2015 Civil Law Cases

2015 CIVIL LAW CASES
FIRST DIVISION
G.R. No. 182864
January 12, 2015
EASTERN SHIPPING LINES, INC., Petitioner,

vs.
BPI/MS INSURANCE CORP., & MITSUI SUMITOMO INSURANCE CO., LTD., Respondents.
DECISION
PEREZ, J.:
Before this Court is a Petition for Review on Certiorari of the Decision of the Second Division of the Court of
Appeals in CA-G.R. CV No. 88744 dated 31 January 2008, modifying the Decision of the Regional Trial Court
(RTC) by upholding the liability of Eastern Shipping Lines, Inc. (ESLI) but absolving Asian Terminals, Inc. (ATI)
from liability and deleting the award of attorney's fees.
1
The facts gathered from the records follow:

On 29 December 2004, BPI/MS Insurance Corporation (BPI/MS) and Mitsui Sumitomo Insurance Company
Limited (Mitsui) filed a Complaint before the RTC of Makati City against ESLI and ATI to recover actual
damages amounting to US$17,560.48 with legal interest, attorneys fees and costs of suit.
3
In their complaint, BPI/MS and Mitsui alleged that on 2 February 2004 at Yokohama, Japan, Sumitomo
Corporation shipped on board ESLIs vessel M/V "Eastern Venus 22" 22 coils of various Steel Sheet weighing
159,534 kilograms in good order and condition for transportation to and delivery at the port of Manila,
Philippines in favor of consignee Calamba Steel Center, Inc. (Calamba Steel) located in Saimsim, Calamba,
Laguna as evidenced by a Bill of Lading with Nos. ESLIYMA001. The declared value of the shipment was
US$83,857.59 as shown by an Invoice with Nos. KJGE-03-1228-NT/KE3. The shipment was insured with the
respondents BPI/MS and Mitsui against all risks under Marine Policy No. 103-GG03448834.
On 11 February 2004, the complaint alleged that the shipment arrived at the port of Manila in an unknown
condition and was turned over to ATI for safekeeping. Upon withdrawal of the shipment by the Calamba Steels
representative, it was found out that part of the shipment was damaged and was in bad order condition such
that there was a Request for Bad Order Survey. It was found out that the damage amounted to US$4,598.85
prompting Calamba Steel to reject the damaged shipment for being unfit for the intended purpose.
On 12 May 2004 at Kashima, Japan, Sumitomo Corporation again shipped on board ESLIs vessel M/V
"Eastern Venus 25" 50 coils in various Steel Sheet weighing 383,532 kilograms in good order and condition for
transportation to and delivery at the port of Manila, Philippines in favor of the same consignee Calamba Steel
asevidenced by a Bill of Lading with Nos. ESLIKSMA002. The declared value of the shipment was
US$221,455.58 as evidenced by Invoice Nos. KJGE-04-1327-NT/KE2. The shipment was insured with the
respondents BPI/MS and Mitsui against all risks under Marine Policy No. 104-GG04457785.
On 21 May 2004, ESLIs vessel withthe second shipment arrived at the port of Manila partly damaged and in
bad order. The coils sustained further damage during the discharge from vessel to shore until its turnover to
ATIs custody for safekeeping.
Upon withdrawal from ATI and delivery to Calamba Steel, it was found out that the damage amounted to
US$12,961.63. As it did before, Calamba Steel rejected the damaged shipment for being unfit for the intended
purpose.
Calamba Steel attributed the damages on both shipments to ESLI as the carrier and ATI as the arrastre
operator in charge of the handling and discharge of the coils and filed a claim against them. When ESLI and
ATI refused to pay, Calamba Steel filed an insurance claim for the total amount of the cargo against BPI/MS
and Mitsuias cargo insurers. As a result, BPI/MS and Mitsui became subrogated in place of and with all the
rights and defenses accorded by law in favor of Calamba Steel.
Opposing the complaint, ATI, in itsAnswer, denied the allegations and insisted that the coils in two shipments
were already damaged upon receipt from ESLIs vessels. It likewise insisted that it exercised due diligence in
the handling of the shipments and invoked that in case of adverse decision, its liability should not
exceed P5,000.00 pursuant to Section 7.01, Article VII of the Contract for Cargo Handling Services between
Philippine Ports Authority (PPA) and ATI. A cross-claim was also filed against ESLI.
4
On its part, ESLI denied the allegations of the complainants and averred that the damage to both shipments
was incurred while the same were in the possession and custody of ATI and/or of the consignee or its
representatives. It also filed a cross-claim against ATI for indemnification in case of liability.
6
To expedite settlement, the case was referred to mediation but it was returned to the trial court for further
proceedings due tothe parties failure to resolve the legal issues as noted inthe Mediators Report dated 28
June 2005.
7
On 10 January 2006, the court issued a Pre-Trial Order wherein the following stipulations wereagreed upon by
the parties:
1. Parties admitted the capacity of the parties to sue and be sued;
2. Parties likewise admitted the existence and due execution of the Bill of Lading covering various steel
sheets in coil attached to the Complaint as Annex A;
3. Parties admitted the existence of the Invoiceissued by Sumitomo Corporation, a true and faithful
copy of which was attached to the Complaint as Annex B;
4. Parties likewise admitted the existence of the Marine Cargo Policy issued by the Mitsui Sumitomo
Insurance Company, Limited, copy of which was attached to the Complaint as Annex C;
5. [ATI] admitted the existence and due execution of the Request for Bad Order Survey dated February
13, 2004, attached to the Complaint as Annex D;
6. Insofar as the second cause of action, [ESLI] admitted the existence and due execution of the
document [Bill of Lading Nos. ESLIKSMA002, Invoice with Nos. KJGE-04-1327-NT/KE2 and Marine
Cargo Policy against all risks on the second shipment] attachedto the Complaint as Annexes E, F and
G;
7. [ATI] admitted the existence of the Bill of Lading together with the Invoices and Marine Cargo Policy.
[It] likewise admitted by [ATI] are the Turn Over Survey of Bad Order Cargoes attached to the
Complaint as Annexes H, H-1 and J.
8
The parties agreed that the procedural issue was whether there was a valid subrogation in favor of BPI/MS and
Mitsui; and that the substantive issues were, whether the shipments suffered damages, the cause of damage,
and the entity liable for reparation of the damages caused. Due to the limited factual mattersof the case, the
parties were required to present their evidence through affidavits and documents. Upon submission of these
evidence, the case was submitted for resolution.
9
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BPI/MS and Mitsui, to substantiate their claims, submitted the Affidavits of (1) Mario A. Manuel (Manuel), the
Cargo Surveyor of Philippine Japan Marine Surveyors and Sworn Measurers Corporation who personally
examined and conducted the surveys on the two shipments; (2) Richatto P. Almeda, the General Manager of
11
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Calamba Steel who oversaw and examined the condition, quantity, and quality of the shipped steel coils, and
who thereafter filed formal notices and claims against ESLI and ATI; and (3) Virgilio G. Tiangco, Jr., the Marine
Claims Supervisor of BPI/MS who processed the insurance claims of Calamba Steel. Along with the Affidavits
were the Bills of Lading covering the two shipments, Invoices, Notices of Loss of Calamba
Steel, Subrogation Form, Insurance Claims, Survey Reports, Turn Over Survey of Bad Order Cargoes and
Request for Bad Order Survey.
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ESLI, in turn, submitted the Affidavits of Captain Hermelo M. Eduarte, Manager of the Operations Department
of ESLI, who monitored in coordination with ATI the discharge of the two shipments, and Rodrigo Victoria
(Rodrigo), the Cargo Surveyor of R & R Industrial and Marine Services, Inc., who personally surveyed the
subject cargoes on board the vessel as well as the manner the ATI employees discharged the coils. The
documents presented were the Bills of Lading, Secretarys Certificate of PPA, granting ATI the duty and
privilege to provide arrastre and stevedoring services at South Harbor, Port of Manila, Contract for Cargo
Handling Services, Damage Report and Turn Over Report made by Rodrigo. ESLI also adopted the Survey
Reports submitted by BPI/MS and Mitsui.
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25
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Lastly, ATI submitted the Affidavits of its Bad Order Inspector Ramon Garcia (Garcia) and Claims Officer
Ramiro De Vera. The documents attached to the submissions were the Turn Over Surveys of Bad Cargo
Order, Requests for Bad Order Survey, Cargo Gatepasses issued by ATI, Notices of Loss/Claims of Calamba
Steel and Contract for Cargo Handling Services.
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35
On 17 September 2006, RTC Makati City rendered a decision finding both the ESLI and ATI liable for the
damages sustained by the two shipments. The dispositive portion reads: WHEREFORE, judgment is hereby
rendered in favor of [BPI/MS and Mitsui] and against [ESLI Inc.] and [ATI], jointly and severally ordering the
latter to pay [BPI/MS and Mitsui] the following: 1. Actual damages amounting to US$17,560.48 plus 6% legal
interest per annum commencing from the filing of this complaint, until the same is fully paid;
2. Attorneys fees in a sum equivalent to 20% of the amount claimed;
3. Costs of suit.
36
Aggrieved, ESLI and ATI filed their respective appeals before the Court of Appeals on both questions of fact
and law.
37
Before the appellate court, ESLI argued that the trial court erred when it found BPI/MS has the capacity to sue
and when it assumed jurisdiction over the case. It also questioned the ruling on its liability since the Survey
Reports indicated that the cause ofloss and damage was due to the "rough handling of ATIs stevedores during
discharge from vessel to shore and during loading operation onto the trucks."It invoked the limitation of liability
of US$500.00 per package asprovided in Commonwealth Act No. 65 or the Carriage of Goods by Sea Act
(COGSA). On the other hand, ATI questioned the capacity to sue of BPI/MS and Mitsui and the award of
attorneys fees despite its lack of justification in the body of the decision. ATI also imputed error on the part of
the trial court when it ruled that ATIs employees were negligent in the ruling of the shipments. It also insisted
on the applicability of the provision of COGSA on limitation of liability.
38
39
In its Decision, the Court of Appeals absolved ATI from liability thereby modifying the decision of the trial court.
The dispositive portions reads:
40
WHEREFORE, the appeal of ESLI is DENIED, while that of ATI is GRANTED. The assailed Judgment dated
September 17, 2006 of Branch 138, RTC of Makati City inCivil Case No. 05-108 is hereby MODIFIED
absolving ATI from liability and deleting the award of attorneys fees. The rest of the decision is affirmed.
41
Before this Court, ESLI seeks the reversal of the ruling on its liability.
At the outset, and notably, ESLI included among its arguments the attribution of liability to ATI but it failed to
implead the latter as a party to the present petition. This non-inclusion was raised by BPI/MS and Mitsui as an
issue in its Comment/Opposition and Memorandum: For reasons known only to [ESLI],it did not implead ATI
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as a party respondent in this case when it could have easily done so. Considering the nature of the arguments
raised by petitioner pointing to ATI as solely responsible for the damages sustained by the subject shipments, it
is respectfully submitted that ATI is an indispensable party in this case. Without ATI being impleaded, the issue
of whether ATI is solely responsible for the damages could not be determined with finality by this Honorable
Court. ATI certainly deserves to be heard on the issue but it could not defend itself because it was not
impleaded before this Court. Perhaps, this is the reason why [ESLI] left out ATI in this case so that it could not
rebut while petitioner puts it at fault.
45
ESLI in its Reply put the blame for the non-exclusion of ATI to BPI/MS and Mitsui:
46
[BPI/MS and Mitsui] claim that herein [ESLI] did not implead [ATI] as a party respondent in the Petition for
Review on Certiorari it had filed. Herein Petitioner submits that it is not the obligation of [ESLI] to implead ATI
as the same isalready the look out of [BPI/MS and Mitsui]. If [BPI/MS and Mitsui] believe that ATI should be
made liable, they should have filed a Motion for Reconsideration with the Honorable Court of Appeals. The fact
that [BPI/MS and Mitsui] did not even lift a finger to question the decision of the Honorable Court of Appeals
goes to show that [BPI/MS and Mitsui] are not interested as to whether or not ATI is indeed liable.
47
It is clear from the exchange that both [ESLI] and [BPI/MS and Mitsui] are aware of the non-inclusion of ATI, the
arrastre operator, as a party to this review of the Decision of the Court of Appeals. By blaming each other for
the exclusion of ATI, [ESLI] and [BPI/MS and Mitsui] impliedly agree that the absolution of ATI from liability
isfinal and beyond review. Clearly, [ESLI] is the consequential loser. It alone must bear the proven liability for
the loss of the shipment. It cannot shift the blame to ATI, the arrastreoperator, which has been cleared by the
Court of Appeals. Neither can it argue that the consignee should bear the loss.
Thus confined, we go to the merits of the arguments of ESLI.
First Issue: Liability of ESLI
ESLI bases of its non-liability onthe survey reports prepared by BPI/MS and Mitsuis witness Manuel which
found that the cause of damage was the rough handling on the shipment by the stevedores of ATI during the
discharging operations. However, Manuel does not absolve ESLI of liability. The witness in fact includes ESLI
in the findings of negligence. Paragraphs 3 and 11 of the affidavit of witness Manuel attribute fault to both ESLI
and ATI.
48
3. The vessel M.V. "EASTERN VENUS" V 22-S carrying the said shipment of 22 coils of various steel sheets
arrived at the port of Manila and discharged the said shipment on or about 11 February 2004 to the arrastre
operator [ATI]. I personally noticed that the 22 coils were roughly handled during their discharging from the
vessel to the pier of [ATI] and even during the loading operations of these coils from the pier to the trucks that
will transport the coils to the consigneess warehouse. During the aforesaid operations, the employees and
forklift operators of [ESLI] and [ATI] were very negligent in the handling of the subject cargoes.
xxxx
11. The vessel M.V. "EASTERN VENUS" V 25-S carrying the said shipment of 50 coils of various steel sheets
arrived at the port of Manila and discharged the said shipment on or about 21 May 2004 to the arrastre
operator [ATI]. I personally noticed that the 50 coils were roughly handled during their discharging from the
vessel to the pier of [ATI] and even during the loading operations of these coils from the pier to the trucks that
will transport the coils to the consigneess warehouse. During the aforesaid operations, the employees and
forklift operators of [ESLI] and [ATI] were very negligent in the handling of the subject cargoes. (Emphasis
supplied).
49
ESLI cannot rely only on parts it chooses. The entire body of evidence should determine the liability of the
parties. From the statements of Manuel, [ESLI] was negligent, whether solely or together with ATI.
To further press its cause, ESLI cites the affidavit of its witness Rodrigo who stated that the cause of the
damage was the rough mishandling by ATIs stevedores.
The affidavit of Rodrigo states that his functions as a cargo surveyor are, (1) getting hold of a copy of the bill of
lading and cargo manifest; (2) inspection and monitoring of the cargo on-board, during discharging and after
unloading from the vessel; and (3) making a necessary report of his findings. Thus, upon arrival at the South
Harbor of Manila of the two vessels of ESLI on 11 February 2004 and on 21 May 2004, Rodrigo immediately
boarded the vessels to inspect and monitor the unloading of the cargoes. In both instances, it was his finding
that there was mishandling on the part of ATIs stevedores which he reported as the cause of the
damage. Easily seen, however, is the absence of a crucial point in determining liability of either or both ESLI
and ATI lack of determination whether the cargo was in a good order condition as described in the bills of
lading at the time of his boarding. As Rodrigo admits, it was also his duty to inspect and monitor the cargo onboard upon arrival of the vessel. ESLI cannot invoke its non-liability solely on the manner the cargo was
discharged and unloaded. The actual condition of the cargoes upon arrival prior to discharge is equally
important and cannot be disregarded. Proof is needed that the cargo arrived at the port of Manila in good order
condition and remained as such prior to its handling by ATI.
50
Common carriers, from the nature of their business and on public policy considerations, are bound to observe
extra ordinary diligence in the vigilance over the goods transported by them. Subject to certain exceptions
enumerated under Article 1734 of the Civil Code, common carriers are responsible for the loss, destruction, or
deterioration of the goods. The extraordinary responsibility of the common carrier lasts from the time the goods
are unconditionally placed in the possession of, and received by the carrier for transportation until the same are
delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive
them.
51
52
In maritime transportation, a bill of lading is issued by a common carrier as a contract, receipt and symbol of
the goods covered by it. If it has no notation of any defect ordamage in the goods, it is considered as a "clean
bill of lading." A clean bill of lading constitutes prima facie evidence of the receipt by the carrier of the goods as
therein described.
1wphi1
53
Based on the bills of lading issued, it is undisputed that ESLI received the two shipments of coils from shipper
Sumitomo Corporation in good condition at the ports of Yokohama and Kashima, Japan. However, upon arrival
at the port of Manila, some coils from the two shipments were partly dented and crumpled as evidenced by the
Turn Over Survey of Bad Order Cargoes No. 67982 dated 13 February 2004 and Turn Over Survey of Bad
Order Cargoes Nos. 68363 and 68365 both dated 24 May 2004 signed by ESLIs representatives, a certain
Tabanao and Rodrigo together with ATIs representative Garcia. According toTurn Over Survey of Bad Order
Cargoes No. 67982, four coils and one skid were partly dented and crumpled prior to turnover by ESLI to ATIs
possession while a total of eleven coils were partly dented and crumpled prior to turnover based on Turn Over
Survey Bad Order Cargoes Nos. 68363 and 68365.
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Calamba Steel requested for a re-examination of the damages sustained by the two shipments. Based on the
Requests for Bad Order Survey Nos. 58267 and 58254 covering the first shipment dated 13 and 17 February
2004, four coils were damaged prior to turnover. The second Request for Bad Order Survey No. 58658 dated
25 May 2004 also affirmed the earlier findings that elevencoils on the second shipment were damaged prior to
turnover.
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In Asian Terminals, Inc., v. Philam Insurance Co., Inc., the Court based its ruling on liability on the Bad Order
Cargo and Turn Over of Bad Order. The Receipt bore a notation "B.O. not yet over to ATI," while the Survey
stated that the said steel case was not opened at the time of survey and was accepted by the arrastre in good
order. Based on these documents, packages in the Asian Terminals, Inc. case were found damaged while in
the custody of the carrier Westwind Shipping Corporation.
60
Mere proof of delivery of the goods in good order to a common carrier and of their arrival in bad order at their
destination constitutes a prima faciecase of fault or negligence against the carrier. If no adequate explanation is
given as to how the deterioration, loss, or destruction of the goods happened, the transporter shall be held
responsible. From the foregoing, the fault is attributable to ESLI. While no longer an issue, it may be
nonetheless state that ATI was correctly absolved of liability for the damage.
61
Second Issue: Limitation of Liability
ESLI assigns as error the appellate courts finding and reasoning that the package limitation under the
COGSA is inapplicable even if the bills of lading covering the shipments only made reference to the
corresponding invoices. Noticeably, the invoices specified among others the weight, quantity, description and
value of the cargoes, and bore the notation "Freight Prepaid" and "As Arranged." ESLI argues that the value of
the cargoes was not incorporated in the bills of lading and that there was no evidence that the shipper had
presented to the carrier in writing prior to the loading of the actual value of the cargo, and, that there was a no
payment of corresponding freight. Finally, despite the fact that ESLI admits the existence of the invoices, it
denies any knowledge either of the value declared or of any information contained therein.
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According to the New Civil Code, the law of the country to which the goods are to be transported shall govern
the liability of the common carrier for their loss, destruction or deterioration. The Code takes precedence as
the primary law over the rights and obligations of common carriers with the Code of Commerce and COGSA
applying suppletorily.
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The New Civil Code provides that a stipulation limiting a common carriers liability to the value of the goods
appearing in the bill of lading is binding, unless the shipper or owner declares a greater value. In addition, a
contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or deterioration
of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed
upon.
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COGSA, on the other hand, provides under Section 4, Subsection 5 that an amount recoverable in case ofloss
or damage shall not exceed US$500.00 per package or per customary freight unless the nature and value of
such goods have been declared by the shipper before shipment and inserted in the bill of lading.
In line with these maritime law provisions, paragraph 13 of bills of lading issued by ESLI to the shipper
specifically provides a similar restriction:
The value of the goods, in calculating and adjusting any claims for which the Carrier may be liable shall, to
avoid uncertainties and difficulties in fixing value, be deemed to the invoice value of the goods plus ocean
freight and insurance, if paid, Irrespective of whether any other value is greater or less, and any partial loss or
damage shall be adjusted pro rataon the basis of such value; provided, however, that neither the Carrier nor
the ship shall in any event be or become liable for any loss, non-delivery or misdelivery of or damage or delay
to, or in connection with the custody or transportation of the goods in an amount exceeding $500.00 per
package lawful money of the United States, or in case of goods not shipped in packages, per customary freight
unit, unless the nature of the goods and a valuation higher than $500.00 is declared in writing by the shipper on
delivery to the Carrier and inserted in the bill of lading and extra freight is paid therein as required by applicable
tariffs to obtain the benefit of such higher valuation. In which case even if the actual value of the goods per
package orunit exceeds such declared value, the value shall nevertheless be deemed to be the declared value
and any Carriers liability shall not exceed such declared value and any partial loss or damage shall be
adjusted pro-rata on the basis thereof. The Carrier shall not be liable for any loss or profit or any consequential
or special damage and shall have the option of replacing any lost goods and replacing o reconditioning any
damage goods. No oral declaration or agreement shall be evidence of a value different from that provided
therein.
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Accordingly, the issue whether or not ESLI has limited liability as a carrier is determined by either absence or
presence of proof that the nature and value of the goods have been declared by Sumitomo Corporation and
inserted in the bills of lading.
ESLI contends that the invoices specifying the weight, quantity, description and value of the cargo in reference
to the bills of lading do not prove the fact that the shipper complied with the requirements mandated by the
COGSA. It contends that there must be an insertion of this declaration in the bill of lading itself to fall outside
the statutory limitation of liability.
ESLI asserts that the appellate court erred when it ruled that there was compliance with the declaration
requirement even if the value of the shipment and fact of payment were indicated on the invoice and not on the
bill of lading itself.
There is no question about the declaration of the nature, weight and description of the goods on the first bill of
lading.
The bills of lading represent the formal expression of the parties rights, duties and obligations. It is the best
evidence of the intention of the parties which is to be deciphered from the language used in the contract, not
from the unilateral post facto assertions of one of the parties, or of third parties who are strangers to the
contract. Thus, when the terms of an agreement have been reduced to writing, it is deemed to contain 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.
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As to the non-declaration of the value of the goods on the second bill of lading, we see no error on the part of
the appellate court when it ruled that there was a compliance of the requirement provided by COGSA. The
declaration requirement does not require that all the details must be written down on the very bill of lading itself.
It must be emphasized that all the needed details are in the invoice, which "contains the itemized list of goods
shipped to a buyer, stating quantities, prices, shipping charges," and other details which may contain numerous
sheets. Compliance can be attained by incorporating the invoice, by way of reference, to the bill of lading
provided that the former containing the description of the nature, value and/or payment of freight charges isas
in this case duly admitted as evidence.
74
In Unsworth Transport International(Phils.), Inc. v. Court of Appeals, the Court held that the insertion of an
invoice number does not in itself sufficiently and convincingly show that petitioner had knowledge of the value
of the cargo. However, the same interpretation does not squarely apply if the carrier had been advised of the
value of the goods as evidenced by the invoice and payment of corresponding freight charges. It would be
unfair for ESLI to invoke the limitation under COGSA when the shipper in fact paid the freight charges based on
the value of the goods. In Adams Express Company v. Croninger, it was said: "Neither is it conformable to
plain principles of justice that a shipper may understate the value of his property for the purpose of reducing the
rate, and then recover a larger value in case of loss. Nor does a limitation based upon an agreed value for the
purpose of adjusting the rate conflict with any sound principle of public policy." Conversely, but for the same
reason, it is unjust for ESLI to invoke the limitation when it is informed that the shipper paid the freight charges
corresponding to the value of the goods.
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Also, ESLI admitted the existence and due execution of the Bills of Lading and the Invoice containing the
nature and value of the goods on the second shipment. As written in the Pre-Trial Order, the parties, including
ESLI, admitted the existence and due execution of the two Bills of Lading together with the Invoice on the
second shipment with Nos. KJGE-04-1327-NT/KE2 dated 12 May 2004. On the first shipment, ESLI admitted
the existence of the Invoice with Nos. KJGE-031228-NT/KE3 dated 2 February 2004.
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The effect of admission of the genuineness and due execution of a document means that the party whose
signature it bears admits that he voluntarily signed the document or itwas signed by another for him and with
his authority.
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A review of the bill of ladings and invoice on the second shipment indicates that the shipper declared the nature
and value of the goods with the corresponding payment of the freight on the bills of lading. Further, under the
caption "description of packages and goods," it states that the description of the goods to be transported as
"various steel sheet in coil" with a gross weight of 383,532 kilograms (89.510 M3).On the other hand, the
amount of the goods is referred in the invoice, the due execution and genuineness of which has already been
admitted by ESLI, is US$186,906.35 as freight on board with payment of ocean freight of US$32,736.06 and
insurance premium of US$1,813.17. From the foregoing, we rule that the non-limitation of liability applies in the
present case.
We likewise accord the same binding effect on the contents of the invoice on the first shipment. ESLI contends
that what was admitted and written on the pre-trial order was only the existence of the first shipment invoice
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but not its contents and due execution. It invokes admission of existence but renounces any knowledge of the
contents written on it.
82
Judicial admissions are legally binding on the party making the admissions. Pre-trial admission in civil cases is
one of the instances of judicial admissions explicitly provided for under Section 7,Rule 18 of the Rules of Court,
which mandates that the contents of the pre-trial order shall control the subsequent course of the action,
thereby, defining and limiting the issues to be tried. In Bayas v. Sandiganbayan, this Court emphasized that:
83
Once the stipulations are reduced into writing and signed by the parties and their counsels, they become
binding on the parties who made them. They become judicial admissions of the fact or facts stipulated. Even if
placed at a disadvantageous position, a party may not be allowed to rescind them unilaterally, it must assume
the consequences of the disadvantage.
84
Moreover, in Alfelor v. Halasan, this Court declared that:

