Professional Documents
Culture Documents
The plan to donate said property to the residents of Bgy. Krus-naLigas, that is, through the Quezon City government, is to their best
interests. Left alone, the present land and physical development of
the area leaves much to be desired. Road and drainage networks
have to be constructed, water and electric facilities installed, and
garbage collection provided for. The residents, even collectively, do
not have the means and resources to provide for themselves such
basis facilities which are necessary if only to upgrade their living
condition.
Should the proposed donation push through, the residents would be
the first to benefit. thus, Branch 100 of this Honorable Court issued
that Order dated April 2, 1986, lifting the injunction, a copy of which
is hereby attached as Annex M;
13. That, however, defendant UP took exception to the aforesaid
Order lifting the Order of Injunction and insisted [on] the dismissal of
the case; thus, it was stated that:
2. Respondent has consistently taken the position that efforts to
expedite the formalization of a Deed of Donation for the benefit of
the residents of Barangay Kruz-na-Ligas should not only be preconditioned on the lifting of the Writ of Preliminary Injunction, but
also the dismissal of the Petition;
in defendant UPs Motion for Reconsideration of the Order dated April
2, 1986, a copy of the said Motion is herein attached as Annex N;
14. That plaintiff Association in [its] Comment on the Motion for
Reconsideration of the Order dated April 2, 1986, filed on June 2,
1986, manifested [its] willingness to the dismissal of the case, aside
from [its] previous consent to the lifting of the preliminary injunction;
provided, that the area to be donatedthru the defendant Quezon City
government be subdivided into lots to be given to the qualified
residents together with the certificate of titles, without cost, a copy of
the said Comment is hereby attached as Annex O;
15. That, that was why, in the hearing re-scheduled on June 13, 1986
of defendant UPs Motion for Reconsideration of the Order dated April
2, 1986 (Annex N), the Order dated June 13, 1986, was issued, the
full text of which is quoted as follows:
SO ORDERED.
Petitioners moved for a reconsideration of the above order. Without
resolving petitioners motion, the trial court ordered petitioners to
amend their complaint to implead respondent Quezon City
government as defendant.[4] Hence, the amended complaint was filed
on June 10, 1992, in which it is alleged:
4. That the Quezon City Government . . . which should be joined as
party plaintiff is instead impleaded herein as party defendant,
because its consent can not be secured within a reasonable time;
On July 27, 1992, respondent city government filed its Answer to the
Amended Complaint with Cross-Claim. [5] However, on November 29,
1993, it moved to withdraw its cross-claim against UP [6] on the
ground that, after conferring with university officials, the city
government had recognized the propriety, validity and legality of the
revocation of the Deed of Donation.[7]
The motion was granted by the trial court in its order, dated
December 22, 1994.[8] On the same day, a Joint Motion to Dismiss
was filed by UP and the Quezon City government on the ground that
the complaint fails to state a cause of action. [9] Petitioners opposed
the motion.
On April 26, 1995, the trial court denied respondents motion to
dismiss on the ground that a perusal of [petitioners] amended
complaint, specifically paragraph 5 thereof, . . . shows that it
necessarily alleges facts entitling [petitioners] to acquire ownership
over the land in question, by reason of laches, which cannot be
disposed of and resolved at this stage without a trial on the merits.
[10]
The trial court, however, reiterated its ruling that petitioners did
not have a cause of action for specific performance on the ground
that the deed of donation had already been revoked as stated in its
order denying injunction.
On August 14, 1995, respondents filed a petition for certiorari with
the Court of Appeals, charging the trial court with grave abuse of
discretion in refusing to dismiss the complaint filed by
petitioners. Respondents contended that
Under this provision of the Civil Code, the following requisites must
be present in order to have a stipulation pour autrui:[15]
the other; each of the private respondents had its own obligations, in
view of conferring a favor upon petitioners.
(2) the stipulation must be a part, not the whole of the contract;
(3) the contracting parties must have clearly and deliberately
conferred a favor upon a third person, not a mere incidental benefit
or interest;
(4) the third person must have communicated his acceptance to the
obligor before its revocation; and
(5) neither of the contracting parties bears the legal representation
or authorization of the third party.
The allegations in the following paragraphs of the amended
complaint are sufficient to bring petitioners action within the purview
of the second paragraph of Art. 1311 on stipulations pour autrui:
1. Paragraph 17, that the deed of donation contains a stipulation that
the Quezon City government, as donee, is required to transfer to
qualified residents of Cruz-na-Ligas, by way of donations, the lots
occupied by them;
2. The same paragraph, that this stipulation is part of conditions and
obligations imposed by UP, as donor, upon the Quezon City
government, as donee;
3. Paragraphs 15 and 16, that the intent of the parties to the deed of
donation was to confer a favor upon petitioners by transferring to the
latter the lots occupied by them;
4. Paragraph 19, that conferences were held between the parties to
convince UP to surrender the certificates of title to the city
government, implying that the donation had been accepted by
petitioners by demanding fulfillment thereof [16] and that private
respondents were aware of such acceptance; and
5. All the allegations considered together from which it can be fairly
inferred that neither of private respondents acted in representation of
It will be noted that under the paragraph cited a third person seeking
to enforce compliance with a stipulation in his favor must signify his
acceptance before it has been revoked. In this case the plaintiff
clearly signified his acceptance to the bank by demanding payment;
and although the Philippine National Bank had already directed its
New York agency to withhold payment when this demand was made,
the rights of the plaintiff cannot be considered to have been
prejudiced by that fact. The word revoked, as there used, must be
understood to imply revocation by the mutual consent of the
contracting parties, or at least by direction of the party purchasing
the exchange.[19]
Moreover, the subjects of these claims are not exactly and entirely
the same parcel of land; petitioners causes of action consist of two
definite and distinct claims. The rule is that a trial court judge cannot
dismiss a complaint which contained two or more causes of action
where one of them clearly states a sufficient cause of action against
the defendant.[24]
Respondents contend, however, that the trial court has already found
that the donation (on which petitioners base their action) has already
been revoked. This contention has no merit. The trial courts ruling on
this point was made in connection with petitioners application for a
writ of preliminary injunction to stop respondent UP from ejecting
petitioners. The trial court denied injunction on the ground that the
donation had already been revoked and therefore petitioners had no
clear legal right to be protected. It is evident that the trial courts
ruling on this question was only tentative, without prejudice to the
final resolution of the question after the presentation by the parties
of their evidence.[20]
Second. It is further contended that the amended complaint alleges
inconsistent causes of action for specific performance of the deed of
donation.Respondents make much of the fact that while petitioners
claim to be the beneficiaries-donees of 15.8 hectares subject of the
deed,[21] they at the same time seek recovery/delivery of title to the
42 hectares of land included in UPs certificate of title. [22]
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 164703
May 4, 2010
ALLAN C. GO, doing business under the name and style "ACG
Express Liner," Petitioner,
vs.
