PHILIPPINE BANK OF

ROMEO G. DELA ROSA,

Petitioners,

COMMUNICATIONS

and

G.R. No. 165500

Present:
PANGANIBAN, C.J.
Chairperson,
YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.

- versus -

ELENITA B. TRAZO,
Respondent.

Promulgated:

August 30, 2006

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CHICO-NAZARIO, J.:
Petitioners are asking Us to reverse, in this Petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, the Decision of the Court of Appeals dated 25
March 2004 and its Resolution dated 23 September 2004 denying petitioners Motion for Reconsideration.
The facts of the case are as follows:
In order to facilitate the payment of her salaries and other monetary benefits from her employer, petitioner Philippine Bank of Communications (PBCOM ) respondent Elenita
B. Trazo opened a payroll account with China Banking Corporation (CBC) under Current Account No. 101-003921-9.
On or about 29 December 1997, petitioner Romeo G. dela Rosa, PBCOM assistant vice-president, instructed CBC to credit all accounts under its payroll with the medical and clothing
subsidy for the year 1998. Accordingly, respondent Trazos current account was credited on that date with the amount of P7,000.00 for such annual subsidy.
On 31 December 1997, respondent Trazo, then project manager of the information technology and management group, resigned from PBCOM.
Since respondent Trazo severed her employment with PBCOM effective 1 January 1998 and was, therefore, no longer entitled to the medical and clothing subsidy for the year 1998,
petitioner dela Rosa wrote William Lim, CBC senior assistant vice-president, on 5 January 1997 authorizing/directing CBC/Lim to debit the sum of P7,000.00 from respondent Trazos
current account. Acting upon such authority/directive, CBC/Lim debited said amount from respondent Trazos account on the same date.
Meanwhile, respondent Trazo drew checks against her current account in favor of Bliss Development Corporation (BDC) and the House of Sara Lee Phils., Inc. However, the checks
were dishonored by CBC due to insufficiency of funds, which was occasioned by the P7,000.00 debit from her current account.
Averring that PBCOM, through dela Rosa, had no authority to unilaterally order the debiting of her current account and that CBC, through Lim, made such debit without her knowledge
and consent resulting in the dishonor of her checks, respondent Trazo instituted an action for damages against PBCOM, dela Rosa, CBC, and Lim before the Regional Trial Court (RTC)
of Quezon City (Branch 79).
Summons was served on CBC and Lim on 19 May 1998 and on petitioners herein, PBCOM and dela Rosa, on 27 May 1998. On 27 May 1998 and 11 June 1998, or before the
expiration of the reglementary period for filing their answers, CBC and Lim, and PBCOM and dela Rosa, respectively, filed motions for 15-day extension of time.
On 8 June 1998, respondent Trazo filed a Motion to Declare Defendants China Banking Corporation and William Lim in Default and Opposition to Motion for Extension of Time to File
Answer and/or Responsive Pleading. On 15 June 1998, respondent Trazo filed a Motion to Declare Defendants Philippine Bank of Communication and Romeo G. dela Rosa in Default.