85
A party who judicially admits a fact cannot later challenge that fact as judicial admissions are a waiver of proof;
production of evidence is dispensed with. A judicial admission also removes an admitted fact from the field of
controversy. Consequently, an admission made in the pleadings cannot be controverted by the party making
such admission and are conclusive as to such party, and all proofs to the contrary or inconsistent there with
should be ignored, whether objection is interposed by the party or not. The allegations, statements or
admissions contained in a pleading are conclusive as against the pleader. A party cannot subsequently take a
position contrary of or inconsistent with what was pleaded. (Citations omitted)
86
The admission having been made in a stipulation of facts at pre-trial by the parties, it must be treated as a
judicial admission. Under Section 4, of Rule 129 of the Rules of Court, a judicial admission requires no proof.
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It is inconceivable that a shipping company with maritime experience and resource like the ESLI will admit the
existence of a maritime document like an invoice even if it has no knowledge of its contents or without having
any copy thereof.
ESLI also asserts that the notation "Freight Prepaid" and "As Arranged," does not prove that there was an
actual declaration made in writing of the payment of freight as required by COGSA. ESLI did not as it could not
deny payment of freight in the amount indicated in the documents. Indeed, the earlier discussions on ESLI's
admission of the existence and due execution of the invoices, cover and disprove the argument regarding
actual declaration of payment. The bills of lading bore a notation on the manner of payment which was "Freight
Prepaid" and "As Arranged" while the invoices indicated the amount exactly paid by the shipper to ESLI.
WHEREFORE, we DENY the Petition for Review on Certiorari. The Decision dated 31 January 2008 and
Resolution dated 5 May 2008 of the Second Division of the Court of Appeals in CA-G.R. CV. No. 88744 are
hereby AFFIRMED.
SO ORDERED.
JOSE PORTUGAL PEREZ
Associate Justice
WE CONCUR:
MARIA LOURDES P.A. SERENO
Chief Justice
Chairperson
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
DIOSDADO M. PERALTA*
Associate Justice
BIENVENIDO L. REYES**
Associate Justice
C E R TI F I C AT I O N
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.
MARIA LOURDES P.A. SERENO
Chief Justice
SECOND DIVISION
G.R. No. 209605
January 12, 2015
NEIL B. AGUILAR and RUBEN CALIMBAS, Petitioners,