MORTIMER F. CORDERO, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 164747
MORTIMER F. CORDERO, Petitioner,
vs.
ALLAN C. GO, doing business under the name and style "ACG
Express Liner," FELIPE M. LANDICHO and VINCENT D.
TECSON, Respondents.
DECISION
VILLARAMA, JR., J.:
For review is the Decision1 dated March 16, 2004 as modified by the
Resolution2 dated July 22, 2004 of the Court of Appeals (CA) in CAG.R. CV No. 69113, which affirmed with modifications the
Decision3 dated May 31, 2000 of the Regional Trial Court (RTC) of
Quezon City, Branch 85 in Civil Case No. 98-35332.
The factual antecedents:
Sometime in 1996, Mortimer F. Cordero, Vice-President of Pamana
Marketing Corporation (Pamana), ventured into the business of
marketing inter-island passenger vessels. After contacting various
overseas fast ferry manufacturers from all over the world, he came to
meet Tony Robinson, an Australian national based in Brisbane,
Australia, who is the Managing Director of Aluminium Fast Ferries
Australia (AFFA).
Between June and August 1997, Robinson signed documents
appointing Cordero as the exclusive distributor of AFFA catamaran
and other fast ferry vessels in the Philippines. As such exclusive
distributor, Cordero offered for sale to prospective buyers the 25meter Aluminium Passenger catamaran known as the SEACAT 25.4
After negotiations with Felipe Landicho and Vincent Tecson, lawyers
of Allan C. Go who is the owner/operator of ACG Express Liner of
Cebu City, a single proprietorship, Cordero was able to close a deal
for the purchase of two (2) SEACAT 25 as evidenced by the
B.
RESPONDENT
GOS
POSITION
PAPER
AND
COUNTERAFFIDAVIT/POSITION PAPER THAT WERE FILED BEFORE THE BUREAU
OF CUSTOMS, ADMITS UNDER OATH THAT HE HAD INDEED
PURCHASED A SECOND VESSEL FROM AFFA.
C. RESPONDENTS ADMITTED IN THEIR PRE-TRIAL BRIEF THAT THEY
HAD PURCHASED A SECOND VESSEL.
II.
I.
THE COURT OF APPEALS ERRED IN NOT SUSTAINING THE JUDGMENT
OF THE TRIAL COURT AWARDING PETITIONER ACTUAL DAMAGES FOR
HIS COMMISSION FOR THE SALE OF THE SECOND VESSEL, SINCE
THERE IS SUFFICIENT EVIDENCE ON RECORD WHICH PROVES THAT
THERE WAS A SECOND SALE OF A VESSEL.
A. THE MEMORANDUM OF AGREEMENT DATED 7 AUGUST 1997
PROVIDES THAT RESPONDENT GO WAS CONTRACTUALLY BOUND TO
BUY TWO (2) VESSELS FROM AFFA.
The controversy boils down to two (2) main issues: (1) whether
petitioner Cordero has the legal personality to sue the respondents
for breach of contract; and (2) whether the respondents may be held
liable for damages to Cordero for his unpaid commissions and
termination of his exclusive distributorship appointment by the
principal, AFFA.
I. Real Party-in-Interest
First, on the issue of whether the case had been filed by the real
party-in-interest as required by Section 2, Rule 3 of the Rules of
Court, which defines such party as the one (1) to be benefited or
injured by the judgment in the suit, or the party entitled to the avails
of the suit. The purposes of this provision are: 1) to prevent the
prosecution of actions by persons without any right, title or interest in
the case; 2) to require that the actual party entitled to legal relief be
the one to prosecute the action; 3) to avoid a multiplicity of suits;
and 4) to discourage litigation and keep it within certain bounds,
pursuant to sound public policy.31 A case is dismissible for lack of
personality to sue upon proof that the plaintiff is not the real party-ininterest, hence grounded on failure to state a cause of action.32
On this issue, we agree with the CA in ruling that it was Cordero and
not Pamana who is the exclusive distributor of AFFA in the Philippines
as shown by the Certification dated June 1, 1997 issued by Tony
Robinson.33 Petitioner Go mentions the following documents also
signed by respondent Robinson which state that "Pamana Marketing
Corporation represented by Mr. Mortimer F. Cordero" was actually the
exclusive distributor: (1) letter dated 1 June 1997 34; (2) certification
dated 5 August 199735; and (3) letter dated 5 August 1997 addressed
to petitioner Cordero concerning "commissions to be paid to Pamana
Marketing Corporation."36 Such apparent inconsistency in naming
AFFAs exclusive distributor in the Philippines is of no moment. For all
intents and purposes, Robinson and AFFA dealt only with Cordero who
alone made decisions in the performance of the exclusive
distributorship, as with other clients to whom he had similarly offered
AFFAs fast ferry vessels. Moreover, the stipulated commissions from
each progress payments made by Go were directly paid by Robinson
to Cordero.37Respondents Landicho and Tecson were only too aware
of Corderos authority as the person who was appointed and acted as
exclusive distributor of AFFA, which can be gleaned from their act of
immediately furnishing him with copies of bank transmittals
everytime Go remits payment to Robinson, who in turn transfers a
portion of funds received to the bank account of Cordero in the
Philippines as his commission. Out of these partial payments of his
commission, Cordero would still give Landicho and Tecson their
respective "commission," or "cuts" from his own commission.
