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The Court finds the allegations of petitioner that the findings of fact of the CA are contrary to evidence and admissions of the parties and that it erred in declaring the contract between the parties as an equitable mortgage to be absolutely unfounded.

A close examination of the records of this case reveals that the findings of fact of the CA are all based on documentary evidence and on admissions and stipulation of facts made by the parties. The CA’s finding that there was no gross inadequacy of the price of respondent’s residential house as stated in the contract, was based on respondent’s own evidence, Tax Declaration No. 44250, which stated that the actual market value of subject residential house in 1986 was only P93,080.00. The fact that respondent has remained in actual physical possession of the property in question, and that respondent has been the one paying the real property taxes on the subject property was established by the admission made by petitioner during the pre-trial conference and embodied in the Pre-Trial Order dated May 25, 1994. The finding that the purchase price in the amount of P165,000.00 earns monthly interest was based on petitioner’s own testimony and admission in her appellee’s brief that the amount of P165,000.00, if not paid on July 29, 1987, shall bear an interest of 10% per month.

The Court sees no reversible error with the foregoing findings of fact made by the CA. The CA correctly ruled that the true nature of the contract entered into by herein parties was one of equitable mortgage.

Article 1602 of the Civil Code enumerates the instances when a purported pacto de retro sale may be considered an equitable mortgage, to wit:

Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases:

(1) When the price of a sale with right to repurchase is unusually inadequate;
 
(2) When the vendor remains in possession as lessee or otherwise;
 
(3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed;
 
(4) When the purchaser retains for himself a part of the purchase price;
 
(5) When the vendor binds himself to pay the taxes on the thing sold;
 
(6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation.


In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as rent or otherwise shall be considered as interest which shall be subject to the usury laws. (Emphasis supplied)

In Legaspi vs. Ong, the Court further explained that:

The presence of even one of the above-mentioned circumstances as enumerated in Article 1602 is sufficient basis to declare a contract of sale with right to repurchase as one of equitable mortgage. As stated by the Code Commission which drafted the new Civil Code, in practically all of the so-called contracts of sale with right of repurchase, the real intention of the parties is that the pretended purchase price is money loaned and in order to secure the payment of the loan, a contract purporting to be a sale with pacto de retro is drawn up.

In the same case, the Court cited Article 1603 of the Civil Code, which provides that in case of doubt, a contract purporting to be a sale with right to repurchase shall be construed as an equitable mortgage.

In the instant case, the presence of the circumstances provided for under paragraphs (2) and (5) of Article 1602 of the Civil Code, and the fact that petitioner herself demands payment of interests on the purported purchase price of the subject property, clearly show that the intention of the parties was merely for the property to stand as security for a loan. The transaction between herein parties was then correctly construed by the CA as an equitable mortgage.

The allegation that the appellate court should not have deleted the award for actual and/or compensatory damages is likewise unmeritorious.

Section 8, Rule 51 of the Rules of Court provides as follows:

Sec. 8. Questions that may be decided. – No error which does not affect the jurisdiction over the subject matter or the validity of the judgment appealed from or the proceedings therein will be considered unless stated in the assignment of errors, or closely related to or dependent on an assigned error and properly argued in the brief, save as the court may pass upon plain errors and clerical errors.

Clearly, the appellate court may pass upon plain errors even if they are not stated in the assignment of errors. In Villegas vs. Court of Appeals, the Court held:

[T]he Court is clothed with ample authority to review matters, even if they are not assigned as errors in the appeal, if it finds that their consideration is necessary in arriving at a just decision of the case.

In the present case, the RTC’s award for actual damages is a plain error because a reading of said trial court’s Decision readily discloses that there is no sufficient evidence on record to prove that petitioner is entitled to the same. Petitioner’s only evidence to prove her claim for actual damages is her testimony that she has spent P3,000.00 in going to and from respondent’s place to try to collect payment and that she spent P1,000.00 every time she travels from Bulacan, where she resides, to Baguio in order to attend the hearings.

In People vs. Sara, the Court held that a witness’ testimony cannot be “considered as competent proof and cannot replace the probative value of official receipts to justify the award of actual damages, for jurisprudence instructs that the same must be duly substantiated by receipts.” Hence, there being no official receipts whatsoever to support petitioner’s claim for actual or compensatory damages, said claim must be denied.

The appellate court was also correct in ordering respondent to pay “legal interest” on the amount of P165,000.00.

Both parties admit that they came to an agreement whereby respondent shall pay petitioner interest, at 9% (according to respondent) or 10% (according to petitioner) per month, if she is unable to pay the principal amount of P165,000.00 on July 29, 1987.

In the Pre-Trial Order dated May 25, 1994, one of the issues for resolution of the trial court was “whether or not the interest to be paid under the agreement is 10% or 9% or whether or not this amount of interest shall be reduced equitably pursuant to law.”

The factual milieu of Carpo vs. Chua is closely analogous to the present case. In the Carpo case, petitioners therein contracted a loan in the amount of P175,000.00 from respondents therein, payable within six months with an interest rate of 6% per month. The loan was not paid upon demand. Therein petitioners claimed that following the Court’s ruling in Medel vs. Court of Appeals, the rate of interest of 6% per month or 72% per annum as stipulated in the principal loan agreement is null and void for being excessive, iniquitous, unconscionable and exorbitant. The Court then held thus:

In a long line of cases, this Court has invalidated similar stipulations on interest rates for being excessive, iniquitous, unconscionable and exorbitant. In Solangon v. Salazar, we annulled the stipulation of 6% per month or 72% per annum interest on a P60,000.00 loan. In Imperial v. Jaucian, we reduced the interest rate from 16% to 1.167% per month or 14% per annum. In Ruiz v. Court of Appeals, we equitably reduced the agreed 3% per month or 36% per annum interest to 1% per month or 12% per annum interest. The 10% and 8% interest rates per month on a P1,000,000.00 loan were reduced to 12% per annum in Cuaton v. Salud. Recently, this Court, in Arrofo v. Quino, reduced the 7% interest per month on a P15,000.00 loan amounting to 84% interest per annum to 18% per annum.

There is no need to unsettle the principle affirmed in Medel and like cases. From that perspective, it is apparent that the stipulated interest in the subject loan is excessive, iniquitous, unconscionable and exorbitant. Pursuant to the freedom of contract principle embodied in Article 1306 of the Civil Code, contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. In the ordinary course, the codal provision may be invoked to annul the excessive stipulated interest.

In the case at bar, the stipulated interest rate is 6% per month, or 72% per annum. By the standards set in the above-cited cases, this stipulation is similarly invalid. x x x.

Applying the afore-cited rulings to the instant case, the inescapable conclusion is that the agreed interest rate of 9% per month or 108% per annum, as claimed by respondent; or 10% per month or 120% per annum, as claimed by petitioner, is clearly excessive, iniquitous, unconscionable and exorbitant. Although respondent admitted that she agreed to the interest rate of 9%, which she believed was exorbitant, she explained that she was constrained to do so as she was badly in need of money at that time. As declared in the Medel case and Imperial vs. Jaucian, “[i]niquitous and unconscionable stipulations on interest rates, penalties and attorney’s fees are contrary to morals.” Thus, in the present case, the rate of interest being charged on the principal loan of P165,000.00, be it 9% or 10% per month, is void. The CA correctly reduced the exhorbitant rate to “legal interest.”

In Trade & Investment Development Corporation of the Philippines vs. Roblett Industrial Construction Corporation, the Court held that:

In Eastern Shipping Lines, Inc. v. Court of Appeals, this Court laid down the following rules with respect to the manner of computing legal interest:

  1. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under Title XVIII on ‘Damages’ of the Civil Code govern in determining the measure of recoverable damages.
  2. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
  3. 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.  (Underscoring supplied)

Applied to the present case, since the agreed interest rate is void, the parties are considered to have no stipulation regarding the interest rate. Thus, the rate of interest should be 12% per annum to be computed from judicial or extrajudicial demand, subject to the provisions of Article 1169 of the Civil Code, to wit:

Art. 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of the obligation.

However, the demand by the creditor shall not be necessary in order that delay may exist:

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

(2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or

(3) When demand would be useless, as when the obligor has rendered it beyond his power to perform.

x x x x

The records do not show any of the circumstances enumerated above. Consequently, the 12% interest should be reckoned from the date of extrajudicial demand.

Petitioner testified that she went to respondent’s place several times to try to collect payment, but she (petitioner) failed to specify the dates on which she made such oral demand. The only evidence which clearly shows the date when petitioner made a demand on respondent is the demand letter dated March 19, 1989 (Exh. “C”), which was received by respondent or her agent on March 29, 1989 per the Registry Return Receipt (Exh. “C-1”). Hence, the interest of 12% per annum should only begin to run from March 29, 1989, the date respondent received the demand letter from petitioner.

WHEREFORE, the petition is hereby DENIED. The Decision of the Court of Appeals dated June 9, 2000 is AFFIRMED with the MODIFICATION that the legal interest rate to be paid by respondent on the principal amount of P165,000.00 is twelve (12%) percent per annum from March 29, 1989 until fully paid.

SO ORDERED.

SOURCE: [ G.R. NO. 145871, January 31, 2006 ]LEONIDES C. DIÑO, PETITIONER, VS. LINA JARDINES, RESPONDENT. Tags: Alcantara Alcoy moral damages Alegria actual damages Aloguinsan Argao Asturias Badian Balamban Bantayan Barili Boljoon Borbon Carmen Catmon Compostela Consolacion Cordova Daanbantayan Dumaguete Bais Sibulan Tampi Bacong Negros Bacolod Separation pay Resign Resignation Back wages Backwages Length of service pay benefit employee employer relationship Silay Kabankalan Daan Bantayan Dalaguete Dumanjug Ginatilan Liloan compensatory damages Madridejos Malabuyoc Medellin Minglanilla Moalboal Oslob Pilar Pinamungajan Poro Ronda Samboan San Fernando San Francisco San Remigio Sante Fe Santander Sibonga Sogod Tabogon Tabuelan Tuburan attorney’s fees Tudela exemplary damages Camotes General Luna Siargao Cagayan Davao Kidapawan Attorney Abogado Lawyer Architect Real Estate Broker nominal damages Sales Agent Properties for Sale Looking for Buyers Design Build House and Lot for Sale for Rent Talisay City Mandaue City Lapu Lapu Lapu-Lapu City Yncierto Sesante Villanueva Ruz Jan Edmond Marc Tim Timothy temperate damages Luz liquidated damages Kristin tct transfer certificate of title tax declaration birth certificate relocation survey surveying judicial titling administrative titling patent title denr cenro foreshore lease ecc environmental compliance certificate design build architect cebu engineer interior design designer residential commercial cebu property warehouse for rent for lease marc Christian yncierto ruz jan Edmond yncierto ruz Kristin Villanueva ruz Edmond mabalot ruz marriage certificate timber land forest land watershed agricultural lot land use conversion hearing trial illegal drugs trial lawyer business corporate lawyer labor lawyer immigration law bureau of immigration cebu 9g visa search warrant warrant of arrest motion to quash information complaint police officers buy bust physical suffering shocked horrified mental anguish fright serious anxiety besmirched reputation sleepless nights wounded feelings moral shock social humiliation similar injuries

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Whether the motion for reconsideration raises any new matter or cogent reason to warrant a reconsideration of this Court’s Resolution of September 24, 2003.