vs.
LIGHTBRINGERS CREDIT COOPERATIVE, Respondent.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari filed by petitioners Neil B. Aguilar (Aguilar) and Ruben Calimbas
(Calimbas), seeking to reverse and set aside the April 5, 2013 and October 9, 2013 Resolutions of the Court of
Appeals (CA) in CA-G.R. SP No. 128914, which denied the petition for review outright, assailing the January 2,
2013 Decision of the Regional Trial Court, Branch 5, Dinalupihan, Bataan (RTC) and the May 9, 2012
Decision of the First Municipal Circuit Trial Court, Dinalupihan-Hermosa, Bataan (MCTC).
1
In the lower courts, one of the issues involved was the proper application of the rules when a party does not
appear in the scheduled pretrial conference despite due notice. In this petition, the dismissal by the CA of the
petition filed under Rule 42 for failure to attach the entire records has also been put to question, aside from the
veracity of indebtedness issue.
The Facts
This case stemmed from the three (3) complaints for sum of money separately filed by respondent Ligh
tbringers Credit Cooperative (respondent) on July 14, 2008 against petitioners Aguilar and Calimbas, and one
Perlita Tantiangco (Tantiangco)which were consolidated before the First Municipal Circuit Trial Court,
Dinalupihan, Bataan (MCTC).The complaints alleged that Tantiangco, Aguilar and Calimbas were members of
the cooperative who borrowed the following funds:
1. In Civil Case No. 1428, Tantiangco allegedly borrowed P206,315.71 as evidenced by Cash
Disbursement Voucher No. 4010 but the net loan was only P45,862.00 as supported by PNB Check
No. 0000005133.
5
2. In Civil Case No. 1429, petitioner Calimbas allegedly borrowed P202,800.18 as evidenced by Cash
No. 0000005088;
6
3. In Civil Case No. 1430, petitioner Aguilar allegedly borrowed P126,849.00 as evidenced by Cash
No. 0000005026;
7
Tantiangco, Aguilar and Calimbas filed their respective answers. They uniformly claimed that the discrepancy
between the principal amount of the loan evidenced by the cash disbursement voucher and the net amount of
loan reflected in the PNB checks showed that they never borrowed the amounts being collected. They also
asserted that no interest could be claimed because there was no written agreement as to its imposition.
On the scheduled pre-trial conference, only respondent and its counsel appeared. The MCTC then issued the
Order, dated August 25, 2009, allowing respondent to present evidence ex parte. Respondent later presented
Fernando Manalili (Manalili), its incumbent General Manager, as its sole witness. In his testimony, Manalili
explained that the discrepancy between the amounts of the loan reflected in the checks and those in the cash
disbursement vouchers were due to the accumulated interests from previous outstanding obligations, withheld
share capital, as well as the service and miscellaneous fees. He stated, however, that it was their bookkeeper
who could best explain the details.
8
Aguilar and Calimbas insisted that they should have the right to crossexamine the witness of respondent,
notwithstanding the fact that these cases were being heard ex parte. In the interest of justice, the MCTC
directed the counsels of the parties to submit their respective position papers on the issue of whether or not a
party who had been declared "as in default" might still participate in the trial of the case. Only respondent,
however, complied with the directive. In its Order, dated April 27, 2011, the MCTC held that since the
proceedings were being heard ex parte, the petitioners who had been declared "as in default" had no rightto
participate therein and to crossexamine the witnesses. Thereafter, respondent filed its formal offer of
evidence. MCTC Ruling
9
10
On May 9, 2012, the MCTC resolved the consolidated cases in three separate decisions. In Civil Case No.
1428, the MCTC dismissed the complaint against Tantiangco because there was no showing that she received
the amount being claimed. Moreover, the PNB check was made payable to "cash" and was encashed by a
certain Violeta Aguilar. There was, however, no evidence that she gave the proceeds to Tantiangco. Further, the
dates indicated in the cash disbursement voucher and the PNB check varied from each other and suggested
that the voucher could refer to a different loan.
1wphi1
11
The decisions in Civil Case No. 1429 and 1430, however, found both Calimbas and Aguilar liable to
respondent for their respective debts. The PNB checks issued to the petitioners proved the existence of the
loan transactions. Their receipts of the loan were proven by their signatures appearing on the dorsal portions of
the checks as well as on the cash disbursement vouchers. As a matter of practice, banks would allow the
encashment of checks only by the named payee and subject to the presentation of proper identification.
Nonetheless, the MCTC ruled that only the amount shown in the PNB check must be awarded because
respondent failed to present its bookkeeper to justify the higher amounts being claimed. The court also
awarded attorneys fees in favor of respondent. The dispositive portion of the decision in Civil Case No. 1429
reads:
12
13
WHEREFORE, premises considered, judgment is hereby rendered in plaintiffs favor and against the
defendant, ordering the latter to pay plaintiff the amount of P60,024.00 with interest at the rate of 12% per
annum from April 4, 2007 until fully paid, plus P15,000.00 as attorneys fees. Costs against the defendant.
SO ORDERED.
14
And in Civil Case No. 1430, the dispositive portion states:
WHEREFORE, premises considered, judgment is hereby rendered in plaintiffs favor and against the
defendant, ordering the latter to pay the plaintiff the amount of P76,152.00 with interest at the rate of 12% per
annum from February 28, 2007 until fully paid.
Defendant is further directed to pay attorneys fees equivalent to 25% of the adjudged amount. Costs against
the defendant.
SO ORDERED.
15
On July 12, 2012, a notice of appeal was filed by the petitioners, and on August 15, 2012, they filed their joint
memorandum for appeal before the Regional Trial Court, Branch 5, Bataan (RTC).Aguilar and Calimbas
argued out that had they been allowed to present evidence, they would have established that the loan
documents were bogus. Respondent produced documents to appear that it had new borrowers but did not lend
any amount to them. Attached to the joint memorandum were photocopies of the dorsal portions of the PNB
checks which showed that these checks were to be deposited back to respondents bank account.
16
17
RTC Ruling
On January 2, 2013, the RTC rendered separate decisions in Civil Case No. DH-1300-12 and Civil Case No.
DH-1299-12 which affirmed the MCTC decisions. It held that the PNB checks were concrete evidence of the
indebtedness of the petitioners to respondent. The RTC relied on the findings of the MCTC that the checks
bore no endorsement to another person or entity. The checks were issued in the name of the petitioners and,
thus, they had the right to encash the same and appropriate the proceeds. The decretal portions of the RTC
decision in both cases similarly read:
18
19
WHEREFORE, premises considered, the appeal is hereby DENIED. The Decision dated May 9, 2012 of the
First Municipal Circuit Trial Court (1st MCTC), Dinalupihan-Hermosa, Bataan is hereby affirmed in toto.
SO ORDERED.
On January 18, 2013, the petitionersfiled their joint motion for reconsideration/new trial before the RTC.
Aguilar and Calimbas reiterated their position that they did not receivethe proceeds of the checks. As an
alternative prayer, petitioners moved that the RTC remand the case to the MCTC for a new trial on account of
the Sinumpaang Salaysay of Arcenit Dela Torre, the bookkeeper of respondent.
20
On February 11, 2013, the RTC issued separate orders denying the motion of the petitioners. It explained that
all the issues were already passed upon and the supposed newly discovered evidence was already available
during appeal, but the petitioners failed to present the same in time.
21
CA Ruling
Aggrieved, Aguilar and Calimbas filed a petition for review before the CA on March 11, 2013. It was dismissed,
however, in the questioned resolution, dated April 5, 2013, stating that the petition was formally defective
because the "verification and disclaimer of forum shopping" and the "affidavit of service" had a defective jurat
for failure of the notary public to indicate his notarial commission number and office address. Moreover, the
entire records of the case, inclusive of the oral and documents evidence, were not attached to the petition in
contravention of Section 2, Rule 42 of the Rules of Court.
22
23
A motion for reconsideration was filed by the petitioners which sought the leniency of the CA. They attached a
corrected verification and disclaimer of forum shopping and affidavit of service.They asked the CA to simply
24
order the RTC to elevate the records of the case pursuant to Section 7, Rule 42 of the Rules of Court.
Moreover, the petitioners could not attach the records of the case because the flooding caused by "Habagat" in
August 2012 soaked the said records in water.
In the other questioned resolution, dated October 9, 2013, the CA denied the motion because the petitioners
still failed to attach the entire records of the case which was a mandatory requirement under Section 2, Rule
42.
Hence, this petition.
SOLE ASSIGNMENT OF ERROR
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN
EXCESS OF JURISDICTION WHEN IT DISMISSED THE PETITION FOR REVIEW FILED BEFORE IT BY
THE PETITIONERS UNDER RULE 42 OF THE RULES OF COURTCITING THAT THE SAID PETITION IS
FORMALLY DEFECTIVE FOR FAILURE OF THE PETITIONERS TO SUBMIT WITHTHE SAID PETITION THE
ENTIRE RECORDS OF THE APPEALED CIVIL CASE NOS. DH-1300-12 AND DH-1299-12.
25
The petitioners argue that contrary to the findings of the CA, they substantially complied with the required form
and contents of a petition for review under Section 2, Rule 42 of the Rules of Court. There is nothing in the
provision which requires that the entire records of the appealed case should be endorsed to the CA. Such
requirement would definitely be cumbersome to poor litigants like them.
They assert that they submitted the following pleadings and material portions of the court records in their
petition for review: (1) certified copies of the decisions, orders or resolutions of the RTC and the MCTC; (2)
complaints against the petitioners attached with documents used by respondent in its formal offer of evidence;
(3) answer of the petitioners; (4) order of the MCTC declaring the petitioners in default; (5) respondents formal
offer of evidence; (6) notice of appeal; (7) joint memorandum of appeal; and (8) joint motion for
reconsideration/new trial. According to the petitioners, these pleadings and records were sufficient to support
their petition for review.
Assuming that there was a reason to dismiss the petition on account of technicalities, the petitioners argue that
the CA should not have strictly applied the rules of procedure and provided leniency to the petitioners. They
also ask the Court to give a glance on the merits of their case brought before the CA.
On February 7, 2014, respondent filed its comment contending that the petitioners had no excuse in their noncompliance with Section 2, Rule 42. They claim that the court records were not attached because these were
soaked in flood water in August 2012, but the RTC rendered its decision in January 2013. The petitionersfailed
to secure a certification from the RTC that these records were indeed unavailable.
26
On May 21, 2014, the petitioners filed their reply before this Court, adding that the elevation of the entire
records of the case was not a mandatory requirement, and the CA could exercise its discretion that it furnished
with the entire records of the case by invoking Section 7, Rule 42 of the Rules of Court.
27
The Courts Ruling

First Procedural Issue
On the sole assignment of error, the Court agrees with the petitioners that Section 2, Rule 42 does not require
that the entire records of the case be attached to the petition for review. The provision states:
Sec. 2. Form and contents. - The petition shall be filed in seven (7) legible copies, with the original copy
intended for the court being indicated as such by the petitioner, and shall (a) state the full names of the parties
to the case, without impleading the lower courts or judges thereof either as petitioners or respondents; (b)
indicate the specific material dates showing that it was filed on time; (c) set forth concisely a statement of the
matters involved, the issues raised, the specification of errors of fact or law, or both, allegedly committed by the
Regional Trial Court, and the reasons or arguments relied upon for the allowance of the appeal; (d) be
accompanied by clearly legible duplicate originals or true copies of the judgments or final orders of both lower
courts, certified correct by the clerk of court of the Regional Trial Court, the requisite number of plain copies
thereof and of the pleadings and other material portions of the record as would support the allegations of the
petition. [Emphasis and underscoring supplied]
The above quoted provision enumerates the required documents that must be attached to a petition for review,
to wit: (1) clearly legible duplicate originals or true copies of the judgments or final orders of both lower courts,
certified correct by the clerk of court of the Regional Trial Court; (2) the requisite number of plain copies thereof;
and (3) of the pleadings and other material portions of the record as would support the allegations of the
petition. Clearly, the Rules do not requirethat the entire records of the case be attached to the petition for
review. Only when these specified documents are not attached in the petition will it suffer infirmities under
Section 3, Rule 42, which states:
Sec. 3. Effect of failure to comply with requirements. - The failure of the petitioner to comply with any of the
foregoing requirements regarding the payment of the docket and other lawful fees, the deposit for costs, proof
of service of the petition, and the contents of and the documents which should accompany the petition shall be
sufficient ground for the dismissal thereof.
In Canton v. City of Cebu, the Court discussed the importance of attaching the pleadings or material portions
of the records to the petition for review. "[P]etitioners discretion in choosing the documents to be attached to
the petition is however not unbridled. The CA has the duty to check the exercise of this discretion, to see to it
that the submission of supporting documents is not merely perfunctory. The practical aspect of this duty is to
enable the CA to determine at the earliest possible time the existence of prima faciemerit in the petition." In
that case, the petition was denied because the petitioner failed to attach the complaint, answer and appeal
memorandum to support their allegation.
28
29
In Cusi-Hernandez v. Diaz, a case where the petitioner did not attach to her petition for review a copy of the
contract to sell that was at the center of controversy, the Court nonetheless found that there was a substantial
compliance with the rule, considering that the petitioner had appended to the petition for review a certified copy
of the decision of the MTC that contained a verbatim reproduction of the omitted contract.
30
Recently, in Galvez, v. CA, it was held that attaching the other records of the MTC and the RTC were not
necessary based on the circumstances of the case. The petitioner therein was not assailing the propriety of the
findings of fact by the MTC and the RTC, but only the conclusions reached by the said lower courts after their
appreciation of the facts. In dealing with the questions of law, the CA could simply refer to the attached
decisions of the MTC and the RTC.
31
Thus, the question in the case at bench is whether or not the petitioners attached the sufficient pleadings and
material portions of the records in their petition for review. The Court rules that the petition was in substantial
compliance with the requirements.
The assignment of error in the petition for review clearly raises questions of fact as the petitioners assail the
appreciation of evidence by the MCTC and the RTC. Thus, aside from the decisions and orders of the MCTC
and the RTC, the petitioners should attach pertinent portions of the records such as the testimony of the
32
solewitness of respondent, the copies of the cash disbursement vouchers and the PNB checks presented by
respondent in the MCTC. In the petition for review, the petitioners attached respondents complaints before the
MCTC which contained the photocopies of the cash disbursement vouchers and PNB checks. These should be
considered as ample compliance with Section 2, Rule 42 of the Rules of Court.
Second Procedural Issue
Nevertheless, instead of remanding the case to the CA, this Court deems it fit to rule on the merits of the case
to once and for all settle the dispute of the parties.
The rule is that a court can only consider the evidence presented by respondent in the MCTC because the
petitioners failed to attend the pre-trial conference on August 25, 2009 pursuant toSection 5, Rule 18 of the
Rules of Court. The Court, however, clarifies that failure to attend the pre-trial does not result in the "default" of
the defendant. Instead, the failure of the defendant to attend shall be cause to allow the plaintiff to present his
evidence ex parteand the court to render judgment on the basis thereof.
33
The case of Philippine American Life & General Insurance Company v. Joseph Enario discussed the
difference between non-appearance of a defendant in a pre-trial conference and the declaration of a defendant
in default in the present Rules of Civil Procedure. The decision states:
34
Prior to the 1997 Revised Rules of Civil Procedure, the phrase "as in default" was initially included in Rule 20 of
the old rules, and which read as follows:
Sec. 2. A party who fails to appear at a pre-trial conference may be non-suited or considered as in default.
It was however amended in the 1997 Revised Rules of Civil Procedure. Justice Regalado, in his book
REMEDIAL LAW COMPENDIUM, explained the rationale for the deletion of the phrase "as in default" in the
amended provision, to wit:
1. This is a substantial reproduction of Section 2 of the former Rule 20 with the change that, instead of
defendant being declared "as in default" by reason of his non appearance, this section now spells out that the
procedure will be to allow the ex parte presentation of plaintiffs evidence and the rendition of judgment on the
basis thereof. While actually the procedure remains the same, the purpose is one of semantical propriety or
terminological accuracy as there were criticisms on the use of the word "default" in the former provision since
that term is identified with the failure to file a required answer, not appearance in court.
If the absent party is the plaintiff, then his case shall be dismissed. If it is the defendant who fails to appear,
then the plaintiff is allowed to present his evidence ex parteand the court shall render judgment on the basis
thereof. Thus, the plaintiff is given the privilege to present his evidence without objection from the defendant,
the likelihood being that the court will decide in favor of the plaintiff, the defendant having forfeited the
opportunity to rebut or present his own evidence. The pre-trial cannot be taken for granted. It is not a mere
technicality in court proceedings for it serves a vital objective: the simplification, abbreviation and expedition of
the trial, if not indeed its dispensation. More significantly, the pre-trial has been institutionalized as the answer
to the clarion call for the speedy disposition of cases. Hailed as the most important procedural innovation in
Anglo-Saxon justice in the nineteenth century, it paved the way for a less cluttered trial and resolution of the
case. It is, thus, mandatory for the trial court to conduct pre-trial in civil cases in order to realize the paramount
objective of simplifying, abbreviating and expediting trial.
35
36
37
In the case at bench, the petitioners failed to attend the pre-trial conference set on August 25, 2009. They did
not even give any excuse for their non-appearance, manifestly ignoring the importance of the pre-trial stage.
Thus, the MCTC properly issued the August 25, 2009 Order, allowing respondent to present evidence ex
parte.
38
The MCTC even showed leniency when it directed the counsels of the parties to submit their respective
position papers on whether or not Aguilar and Calimbas could still participate in the trial of the case despite
their absence in the pre-trial conference. This gave Aguilar and Calimbas a second chance to explain their nonattendance and, yet,only respondent complied with the directive to file a position paper. The MCTC, in its
Order, dated April 27, 2011, properly held that since the proceedings were being heard ex parte, Aguilar and
Calimbas had no right to participate therein and to cross-examine the witness.
39
Thus, as it stands, the Court can only consider the evidence on record offered by respondent. The petitioners
lost their right to present their evidence during the trial and, a fortiori, on appeal due to their disregard of the
mandatory attendance in the pre-trial conference.
Substantive Issue
And on the merits of the case, the Court holds that there was indeed a contract of loan between the petitioners
and respondent. The Court agrees with the findings of fact of the MCTC and the RTC that a check was a
sufficient evidence of a loan transaction. The findings of fact of the trial court, its calibration of the testimonies
of the witnesses and its assessment of the probative weight thereof, as well as its conclusions anchored on the
findings are accorded high respect, if not conclusive effect.
40
The case of Pua v. Spouses Lo Bun Tiong discussed the weight of a check as an evidence of a loan:
41
In Pacheco v. Court of Appeals, this Court has expressly recognized that a check constitutes an evidence of
indebtedness and is a veritable proof of an obligation. Hence, it can be used in lieu of and for the same
purpose as a promissory note. In fact, in the seminal case of Lozano v. Martinez, We pointed out that a check
functions more than a promissory note since it not only contains an undertaking to pay an amount of money but
is an "order addressed to a bank and partakes of a representation that the drawer has funds on deposit against
which the check is drawn, sufficient to ensure payment upon its presentation to the bank." This Court reiterated
this rule in the relatively recent Lim v. Mindanao Wines and Liquour Galleria stating that a check, the entries of
which are in writing, could prove a loan transaction.
42
There is no dispute that the signatures of the petitioners were present on both the PNB checks and the cash
disbursement vouchers. The checks were also made payable to the order of the petitioners. Hence, respondent
can properly demand that they pay the amounts borrowed. If the petitioners believe that there is some other
bogus scheme afoot, then they must institute a separate action against the responsible personalities.
Otherwise, the Court can only rule on the evidence on record in the case at bench, applying the appropriate
laws and jurisprudence.
As to the award of attorney's fees, the Court is of the view that the same must be removed. Attorney's fees are
in the concept of actual or compensatory damages allowed under the circumstances provided for in Article
2208 of the Civil Code, and absent any evidence supporting its grant, the same must be deleted for lack of
factual basis. In this case, the MCTC merely stated that respondent was constrained to file the present suit on
account of the petitioners' obstinate failure to settle their obligation. Without any other basis on record to
support the award, such cannot be upheld in favor of respondent. The settled rule is that no premium should be
placed on the right to litigate and that not every winning party is entitled to an automatic grant of attorney's
fees.
43
44
WHEREFORE, the petition is PARTIALLY GRANTED.
In accord with the discourse on the substantive issue, the January 2, 2013 decision of the Regional Trial Court,
Branch 5, Dinalupihan, Bataan, is AFFIRMED. The award of attorney's fees is, however, DELETED.
SO ORDERED.
JOSE CATRAL MENDOZA
Associate Justice
SECOND DIVISION
G.R. No. 204702
January 14, 2015
RICARDO C. HONRADO, Petitioner,