Respondents Landicho and Tecson failed to refute the evidence
submitted by Cordero consisting of receipts signed by them. Said
were engaged for only one (1) transaction, that is, the purchase of
the first SEACAT 25 in August 1997.
Petitioner Go argues that unlike in Yu v. Court of Appeals 48 there is no
conclusive proof adduced by petitioner Cordero that they actually
purchased a second SEACAT 25 directly from AFFA and hence there
was no violation of the exclusive distributorship agreement. Further,
he contends that the CA gravely abused its discretion in holding
them solidarily liable to Cordero, relying on Articles 1207, 19 and 21
of the Civil Code despite absence of evidence, documentary or
testimonial, showing that they conspired to defeat the very purpose
of the exclusive distributorship agreement.49
We find that contrary to the claims of petitioner Cordero, there was
indeed no sufficient evidence that respondents actually purchased a
second SEACAT 25 directly from AFFA. But this circumstance will not
absolve respondents from liability for invading Corderos rights under
the exclusive distributorship. Respondents clearly acted in bad faith
in bypassing Cordero as they completed the remaining payments to
AFFA without advising him and furnishing him with copies of the bank
transmittals as they previously did, and directly dealt with AFFA
through Robinson regarding arrangements for the arrival of the first
SEACAT 25 in Manila and negotiations for the purchase of the second
vessel pursuant to the Memorandum of Agreement which Cordero
signed in behalf of AFFA. As a result of respondents actuations,
Cordero incurred losses as he was not paid the balance of his
commission from the sale of the first vessel and his exclusive
distributorship revoked by AFFA.
Petitioner Go contends that the trial and appellate courts erred in
holding them solidarily liable for Corderos unpaid commission, which
is the sole obligation of the principal AFFA. It was Robinson on behalf
of AFFA who, in the letter dated August 5, 1997 addressed to
Cordero, undertook to pay commission payments to Pamana on a
staggered progress payment plan in the form of percentage of the
commission per payment. AFFA explicitly committed that it will,
"upon receipt of progress payments, pay to Pamana their full
commission by telegraphic transfer to an account nominated by
Pamana within one to two days of [AFFA] receiving such
payments."50Petitioner Go further maintains that he had not in any
contract with Bai Tonina Sepi, the fact was that he was unable to
prove malice or bad faith on the part of petitioner in purchasing the
property. Therefore, the claim of tortuous interference was never
established.57
In their Answer, respondents denied having anything to do with the
unpaid balance of the commission due to Cordero and the eventual
termination of his exclusive distributorship by AFFA. They gave a
different version of the events that transpired following the signing of
Shipbuilding Contract No. 7825. According to them, several buildercompetitors still entered the picture after the said contract for the
purchase of one (1) SEACAT 25 was sent to Brisbane in July 1997 for
authentication, adding that the contract was to be effective on
August 7, 1997, the time when their funds was to become available.
Go admitted he called the attention of AFFA if it can compete with
the prices of other builders, and upon mutual agreement, AFFA
agreed to give them a discounted price under the following terms
and conditions: (1) that the contract price be lowered; (2) that Go will
obtain another vessel; (3) that to secure compliance of such
conditions, Go must make an advance payment for the building of
the second vessel; and (4) that the payment scheme formerly agreed
upon as stipulated in the first contract shall still be the basis and
used as the guiding factor in remitting money for the building of the
first vessel. This led to the signing of another contract superseding
the first one (1), still to be dated 07 August 1997. Attached to the
answer were photocopies of the second contract stating a lower
purchase price (US$1,150,000.00) and facsimile transmission of AFFA
to Go confirming the transaction.58
As to the cessation of communication with Cordero, Go averred it was
Cordero who was nowhere to be contacted at the time the
shipbuilding progress did not turn good as promised, and it was
always Landicho and Tecson who, after several attempts, were able
to locate him only to obtain unsatisfactory reports such that it was
Go who would still call up Robinson regarding any progress status
report, lacking documents for MARINA, etc., and go to Australia for
ocular inspection. Hence, in May 1998 on the scheduled launching of
the ship in Australia, Go engaged the services of Landicho who went
to Australia to see to it that all documents needed for the shipment
of the vessel to the Philippines would be in order. It was also during
this time that Robinsons request for inquiry on the Philippine price of
a Wartsila engine for AFFAs then on-going vessel construction, was
misinterpreted by Cordero as indicating that Go was buying a second
vessel.59
We find these allegations unconvincing and a mere afterthought as
these were the very same averments contained in the Position Paper
for the Importer dated October 9, 1998, which was submitted by Go
on behalf of ACG Express Liner in connection with the complaintaffidavit filed by Cordero before the BOC-SGS Appeals Committee
relative to the shipment valuation of the first SEACAT 25 purchased
from AFFA.60 It appears that the purported second contract
superseding the original Shipbuilding Contract No. 7825 and stating a
lower price of US$1,150,000.00 (not US$1,465,512.00) was only
presented before the BOC to show that the vessel imported into the
Philippines was not undervalued by almost US$500,000.00. Cordero
vehemently denied there was such modification of the contract and
accused respondents of resorting to falsified documents, including
the facsimile transmission of AFFA supposedly confirming the said
sale for only US$1,150,000.00. Incidentally, another document filed
in said BOC case, the Counter-Affidavit/Position Paper for the Importer
dated November 16, 1998,61 states in paragraph 8 under the
Antecedent facts thereof, that -8. As elsewhere stated, the total remittances made by herein
Importer to AFFA does not alone represent the purchase price for
Seacat 25. It includes advance payment for the acquisition of another
vessel as part of the deal due to the discounted price.62
which even gives credence to the claim of Cordero that respondents
negotiated for the sale of the second vessel and that the
nonpayment of the remaining two (2) instalments of his commission
for the sale of the first SEACAT 25 was a result of Go and Landichos
directly dealing with Robinson, obviously to obtain a lower price for
the second vessel at the expense of Cordero.