Motion for Reconsideration

Three principal arguments were raised in the petitioner’s Motion for Reconsideration. First, that a fair resolution of the case should be based on contract law, not on policy considerations; the contracts do not authorize the right to top to be derived from the right of first refusal. Second, that neither the right of first refusal nor the right to top can be legally exercised by the consortium which is not the proper party granted such right under either the JVA or the Asset Specific Bidding Rules (ASBR). Third, that the maintenance of the 60%-40% relationship between the National Investment and Development Corporation (NIDC) and KAWASAKI arises from contract and from the Constitution because PHILSECO is a landholding corporation and need not be a public utility to be bound by the 60%-40% constitutional limitation.

On the other hand, private respondent PHILYARDS asserts that J.G. Summit has not been able to show compelling reasons to warrant a reconsideration of the Decision of the Court. PHILYARDS denies that the Decision is based mainly on policy considerations and points out that it is premised on principles governing obligations and contracts and corporate law such as the rule requiring respect for contractual stipulations, upholding rights of first refusal, and recognizing the assignable nature of contracts rights. Also, the ruling that shipyards are not public utilities relies on established case law and fundamental rules of statutory construction. PHILYARDS stresses that KAWASAKI’s right of first refusal or even the right to top is not limited to the 40% equity of the latter. On the landholding issue raised by J.G. Summit, PHILYARDS emphasizes that this is a non-issue and even involves a question of fact. Even assuming that this Court can take cognizance of such question of fact even without the benefit of a trial, PHILYARDS opines that landholding by PHILSECO at the time of the bidding is irrelevant because what is essential is that ultimately a qualified entity would eventually hold PHILSECO’s real estate properties. Further, given the assignable nature of the right of first refusal, any applicable nationality restrictions, including landholding limitations, would not affect the right of first refusal itself, but only the manner of its exercise. Also, PHILYARDS argues that if this Court takes cognizance of J.G. Summit’s allegations of fact regarding PHILSECO’s landholding, it must also recognize PHILYARDS’ assertions that PHILSECO’s landholdings were sold to another corporation. As regards the right of first refusal, private respondent explains that KAWASAKI’s reduced shareholdings (from 40% to 2.59%) did not translate to a deprivation or loss of its contractually granted right of first refusal. Also, the bidding was valid because PHILYARDS exercised the right to top and it was of no moment that losing bidders later joined PHILYARDS in raising the purchase price.

In cadence with the private respondent PHILYARDS, public respondents COP and APT contend:

1. The conversion of the right of first refusal into a right to top by 5% does not violate any provision in the JVA between NIDC and KAWASAKI.

2. PHILSECO is not a public utility and therefore not governed by the constitutional restriction on foreign ownership.

3. The petitioner is legally estopped from assailing the validity of the proceedings of the public bidding as it voluntarily submitted itself to the terms of the ASBR which included the provision on the right to top.

4. The right to top was exercised by PHILYARDS as the nominee of KAWASAKI and the fact that PHILYARDS formed a consortium to raise the required amount to exercise the right to top the highest bid by 5% does not violate the JVA or the ASBR.

5. The 60%-40% Filipino-foreign constitutional requirement for the acquisition of lands does not apply to PHILSECO because as admitted by petitioner itself, PHILSECO no longer owns real property.

6. Petitioner’s motion to elevate the case to the Court en banc is baseless and would only delay the termination of this case.

In a Consolidated Comment dated March 8, 2004, J.G. Summit countered the arguments of the public and private respondents in this wise:

  1. The award by the APT of 87.67% shares of PHILSECO to PHILYARDS with losing bidders through the exercise of a right to top, which is contrary to law and the constitution is null and void for being violative of substantive due process and the abuse of right provision in the Civil Code.
  1. The bidders[’] right to top was actually exercised by losing bidders.
    1. The right to top or the right of first refusal cannot co-exist with a genuine competitive bidding.
    1. The benefits derived from the right to top were unwarranted.
  • The landholding issue has been a legitimate issue since the start of this case but is shamelessly ignored by the respondents.
  1. The landholding issue is not a non-issue.
    1. The landholding issue does not pose questions of fact.
    1. That PHILSECO owned land at the time that the right of first refusal was agreed upon and at the time of the bidding are most relevant.
    1. Whether a shipyard is a public utility is not the core issue in this case.
  • Fraud and bad faith attend the alleged conversion of an inexistent right of first refusal to the right to top.
  1. The history behind the birth of the right to top shows fraud and bad faith.
    1. The right of first refusal was, indeed, “effectively useless.”
  • Petitioner is not legally estopped to challenge the right to top in this case.
  1. Estoppel is unavailing as it would stamp validity to an act that is prohibited by law or against public policy.
    1. Deception was patent; the right to top was an attractive nuisance.
    1. The 10% bid deposit was placed in escrow.

J.G. Summit’s insistence that the right to top cannot be sourced from the right of first refusal is not new and we have already ruled on the issue in our Resolution of September 24, 2003. We upheld the mutual right of first refusal in the JVA. We also ruled that nothing in the JVA prevents KAWASAKI from acquiring more than 40% of PHILSECO’s total capitalization. Likewise, nothing in the JVA or ASBR bars the conversion of the right of first refusal to the right to top. In sum, nothing new and of significance in the petitioner’s pleading warrants a reconsideration of our ruling.

Likewise, we already disposed of the argument that neither the right of first refusal nor the right to top can legally be exercised by the consortium which is not the proper party granted such right under either the JVA or the ASBR. Thus, we held:

The fact that the losing bidder, Keppel Consortium (composed of Keppel, SM Group, Insular Life Assurance, Mitsui and ICTSI), has joined PHILYARDS in the latter’s effort to raise P2.131 billion necessary in exercising the right to top is not contrary to law, public policy or public morals. There is nothing in the ASBR that bars the losing bidders from joining either the winning bidder (should the right to top is not exercised) or KAWASAKI/PHI (should it exercise its right to top as it did), to raise the purchase price. The petitioner did not allege, nor was it shown by competent evidence, that the participation of the losing bidders in the public bidding was done with fraudulent intent. Absent any proof of fraud, the formation by [PHILYARDS] of a consortium is legitimate in a free enterprise system. The appellate court is thus correct in holding the petitioner estopped from questioning the validity of the transfer of the National Government’s shares in PHILSECO to respondent.

Further, we see no inherent illegality on PHILYARDS’ act in seeking funding from parties who were losing bidders. This is a purely commercial decision over which the State should not interfere absent any legal infirmity. It is emphasized that the case at bar involves the disposition of shares in a corporation which the government sought to privatize. As such, the persons with whom PHILYARDS desired to enter into business with in order to raise funds to purchase the shares are basically its business. This is in contrast to a case involving a contract for the operation of or construction of a government infrastructure where the identity of the buyer/bidder or financier constitutes an important consideration. In such cases, the government would have to take utmost precaution to protect public interest by ensuring that the parties with which it is contracting have the ability to satisfactorily construct or operate the infrastructure.

On the landholding issue, J.G. Summit submits that since PHILSECO is a landholding company, KAWASAKI could exercise its right of first refusal only up to 40% of the shares of PHILSECO due to the constitutional prohibition on landholding by corporations with more than 40% foreign-owned equity. It further argues that since KAWASAKI already held at least 40% equity in PHILSECO, the right of first refusal was inutile and as such, could not subsequently be converted into the right to top.  Petitioner also asserts that, at present, PHILSECO continues to violate the constitutional provision on landholdings as its shares are more than 40% foreign-owned. PHILYARDS admits that it may have previously held land but had already divested such landholdings. It contends, however, that even if PHILSECO owned land, this would not affect the right of first refusal but only the exercise thereof. If the land is retained, the right of first refusal, being a property right, could be assigned to a qualified party. In the alternative, the land could be divested before the exercise of the right of first refusal. In the case at bar, respondents assert that since the right of first refusal was validly converted into a right to top, which was exercised not by KAWASAKI, but by PHILYARDS which is a Filipino corporation (i.e., 60% of its shares are owned by Filipinos), then there is no violation of the Constitution. At first, it would seem that questions of fact beyond cognizance by this Court were involved in the issue. However, the records show that PHILYARDS admits it had owned land up until the time of the bidding. Hence, the only issue is whether KAWASAKI had a valid right of first refusal over PHILSECO shares under the JVA considering that PHILSECO owned land until the time of the bidding and KAWASAKI already held 40% of PHILSECO’s equity.

We uphold the validity of the mutual rights of first refusal under the JVA between KAWASAKI and NIDC. First of all, the right of first refusal is a property right of PHILSECO shareholders, KAWASAKI and NIDC, under the terms of their JVA. This right allows them to purchase the shares of their co-shareholder before they are offered to a third party. The agreement of co-shareholders to mutually grant this right to each other, by itself, does not constitute a violation of the provisions of the Constitution limiting land ownership to Filipinos and Filipino corporations. As PHILYARDS correctly puts it, if PHILSECO still owns land, the right of first refusal can be validly assigned to a qualified Filipino entity in order to maintain the 60%-40% ratio. This transfer, by itself, does not amount to a violation of the Anti-Dummy Laws, absent proof of any fraudulent intent. The transfer could be made either to a nominee or such other party which the holder of the right of first refusal feels it can comfortably do business with. Alternatively, PHILSECO may divest of its landholdings, in which case KAWASAKI, in exercising its right of first refusal, can exceed 40% of PHILSECO’s equity. In fact, it can even be said that if the foreign shareholdings of a landholding corporation exceeds 40%, it is not the foreign stockholders’ ownership of the shares which is adversely affected but the capacity of the corporation to own land – that is, the corporation becomes disqualified to own land. This finds support under the basic corporate law principle that the corporation and its stockholders are separate juridical entities. In this vein, the right of first refusal over shares pertains to the shareholders whereas the capacity to own land pertains to the corporation. Hence, the fact that PHILSECO owns land cannot deprive stockholders of their right of first refusal.  No law disqualifies a person from purchasing shares in a landholding corporation even if the latter will exceed the allowed foreign equity, what the law disqualifies is the corporation from owning land. This is the clear import of the following provisions in the Constitution:

Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant.

xxx               xxx               xxx


Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain. (emphases supplied)

The petitioner further argues that “an option to buy land is void in itself (Philippine Banking Corporation v. Lui She, 21 SCRA 52 [1967]). The right of first refusal granted to KAWASAKI, a Japanese corporation, is similarly void. Hence, the right to top, sourced from the right of first refusal, is also void.” Contrary to the contention of petitioner, the case of Lui She did not that say “an option to buy land is void in itself,” for we ruled as follows:

x x x To be sure, a lease to an alien for a reasonable period is valid. So is an option giving an alien the right to buy real property on condition that he is granted Philippine citizenship. As this Court said in Krivenko vs. Register of Deeds:

[A]liens are not completely excluded by the Constitution from the use of lands for residential purposes. Since their residence in the Philippines is temporary, they may be granted temporary rights such as a lease contract which is not forbidden by the Constitution. Should they desire to remain here forever and share our fortunes and misfortunes, Filipino citizenship is not impossible to acquire.