On 16 June 1998, CBC and Lim filed a Motion to Dismiss the case on the ground of improper venue. On 24 June 1998, PBCOM and dela Rosa filed their own Motion to Dismiss on the
ground that the complaint failed to state a cause of action.
On 7 October 1998, the lower court issued an Omnibus Order granting the motions to dismiss and declaring the motions to declare defendants in default moot and academic. The
dispositive portion of the Omnibus Order is as follows:
PREMISES CONSIDERED, the case against defendants China Bank and William Lim is DISMISSED on the ground of improper venue. The case against defendants Philippine
Bank of Communications and Romeo G. dela Rosa is DISMISSED for lack of cause of action.
Respondent Trazo filed with the trial court a Notice of Appeal. In the assailed Decision, the Court of Appeals ruled in favor of respondent Trazo, disposing of the case in the
following manner:
WHEREFORE, the omnibus order dated October 7, 1998 of the Regional Trial Court of Quezon City (Branch 79) is REVERSED and SET ASIDE and the complaint
REINSTATED. Appellant is given ten (10) days from notice of finality of this decision within which to amend the complaint.
Petitioners filed their Motion for Reconsideration on 14 April 2004, while CBC and Lim filed their Motion for Reconsideration on 19 April 2004. On 23 September 2004, the Court of
Appeals issued the assailed Resolution wherein both motions for reconsideration were denied for lack of merit.
Hence, the instant Petition, where petitioners PBCOM and Trazo bring before us the following issues:
A. WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE COMPLAINT STATED A CAUSE OF ACTION FOR DAMAGES AGAINST PETITIONERS ARISING
OUT OF THE ALLEGED UNLAWFUL DEBITING OF RESPONDENTS CHINABANK ACCOUNT, NOTWITHSTANDING THAT IT WAS CHINABANK WHICH DEBITED THE ACCOUNT,
NOT PETITIONERS.
B. WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT THE COMPLAINT PLEADED A CAUSE OF ACTION FOR ABUSE OF RIGHTS AGAINST
PETITIONERS.
C. WHETHER OR NOT THE COURT OF APPEALS ERRED IN ORDERING THE AMENDMENT OF THE COMPLAINT DESPITE THE COMPLAINTS ABSOLUTE FAILURE TO STATE
A CAUSE OF ACTION AGAINST PETTIONERS.
D. WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT THE VENUE CLAUSE IN THE APPLICATION FOR NEW CURRENT ACCOUNTS IS NOT EXCLUSIVE
Only CBC, and not petitioners PBCOM and dela Rosa, can move for dismissal on the ground of improper venue.
The Application for New Current Accounts, which embodies the terms and conditions of respondent Trazos relationship with CBC, contains a stipulation on venue, to wit:
In case of litigation hereunder, venue shall be in the City Court or Court of First Instance of Manila as the case may be for determination of any and all questions arising thereunder.
The RTC of Quezon City dismissed the complaint against CBC and Lim based on this stipulation, but the Court of Appeals reversed said dismissal. According to the Court of Appeals,
absent any qualifying or restrictive words, a stipulation on venue should be considered merely as an agreement on an additional forum, and not to be considered as limiting venue to the
specified place.
Before proceeding any further, it bears to point out that among the multiple defendants in the case filed by respondent Trazo, only CBC and its officer Lim can assert the alleged
impropriety of venue since they are privy to and covered by the contract containing the venue stipulation. Indeed, the dispositive portion of the RTC decision shows that the dismissal on
the ground of improper venue was effective only as against CBC and Lim. As CBC and Lim did not appeal the decision of the Court of Appeals reversing the RTC ruling, such decision
has become final and executory as regards its disposition on the issue regarding venue.
Nevertheless, We agree with the Court of Appeals that it was incorrect for the RTC to dismiss the complaint on the ground of improper venue. The parties must be able to show that the