The act of Go, Landicho and Tecson in inducing Robinson and AFFA to
enter into another contract directly with ACG Express Liner to obtain
a lower price for the second vessel resulted in AFFAs breach of its
contractual obligation to pay in full the commission due to Cordero
The failure of Robinson, Go, Tecson and Landico to act with fairness,
honesty and good faith in securing better terms for the purchase of
high-speed catamarans from AFFA, to the prejudice of Cordero as the
duly appointed exclusive distributor, is further proscribed by Article
19 of the Civil Code:
Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due,
and observe honesty and good faith.
As we have expounded in another case:
Elsewhere, we explained that when "a right is exercised in a manner
which does not conform with the norms enshrined in Article 19 and
results in damage to another, a legal wrong is thereby committed for
which the wrongdoer must be responsible." The object of this article,
therefore, is to set certain standards which must be observed not
only in the exercise of ones rights but also in the performance of
ones duties. These standards are the following: act with justice, give
everyone his due and observe honesty and good faith. Its antithesis,
necessarily, is any act evincing bad faith or intent to injure. Its
elements are the following: (1) There is a legal right or duty; (2)
which is exercised in bad faith; (3) for the sole intent of prejudicing or
injuring another. When Article 19 is violated, an action for damages is
proper under Articles 20 or 21 of the Civil Code. Article 20 pertains to
damages arising from a violation of law x x x. Article 21, on the other
hand, states:
Art. 21. Any person who willfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public policy
shall compensate the latter for the damage.
Article 21 refers to acts contra bonus mores and has the following
elements: (1) There is an act which is legal; (2) but which is contrary
to morals, good custom, public order, or public policy; and (3) it is
done with intent to injure.
A common theme runs through Articles 19 and 21, and that is, the
act complained of must be intentional.64
A payment in full for the damage done, by one of the joint tort
feasors, of course satisfies any claim which might exist against the
others. There can be but satisfaction. The release of one of the joint
tort feasors by agreement generally operates to discharge all. x x x
Of course, the court during trial may find that some of the alleged
tort feasors are liable and that others are not liable. The courts may
release some for lack of evidence while condemning others of the
alleged tort feasors. And this is true even though they are charged
jointly and severally.67 [emphasis supplied.]
The rule is that the defendant found guilty of interference with
contractual relations cannot be held liable for more than the amount
for which the party who was inducted to break the contract can be
held liable.68 Respondents Go, Landicho and Tecson were therefore
correctly held liable for the balance of petitioner Corderos
commission from the sale of the first SEACAT 25, in the amount of
US$31,522.09 or its peso equivalent, which AFFA/Robinson did not
pay in violation of the exclusive distributorship agreement, with
interest at the rate of 6% per annum from June 24, 1998 until the
same is fully paid.
Respondents having acted in bad faith, moral damages may be
recovered under Article 2219 of the Civil Code.69On the other hand,
the requirements of an award of exemplary damages are: (1) they
may be imposed by way of example in addition to compensatory
damages, and only after the claimants right to them has been
established; (2) that they cannot be recovered as a matter of right,
their determination depending upon the amount of compensatory
damages that may be awarded to the claimant; and (3) the act must
be accompanied by bad faith or done in a wanton, fraudulent,
oppressive or malevolent manner.70 The award of exemplary
damages is thus in order. However, we find the sums awarded by the
trial court as moral and exemplary damages as reduced by the CA,
still excessive under the circumstances.
Moral damages are meant to compensate and alleviate the physical
suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and
similar injuries unjustly caused. Although incapable of pecuniary
QUISUMBING, J.:
This petition for certiorari challenges the Decision 1 of the Court of
Appeals dated October 10, 1994, and the Resolution 2 dated June 5,
1995, in CA-G.R. CV No. 38784. The appellate court affirmed the
decision of the Regional Trial Court of Manila, Branch 35, except for
the award of attorney's fees, as follows:
When the contracts expired, the parties did not renew the contracts,
but Tek Hua continued to occupy the premises. In 1976, Tek Hua
Trading Co. was dissolved. Later, the original members of Tek Hua
Trading Co. including Manuel C. Tiong, formed Tek Hua Enterprising
Corp., herein respondent corporation.