But if an alien is given not only a lease of, but also an option to buy, a piece of land, by virtue of which the Filipino owner cannot sell or otherwise dispose of his property, this to last for 50 years, then it becomes clear that the arrangement is a virtual transfer of ownership whereby the owner divests himself in stages not only of the right to enjoy the land (jus possidendi, jus utendi, jus fruendi and jus abutendi) but also of the right to dispose of it (jus disponendi) — rights the sum total of which make up ownership. It is just as if today the possession is transferred, tomorrow, the use, the next day, the disposition, and so on, until ultimately all the rights of which ownership is made up are consolidated in an alien. And yet this is just exactly what the parties in this case did within this pace of one year, with the result that Justina Santos'[s] ownership of her property was reduced to a hollow concept. If this can be done, then the Constitutional ban against alien landholding in the Philippines, as announced in Krivenko vs. Register of Deeds, is indeed in grave peril. (emphases supplied; Citations omitted)

In Lui She, the option to buy was invalidated because it amounted to a virtual transfer of ownership as the owner could not sell or dispose of his properties. The contract in Lui She prohibited the owner of the land from selling, donating, mortgaging, or encumbering the property during the 50-year period of the option to buy. This is not so in the case at bar where the mutual right of first refusal in favor of NIDC and KAWASAKI does not amount to a virtual transfer of land to a non-Filipino. In fact, the case at bar involves a right of first refusal over shares of stock while the Lui She case involves an option to buy the land itself. As discussed earlier, there is a distinction between the shareholder’s ownership of shares and the corporation’s ownership of land arising from the separate juridical personalities of the corporation and its shareholders.

We note that in its Motion for Reconsideration, J.G. Summit alleges that PHILSECO continues to violate the Constitution as its foreign equity is above 40% and yet owns long-term leasehold rights which are real rights. It cites Article 415 of the Civil Code which includes in the definition of immovable property, “contracts for public works, and servitudes and other real rights over immovable property.” Any existing landholding, however, is denied by PHILYARDS citing its recent financial statements. First, these are questions of fact, the veracity of which would require introduction of evidence. The Court needs to validate these factual allegations based on competent and reliable evidence. As such, the Court cannot resolve the questions they pose. Second, J.G. Summit misreads the provisions of the Constitution cited in its own pleadings, to wit:

29.2 Petitioner has consistently pointed out in the past that private respondent is not a 60%-40% corporation, and this violates the Constitution x x x The violation continues to this day because under the law, it continues to own real property…

xxx   xxx   xxx

32. To review the constitutional provisions involved, Section 14, Article XIV of the 1973 Constitution (the JVA was signed in 1977), provided:

“Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.”

32.1 This provision is the same as Section 7, Article XII of the 1987 Constitution.

32.2 Under the Public Land Act, corporations qualified to acquire or hold lands of the public domain are corporations at least 60% of which is owned by Filipino citizens (Sec. 22, Commonwealth Act 141, as amended). (emphases supplied)

As correctly observed by the public respondents, the prohibition in the Constitution applies only to ownership of land. It does not extend to immovable or real property as defined under Article 415 of the Civil Code. Otherwise, we would have a strange situation where the ownership of immovable property such as trees, plants and growing fruit attached to the land would be limited to Filipinos and Filipino corporations only.

III.


WHEREFORE, in view of the foregoing, the petitioner’s Motion for Reconsideration is DENIED WITH FINALITY and the decision appealed from is AFFIRMED. The Motion to Elevate This Case to the Court En Banc is likewise DENIED for lack of merit.

SO ORDERED.

SOURCE: [ G.R. NO. 124293, January 31, 2005 ] J.G. SUMMIT HOLDINGS, INC., PETITIONER, VS. COURT OF APPEALS; COMMITTEE ON PRIVATIZATION, ITS CHAIRMAN AND MEMBERS; ASSET PRIVATIZATION TRUST; AND PHILYARDS HOLDINGS, INC., RESPONDENTS. Tags: Alcantara Alcoy moral damages Alegria actual damages Aloguinsan Argao Asturias Badian Balamban Bantayan Barili Boljoon Borbon Carmen Catmon Compostela Consolacion Cordova Daanbantayan Dumaguete Bais Sibulan Tampi Bacong Negros Bacolod Separation pay Resign Resignation Back wages Backwages Length of service pay benefit employee employer relationship Silay Kabankalan Daan Bantayan Dalaguete Dumanjug Ginatilan Liloan compensatory damages Madridejos Malabuyoc Medellin Minglanilla Moalboal Oslob Pilar Pinamungajan Poro Ronda Samboan San Fernando San Francisco San Remigio Sante Fe Santander Sibonga Sogod Tabogon Tabuelan Tuburan attorney’s fees Tudela exemplary damages Camotes General Luna Siargao Cagayan Davao Kidapawan Attorney Abogado Lawyer Architect Real Estate Broker nominal damages Sales Agent Properties for Sale Looking for Buyers Design Build House and Lot for Sale for Rent Talisay City Mandaue City Lapu Lapu Lapu-Lapu City Yncierto Sesante Villanueva Ruz Jan Edmond Marc Tim Timothy temperate damages Luz liquidated damages Kristin tct transfer certificate of title tax declaration birth certificate relocation survey surveying judicial titling administrative titling patent title denr cenro foreshore lease ecc environmental compliance certificate design build architect cebu engineer interior design designer residential commercial cebu property warehouse for rent for lease marc Christian yncierto ruz jan Edmond yncierto ruz Kristin Villanueva ruz Edmond mabalot ruz marriage certificate timber land forest land watershed agricultural lot land use conversion hearing trial illegal drugs trial lawyer business corporate lawyer labor lawyer immigration law bureau of immigration cebu 9g visa search warrant warrant of arrest motion to quash information complaint police officers buy bust physical suffering shocked horrified mental anguish fright serious anxiety besmirched reputation sleepless nights wounded feelings moral shock social humiliation similar injuries

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Whether there are sufficient bases to elevate the case at bar to the Court en banc.

Motion to Elevate this Case to the
Court En Banc

The petitioner prays for the elevation of the case to the Court en banc on the following grounds:

1. The main issue of the propriety of the bidding process involved in the present case has been confused with the policy issue of the supposed fate of the shipping industry which has never been an issue that is determinative of this case.

2. The present case may be considered under the Supreme Court Resolution dated February 23, 1984 which included among en banc cases those involving a novel question of law and those where a doctrine or principle laid down by the Court en banc or in division may be modified or reversed.

3. There was clear executive interference in the judicial functions of the Court when the Honorable Jose Isidro Camacho, Secretary of Finance, forwarded to Chief Justice Davide, a memorandum dated November 5, 2001, attaching a copy of the Foreign Chambers Report dated October 17, 2001, which matter was placed in the agenda of the Court and noted by it in a formal resolution dated November 28, 2001.

Opposing J.G. Summit’s motion to elevate the case en banc, PHILYARDS points out the petitioner’s inconsistency in previously opposing PHILYARDS’ Motion to Refer the Case to the Court En Banc. PHILYARDS contends that J.G. Summit should now be estopped from asking that the case be referred to the Court en banc. PHILYARDS further contends that the Supreme Court en banc is not an appellate court to which decisions or resolutions of its divisions may be appealed citing Supreme Court Circular No. 2-89 dated February 7, 1989. PHILYARDS also alleges that there is no novel question of law involved in the present case as the assailed Resolution was based on well-settled jurisprudence. Likewise, PHILYARDS stresses that the Resolution was merely an outcome of the motions for reconsideration filed by it and the COP and APT and is “consistent with the inherent power of courts to ‘amend and control its process and orders so as to make them conformable to law and justice.’ (Rule 135, sec. 5)” Private respondent belittles the petitioner’s allegations regarding the change in ponente and the alleged executive interference as shown by former Secretary of Finance Jose Isidro Camacho’s memorandum dated November 5, 2001 arguing that these do not justify a referral of the present case to the Court en banc.

In insisting that its Motion to Elevate This Case to the Court En Banc should be granted, J.G. Summit further argued that: its Opposition to the Office of the Solicitor General’s Motion to Refer is different from its own Motion to Elevate; different grounds are invoked by the two motions; there was unwarranted “executive interference”; and the change in ponente is merely noted in asserting that this case should be decided by the Court en banc.

We find no merit in petitioner’s contention that the propriety of the bidding process involved in the present case has been confused with the policy issue of the fate of the shipping industry which, petitioner maintains, has never been an issue that is determinative of this case. The Court’s Resolution of September 24, 2003 reveals a clear and definitive ruling on the propriety of the bidding process. In discussing whether the right to top granted to KAWASAKI in exchange for its right of first refusal violates the principles of competitive bidding, we made an exhaustive discourse on the rules and principles of public bidding and whether they were complied with in the case at bar. This Court categorically ruled on the petitioner’s argument that PHILSECO, as a shipyard, is a public utility which should maintain a 60%-40% Filipino-foreign equity ratio, as it was a pivotal issue. In doing so, we recognized the impact of our ruling on the shipbuilding industry which was beyond avoidance.

We reject petitioner’s argument that the present case may be considered under the Supreme Court Resolution dated February 23, 1984 which included among en banc cases those involving a novel question of law and those where a doctrine or principle laid down by the court en banc or in division may be modified or reversed. The case was resolved based on basic principles of the right of first refusal in commercial law and estoppel in civil law. Contractual obligations arising from rights of first refusal are not new in this jurisdiction and have been recognized in numerous cases. Estoppel is too known a civil law concept to require an elongated discussion. Fundamental principles on public bidding were likewise used to resolve the issues raised by the petitioner. To be sure, petitioner leans on the right to top in a public bidding in arguing that the case at bar involves a novel issue. We are not swayed. The right to top was merely a condition or a reservation made in the bidding rules which was fully disclosed to all bidding parties. In Bureau Veritas, represented by Theodor H. Hunermann v. Office of the President, et al., we dealt with this conditionality, viz:

x x x It must be stressed, as held in the case of A.C. Esguerra & Sons v. Aytona, et al., (L-18751, 28 April 1962, 4 SCRA 1245), that in an “invitation to bid, there is a condition imposed upon the bidders to the effect that the bidding shall be subject to the right of the government to reject any and all bids subject to its discretion. In the case at bar, the government has made its choice and unless an unfairness or injustice is shown, the losing bidders have no cause to complain nor right to dispute that choice. This is a well-settled doctrine in this jurisdiction and elsewhere.”

The discretion to accept or reject a bid and award contracts is vested in the Government agencies entrusted with that function. The discretion given to the authorities on this matter is of such wide latitude that the Courts will not interfere therewith, unless it is apparent that it is used as a shield to a fraudulent award (Jalandoni v. NARRA, 108 Phil. 486 [1960]). x x x The exercise of this discretion is a policy decision that necessitates prior inquiry, investigation, comparison, evaluation, and deliberation. This task can best be discharged by the Government agencies concerned, not by the Courts. The role of the Courts is to ascertain whether a branch or instrumentality of the Government has transgressed its constitutional boundaries. But the Courts will not interfere with executive or legislative discretion exercised within those boundaries. Otherwise, it strays into the realm of policy decision-making.