stipulation is exclusive. Thus, sans words expressing the parties intention to restrict the filing of a suit in a particular place, courts will allow the filing of a case in any of the venues
prescribed by law or stipulated by the parties, as long as the jurisdictional requirements are followed. The subject clause contains no qualifying nor restrictive words, such as must, or
exclusively, as would indicate the parties intention mandatorily to restrict the venue of actions to the courts of (Manila) only.
In the 8 December 2000 case of Langkaan Realty Development, Inc. v. United Coconut Planters Bank, where the venue stipulation contained the word shall, we held that the
stipulations of the parties lack qualifying or restrictive words to indicate the exclusivity of the agreed forum, and therefore the stipulated place is considered only as an additional, not a
limiting venue. Consequently, the dismissal by the RTC of the complaint against CBC and Lim on ground of improper venue is erroneous, and was correctly reversed by the Court of
Appeals.
Respondent Trazos complaint contains a cause of action against petitioners PBCOM and dela Rosa.
As discussed above, the RTC dismissed the complaint, insofar as it operates against CBC and Lim, on the ground of improper venue. In the same Omnibus Order, the RTC also
dismissed the same complaint on the ground of failure to state a cause of action, this time, insofar as the complaint operates against petitioners PBCOM and dela Rosa. The Court of
Appeals, in reversing the Order of the RTC dismissing the complaint on the ground of failure to state a cause of action, held:
Par. 13 of the complaint recites appellants alleged cause of action against [PBCOM and dela Rosa]. It reads:
13. Upon further personal inquiry with [PBCOM], [respondent Trazo] found out that on January 5, 1998 [petitioner] ROMEO G. DE LA ROSA, without [respondent Trazos] knowledge,
consent and approval, wrote a letter and authorized/directed x x x CHINABANK and WILLIAM LIM `to debit the account of Elenita Trazo under C/A #101-003921-9 in the amount of
PESOS: SEVEN THOUSAND PESOS ONLY P7,000.00 representing her medical and clothing subsidy for the year 1998. He even acknowledged and admitted that [respondent Trazo]
resigned from PBCom effective December 31, 1997. He further stated that CHINABANK make the `Managers check payable to Philippine Bank of Communications. x x x.
Crucial to appellants action against [PBCOM and dela Rosa] is the issue of whether the latter had the right to authorize/direct [CBC and Lim] to debit the amount of P7,000.00 from
appellants current account and, if so, whether appellant was entitled to notice of such authority/directive.
In authorizing/directing [CBC and Lim] to debit appellants current account, [PBCOM and dela Rosa] had, in effect, sought to recover, without resorting to a court action, an amount
erroneously credited to her. And because appellant was not given the courtesy of a notice of such authority/directive, she was lulled into the belief that her funds at CBC were sufficient
to cover the checks she was issuing.
Nevertheless, the lower court ruled that the averment in par. 13 of the complaint is insufficient to make out a cause of action against [PBCOM and dela Rosa] on the theory that the debit
(of) the amount of P7,000.00 from the account of [respondent Trazo] x x x cannot be attributed as the fault of (PBCOM) since the fiduciary relationship exists only between (CBC) and
[respondent Trazo] as its depositor and the primary responsibility whether to deposit or not lies with (CBC) alone.
However, the lower court did not consider whether the act of authorizing/directing CBC/Lim to debit appellants current account without giving notice to her constitutes a cause of action
against [PBCOM and dela Rosa], for abuse of rights.
The modern tendency is to depart from the classical and traditional theory and to grant indemnity for damages in cases where there is an abuse of rights, even when the act is not illicit
(Sea Commercial Company, Inc. vs. Court of Appeals, 319 SCRA 210). But even supposing that the asserted act of [PBCOM and dela Rosa] is insufficient to make out a case of abuse
of rights, the lower court could have simply ordered appellant to amend the complaint. Thus, Sec. 1, Rule 10, in relation to Sec. 3, Rule 16, id., allows amendment of pleadings before a
responsive pleading is served.
Amendment of the complaint, by way of supplementing and amplifying facts as would carve out a clear abuse of rights situation, would prevent multiplicity of suits. This is so because of
Our ruling that the dismissal of the complaint against [CBC and Lim] on ground of improper venue is erroneous, with the effect that the complaint against them is reinstated. However,
affirmance of the dismissal of the complaint against [PBCOM and dela Rosa] anchored on failure to state a cause of action would trigger the filing of a new action against the latter,
thereby spawning two suits, i.e., the instant action and the new one.
Amendment, not dismissal, of the complaint is proper to avoid multiplicity of suits (Eugenio, Sr. vs. Velez, 185 SCRA 425). The policy in this jurisdiction is that amendment of pleadings
is favored and liberally allowed in the interest of substantial justice. Amendment of the complaint may be allowed even if an order for its dismissal has been issued provided that the
motion to amend is filed before the order of dismissal acquired finality (Tirona vs. Alejo, 367 SCRA 17). Rules of Procedure, after all, are but tools designed to facilitate the attainment of
justice (Valenzuela vs. Court of Appeals, 363 SCRA 779).