So Pek Giok, managing partner of Tek Hua Trading, died in 1986. So
Pek Giok's grandson, petitioner So Ping Bun, occupied the warehouse
for his own textile business, Trendsetter Marketing.
On August 1, 1989, lessor DCCSI sent letters addressed to Tek Hua
Enterprises, informing the latter of the 25% increase in rent effective
September 1, 1989. The rent increase was later on reduced to 20%
effective January 1, 1990, upon other lessees' demand. Again on
December 1, 1990, the lessor implemented a 30% rent increase.
Enclosed in these letters were new lease contracts for signing. DCCSI
warned that failure of the lessee to accomplish the contracts shall be
deemed as lack of interest on the lessee's part, and agreement to the
termination of the lease. Private respondents did not answer any of
these letters. Still, the lease contracts were not rescinded.
Binondo, Manila
Tek
Hua
Enterprising
Corporation, the sum of
P500,000.00,
for
attorney's fees;
TRIAL
COURT'S
DECISION
FINDING SO PING BUN GUILTY OF
TORTUOUS INTERFERENCE OF
CONTRACT?
4.
Dismissing
the
complaint,
insofar
as
plaintiff Manuel C. Tiong is
concerned,
and
the
respective counterclaims
of the defendant;
5. Ordering defendant So
Ping Bun to pay the costs
of this lawsuit;
This judgment is without prejudice to the rights of
plaintiff Tek Hua Enterprising Corporation and
defendant Dee C. Chuan & Sons, Inc. to negotiate for
the renewal of their lease contracts over the premises
located at Nos. 930, 930-Int., 924-B and 924-C Soler
Street, Binondo, Manila, under such terms and
conditions as they agree upon, provided they are not
contrary to law, public policy, public order, and morals.
SO ORDERED.
It is true that the lower courts did not award damages, but this was
only because the extent of damages was not quantifiable. We had a
similar situation in Gilchrist, where it was difficult or impossible to
determine the extent of damage and there was nothing on record to
serve as basis thereof. In that case we refrained from awarding
damages. We believe the same conclusion applies in this case.
SECOND DIVISION
G.R. No. 164587
February 4, 2008
SO ORDERED.13
On appeal, the Court of Appeals reversed and set aside the trial
courts decision on the following grounds: (1) there was no meeting
of the minds as to the offer and acceptance between the parties; (2)
there was no implied acceptance of the P1 million check as Mid-Pasig
was not aware of its source at the time Mid-Pasig discovered the
existence of the P1 million in its account; and (3) Rocklands
subsequent acts and/or omissions contradicted its claim that there
was already a contract of lease, as it neither took possession of the
property, nor did it pay for the corresponding monthly rentals.
Accordingly, the Court of Appeals dismissed Rocklands complaint, as
well as Mid-Pasigs counterclaim. Rockland sought reconsideration,
but it was denied.
xxxx
Rockland contends that the contract of lease had been perfected and
that Mid-Pasig is in estoppel in pais because it impliedly accepted its
offer when the P1 million check was credited to Mid-Pasigs account.
Mid-Pasig counters that it never accepted Rocklands offer. It avers it
immediately rejected Rocklands offer upon learning of the
mysterious deposit of the P1 million check in its account.
Since the re-stated issues are intertwined, we shall discuss them
jointly.
A contract has three distinct stages: preparation, perfection, and
consummation. Preparation or negotiation begins when the
prospective contracting parties manifest their interest in the contract
and ends at the moment of their agreement. Perfection or birth of the
contract
occurs
when
they
agree
upon
the essential
elements thereof. Consummation, the last stage, occurs when the
parties "fulfill or perform the terms agreed upon in the contract,
culminating in the extinguishment thereof."15
Negotiation is formally initiated by an offer. Accordingly, an offer that
is not accepted, either expressly or impliedly, 16 precludes the
existence of consent, which is one of the essential elements 17 of a
contract. Consent, under Article 1319 of the Civil Code, is manifested
by the meeting of the offer and acceptance upon the thing which are
to constitute a contract. To produce a contract, the offer must be
certain and the acceptance absolute.18
A close review of the events in this case, in the light of the parties
evidence, shows that there was no perfected contract of lease
between the parties. Mid-Pasig was not aware that Rockland
deposited the P1 million check in its account. It only learned of
Rocklands check when it received Rocklands February 2, 2001 letter.
Mid-Pasig, upon investigation, also learned that the check was
deposited at the Philippine National Bank (PNB) San Juan Branch,
instead of PNB Ortigas Branch where Mid-Pasig maintains its account.
Immediately, Mid-Pasig wrote Rockland on February 6, 2001 rejecting
the offer, and proposed that Rockland apply the P1 million to its other
existing lease instead. These circumstances clearly show that there
was no concurrence of Rocklands offer and Mid-Pasigs acceptance.
CARPIO, J.:
The Case
1
The results of operation of Korean Air for the Year 2000, was [sic]
bad. The Company suffered a net loss of over THREE HUNDRED SIXTY
SEVEN MILLION DOLLARS, (USD367,000,000.00). For this reason, the
budget for the Year 2001 was reduced by 10%. Accordingly, to
prevent further losses, Head Office recently implemented an early
retirement program not only for Head Office staffs but throughout all
Korean Air branches abroad. Unfortunately, in Head Office alone, 500
positions will be affected. This program is being offered before finally
conducting a retrenchment program.
In compliance with Head Office instruction, MNLSM Management, on
its discretion, is hereby offering the said early retirement program to
its staff. Availing employees shall be given ONE AND A HALF MONTHS
(1.50%) [sic] salary for every year of service and other benefits. This
rate is 50% higher than the retrenchment pay prevailing in the CBA.