It is only upon a clear showing of grave abuse of discretion that the Courts will set aside the award of a contract made by a government entity. Grave abuse of discretion implies a capricious, arbitrary and whimsical exercise of power (Filinvest Credit Corp. v. Intermediate Appellate Court, No. 65935, 30 September 1988, 166 SCRA 155). The abuse of discretion must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform a duty enjoined by law, as to act at all in contemplation of law, where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility (Litton Mills, Inc. v. Galleon Trader, Inc., et al[.], L-40867, 26 July 1988, 163 SCRA 489).

The facts in this case do not indicate any such grave abuse of discretion on the part of public respondents when they awarded the CISS contract to Respondent SGS. In the “Invitation to Prequalify and Bid” (Annex “C,” supra), the CISS Committee made an express reservation of the right of the Government to “reject any or all bids or any part thereof or waive any defects contained thereon and accept an offer most advantageous to the Government.” It is a well-settled rule that where such reservation is made in an Invitation to Bid, the highest or lowest bidder, as the case may be, is not entitled to an award as a matter of right (C & C Commercial Corp. v. Menor, L-28360, 27 January 1983, 120 SCRA 112). Even the lowest Bid or any Bid may be rejected or, in the exercise of sound discretion, the award may be made to another than the lowest bidder (A.C. Esguerra & Sons v. Aytona, supra, citing 43 Am. Jur., 788). (emphases supplied)

Like the condition in the Bureau Veritas case, the right to top was a condition imposed by the government in the bidding rules which was made known to all parties. It was a condition imposed on all bidders equally, based on the APT’s exercise of its discretion in deciding on how best to privatize the government’s shares in PHILSECO. It was not a whimsical or arbitrary condition plucked from the ether and inserted in the bidding rules but a condition which the APT approved as the best way the government could comply with its contractual obligations to KAWASAKI under the JVA and its mandate of getting the most advantageous deal for the government. The right to top had its history in the mutual right of first refusal in the JVA and was reached by agreement of the government and KAWASAKI.

Further, there is no “executive interference” in the functions of this Court by the mere filing of a memorandum by Secretary of Finance Jose Isidro Camacho. The memorandum was merely “noted” to acknowledge its filing. It had no further legal significance. Notably too, the assailed Resolution dated September 24, 2003 was decided unanimously by the Special First Division in favor of the respondents.

Again, we emphasize that a decision or resolution of a Division is that of the Supreme Court and the Court en banc is not an appellate court to which decisions or resolutions of a Division may be appealed.

For all the foregoing reasons, we find no basis to elevate this case to the Court en banc.

SOURCE: [ G.R. NO. 124293, January 31, 2005 ]J.G. SUMMIT HOLDINGS, INC., PETITIONER, VS. COURT OF APPEALS; COMMITTEE ON PRIVATIZATION, ITS CHAIRMAN AND MEMBERS; ASSET PRIVATIZATION TRUST; AND PHILYARDS HOLDINGS, INC., RESPONDENTS. Tags: Alcantara Alcoy moral damages Alegria actual damages Aloguinsan Argao Asturias Badian Balamban Bantayan Barili Boljoon Borbon Carmen Catmon Compostela Consolacion Cordova Daanbantayan Dumaguete Bais Sibulan Tampi Bacong Negros Bacolod Separation pay Resign Resignation Back wages Backwages Length of service pay benefit employee employer relationship Silay Kabankalan Daan Bantayan Dalaguete Dumanjug Ginatilan Liloan compensatory damages Madridejos Malabuyoc Medellin Minglanilla Moalboal Oslob Pilar Pinamungajan Poro Ronda Samboan San Fernando San Francisco San Remigio Sante Fe Santander Sibonga Sogod Tabogon Tabuelan Tuburan attorney’s fees Tudela exemplary damages Camotes General Luna Siargao Cagayan Davao Kidapawan Attorney Abogado Lawyer Architect Real Estate Broker nominal damages Sales Agent Properties for Sale Looking for Buyers Design Build House and Lot for Sale for Rent Talisay City Mandaue City Lapu Lapu Lapu-Lapu City Yncierto Sesante Villanueva Ruz Jan Edmond Marc Tim Timothy temperate damages Luz liquidated damages Kristin tct transfer certificate of title tax declaration birth certificate relocation survey surveying judicial titling administrative titling patent title denr cenro foreshore lease ecc environmental compliance certificate design build architect cebu engineer interior design designer residential commercial cebu property warehouse for rent for lease marc Christian yncierto ruz jan Edmond yncierto ruz Kristin Villanueva ruz Edmond mabalot ruz marriage certificate timber land forest land watershed agricultural lot land use conversion hearing trial illegal drugs trial lawyer business corporate lawyer labor lawyer immigration law bureau of immigration cebu 9g visa search warrant warrant of arrest motion to quash information complaint police officers buy bust physical suffering shocked horrified mental anguish fright serious anxiety besmirched reputation sleepless nights wounded feelings moral shock social humiliation similar injuries

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THE TRIAL COURT ERRED IN HOLDING THAT THE ALLEGED FRAUD IN THE APPLICATION FOR THE REGISTRATION OF THE LAND IS THE KIND OF FRAUD CONTEMPLATED BY LAW TO WARRANT RECONVEYANCE OF THE SUBJECT PROPERTY

The settled rule is that every action must be prosecuted or defended in the name of the real party-in-interest. Where the action is allowed to be prosecuted or defended by a representative acting in a fiduciary capacity, the beneficiary must be included in the title of the case and shall be deemed to be the real party-in-interest. The name of such beneficiaries shall, likewise, be included in the complaint.

Section 4, Rule 8 of the Rules of Court further provides that facts showing the capacity of a party to sue or be sued, or the authority of a party to sue or be sued in a representative capacity must be averred in the complaint.  In order to maintain an action in a court of justice, the plaintiff must have an actual legal existence, that is, he or she or it must be a person in law and possessed of a legal entity as either a natural or an artificial person, and no suit can lawfully be prosecuted in the name of that person. The party bringing suit has the burden of proving the sufficiency of the representative character that he claims.  If a complaint is filed by one who claims to represent a party as plaintiff but who, in fact, is not authorized to do so, such complaint is not deemed filed and the court does not acquire jurisdiction over the complaint. It must be stressed that an unauthorized complaint does not produce any legal effect. Corollary, the defendant can assail the facts alleged therein through a motion to dismiss on the ground that the plaintiff has no capacity to sue under Section 1(d) of Rule 16 of the Rules of Court, that is, that he does not have the representative he claims.

Section 7, Rule 3 of the Rules of Court reads:

SEC. 7. Compulsory joinder of indispensable parties. – Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants.

Thus, the presence of all indispensable parties is a condition sine qua non for the exercise of judicial power.  It is precisely when an indispensable party is not before the court that the action should be dismissed. The plaintiff is mandated to implead all indispensable parties, and the absence of one renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties, but even as to those present. One who is a party to a case is not bound by any decision of the court; otherwise, he will be deprived of his right to due process.

The records show that when Roman Realon died intestate on April 4, 1946, he was survived by his son, Alfredo, and his nephews, who were the children of his deceased son, Buenaventura, namely, Marciano, Joaquino, Florentino, Felipe, Marcelo, Sesinando and Montano, all surnamed Realon.  On the other hand, when Alfredo died intestate, he was survived by his heirs, Ruperta Mapanso, Florentino Purificacion, Emiliano Purificacion, the son of his deceased daughter, Beatriz Realon, Serafin Purificacion and Leonedes Purificacion. Marcelo Realon was survived by his heirs, namely, Ma. Luz Librado, Santiago Realon, Isidro R. Manabo, Rufina B. Mercado and Romel Realon. Only Joaquino, Florentino, Felipe, Sesinando and Montano are still alive.

The four (4) respondents herein, who were the plaintiffs in the trial court, sought the nullification of the Contract to Sell in favor of the petitioner executed by Marciano and his brothers, as well as the Contract to Sell executed by Alfredo over the undivided shares in Lot No. 1253, the deed of sale with mortgage executed by Marciano Realon and his brothers, and the deed of sale with mortgage executed by Alfredo in favor of the petitioner.  They likewise sought to nullify OCT No. O-2348 under the name of the petitioner and the reconveyance of the said lot to the respondents, free from all liens and encumbrances on their allegation that the petitioner committed fraud in the execution of the said deeds and in receiving the said title. Hence, all the surviving signatories to the said documents, namely, Joaquino, Francisco, Felipe, Sesinando and Montano, all surnamed Realon, and the other surviving heirs of Alfredo Realon and Marciano and Marcelo, were indispensable parties as plaintiffs.  Moreover, if the trial court rendered judgment against the petitioner, ordering him to convey the property to the vendors, the latter, as the predecessor-in-interest of the vendors, would have to refund to the vendee the amount they received from the latter.  Hence, the respondents herein should have impleaded them in their complaint.  However, the only plaintiffs impleaded in the complaint were the respondents herein, namely, Francisco, Domingo and Felipe, all surnamed Realon and Emiliano Purificacion.  The surviving signatories of the assailed deeds and the other heirs of the deceased vendors were not impleaded as plaintiffs. Without the presence of all the other heirs as plaintiffs, the trial court could not validly render judgment and grant relief in favor of the respondents; it could, likewise, not rule in favor of the petitioner for the refund of his payments made to the respondents as the successors-in-interest of the vendors.  The failure of the respondents to implead the said signatories and all the other heirs as parties-plaintiffs constituted a legal obstacle to the trial court and the appellate court’s exercise of judicial power over the said case, and thereby rendered any orders or judgments made therein a nullity. To reiterate, the absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties, but even as to those present. Thus, the RTC should have ordered the dismissal of the complaint.

The Court notes that the respondents even failed to include the names of all the other heirs, including the signatories to the assailed deeds in the complaint and in the title thereof, and appending thereto a copy of any special power of attorney authorizing the respondents to sue in their respective capacity for said heirs.  Thus, the petitioner was prevented from questioning the capacity of the said heirs to sue in their respective capacity either in a motion to dismiss the complaint or in his answer to the complaint.

We note that of the four (4) plaintiffs, Domingo Realon failed to sign the certification of non-forum shopping.  On the other hand, the three other plaintiffs who signed the certification failed to append to the complaint a special power of attorney signed by all the surviving vendors and other heirs specifically authorizing them to sign the same for and in their behalf.  This is fatal to the complaint and warrants the dismissal thereof.

In sum then, the trial court should have rendered judgment dismissing the respondents’ complaint, and the Court of Appeals should have reversed the appealed decision of the RTC.

Indeed, even if the complaint of the respondents did not suffer from any substantial defects, the appellate court should still have reversed the trial court’s decision on the ground that the respondents failed to prove that the petitioner secured OCT No. O-2348 through actual or extrinsic fraud; and that the Contracts to Sell and Deeds of Sale with Mortgage were fraudulent.