vs.
GMA NETWORK FILMS, INC., Respondent.
DECISION
CARPIO, J.:
The Case
We review the Decision of the Court of Appeals (CA) ordering petitioner Ricardo C. Honrado (petitioner) to pay
a sum of money to respondent GMA Network Films, Inc. for breach of contract and breach of trust.
1
The Facts
On 11December 1998, respondent GMA Network Films, Inc. (GMA Films) entered into a "TV Rights
Agreement" (Agreement) with petitioner under which petitioner, as licensor of 36 films, granted to GMA Films,
for a fee ofP60.75 million, the exclusive right to telecast the 36 films for a period of three years. Under
Paragraph 3 of the Agreement, the parties agreed that "all betacam copies of the [films] should pass through
broadcast quality test conducted by GMA-7," the TV station operated by GMA Network, Inc. (GMA Network), an
affiliate of GMA Films. The parties also agreed to submit the films for review by the Movie and Television
Review and Classification Board (MTRCB) and stipulated on the remedies in the event that MTRCB bans the
telecasting ofany of the films (Paragraph 4):
The PROGRAMME TITLES listed above shall be subject to approval by the Movie and Television Review and
Classification Board (MTRCB) and, in the event of disapproval, LICENSOR [Petitioner] will either replace the
censored PROGRAMME TITLES with another title which is mutually acceptable to both parties or, failure to do
such, a proportionate reduction from the total price shall either be deducted or refunded whichever is the case
by the LICENSOR OR LICENSEE [GMA Films]. (Emphasis supplied)
3
Two of the films covered by the Agreement were Evangeline Katorse and Bubot for which GMA Films paid P1.5
million each.
In 2003, GMA Films sued petitioner in the Regional Trial Court of Quezon City (trial court) to collect P1.6 million
representing the fee it paid for Evangeline Katorse (P1.5 million) and a portion of the fee it paid for Bubot
(P350,000 ). GMA Films alleged that it rejected Evangeline Katorse because "its running time was too short for
telecast" and petitioner only remitted P900,000 to the owner of Bubot (Juanita Alano [Alano]), keeping for
4
himself the balance of P350,000. GMA Films prayed for the return of such amount on the theory that an implied
trust arose between the parties as petitioner fraudulently kept it for himself.
6
Petitioner denied liability, counter-alleging that after GMA Films rejected Evangeline Katorse, he replaced it with
another film, Winasak na Pangarap, which GMA Films accepted. As proof of such acceptance, petitioner
invoked a certification of GMA Network, dated 30 March 1999, attesting that such film "is of good broadcast
quality" (Film Certification). Regarding the fee GMA Films paid for Bubot, petitioner alleged that he had settled
his obligation to Alano. Alternatively, petitioner alleged that GMA Films, being a stranger to the contracts he
entered into with the owners of the films in question, has no personality to question his compliance with the
terms of such contracts. Petitioner counterclaimed for attorneys fees.
7
The Ruling of the Trial Court

The trial court dismissed GMA Films complaint and, finding merit in petitioners counterclaim, ordered GMA
Films to pay attorneys fees (P100,000). The trial court gave credence to petitioners defense that he replaced
Evangeline Katorse with Winasak na Pangarap. On the disposal of the fee GMA Films paid for Bubot, the trial
court rejected GMA Films theory of implied trust, finding insufficient GMA Films proof that petitioner pocketed
any portion of the fee in question.
GMA Films appealed to the CA.
The Ruling of the Court of Appeals
The CA granted GMA Films appeal, set aside the trial courts ruling, and ordered respondent to pay GMA
FilmsP2 million as principal obligation with 12% annual interest, exemplary damages (P100,000), attorneys
fees (P200,000), litigation expenses (P100,000) and the costs. Brushing aside the trial courts appreciation of
the evidence, the CA found that (1) GMA Films was authorized under Paragraph 4 of the Agreement to reject
Evangeline Katorse, and (2) GMA Films never accepted Winasak na Pangarap as replacement because it was
a "bold" film.
8
On petitioners liability for the fee GMA Films paid for Bubot, the CA sustained GMA Films contention that
petitioner was under obligation to turn over to the film owners the fullamount GMA Films paid for the films as
"nowhere in the TV Rights Agreement does it provide that the licensor is entitled to any commission x x x
[hence] x x x [petitioner] Honrado cannot claim any portion of the purchase price paid for by x x x GMA
Films." The CA concluded that petitioners retention of a portion of the fee for Bubot gave rise to an implied
trust between him and GMA Films, obligating petitioner, as trustee, to return to GMA Films, as beneficiary, the
amount claimed by the latter.
10
Hence, this petition. Petitioner prays for the reinstatement of the trial courts ruling while GMA Films attacks the
petition for lack of merit.
The Issue
The question is whether the CA erred in finding petitioner liable for breach of the Agreement and breach of
trust.
The Ruling of the Court
We grant the petition. We find GMA Films complaint without merit and accordingly reinstate the trial courts
ruling dismissing it with the modification that the award of attorneys fees is deleted. Petitioner Committed No
Breach of Contract or Trust
MTRCB Disapproval the Stipulated
Basis for Film Replacement
The parties do not quarrel on the meaning of Paragraph 4 of the Agreement which states:
The PROGRAMME TITLES listed [in the Agreement] x x x shall be subject to approval by the Movie and
Television Review and Classification Board (MTRCB) and, in the event of disapproval, LICENSOR [Petitioner]
will either replace the censored PROGRAMME TITLES with another title which is mutually acceptable to both
parties or, failure to do such, a proportionate reduction from the total price shall either be deducted or refunded
whichever is the case by the LICENSOR OR LICENSEE [GMA Films]. (Emphasis supplied)
11
Under this stipulation, what triggersthe rejection and replacement of any film listed in the Agreement is the
"disapproval" of its telecasting by MTRCB.
Nor is there any dispute that GMA Films rejected Evangeline Katorse not because it was disapproved by
MTRCB but because the films total running time was too short for telecast (undertime). Instead of rejecting
GMA Films demand for falling outside of the terms of Paragraph 4, petitioner voluntarily acceded to it and
replaced such film with Winasak na Pangarap. What is disputed is whether GMA Films accepted the
replacement film offered by petitioner.
Petitioner maintains that the Film Certification issued by GMA Network attesting to the "good broadcast quality"
of Winasak na Pangarap amounted to GMA Films acceptance of such film. On the other hand, GMA Films
insists that such clearance pertained only to the technical quality of the film but not to its content which it
rejected because it found the film as "bomba" (bold). The CA, working under the assumption that the ground
GMA Films invoked to reject Winasak na Pangarap was sanctioned under the Agreement, found merit in the
latters claim. We hold that regardless of the import of the Film Certification, GMA Films rejection of Winasak
na Pangarap finds no basis in the Agreement.
12
In terms devoid of any ambiguity, Paragraph 4 of the Agreement requires the intervention of MTRCB, the state
censor, before GMA Films can reject a film and require its replacement. Specifically, Paragraph 4 requires that
MTRCB, after reviewing a film listed in the Agreement, disapprove or X-rate it for telecasting. GMA Films does
not allege, and we find no proof on record indicating, that MTRCB reviewed Winasak na Pangarap and X-rated
it. Indeed, GMA Films own witness, Jose Marie Abacan (Abacan), then Vice-President for Program
Management of GMA Network, testified during trial that it was GMA Network which rejected Winasak na
Pangarap because the latter considered the film "bomba." In doing so, GMA Network went beyond its
assigned role under the Agreement of screening films to test their broadcast quality and assumed the function
of MTRCB to evaluate the films for the propriety of their content. This runs counter to the clear terms of
Paragraphs 3 and 4 of the Agreement.
13
Disposal of the Fees Paid to

Petitioner Outside of the Terms
of the Agreement
GMA Films also seeks refund for the balance of the fees it paid to petitioner for Bubot which petitioner allegedly
failed to turn-over to the films owner, Alano. Implicit in GMA Films claim is the theory that the Agreement
14
obliges petitioner to give to the film owners the entire amount he received from GMA Films and that his failure
to do so gave rise to an implied trust, obliging petitioner to hold whatever amount he kept in trust for GMA
Films. The CA sustained GMA Films interpretation, noting that the Agreement "does not provide that the
licensor is entitled to any commission."
15
This is error.
The Agreement, as its full title denotes ("TV Rights Agreement"), is a licensing contract, the essence of which is
the transfer by the licensor (petitioner) to the licensee (GMA Films), for a fee, of the exclusive right to telecast
the films listed in the Agreement. Stipulations for payment of "commission" to the licensor is incongruous to the
nature of such contracts unless the licensor merely acted as agent of the film owners. Nowhere in the
Agreement, however, did the parties stipulate that petitioner signed the contract in such capacity. On the
contrary, the Agreement repeatedly refers to petitioner as "licensor" and GMA Films as "licensee." Nor did the
parties stipulate that the fees paid by GMA Films for the films listed in the Agreement will be turned over by
petitioner to the film owners. Instead, the Agreement merely provided that the total fees will be paid in three
installments (Paragraph 3).
16
We entertain no doubt that petitioner forged separate contractual arrangements with the owners of the films
listed in the Agreement, spelling out the terms of payment to the latter. Whether or not petitioner complied with
these terms, however, is a matter to which GMA Films holds absolutely no interest. Being a stranger to such
arrangements, GMA Films is no more entitled to complain of any breach by petitioner of his contracts with the
film owners than the film owners are for any breach by GMA Films of its Agreement with petitioner.
We find it unnecessary to pass upon the question whether an implied trust arose between the parties, as held
by the CA. Such conclusion was grounded on the erroneous assumption that GMA Films holds an interest in
the disposition of the licensing fees it paid to petitioner.
1wphi1
Award of Attorney's Fees to Petitioner Improper

The trial court awarded attorney's fees to petitioner as it "deemed it just and reasonable" to do so, using the
amount provided by petitioner on the witness stand (P100,000). Undoubtedly, attorney's fees may be awarded
if the trial court "deems it just and equitable." Such ground, however, must be fully elaborated in the body of
the ruling. Its mere invocation, without more, negates the nature of attorney's fees as a form of actual
damages.
17
18
19
WHEREFORE, we GRANT the petition. The Decision, dated 30 April 2012 and Resolution, dated 19 November
2012, of the Court of Appeals are SET ASIDE. The Decision, dated 5 December 2008, of the Regional Trial
Court of Quezon City (Branch 223) is REINSTATED with the MODIFICATION that the award of attorney's fees
is DELETED.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
FIRST DIVISION
G.R. No. 184458
January 14, 2015
RODRIGO RIVERA, Petitioner,

