASI.
Jones rendered outstanding services for the petitioners from 1975 to
October 1997. On October 17, 1997, Jones was compelled by the owner
of ASI, herein petitioner Tadahiko Hashimoto, to file his involuntary
resignation on the ground that ASI allegedly suffered losses due to lack of
market and incurred several debts caused by a slam in the market. At the
time of his resignation, Jones had unpaid salaries for eighteen (18)
months from May 1995 to October 1997 equivalent to P396,000.00 and
US$38,880.00. He was likewise not paid his separation pay
commensurate to his 21 years of service in the amount of P462,000.00
and US$45,360.00 and 13th month pay amounting to P33,000.00. Jones
demanded payment of his money claims upon resignation but ASI
informed him that it would just settle first the money claims of the rank-
and-file employees, and his claims will be paid thereafter. Knowing the
predicament of the company, Jones patiently waited for his turn to be
paid. Several demands were made by Jones but ASI just kept on assuring
him that he will be paid his monetary claims. Jones died on August 5,
2002 and failed to receive the same.
On the other hand, the petitioners contend that Jones voluntarily resigned
on October 31, 1997. Thus, Erlindas cause of action has already
prescribed and is forever barred on the ground that under Article 291 of
the Labor Code, all money claims arising from an employer-employee
relationship shall be filed within three (3) years from the time the cause of
action accrues. Since the complaint was filed only on September 27,
2002, or almost five (5) years from the date of the alleged illegal dismissal
of her husband Jones, Erlindas complaint is now barred.
On September 14, 2003, Labor Arbiter Reynaldo V. Abdon rendered a
decision ordering the petitioners to pay Erlinda the amount of
P693,000.00 and US$74,040.00 or its equivalent in peso or amounting to
a total of P4,765,200.00 representing her husbands unpaid salaries, 13th
month pay, and separation pay, and five [percent] (5%) on the said total
award as attorneys fees.
On October 10, 2003, the petitioners filed a notice of appeal with motion
to reduce bond and attached thereto photocopies of the receipts for the
cash bond in the amount of P290,000.00, and appeal fee in the amount of
P170.00.
On January 15, 2004, public respondent NLRC issued an order denying
the petitioners motion to reduce bond and directing the latter to post an
additional bond, and in case the petitioners opted to post a surety bond,
the latter were required to submit a joint declaration, indemnity agreement
5
ESTOPPEL
and
collateral security within ten (10) days from receipt of the said order,
otherwise their appeal shall be dismissed. The pertinent portion of such
order reads:
After a review however of respondents-appellants['] instant motion, We
find that the same does not proffer any valid or justifiable reason that
would warrant a reduction of the appeal bond. Hence, the same must be
denied.
WHEREFORE, respondents-appellants are hereby ordered to post a cash
or surety bond in the amount equivalent to the monetary award of Four
Million Seven Hundred Sixty-Five Thousand and Two Hundred Pesos
(P4,765,200.00) granted in the appealed Decision (less the Two Hundred
and Ninety Thousand Pesos [P290,000.00] cash bond already posted),
and joint declaration, indemnity agreement and collateral security in case
respondents-appellants opted to post a surety bond, as required by Art.
223 of the Labor Code as amended and Section 6, Rule VI of the NLRC
New Rules of Procedure as amended within an unextendible period of ten
(10) calendar days from receipt of this Order; otherwise, the appeal shall
be dismissed for non-perfection thereof.
SO ORDERED.
On February 19, 2004, the petitioners moved for a reconsideration of the
said order. However, the public respondent in its resolution dated March
18, 2004 denied the same and dismissed the appeal of the petitioners,
thus:
The reduction of appeal bond is not a matter of right but rests upon our
sound discretion. Thus, after We denied respondents-appellants['] Motion
to Reduce [B]ond, they should have immediately complied with our 15
January 2004 Order directing them to post an additional cash or surety
bond in the amount equivalent to the judgment award less the cash bond
already posted within the extended period of ten (10) days. In all,
respondents had twenty (20) days, including the ten (10)-day period,
prescribed under Article 223 of the Labor Code and under Section 6, Rule
VI of the NLRC New Rules of Procedure, within which to post a cash or
surety bond. To seek a reconsideration of our 15 January 2004 order is
tantamount to seeking another extension of the period within which to
perfect an appeal, which is however, not allowed under Section 7, Rule VI
of the NLRC Rule. x x x
xxxx
WHEREFORE, premises considered, the Motion for Reconsideration filed
by respondents-appellants is hereby DENIED and the instant appeal
DISMISSED for non-perfection thereof.
SO ORDERED.
On April 22, 2004, the aforesaid resolution became final and executory.
Thus, herein private respondent Erlinda filed a motion for execution.
On May 31, 2004, the petitioners filed an opposition to the said motion for
execution. On June 11, 2004, Labor Arbiter Reynaldo Abdon issued an
order directing the issuance of a writ of execution.[3]
On May 28, 2004, petitioners filed a petition for certiorari under Rule 65 of
the Rules of Court before the CA and prayed for the issuance of a
temporary restraining order (TRO) and a writ of preliminary injunction. On
June 30, 2004, the CA issued a TRO directing the respondents, their
agents, assigns, and all persons acting on their behalf to refrain and/or
cease and desist from executing the Decision dated September 14, 2003
and Resolution dated March 18, 2004 of the Labor Arbiter (LA).
On April 15, 2005, the CA issued the assailed Decision dismissing the
petition. Petitioner filed a motion for reconsideration. On July 12, 2005,
the CA issued the assailed Resolution denying the motion for
reconsideration for lack of merit.
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 OBLIGATIONS AND CONTRACTS CASES
On September 8, 2005, petitioners posted the instant petition presenting
the following grounds in support of their arguments: 1) the cause of action
of respondent has already prescribed; 2) the National Labor Relations
Commission (NLRC) gravely abused its discretion when it dismissed the
appeal of petitioners for failure to post the complete amount of the appeal
bond; and 3) the monetary claim was resolved by the LA with uncertainty.
The Issues
The following are the issues that should be resolved in order to come up
with a just determination of the case:
I. Whether the cause of action of respondents has already prescribed;
II. Whether the posting of the complete amount of the bond in an appeal
from the decision of the LA to the NLRC is an indispensable requirement
for the perfection of the appeal despite the filing of a motion to reduce the
amount of the appeal bond; and
III. Whether there were sufficient bases for the grant of the monetary
award of the LA to the respondent.
The Ruling of the Court
We resolve to deny the petition.
I cases involving monetary awards from the decision of the LA.[11] The
Petitioners aver that the action of the respondents for the recovery of
unpaid wages, separation pay and 13th month pay has already
prescribed since the action was filed almost five years from the time
Jones severed his employment from ASI. Jones filed his resignation on
October 31, 1997, while the complaint before the LA was instituted on
September 29, 2002. Petitioners contend that the three-year prescriptive
period under Article 291[4] of the Labor Code had already set-in, thereby
barring all of respondents money claims arising from their employer-
employee relations.
Based on the findings of facts of the LA, it was ASI which was responsible
for the delay in the institution of the complaint. When Jones filed his
resignation, he immediately asked for the payment of his money claims.
However, the management of ASI promised him that he would be paid
immediately after the claims of the rank-and-file employees had been
paid. Jones relied on this representation. Unfortunately, the promise was
never fulfilled even until the time of Jones death.
In light of these circumstances, we can apply the principle of promissory
estoppel, which is a recognized exception to the three-year prescriptive
period enunciated in Article 291 of the Labor Code.
Promissory estoppel may arise from the making of a promise, even
though without consideration, if it was intended that the promise should
be relied upon, as in fact it was relied upon, and if a refusal to enforce it
would virtually sanction the perpetration of fraud or would result in other
injustice.[5] Promissory estoppel presupposes the existence of a promise
on the part of one against whom estoppel is claimed. The promise must
be plain and unambiguous and sufficiently specific so that the court can
understand the obligation assumed and enforce the promise according to
its terms.[6]
In order to make out a claim of promissory estoppel, a party bears the
burden of establishing the following elements: (1) a promise was
reasonably expected to induce action or forbearance; (2) such promise
did, in fact, induce such action or forbearance; and (3) the party suffered
detriment as a result.[7]
All the requisites of promissory estoppel are present in this case. Jones
relied on the promise of ASI that he would be paid as soon as the claims
of all the rank-and-file employees had been paid. If not for this promise
that he had held on to until the time of his death, we see no reason why
he would delay filing the complaint before the LA. Thus, we find ample
ESTOPPEL
justification not to follow the prescriptive period imposed under Article 291
of the Labor Code. Great injustice will be committed if we will brush aside
the employees claims on a mere technicality, especially when it was
petitioners own action that prevented respondent from interposing the
claims within the required period.[8]
II
Petitioners argue that the NLRC committed grave abuse of discretion in
dismissing their appeal for failure to post the complete amount of the
bond. They assert that they cannot post an appeal bond equivalent to the
monetary award rendered by the LA due to financial incapacity. They say
that strict enforcement of the NLRC Rules of Procedure[9] that the appeal
bond shall be equivalent to the monetary award is oppressive and would
have the effect of depriving petitioners of their right to appeal.[10]
Article 223 of the Labor Code mandates that in case of a judgment of the
LA involving a monetary award, an appeal by the employer to the NLRC
may be perfected only upon the posting of a cash or surety bond issued
by a reputable bonding company duly accredited by the Commission, in
the amount equivalent to the monetary award in the judgment appealed
from.
The posting of a bond is indispensable to the perfection of an appeal in
intention of the lawmakers to make the bond a mandatory requisite for the
perfection of an appeal by the employer is clearly limned in the provision
that an appeal by the employer may be perfected "only upon the posting
of a cash or surety bond." The word "only" makes it perfectly plain that the
lawmakers intended the posting of a cash or surety bond by the employer
to be the essential and exclusive means by which an employer's appeal
may be perfected. The word "may" refers to the perfection of an appeal as
optional on the part of the defeated party, but not to the compulsory
posting of an appeal bond, if he desires to appeal. The meaning and the
intention of the legislature in enacting a statute must be determined from
the language employed; and where there is no ambiguity in the words
used, then there is no room for construction.[12]
The filing of the bond is not only mandatory but also a jurisdictional
requirement that must be complied with in order to confer jurisdiction
upon the NLRC.[13] Non-compliance therewith renders the decision of the
LA final and executory.[14] This requirement is intended to assure the
workers that if they prevail in the case, they will receive the money
judgment in their favor upon the dismissal of the employer's appeal. It is
intended to discourage
employers from using an appeal to delay or evade their obligation to
satisfy their employees' just and lawful claims.[15]
In the instant case, the failure of petitioners to comply with the
requirement of posting a bond equivalent in amount to the monetary
award is fatal to their appeal. Section 6 of the New Rules of Procedure of
the NLRC mandates, among others, that no motion to reduce bond shall
be entertained except on meritorious grounds and upon the posting of a
bond in a reasonable amount in relation to the monetary award. The
NLRC has the full discretion to grant or deny their motion to reduce the
amount of the appeal bond. The finding of the NLRC that petitioners did
not present sufficient justification for the reduction thereof is generally
conclusive upon this Court absent a showing that the denial was tainted
with bad faith.