As a ground for the nullification of the decision in LRC Case No. 83-15, and OCT No. O-2348 issued on the basis thereof, fraud must be extrinsic or actual, and not intrinsic.  The Court elaborated on the distinction of the two species of frauds, thus:

Fraud may also be either extrinsic or intrinsic. Fraud is regarded as intrinsic where the fraudulent acts pertain to an issue involved in the original action, or where the acts constituting the fraud were or could have been litigated therein and is regarded as extrinsic where it prevents a party from having a trial or from presenting his entire case to the court, or where it operates upon matters pertaining not to the judgment itself but to the manner in which it is procured, so that there is no fair submission of the controversy.  Extrinsic fraud is also actual fraud, but collateral to the transaction sued upon.

The distinctions are significant because only actual fraud or extrinsic fraud has been accepted as grounds for a judgment to be annulled or, as in this case, a decree of registration reopened and reviewed.  In the oft-cited Macabingkil v. People’s Homesite and Housing Corporation case, the Court drew from American jurisprudence stating that “relief has been granted on the ground that, by some fraud practiced directly upon the party seeking relief against the judgment or decree, (and) that party has been prevented from presenting all of his case to the court.” The “fraud” contemplated by the law in this case (Section 32, P.D. No. 1529) is actual and extrinsic, which includes an intentional omission of fact required by law.  For fraud to justify a review of a decree, it must be extrinsic or collateral, and the facts upon which it is based have not been controverted or resolved in the case where the judgment sought to be annulled was rendered.  Persons who were fraudulently deprived of their opportunity to be heard in the original registration case are entitled to a review of a decree or registration.

In contrast to actual fraud, constructive fraud is construed as such because of its detrimental effect upon public interests, as well as public or private confidence in the Torrens System, even though the act is not done or committed with an actual design to commit positive fraud or injury upon other persons.

The records show that in his application in LRC Case No. 83-15, the petitioner, who was the applicant, alleged that he was the owner of the property, having acquired the same based on the Contract to Sell dated July 31, 1979, executed in his favor by Alfredo and Marciano Realon.  He also alleged that the property was unoccupied and that there was no lien or encumbrance of any kind whatsoever affecting the said land, and that he had no knowledge of any person having any interest therein, legal or equitable.

The allegation that the petitioner was the owner of the property is admittedly incorrect because the deeds executed by Marciano and Alfredo Realon on July 31, 1979 were the contracts to sell, under which the petitioner, as buyer, would acquire title over the property only upon his payment of the balance of the purchase price thereof on or before May 23, 1980; or the issuance of a torrens title in the names of the vendees and the execution by the seller of a final deed of sale. Also, the property was tenanted by respondent Emiliano Purificacion.

When he filed his application on November 11, 1983, the petitioner had not yet paid the balance of the purchase price of the property.  The vendors themselves failed to file an application for the issuance of a torrens title over the property in their names.  Hence, the petitioner had not yet acquired ownership over the property when he filed his application.  However, the Court believes that there was no intention on the part of the petitioner to deceive Alfredo and Marciano Realon, and deprive them of their right to be heard on the said application because (a) the petitioner appended to his application and adduced in evidence copies of the contracts to sell in favor of the petitioner executed by Alfredo and Marciano Realon, the latter for and in his behalf, and those of this brothers; and (b) Alfredo and Marciano Realon were served with copies of the notice of hearing of the said application, even testified for the petitioner and affirmed the validity of  the said deeds.  The respondents, as successors-in-interest of the vendees, can no longer assail the admissions of Alfredo and Marciano when they testified for the petitioner in LRC Case No. 83-15.

As gleaned from the decision of the trial court, the petitioner still had a balance on the purchase price of the property due to the vendees amounting to P129,349.73.

We agree with the appellate court that the RTC erred in its decision in LRC Case No. 83-15 declaring the petitioner, who was the applicant in the RTC, to be the legal owner of the property based on the contracts to sell executed in his favor by Alfredo and his nephews.  However, there is no showing in the records that the decision was appealed to the Court of Appeals.  Indeed, the decision had become final and executory, and the court had issued a decree based on its decision.  In due course, the Register of Deeds issued OCT No. 1248 in favor of the petitioner.  Hence, even if erroneous, the decision can no longer be altered. Consequently, the respondents were barred by the decision of the RTC in Civil Case No. BCV 94-28 from impugning the deed of sale with mortgage executed in favor of the petitioner by Alfredo and his nephews on January 8, 1985.  In its decision in the said case, the RTC declared:

At the trial, Engr. Aldersen Ilaban was called to the stand who testified that he is the authorized representative of the plaintiff, having been designated as administrator of his properties (Exh. “E”). He averred that his principal bought the parcel of land in question located at Carmona, Cavite, from its former owners, Alfredo Realon, Marciano Realon, in two (2) separate deeds of sale with mortgage (Exh. “A” & “B”). He further declared that the sellers undertook to deliver to the plaintiff the title covering the subject property upon payment of the balance of the purchase price.  However, despite plaintiff’s offer to pay the entire consideration of the sale after plaintiff exerted effort to secure the torrens title over the subject lot, defendants refused to accept the same in view of their demand for a higher consideration. This prompted plaintiff to write a letter to defendants on October 15, 1993 whereby he tendered payment of the remaining balance (Exh. “C”). Four months thereafter, he again wrote defendants advising them that if they would still refuse to accept the payment, he would deposit the amount of P42,849.23 directly in open court (Exh. “D”).

Considering that the respondents, as defendants therein, failed to appeal the decision, it became final and executory and can no longer be assailed.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED.  The assailed decision of the Court of Appeals in CA-G.R. CV No. 68979, and that of the Regional Trial Court, are SET ASIDE. No costs.

SO ORDERED.

SOURCE: [ G.R. NO. 159156, January 31, 2005 ]RAMON P. ARON, PETITIONER, VS. FRANCISCO REALON, DOMINGO REALON AND FELIPE REALON, REPRESENTING THE HEIRS OF MARCIANO REALON AND ROMAN REALON, EMILIANO R. PURIFICACION, REPRESENTING THE HEIRS OF ALFREDO REALON AND ROMAN REALON, RESPONDENTS. Tags: Alcantara Alcoy moral damages Alegria actual damages Aloguinsan Argao Asturias Badian Balamban Bantayan Barili Boljoon Borbon Carmen Catmon Compostela Consolacion Cordova Daanbantayan Dumaguete Bais Sibulan Tampi Bacong Negros Bacolod Separation pay Resign Resignation Back wages Backwages Length of service pay benefit employee employer relationship Silay Kabankalan Daan Bantayan Dalaguete Dumanjug Ginatilan Liloan compensatory damages Madridejos Malabuyoc Medellin Minglanilla Moalboal Oslob Pilar Pinamungajan Poro Ronda Samboan San Fernando San Francisco San Remigio Sante Fe Santander Sibonga Sogod Tabogon Tabuelan Tuburan attorney’s fees Tudela exemplary damages Camotes General Luna Siargao Cagayan Davao Kidapawan Attorney Abogado Lawyer Architect Real Estate Broker nominal damages Sales Agent Properties for Sale Looking for Buyers Design Build House and Lot for Sale for Rent Talisay City Mandaue City Lapu Lapu Lapu-Lapu City Yncierto Sesante Villanueva Ruz Jan Edmond Marc Tim Timothy temperate damages Luz liquidated damages Kristin tct transfer certificate of title tax declaration birth certificate relocation survey surveying judicial titling administrative titling patent title denr cenro foreshore lease ecc environmental compliance certificate design build architect cebu engineer interior design designer residential commercial cebu property warehouse for rent for lease marc Christian yncierto ruz jan Edmond yncierto ruz Kristin Villanueva ruz Edmond mabalot ruz marriage certificate timber land forest land watershed agricultural lot land use conversion hearing trial illegal drugs trial lawyer business corporate lawyer labor lawyer immigration law bureau of immigration cebu 9g visa search warrant warrant of arrest motion to quash information complaint police officers buy bust physical suffering shocked horrified mental anguish fright serious anxiety besmirched reputation sleepless nights wounded feelings moral shock social humiliation similar injuries

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On Whether Manna Properties Failed to Comply with the Jurisdictional Requirements for Original Registration

Petitioner contends that PD 1529 sets a 90-day maximum period between the court order setting the initial hearing date and the hearing itself. Petitioner points out that in this case, the trial court issued the order setting the date of the initial hearing on 15 March 1995, but the trial court set the hearing date itself on 18 July 1995. Considering that there are 125 days in between the two dates, petitioner argues that the trial court exceeded the 90-day period set by PD 1529. Thus, petitioner concludes “the applicant [Manna Properties] failed to comply with the jurisdictional requirements for original registration.”

The petitioner is mistaken.

The pertinent portion of Section 23 of PD 1529 reads:

Sec. 23. Notice of initial hearing, publication etc. – The court shall, within five days from filing of the application, issue an order setting the date and hour of initial hearing which shall not be earlier than forty-five days nor later than ninety days from the date of the order.

xxx

The duty and the power to set the hearing date lies with the land registration court. After an applicant has filed his application, the law requires the issuance of a court order setting the initial hearing date. The notice of initial hearing is a court document. The notice of initial hearing is signed by the judge and copy of the notice is mailed by the clerk of court to the LRA. This involves a process to which the party applicant absolutely has no participation.

Petitioner is correct that in land registration cases, the applicant must strictly comply with the jurisdictional requirements. In this case, the applicant complied with the jurisdictional requirements.

The facts reveal that Manna Properties was not at fault why the hearing date was set beyond the 90-day maximum period. The records show that the Docket Division of the LRA repeatedly requested the trial court to reset the initial hearing date because of printing problems with the National Printing Office, which could affect the timely publication of the notice of hearing in the Official Gazette.  Indeed, nothing in the records indicates that Manna Properties failed to perform the acts required of it by law.

We have held that “a party to an action has no control over the Administrator or the Clerk of Court acting as a land court; he has no right to meddle unduly with the business of such official in the performance of his duties.” A party cannot intervene in matters within the exclusive power of the trial court.  No fault is attributable to such party if the trial court errs on matters within its sole power.  It is unfair to punish an applicant for an act or omission over which the applicant has neither responsibility nor control, especially if the applicant has complied with all the requirements of the law.

Petitioner limited itself to assailing the lapse of time between the issuance of the order setting the date of initial hearing and the date of the initial hearing itself. Petitioner does not raise any other issue with respect to the sufficiency of the application. Petitioner does not also question the sufficiency of the publication of the required notice of hearing. Consequently, petitioner does not dispute the real jurisdictional issue involved in land registration cases — compliance with the publication requirement under PD 1529. As the records show, the notice of hearing was published both in the Official Gazette and a newspaper of general circulation well ahead of the date of hearing.  This complies with the legal requirement of serving the entire world with sufficient notice of the registration proceedings.