vs.
SPOUSES SALVADOR CHUA AND VIOLETA S. CHUA, Respondents.
x-----------------------x
G.R. No. 184472
SPS. SALVADOR CHUA and VIOLETA S. CHUA, Petitioners,
vs.
RODRIGO RIVERA, Respondent.
DECISION
PEREZ, J.:
Before us are consolidated Petitions for Review on Certiorari under Rule 45 of the Rules of Court assailing the
Decision of the Court of Appeals in CA-G.R. SP No. 90609 which affirmed with modification the separate
rulings of the Manila City trial courts, the Regional Trial Court, Branch 17 in Civil Case No. 02-105256 and the
Metropolitan Trial Court (MeTC), Branch 30, in Civil Case No. 163661, a case for collection of a sum of money
due a promissory note. While all three (3) lower courts upheld the validity and authenticity of the promissory
note as duly signed by the obligor, Rodrigo Rivera (Rivera), petitioner in G.R. No. 184458, the appellate court
modified the trial courts consistent awards: (1) the stipulated interest rate of sixty percent (60%) reduced to
twelve percent (12%) per annumcomputed from the date of judicial or extrajudicial demand, and (2)
reinstatement of the award of attorneys fees also in a reduced amount of P50,000.00.
1
In G.R. No. 184458, Rivera persists in his contention that there was no valid promissory note and questions the
entire ruling of the lower courts. On the other hand, petitioners in G.R. No. 184472, Spouses Salvador and
Violeta Chua (Spouses Chua), take exception to the appellate courts reduction of the stipulated interest rate of
sixty percent (60%) to twelve percent (12%) per annum.
We proceed to the facts.
The parties were friends of long standing having known each other since 1973: Rivera and Salvador are
kumpadres, the former is the godfather of the Spouses Chuas son.
On 24 February 1995, Rivera obtained a loan from the Spouses Chua:
PROMISSORY NOTE
120,000.00
FOR VALUE RECEIVED, I, RODRIGO RIVERA promise to pay spouses SALVADOR C. CHUA and VIOLETA
SY CHUA, the sum of One Hundred Twenty Thousand Philippine Currency (P120,000.00) on December 31,
1995.
It is agreed and understood that failure on my part to pay the amount of (120,000.00) One Hundred Twenty
Thousand Pesos on December 31, 1995. (sic) I agree to pay the sum equivalent to FIVE PERCENT (5%)
interest monthly from the date of default until the entire obligation is fully paid for.
Should this note be referred to a lawyer for collection, I agree to pay the further sum equivalent to twenty
percent (20%) of the total amount due and payable as and for attorneys fees which in no case shall be less
than P5,000.00 and to pay in addition the cost of suit and other incidental litigation expense.
Any action which may arise in connection with this note shall be brought in the proper Court of the City of
Manila.
Manila, February 24, 1995[.]
(SGD.) RODRIGO RIVERA
In October 1998, almost three years from the date of payment stipulated in the promissory note, Rivera, as
partial payment for the loan, issued and delivered to the SpousesChua, as payee, a check numbered 012467,
dated 30 December 1998, drawn against Riveras current account with the Philippine Commercial International
Bank (PCIB) in the amount of P25,000.00.
On 21 December 1998, the Spouses Chua received another check presumably issued by Rivera, likewise
drawn against Riveras PCIB current account, numbered 013224, duly signed and dated, but blank as to payee
and amount. Ostensibly, as per understanding by the parties, PCIB Check No. 013224 was issued in the
amount ofP133,454.00 with "cash" as payee. Purportedly, both checks were simply partial payment for Riveras
loan in the principal amount of P120,000.00.
Upon presentment for payment, the two checks were dishonored for the reason "account closed."
As of 31 May 1999, the amount due the Spouses Chua was pegged at P366,000.00 covering the principal
ofP120,000.00 plus five percent (5%) interest per month from 1 January 1996 to 31 May 1999.
The Spouses Chua alleged that they have repeatedly demanded payment from Rivera to no avail. Because of
Riveras unjustified refusal to pay, the Spouses Chua were constrained to file a suit on 11 June 1999. The case
was raffled before the MeTC, Branch 30, Manila and docketed as Civil Case No. 163661.
In his Answer with Compulsory Counterclaim, Rivera countered that: (1) he never executed the subject
Promissory Note; (2) in all instances when he obtained a loan from the Spouses Chua, the loans were always
covered by a security; (3) at the time of the filing of the complaint, he still had an existing indebtedness to the
Spouses Chua, secured by a real estate mortgage, but not yet in default; (4) PCIB Check No. 132224 signed
by him which he delivered to the Spouses Chua on 21 December 1998, should have been issued in the amount
of only 1,300.00, representing the amount he received from the Spouses Chuas saleslady; (5) contrary to the
supposed agreement, the Spouses Chua presented the check for payment in the amount of P133,454.00; and
(6) there was no demand for payment of the amount of P120,000.00 prior to the encashment of PCIB Check
No. 0132224.
5
In the main, Rivera claimed forgery of the subject Promissory Note and denied his indebtedness thereunder.
The MeTC summarized the testimonies of both parties respective witnesses:
[The spouses Chuas] evidence include[s] documentary evidence and oral evidence (consisting of the
testimonies of [the spouses] Chua and NBI Senior Documents Examiner Antonio Magbojos). x x x
xxxx
Witness Magbojos enumerated his credentials as follows: joined the NBI (1987); NBI document examiner
(1989); NBI Senior Document Examiner (1994 to the date he testified); registered criminologist; graduate of
18th Basic Training Course [i]n Questioned Document Examination conducted by the NBI; twice attended a
seminar on US Dollar Counterfeit Detection conducted by the US Embassy in Manila; attended a seminar on
Effective Methodology in Teaching and Instructional design conducted by the NBI Academy; seminar lecturer
on Questioned Documents, Signature Verification and/or Detection; had examined more than a hundred
thousand questioned documents at the time he testified.
Upon [order of the MeTC], Mr. Magbojos examined the purported signature of [Rivera] appearing in the
Promissory Note and compared the signature thereon with the specimen signatures of [Rivera] appearing on
several documents. After a thorough study, examination, and comparison of the signature on the questioned
document (Promissory Note) and the specimen signatures on the documents submitted to him, he concluded
that the questioned signature appearing in the Promissory Note and the specimen signatures of [Rivera]
appearing on the other documents submitted were written by one and the same person. In connection with his
findings, Magbojos prepared Questioned Documents Report No. 712-1000 dated 8 January 2001, with the
following conclusion: "The questioned and the standard specimen signatures RODGRIGO RIVERA were
written by one and the same person."
[Rivera] testified as follows: he and [respondent] Salvador are "kumpadres;" in May 1998, he obtained a loan
from [respondent] Salvador and executed a real estate mortgage over a parcel of land in favor of [respondent
Salvador] as collateral; aside from this loan, in October, 1998 he borrowed P25,000.00 from Salvador and
issued PCIB Check No. 126407 dated 30 December 1998; he expressly denied execution of the Promissory
Note dated 24 February 1995 and alleged that the signature appearing thereon was not his signature;
[respondent Salvadors] claim that PCIB Check No. 0132224 was partial payment for the Promissory Note was
not true, the truth being that he delivered the check to [respondent Salvador] with the space for amount left
blank as he and [respondent] Salvador had agreed that the latter was to fill it in with the amount of P1,300.00
which amount he owed [the spouses Chua]; however, on 29 December 1998 [respondent] Salvador called him
and told him that he had written P133,454.00 instead of P1,300.00; x x x. To rebut the testimony of NBI Senior
Document Examiner Magbojos, [Rivera] reiterated his averment that the signature appearing on the Promissory
Note was not his signature and that he did not execute the Promissory Note.
6
After trial, the MeTC ruled in favor of the Spouses Chua:

WHEREFORE, [Rivera] is required to pay [the spouses Chua]: P120,000.00 plus stipulated interest at the rate
of 5% per month from 1 January 1996, and legal interest at the rate of 12% percent per annum from 11 June
1999, as actual and compensatory damages; 20% of the whole amount due as attorneys fees.
7
On appeal, the Regional Trial Court, Branch 17, Manila affirmed the Decision of the MeTC, but deleted the
award of attorneys fees to the Spouses Chua:
WHEREFORE, except as to the amount of attorneys fees which is hereby deleted, the rest of the Decision
dated October 21, 2002 is hereby AFFIRMED.
8
Both trial courts found the Promissory Note as authentic and validly bore the signature of Rivera. Undaunted,
Rivera appealed to the Court of Appeals which affirmed Riveras liability under the Promissory Note, reduced
the imposition of interest on the loan from 60% to 12% per annum, and reinstated the award of attorneys fees
in favor of the Spouses Chua:
WHEREFORE, the judgment appealed from is hereby AFFIRMED, subject to the MODIFICATION that the
interest rate of 60% per annum is hereby reduced to12% per annum and the award of attorneys fees is
reinstated atthe reduced amount of P50,000.00 Costs against [Rivera].
9
Hence, these consolidated petitions for review on certiorariof Rivera in G.R. No. 184458 and the Spouses Chua
in G.R. No. 184472, respectively raising the following issues:
A. In G.R. No. 184458
1. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING
THE RULING OF THE RTC AND M[e]TC THAT THERE WAS A VALID PROMISSORY NOTE
EXECUTED BY [RIVERA].
2. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING
THAT DEMAND IS NO LONGER NECESSARY AND IN APPLYING THE PROVISIONS OF
THE NEGOTIABLE INSTRUMENTS LAW.
3. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN AWARDING

ATTORNEYS FEES DESPITE THE FACT THAT THE SAME HAS NO BASIS IN FACT AND
IN LAW AND DESPITE THE FACT THAT [THE SPOUSES CHUA] DID NOT APPEAL FROM
THE DECISION OF THE RTC DELETING THE AWARD OF ATTORNEYS FEES.
10
B. In G.R. No. 184472

[WHETHER OR NOT] THE HONORABLE COURT OF APPEALS COMMITTED GROSS LEGAL ERROR
WHEN IT MODIFIED THE APPEALED JUDGMENT BY REDUCING THE INTEREST RATE FROM 60% PER
ANNUM TO 12% PER ANNUM IN SPITE OF THE FACT THAT RIVERA NEVER RAISED IN HIS ANSWER
THE DEFENSE THAT THE SAID STIPULATED RATE OF INTEREST IS EXORBITANT, UNCONSCIONABLE,
UNREASONABLE, INEQUITABLE, ILLEGAL, IMMORAL OR VOID.
11
As early as 15 December 2008, wealready disposed of G.R. No. 184472 and denied the petition, via a Minute
Resolution, for failure to sufficiently show any reversible error in the ruling of the appellate court specifically
concerning the correct rate of interest on Riveras indebtedness under the Promissory Note.
12
On 26 February 2009, Entry of Judgment was made in G.R. No. 184472.

Thus, what remains for our disposition is G.R. No. 184458, the appeal of Rivera questioning the entire ruling of
the Court of Appeals in CA-G.R. SP No. 90609.
Rivera continues to deny that heexecuted the Promissory Note; he claims that given his friendship withthe
Spouses Chua who were money lenders, he has been able to maintain a loan account with them. However,
each of these loan transactions was respectively "secured by checks or sufficient collateral."
Rivera points out that the Spouses Chua "never demanded payment for the loan nor interest thereof (sic) from
[Rivera] for almost four (4) years from the time of the alleged default in payment [i.e., after December 31,
1995]."
13
On the issue of the supposed forgery of the promissory note, we are not inclined to depart from the lower
courts uniform rulings that Rivera indeed signed it.
Rivera offers no evidence for his asseveration that his signature on the promissory note was forged, only that
the signature is not his and varies from his usual signature. He likewise makes a confusing defense of having
previously obtained loans from the Spouses Chua who were money lenders and who had allowed him a period
of "almost four (4) years" before demanding payment of the loan under the Promissory Note.
First, we cannot give credence to such a naked claim of forgery over the testimony of the National Bureau of
Investigation (NBI) handwriting expert on the integrity of the promissory note. On that score, the appellate court
aptly disabled Riveras contention:
[Rivera] failed to adduce clear and convincing evidence that the signature on the promissory note is a forgery.
The fact of forgery cannot be presumed but must be proved by clear, positive and convincing evidence. Mere
variance of signatures cannot be considered as conclusive proof that the same was forged. Save for the denial
of Rivera that the signature on the note was not his, there is nothing in the records to support his claim of
forgery. And while it is true that resort to experts is not mandatory or indispensable to the examination of
alleged forged documents, the opinions of handwriting experts are nevertheless helpful in the courts
determination of a documents authenticity.
To be sure, a bare denial will not suffice to overcome the positive value of the promissory note and the
testimony of the NBI witness. In fact, even a perfunctory comparison of the signatures offered in evidence
would lead to the conclusion that the signatures were made by one and the same person.
It is a basic rule in civil cases that the party having the burden of proof must establish his case by
preponderance of evidence, which simply means "evidence which is of greater weight, or more convincing than
that which is offered in opposition to it."
Evaluating the evidence on record, we are convinced that [the Spouses Chua] have established a prima
faciecase in their favor, hence, the burden of evidence has shifted to [Rivera] to prove his allegation of forgery.
Unfortunately for [Rivera], he failed to substantiate his defense. Well-entrenched in jurisprudence is the rule
that factual findings of the trial court, especially when affirmed by the appellate court, are accorded the highest
degree of respect and are considered conclusive between the parties. A review of such findings by this Court
is not warranted except upon a showing of highly meritorious circumstances, such as: (1) when the findings of
a trial court are grounded entirely on speculation, surmises or conjectures; (2) when a lower court's inference
from its factual findings is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of
discretion in the appreciation of facts; (4) when the findings of the appellate court go beyond the issues of the
case, or fail to notice certain relevant facts which, if properly considered, will justify a different conclusion; (5)
when there is a misappreciation of facts; (6) when the findings of fact are conclusions without mention of the
specific evidence on which they are based, are premised on the absence of evidence, or are contradicted by
evidence on record. None of these exceptions obtains in this instance. There is no reason to depart from the
separate factual findings of the three (3) lower courts on the validity of Riveras signature reflected in the
Promissory Note.
14
15
16
Indeed, Rivera had the burden ofproving the material allegations which he sets up in his Answer to the
plaintiffs claim or cause of action, upon which issue is joined, whether they relate to the whole case or only to
certain issues in the case.
17
In this case, Riveras bare assertion is unsubstantiated and directly disputed by the testimony of a handwriting
expert from the NBI. While it is true that resort to experts is not mandatory or indispensable to the examination
or the comparison of handwriting, the trial courts in this case, on its own, using the handwriting expert
testimony only as an aid, found the disputed document valid.
18
Hence, the MeTC ruled that:

[Rivera] executed the Promissory Note after consideration of the following: categorical statement of
[respondent] Salvador that [Rivera] signed the Promissory Note before him, in his ([Riveras]) house; the
conclusion of NBI Senior Documents Examiner that the questioned signature (appearing on the Promissory
Note) and standard specimen signatures "Rodrigo Rivera" "were written by one and the same person"; actual
view at the hearing of the enlarged photographs of the questioned signature and the standard specimen
signatures.
19
Specifically, Rivera insists that: "[i]f that promissory note indeed exists, it is beyond logic for a money lender to
extend another loan on May 4, 1998 secured by a real estate mortgage, when he was already in default and
has not been paying any interest for a loan incurred in February 1995."
20
We disagree.
It is likewise likely that precisely because of the long standing friendship of the parties as "kumpadres," Rivera
was allowed another loan, albeit this time secured by a real estate mortgage, which will cover Riveras loan
should Rivera fail to pay. There is nothing inconsistent with the Spouses Chuas two (2) and successive loan
accommodations to Rivera: one, secured by a real estate mortgage and the other, secured by only a
Promissory Note.
Also completely plausible is thatgiven the relationship between the parties, Rivera was allowed a substantial
amount of time before the Spouses Chua demanded payment of the obligation due under the Promissory Note.
In all, Riveras evidence or lack thereof consisted only of a barefaced claim of forgery and a discordant defense
to assail the authenticity and validity of the Promissory Note. Although the burden of proof rested on the
Spouses Chua having instituted the civil case and after they established a prima facie case against Rivera, the
burden of evidence shifted to the latter to establish his defense. Consequently, Rivera failed to discharge the
burden of evidence, refute the existence of the Promissory Note duly signed by him and subsequently, that he
did not fail to pay his obligation thereunder. On the whole, there was no question left on where the respective
evidence of the parties preponderatedin favor of plaintiffs, the Spouses Chua. Rivera next argues that even
assuming the validity of the Promissory Note, demand was still necessary in order to charge him liable
thereunder. Rivera argues that it was grave error on the part of the appellate court to apply Section 70 of the
Negotiable Instruments Law (NIL).
21
22
We agree that the subject promissory note is not a negotiable instrument and the provisions of the NIL do not
apply to this case. Section 1 of the NIL requires the concurrence of the following elements to be a negotiable
instrument:
(a) It must be in writing and signed by the maker or drawer;
(b) Must contain an unconditional promise or order to pay a sum certain in money;
(c) Must be payable on demand, or at a fixed or determinable future time;
(d) Must be payable to order or to bearer; and
(e) Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein
with reasonable certainty.
On the other hand, Section 184 of the NIL defines what negotiable promissory note is: SECTION 184.
Promissory Note, Defined. A negotiable promissory note within the meaning of this Act is an unconditional
promise in writing made by one person to another, signed by the maker, engaging to pay on demand, or at a
fixed or determinable future time, a sum certain in money to order or to bearer. Where a note is drawn to the
makers own order, it is not complete until indorsed by him.
The Promissory Note in this case is made out to specific persons, herein respondents, the Spouses Chua, and
not to order or to bearer, or to the order of the Spouses Chua as payees. However, even if Riveras Promissory
Note is not a negotiable instrument and therefore outside the coverage of Section 70 of the NIL which provides
that presentment for payment is not necessary to charge the person liable on the instrument, Rivera is still
liable under the terms of the Promissory Note that he issued.
The Promissory Note is unequivocal about the date when the obligation falls due and becomes demandable
31 December 1995. As of 1 January 1996, Rivera had already incurred in delay when he failed to pay the
amount ofP120,000.00 due to the Spouses Chua on 31 December 1995 under the Promissory Note.
Article 1169 of the Civil Code explicitly provides:
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 their obligation.
However, the demand by the creditor shall not be necessary in order that delay may exist:
(1) When the obligation or the law expressly so declare; 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.
In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a
proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation,
delay by the other begins. (Emphasis supplied)
There are four instances when demand is not necessary to constitute the debtor in default: (1) when there is an
express stipulation to that effect; (2) where the law so provides; (3) when the period is the controlling motive or
the principal inducement for the creation of the obligation; and (4) where demand would be useless. In the first
two paragraphs, it is not sufficient that the law or obligation fixes a date for performance; it must further state
expressly that after the period lapses, default will commence.
We refer to the clause in the Promissory Note containing the stipulation of interest:
It is agreed and understood that failure on my part to pay the amount of (P120,000.00) One Hundred Twenty
Thousand Pesos on December 31, 1995. (sic) I agree to pay the sum equivalent to FIVE PERCENT (5%)
interest monthly from the date of default until the entire obligation is fully paid for.
23
which expressly requires the debtor (Rivera) to pay a 5% monthly interest from the "date of default" until the
entire obligation is fully paid for. The parties evidently agreed that the maturity of the obligation at a date
certain, 31 December 1995, will give rise to the obligation to pay interest. The Promissory Note expressly
provided that after 31 December 1995, default commences and the stipulation on payment of interest starts.
The date of default under the Promissory Note is 1 January 1996, the day following 31 December 1995, the
due date of the obligation. On that date, Rivera became liable for the stipulated interest which the Promissory
Note says is equivalent to 5% a month. In sum, until 31 December 1995, demand was not necessary before
Rivera could be held liable for the principal amount of P120,000.00. Thereafter, on 1 January 1996, upon
default, Rivera became liable to pay the Spouses Chua damages, in the form of stipulated interest.
The liability for damages of those who default, including those who are guilty of delay, in the performance of
their obligations is laid down on Article 1170 of the Civil Code.
24
Corollary thereto, Article 2209 solidifies the consequence of payment of interest as an indemnity for damages
when the obligor incurs in delay:
Art. 2209. If the obligation consists inthe payment of a sum of money, and the debtor incurs in delay, the
indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed
upon, and in the absence of stipulation, the legal interest, which is six percent per annum. (Emphasis supplied)
Article 2209 is specifically applicable in this instance where: (1) the obligation is for a sum of money; (2) the
debtor, Rivera, incurred in delay when he failed to pay on or before 31 December 1995; and (3) the Promissory
Note provides for an indemnity for damages upon default of Rivera which is the payment of a 5%monthly
interest from the date of default.
We do not consider the stipulation on payment of interest in this case as a penal clause although Rivera, as
obligor, assumed to pay additional 5% monthly interest on the principal amount of P120,000.00 upon default.
Article 1226 of the Civil Code provides:
Art. 1226. In obligations with a penal clause, the penalty shall substitute the indemnity for damages and the
payment of interests in case of noncompliance, if there isno stipulation to the contrary. Nevertheless, damages
shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation.
The penalty may be enforced only when it is demandable in accordance with the provisions of this Code.
The penal clause is generally undertaken to insure performance and works as either, or both, punishment and
reparation. It is an exception to the general rules on recovery of losses and damages. As an exception to the
general rule, a penal clause must be specifically set forth in the obligation.
25
In high relief, the stipulation in the Promissory Note is designated as payment of interest, not as a penal clause,
and is simply an indemnity for damages incurred by the Spouses Chua because Rivera defaulted in the
payment of the amount of P120,000.00. The measure of damages for the Riveras delay is limited to the
interest stipulated in the Promissory Note. In apt instances, in default of stipulation, the interest is that provided
by law.
26
In this instance, the parties stipulated that in case of default, Rivera will pay interest at the rate of 5% a month
or 60% per annum. On this score, the appellate court ruled:
It bears emphasizing that the undertaking based on the note clearly states the date of payment tobe 31
December 1995. Given this circumstance, demand by the creditor isno longer necessary in order that delay
may exist since the contract itself already expressly so declares. The mere failure of [Spouses Chua] to
immediately demand or collect payment of the value of the note does not exonerate [Rivera] from his liability
therefrom. Verily, the trial court committed no reversible error when it imposed interest from 1 January 1996 on
the ratiocination that [Spouses Chua] were relieved from making demand under Article 1169 of the Civil Code.
xxxx
As observed by [Rivera], the stipulated interest of 5% per month or 60% per annum in addition to legal interests
and attorneys fees is, indeed, highly iniquitous and unreasonable. Stipulated interest rates are illegal if they are
unconscionable and the Court is allowed to temper interest rates when necessary. Since the interest rate
agreed upon is void, the parties are considered to have no stipulation regarding the interest rate, thus, the rate
of interest should be 12% per annum computed from the date of judicial or extrajudicial demand.
27
The appellate court found the 5% a month or 60% per annum interest rate, on top of the legal interest and
attorneys fees, steep, tantamount to it being illegal, iniquitous and unconscionable. Significantly, the issue on
payment of interest has been squarely disposed of in G.R. No. 184472 denying the petition of the Spouses
Chua for failure to sufficiently showany reversible error in the ruling of the appellate court, specifically the
reduction of the interest rate imposed on Riveras indebtedness under the Promissory Note. Ultimately, the
denial of the petition in G.R. No. 184472 is res judicata in its concept of "bar by prior judgment" on whether the
Court of Appeals correctly reduced the interest rate stipulated in the Promissory Note.
Res judicata applies in the concept of "bar by prior judgment" if the following requisites concur: (1) the former
judgment or order must be final; (2) the judgment or order must be on the merits; (3) the decision must have
been rendered by a court having jurisdiction over the subject matter and the parties; and (4) there must be,
between the first and the second action, identity of parties, of subject matter and of causes of action.
28
In this case, the petitions in G.R. Nos. 184458 and 184472 involve an identity of parties and subject matter
raising specifically errors in the Decision of the Court of Appeals. Where the Court of Appeals disposition on
the propriety of the reduction of the interest rate was raised by the Spouses Chua in G.R. No. 184472, our
ruling thereon affirming the Court of Appeals is a "bar by prior judgment."
At the time interest accrued from 1 January 1996, the date of default under the Promissory Note, the then
prevailing rate of legal interest was 12% per annum under Central Bank (CB) Circular No. 416 in cases
involving the loan or for bearance of money. Thus, the legal interest accruing from the Promissory Note is 12%
per annum from the date of default on 1 January 1996. However, the 12% per annumrate of legal interest is
only applicable until 30 June 2013, before the advent and effectivity of Bangko Sentral ng Pilipinas (BSP)
Circular No. 799, Series of 2013 reducing the rate of legal interest to 6% per annum. Pursuant to our ruling in
Nacar v. Gallery Frames, BSP Circular No. 799 is prospectively applied from 1 July 2013. In short, the
applicable rate of legal interest from 1 January 1996, the date when Rivera defaulted, to date when this
Decision becomes final and executor is divided into two periods reflecting two rates of legal interest: (1) 12%
29
30
per annum from 1 January 1996 to 30 June 2013; and (2) 6% per annum FROM 1 July 2013 to date when this
Decision becomes final and executory.
As for the legal interest accruing from 11 June 1999, when judicial demand was made, to the date when this
Decision becomes final and executory, such is likewise divided into two periods: (1) 12% per annum from 11
June 1999, the date of judicial demand to 30 June 2013; and (2) 6% per annum from 1 July 2013 to date when
this Decision becomes final and executor. We base this imposition of interest on interest due earning legal
interest on Article 2212 of the Civil Code which provides that "interest due shall earn legal interest from the time
it is judicially demanded, although the obligation may be silent on this point."
31
From the time of judicial demand, 11 June 1999, the actual amount owed by Rivera to the Spouses Chua could
already be determined with reasonable certainty given the wording of the Promissory Note.
32
We cite our recent ruling in Nacar v. Gallery Frames:
33
I. When an obligation, regardless of its source, i.e., law, contracts, quasicontracts, delicts or quasidelicts 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.
II. 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:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a
loan or for bearance 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 6% per
annum to be computed from default, i.e., from judicial or extra judicial demand under and
subject to the provisions ofArticle 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an
interest on the amount of damages awarded may be imposed at the discretion of the court at
the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or
damages, except when or until the demand can be established with reasonable certainty.
Accordingly, where the demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code),
but when such certainty cannot be so reasonably established at the time the demand is made,
the interest shall begin to run only from the date the judgment of the court is made (at which
time the quantification of damages may be deemed to have been reasonably ascertained).
The actual base for the computation of legal interest shall, in any case, be on the amount
finally adjudged. 3. When the judgment of the court awarding a sum of money becomes final
and executory, the rate of legal interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 6% per annum from such finality until its satisfaction, this interim
period being deemed to be by then an equivalent to a for bearance of credit. And, in addition
to the above, judgments that have become final and executory prior to July 1, 2013, shall not
be disturbed and shall continue to be implemented applying the rate of interest fixed therein.
(Emphasis supplied)
1wphi1
On the reinstatement of the award of attorneys fees based on the stipulation in the Promissory Note, weagree
with the reduction thereof but not the ratiocination of the appellate court that the attorneys fees are in the
nature of liquidated damages or penalty. The interest imposed in the Promissory Note already answers as
liquidated damages for Riveras default in paying his obligation. We award attorneys fees, albeit in a reduced
amount, in recognition that the Spouses Chua were compelled to litigate and incurred expenses to protect their
interests. Thus, the award of P50,000.00 as attorneys fees is proper.
34
For clarity and to obviate confusion, we chart the breakdown of the total amount owed by Rivera to the
Spouses Chua:
Face value of the

Promissory Note
Stipulated Interest A & B
February 24, 1995 to A. January 1, 1996 to

December 31, 1995 June 30, 2013
B. July 1 2013 to date
when this Decision
becomes final and
executory
P120,000.00
A. 12 % per annumon the

principal amount
ofP120,000.00
B. 6% per annumon the
principal amount
ofP120,000.00
Interest due earning legal

interest A & B
Attorneys fees
A. June 11, 1999 (date of

judicial demand) to June
30, 2013
B. July 1, 2013 to date
when this Decision
becomes final and
executory
Wholesale
Amount
A. 12% per annumon the

total amount of column 2
B. 6% per annumon the
total amount of column 2
P50,000.00
Total
Amount
Total amount of
Columns 1-4
35
The total amount owing to the Spouses Chua set forth in this Decision shall further earn legal interest at the
rate of 6% per annum computed from its finality until full payment thereof, the interim period being deemed to
be a forbearance of credit.
WHEREFORE, the petition in G.R. No. 184458 is DENIED. The Decision of the Court of Appeals in CA-G.R.
SP No. 90609 is MODIFIED. Petitioner Rodrigo Rivera is ordered to pay respondents Spouse Salvador and
Violeta Chua the following:
(1) the principal amount of P120,000.00;
(2) legal interest of 12% per annumof the principal amount of P120,000.00 reckoned from 1 January
1996 until 30 June 2013;
(3) legal interest of 6% per annumof the principal amount of P120,000.00 form 1 July 2013 to date
when this Decision becomes final and executory;
(4) 12% per annumapplied to the total of paragraphs 2 and 3 from 11 June 1999, date of judicial
demand, to 30 June 2013, as interest due earning legal interest;
(5) 6% per annumapplied to the total amount of paragraphs 2 and 3 from 1 July 2013 to date when this
Decision becomes final and executor, asinterest due earning legal interest;
(6) Attorneys fees in the amount of P50,000.00; and
(7) 6% per annum interest on the total of the monetary awards from the finality of this Decision until full
payment thereof.
Costs against petitioner Rodrigo Rivera.
SO ORDERED.
JOSE PORTUGAL PEREZ
Associate Justice
FIRST DIVISION
G.R. No. 204866
January 21, 2015
RUKS KONSULT AND CONSTRUCTION, Petitioner,

vs.
ADWORLD SIGN AND ADVERTISING CORPORATION* and TRANSWORLD MEDIA ADS,
INC., Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari are the Decision dated November 16, 2011 and the
Resolution dated December 10, 2012 of the Court of Appeals (CA) in CA-G.R. CV No. 94693 which affirmed
the Decision dated August 25, 2009 of the Regional Trial Court of Makati City, Branch 142 (RTC) in Civil Case
No. 03-1452 holding, inter alia, petitioner Ruks Konsult and Construction (Ruks) and respondent Transworld
Media Ads, Inc. (Transworld) jointly and severally liable to respondent Adworld Sign and Advertising
Corporation (Adworld) for damages.
1
The Facts
The instant case arose from a complaint for damages filed by Adworld against Transworld and Comark
International Corporation (Comark) before the RTC. In the complaint, Adworld alleged that it is the owner of a
75 ft. x 60 ft. billboard structure located at EDSA Tulay, Guadalupe, Barangka Mandaluyong, which was
misaligned and its foundation impaired when, on August 11, 2003, the adjacent billboard structure owned by
Transworld and used by Comark collapsed and crashed against it. Resultantly, on August 19, 2003, Adworld
sent Transworld and Comark a letter demanding payment for the repairs of its billboard as well asloss of rental
income. On August 29, 2003, Transworld sent its reply, admitting the damage caused by its billboard structure
on Adworlds billboard, but nevertheless, refused and failed to pay the amounts demanded by Adworld. As
Adworlds final demand letter also went unheeded, it was constrained to file the instant complaint, praying for
damages in the aggregate amount ofP474,204.00, comprised of P281,204.00 for materials, P72,000.00 for
labor, and P121,000.00 for indemnity for loss of income.
5
In its Answer with Counterclaim, Transworld averred that the collapse of its billboard structure was due to
extraordinarily strong winds that occurred instantly and unexpectedly, and maintained that the damage caused
to Adworlds billboard structure was hardly noticeable. Transworld likewise filed a Third-Party Complaint against
Ruks, the company which built the collapsed billboard structure in the formers favor. It was alleged therein
that the structure constructed by Ruks had a weak and poor foundation not suited for billboards, thus, prone to
collapse, and as such, Ruks should ultimately be held liable for the damages caused to Adworlds billboard
structure.
1wphi1
For its part, Comark denied liability for the damages caused to Adworlds billboard structure, maintaining that it
does not have any interest on Transworlds collapsed billboard structure as it only contracted the use of the
same. In this relation, Comark prayed for exemplary damages from Transworld for unreasonably includingit as
a party-defendant in the complaint.
8
Lastly, Ruks admitted that it entered into a contract with Transworld for the construction of the latters billboard
structure, but denied liability for the damages caused by its collapse. It contended that when Transworld hired
its services, there was already an existing foundation for the billboard and that it merely finished the structure
according to the terms and conditions of its contract with the latter.
9
The RTC Ruling
In a Decision dated August 25, 2009, the RTC ultimately ruled in Adworlds favor, and accordingly, declared,
inter alia, Transworld and Ruks jointly and severally liable to Adworld in the amount of P474,204.00 as actual
damages, with legal interest from the date of the filing of the complaint until full payment thereof, plus attorneys
fees in the amount of P50,000.00. The RTC found both Transworld and Ruks negligent in the construction of
the collapsed billboard as they knew that the foundation supporting the same was weak and would pose
danger to the safety of the motorists and the other adjacent properties, such as Adworlds billboard, and yet,
they did not do anything to remedy the situation. In particular, the RTC explained that Transworld was made
aware by Ruks that the initial construction of the lower structure of its billboard did not have the proper
foundation and would require additional columns and pedestals to support the structure. Notwithstanding,
however, Ruks proceeded with the construction of the billboards upper structure and merely assumed that
Transworld would reinforce its lower structure. The RTC then concluded that these negligent acts were the
direct and proximate cause of the damages suffered by Adworlds billboard.
10
11
12
13
14
Aggrieved, both Transworld and Ruks appealed to the CA. In a Resolution dated February 3, 2011, the CA
dismissed Transworlds appeal for its failure to file an appellants brief on time. Transworld elevated its case
before the Court, docketed as G.R. No. 197601. However, in a Resolution dated November 23, 2011, the
Court declared the case closed and terminated for failure of Transworld to file the intended petition for review
on certiorariwithin the extended reglementary period. Subsequently, the Court issued an Entry of
Judgment dated February 22, 2012 in G.R. No. 197601 declaring the Courts November 23, 2011 Resolution
final and executory.
15
16
17
18
The CA Ruling
In a Decision dated November 16, 2011, the CA denied Rukss appeal and affirmed the ruling of the RTC. It
adhered to the RTCs finding of negligence on the part of Transworld and Ruks which brought about the
damage to Adworlds billboard. It found that Transworld failed to ensure that Ruks will comply with the approved
plans and specifications of the structure, and that Ruks continued to install and finish the billboard structure
despite the knowledge that there were no adequate columns to support the same.
19
20
Dissatisfied, Ruks moved for reconsideration, which was, however, denied in a Resolution dated December
10, 2012,hence, this petition.
21
22
On the other hand, Transworld filed another appeal before the Court, docketed as G.R. No. 205120. However,
the Court denied outright Transworlds petition in a Resolution dated April 15, 2013, holding that the same was
already bound by the dismissal of its petition filed in G.R. No. 197601.
23
24
The Issue Before the Court