Furthermore, we would like to reiterate that appeal is not a constitutional
right, but a mere statutory privilege. Thus, parties who seek to avail
themselves of it must comply with the statutes or rules allowing it.
Perfection of an appeal in the manner and within the period permitted by
law is mandatory and jurisdictional. The requirements for perfecting an
appeal must, as a rule, be strictly followed. Such requirements are
considered indispensable interdictions against needless delays and are
necessary for the orderly discharge of the judicial business. Failure to
perfect the appeal renders the judgment of the court final and executory.
Just as a losing party has the privilege to file an appeal within the
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 OBLIGATIONS AND CONTRACTS CASES
prescribed period, so does the winner also have the correlative right to
enjoy the finality of the decision.[16]
III
The propriety of the monetary award of the LA is already binding upon this
Court. As we have repeatedly pointed out, petitioners failure to perfect
their appeal in the manner and period required by the rules makes the
award final and executory. Petitioners stance that there was no sufficient
basis for the award of the payment of withheld wages, separation pay and
13th month pay must fail. Such matters are questions of facts requiring
the presentation of evidence. Findings of facts of administrative and
quasi-judicial bodies, which have acquired expertise on specific matters,
are accorded weight and respect by the Court. They are deemed final and
conclusive, unless compelling reasons are presented for us to digress
therefrom.
WHEREFORE, in view of the foregoing, the petition is DENIED for lack of
merit. The Decision dated April 15, 2005 and the Resolution dated July
12, 2005 of the Court of Appeals in CA-G.R. SP No. 84206 are hereby
AFFIRMED.
SO ORDERED.
G.R. Nos. 159017-18 March 9, 2011
PAULINO S. ASILO, JR., Petitioner,
vs.
THE PEOPLE OF THE PHILIPPINES and Spouses VISITACION AND
CESAR C. BOMBASI, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 159059
VICTORIA BUETA VDA. DE COMENDADOR, IN REPRESENTATION
OF DEMETRIO T. COMENDADOR, Petitioner,
vs.
VISITACION C. BOMBASI AND CESAR C. BOMBASI, Respondents.
DECISION
PEREZ, J.:
At bench are appeals by certiorari1 from the Decision2 of the Fourth
Division of the Sandiganbayan; (1) finding Demetrio T. Comendador3
(Mayor Comendador) and Paulino S. Asilo, Jr.4 guilty beyond reasonable
doubt of violation of Sec. 3(e) of Republic Act No. 3019; (2) dismissing the
cases against accused Alberto S. Angeles;5 (3) ordering the defendants
Municipality of Nagcarlan, Laguna, Demetrio T. Comendador and Paulino
S. Asilo, Jr. to pay the plaintiffs now respondents Visitacion C. Bombasi
(Visitacion) and Cesar C. Bombasi damages; and (4) dismissing the
cases against the spouses Alida and Teddy Coroza6 and Benita and
Isagani Coronado.7
The factual antecedents of the case are:
On 15 March 1978, Private Respondent Visitacions late mother Marciana
Vda. De Coronado (Vda. De Coronado) and the Municipality of
Nagcarlan, Laguna (represented by the then Municipal Mayor Crisostomo
P. Manalang) entered into a lease contract whereby the Municipality
allowed the use and enjoyment of property comprising of a lot and a store
located at the corner of Coronado and E. Fernandez Sts. at Poblacion,
Nagcarlan, Laguna, in favor of the respondents mother for a period of
twenty (20) years beginning on 15 March 1978 until 15 March 1998,
extendible for another 20 years.8
ESTOPPEL
The lease
contract provided that the late Vda. De Coronado could build a firewall on
her rented property which must be at least as high as the store; and in
case of modification of the public market, she or her heir/s would be given
preferential rights.
Visitacion took over the store when her mother died sometime in 1984.9
From then on up to January 1993, Visitacion secured the yearly Mayors
permits.10
Sometime in 1986, a fire razed the public market of Nagcarlan. Upon
Visitacions request for inspection on 15 May 1986, District Engineer
Marcelino B. Gorospe (Engineer Gorospe) of the then Ministry of Public
Works and Highways,11 Regional Office No. IV-A, found that the store of
Visitacion remained intact and stood strong. This finding of Engineer
Gorospe was contested by the Municipality of Nagcarlan.
The store of Visitacion continued to operate after the fire until 15 October
1993.
On 1 September 1993, Visitacion received a letter12 from Mayor
Comendador directing her to demolish her store within five (5) days from
notice. Attached to the letter were copies of Sangguniang Bayan
Resolution No. 15613 dated 30 August 1993 and a Memorandum issued
by Asst. Provincial Prosecutor Marianito Sasondoncillo of Laguna.
The relevant provisos of the Resolution No. 156 states that:
NOW THEREFORE, be it RESOLVED, as it hereby resolved to authorize
Hon. Demetrio T. Comendador to enforce and order the Coronados to
demolish the building constructed on the space previously rented to them
in order to give way for the construction of a new municipal market
building.
RESOLVED FURTHER, to authorize Demetrio T. Comendador, Honorable
Mayor of Nagcarlan to file an Unlawful Detainer Case with damages for
the expenses incurred due to the delay in the completion of the project if
the Coronados continuously resists the order.
On 3 September 1993, Visitacion wrote a reply letter to Mayor
Comendador saying that: (1) the lease contract was still existing and
legally binding; (2) she was willing to vacate the store as long as same
place and area would be given to her in the new public market; and (3) in
case her proposals are not acceptable to Mayor Comendador, for the
latter to just file an unlawful detainer case against her pursuant to
Sangguniang Bayan Resolution No. 156. Pertinent portions of the letter
read:
x x x With all due respect to the resolution of the Municipal Council and
the opinion rendered by the Laguna Asst. Provincial Prosecutor, it is my
considered view, however, arrived at after consultation with my legal
counsel, that our existing lease contract is still legally binding and in full
force and effect. Lest I appear to be defiant, let me reiterate to you and
the council that we are willing to vacate the said building provided that a
new contract is executed granting to us the same space or lot and the
same area. I believe that our proposal is most reasonable and fair under
the circumstance. If you are not amenable to the said proposal, I concur
with the position taken by the Council for you to file the appropriate action
in court for unlawful detainer to enable our court to finally thresh out our
differences.141avvphi1
On 15 September 1993, Asst. Provincial Prosecutor Florencio Buyser
sent a letter to Visitacion ordering her to vacate the portion of the public
market she was occupying within 15 days from her receipt of the letter;
else, a court action will be filed against her.
On 11 October 1993, the Sangguniang Bayan of Nagcarlan, Laguna
issued Resolution No. 183 authorizing Mayor Comendador to demolish
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 OBLIGATIONS AND CONTRACTS CASES
the store being occupied by Visitacion using legal means. The significant
portion of the Resolution reads:
Kung kaya ang Sangguniang Bayan ay buong pagkakaisang IPINASIYA:
Ang pagbibigay kapangyarihan kay Kgg. Demetrio T. Comendador na
ipagiba ang anumang istrakturang nagiging sagabal sa mabilis at maayos
na pagbabangon ng pamilihang bayan.15
On 14 October 1993, Municipal Administrator Paulino S. Asilo, Jr. (Asilo)
also sent a letter16 to Visitacion informing her of the impending demolition
of her store the next day. Within the same day, Visitacion wrote a reply
letter17 to Asilo, alleging that there is no legal right to demolish the store
in the absence of a court order and that the Resolutions did not sanction
the demolition of her store but only the filing of an appropriate unlawful
detainer case against her. She further replied that if the demolition will
take place, appropriate administrative, criminal and civil actions will be
filed against Mayor Comendador, Asilo and all persons who will take part
in the demolition.
On 15 October 1993, Mayor Comendador relying on the strength of
Sangguniang Bayan Resolution Nos. 183 and 156 authorized the
demolition of the store with Asilo and Angeles supervising the work.
Engineer Winston Cabrega (Engineer Cabrega), a licensed civil engineer,
estimated the cost of the demolished property as amounting to
P437,900.0018
On 19 August 1994, Visitacion, together with her husband Cesar Bombasi
(Spouses Bombasi) filed with the Regional Trial Court of San Pablo City,
Laguna a Civil Case19 for damages with preliminary injunction against
the Municipality of Nagcarlan, Laguna, Mayor Demetrio T. Comendador,
Paulino S. Asilo, Jr., and Alberto S. Angeles. The complaint was soon
after amended to include the Spouses Benita and Isagani Coronado and
Spouses Alida and Teddy Coroza as formal defendants because they
were then the occupants of the contested area.
The spouses prayed for the following disposition:
1. RESTRAINING or ENJOINING defendant Municipality and defendant
Municipal Mayor from leasing the premises subject of lease Annex "A"
hereof, part of which is now occupied by PNP Outpost and by the
Municipal Collectors Office, and the equivalent adjacent area thereof, and
to cause the removal of said stalls;
2. UPHOLDING the right of plaintiffs to occupy the equivalent corner area
of the leased areas being now assigned to other persons by defendants
Municipality and/or by defendant Municipal Mayor, and to allow plaintiffs
to construct their stalls thereon;
3. MAKING the injunction permanent, after trial;
4. ORDERING defendants to pay plaintiffs, jointly and severally, the
following
(a) P437,900.00 for loss of building/store and other items therein;
(b) P200,000.00 for exemplary damages;
(c) P200,000.00 for moral damages;
(d) P30,.00 for attorneys fees and P700.00 for every attendance of
counsel in court.
5. GRANTING further reliefs upon plaintiffs as justice and equity may
warrant in the premises.20
Spouses Bombasi, thereafter, filed a criminal complaint21 against Mayor
Comendador, Asilo and Angeles for violation of Sec. 3(e) of Republic Act
No. 3019 otherwise known as the "Anti-Graft and Corrupt Practices Act"
ESTOPPEL
before the
Office of the Ombudsman. On 22 February 1996, an Information22
against Mayor Comendador, Asilo and Angeles was filed, which reads:
That on or about October 15, 1993, at Nagcarlan, Laguna, Philippines,
and within the jurisdiction of this Honorable Court, the above-named
accused, all public officers, accused Demetrio T. Comendador, being then
the Municipal Mayor, accused Paulino S. Asilo, Jr. being then the
Municipal Administrator and accused Alberto S. Angeles being then the
Municipal Planning and Development Coordinator, all of the Municipality
of Nagcarlan, Laguna, committing the crime herein charged in relation to,
while in the performance and taking advantage of their official functions,
conspiring and confederating with each other, and with evident bad faith,
manifest partiality or through gross inexcusable negligence, did then and
there willfully, unlawfully, criminally cause the demolition of a public
market stall leased by the municipal government in favor of one Visitacion
Coronado-Bombasi without legal or justifiable ground therefor, thus,
causing undue injury to the latter in the amount of PESOS: FOUR
HUNDRED THIRTY SEVEN THOUSAND AND NINE HUNDRED ONLY
(P437,900.00).