Petitioners argue that the afore-quoted paragraph 13 shows that PBCOM and dela Rosa merely requested CBC to debit the account of respondent Trazo, and that nothing in said
paragraph shows that PBCOM and dela Rosa were actually responsible for the alleged unlawful debiting of respondents account.
As regards the Court of Appeals finding that the complaint contains a cause of action against petitioners for abuse of rights, petitioners claim that the elements of abuse of rights are not
found in the complaint, since no bad faith was imputed to PBCOM and dela Rosa in requesting the debiting of the amount stated, and since there was no allegation showing that
PBCOM and dela Rosa acted with the sole intent of prejudicing or injuring respondent in requesting the same.
While we agree with petitioners that the complaint does not contain a cause of action against them for abuse of rights, their petition would, nonetheless, fail.
A cause of action is an act or omission of one party in violation of the legal right of the other. A motion to dismiss based on lack of cause of action hypothetically admits the truth of the
allegations in the complaint. The allegations in a complaint are sufficient to constitute a cause of action against the defendants if, hypothetically admitting the facts alleged, the court can
render a valid judgment upon the same in accordance with the prayer therein. A cause of action exists if the following elements are present, namely: (1) a right in favor of the plaintiff by
whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on
the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff for which the latter may maintain an action for
recovery of damages.
The Court of Appeals, like the RTC, seems to have acquiesced in the petitioners statement that respondents cause of action against them is found exclusively in paragraph 13 of the
complaint. An examination of the subject complaint, however, reveals that it contains other provisions establishing the cause of action against petitioners PBCOM and de la Rosa, not
the least of which is paragraph 23, which provides:
23. In debiting the checking/current account of the plaintiff, without her knowledge, consent and approval, defendants acted in a wanton, reckless and oppressive manner.
Defendants PBCOM and ROMEO G. DE LA ROSA had no cause nor reason to unilaterally order the debiting of plaintiffs account as it was her personal property and not of
defendant PBCOM. Even if defendant PBCOM erroneously credited plaintiff with monetary benefits, plaintiff was to receive, as she did receive separation benefits equivalent to more
than FIVE HUNDRED THOUSAND PESOS (P500,000.00) more or less, from defendant PBCOM itself. A reasonable set-off or compensation should and could have been resorted to.
However, defendant PBCOM never utilized this option. Defendant PBCOM neither informed plaintiff of said transaction, much less seek her approval and authority to debit her
CHINABANK account when at the time of the debitting (sic), January 5, 1998, she was no longer an employee of PBCOM. (Emphasis supplied.)
As regards respondent Trazos entitlement to damages, the complaint recites that:
In order not to jeopardize her housing loan obligations with BDC and Sara Lee, Phil., Inc., and considering the legal actions foisted against her, x x x [respondent
Trazo] made immediate restitution to BDC and Sara Lee Phil., Inc. for her outstanding obligations, which included unwarranted charges and penalties which were not
[respondent Trazos] making.
The Complaint also claims that the actions of defendants therein, including petitioners PBCOM and dela Rosa, caused mental anguish, moral shock, besmirched
reputation, social humiliation, serious fright and anxiety, sleepless nights and wounded feelings. The same was reiterated in Annex K of said complaint, wherein respondent
Trazo, through her legal representative, wrote to petitioner dela Rosa, in his capacity as Assistant Vice-President of petitioner PBCOM, stating:
On January 5, 1997, you, as AVP of PBCOMs Human Resource Management Department, authorized CHINA BANKING CORPORATION to debit our clients account
under C/A # 101-003921-9 in the amount of SEVEN THOUSAND PESOS (P7,000.00), representing her medical and clothing subsidy for the year 1998, without notifying our
client, much less acquiring her consent and approval. However, our client resigned from PBCOM effective July 1, 1998, during which time the same account already ceased to
be a payroll account.
As a result of your action[,] our client incurred damages and injury in several personal transactions involving check payments made by her under said checking
account with CHINA BANKING CORPORATION. This unfortunate incident caused her untold sufferings, not to mention lost opportunities in her profession and other
businesses, besmirched reputation, sleepless nights, mental anguish and wounded feelings.
Paragraph 20 of the complaint makes its Annex K an integral part thereof.
We find a sufficient cause of action in the above-quoted allegations. If these allegations are assumed to be true, respondent Trazo would indeed be entitled to damages,
though the amount of the same would still depend on the evidence presented during trial.
We carefully scrutinize the allegations in the Complaint. It provides that (d)efendants PBCOM and ROMEO G. DE LA ROSA had no cause nor reason to unilaterally order