The primordial issue for the Courts resolution is whether or not the CA correctly affirmed the ruling of the RTC
declaring Ruks jointly and severally liable with Transworld for damages sustained by Adworld.
The Courts Ruling
The petition is without merit.
At the outset, it must be stressed that factual findings of the RTC, when affirmed by the CA, are entitled to great
weight by the Court and are deemed final and conclusive when supported by the evidence on record. Absent
any exceptions to this rule such as when it is established that the trial court ignored, overlooked,
misconstrued, or misinterpreted cogent facts and circumstances that, if considered, would change the outcome
of the case such findings must stand.
25
26
After a judicious perusal of the records, the Court sees no cogent reason to deviate from the findings of the
RTC and the CA and their uniform conclusion that both Transworld and Ruks committed acts resulting in the
collapse of the formers billboard, which in turn, caused damage to the adjacent billboard of Adworld.
Jurisprudence defines negligence as the omission to do something which a reasonable man, guided by those
considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something
which a prudent and reasonable man would not do. It is the failure to observe for the protection of the interest
of another person that degree of care, precaution, and vigilance which the circumstances justly demand,
whereby such other person suffers injury.
27
28
In this case, the CA correctly affirmed the RTCs finding that Transworlds initial construction of its billboards
lower structure without the proper foundation, and that of Rukss finishing its upper structure and just merely
assuming that Transworld would reinforce the weak foundation are the two (2) successive acts which were the
direct and proximate cause of the damages sustained by Adworld. Worse, both Transworld and Ruks were fully
aware that the foundation for the formers billboard was weak; yet, neither of them took any positive step to
reinforce the same. They merely relied on each others word that repairs would be done to such foundation, but
none was done at all. Clearly, the foregoing circumstances show that both Transworld and Ruks are guilty of
negligence in the construction of the formers billboard, and perforce, should be held liable for its collapse and
the resulting damage to Adworlds billboard structure. As joint tortfeasors, therefore, they are solidarily liable to
Adworld. Verily, "[j]oint tortfeasors are those who command, instigate, promote, encourage, advise,
countenance, cooperate in, aid or abet the commission of a tort, or approve of it after it is done, if done for their
benefit. They are also referred to as those who act together in committing wrong or whose acts, if independent
of each other, unite in causing a single injury. Under Article 2194 of the Civil Code, joint tortfeasors are
solidarily liable for the resulting damage. In other words, joint tortfeasors are each liable as principals, to the
same extent and in the same manner as if they had performed the wrongful act themselves." The Courts
pronouncement in People v. Velasco is instructive on this matter, to wit:
29
30
31
32
Where several causes producing an injury are concurrent and each is an efficient cause without which the
injury would not have happened, the injury may be attributed to all or any of the causes and recovery may be
had against any or all of the responsible persons although under the circumstances of the case, it may appear
that one of them was more culpable, and that the duty owed by them to the injured person was not same. No
actor's negligence ceases to be a proximate cause merely because it does not exceed the negligence of other
actors. Each wrongdoer is responsible for the entire result and is liable as though his acts were the sole cause
of the injury.
There is no contribution between joint [tortfeasors] whose liability is solidary since both of them are liable for the
total damage. Where the concurrent or successive negligent acts or omissions of two or more persons,
although acting independently, are in combination the direct and proximate cause of a single injury to a third
person, it is impossible to determine in what proportion each contributed to the injury and either of them is
responsible for the whole injury. x x x. (Emphases and underscoring supplied)
1wphi1
In conclusion, the CA correctly affirmed the ruling of the RTC declaring Ruks jointly and severally liable with
Transworld for damages sustained by Adworld.
WHEREFORE, the petition is DENIED. The Decision dated November 16, 2011 and the Resolution dated
December 10, 2012 of the Court of Appeals in CA-G.R. CV No. 94693 are hereby AFFIRMED.
SO ORDERED.
ESTELA M. PERLAS-BERNABE
Associate Justice
SECOND DIVISION
G.R. No. 199648
January 28, 2015
FIRST OPTIMA REALTY CORPORATION, Petitioner,

vs.
SECURITRON SECURITY SERVICES, INC., Respondent.
DECISION
DEL CASTILLO, J.:
In a potential sale transaction, the prior payment of earnest money even before the property owner can agree
to sell his property is irregular, and cannot be used to bind the owner to the obligations of a seller under an
otherwise perfected contract of sale; to cite a well-worn cliche, the carriage cannot be placed before the horse.
The property owner-prospective seller may not be legally obliged to enter into a sale with a prospective buyer
through the latter's employment of questionable practices which prevent the owner from freely giving his
consent to the transaction; this constitutes a palpable transgression of the prospective seller's rights of
ownership over his property, an anomaly which the Court will certainly not condone.
This Petition for Review on Certiorari seeks to set aside: 1) the September 30, 2011 Decision of the Court of
Appeals (CA) in CA-G.R. CV No. 93715 affirming the February 16, 2009 Decision' of the Regional Trial Court
(RTC) of Pasay City, Branch 115 in Civil Case No. 06-0492 CFM; and 2) the CAs December 9, 2011
Resolution denying the herein petitioners Motion for Reconsideration of the assailed judgment.
1
Factual Antecedents
Petitioner First Optima Realty Corporation is a domestic corporation engaged in the real estate business. It is
the registered owner of a 256-square meter parcel of land with improvements located in Pasay City, covered by
Transfer Certificate of Title No. 125318 (the subject property). Respondent Securitron Security Services, Inc.,
on the other hand, is a domestic corporation with offices located beside the subject property.
6
Looking to expand its business and add toits existing offices, respondent through its General Manager,
Antonio Eleazar (Eleazar) sent a December 9, 2004 Letter addressed to petitioner through its Executive
Vice-President, Carolina T. Young (Young) offering to purchase the subject property at P6,000.00 per square
meter. A series of telephone calls ensued, but only between Eleazar and Youngs secretary; Eleazar likewise
personally negotiated with a certain Maria Remoso (Remoso), who was an employee of petitioner. At this
point, Eleazar was unable to personally negotiate with Young or the petitioners board of directors.
7
Sometime thereafter, Eleazar personally went to petitioners office offering to pay for the subject property in
cash, which he already brought with him. However, Young declined to accept payment, saying that she still
needed to secure her sisters advice on the matter. She likewise informed Eleazar that prior approval of
petitioners Board of Directors was required for the transaction, to which remark Eleazar replied that
respondent shall instead await such approval.
10
11
On February 4, 2005, respondent sent a Letter of even date to petitioner. It was accompanied by Philippine
National Bank Check No. 24677 (the subject check), issued for P100,000.00 and made payable to petitioner.
The letter states thus:
12
Gentlemen:
As agreed upon, we are making a deposit of ONE HUNDRED THOUSAND PESOS (Php 100,000.00) as
earnest money for your property at the corner of Layug St., & Lim-An St., Pasay City as per TCT No. 125318
with an area of 256 sq. m. at 6,000.00/ sq. m. for a total of ONE MILLION FIVE HUNDRED THIRTY SIX
THOUSAND PESOS (Php 1,536,000.00).
Full payment upon clearing of the tenants at said property and signing of the Deed of Sale.
(signed)
ANTONIO S. ELEAZAR
13
Despite the delicate nature of the matter and large amount involved, respondent did not deliver the letter and
check directly to Young or her office; instead, they were coursed through an ordinary receiving
clerk/receptionist of the petitioner, who thus received the same and therefor issued and signed Provisional
Receipt No. 33430. The said receipt reads:
14
Received from x x x Antonio Eleazar x x x the sum of Pesos One Hundred Thousand x x x
IN PAYMENT OF THE FOLLOWING x x x
Earnest money or Partial payment of
Pasay Property Layug & Lim-an St. x x x.
Note: This is issued to transactions not
yet cleared but subsequently an OfficialReceipt will be issued. x x x
15
The check was eventually deposited with and credited to petitioners bank account.
Thereafter, respondent through counsel demanded in writing that petitioner proceed with the sale of the
property. In a March 3, 2006 Letter addressed to respondents counsel, petitioner wrote back:
16
17
Dear Atty. De Jesus:

Anent your letter dated January 16, 2006 received on February 20, 2006, please be informed of the following:
1. It was your client SECURITRON SECURITY SERVICES, INC. represented by Mr. Antonio Eleazar
who offered to buy our property located at corner Layug and Lim-An St., Pasay City;
2. It tendered an earnest money despite the fact that we are still undecided to sell the said property;
3. Our Board of Directors failed to pass a resolution to date whether it agrees to sell the property;
4. We have no Contract for the earnest money nor Contract to Sell the said property with your client;
Considering therefore the above as well as due to haste and demands which we feel [are forms] of intimidation
and harassment, we regret to inform you that we are now incline (sic) not to accept your offer to buy our
property. Please inform your client to coordinate with us for the refund of this (sic) money.
Very truly yours,
(signed)
CAROLINA T. YOUNG
Executive Vice[-]President
18
Ruling of the Regional Trial Court of Pasay City