Upon their arraignments, all the accused entered their separate pleas of
"Not Guilty."
On 4 March 1997, the Sandiganbayan promulgated a Resolution ordering
the consolidation of Civil Case No. SP-4064 (94)23 with Criminal Case
No. 23267 pending before the Third Division pursuant to Section 4,
Presidential Decree No. 1606, which pertinently reads:
Any provision of law or Rules of Court to the contrary notwithstanding, the
criminal action and the corresponding civil action for the recovery of civil
liability arising from the offense charged shall at all times be
simultaneously instituted with, and jointly determined in the same
proceeding by the Sandiganbayan or the appropriate courts, the filing of
the criminal action being deemed to necessarily carry with it the filing of
the civil action, and no right to reserve the filing of such civil action
separately from the criminal action shall be recognized; Provided,
however, that where the civil action had heretofore been filed separately
but judgment therein has not yet been rendered, and the criminal case is
hereafter filed with the Sandiganbayan or the appropriate court, said civil
action shall be transferred to the Sandiganbayan or the appropriate court
as the case may be, for consolidation and joint determination with the
criminal action, otherwise the separate civil action shall be deemed
abandoned.24
During the pendency of the case, Alberto S. Angeles died on 16
November 1997. Accordingly, the counsel of Angeles filed a motion to
drop accused Angeles. On 22 September 1999, the Third Division of
Sandiganbayan issued an Order25 DISMISSING the case against
Angeles. The germane portion of the Order reads:
In view of the submission of the death certificate of accused/defendant
Alberto S. Angeles, and there being no objection on the part of the Public
Prosecutor, cases against deceased accused/defendant Angeles only, are
hereby DISMISSED.
The death of Mayor Comendador followed on 17 September 2002. As a
result, the counsel of the late Mayor filed on 3 March 2003 a
Manifestation before the Sandiganbayan informing the court of the fact of
Mayor Comendadors death.
On 28 April 2003, the Sandiganbayan rendered a decision, the dispositive
portion of which reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered as
follows:
In Criminal Case No. 23267, the court finds accused Demetrio T.
Comendador and Paulino S. Asilo, Jr. guilty beyond reasonable doubt of
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 OBLIGATIONS AND CONTRACTS CASES
violation of Sec. 3(e) of Republic Act. No. 3019 as amended, and in the
absence of aggravating and mitigating circumstances, applying the
Indeterminate Sentence Law, said accused are sentenced to suffer the
indeterminate penalty of 6 years and 2 months imprisonment as minimum
to 10 years and 1 day as maximum.
The order of the court dated September 22, 1999 dismissing the cases
against the accused Alberto S. Angeles, who died on November 16, 1997
is hereby reiterated.
In Civil Case No. 4064, defendants Municipality of Nagcarlan, Laguna,
Demetrio T. Comendador and Paulino S. Asilo, Jr. are hereby ordered
jointly and severally to pay plaintiff P437,900.00 as actual damages for
the destruction of the store; P100,000.00 as moral damages; P30,000.00
as attorneys fees, and to pay the cost of the suit. The prayer for
exemplary damages is denied as the court found no aggravating
circumstances in the commission of the crime.
In view of this courts finding that the defendant spouses Alida and Teddy
Coroza are lawful occupants of the subject market stalls from which they
cannot be validly ejected without just cause, the complaint against them is
dismissed. The complaint against defendant spouses Benita and Isagani
Coronado is likewise dismissed, it appearing that they are similarly
situated as the spouses Coroza. Meanwhile, plaintiff Visitacion Bombasi is
given the option to accept market space being given to her by the
municipality, subject to her payment of the appropriate rental and permit
fees.
The prayer for injunctive relief is denied, the same having become moot
and academic.
The compulsory counterclaim of defendant Comendador is likewise
denied for lack of merit.26
Within the same day, Asilo, through his counsel, filed a Motion for
Reconsideration27 of the Decision alleging that there was only an error of
judgment when he complied with and implemented the order of his
superior, Mayor Comendador. He likewise alleged that there is no liability
when a public officer commits in good faith an error of judgment. The
Sandiganbayan, on its Resolution28 dated 21 July 2003 denied the
Motion for Reconsideration on the ground that good faith cannot be
argued to support his cause in the face of the courts finding that bad faith
attended the commission of the offense charged. The Court further
explained that the invocation of compliance with an order of a superior is
of no moment for the "demolition [order] cannot be described as having
the semblance of legality inasmuch as it was issued without the authority
and therefore the same was patently illegal."29
The counsel for the late Mayor also filed its Motion for Reconsideration30
on 12 May 2003 alleging that the death of the late Mayor had totally
extinguished both his criminal and civil liability. The Sandiganbayan on its
Resolution31 granted the Motion insofar as the extinction of the criminal
liability is concerned and denied the extinction of the civil liability holding
that the civil action is an independent civil action.
Hence, these Petitions for Review on Certiorari.32
Petitioner Asilo argues that in order to sustain conviction under Sec. 3(e)
of Republic Act No. 3019 or "The Anti-Graft and Corrupt Practices Act,"
the public officer must have acted with manifest partiality, evident bad
faith or gross negligence. He also contended that he and his co-accused
acted in good faith in the demolition of the market and, thereby, no liability
was incurred.
On the other hand, Petitioner Victoria argues that the death of Mayor
Comendador prior to the promulgation of the decision extinguished NOT
ONLY Mayor Comendadors criminal liability but also his civil liability. She
also asserted good faith on the part of the accused public officials when
they performed the demolition of the market stall. Lastly, she contended
9
ESTOPPEL
that
assuming arguendo that there was indeed liability on the part of the
accused public officials, the actual amount of damages being claimed by
the Spouses Bombasi has no basis and was not duly substantiated.
Liability of the accused public officials
under Republic Act No. 3019
Section 3(e) of Republic Act No. 3019 provides:
In addition to acts or omissions of public officers already penalized by
existing law, the following shall constitute corrupt practices of any public
officer and are hereby declared to be unlawful:
xxxx
(e) Causing any undue injury to any party, including the Government, or
giving any private party any unwarranted benefits, advantage or
preference in the discharge of his official, administrative or judicial
functions through manifest partiality, evident bad faith or gross
inexcusable negligence. This provision shall apply to officers and
employees of offices or government corporations charged with the grant
of licenses or permits or other concessions.
The elements of the offense are as follows: (1) that the accused are public
officers or private persons charged in conspiracy with them; (2) that said
public officers commit the prohibited acts during the performance of their
official duties or in relation to their public positions; (3) that they caused
undue injury to any party, whether the Government or a private party; (4)
OR that such injury is caused by giving unwarranted benefits, advantage
or preference to the other party; and (5) that the public officers have acted
with manifest partiality, evident bad faith or gross inexcusable
negligence.33
We sustain the Sandiganbayan in its finding of criminal and civil liabilities
against petitioner Asilo and petitioner Mayor Comendador as here
represented by his widow Victoria Bueta.
We agree with the Sandiganbayan that it is undisputable that the first two
requisites of the criminal offense were present at the time of the
commission of the complained acts and that, as to the remaining
elements, there is sufficient amount of evidence to establish that there
was an undue injury suffered on the part of the Spouses Bombasi and
that the public officials concerned acted with evident bad faith when they
performed the demolition of the market stall.
Causing undue injury to any party, including the government, could only
mean actual injury or damage which must be established by evidence.34
In jurisprudence, "undue injury" is consistently interpreted as "actual."
Undue has been defined as "more than necessary, not proper, [or] illegal;"
and injury as "any wrong or damage done to another, either in his person,
rights, reputation or property [that is, the] invasion of any legally protected
interest of another." Actual damage, in the context of these definitions, is
akin to that in civil law.35
It is evident from the records, as correctly observed by the
Sandiganbayan, that Asilo and Mayor Comendador as accused below did
not deny that there was indeed damage caused the Spouses Bombasi on
account of the demolition. We affirm the finding that:
xxx. Clearly, the demolition of plaintiffs store was carried out without a
court order, and notwithstanding a restraining order which the plaintiff was
able to obtain. The demolition was done in the exercise of official duties
which apparently was attended by evident bad faith, manifest partiality or
gross inexcusable negligence as there is nothing in the two (2) resolutions
which gave the herein accused the authority to demolish plaintiffs store.
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 OBLIGATIONS AND CONTRACTS CASES
"Evident bad faith" connotes not only bad judgment but also palpably and
patently fraudulent and dishonest purpose to do moral obliquity or
conscious wrongdoing for some perverse motive or ill will.36 [It]
contemplates a state of mind affirmatively operating with furtive design or
with some motive or self-interest or ill will or for ulterior purposes.37
It is quite evident in the case at bar that the accused public officials
committed bad faith in performing the demolition.
First, there can be no merit in the contention that respondents structure is
a public nuisance. The abatement of a nuisance without judicial
proceedings is possible if it is nuisance per se.38 Nuisance per se is that
which is nuisance at all times and under any circumstance, regardless of
location and surroundings.39 In this case, the market stall cannot be
considered as a nuisance per se because as found out by the Court, the
buildings had not been affected by the 1986 fire. This finding was certified
to by Supervising Civil Engineer Wilfredo A. Sambrano of the Laguna
District Engineer Office.40 To quote:
An inspection has been made on the building (a commercial
establishment) cited above and found out the following:
1. It is a two-storey building, sketch of which is attached.
2. It is located within the market site.
3. The building has not been affected by the recent fire.
4. The concrete wall[s] does not even show signs of being exposed to
fire.41
Second, the Sangguniang Bayan resolutions are not enough to justify
demolition. Unlike its predecessor law,42 the present Local Government
Code43 does not expressly provide for the abatement of nuisance.44 And
even assuming that the power to abate nuisance is provided for by the
present code, the accused public officials were under the facts of this
case, still devoid of any power to demolish the store. A closer look at the
contested resolutions reveals that Mayor Comendador was only
authorized to file an unlawful detainer case in case of resistance to obey
the order or to demolish the building using legal means. Clearly, the act of
demolition without legal order in this case was not among those provided
by the resolutions, as indeed, it is a legally impossible provision.
Furthermore, the Municipality of Nagcarlan, Laguna, as represented by
the then Mayor Comendador, was placed in estoppel after it granted
yearly business permits45 in favor of the Spouses Bombasi. Art. 1431 of
the New Civil Code provides that, through estoppel, an admission or
representation is rendered conclusive upon the person making it, and
cannot be denied or disproved as against the person relying thereon. The
representation made by the municipality that the Spouses Bombasi had
the right to continuously operate its store binds the municipality. It is
utterly unjust for the Municipality to receive the benefits of the store
operation and later on claim the illegality of the business.
The bad faith of the petitioners completes the elements of the criminal
offense of violation of Sec. 3(e) of Republic Act No. 3019. The same bad
faith serves as the source of the civil liability of Asilo, Angeles, and Mayor
Comendador.