Please accept our deepest regrets.7
In a letter8 dated 23 August 2001 and addressed to Korean Airs
Philippine general manager Suk Kyoo Kim (Suk), Yuson accepted the
offer for early retirement.
In a letter9 dated 24 August 2001, Suk informed Yuson that she was
excluded from the ERP because she was retiring on 8 January 2002.
Suk stated that:
Please be informed that you are excluded from the "Early Retirement
Program". The program is intended to staffs, upon discretion of
management, who still have long years left with the Company before
reaching retirement age. You are already due for retirement on
January 8, 2002. This program is being implemented by the Company
as a cost saving tool to prevent further losses.10
Hwang, and Park Jin Suk. In a Resolution 25 dated 30 July 2002, the
Bureau dismissed the complaint.
In his 31 January 2003 Decision, Labor Arbiter Santos denied for lack
of merit Yusons claims for benefit under the ERP, for moral and
exemplary damages, and for attorneys fees. The dispositive portion
of the Decision stated:
evil motive on Korean Airs part; (9) Yuson was not entitled to
exemplary damages because Korean Air did not act in a wanton,
oppressive, or malevolent manner; and (10) Korean Air acted in good
faith.
On 14 February 2003, Tae and Yuson entered into a compromise
agreement27 and amicably settled the criminal case. They stated
that:
1. Without necessarily admitting that they violated any law,
and in deference to the desire of the Honorable Judge that the
parties amicably settle the RTC Case if only to buy peace and
avoid a protracted criminal litigation, Messrs. Tae Sang Kim,
Benedicto Cajucom and the Company have agreed to pay
Adelina A.S. Yuson, and the latter acknowledges receipt from
them the amount of ONE MILLION SIX HUNDRED SEVENTY
ONE THOUSAND FIVE HUNDRED FORTY SIX PESOS AND
NINETY TWO CENTAVOS (P1,671,546.92), representing her
retirement benefit pursuant to Article 287 of the Labor Code,
as amended. This amount includes six percent (6%) legal
interest from the date of her retirement on 8 January 2002
until 8 February 2003, less Ms. Yusons salary loan balance in
the amount of TWENTY FIVE THOUSAND PESOS (P25,000.00).
x x x This amount represents a complete settlement of all her
claims in the RTC Case and such compensation and benefits to
which she may be entitled under Article 287 of the Labor
Code, as amended;
2. x x x x
3. x x x x
4. x x x x
5. The parties hereby agree and understand that the
withdrawal of the RTC Case is without prejudice to other
claims, which Mrs. Yuson may have in the NLRC Case. The
parties agree and understand that Ms. Yuson shall continue to
pursue her claims in the NLRC Case, which shall remain
pending until final decision by the NLRC and the appropriate
courts. The parties agree that Ms. Yuson shall deduct the
amount of ONE MILLION FIVE HUNDRED NINETY THREE
THOUSAND
ONE
PESOS
AND
EIGHTY
CENTAVOS
(P1,593,001.80), which she received under this Compromise
Agreement, from the amount that will be awarded to her by
the NLRC and the appropriate courts should the NLRC Case be
decided in her favor.28
Yuson filed with the NLRC an appeal memorandum 29 dated 10 March
2003 challenging Labor Arbiter Santos 31 January 2003 Decision.
The NLRC referred the case to Labor Arbiter Cristeta D. Tamayo
(Labor Arbiter Tamayo) for report and recommendation.
The NLRCs Ruling
In its 30 January 2004 Decision, 30 the NLRC adopted the report and
recommendations of Labor Arbiter Tamayo to order Korean Air and
Suk to pay Yuson her benefit under the ERP and to give her 10
Korean Air economy tickets.
Korean Air and Suk filed with the NLRC a motion 31 for reconsideration
dated 6 May 2004. In its 30 July 2004 Resolution, the NLRC set aside
its 30 January 2004 Decision and affirmed Labor Arbiter Santos 31
January 2003 Decision. The NLRC held that (1) the 21 August 2001
memorandum reserved to Korean Air discretion in approving
applications for the ERP; (2) approval of applications for the ERP was
a valid exercise of Korean Airs management prerogative; (3) Yuson
was retiring on 8 January 2002; (4) inclusion of Yuson in the ERP
would have been contrary to the objective of the program as a costsaving scheme; (5) Labor Arbiter Tamayo had no basis in granting
Yuson 10 Korean Air economy tickets; (6) Yuson did not show that
Korean Air ever implemented the travel benefit under the IPM; and
(7) Korean Air and Suk adequately showed that the company had
been giving one Korean Air ticket to retiring employees.
Yuson filed with the Court of Appeals a petition 32 for certiorari under
Rule 65 of the Rules of Court.
The Court of Appeals Ruling
In its 28 June 2005 Decision, the Court of Appeals set aside the
NLRCs 30 July 2004 Resolution and affirmed the commissions 30
January 2004 Decision. The Court of Appeals held that (1) the 21
August 2001 memorandum included both rank-and-file and
managerial employees; (2) Korean Airs offer for early retirement and
Yusons acceptance of the offer constituted a perfected contract
under Article 1315 of the Civil Code; (3) Korean Air forced Yuson to
retire on 8 January 2002; and (4) Korean Airs reason for excluding
Yuson in the ERP was misplaced because the company would have
incurred more costs by keeping Yuson in its employ until her
compulsory retirement on 8 January 2007.
Hence, the present petition.
The Issues
Korean Air and Suk raise as issues that the Court of Appeals erred in
(1) failing to consider that Yusons claim for benefit under the ERP
became moot when she availed of the optional retirement under
Article 287 of the Labor Code, as amended; (2) ruling that Yuson may
claim benefit under the ERP; and (3) awarding Yuson 10 Korean Air
economy tickets.