the debitting (sic) of plaintiffs account as it was her personal property and not of defendant PBCOM. The Complaint also described the action of all defendants, including petitioners
PBCOM and dela Rosa, as unjust and illegal, and done in a wanton, reckless and oppressive manner. The cause of action stated in the Complaint, therefore, consists in (1) a right
in favor of the plaintiff, which in this case consists of a right to her personal property; (2) an obligation on the part of the named defendant to respect her right to her personal property;
and (3) an act of such defendant violative of the right of the plaintiff, which in this case is the order by petitioners to CBC and Lim to debit respondent Trazos account, an act which
petitioners allege to have caused them damage.
In the case at bar, the allegations in the complaint verily show a cause of action. To sustain a motion to dismiss for lack of cause of action, the Complaint must show that the
claim for relief does not exist rather than that a claim has been defectively stated or is ambiguous, indefinite or uncertain.
We, however, disagree with the Court of Appeals when it decided that the allegations in the complaint show a cause of action against petitioners for abuse of rights under
Article 19 of the Civil Code. The elements of abuse of rights are: (1) a legal right or duty; (2) which is exercised in bad faith; and (3) for the sole intent of prejudicing or injuring another.
Rather, the allegations bare commission of an act contrary to law under Article 20 of the same Code, which provides:
Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same.
Whereas Article 19 provides for a cause of action for damages in cases when there is no law violated, the act causing damage being within rights or duties of defendant, Article 20
furnishes a general sanction for violations of provisions of law which do not especially provide their own sanction. The complaint clearly alleges a violation of respondent Trazos property
rights with respect to her checking account. Article 429 of the Civil Code provides that the owner or lawful possessor of the thing has the right to exclude any person from the enjoyment
and disposal thereof.
Petitioners retort that the complaint did not base its claim for damages on Articles 19, 20 and 21 of the Civil Code and faults the Court of Appeals for making out a cause of action for
respondent on grounds not even alleged in the Complaint. We, however, have held in Consolidated Dairy Products, Co. v. Court of Appeals that the applicable law to a set of facts stated
in the complaint need not be set out directly. Consequently, the complaint need not state that the property right alleged to have been violated is found in Article 429 of the Civil Code, or
that such violation entitled petitioner Trazo to damages pursuant to Article 20 of the same Code, which provides a cause of action therefor.
Petitioners claim that respondent failed to specify in the complaint the standard of proper conduct and decency required of PBCOM and the basis of invoking such standard on PBCOM
did not improve their position any. The complaint should state only ultimate facts, not conclusions of law, nor evidentiary facts. In determining whether the allegations of a complaint are
sufficient to support a cause of action, the complaint does not have to establish or allege the facts proving the existence of a cause of action at the outset; this will have to be done at the
trial on the merits of the case. Ultimate facts refer to the principal, determinative, constitutive facts upon the existence of which the cause of action rests. The term does not refer to
details of probative matter or particulars of evidence which establish the material ingredients
In their last ditch efforts to save their cause, petitioners assert that the duty to notify respondent regarding the debiting of her account properly belongs to CBC and that, had CBC denied
petitioners request, then there would have been no alleged debit of respondents account. Petitioners add that the mere act of requesting a bank to return a certain amount of money
erroneously credited to one of the banks depositors cannot be considered an act which violates the rights of said depositor
Petitioners allegations are in the nature of defenses, and, thus, cannot be considered in determining the sufficiency of the cause of action. For the complaint to be dismissed
for failure to state the cause of action, the insufficiency of the cause of action must appear on the face of the complaint. If the allegations in a complaint can furnish a sufficient basis by
which the complaint can be maintained, the same should not be dismissed regardless of the defenses that may be assessed by the defendants
WHEREFORE, the instant petition is DENIED for lack of merit. The assailed Decision and Resolution of the Court of Appeals, which reversed and set aside the Regional Trial Court of
Quezon Citys 7 October 1998 Omnibus Order dismissing respondents complaint, are AFFIRMED. Costs against petitioners.
SO ORDERED.

G.R. No. 126363 June 26, 1998

THE CONGREGATION OF THE RELIGIOUS OF THE VIRGIN MARY, petitioner, vs. THE COURT OF APPEALS and SPOUSES JEROME and TERESA PROTASIO, respondents.
MARTINEZ, J.:
Petitioner, The Congregation Of The Religious Of The Virgin Mary, has filed this petition for review on certiorari, urging us to reverse the decision 1 of the Court of Appeals dated
September 12, 1996, in CA-G.R. CV No. 43311, entitled "SPS. JEROME and TERESA PROTASIO, Plaintiffs-Appellees, versus, THE RELIGIOUS OF THE VIRGIN MARY, DefendantAppellant." The decision affirmed the judgment of the Regional Trial Court of Davao City in Civil Case No. 29,960-91, ordering the petitioner to return the possession of the disputed land
to the respondents-spouses and to pay them damages.
The facts of this case, as found by the respondent court, 2 are as follows:
On December 26, 1964, Gervacio Serapio, the grandfather of herein respondents-spouses Jerome and Teresa Protasio, sold to herein petitioner, the Congregation of the Religious of
the Virgin Mary, two (2) lots identified as Lot No. 5-A and Lot No. 5-C which were covered by TCT Nos. 14834 and 14835, respectively. In between Lot No. 5-A and Lot No. 5-C is Lot No.
5-B. Petitioner did not buy it when it was offered for sale by Gervacio Serapio. In 1978, Gervacio died and his estate consisting of several parcels of land was settled extra-judicially
among his heirs.
In October of 1989, respondents-spouses purchased Lot No. 5-B from the heirs of Gervacio Serapio. Accordingly, TCT No. 148595 was issued in their name. Sometime in November of
1989, respondents-spouses had the subject Lot No. 5-B surveyed and they discovered that 664 square meters of their 858 square meters property was fenced and occupied by
petitioner. They also found out that a building for the boys' quarters and a portion of petitioner's gymnasium were constructed inside Lot No. 5-B. The encroachment by petitioner on
respondents-spouses land was made without the latter's knowledge and consent. Despite repeated demands by respondents-spouses, petitioner failed and refused to (1) restore to the
spouses possession of the encroached property; (2) demolish the improvements constructed thereon, and (3) pay damages and back rentals. Thus, on September 23, 1991, a
complaint for recovery of possession of real property damages, back rentals and attorney's fees was filed by respondents-spouses against the petitioner. The complaint was docketed as
Civil Case No. 20,960-91 of the Regional Trial Court of Davao City, Branch 15. In answer to the complaint, petitioner admitted that it occupies part of the litigated property but averred
that Lot No. 5-B was supposed to be a road lot that would give their Lots 5-A and 5-C means of entry and egress to the public road and, therefore, was beyond the commerce of man.
Petitioner further claims that respondents-spouses, as successors-in-interest of Gervacio Serapio, have the obligation to respect the perpetual use of Lot No. 5-B ceded to it by Serapio.
After trial on the merits, the trials court rendered judgment in favor of respondents-spouses and against the petitioner. It rejected petitioner's claim of being a builder in good faith of the
improvements it introduced on the disputed lot of respondents-spouses. The dispositive portion of the decision dated July 30, 1993 reads:
WHEREFORE, judgment is rendered ordering the defendant (now petitioner):
1. To vacate the part of the plaintiffs' (now respondents-spouses') lot covered by TCT No. 148595 it is presently occupying and to peaceably return the possession to the plaintiffs at its
own expense.
2. To demolish the buildings and improvements it introduced on the lot of the plaintiffs at its own expense.
3. To pay on hundred thousand pesos (P100,000.00) as moral damages.
4. To pay back rentals of fifteen thousand pesos (P15,000.00) with legal interests to be computed from January 31, 1991 until fully paid.
5. To pay one hundred thousand pesos (P100,000.00) as attorney's fees, four thousand pesos (P4,000.00) as litigation expenses and the costs of suit.
SO ORDERED. 3
Upon appeal by petitioner to the respondent court, the latter affirmed in toto the judgment of the trial court.
Still dissatisfied, petitioner now comes to us via the present petition, assailing the respondent court's decision on the following grounds:
I
THE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT FINDING THAT PRIVATE RESPONDENTS' ANCESTOR, GERVACIO SERAPIO, HAD CEDED TO THE PETITIONER THE
PERPETUAL USE OF LOT 5-B.