It must be noted that when Angeles died on 16 November 1997, a motion
to drop him as an accused was filed by his counsel with no objection on
the part of the prosecution. The Sandiganbayan acted favorably on the
motion and issued an Order dismissing all the cases filed against
Angeles. On the other hand, when Mayor Comendador died and an
adverse decision was rendered against him which resulted in the filing of
a motion for reconsideration by Mayor Comendadors counsel, the
prosecution opposed the Motion specifying the ground that the civil
liability did not arise from delict, hence, survived the death of the accused.
10
ESTOPPEL
The
Sandiganbayan upheld the opposition of the prosecution which
disposition was not appealed.
We note, first off, that the death of Angeles and of Mayor Comendador
during the pendency of the case extinguished their criminal liabilities.
We now hold, as did the Sandiganbayan that the civil liability of Mayor
Comendador survived his death; and that of Angeles could have likewise
survived had it not been for the fact that the resolution of the
Sandiganbayan that his death extinguished the civil liability was not
questioned and lapsed into finality.
We laid down the following guidelines in People v. Bayotas:46
Death of the accused pending appeal of his conviction extinguishes his
criminal liability as well as the civil liability based solely thereon. As opined
by Justice Regalado, in this regard, "the death of the accused prior to final
judgment terminates his criminal liability and only the civil liability directly
arising from and based solely on the offense committed, i.e., civil liability
ex delicto in senso strictiore."
Corollarily, the claim for civil liability survives notwithstanding the death of
(the) accused, if the same may also be predicated on a source of
obligation other than delict. Article 1157 of the Civil Code enumerates
these other sources of obligation from which the civil liability may arise as
a result of the same act or omission:
a) Law
b) Contracts
c) Quasi-contracts
d) Acts or omissions punished by law; and
e) Quasi-delicts. (Emphasis ours)
Where the civil liability survives, as explained [above], an action for
recovery therefore may be pursued but only by way of filing a separate
civil action47 and subject to Section 1, Rule 111 of the 1985 Rules on
Criminal Procedure as amended. This separate civil action may be
enforced either against the executor/administrator or the estate of the
accused, depending on the source of obligation upon which the same is
based as explained above.
Finally, the private offended party need not fear a forfeiture of his right to
file this separate civil action by prescription, in cases where during the
prosecution of the criminal action and prior to its extinction, the private-
offended party instituted together therewith the civil action. In such case,
the statute of limitations on the civil liability is deemed interrupted during
the pendency of the criminal case, conformably with provisions of Article
1155 of the New Civil Code, which should thereby avoid any
apprehension on a possible privation of right by prescription.
Upon death of the accused pending appeal of his conviction, the criminal
action is extinguished inasmuch as there is no longer a defendant to
stand as the accused; the civil action instituted therein for recovery of civil
liability ex delicto is ipso facto extinguished, grounded as it is on the
criminal.48
The New Civil Code provisions under the Chapter, Human Relations,
were cited by the prosecution to substantiate its argument that the civil
action based therein is an independent one, thus, will stand despite the
death of the accused during the pendency of the case.
On the other hand, the defense invoked Section 4 of Presidential Decree
No. 1606, as amended by Republic Act No. 8249, in support of its
argument that the civil action was dependent upon the criminal action,
FCTalonMD | LLB-1 Estrellado
 OBLIGATIONS AND CONTRACTS CASES
thus, was extinguished upon the death of the accused. The law provides
that:
Any provision of law or the Rules of Court to the contrary notwithstanding,
the criminal action and the corresponding civil action for the recovery of
civil liability arising from the offense charged shall at all times be
simultaneously instituted with, and jointly determined in the same
proceeding by, the Sandiganbayan, the filing of the criminal action being
deemed to necessarily carry with it the filing of the civil action, and no
right to reserve the filing of such action shall be recognized. (Emphasis
ours)
We agree with the prosecution.
Death of Mayor Comendador during the pendency of the case could have
extinguished the civil liability if the same arose directly from the crime
committed. However, in this case, the civil liability is based on another
source of obligation, the law on human relations.49 The pertinent articles
follow:
Art. 31 of the Civil Code states:
When the civil action is based on an obligation not arising from the act or
omission complained of as a felony, such civil action may proceed
independently of the criminal proceedings and regardless of the result of
the latter.
And, Art. 32(6) states:
Any public officer or employee, or any private individual, who directly or
indirectly obstructs, defeats, violates or in any manner impedes or impairs
any of the following rights and liberties of another person shall be liable to
the latter for damages:
(6) The right against deprivation of property without due process of law;
xxxx
In any of the cases referred to in this article, whether or not the
defendant's act or omission constitutes a criminal offense, the aggrieved
party has a right to commence an entirely separate and distinct civil action
for damages, and for other relief. Such civil action shall proceed
independently of any criminal prosecution (if the latter be instituted), and
may be proved by a preponderance of evidence.
As held in Aberca v. Ver:
It is obvious that the purpose of the above codal provision [Art. 32 of the
New Civil Code] is to provide a sanction to the deeply cherished rights
and freedoms enshrined in the Constitution. Its message is clear; no man
may seek to violate those sacred rights with impunity. x x x.50
Indeed, the basic facts of this case point squarely to the applicability of
the law on human relations. First, the complaint for civil liability was filed
way AHEAD of the information on the Anti-Graft Law. And, the complaint
for damages specifically invoked defendant Mayor Comendadors
violation of plaintiffs right to due process. Thus:
xxxx
In causing or doing the forcible demolition of the store in question, the
individual natural defendants did not only act with grave abuse of
authority but usurped a power which belongs to our courts of justice; such
actuations were done with malice or in bad faith and constitute an
invasion of the property rights of plaintiff(s) without due process of law.
xxxx
11
ESTOPPEL
The Court
is in one with the prosecution that there was a violation of the right to
private property of the Spouses Bombasi. The accused public officials
should have accorded the spouses the due process of law guaranteed by
the Constitution and New Civil Code. The Sangguniang Bayan
Resolutions as asserted by the defense will not, as already shown, justify
demolition of the store without court order. This Court in a number of
decisions51 held that even if there is already a writ of execution, there
must still be a need for a special order for the purpose of demolition
issued by the court before the officer in charge can destroy, demolish or
remove improvements over the contested property.52 The pertinent
provisions are the following:
Before the removal of an improvement must take place, there must be a
special order, hearing and reasonable notice to remove. Section 10(d),
Rule 39 of the Rules of Court provides:
(d) Removal of improvements on property subject of execution. When
the property subject of execution contains improvements constructed or
planted by the judgment obligor or his agent, the officer shall not destroy,
demolish or remove said improvements except upon special order of the
court, issued upon motion of the judgment obligee after due hearing and
after the former has failed to remove the same within a reasonable time
fixed by the court.
The above-stated rule is clear and needs no interpretation. If demolition is
necessary, there must be a hearing on the motion filed and with due
notices to the parties for the issuance of a special order of demolition.53
This special need for a court order even if an ejectment case has
successfully been litigated, underscores the independent basis for civil
liability, in this case, where no case was even filed by the municipality.
The requirement of a special order of demolition is based on the
rudiments of justice and fair play. It frowns upon arbitrariness and
oppressive conduct in the execution of an otherwise legitimate act. It is an
amplification of the provision of the Civil Code that every person must, in
the exercise of his rights and in the performance of his duties, act with
justice, give everyone his due, and observe honesty and good faith.54
Notably, the fact that a separate civil action precisely based on due
process violations was filed even ahead of the criminal case, is
complemented by the fact that the deceased plaintiff Comendador was
substituted by his widow, herein petitioner Victoria who specified in her
petition that she has "substituted him as petitioner in the above captioned
case." Section 1, Rule III of the 1985 Rules in Criminal Procedure
mentioned in Bayotas is, therefore, not applicable. Truly, the
Sandiganbayan was correct when it maintained the separate docketing of
the civil and criminal cases before it although their consolidation was
erroneously based on Section 4 of Presidential Decree No. 1606 which
deals with civil liability "arising from the offense charged."
We must, however, correct the amount of damages awarded to the
Spouses Bombasi.
To seek recovery of actual damages, it is necessary to prove the actual
amount of loss with a reasonable degree of certainty, premised upon
competent proof and on the best evidence obtainable.55 In this case, the
Court finds that the only evidence presented to prove the actual damages
incurred was the itemized list of damaged and lost items56 prepared by
Engineer Cabrega, an engineer commissioned by the Spouses Bombasi
to estimate the costs.
As held by this Court in Marikina Auto Line Transport Corporation v.
People of the Philippines,57
x x x [W]e agree with the contention of petitioners that respondents failed
to prove that the damages to the terrace caused by the incident amounted
to P100,000.00. The only evidence adduced by respondents to prove
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 OBLIGATIONS AND CONTRACTS CASES
actual damages claimed by private respondent were the summary liability
computation of damage made by Engr. Jesus R. Regal, Jr. amounting to survives. The Municipality of Nagcarlan, Paulino Asilo and Demetrio T.
P171,088.46 and the receipt issued by the BB Construction and Steel Comendador, as substituted by Victoria Bueta Vda. De Comendador, are
Fabricator to private respondent for P35,000.00 representing cost for hereby declared solidarily liable to the Spouses Bombasi for temperate
carpentry works, masonry, welding, and electrical works. Respondents damages in the amount of P200,000.00 and moral damages in the
failed to present Regal to testify on his estimation. In its five-page amount of P100,000.00.
decision, the trial court awarded P150,000.00 as actual damages to
private respondent but failed to state the factual basis for such award. Costs against the petitioners-appellants.
Indeed, the trial court merely declared in the decretal portion of its
decision that the "sum of P150,000.00 as reasonable compensation SO ORDERED.
sustained by plaintiff for her damaged apartment." The appellate court, for
its part, failed to explain how it arrived at the amount of P100,000.00 in its PRISMA CONSTRUCTION & DEVELOPMENT CORPORATION and
three-page decision. Thus, the appellate court merely declared: ROGELIO S. PANTALEON,
Petitioners,
With respect to the civil liability of the appellants, they contend that there vs
was no urgent necessity to completely demolish the apartment in question ARTHUR F. MENCHAVEZ ,
considering the nature of the damages sustained as a result of the Respondent.
accident. Consequently, appellants continue, the award of P150,000.00
as compensation sustained by the plaintiff-appellee for her damaged G.R. No. 160545
apartment is an unconscionable amount.

Further, in one case,58 this Court held that the amount claimed by the Present:
respondent-claimants witness as to the actual amount of damages
"should be admitted with extreme caution considering that, because it was *NACHURA, J.,
a bare assertion, it should be supported by independent evidence." The BRION, Acting Chairperson,
Court further said that whatever claim the respondent witness would DEL CASTILLO,
allege must be appreciated in consideration of his particular self- ABAD, and
interest.59 There must still be a need for the examination of the PEREZ, JJ.
documentary evidence presented by the claimants to support its claim Promulgated:
with regard to the actual amount of damages.