The Courts Ruling
The petition is meritorious.
On 8 January 2002, Yuson availed of the optional retirement under
Article 287 of the Labor Code, as amended. The third paragraph of
Article 287 states that:
In the absence of a retirement plan or agreement providing for
retirement benefits of employees in the establishment, an employee
upon reaching the age of sixty (60) years or more, but not beyond
sixty-five (65) years which is hereby declared the compulsory
retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay
equivalent to at least one-half (1/2) month salary for every year of
service, a fraction of at least six (6) months being considered as one
whole year.
long and unjustly been denied of his retirement benefits since August
18, 1993 cannot be expected to remain idle.
By his acceptance of retirement benefits the petitioner is
deemed to have opted to retire under the third paragraph of
Article 287 of the Labor Code, as amended by R.A. No. 7641.
Thereunder he could choose to retire upon reaching the age of 60
years, provided it is before reaching 65 years, which is the
compulsory age of retirement.
Also worth noting is his statement that he "had long and unjustly
been denied of his retirement benefits since August 18, 1993."
Elsewise stated, he was entitled to retirement benefits as early as 18
August 1993 but was denied thereof without justifiable reason. This
could only mean that he has already acceded to his retirement,
effective on such date when he reached the age of 60
years.35 (Emphasis supplied)
The Court of Appeals held that Yuson may claim benefit under the
ERP because "the offer was certain and the acceptance is absolute;
hence, there is a valid contract pursuant to the last paragraph of
Article 1315 of the New Civil Code."36
The Court disagrees. Articles 1315, 1318 and 1319 of the Civil Code,
respectively, state:
Art. 1315. Contracts are perfected by mere consent, and from that
moment the parties are bound not only to the fulfillment of what has
been expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith, usage
and law.
Art. 1318. There is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
Art. 1319. Consent is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the
contract. The offer must be certain and the acceptance absolute.
x x x (Emphasis supplied)
An offer is a unilateral proposition made by one party to another for
the celebration of a contract. For an offer to be certain, a contract
must come into existence by the mere acceptance of the offeree
without any further act on the offerors part. The offer must be
definite, complete and intentional. In Spouses Paderes v. Court of
Appeals,37the Court held that, "There is an offer in the context of
Article 1319 only if the contract can come into existence by the mere
acceptance of the offeree, without any further act on the part of the
offeror. Hence, the offer must be definite, complete and
intentional."38
In the present case, the offer is not certain: (1) the 21 August 2001
memorandum clearly states that, "MNLSM Management, on its
discretion, is hereby offering the said early retirement program to
its staff"; (2) applications for the ERP were forwarded to the head
office for approval, and further acts on the offerors part were
necessary before the contract could come into existence; and (3) the
21 August 2001 memorandum clearly states Korean Airs intention,
which was, "to prevent further losses." Korean Air could not have
intended to ministerially approve all applications for the ERP.
The Court of Appeals held that Korean Air forced Yuson to retire on 8
January 2002. The Court of Appeals stated that, "By its letter of
August 24, 2001, Private Respondent is forcing Petitioner to retire
even if the choice of optional retirement belongs to the latter." 39
The Court disagrees. The surrounding circumstances show that
Korean Air did not force Yuson to retire on 8 January 2002. Yuson was
actually retiring on 8 January 2002: (1) in April 2001, Yuson
requested Korean Air that she be transferred to the cargo department
because she intended to pursue a cargo agency business after her
retirement; (2) in its 24 August and 12 September 2001 letters,
Korean Air clearly stated that Yuson was retiring on 8 January 2002;
(3) Yuson never corrected or denied Korean Airs statements
regarding her retirement date; (4) on 8 January 2002, Yuson
retired under Article 287 of the Labor Code, as amended; (5) in his
31 January 2003 Decision, Labor Arbiter Santos stated, "As
admitted by complainant, she was set to retire by January
2002";40 and (6) in its 30 July 2004 Resolution, the NLRC stated, "it
was shown in the records of this case that [Yuson] was about to retire
sometime in January 2002, which in fact happened."41
ruled that said provision was inapplicable considering that employeremployee relationship is imbued with public interest, thus, Philippine
laws were applicable.43
[O]n the award of ten (10) Korean Air tickets, we likewise assiduously
re-examined the record of this case and we must admit that we have
overlooked the fact that in the recommendation made by Labor
Arbiter Cristeta D. Tamayo, which as we stated earlier was adopted
en toto by former Commissioner Vicente S.E. Veloso, except in her
summation, there was nothing in her disquisition which shows that
she ever discussed the basis of her award of ten Korean Air tickets in
favor of complainant. "Decisions, however, concisely written, must
distinctly and clearly set forth the facts and the law upon which they
are based, a rule applicable as well to dispositions by quasi-judicial
and administrative bodies." (Naguiat vs. NLRC, 269 SCRA 664) In any
event, while it may be argued that the "point system" of earning
travel benefits is mentioned in Chapter 14, Section 2.14.3.4 of the
International Passenger Manual of Korean Air, nevertheless, it is also
very clear that complainant has not shown that this policy has been
implemented in the Philippines or has ever been granted to local
managers. In the absence of a single precedent where this privilege
was extended by the respondent company, the effort of complainant
to prove her entitlement to this benefit must also fall on barren
ground. In contrast, respondents have adequately shown that, during
complainants tenure, respondent company has extended to her CBA
benefits on free tickets, and even more. Certainly, complainant
cannot enjoy the best of both worlds, so to speak.44
In its 30 July 2004 Resolution, the NLRC also held that Yuson was not
entitled to the tickets. The NLRC stated that:
Korean Air had never implemented the IPM in the Philippines. Its,
employees, including Yuson, received the travel benefit under the
CBA. During her 26-year stay in Korean Air, Yuson already received
more than 10 tickets.