II
THE PUBLIC RESPONDENT GRIEVOUSLY IGNORED THE EVIDENCE ON RECORD AND ERRED IN NOT HOLDING THAT PRIVATE RESPONDENTS' CLAIM HAD CLEARLY
BEEN BARRED BY LACHES.
III
THE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT AWARDED ACTUAL DAMAGES IN THE FORM OF BACK RENTALS WITHOUT PROOF TO
SUPPORT THE SAME.
IV
THE PUBLIC RESPONDENT COMMITTED GAVE ABUSE OF DISCRETION IN AWARDING MORAL DAMAGES TO PRIVATE RESPONDENTS
(A) IN THE ABSENCE OF A PRAYER FOR THE AWARD NOR PROOF OF THE SAME.
(B) IN THE FACE OF EVIDENCE CLEARLY SHOWING THAT PRIVATE RESPONDENTS WERE PURCHASERS IN BAD FAITH. 4
The above-quoted errors allegedly committed by the respondent court call for a review of its findings of facts. As a general rule, the re-examination of the evidence submitted by the
contending parties during the trial of case is not a function that this Court normally undertakes inasmuch as the findings of facts of the respondent court are generally binding and
conclusive on the Supreme Court. 5 The jurisdiction of this Court in a petition for review on certiorari under Rule 45 of the Revised Rules of Court is limited to reviewing only errors of
law, 6 not of fact, unless the factual findings complained of are devoid of support by the evidence on record or the assailed judgment is based on misapprehension of facts. 7
Petitioner contends that its case should be treated as an exception to the said general rule since the respondent court "overlooked certain relevant facts not disputed by the parties,
which if properly considered, would justify a different conclusion." 8
Let us examine these "relevant facts" which the respondent court allegedly overlooked when it rendered the assailed decision.
First. Petitioner maintains that Gervacio Serapio, the original owner of the land in question (Lot 5-B), had in his lifetime represented, committed and warranted that the said lot would be
for petitioner's perpetual use as a road lot, it being the only access to the public road for Lot 5-A and 5-C, and to each other. 9
In support of this posture, petitioner cited the document entitled "Agreement Of Purchase And Sale" 10 dated July 8, 1959, executed between Gervacio Serapio and petitioner, which
Agreement shows a sketch attached thereto as Annex "A" 11 indicating the locating of the two (2) lots subject of the Agreement and two (2) proposed roads, the Simeon de Jesus St. and
Padre Faura St. (which is the disputed Lot B). Petitioner argues that "without that map (sketch) and the implicit assurance that goes with it, there could not have been a sale." 12
There is nothing significant in the said sketch which would justify a reversal of the findings and conclusions reached by the respondent court. It is merely a sketch of the location of the
two (2) lots subject of the sale. There is no express or implied agreement in said annex containing the sketch which would confirm petitioner's claim that Geronimo Serapio "had ceded
to the petitioner the perpetual use of Lot 5-B." If petitioner's claim was true, then the same could have easily been inserted as an additional agreement between the parties. That it was
not made so, only shows that petitioner's claim is nothing but a mere conjecture, which has zero evidentiary weight. Section 9, Rule 130 of the Revised Rules of Court provides in part
that where, as here, "the terms of an agreement have been reduced to writing, it is considered as containing all the terms agreed upon and there can be, between the parties and their
successors in interest, no evidence of such terms other than the contents of the written agreement." Simply put, any oral evidence of an agreement should be excluded when after all,
the existing agreement is already in writing. 13 Thus, we are not prepared to disturb the following findings and conclusions of the respondent court:
Appellant first argues that the original owner of the subject land, Gervacio Serapio, had intended, represented and warranted that the same would be for its perpetual; use as a road lot.
Involving as it does a transmission of real rights, this claim should be based on something more concrete than bare allegations and speculations. In the instant case, however, there is
notably no concrete evidence supporting appellant's claim.
Appellant would have Us believe that the map attached to the Agreement of Purchase and Sale between it and Gervacio Serapio, containing as it does the proposed roads in the area,
implicitly carries the assurance that Gervacio Serapio had made with respect to said proposed roads.
Even the most careful perusal of the map attached to the Agreement of Purchase and Sale between appellant and Gervacio Serapio, however, does not reveal anything other than that it
merely shows the location of the lots subject of such Agreement. Indeed, from the Agreement itself, it is clear that said map was attached simply to identify the location of the lots
covered by the Agreement; and that reference to the map was simply as follows
. . ., the SELLER by these presents PROMISE TO SELL to said BUYER, these portions of land more particularly identified and designated as Lot Nos. "A" and "C" in the sketch hereto
attached and marked as Annex "A," . . . (Exh. 16, Agreement of Purchase and Sale) [Emphasis ours]
There being no provision in the Agreement, whatsoever, regarding the subject lot, or the grant of its use unto appellant, We cannot now accept appellant's bare allegations on Gervacio
Serapio's representation and warranty that the subject land would be for its perpetual use as a road lot. At any rate, it has been ruled that in case of doubt in the provisions of the Deed
of Sale, the least transmission of rights should prevail (Gacos vs. Court of Appeals, 212 SCRA 8).