March 9, 2010
The price quotation made by Engineer Cabrega presented as an x------------------------------------------------------------------------------------------x
exhibit60 partakes of the nature of hearsay evidence considering that the DECISION
person who issued them was not presented as a witness.61 Any
evidence, whether oral or documentary, is hearsay if its probative value is BRION, J.:
not based on the personal knowledge of the witness but on the
knowledge of another person who is not on the witness stand. Hearsay We resolve in this Decision the petition for review on certiorari[1] filed by
evidence, whether objected to or not, has no probative value unless the petitioners Prisma Construction & Development Corporation (PRISMA)
proponent can show that the evidence falls within the exceptions to the and Rogelio S. Pantaleon (Pantaleon) (collectively, petitioners) who seek
hearsay evidence rule.62 Further, exhibits do not fall under any of the to reverse and set aside the Decision[2] dated May 5, 2003 and the
exceptions provided under Sections 37 to 47 of Rule 130 of the Rules of Resolution[3] dated October 22, 2003 of the Former Ninth Division of the
Court. Court of Appeals (CA) in CA-G.R. CV No. 69627. The assailed CA
Decision affirmed the Decision of the Regional Trial Court (RTC), Branch
Though there is no sufficient evidence to award the actual damages 73, Antipolo City in Civil Case No. 97-4552 that held the petitioners liable
claimed, this Court grants temperate damages for P200,000.00 in view of for payment of P3,526,117.00 to respondent Arthur F. Menchavez
the loss suffered by the Spouses Bombasi. Temperate damages are (respondent), but modified the interest rate from 4% per month to 12%
awarded in accordance with Art. 2224 of the New Civil Code when the per annum, computed from the filing of the complaint to full payment. The
court finds that some pecuniary loss has been suffered but its amount assailed CA Resolution denied the petitioners Motion for Reconsideration.
cannot, from the nature of the case, be proven with certainty. The amount
of temperate or moderated damages is usually left to the discretion of the FACTUAL BACKGROUND
courts but the same should be reasonable, bearing in mind that the
temperate damages should be more than nominal but less than The facts of the case, gathered from the records, are briefly summarized
compensatory.63 Without a doubt, the Spouses Bombasi suffered some below.
form of pecuniary loss in the impairment of their store. Based on the
record of the case,64 the demolished store was housed on a two-story On December 8, 1993, Pantaleon, the President and Chairman of the
building located at the markets commercial area and its concrete walls Board of PRISMA, obtained a P1,000,000.00[4] loan from the respondent,
remained strong and not affected by the fire. However, due to the failure with a monthly interest of P40,000.00 payable for six months, or a total
of the Spouses Bombasi to prove the exact amount of damage in obligation of P1,240,000.00 to be paid within six (6) months,[5] under the
accordance with the Rules of Evidence,65 this court finds that following schedule of payments:
P200,000.00 is the amount just and reasonable under the circumstances.
January 8, 1994 . P40,000.00
WHEREFORE, the instant appeal is DENIED. Accordingly, the Decision of February 8, 1994 ... P40,000.00
the Sandiganbayan dated 28 April 2003 is hereby AFFIRMED WITH March 8, 1994 ... P40,000.00
MODIFICATION. The Court affirms the decision finding the accused April 8, 1994 . P40,000.00
Paulino S. Asilo, Jr. and Demetrio T. Comendador guilty of violating May 8, 1994 .. P40,000.00
Section 3(e) of Republic Act No. 3019. We declare the finality of the June 8, 1994 P1,040,000.00[6]
dismissal of both the criminal and civil cases against Alberto S. Angeles Total P1,240,000.00
as the same was not appealed. In view of the death of Demetrio T. To secure the payment of the loan, Pantaleon issued a promissory note[7]
Comendador pending trial, his criminal liability is extinguished; but his civil that states:

12

ESTOPPEL FCTalonMD | LLB-1 Estrellado

 OBLIGATIONS AND CONTRACTS CASES
I, Rogelio S. Pantaleon, hereby acknowledge the receipt of ONE MILLION
TWO HUNDRED FORTY THOUSAND PESOS (P1,240,000), Philippine
Currency, from Mr. Arthur F. Menchavez, representing a six-month loan
payable according to the following schedule:
January 8, 1994 . P40,000.00
February 8, 1994 ... P40,000.00
March 8, 1994 ... P40,000.00
April 8, 1994 . P40,000.00
May 8, 1994 .. P40,000.00
June 8, 1994 P1,040,000.00
The checks corresponding to the above amounts are hereby
acknowledged.[8]
and six (6) postdated checks corresponding to the schedule of payments.
Pantaleon signed the promissory note in his personal capacity,[9] and as
duly authorized by the Board of Directors of PRISMA.[10] The petitioners
failed to completely pay the loan within the stipulated six (6)-month
period.
From September 8, 1994 to January 4, 1997, the petitioners paid the
following amounts to the respondent:
September 8, 1994 P320,000.00
October 8, 1995.P600,000.00
November 8, 1995.....P158,772.00
January 4, 1997 P30,000.00[11]
As of January 4, 1997, the petitioners had already paid a total of
P1,108,772.00. However, the respondent found that the petitioners still
had an outstanding balance of P1,364,151.00 as of January 4, 1997, to
which it applied a 4% monthly interest.[12] Thus, on August 28, 1997, the
respondent filed a complaint for sum of money with the RTC to enforce
the unpaid balance, plus 4% monthly interest, P30,000.00 in attorneys
fees, P1,000.00 per court appearance and costs of suit.[13]
In their Answer dated October 6, 1998, the petitioners admitted the loan of
P1,240,000.00, but denied the stipulation on the 4% monthly interest,
arguing that the interest was not provided in the promissory note.
Pantaleon also denied that he made himself personally liable and that he
made representations that the loan would be repaid within six (6) months.
[14]
THE RTC RULING
The RTC rendered a Decision on October 27, 2000 finding that the
respondent issued a check for P1,000,000.00 in favor of the petitioners
for a loan that would earn an interest of 4% or P40,000.00 per month, or a
total of P240,000.00 for a 6-month period. It noted that the petitioners
made several payments amounting to P1,228,772.00, but they were still
indebted to the respondent for P3,526,117.00 as of February 11,[15] 1999
after considering the 4% monthly interest. The RTC observed that
PRISMA was a one-man corporation of Pantaleon and used this
circumstance to justify the piercing of the veil of corporate fiction. Thus,
the RTC ordered the petitioners to jointly and severally pay the
respondent the amount of P3,526,117.00 plus 4% per month interest from
February 11, 1999 until fully paid.[16]
The petitioners elevated the case to the CA via an ordinary appeal under
Rule 41 of the Rules of Court, insisting that there was no express
stipulation on the 4% monthly interest.
THE CA RULING
The CA decided the appeal on May 5, 2003. The CA found that the parties
agreed to a 4% monthly interest principally based on the board resolution
that authorized Pantaleon to transact a loan with an approved interest of
13
ESTOPPEL
not more
than 4% per month. The appellate court, however, noted that the interest
of 4% per month, or 48% per annum, was unreasonable and should be
reduced to 12% per annum. The CA affirmed the RTCs finding that
PRISMA was a mere instrumentality of Pantaleon that justified the
piercing of the veil of corporate fiction. Thus, the CA modified the RTC
Decision by imposing a 12% per annum interest, computed from the filing
of the complaint until finality of judgment, and thereafter, 12% from finality
until fully paid.[17]
After the CA's denial[18] of their motion for reconsideration,[19] the
petitioners filed the present petition for review on certiorari under Rule 45
of the Rules of Court.
THE PETITION
The petitioners submit that the CA mistakenly relied on their board
resolution to conclude that the parties agreed to a 4% monthly interest
because the board resolution was not an evidence of a loan or
forbearance of money, but merely an authorization for Pantaleon to
perform certain acts, including the power to enter into a contract of loan.
The expressed mandate of Article 1956 of the Civil Code is that interest
due should be stipulated in writing, and no such stipulation exists. Even
assuming that the loan is subject to 4% monthly interest, the interest
covers the six (6)-month period only and cannot be interpreted to apply
beyond it. The petitioners also point out the glaring inconsistency in the
CA Decision, which reduced the interest from 4% per month or 48% per
annum to 12% per annum, but failed to consider that the amount of
P3,526,117.00 that the RTC ordered them to pay includes the
compounded 4% monthly interest.
THE CASE FOR THE RESPONDENT
The respondent counters that the CA correctly ruled that the loan is
subject to a 4% monthly interest because the board resolution is attached
to, and an integral part of, the promissory note based on which the
petitioners obtained the loan. The respondent further contends that the
petitioners are estopped from assailing the 4% monthly interest, since
they agreed to pay the 4% monthly interest on the principal amount under
the promissory note and the board resolution.
THE ISSUE
The core issue boils down to whether the parties agreed to the 4%
monthly interest on the loan. If so, does the rate of interest apply to the 6-
month payment period only or until full payment of the loan?
OUR RULING
We find the petition meritorious.
Interest due should be stipulated in writing; otherwise, 12% per annum
Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.[20] When
the terms of a contract are clear and leave no doubt as to the intention of
the contracting parties, the literal meaning of its stipulations governs.[21]
In such cases, courts have no authority to alter the contract by
construction or to make a new contract for the parties; a court's duty is
confined to the interpretation of the contract the parties made for
themselves without regard to its wisdom or folly, as the court cannot
supply material stipulations or read into the contract words the contract
does not contain.[22] It is only when the contract is vague and ambiguous
that courts are permitted to resort to the interpretation of its terms to
determine the parties intent.
In the present case, the respondent issued a check for P1,000,000.00.
[23] In turn, Pantaleon, in his personal capacity and as authorized by the
Board, executed the promissory note quoted above. Thus, the
P1,000,000.00 loan shall be payable within six (6) months, or from
FCTalonMD | LLB-1 Estrellado
 OBLIGATIONS AND CONTRACTS CASES
January 8, 1994 up to June 8, 1994. During this period, the loan shall
earn an interest of P40,000.00 per month, for a total obligation of
P1,240,000.00 for the six-month period. We note that this agreed sum can
be computed at 4% interest per month, but no such rate of interest was
stipulated in the promissory note; rather a fixed sum equivalent to this rate
was agreed upon.
Article 1956 of the Civil Code specifically mandates that no interest shall
be due unless it has been expressly stipulated in writing. Under this
provision, the payment of interest in loans or forbearance of money is
allowed only if: (1) there was an express stipulation for the payment of
interest; and (2) the agreement for the payment of interest was reduced in
writing. The concurrence of the two conditions is required for the payment
of interest at a stipulated rate. Thus, we held in Tan v. Valdehueza[24] and
Ching v. Nicdao[25] that collection of interest without any stipulation in
writing is prohibited by law.
Applying this provision, we find that the interest of P40,000.00 per month
corresponds only to the six (6)-month period of the loan, or from January
8, 1994 to June 8, 1994, as agreed upon by the parties in the promissory
note. Thereafter, the interest on the loan should be at the legal interest
rate of 12% per annum, consistent with our ruling in Eastern Shipping
Lines, Inc. v. Court of Appeals:[26]
When the obligation is breached, and it consists in the payment of a sum
of money, i.e., a loan or forbearance of money, the interest due should be
that which may have been stipulated in writing. Furthermore, the interest
due shall itself earn legal interest from the time it is judicially demanded.