SOURCE: [ G.R. NO. 146527, January 31, 2005 ]REPUBLIC OF THE PHILIPPINES, PETITIONER, VS. MANNA PROPERTIES, INC., REPRESENTED BY ITS PRESIDENT, JOSE TANYAO, RESPONDENT. Tags: Alcantara Alcoy moral damages Alegria actual damages Aloguinsan Argao Asturias Badian Balamban Bantayan Barili Boljoon Borbon Carmen Catmon Compostela Consolacion Cordova Daanbantayan Dumaguete Bais Sibulan Tampi Bacong Negros Bacolod Separation pay Resign Resignation Back wages Backwages Length of service pay benefit employee employer relationship Silay Kabankalan Daan Bantayan Dalaguete Dumanjug Ginatilan Liloan compensatory damages Madridejos Malabuyoc Medellin Minglanilla Moalboal Oslob Pilar Pinamungajan Poro Ronda Samboan San Fernando San Francisco San Remigio Sante Fe Santander Sibonga Sogod Tabogon Tabuelan Tuburan attorney’s fees Tudela exemplary damages Camotes General Luna Siargao Cagayan Davao Kidapawan Attorney Abogado Lawyer Architect Real Estate Broker nominal damages Sales Agent Properties for Sale Looking for Buyers Design Build House and Lot for Sale for Rent Talisay City Mandaue City Lapu Lapu Lapu-Lapu City Yncierto Sesante Villanueva Ruz Jan Edmond Marc Tim Timothy temperate damages Luz liquidated damages Kristin tct transfer certificate of title tax declaration birth certificate relocation survey surveying judicial titling administrative titling patent title denr cenro foreshore lease ecc environmental compliance certificate design build architect cebu engineer interior design designer residential commercial cebu property warehouse for rent for lease marc Christian yncierto ruz jan Edmond yncierto ruz Kristin Villanueva ruz Edmond mabalot ruz marriage certificate timber land forest land watershed agricultural lot land use conversion hearing trial illegal drugs trial lawyer business corporate lawyer labor lawyer immigration law bureau of immigration cebu 9g visa search warrant warrant of arrest motion to quash information complaint police officers buy bust physical suffering shocked horrified mental anguish fright serious anxiety besmirched reputation sleepless nights wounded feelings moral shock social humiliation similar injuries

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The settled rule is that every action must be prosecuted or defended in the name of the real party-in-interest

Where the action is allowed to be prosecuted or defended by a representative acting in a fiduciary capacity, the beneficiary must be included in the title of the case and shall be deemed to be the real party-in-interest. The name of such beneficiaries shall, likewise, be included in the complaint.

Section 4, Rule 8 of the Rules of Court further provides that facts showing the capacity of a party to sue or be sued, or the authority of a party to sue or be sued in a representative capacity must be averred in the complaint.  In order to maintain an action in a court of justice, the plaintiff must have an actual legal existence, that is, he or she or it must be a person in law and possessed of a legal entity as either a natural or an artificial person, and no suit can lawfully be prosecuted in the name of that person. The party bringing suit has the burden of proving the sufficiency of the representative character that he claims.  If a complaint is filed by one who claims to represent a party as plaintiff but who, in fact, is not authorized to do so, such complaint is not deemed filed and the court does not acquire jurisdiction over the complaint. It must be stressed that an unauthorized complaint does not produce any legal effect. Corollary, the defendant can assail the facts alleged therein through a motion to dismiss on the ground that the plaintiff has no capacity to sue under Section 1(d) of Rule 16 of the Rules of Court, that is, that he does not have the representative he claims.

Section 7, Rule 3 of the Rules of Court reads:

SEC. 7. Compulsory joinder of indispensable parties. – Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants.

Thus, the presence of all indispensable parties is a condition sine qua non for the exercise of judicial power.  It is precisely when an indispensable party is not before the court that the action should be dismissed. The plaintiff is mandated to implead all indispensable parties, and the absence of one renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties, but even as to those present. One who is a party to a case is not bound by any decision of the court; otherwise, he will be deprived of his right to due process.

The records show that when Roman Realon died intestate on April 4, 1946, he was survived by his son, Alfredo, and his nephews, who were the children of his deceased son, Buenaventura, namely, Marciano, Joaquino, Florentino, Felipe, Marcelo, Sesinando and Montano, all surnamed Realon.  On the other hand, when Alfredo died intestate, he was survived by his heirs, Ruperta Mapanso, Florentino Purificacion, Emiliano Purificacion, the son of his deceased daughter, Beatriz Realon, Serafin Purificacion and Leonedes Purificacion. Marcelo Realon was survived by his heirs, namely, Ma. Luz Librado, Santiago Realon, Isidro R. Manabo, Rufina B. Mercado and Romel Realon. Only Joaquino, Florentino, Felipe, Sesinando and Montano are still alive.

The four (4) respondents herein, who were the plaintiffs in the trial court, sought the nullification of the Contract to Sell in favor of the petitioner executed by Marciano and his brothers, as well as the Contract to Sell executed by Alfredo over the undivided shares in Lot No. 1253, the deed of sale with mortgage executed by Marciano Realon and his brothers, and the deed of sale with mortgage executed by Alfredo in favor of the petitioner.  They likewise sought to nullify OCT No. O-2348 under the name of the petitioner and the reconveyance of the said lot to the respondents, free from all liens and encumbrances on their allegation that the petitioner committed fraud in the execution of the said deeds and in receiving the said title. Hence, all the surviving signatories to the said documents, namely, Joaquino, Francisco, Felipe, Sesinando and Montano, all surnamed Realon, and the other surviving heirs of Alfredo Realon and Marciano and Marcelo, were indispensable parties as plaintiffs.  Moreover, if the trial court rendered judgment against the petitioner, ordering him to convey the property to the vendors, the latter, as the predecessor-in-interest of the vendors, would have to refund to the vendee the amount they received from the latter.  Hence, the respondents herein should have impleaded them in their complaint.  However, the only plaintiffs impleaded in the complaint were the respondents herein, namely, Francisco, Domingo and Felipe, all surnamed Realon and Emiliano Purificacion.  The surviving signatories of the assailed deeds and the other heirs of the deceased vendors were not impleaded as plaintiffs. Without the presence of all the other heirs as plaintiffs, the trial court could not validly render judgment and grant relief in favor of the respondents; it could, likewise, not rule in favor of the petitioner for the refund of his payments made to the respondents as the successors-in-interest of the vendors.  The failure of the respondents to implead the said signatories and all the other heirs as parties-plaintiffs constituted a legal obstacle to the trial court and the appellate court’s exercise of judicial power over the said case, and thereby rendered any orders or judgments made therein a nullity. To reiterate, the absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties, but even as to those present. Thus, the RTC should have ordered the dismissal of the complaint.

The Court notes that the respondents even failed to include the names of all the other heirs, including the signatories to the assailed deeds in the complaint and in the title thereof, and appending thereto a copy of any special power of attorney authorizing the respondents to sue in their respective capacity for said heirs.  Thus, the petitioner was prevented from questioning the capacity of the said heirs to sue in their respective capacity either in a motion to dismiss the complaint or in his answer to the complaint.

We note that of the four (4) plaintiffs, Domingo Realon failed to sign the certification of non-forum shopping.  On the other hand, the three other plaintiffs who signed the certification failed to append to the complaint a special power of attorney signed by all the surviving vendors and other heirs specifically authorizing them to sign the same for and in their behalf.  This is fatal to the complaint and warrants the dismissal thereof.

In sum then, the trial court should have rendered judgment dismissing the respondents’ complaint, and the Court of Appeals should have reversed the appealed decision of the RTC.

Indeed, even if the complaint of the respondents did not suffer from any substantial defects, the appellate court should still have reversed the trial court’s decision on the ground that the respondents failed to prove that the petitioner secured OCT No. O-2348 through actual or extrinsic fraud; and that the Contracts to Sell and Deeds of Sale with Mortgage were fraudulent.

As a ground for the nullification of the decision in LRC Case No. 83-15, and OCT No. O-2348 issued on the basis thereof, fraud must be extrinsic or actual, and not intrinsic.  The Court elaborated on the distinction of the two species of frauds, thus:

Fraud may also be either extrinsic or intrinsic. Fraud is regarded as intrinsic where the fraudulent acts pertain to an issue involved in the original action, or where the acts constituting the fraud were or could have been litigated therein and is regarded as extrinsic where it prevents a party from having a trial or from presenting his entire case to the court, or where it operates upon matters pertaining not to the judgment itself but to the manner in which it is procured, so that there is no fair submission of the controversy.  Extrinsic fraud is also actual fraud, but collateral to the transaction sued upon.

The distinctions are significant because only actual fraud or extrinsic fraud has been accepted as grounds for a judgment to be annulled or, as in this case, a decree of registration reopened and reviewed.  In the oft-cited Macabingkil v. People’s Homesite and Housing Corporation case, the Court drew from American jurisprudence stating that “relief has been granted on the ground that, by some fraud practiced directly upon the party seeking relief against the judgment or decree, (and) that party has been prevented from presenting all of his case to the court.” The “fraud” contemplated by the law in this case (Section 32, P.D. No. 1529) is actual and extrinsic, which includes an intentional omission of fact required by law.  For fraud to justify a review of a decree, it must be extrinsic or collateral, and the facts upon which it is based have not been controverted or resolved in the case where the judgment sought to be annulled was rendered.  Persons who were fraudulently deprived of their opportunity to be heard in the original registration case are entitled to a review of a decree or registration.

In contrast to actual fraud, constructive fraud is construed as such because of its detrimental effect upon public interests, as well as public or private confidence in the Torrens System, even though the act is not done or committed with an actual design to commit positive fraud or injury upon other persons.

The records show that in his application in LRC Case No. 83-15, the petitioner, who was the applicant, alleged that he was the owner of the property, having acquired the same based on the Contract to Sell dated July 31, 1979, executed in his favor by Alfredo and Marciano Realon.  He also alleged that the property was unoccupied and that there was no lien or encumbrance of any kind whatsoever affecting the said land, and that he had no knowledge of any person having any interest therein, legal or equitable.

The allegation that the petitioner was the owner of the property is admittedly incorrect because the deeds executed by Marciano and Alfredo Realon on July 31, 1979 were the contracts to sell, under which the petitioner, as buyer, would acquire title over the property only upon his payment of the balance of the purchase price thereof on or before May 23, 1980; or the issuance of a torrens title in the names of the vendees and the execution by the seller of a final deed of sale. Also, the property was tenanted by respondent Emiliano Purificacion.

When he filed his application on November 11, 1983, the petitioner had not yet paid the balance of the purchase price of the property.  The vendors themselves failed to file an application for the issuance of a torrens title over the property in their names.  Hence, the petitioner had not yet acquired ownership over the property when he filed his application.  However, the Court believes that there was no intention on the part of the petitioner to deceive Alfredo and Marciano Realon, and deprive them of their right to be heard on the said application because (a) the petitioner appended to his application and adduced in evidence copies of the contracts to sell in favor of the petitioner executed by Alfredo and Marciano Realon, the latter for and in his behalf, and those of this brothers; and (b) Alfredo and Marciano Realon were served with copies of the notice of hearing of the said application, even testified for the petitioner and affirmed the validity of  the said deeds.  The respondents, as successors-in-interest of the vendees, can no longer assail the admissions of Alfredo and Marciano when they testified for the petitioner in LRC Case No. 83-15.

As gleaned from the decision of the trial court, the petitioner still had a balance on the purchase price of the property due to the vendees amounting to P129,349.73.