The rest of appellant's arguments in support of its claim regarding perpetual use of the subject land as a road lot are nothing but mere speculations which, as We have stressed, cannot
suffice for Us to uphold any transmission of real rights. Being painfully bereft of concrete evidence, said claim of appellant must be brushed aside. 14
Even if we were to accept as true petitioner's stance that Lot 5-B was intended by Gervacio Serapio as a road right of way for petitioner's perpetual use, still a grant of a right of way in
favor of petitioner does not legally entitle it to occupy part of the said lot which is registered in repondents-spouses' name, more so to introduce permanent improvements thereon such
as a gymnasium and a boys' quarters/dormitory.
Thus, what is actually at issue here is not whether the petitioner could use Lot 5-B in question as a road, but rather whether the petitioner could legally possess/occupy part of the said
lot. This is, in fact, the only issue as agreed upon by the contending parties during the pre-trial conference of this case before the trial court. 15 As discussed earlier, petitioner has no right
whatsover to possess and construct permanent structures on the questioned land owned by respondent-spouses. Petitioner admits in its answer to the complaint that it introduced
improvement on the subject lot without the consent and knowledge of respondent-spouses. 16 It is thus a builder in bad faith. Again, we find no reversible error in the following ruling of
the respondent court:
Which leads us to a discussion of whether or not appellant was in bad faith in introducing improvements on the subject land. It cannot be denied that appellant never gained title to the
subject land as it admits to not having purchased the said lot (TSN, p. 81, November 9, 1992). Neither has appellant successfully shown any right to introduce improvements on the said
land (its claim of grant of perpetual use of the same as a road lot and its right to build on a right of way both having been rejected above). This being so, it follows that appellant was a
builder in bad faith in that, knowing that the land did not belong to it and that it had no right to build thereon, it nevertheless caused the improvements in question to be erected.
Next, appellant claims that granting that it was in bad faith appellees and their predecessors-in-interest were equally guilty of bad faith in allowing the construction of the improvements.
This bad faith on the part of the appellees and their predecessors-in-interest should, however, have been proved at the hearing below, for in the absence of such proof, it must be
presumed that with the unlawful trespass upon the subject land, the building were commenced thereon without the knowledge and consent of the owners thereof (Rivera vs. Archbishop
of Manila, 40 Phil. 717). Again, We find such proof absent in the instant case. 17
Second. Petitioner contends that the respondent court struck down its defense of laches "with a grossly erroneous and unfair declaration that since the private respondents themselves
did not sleep on their rights, there could be no laches." 18 Suffice it to state that no evidence was presented by petitioner during the trial to prove that the improvements constructed on
the subject property were made during the lifetime of Gervacio Serapio, nor that Serapio, his heirs or respondents-spouses were aware of, much less tolerated, the said structures so as
to make them guilty of laches proper:
Neither are We convinced by appellant's argument that appellee's claim is barred by laches. In Olizon vs. Court of Appeals, 236 SCRA 148, the Supreme Court once again defined
laches
. . . as the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could or should have been done earlier: it is negligence or
omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it.
Here, the improvements introduced by appellant were finished in 1988. In November 1989, a month after appellees purchased the subject lot, they had the same surveyed, after which
they immediately sought to inform the appellant about the encroachment they had discovered (TSN, pp. 8-11, August 26, 1992). Thereafter, on October 26, 1990, appellees, through
their lawyer, sent a demand letter to appellant regarding the matter, followed by another demand letter dated January 31, 1991. Finally the Complaint was filed on September 23, 1991.
All told, We do not find laches to have set in to effectively bar appellees from the claims contained in their Complaint. By any indication, the lapse of a mere three (3) years from the time
the improvements were constructed up to the time of the filing of the Complaint cannot be construed as sufficient to hold the complainant as barred by laches. Especially so since during
the interim, appellees were diligent in having the subject land surveyed and in sending demand letter to appellant. 19
Third. Petitioner claims that the respondent court committed grave abuse of discretion when it awarded respondents-spouses actual damages in the form of back rentals of P15,000.00
a month, plus the legal rate of interest, to be reckoned from January, 1991, without proof to support the same. We have examined the respondents-spouses' complaint and the testimony
of respondent Jerome Protasio on the matter of back rentals prayed for in the complaint, and we find no factual basis how such award was arrived at. Thus, we have to discard such
award of damages. A party is entitled to an adequate compensation for such pecuniary loss actually suffered by him as he has duly prove. 20 Such damages, to be recoverable, must not
only be capable of proof, but must actually be proved with a reasonable degree of certainty. 21 These damages cannot be presumed, 22 and the courts in making such award of damages
must point out specific facts which could afford a basis for measuring whatever compensatory or actual damages are borne. 23
Fourth. We also agree with the petitioner that the respondent court should not have awarded respondents-spouses moral damages of P100,00.00 simply because their complaint did not
specifically ask for such relief. Moral damages must be disallowed when it is not specifically prayed for in the complaint. 24 It is elementary that in order that moral damages may be
awarded, there must be pleading and proof of moral suffering, mental anguish, fright and the like, 25 both of which are absent in this case.