In the absence of stipulation, the rate of interest shall be 12% per annum
to be computed from default, i.e., from judicial or extrajudicial demand
under and subject to the provisions of Article 1169 of the Civil Code.
(Emphasis supplied)
We reiterated this ruling in Security Bank and Trust Co. v. RTC-Makati, Br.
61,[27] Sulit v. Court of Appeals,[28] Crismina Garments, Inc. v. Court of
Appeals,[29] Eastern Assurance and Surety Corporation v. Court of
Appeals,[30] Sps. Catungal v. Hao,[31] Yong v. Tiu,[32] and Sps. Barrera
v. Sps. Lorenzo.[33] Thus, the RTC and the CA misappreciated the facts
of the case; they erred in finding that the parties agreed to a 4% interest,
compounded by the application of this interest beyond the promissory
notes six (6)-month period. The facts show that the parties agreed to the
payment of a specific sum of money of P40,000.00 per month for six
months, not to a 4% rate of interest payable within a six (6)-month period.
Medel v. Court of Appeals not applicable
The CA misapplied Medel v. Court of Appeals[34] in finding that a 4%
interest per month was unconscionable.
In Medel, the debtors in a P500,000.00 loan were required to pay an
interest of 5.5% per month, a service charge of 2% per annum, and a
penalty charge of 1% per month, plus attorneys fee equivalent to 25% of
the amount due, until the loan is fully paid. Taken in conjunction with the
stipulated service charge and penalty, we found the interest rate of 5.5%
to be excessive, iniquitous, unconscionable, exorbitant and hence,
contrary to morals, thereby rendering the stipulation null and void.
Applying Medel, we invalidated and reduced the stipulated interest in
Spouses Solangon v. Salazar[35] of 6% per month or 72% per annum
interest on a P60,000.00 loan; in Ruiz v. Court of Appeals,[36] of 3% per
month or 36% per annum interest on a P3,000,000.00 loan; in Imperial v.
Jaucian,[37] of 16% per month or 192% per annum interest on a
P320,000.00 loan; in Arrofo v. Quio,[38] of 7% interest per month or 84%
per annum interest on a P15,000.00 loan; in Bulos, Jr. v. Yasuma,[39] of
4% per month or 48% per annum interest on a P2,500,000.00 loan; and in
Chua v. Timan,[40] of 7% and 5% per month for loans totalling
P964,000.00. We note that in all these cases, the terms of the loans were
open-ended; the stipulated interest rates were applied for an indefinite
period.
14
ESTOPPEL
Medel
finds no application in the present case where no other stipulation exists
for the payment of any extra amount except a specific sum of P40,000.00
per month on the principal of a loan payable within six months.
Additionally, no issue on the excessiveness of the stipulated amount of
P40,000.00 per month was ever put in issue by the petitioners;[41] they
only assailed the application of a 4% interest rate, since it was not agreed
upon.
It is a familiar doctrine in obligations and contracts that the parties are
bound by the stipulations, clauses, terms and conditions they have
agreed to, which is the law between them, the only limitation being that
these stipulations, clauses, terms and conditions are not contrary to law,
morals, public order or public policy.[42] The payment of the specific sum
of money of P40,000.00 per month was voluntarily agreed upon by the
petitioners and the respondent. There is nothing from the records and, in
fact, there is no allegation showing that petitioners were victims of fraud
when they entered into the agreement with the respondent.
Therefore, as agreed by the parties, the loan of P1,000,000.00 shall earn
P40,000.00 per month for a period of six (6) months, or from December 8,
1993 to June 8, 1994, for a total principal and interest amount of
P1,240,000.00. Thereafter, interest at the rate of 12% per annum shall
apply. The amounts already paid by the petitioners during the pendency of
the suit, amounting to P1,228,772.00 as of February 12, 1999,[43] should
be deducted from the total amount due, computed as indicated above. We
remand the case to the trial court for the actual computation of the total
amount due.
Doctrine of Estoppel not applicable
The respondent submits that the petitioners are estopped from disputing
the 4% monthly interest beyond the six-month stipulated period, since
they agreed to pay this interest on the principal amount under the
promissory note and the board resolution.
We disagree with the respondents contention.
We cannot apply the doctrine of estoppel in the present case since the
facts and circumstances, as established by the record, negate its
application. Under the promissory note,[44] what the petitioners agreed to
was the payment of a specific sum of P40,000.00 per month for six
months not a 4% rate of interest per month for six (6) months on a loan
whose principal is P1,000,000.00, for the total amount of P1,240,000.00.
Thus, no reason exists to place the petitioners in estoppel, barring them
from raising their present defenses against a 4% per month interest after
the six-month period of the agreement. The board resolution,[45] on the
other hand, simply authorizes Pantaleon to contract for a loan with a
monthly interest of not more than 4%. This resolution merely embodies
the extent of Pantaleons authority to contract and does not create any
right or obligation except as between Pantaleon and the board. Again, no
cause exists to place the petitioners in estoppel.
Piercing the corporate veil unfounded
We find it unfounded and unwarranted for the lower courts to pierce the
corporate veil of PRISMA.
The doctrine of piercing the corporate veil applies only in three (3) basic
instances, namely: a) when the separate and distinct corporate
personality defeats public convenience, as when the corporate fiction is
used as a vehicle for the evasion of an existing obligation; b) in fraud
cases, or when the corporate entity is used to justify a wrong, protect a
fraud, or defend a crime; or c) is used in alter ego cases, i.e., where a
corporation is essentially a farce, since it is a mere alter ego or business
conduit of a person, or where the corporation is so organized and
controlled and its affairs so conducted as to make it merely an
instrumentality, agency, conduit or adjunct of another corporation.[46] In
the absence of malice, bad faith, or a specific provision of law making a
corporate officer liable, such corporate officer cannot be made personally
liable for corporate liabilities.[47]
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 OBLIGATIONS AND CONTRACTS CASES
In the present case, we see no competent and convincing evidence of
any wrongful, fraudulent or unlawful act on the part of PRISMA to justify
piercing its corporate veil. While Pantaleon denied personal liability in his
Answer, he made himself accountable in the promissory note in his
personal capacity and as authorized by the Board Resolution of PRISMA.
[48] With this statement of personal liability and in the absence of any
representation on the part of PRISMA that the obligation is all its own
because of its separate corporate identity, we see no occasion to consider
piercing the corporate veil as material to the case.
WHEREFORE, in light of all the foregoing, we hereby REVERSE and
SET ASIDE the Decision dated May 5, 2003 of the Court of Appeals in
CA-G.R. CV No. 69627. The petitioners loan of P1,000,000.00 shall bear
interest of P40,000.00 per month for six (6) months from December 8,
1993 as indicated in the promissory note. Any portion of this loan, unpaid
as of the end of the six-month payment period, shall thereafter bear
interest at 12% per annum. The total amount due and unpaid, including
accrued interests, shall bear interest at 12% per annum from the finality of
this Decision. Let this case be REMANDED to the Regional Trial Court,
Branch 73, Antipolo City for the proper computation of the amount due as
herein directed, with due regard to the payments the petitioners have
already remitted. Costs against the respondent.
SO ORDERED.
[G.R. NO. 165938 : November 25, 2009]
ROGELIO DIZON, Petitioner, v. PHILIPPINE VETERANS BANK,
Respondent.
DECISION
PERALTA, J.:
Assailed in the present Petition for Review on Certiorari under Rule 45 of
the Rules of Court is the Resolution1 of the Court of Appeals (CA) in CA-
G.R. CV No. 72856, dated August 25, 2003, which dismissed herein
petitioner's appeal, and its Resolution2 dated November 2, 2004 denying
petitioner's motion for reconsideration.
The undisputed facts are as follows:
Herein petitioner Rogelio Dizon and his wife Corazon were the owners of
three parcels of land located in Angeles City, Pampanga covered by
Transfer Certificate of Title (TCT) Nos. T-12567, T-35788 and T-29117-R
(3793). On September 26, 1979, the Spouses Dizon mortgaged these lots
to herein respondent Philippine Veterans Bank (PVB) as security for a
credit accommodation which they obtained from PVB. The Spouses Dizon
failed to pay their obligation. As a consequence, PVB extrajudicially
foreclosed the mortgage and was able to acquire the subject properties at
public auction conducted on December 8, 1983. Subsequently, a
Certificate of Sale was issued in favor of PVB which was registered with
the Register of Deeds of Angeles City on November 22, 1984.
Sometime in June 1986, PVB filed with the Regional Trial Court (RTC) of
Angeles City a Petition for the Issuance of Owner's Duplicate Certificate
of Title covering the subject lots. The case was docketed as L.R.C. CAD.
CASE NO. A-124-91. Apparently, for failure of PVB to prosecute the case
for an unreasonable length of time, the petition was dismissed without
prejudice.
On July 26, 1999, PVB filed anew with the RTC of Angeles City a Petition
for Issuance of Owner's Duplicate Copy of Transfer Certificate of Title
over the same parcels of land. The case was docketed as L.R.C. Case
No. A-124-1024. Herein petitioner opposed the petition.
On November 16, 1999, PVB filed with the RTC of Angeles City an ex-
parte petition for the issuance of a writ of possession. The case was
docketed as Cad. Case No. A-124-1057. On February 19, 2002, the RTC
15
ESTOPPEL
rendered
judgment in favor of PVB. On appeal, however, the CA reversed the
decision of the RTC and dismissed PVB's petition for the issuance of a
writ of possession. The CA Decision became final and executory on
January 14, 2004.
Meanwhile, after due proceedings in L.R.C. Case No. A-124-1024, the
RTC rendered judgment granting the petition of PVB. The dispositive
portion of the RTC Decision, dated August 6, 2001, reads as follows:
WHEREFORE, the Register of Deeds of Angeles City is directed to issue
another owner's duplicate copies of T.C.T. Nos. T-12567, 29117 (3793)
and 35788 in favor of petitioner Philippine Veterans Bank, which shall
contain a memorandum of the fact that they be issued in place of the lost
ones but shall, in all respect, be entitled to like faith and credit as the
original duplicates and shall thereafter be regarded as such for all
purposes of Pres. Decree No. 1529, after the petitioner shall have
complied with all the mandatory requirements of the law on the matter.
SO ORDERED.3
Feeling aggrieved, Rogelio filed an appeal with the CA. On August 25,
2003, the CA issued the presently assailed Resolution dismissing
Rogelio's appeal for his failure to file his appellant's brief.
Rogelio filed a motion for reconsideration, but the same was denied by
the CA in a subsequent Resolution dated November 2, 2004.