We agree with the appellate court that the RTC erred in its decision in LRC Case No. 83-15 declaring the petitioner, who was the applicant in the RTC, to be the legal owner of the property based on the contracts to sell executed in his favor by Alfredo and his nephews.  However, there is no showing in the records that the decision was appealed to the Court of Appeals.  Indeed, the decision had become final and executory, and the court had issued a decree based on its decision.  In due course, the Register of Deeds issued OCT No. 1248 in favor of the petitioner.  Hence, even if erroneous, the decision can no longer be altered. Consequently, the respondents were barred by the decision of the RTC in Civil Case No. BCV 94-28 from impugning the deed of sale with mortgage executed in favor of the petitioner by Alfredo and his nephews on January 8, 1985.  In its decision in the said case, the RTC declared:

At the trial, Engr. Aldersen Ilaban was called to the stand who testified that he is the authorized representative of the plaintiff, having been designated as administrator of his properties (Exh. “E”). He averred that his principal bought the parcel of land in question located at Carmona, Cavite, from its former owners, Alfredo Realon, Marciano Realon, in two (2) separate deeds of sale with mortgage (Exh. “A” & “B”). He further declared that the sellers undertook to deliver to the plaintiff the title covering the subject property upon payment of the balance of the purchase price.  However, despite plaintiff’s offer to pay the entire consideration of the sale after plaintiff exerted effort to secure the torrens title over the subject lot, defendants refused to accept the same in view of their demand for a higher consideration. This prompted plaintiff to write a letter to defendants on October 15, 1993 whereby he tendered payment of the remaining balance (Exh. “C”). Four months thereafter, he again wrote defendants advising them that if they would still refuse to accept the payment, he would deposit the amount of P42,849.23 directly in open court (Exh. “D”).

Considering that the respondents, as defendants therein, failed to appeal the decision, it became final and executory and can no longer be assailed.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED.  The assailed decision of the Court of Appeals in CA-G.R. CV No. 68979, and that of the Regional Trial Court, are SET ASIDE. No costs.

SO ORDERED.

SOURCE: [ G.R. NO. 159156, January 31, 2005 ] RAMON P. ARON, PETITIONER, VS. FRANCISCO REALON, DOMINGO REALON AND FELIPE REALON, REPRESENTING THE HEIRS OF MARCIANO REALON AND ROMAN REALON, EMILIANO R. PURIFICACION, REPRESENTING THE HEIRS OF ALFREDO REALON AND ROMAN REALON, RESPONDENTS. TAGS: Alcantara Alcoy moral damages Alegria actual damages Aloguinsan Argao Asturias Badian Balamban Bantayan Barili Boljoon Borbon Carmen Catmon Compostela Consolacion Cordova Daanbantayan Dumaguete Bais Sibulan Tampi Bacong Negros Bacolod Separation pay Resign Resignation Back wages Backwages Length of service pay benefit employee employer relationship Silay Kabankalan Daan Bantayan Dalaguete Dumanjug Ginatilan Liloan compensatory damages Madridejos Malabuyoc Medellin Minglanilla Moalboal Oslob Pilar Pinamungajan Poro Ronda Samboan San Fernando San Francisco San Remigio Sante Fe Santander Sibonga Sogod Tabogon Tabuelan Tuburan attorney’s fees Tudela exemplary damages Camotes General Luna Siargao Cagayan Davao Kidapawan Attorney Abogado Lawyer Architect Real Estate Broker nominal damages Sales Agent Properties for Sale Looking for Buyers Design Build House and Lot for Sale for Rent Talisay City Mandaue City Lapu Lapu Lapu-Lapu City Yncierto Sesante Villanueva Ruz Jan Edmond Marc Tim Timothy temperate damages Luz liquidated damages Kristin tct transfer certificate of title tax declaration birth certificate relocation survey surveying judicial titling administrative titling patent title denr cenro foreshore lease ecc environmental compliance certificate design build architect cebu engineer interior design designer residential commercial cebu property warehouse for rent for lease marc Christian yncierto ruz jan Edmond yncierto ruz Kristin Villanueva ruz Edmond mabalot ruz marriage certificate timber land forest land watershed agricultural lot land use conversion hearing trial illegal drugs trial lawyer business corporate lawyer labor lawyer immigration law bureau of immigration cebu 9g visa search warrant warrant of arrest motion to quash information complaint police officers buy bust physical suffering shocked horrified mental anguish fright serious anxiety besmirched reputation sleepless nights wounded feelings moral shock social humiliation similar injuries

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When is the payment of damages as well as attorney’s fees proper?

In a Supreme Court case, the following damages were awarded:

“xxx

The RTC awarded moral damages, exemplary damages, attorney’s fees, plus P2,000.00 for every appearance, and costs of litigation.

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Moral damages are meant to compensate the claimant for any physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injuries unjustly caused. Petitioner Rosalina has adequately established the factual basis for the award of moral damages when she testified that she felt shocked and horrified upon knowing of the foreclosure sale.

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However, we find the RTC’s award of P2,000,000.00 excessive and unconscionable, and reduce the salve to P100,000.00.
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Exemplary damages are imposed by way of example for the public good, in addition to moral, temperate, liquidated or compensatory damages. We reduce the RTC’s award of P500,000.00 to P30,000.00.
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Attorneys fees are allowed when exemplary damages are awarded and when the party to a suit is compelled to incur expenses to protect his interest. We find the RTC’s award of attorney’s fees in the amount of P100,000.00 proper.

xxx”

From the case of SPOUSES GILDARDO LOQUELLANO and ROSALINA JULIET B. LOQUELLANO, petitioners, xxx

Alcantara Alcoy moral damages Alegria actual damages Aloguinsan Argao Asturias Badian Balamban Bantayan Barili Boljoon Borbon Carmen Catmon Compostela Consolacion Cordova Daanbantayan Dumaguete Bais Sibulan Tampi Bacong Negros Bacolod Separation pay Resign Resignation Back wages Backwages Length of service pay benefit employee employer relationship Silay Kabankalan Daan Bantayan Dalaguete Dumanjug Ginatilan Liloan compensatory damages Madridejos Malabuyoc Medellin Minglanilla Moalboal Oslob Pilar Pinamungajan Poro Ronda Samboan San Fernando San Francisco San Remigio Sante Fe Santander Sibonga Sogod Tabogon Tabuelan Tuburan attorney’s fees Tudela exemplary damages Camotes General Luna Siargao Cagayan Davao Kidapawan Attorney Abogado Lawyer Architect Real Estate Broker nominal damages Sales Agent Properties for Sale Looking for Buyers Design Build House and Lot for Sale for Rent Talisay City Mandaue City Lapu Lapu Lapu-Lapu City Yncierto Sesante Villanueva Ruz Jan Edmond Marc Tim Timothy temperate damages Luz liquidated damages Kristin tct transfer certificate of title tax declaration birth certificate relocation survey surveying judicial titling administrative titling patent title denr cenro foreshore lease ecc environmental compliance certificate design build architect cebu engineer interior design designer residential commercial cebu property warehouse for rent for lease marc Christian yncierto ruz jan Edmond yncierto ruz Kristin Villanueva ruz Edmond mabalot ruz marriage certificate timber land forest land watershed agricultural lot land use conversion hearing trial illegal drugs trial lawyer business corporate lawyer labor lawyer immigration law bureau of immigration cebu 9g visa search warrant warrant of arrest motion to quash information complaint police officers buy bust physical suffering shocked horrified mental anguish fright serious anxiety besmirched reputation sleepless nights wounded feelings moral shock social humiliation similar injuries

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Case on the validity of an extrajudicial foreclosure and auction sale of debtor’s property

Petitioner Rosalina Juliet Loquellano used to be a regular employee in the Financial Central Department of respondent Hongkong and Shanghai Banking Corporation, Ltd. (respondent bank). As such, she became an automatic member of respondent Hongkong and Shanghai Banking Corporation-Staff Retirement Plan (HSBC-SRP) that provides retirement, disability and loan benefits to the bank’s employees. In 1988, petitioner Rosalina applied with respondent HSBC-SRP a housing loan in the amount of P400,000.00 payable in twenty-five (25) years at six percent (6%) per annum, through monthly salary deduction from petitioner Rosalina’s salary savings account with respondent HSBC. It was provided in the loan application that the loan was secured by setting-off petitioner Rosalina’s retirement benefits and chattel mortgage. She executed a promissory note for the payment of the said loan.

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On September 5, 1990, petitioners spouses Gildardo and Rosalina Loquellano and Manuel S. Estacion, the managing trustee for and in behalf of the respondent HSBC-SRP, entered into a contract of real estate mortgage wherein petitioners constituted a mortgage over their house and lot covered by TCT No. 95422 (44867) of the Register of Deeds of Pasay City to secure the payment of their housing loan. Petitioner Rosalina had been religiously paying the monthly installments and interests due on the housing loan through automatic salary deductions.

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Subsequently, a labor dispute arose between the respondent bank and the bank union, to which petitioner Rosalina was a member, which culminated in a strike staged on December 22, 1993. Petitioner Rosalina, together with other bank employees, were dismissed from the service for abandonment, among others. Petitioner Rosalina and the other dismissed employees filed with the Labor Arbiter (LA) an illegal dismissal case against the respondent bank. The LA declared the strike illegal and dismissed the complaint. The labor case had reached us through a petition for review on certiorari filed by the dismissed concerned employees and had already been decided by us on January 11, 2016. While we declared the strike illegal, we also held that the mere finding of such did not justify the wholesale termination of the strikers from their employment. We found that there was illegal dismissal and ordered the bank, among others, to pay the backwages and separation pay of the 18 employees named in the decision, which included petitioner Rosalina, in lieu of reinstatement.

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In the meantime, due to petitioner Rosalina’s termination from employment with the bank on December 27, 1993, petitioners were unable to make any payments of the amortizations due in Rosalina’s salary savings account beginning January 1994. Respondent HSBC-SRP sent demand letters dated June 13, 1994 and November 28, 1994, respectively, to petitioner Rosalina for the payment of her outstanding obligation in full. Petitioner Rosalina offered to make partial payment of her housing loan arrears in the amount of P69,205.99, which respondent HSBC-SRP rejected.
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Subsequently, petitioner Rosalina received an Installment Due Reminder dated July 26, 1995 issued by respondent HSBC-SRP on her housing loan, wherein it was shown that the monthly installment overdue, the interest overdue and the interest accrued on the overdue installment amounted to P55,681.85 and the outstanding loan balance was P315,958.00. On August 11, 1995, petitioner Rosalina, through her salary savings account which was still existing, deposited the payments for all her monthly installment arrears and interests, and penalties from January 1994 up to August 1995. Respondent bank accepted the payments and credited them to her housing loan account. Thereafter, petitioner Rosalina received an Installment Due Reminder dated August 28, 1995, wherein it already reflected the payments she had made as her outstanding housing loan obligation was already reduced to P289,945.00.
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In a letter dated September 25, 1995 to petitioner Rosalina, respondent HSBC-SRP demanded for the payment of the entire housing loan obligation in the amount of P289,945.00. Notwithstanding, petitioner Rosalina received an Installment Due Reminder dated September 27, 1995, reflecting the then current monthly installment and interest due thereon. Petitioner Rosalina, subsequently, received more installment due reminders showing a reduction in the outstanding balance of her housing loan. She continuously made deposits to her salary savings account with the respondent bank for the payment of her monthly amortizations. Respondent bank debited petitioner Rosalina’s savings account and credited the payments to the balance of the installment and the interest due on the housing loan up to June 1996.
On May 20, 1996, petitioners’ mortgaged property was extrajudicially foreclosed by respondent HSBC-SRP and was sold at public auction for the amount of P324,119.59, with respondent Manuel S. Estacion as the highest bidder. A Certificate of Sale dated June 5, 1996 was issued.