On April 18, 2006, respondent filed with the Pasay RTC a civil case against petitioner for specific performance
with damages to compel the latter to consummate the supposed sale of the subject property. Docketed as Civil
Case No. 06-0492 CFM and assigned to Branch 115 of the Pasay RTC, the Complaint is predicated on the
claim that since a perfected contract of sale arose between the parties after negotiations were conducted and
respondent paid the P100,000.00 supposed earnest money which petitioner accepted, the latter should be
compelled to sell the subject property to the former. Thus, respondent prayed that petitioner be ordered to
comply with its obligation as seller, accept the balance of the purchase price, and execute the corresponding
deed of sale in respondents favor; and that petitioner be made to pay P200,000.00 damages for its breach and
delay in the performance of its obligations, P200,000.00 by way of attorney's fees, and costs of suit.
19
In its Answer with Compulsory Counterclaim, petitioner argued that it never agreed to sell the subject property;
that its board of directors did not authorize the sale thereof to respondent, as no corresponding board
resolution to such effect was issued; that the respondents P100,000.00 check payment cannot be considered
as earnest money for the subject property, since said payment was merely coursed through petitioners
receiving clerk, who was forced to accept the same; and that respondent was simply motivated by a desire to
acquire the subject property at any cost. Thus, petitioner prayed for the dismissal of the case and, by way of
counterclaim, it sought the payment of moral damages in the amount of P200,000.00; exemplary damages in
the amount ofP100,000.00; and attorneys fees and costs of suit.
20
In a Reply, respondent countered that authorization by petitioners Board of Directors was not necessary since
it is a real estate corporation principally engaged in the buying and selling of real property; that respondent did
not force nor intimidate petitioners receiving clerk into accepting the February 4, 2005 letter and check
forP100,000.00; that petitioners acceptance of the check and its failure for more than a year to return
respondents payment amounts to estoppel and a ratification of the sale; and that petitioner is not entitled to its
counterclaim.
21
After due proceedings were taken, the Pasay RTC issued its Decision dated February 16, 2009, decreeing as
follows:
WHEREFORE, defendant First Optima Realty Corporation is directed to comply with its obligation by accepting
the remaining balance of One Million Five Hundred Thirty-Six Thousand Pesos and Ninety-Nine Centavos
(P1,536,000.99), and executing the corresponding deed of sale in favor of the plaintiff Securitron Security
Services, Inc. over the subject parcel of land.
No costs.
SO ORDERED.
22
In ruling for the respondent, the trial court held that petitioners acceptance of P100,000.00 earnest money
indicated the existence of a perfected contract of sale between the parties; that there is no showing that when
respondent gave the February 4, 2005 letter and check to petitioners receiving clerk, the latter was harassed
or forced to accept the same; and that for the sale of the subject property, no resolution of petitioners board of
directors was required since Young was "free to represent" the corporation in negotiating with respondent for
the sale thereof. Ruling of the Court of Appeals
Petitioner filed an appeal with the CA. Docketed as CA-G.R. CV No. 93715, the appeal made out a case that
no earnest money can be considered to have been paid to petitioner as the supposed payment was received
by a mere receiving clerk, who was not authorized to accept the same; that the required board of directors
resolution authorizing the sale of corporate assets cannot be dispensed with in the case of petitioner; that
whatever negotiations were held between the parties only concerned the possible sale, not the sale itself, of the
subject property; that without the written authority of petitioners board of directors, Young cannot enter into a
sale of its corporate property; and finally, that there was no meeting of the minds between the parties in the first
place.
On September 30, 2011, the CA issued the assailed Decision affirming the trial courts February 16,
2009Decision, pronouncing thus:
Article 1318 of the Civil Code declares that no contract exists unless the following requisites concur: (1)
consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of
the obligation established.
A careful perusal of the records of the case show[s] that there was indeed a negotiation between the parties as
regards the sale of the subject property, their disagreement lies on whether they have arrived on an agreement
regarding said sale. Plaintiff-appellee avers that the parties have already agreed on the sale and the price for it
and the payment of earnest money and the remaining balance upon clearing of the property of unwanted
tenants. Defendant-appellant on the other hand disputes the same and insists that there was no concrete
agreement between the parties.
Upon a careful consideration of the arguments of the parties and the records of the case, we are more inclined
to sustain the arguments of the plaintiff-appellee and affirm the findings of the trial court that there was indeed a
perfected contract of sale between the parties. The following instances militate against the claim of the
defendant-appellant: First. The letter of the plaintiff-appellee dated February 4, 2005 reiterating their agreement
as to the sale of the realty for the consideration of Php 1,536,000.00 was not disputed nor replied to by the
defendant-appellant, the said letter also provides for the payment of the earnest money of Php 100,000.00 and
the full payment upon the clearing of the property of unwanted tenants, if the defendant-appellant did not really
agree on the sale of the property it could have easily replied to the said letter informing the plaintiff-appellee
that it is not selling the property or that the matter will be decided first by the board of directors, defendantappellants silence or inaction on said letter shows its conformity or consent thereto; Second. In addition to the
aforementioned letter, defendant-appellants acceptance of the earnest money and the issuance of a
provisional receipt clearly shows that there was indeed an agreement between the parties and we do not
subscribe to the argument of the defendant-appellant that the check was merely forced upon its employee and
the contents of the receipt was just dictated by the plaintiff-appellees employee because common sense
dictates that a person would not issue a receipt for a check with a huge amount if she does not know what that
is for and similarly would not issue [a] receipt which would bind her employer if she does not have prior
instructions to do [so] from her superiors; Third. The said check for earnest money was deposited in the bank
by defendant-appellant and not until after one year did it offer to return the same. Defendant-appellant cannot
claim lack of knowledge of the payment of the check since there was a letter for it, and it is just incredible that a
big amount of money was deposited in [its] account [without knowing] about it [or] investigat[ing] what [it was]
for. We are more inclined to believe that their inaction for more than one year on the earnest money paid was
due to the fact that after the payment of earnest money the place should be cleared of unwanted tenants before
the full amount of the purchase price will be paid as agreed upon as shown in the letter sent by the plaintiffappellee.
As stated above the presence of defendant-appellants consent and, corollarily, the existence of a perfected
contract between the parties are evidenced by the payment and receipt of Php 100,000.00 as earnest money
by the contracting parties x x x. Under the law on sales, specifically Article 1482 of the Civil Code, it provides
that whenever earnest money is given in a contract of sale, it shall be considered as part of the price and proof
of the perfection of the contract. Although the presumption is not conclusive, as the parties may treat the
earnest money differently, there is nothing alleged in the present case that would give rise to a contrary
presumption.
We also do not find merit in the contention of the defendant-appellant that there is a need for a board resolution
for them to sell the subject property since it is a corporation, a juridical entity which acts only thru the board of
directors. While we agree that said rule is correct, we must also point out that said rule is the general rule for all
corporations [but] a corporation [whose main business is buying and selling real estate] like herein defendantappellant, is not required to have a board resolution for the sale of the realty in the ordinary course of business,
thus defendant-appellants claim deserves scant consideration.
Furthermore, the High Court has held that "a corporate officer or agent may represent and bind the corporation
in transactions with third persons to the extent that the authority to do so has been conferred upon him, and this
includes powers which have been intentionally conferred, and also such powers as, in the usual course of the
particular business, are incidental to, or may be implied from, the powers intentionally conferred, powers added
by custom and usage, as usually pertaining to the particular officer or agent, and such apparent powers as the
corporation has caused persons dealing with the officer or agent to believe that it was conferred."
In the case at bench, it is not disputed and in fact was admitted by the defendant-appellant that Ms. Young, the
Executive Vice-President was authorized to negotiate for the possible sale of the subject parcel of land.
Therefore, Ms. Young can represent and bind defendant-appellant in the transaction.
Moreover, plaintiff-appellee can assume that Ms. Young, by virtue of her position, was authorized to sell the
property of the corporation. Selling of realty is not foreign to [an] executive vice[-]presidents function, and the
real estate sale was shown to be a normal business activity of defendant-appellant since its primary business is
the buy and sell of real estate. Unmistakably, its Executive Vice-President is cloaked with actual or apparent
authority to buy or sell real property, an activity which falls within the scope of her general authority.
Furthermore, assuming arguendo that a board resolution was indeed needed for the sale of the subject
property, the defendant-appellant is estopped from raising it now since, [it] did not inform the plaintiff-appellee
of the same, and the latter deal (sic) with them in good faith. Also it must be stressed that the plaintiff-appellee
negotiated with one of the top officer (sic) of the company thus, any requirement on the said sale must have
been known to Ms. Young and she should have informed the plaintiff-appellee of the same.
In view of the foregoing we do not find any reason to deviate from the findings of the trial court, the parties
entered into the contract freely, thus they must perform their obligation faithfully. Defendant-appellants
unjustified refusal to perform its part of the agreement constitutes bad faith and the court will not tolerate the
same.
WHEREFORE, premises considered, the Decision of the Regional Trial Court of Pasay City Branch 115, in Civil
Case No. 06-0492 CFM is hereby AFFIRMED.
SO ORDERED.
23
Petitioner moved for reconsideration, but in a December 9, 2011 Resolution, the CA held its ground. Hence,
the present Petition.
24
Issues
In an October 9,2013 Resolution, this Court resolved to give due course to the Petition, which raises the
following issues:
25
I
THE HONORABLE COURT OF APPEALS ERRED ON A QUESTION OF LAW WHEN IT RULED THAT THE
MONEY RESPONDENT DELIVERED TO PETITIONER WAS EARNEST MONEY THEREBY PROVIDING A
PERFECTED CONTRACT OF SALE.
II
THE HONORABLE COURT OF APPEALS ERRED ON A QUESTION OF LAW WHEN IT RULED THAT THE
TIME THAT LAPSED IN RETURNING THE MONEY AND IN REPLYING TO THE LETTER IS PROOF OF
ACCEPTANCE OF EARNEST MONEY.
III
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS AND GRAVE ERROR WHEN IT
IGNOREDTHE RESERVATION IN THE PROVISIONAL RECEIPT "Note: This is issued to transactions not
yet cleared but subsequently an Official Receipt will be issued."
26
Petitioners Arguments
In its Petition and Reply seeking to reverse and set aside the assailed CA dispositions and in effect to dismiss
Civil Case No. 06-0492 CFM, petitioner argues that respondent failed to prove its case that a contract of sale
was perfected between the parties. It particularly notes that, contrary to the CAs ruling, respondents delivery of
the February 4, 2005 letter and check; petitioners failure to respond to said letter; petitioners supposed
acceptance of the check by depositing the same in its account; and its failure to return the same after more
than one year from its tender these circumstances do not at all prove that a contract of sale was perfected
between the parties. It claims that there was never an agreement in the first place between them concerning
the sale of the subject property, much less the payment of earnest money therefor; that during trial, Eleazar
himself admitted that the check was merely a "deposit"; that the February 4, 2005 letter and check were
delivered not to Young, but to a mere receiving clerk of petitioner who knew nothing about the supposed
transaction and was simply obliged to accept the same without the prerogative to reject them; that the
acceptance of respondents supposed payment was not cleared and was subject to approval and issuance of
the corresponding official receipt as noted in Provisional Receipt No. 33430; that respondent intentionally
delivered the letter and check in the manner that it did in order to bind petitioner to the supposed sale with or
without the latters consent; that petitioner could not be faulted for receiving the check and for depositing the
same as a matter of operational procedure with respect to checks received in the course of its day-to-day
business.
27
28
Petitioner argues that ultimately, it cannot be said that it gave its consent to any transaction with respondent or
to the payment made by the latter. Respondents letter and check constitute merely an offer which required
petitioners acceptance in order to give rise to a perfected sale; "[o]therwise, a buyer can easily bind any
unsuspecting seller to a contract of sale by merely devising a way that prevents the latter from acting on the
communicated offer."
29
Petitioner thus theorizes that since it had no perfected agreement with the respondent, the latters check should
be treated not as earnest money, but as mere guarantee, deposit or option money to prevent the prospective
seller from backing out from the sale, since the payment of any consideration acquires the character of
earnest money only after a perfected sale between the parties has been arrived at.
30
31
Respondents Arguments
In its Comment, respondent counters that petitioners case typifies a situation where the seller has had an
undue change of mind and desires to escape the legal consequences attendant to a perfected contract of sale.
It reiterates the appellate courts pronouncements that petitioners failure to reply to respondents February 4,
2005 letter indicates its consent to the sale; that its acceptance of the check as earnest money and the
issuance of the provisional receipt prove that there is a prior agreement between the parties; that the deposit of
the check in petitioners account and failure to timely return the money to respondent militates against
petitioners claim of lack of knowledge and consent. Rather they indicate petitioners decision to sell subject
property as agreed. Respondent adds that contrary to petitioners claim, negotiations were in fact held between
the parties after it sent its December 9, 2004 letter-offer, which negotiations precisely culminated in the
preparation and issuance of the February4, 2005 letter; that petitioners failure to reply to its February 4, 2005
letter meant that it was amenable to respondents terms; that the issuance of a provisional receipt does not
prevent the perfection of the agreement between the parties, since earnest money was already paid; and that
petitioner cannot pretend to be ignorant of respondents check payment, as it involved a large sum of money
that was deposited in the formers bank account.
32
Our Ruling
The Court grants the Petition. The trial and appellate courts erred materially in deciding the case; they
overlooked important facts that should change the complexion and outcome of the case.
It cannot be denied that there were negotiations between the parties conducted after the respondents
December 9, 2004 letter-offer and prior to the February 4, 2005 letter. These negotiations culminated in a
meeting between Eleazar and Young whereby the latter declined to enter into an agreement and accept cash
payment then being tendered by the former. Instead, Young informed Eleazar during said meeting that she still
had to confer with her sister and petitioners board of directors; in turn, Eleazar told Young that respondent shall
await the necessary approval.
Thus, the trial and appellate courts failed to appreciate that respondents offer to purchase the subject property
was never accepted by the petitioner at any instance, even after negotiations were held between them. Thus,
as between them, there is no sale to speak of. "When there is merely an offer by one party without acceptance
of the other, there is no contract." To borrow a pronouncement in a previously decided case,
33
The stages of a contract of sale are: (1) negotiation, starting from the time the prospective contracting parties
indicate interest in the contract to the time the contract is perfected; (2) perfection, which takes place upon the
concurrence of the essential elements of the sale; and (3) consummation, which commences when the parties
perform their respective undertakings under the contract of sale, culminating in the extinguishment of the
contract.
In the present case, the parties never got past the negotiation stage. Nothing shows that the parties had agreed
on any final arrangement containing the essential elements of a contract of sale, namely, (1) consent or the
meeting of the minds of the parties; (2) object or subject matter of the contract; and (3) price or consideration of
the sale.
34
Respondents subsequent sending of the February 4, 2005 letter and check to petitioner without awaiting the
approval of petitioners board of directors and Youngs decision, or without making a new offer constitutes a
mere reiteration of its original offer which was already rejected previously; thus, petitioner was under no
obligation to reply to the February 4, 2005 letter. It would be absurd to require a party to reject the very same
offer each and every time it is made; otherwise, a perfected contract of sale could simply arise from the failure
to reject the same offer made for the hundredth time. Thus, said letter cannot be considered as evidence of a
perfected sale, which does not exist in the first place; no binding obligation on the part of the petitioner to sell its
property arose as a consequence. The letter made no new offer replacing the first which was rejected.
1wphi1
Since there is no perfected sale between the parties, respondent had no obligation to make payment through
the check; nor did it possess the right to deliver earnest money to petitioner in order to bind the latter to a sale.
As contemplated under Art. 1482 of the Civil Code, "there must first be a perfected contract of sale before we
can speak of earnest money." "Where the parties merely exchanged offers and counter-offers, no contract is
perfected since they did not yet give their consent to such offers. Earnest money applies to a perfected sale."
35
36
This Court is inclined to accept petitioners explanation that since the check was mixed up with all other checks
and correspondence sent to and received by the corporation during the course of its daily operations, Young
could not have timely discovered respondents check payment; petitioners failure to return the purported
earnest money cannot mean that it agreed to respondents offer.
Besides, respondents payment of supposed earnest money was made under dubious circumstances and in
disregard of sound business practice and common sense. Indeed, respondent must be faulted for taking such a
course of action that is irregular and extraordinary: common sense and logic dictate that if any payment is
made under the supposed sale transaction, it should have been made directly to Young or coursed directly
through her office, since she is the officer directly responsible for negotiating the sale, as far as respondent is
concerned and considering the amount of money involved; no other ranking officer of petitioner can be
expected to know of the ongoing talks covering the subject property. Respondent already knew, from Eleazars
previous meeting with Young, that it could only effectively deal with her; more than that, it should know that
corporations work only through the proper channels. By acting the way it did coursing the February 4, 2005
letter and check through petitioners mere receiving clerk or receptionist instead of directly with Youngs office,
respondent placed itself under grave suspicion of putting into effect a premeditated plan to unduly bind
petitioner to its rejected offer, in a manner which it could not achieve through negotiation and employing normal
business practices. It impresses the Court that respondent attempted to secure the consent needed for the sale
by depositing part of the purchase price and under the false pretense that an agreement was already arrived at,
even though there was none. Respondent achieved the desired effect up to this point, but the Court will not be
fooled.
Thus, as between respondents irregular and improper actions and petitioners failure to timely return
theP100,000.00 purported earnest money, this Court sides with petitioner. In a manner of speaking, respondent
cannot fault petitioner for not making a refund since it is equally to blame for making such payment under false
pretenses and irregular circumstances, and with improper motives. Parties must come to court with clean
hands, as it were.
In a potential sale transaction, the prior payment of earnest money even before the property owner can agree
to sell his property is irregular, and cannot be used to bind the owner to the obligations of a seller under an
otherwise perfected contract of sale; to cite a well-worn clich, the carriage cannot be placed before the horse.
The property owner-prospective seller may not be legally obliged to enter into a sale with a prospective buyer
through the latters employment of questionable practices which prevent the owner from freely giving his
consent to the transaction; this constitutes a palpable transgression of the prospective sellers rights of
ownership over his property, an anomaly which the Court will certainly not condone. An agreement where the
prior free consent of one party thereto is withheld or suppressed will be struck down, and the Court shall always
endeavor to protect a property owners rights against devious practices that put his property in danger of being
lost or unduly disposed without his prior knowledge or consent. As this ponente has held before, "[t]his Court
cannot presume the existence of a sale of land, absent any direct proof of it."
37
Nor will respondent's supposed payment be 'treated as a deposit or guarantee; its actions will not be dignified
and must be called for what they are: they were done irregularly and with a view to acquiring the subject
property against petitioner's consent.
Finally, since there is nothing in legal contemplation which petitioner must perform particularly for the
respondent, it should follow that Civil Case No. 06-0492 CFM for specific performance with damages is left with
no leg. to stand on; it must be dismissed.
With the foregoing view, there is no need to resolve the other specific issues and arguments raised by the
petitioner, as they do not materially affect the rights and obligations of the parties - the Court having declared
that no agreement exists between them; nor do they have the effect of altering the outcome of the case.
WHEREFORE, the Petition is GRANTED. The September 30, 2011 Decision and December 9, 2011 Resolution
of the Court of Appeals in CA-G.R. CV No. 93715, as well as the February 16, 2009 Decision of the Regional
Trial Court of Pasay City, Branch 115 in Civil Case No. 06-0492 CFM are REVERSED and SET ASIDE. Civil
Case No. 06-0492 CFM is ordered DISMISSED. , Petitioner First Optima Realty Corporation is ordered to
REFUND the amount of P100,000.00 to respondent Securitron Security Services, Inc. without interest, unless
petitioner has done so during the course of the proceedings.
SO ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice
FEBRUARY 2015

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2015 CIVIL LAW CASES

January 12, 2015

EASTERN SHIPPING LINES, INC., Petitioner,

The facts gathered from the records follow:

Second Issue: Limitation of Liability

Moreover, in Alfelor v. Halasan, this Court declared that:

January 12, 2015

NEIL B. AGUILAR and RUBEN CALIMBAS, Petitioners,

And in Civil Case No. 1430, the dispositive portion states:

The Courts Ruling

WHEREFORE, the petition is PARTIALLY GRANTED.

January 14, 2015

RICARDO C. HONRADO, Petitioner,

The Ruling of the Trial Court

Disposal of the Fees Paid to

Award of Attorney's Fees to Petitioner Improper

January 14, 2015

RODRIGO RIVERA, Petitioner,

After trial, the MeTC ruled in favor of the Spouses Chua:

3. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN AWARDING

B. In G.R. No. 184472

On 26 February 2009, Entry of Judgment was made in G.R. No. 184472.

Hence, the MeTC ruled that:

We cite our recent ruling in Nacar v. Gallery Frames:

Face value of the

Stipulated Interest A & B

February 24, 1995 to A. January 1, 1996 to

A. 12 % per annumon the

Interest due earning legal

A. June 11, 1999 (date of

A. 12% per annumon the

January 21, 2015

RUKS KONSULT AND CONSTRUCTION, Petitioner,

The RTC Ruling

The Issue Before the Court

January 28, 2015

FIRST OPTIMA REALTY CORPORATION, Petitioner,

Dear Atty. De Jesus:

Ruling of the Regional Trial Court of Pasay City

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