Hence, the present petition based on the following grounds:
I. Whether or not the questioned second Petition for Issuance of Owner's
Duplicate copy of Transfer Certificate of Title Nos. T-12567, 2917 (3793),
5788 in lieu of lost owner's copy filed by the Petitioner-Appellee on July
26, 1999, after more than sixteen (16) years after the Foreclosure Sale
sometime in December 8, 1983 is barred by prescription;
II. Whether or not the three (3) defective, fictitious and/or fake Owner's
duplicate certificates of title attached in the dismissed original petition filed
on June 1986 when it was the Respondent Bank (petitioner therein) itself
which placed the remarks on the upper right corner of the titles the
phrase: ALLEGEDLY FAKE in our possession presented as collaterals are
similar to the three (3) certified true copies of the original certificates of
title on file at the Register of Deeds of Angeles City attached in the
second Petition and marked as Annexes "A", "B" and "C" thereof
respectively;
III. Whether or not Atty. Ma. Rosario A. Sabalburo, Head of Assets
Recovery Department of the PVB, has committed the crime of perjury in
her Sworn Affidavit of Loss that she executed on July 23, 1999, by
presenting as pieces of evidence the copies of the original certificates of
title secured from the Register of Deeds of Angeles City and not the
machine copies of the owner's duplicate certificates of title that were
found in their file as claimed or true xerox copies from RTC BR. 62;
IV. Whether or not the documentary bases (the three certified copies of
title issued by the Register of Deeds of Angeles City only last November
16, 1999 which were duly verified by Mr. Ronnie Vergara and Mr.
Herminio Manalang, the records officer and Vault Keeper, respectively of
the said Office, used in the Respondent Bank's second Petition are the
very same copies of the said collaterals having the same annotations and
encumbrances making them as the true and faithful reproductions of the
titles used in the Bank's first Petition filed by the Petitioner on June 19,
1986. (Emphasis supplied.)4
The petition lacks merit.
With respect to the first issue, petitioner contends that the petition filed by
respondent bank has prescribed, citing Article 1142 of the Civil Code
which states that "[a] mortgage action prescribes in ten years."
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 OBLIGATIONS AND CONTRACTS CASES
It is true that, under Article 1142 of the Civil Code, an action to enforce a
right arising from a mortgage should be enforced within ten (10) years
from the time the right of action accrues; otherwise, it will be barred by
prescription and the mortgage creditor will lose his rights under the
mortgage.5 It is clear that the actions referred to under Article 1142 of the
Civil Code are those that necessarily arise from a mortgage. In the
present case, however, PVB's petition for the issuance of an owner's
duplicate certificate of title already arises from its right as the owner of the
subject properties and no longer as a mortgagee. The mortgage contract
respondent entered into with petitioner had already been foreclosed, the
properties sold and the sale in favor of PVB registered with the Register
of Deeds of the Province of Cagayan. Hence, since the petition filed by
PVB is not a mortgage action, the provisions of Article 1142 of the Civil
Code do not apply.
In any case, Presidential Decree (PD) No. 1529, otherwise known as the
Property Registration Decree, the law that specifically governs petitions
for the replacement of lost duplicate certificates of title, does not provide
for any limitation or period for filing the said petition. The silence of the law
on this matter can only be interpreted to mean that there is no intention to
provide a prescriptive period for filing this petition.
As to the second issue, petitioner anchors his opposition to the petition
filed by PVB on the contention that the titles, which he presented to the
bank as evidence that the subject properties were used as security for the
loan he and his wife incurred with the said bank, were genuine but were
later on altered by the bank's officials and employees with whom he
allegedly entered a deal in order to have his loan approved. Petitioner
claims that this altered and spurious titles were the ones presented by
PVB in its first petition filed with the RTC in June 1986. However, these
allegations remain unsubstantiated. They are self-serving statements
which are not supported by any evidence whatsoever. It is settled that one
who alleges a fact has the burden of proving it and mere allegation is not
evidence.6 The established fact remains that petitioner and his wife were
the ones who submitted to PVB the authentic owner's copy of the titles
over the subject properties and that these copies were
lost.rbl r l l lbrr
The Court cannot follow the logic in petitioner's arguments considering
that, in the first place, he and his wife were the ones who submitted the
titles to PVB. Now that PVB seeks to obtain a duplicate copy of the titles
covering the subject properties which it legally acquired, petitioner has
made a complete turnaround and now assails the authenticity of these
titles which he and his wife used to obtain their loan. Nonetheless,
petitioner is estopped from doing so.
Settled is the rule that a person, who by his deed or conduct has induced
another to act in a particular manner, is barred from adopting an
inconsistent position, attitude or course of conduct that thereby causes
loss or injury to the latter.7 The doctrine of estoppel is based upon the
grounds of public policy, fair dealing, good faith and justice, and its
purpose is to forbid one to speak against his own act, representations, or
commitments to the injury of one to whom they were directed and who
reasonably relied thereon.8
Article 1431 of the Civil Code states that "[t]hrough estoppel an admission
or representation is rendered conclusive upon the person making it, and
cannot be denied or disproved as against the person relying thereon."
The essential elements of estoppel are: (1) conduct of a party amounting
to false representation or concealment of material facts or at least
calculated to convey the impression that the facts are otherwise than, and
inconsistent with, those which the party subsequently attempts to assert;
(2) intent, or at least expectation, that this conduct shall be acted upon by,
or at least influence, the other party; and (3) knowledge, actual or
constructive, of the real facts.9
16
ESTOPPEL
In the
present case, petitioner may not renege on his own acts and
representations to the prejudice of respondent bank, which has relied on
them. Since petitioner entered into a binding contract on his own volition
using the titles which he now assails, he is therefore estopped from
questioning the authenticity of these documents which paved the way for
the consummation of the contract from which he derived benefit.
Other than to harass the respondent, the Court is at a loss as to what
petitioner really desires to achieve in opposing the respondent bank's
petition. The Court agrees with respondent's observation that petitioner's
actuations are demonstrative of his desperate attempt to cling on to the
subject properties despite the fact that he has lost them by reason of
foreclosure due to his failure to pay his obligations and his subsequent
inability to redeem them during the period allowed by law.
Coming to the third and fourth issues, petitioner calls on the Court to
resolve issues of fact. Settled is the rule that a Petition for Review on
Certiorari filed with this Court under Rule 45 of the Revised Rules of Court
shall raise only questions of law.10 This Court is not a trier of facts. It is
not its function to analyze or weigh evidence. The jurisdiction of this Court
over cases brought to it is limited to the review and rectification of errors
allegedly committed by the lower courts.11 While there are exceptions to
this rule,12 the Court finds that the present case does not fall under any
of them.
In any case, what petitioner is trying to impress upon the Court in the third
and fourth issues is that PVB is concealing the fact that the alleged
spurious copies of the subject TCTs were not actually lost. However, the
Court gives full faith and credence to the finding of the RTC that the
owner's duplicate copies in the possession of PVB were, in fact, lost. This
is consistent with the settled rule that appellate courts should not, unless
for strong and cogent reasons, reverse the findings of fact of trial
courts.13 This is so because trial judges are in a better position to
examine real evidence and at a vantage point to observe the actuation
and the demeanor of the witnesses.14 In the instant case, the Court finds
no sufficient reason to depart from the above findings of the RTC.
Petitioner further questions PVB's submission of the certified true copies
of the TCTs covering the subject properties, which were taken from the
files of the Register of Deeds of Angeles City. However, PVB has
sufficiently explained that it is only submitting evidence to prove that it
complied with the jurisdictional requirement under Section 10915 of PD
No. 1529, which directs a person applying for the issuance of another
duplicate certificate of title to file a sworn statement with the concerned
Register of Deeds of the fact of loss or destruction of the original owner's
duplicate copy of the subject TCT.
It bears to emphasize that in a petition for the issuance of a second
owner's duplicate copy of a certificate of title in replacement of a lost one,
the only questions to be resolved are: whether or not the original owner's
duplicate copy has indeed been lost and whether the petitioner seeking
the issuance of a new owner's duplicate title is the registered owner or
other person in interest.16
The first question is factual and, in the present case, the RTC had already
made a finding that the original owner's duplicate copy of the subject
TCTs had indeed been lost. In this respect, the Court finds no cogent
reason to depart from the findings of the RTC as discussed earlier.
As to the second question, there is no dispute that PVB has an interest
over the subject properties having acquired the same at public auction.
In sum, there is no doubt as to the identity of the subject properties. There
is neither any dispute with respect to the fact that petitioner and his wife
mortgaged these properties to PVB and that they subsequently failed to
pay their obligations to the latter. Nor is there any issue as to the validity
of the foreclosure proceedings as well as the auction sale conducted and
PVB's subsequent acquisition of the subject properties.
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 OBLIGATIONS AND CONTRACTS CASES
Hence, on the basis of the foregoing, the Court finds that the RTC
committed no error in granting PVB's petition for the issuance of an
owner's duplicate copy of certificates of title covering the subject
properties.
WHEREFORE, the petition is DENIED. The Resolutions dated August 25,
2003 and November 2, 2004, respectively, of the Court of Appeals in CA-
G.R. CV No. 72856, are AFFIRMED.
SO ORDERED.
G.R. No. 193453 June 5, 2013
SPOUSES RUBIN AND PORTIA HOJAS, Petitioners,
vs.
PHILIPPINE AMANAH BANK AND RAMON KUE, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari assailing the July 28, 2010
Decision1 of the Court of Appeals (CA), in CA-G.R. CV No. 55722, which
affirmed the May 27, 1996 Decision of the Regional Trial Court, Branch
13, Zamboanga City (RTC), dismissing Civil Case No. 1028 (3952), an
action for "Determination of True Balance of Mortgage, Debt,
Annulment/Setting
Aside of Extrajudicial Foreclosure of Mortgage and Damages, with Prayer
for Preliminary Injunction."