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On August 22, 1996, petitioners filed with the Regional Trial Court (RTC) of Parañaque City, Branch 274, a Complaint for Annulment of Sale with Damages and Preliminary Injunction against Hongkong and Shanghai Banking Corporation, Ltd.; Manuel S. Estacion; Hongkong and Shanghai Banking Corporation-Staff Retirement Plan, as represented by Atty. Manuel G. Montecillo, Mr. Stuart P. Milne and Mr. Alejandro L. Custodio; Leonarda Leilani Amurao and Benedicto G. Hebron, in their capacities as Clerk of Court/Ex-Officio Sheriff and Sheriff-in-Charge of the RTC of Parañaque. Petitioners alleged, among others, that the foreclosure of their mortgaged property was tainted with bad faith, considering that they had paid all the arrears, interests and penalties due on their housing loan since August 1995, and were updated with their loan obligations up to June 1996.

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In their Answer, respondents HSBC-SRP and Estacion argued that the entire loan obligations accelerated when petitioner Rosalina was terminated and ceased to be an employee of respondent bank as provided in the HSBC-SRP Rules and Regulations, and she failed to pay the entire balance of the housing loan. Also, petitioners were in default, having failed to pay the amortizations beginning January 1994 up to July 1995; thus, they had the right to extrajudicially foreclose the mortgaged property under their mortgage contract.
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Respondent bank claimed that it should not have been impleaded in the complaint, since it was not privy to the real estate mortgage nor to the extrajudicial foreclosure proceedings.

xxx

The issues for resolution are (1) whether the extrajudicial foreclosure and auction sale of petitioners’ property by respondent HSBC-SRP on May 20, 1996 was valid; and (2) whether petitioners are entitled to the payment of damages as well as attorney’s fees.
xxx

We find that respondent HSBC-SRP’s filing of the extrajudicial foreclosure proceedings on May 20, 1996 has no basis and, therefore, invalid.
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It is established that petitioners failed to pay the monthly amortizations of their housing loan secured by a real estate mortgage on their property since January 1994, i.e., after petitioner Rosalina was terminated by the bank on December 27, 1993. Thus, respondent HSBC-SRP sent demand letters dated June 13, 1994 and November 28, 1994 to petitioner Rosalina asking her to pay the outstanding housing loan obligation in full. Petitioner Rosalina’s offer of partial payment was rejected by respondent HSBC-SRP. In the meantime, no foreclosure proceedings was yet filed by respondent HSBC-SRP against petitioners’ mortgaged property. Subsequently, petitioner Rosalina received an Installment Due Reminder dated July 26, 1995, informing her of the overdue monthly amortizations, interests and penalty in the amount of P55,681.85, with an outstanding balance of P315,958.00. On August 11, 1995, petitioner Rosalina then deposited in her salary savings account the payment for all the principal and interest arrearages from January 1994 up to August 1995. The payments she made in her account were accepted by respondent bank and credited them to the payment of the overdue monthly amortizations of her housing loan.

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While respondent HSBC-SRP wrote petitioner Rosalina a letter dated September 25, 1995 demanding payment of the latter’s entire unpaid housing loan obligation, now with a reduced balance in the amount of P289,945.00, however, petitioner Rosalina still received an Installment Due Reminder dated September 27, 1995 reminding her of her monthly installment and interest due, sans penalty charge, which she paid.

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Thereafter, petitioner Rosalina continuously received Installment Due Reminders for the housing loan, to wit: dated December 21, 1995, February 26, 1996, March 13, 1996 and April 11, 1996, which showed a diminishing loan balance by reason of respondent HSBC-SRP’s acceptance of payments of her monthly installments and interests due from September 1995 up to June 1996. Therefore, respondent HSBC-SRP is now estopped from foreclosing the mortgage property on May 20, 1996.
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Article 1431 of the Civil Code defines estoppel as follows:
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Art. 1431. 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.
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And Section 2 (a), Rule 131 of the Rules of Court provides:
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SEC. 2. Conclusive presumptions. — The following are instances of conclusive presumptions:
(a) Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a particular thing is true, and to act upon such belief, he cannot, in any litigation arising out of such declaration, act or omission, be permitted to falsify it.
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Estoppel is a doctrine that prevents a person from adopting an inconsistent position, attitude, or action if it will result in injury to another. One who, by his acts, representations or admissions, or by his own silence when he ought to speak out, intentionally or through culpable negligence, induces another to believe certain facts to exist and such other rightfully relies and acts on such belief, can no longer deny the existence of such fact as it will prejudice the latter. The doctrine of estoppel is based upon the grounds of public policy, fair dealing, good faith and justice. It springs from equitable principles and the equities in the case. It is designed to aid the law in the administration of justice where, without its aid, injustice might result.

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To stress, respondent HSBC-SRP continuously sent out monthly Installment Due Reminders to petitioner Rosalina despite its demand letter dated September 25, 1995 to pay the full amount of the loan obligation within 3 days from receipt of the letter. It, likewise, continuously accepted petitioner Rosalina’s subsequent monthly amortization payments until June 1996; thus, making their default immaterial. Moreover, there was no more demand for the payment of the full obligation afterwards. Consequently, petitioners were made to believe that respondent HSBC-SRP was applying their payments to their monthly loan obligations as it had done before. It is now estopped from enforcing its right to foreclose by reason of its acceptance of the delayed payments.

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Also, Article 1235 of the Civil Code provides that when the creditor accepts performance, knowing its incompleteness and irregularity without protest or objection, the obligation is deemed complied with. Respondent HSBC-SRP accepted Rosalina’s payment of her housing loan account for almost one year without any objection.
Respondent HSBC-SRP argues that estoppel is not applicable since the payments upon which petitioners rely were made without its knowledge and consent; that the updated balances were automatically generated by the system; that petitioner Rosalina made unilateral payments to her salary savings account knowing that any amount she deposited therein will be automatically credited as payments for her loan obligations.
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We are not persuaded.
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It is respondent HSBC-SRP, not petitioner Rosalina, which has access and control of the computer system with regard to the crediting of the housing loan payments. It cannot now deny its action of continuously accepting petitioner Rosalina’s monthly amortizations, coupled with the sending out of installment due reminders, and statements of her updated housing loan account to prejudice petitioners who relied thereon.
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We find that petitioners are entitled to damages for the invalid foreclosure of their property. The RTC held respondent bank HSBC-SRP and Estacion solidarily liable for the payment of damages. However, we only find respondent HSBC-SRP liable as it was the one which illegally foreclosed petitioners’ mortgaged property. However, respondent HSBC, as correctly pointed out by the CA, was not a party to the real estate mortgage executed between respondent HSBC-SRP and petitioners nor it had participation in the foreclosure proceedings. On the other hand, Estacion was only a trustee of respondent HSBC-SRP acting within the scope of its authority.
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The RTC awarded moral damages, exemplary damages, attorney’s fees, plus P2,000.00 for every appearance, and costs of litigation.

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Moral damages are meant to compensate the claimant for any physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injuries unjustly caused. Petitioner Rosalina has adequately established the factual basis for the award of moral damages when she testified that she felt shocked and horrified upon knowing of the foreclosure sale. However, we find the RTC’s award of P2,000,000.00 excessive and unconscionable, and reduce the salve to P100,000.00.

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Exemplary damages are imposed by way of example for the public good, in addition to moral, temperate, liquidated or compensatory damages. 36 We reduce the RTC’s award of P500,000.00 to P30,000.00.
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Attorneys fees are allowed when exemplary damages are awarded and when the party to a suit is compelled to incur expenses to protect his interest. We find the RTC’s award of attorney’s fees in the amount of P100,000.00 proper.
xxx

This is from a supreme court case SPOUSES GILDARDO LOQUELLANO and ROSALINA JULIET B. LOQUELLANO, petitioners xxx Tags: Resign Resignation Back wages Backwages Length of service pay benefit employee employer relationship Silay Kabankalan Daan Bantayan Dalaguete Dumanjug Ginatilan Liloan Madridejos Malabuyoc Medellin Minglanilla Moalboal Oslob Pilar Pinamungajan Poro Ronda Samboan San Fernando San Francisco San Remigio Sante Fe Santander Sibonga Sogod Tabogon Tabuelan Tuburan Tudela Camotes General Luna Siargao Cagayan Davao Kidapawan Attorney Abogado Lawyer Architect Real Estate Broker Sales Agent Properties for Sale Looking for Buyers Design Build House and Lot for Sale for Rent Talisay City Mandaue City Lapu Lapu Lapu-Lapu City Yncierto Sesante Villanueva Ruz Jan Edmond Marc Tim Timothy Luz Kristin tct transfer certificate of title tax declaration birth certificate relocation survey surveying judicial titling administrative titling patent title

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AN ACTION FOR RECONVEYANCE IS NOT AFFECTED BY AN ALLEGATION SEEKING THE APPOINTMENT OF ADMINISTRATRIX OF THE ESTATE

In an action for reconveyance, an allegation seeking appointment as administratrix of an estate, would not oust the RTC of its jurisdiction over the whole case. An action for reconveyance, which involves title to property worth millions of pesos, such as the lots subject of this case, is cognizable by the RTC. Likewise falling within its jurisdiction are actions “incapable of pecuniary estimation,” such as the appointment of an administratrix for an estate. Even the Rules on Venue of estate proceedings (Section 1 of Rule 73 impliedly recognizes the jurisdiction of the RTC over petitions for granting of letters of administration. On the other hand, probate proceedings for the settlement of estate are within the ambit of either the RTC or MTC depending on the net worth of the estate.

[G.R. No. 122646. March 14, 1997.]
ADELIA C. MENDOZA, for herself and Administratrix of the Intestate Estate of the late NORBERTO B. MENDOZA, petitioners, vs. HON. ANGELITO C. TEH, Presiding Judge, Branch 87, RTC, Rosario, Batangas, SPS. HERMINIO & CLARITA TAYAG @ SPS. GEORGE T. TIGLAO & CLARIZZA T. TIGLAO and/or @ TEOFILO M. ESGUERA, LEONOR M. ESGUERA, LETICIA M. ESGUERA, JOEL M. ESGUERA, RICARDO M. ESGUERA, VOLTAIRE E. TAYAG, BENITO I. TAYAG, MERLIE MALIG, ALBERTO T. TAYAG, ROSEMARIE T. TAYAG, LETICIA E. LULU and the REGISTER OF DEEDS FOR THE PROVINCE OF BATANGAS, respondents.