Finally. We further agree with the petitioner that the award of attorney's fees of P100,000.00 should be eliminated for lack of factual basis and legal justification. The only evidence to
support respondents-spouses' claim for attorney's fees is the testimony of Jerome Protasio to effect that his agreement with the law firm handling his case is that he is obligated to pay
"25% of the obligation receivable . . ." 26 That is all. Both the trial court and respondent Court of Appeals likewise did not cite specific factual basis to justify the award of attorney's fees,
which is in violation of the proscription against the imposition of a penalty on the right to litigate. 27 As we enunciated in Refractories Corporation of the Philippines vs. Intermediate
Appellate Court: 28
. . . The award of attorney's fees is the exception rather than the general rule and counsel's fees is not to be awarded every time a party wins a suit. The discretion of the court to award
attorney's fees under Article 2208 of the Civil Code "demand factual, legal and equitable justification, without which the award is a conclusion without a premise, its basis being
improperly left to speculation and conjecture." In all events, the court must state the reason for the award of attorney's fees.
WHEREFORE, the decision of the respondent Court of Appeals dated September 12, 1996, in CA-G.R. CV No. 43311, is hereby MODIFIED in the sense that the awards of back
rentals, moral damages and attorney's fees are hereby DELETED. In all other respects, the assailed decision is AFFIRMED. No pronouncement as to costs.
SO ORDERED.