The petitioners, Spouses Rubin and Portia Hojas (petitioners), alleged
that on April 11, 1980, they secured a loan from respondent Philippine
Amanah Bank (PAB) in the amount of P450,000.00; that this loan was
secured by a mortgage, covering both personal and real properties; that
from May 14, 1981 to June 27, 1986, they made various payments
amounting to P486,162.13; that PAB, however, did not properly credit
their payments; that based on the summary of payments furnished by
PAB to them on February 24, 1989, only 13 payments were credited,
erroneously amounting to P317,048.83; that PAB did not credit the
payment they made totaling P165,623.24; and that, in the statement of
their account as of October 17, 1984, PAB listed their total payment as
412,211.54 on the principal, and P138,472.09 as 30% interest, all
amounting to P550,683.63, despite the fact that at that time, petitioners
had already paid the total sum of P486,162.13.2
Petitioners further averred that for failure to pay the loan, PAB applied for
the extrajudicial foreclosure of the mortgaged real properties of petitioners
with the Ex-Officio Sheriff; that consequently, a Notice of Extrajudicial
Foreclosure was issued on January 12, 1987 setting the foreclosure sale
on April 21, 1987 and, stating therein the mortgage debt in the sum of
P450,000.00; and that, in the public auction conducted, PAB acquired
said real property.3
It was further alleged that on March 9, 1988, through the intervention of
then Senator Aquilino Pimentel, Farouk A. Carpizo (Carpizo), the
OICPresident of PAB, wrote Roberto Hojas (Roberto), petitioners son,
informing him that although the one-year redemption period would expire
on April 21, 1988, by virtue of the banks incentive scheme, the
redemption period was extended until December 31, 1988; that despite
said letter from the OIC-President, the OIC of the Project Development
Department of PAB wrote Rubin Hojas that the real properties acquired by
PAB would be sold in a public bidding before the end of August, 1988; that
on November 4, 1988, a public bidding was conducted; that in the said
bidding, the mortgaged properties were awarded to respondent Ramon
Kue (Kue); that subsequently, they received a letter from the OIC of the
Project Development Department, dated January 3, 1989, informing them
that they had fifteen (15) days from receipt within which to vacate the
17
ESTOPPEL
premises;
that Kue then sent another letter, dated January 31, 1989, informing them
that he had already acquired the said property and that they were
requested to vacate the premises within fifteen (15) days from receipt
thereof;4 and that because of this development, on May 7, 1991,
petitioners filed an action for "Determination of True Balance of Mortgage
Debt, Annulment/Setting Aside of Extrajudicial Foreclosure of Mortgage
and Damages, with Prayer for Preliminary Injunction" against PAB.5
On May 27, 1996, the RTC dismissed petitioners complaint. It ruled,
among others, that: 1) PAB was not guilty of bad faith in conducting the
extrajudicial foreclosure as it, at one time, even suspended the conduct of
the foreclosure upon the request of petitioners, who, nevertheless, failed
to exert effort to settle their accounts; 2) because petitioners failed to
redeem their properties within the period allowed, PAB became its
absolute owner and, as such, it had the right to sell the same to Kue, who
acquired the property for value and in good faith; and 3) the subsequent
foreclosure and auction sale having been conducted above board and in
accordance with the requisite legal procedure, collusion between PAB and
Kue was certainly alien to the issue.6
Aggrieved, petitioners filed an appeal assailing the May 27, 1996 RTC
Decision. They asserted that the March 9, 1988 Letter of Carpizo to
Roberto Hojas extended the redemption period from April 21 to December
31, 1988. Considering that they had relied on Carpizos representation,
PAB violated the principle of estoppel when it conducted the public sale
on November 4, 1988.7 Their basis was the portion of said letter which
stated:
xxxx
As the Bank has adopted an incentive scheme whereby payments are
liberalized to give chances to former owners to repossess their properties,
we suggest that you advise your parents to drop by at our Zamboanga
Office so they can avail of this rare privilege which shall be good only up
to December 31, 1988. (Emphasis supplied)8
The CA was not sympathetic with petitioners position. It held that the
period of redemption was never extended. The date "December 31, 1988"
was not an extension of the redemption period. It was merely the last day
for the availment of the liberalized payment for the repossession of
foreclosed assets under PABs incentive scheme. PAB, through said
letter, did not make an unqualified representation to petitioners that it had
extended the redemption period. As such, PAB could not be said to have
violated the principle of estoppel when it conducted a public sale on
November 4, 1988.9 Thus, the dispositive portion of the CA decision
reads:
ACCORDINGLY, the instant appeal is DENIED. The Decision dated May
27, 1996, of the Regional Trial Court, 9th Judicial Region, Branch No. 13
of Zamboanga City, in Civil Case No. 1028 (3952), is AFFIRMED.
SO ORDERED.10
Undaunted, petitioners filed the present petition for review. It postulated
the sole issue:
WHETHER OR NOT THE CA ERRED IN NOT HOLDING PAB TO HAVE
VIOLATED THE PRINCIPLE OF ESTOPPEL WHEN THE LATTER
CONDUCTED THE NOVEMBER 4, 1988 PUBLIC SALE.
Petitioners reiterated their argument that the November 4, 1988 public
sale by PAB was violative of the principle of estoppel because said bank
made it appear that the one-year redemption period was extended. As
such, when PAB sold the property before said date, they suffered
damages and were greatly prejudiced.11 They also argued that since they
manifested their interest in availing of the said "incentive scheme," PAB
should have, at the very least, waited until December 31, 1988, before it
sold the subject foreclosed property in a public auction.12
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 OBLIGATIONS AND CONTRACTS CASES
On the other hand, PAB explains that the purpose of the "incentive
scheme" was to give previous owners the chance to redeem their
properties on easy payment term basis, through condonation of some
charges and penalties and allowing payment by installment based on their
proposals which may be acceptable to PAB. Therefore, the March 9, 1988
Letter of Carpizo was an invitation for petitioners to submit a proposal to
PAB.13 It was not meant to extend the one-year redemption period.
As early as August 11, 1988, PAB wrote petitioners informing them of the
scheduled public bidding. After receipt of the letter, petitioners went to
PAB to signify their willingness to avail of the said incentive scheme.
They, however, failed to submit a proposal. In fact, PAB did not hear from
petitioners again. As such, the respondent sold the subject property in a
public sale on November 4, 198814 PAB cited the RTCs finding that
although the petitioners manifested their intention to avail of the incentive
scheme desire alone was not sufficient. Redemption is not a matter of
intent but involved making the proper payment or tender of the price of
the land within the specified period.15
The petition is bereft of merit.
Through estoppel, an admission or representation is rendered conclusive
upon the person making it, and cannot be denied or disproved as against
the person relying on it.16 This doctrine is based on the grounds of public
policy, fair dealing, good faith, and justice and its purpose is to forbid one
to speak against his own act, representations or commitments to the
injury of one to whom they were directed and who reasonably relied on
it.17 Thus, in order for this doctrine to operate, a representation must
have been made to the detriment of another who relied on it. In other
words, estoppel would not lie against one who, in the first place, did not
make any representation.
In this case, a perusal of the letter, on which petitioners based their
position that the redemption period had been extended, shows otherwise.
Pertinent portions of the said letter read:
xxxx
Our records show that the above account has already been foreclosed by
the bank. However, the borrowers concerned can still exercise the one (1)
year right of redemption over the foreclosed properties until April 21,
1988.
As the Bank has adopted an incentive scheme whereby payments are
liberalized to give chances to former owners to repossess their properties,
we suggest that you advise your parents to drop by at our Zamboanga
Office so they can avail of this rare privilege which shall be good only up
to December 31, 1988. [Emphases and Underscoring Supplied]18
As correctly held by the RTC and upheld by the CA, the date "December
31, 1988" refers to the last day when owners of foreclosed properties, like
petitioners, could submit their payment proposals to the bank. The letter
was very clear. It was about the availment of the liberalized payment
scheme of the bank. On the last day for redemption, the letter was also
clear. It was April 21, 1988. It was never extended.
The opportunity given to the petitioners was to avail of the liberalized
payment scheme which program would expire on December 31, 1988. As
explained by Abraham Iribani (Iribani), the OIC of the Project
Development Department of PAB, it was to give a chance to previous
owners to repossess their properties on easy term basis, possibly by
condonation of charges and penalties and payment on instalment. The
letter of Carpizo was an invitation to the petitioners to come to the bank
with their proposal. It appears that the petitioners could not come up with
a proposal acceptable to the bank.
For said reason, the mortgaged property was included in the list of
mortgaged properties that would be sold through a scheduled public
18
ESTOPPEL
bidding.
Thus, on August 11, 1988, Iribani wrote the petitioners about the
scheduled bidding. In response, the petitioners told Iribani that they would
go Manila to explain their case. They did not, however, return even after
the public bidding. In this regard, the CA was correct when it wrote:
Here, there is no estoppel to speak of. The letter does not show that the
Bank had unqualifiedly represented to the Hojases that it had extended
the redemption period to December 31, 1988. Thus, the Hojases have no
basis in positing that the public sale conducted on November 4, 1988 was
null and void for having been prematurely conducted.19
Moreover, petitioners allegation that they had signified their intention to
avail of the incentive scheme (which they have equated to their intention
to redeem the property), did not amount to an exercise of redemption
precluding the bank from making the public sale.20 In the case of China
Banking Corporation v. Martir,21 this Court expounded on what
constitutes a proper exercise of the right of redemption, to wit:
The general rule in redemption is that it is not sufficient that a person
offering to redeem manifests his desire to do so. The statement of
intention must be accompanied by an actual and simultaneous tender of
payment. This constitutes the exercise of the right to repurchase.
In several cases decided by the Court where the right to repurchase was
held to have been properly exercised, there was an unequivocal tender of
payment for the full amount of the repurchase price. Otherwise, the offer
to redeem is ineffectual. Bona fide redemption necessarily implies a
reasonable and valid tender of the entire repurchase price, otherwise the
rule on the redemption period fixed by law can easily be circumvented.
Moreover, jurisprudence also characterizes a valid tender of payment as
one where the full redemption price is tendered. Consequently, in this
case, the offer by respondents on July 24, 1986 to redeem the foreclosed
properties for 1,872,935 and the subsequent consignation in court of
P1,500,000 on August 27, 1986, while made within the period of
redemption, was ineffective since the amount offered and actually
consigned not only did not include the interest but was in fact also way
below the P2,782,554.66 paid by the highest bidder/purchaser of the
properties during the auction sale.
In Bodiongan vs. Court of Appeals, we held:
In order to effect a redemption, the judgment debtor must pay the
purchaser the redemption price composed of the following: (1) the price
which the purchaser paid for the property; (2) interest of 1% per month on
the purchase price; (3) the amount of any assessments or taxes which the
purchaser may have paid on the property after the purchase; and (4)
interest of 1% per month on such assessments and taxes x x x.
Furthermore, Article 1616 of the Civil Code of the Philippines provides:
The vendor cannot avail himself of the right to repurchase without
returning to the vendee the price of the sale x x x.
It is not difficult to understand why the redemption price should either be
fully offered in legal tender or else validly consigned in court. Only by such
means can the auction winner be assured that the offer to redeem is
being made in good faith.1wphi1
Respondents' repeated requests for information as regards the amount of
loan availed from the credit line and the amount of redemption, and
petitioner's failure to accede to said requests do not invalidate the
foreclosure. Respondents can find other ways to know the redemption
price. For one, they can examine the Certificate of Sale registered with
the Register of Deeds to verify the purchase price, or upon the filing of
their complaint, they could have moved for a computation of the
redemption price and consigned the same to the court. At any rate,
whether or not respondents '"were diligent in asserting their willingness to
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 OBLIGATIONS AND CONTRACTS CASES
pay is irrelevant. Redemption within the period allowed by law is not a
matter of intent but a question of payment or valid tender of the full
redemption price within said period.
Even the complaint instituted by respondents cannot aid their plight
because the institution of an action to annul a foreclosure sale does not
suspend the running of the redemption period. (Underscoring supplied)22
avail of
the scheme, they were also ready to pay the redemption price. Hence, as
they failed to exercise their right of redemption and failed to take
advantage of the liberalized incentive scheme, PAB was well within its
right to sell its property in a public sale.
WHEREFORE, the petition is DENIED.

In the case at bench, the record is bereft of concrete evidence that would SO ORDERED.
show that, aside from the fact that petitioners manifested their intention to

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ESTOPPEL FCTalonMD | LLB-1 Estrellado