WHEREFORE, we GRANT the petition. We SET ASIDE the 28 June
2005 Decision and 3 November 2005 Resolution of the Court of
Appeals in CA-G.R. SP No. 86762, and AFFIRM the 30 July 2004
Resolution of the National Labor Relations Commission in NLRC NCR
vs. COURT
OF
APPEALS,
OF
MANILA,
and
NIDA
DECISION
PARDO, J.:
Appeal via certiorari from a decision of the Court of Appeals,
declaring that there was no perfected contract between petitioner
Jazmin Soler and The Commercial Bank of Manila (COMBANK FOR
BREVITY, formerly Boston Bank of the Philippines) for the renovation
of its Ermita Branch, thereby denying her claim for payment of
professional fees for services rendered.
[1]
xxx
The defendant bank never gave its imprimatur or consent to the
contract considering that the bidding or the question of renovating
the ceiling of the branch office of defendant bank was deferred
because the commercial bank is for sale. It is under privatization. xxx
At any rate, we find that the appellee failed to prove the allegations
in her complaint. xxx
SO ORDERED.[11]
On November 29, 1990, COMBANK, and Ms. Nida Lopez, filed
their notice of appeal.[12] On December 5, 1990, the trial court
ordered[13] the records of the case elevated to the Court of Appeals.[14]
[23]
No costs.
SO ORDERED.
6 January 1992
Dear Vic,
8. Rebelyon
(Signed
Charo
ConcioO
Februar
1992, d
Del
approac
ABS-CB
Concio,
list cons
52
movie t
not yet
televisio
includin
titles su
the
case, a
104
(previou
aired
television)
form of from
a proposal contract Annex "C" of the complaint (Exh. "1"which
Viva;
ABS-CBN
Exh. "C" - ABS-CBN).
may
choose
another
52 On April 06, 1992, Del Rosario and Mr. Graciano Gozon
titles, as a total of RBS Senior vice-president for Finance discussed the
of 156 titles, terms and conditions of Viva's offer to sell the 104
proposing to sell films, after the rejection of the same package by ABSto
ABS-CBN CBN.
airing
rights
over
this On April 07, 1992, defendant Del Rosario received
package of 52 through his secretary, a handwritten note from Ms.
originals and 52 Concio, (Exh. "5" - Viva), which reads: "Here's the draft
re-runs
for of the contract. I hope you find everything in order," to
P60,000,000.00 which was attached a draft exhibition agreement (Exh.
of
which "C''- ABS-CBN; Exh. "9" - Viva, p. 3) a counter-proposal
P30,000,000.00 covering 53 films, 52 of which came from the list sent
will be in cash by defendant Del Rosario and one film was added by
and
Ms. Concio, for a consideration of P35 million. Exhibit
P30,000,000.00 "C" provides that ABS-CBN is granted films right to 53
worth
of films and contains a right of first refusal to "1992 Viva
television spots Films." The said counter proposal was however
(Exh. "4" to "4- rejected by Viva's Board of Directors [in the] evening of
C"
Viva;
"9" the same day, April 7, 1992, as Viva would not sell
-Viva).
anything less than the package of 104 films for P60
million pesos (Exh. "9" - Viva), and such rejection was
On April 2, 1992, defendant Del Rosario and ABS-CBN general
relayed to Ms. Concio.
manager, Eugenio Lopez III, met at the Tamarind Grill Restaurant in
Quezon City to discuss the package proposal of Viva. What transpired
On April 29, 1992, after the rejection of ABS-CBN and
in that lunch meeting is the subject of conflicting versions. Mr. Lopez
following several negotiations and meetings defendant
testified that he and Mr. Del Rosario allegedly agreed that ABS-CRN
Del Rosario and Viva's President Teresita Cruz, in
was granted exclusive film rights to fourteen (14) films for a total
consideration of P60 million, signed a letter of
consideration of P36 million; that he allegedly put this agreement as
agreement dated April 24, 1992. granting RBS the
to the price and number of films in a "napkin'' and signed it and gave
exclusive right to air 104 Viva-produced and/or
it to Mr. Del Rosario (Exh. D; TSN, pp. 24-26, 77-78, June 8, 1992). On
acquired films (Exh. "7-A" - RBS; Exh. "4" - RBS)
the other hand, Del Rosario denied having made any agreement with
including the fourteen (14) films subject of the present
Lopez regarding the 14 Viva films; denied the existence of a napkin in
case. 4
which Lopez wrote something; and insisted that what he and Lopez
discussed at the lunch meeting was Viva's film package offer of 104
On 27 May 1992, ABS-CBN filed before the RTC a complaint for
films (52 originals and 52 re-runs) for a total price of P60 million. Mr.
specific performance with a prayer for a writ of preliminary injunction
Lopez promising [sic]to make a counter proposal which came in the
and/or temporary restraining order against private respondents
16
knowledge that the contract with VIVA had not been perfected, It also
upheld the award of attorney's fees, reasoning that with ABS-CBN's
act of instituting Civil Case No, Q-92-1209, RBS was "unnecessarily
forced to litigate." The appellate court, however, reduced the awards
of moral damages to P2 million, exemplary damages to P2 million,
and attorney's fees to P500, 000.00.
On the other hand, respondent Court of Appeals denied VIVA and Del
Rosario's appeal because it was "RBS and not VIVA which was
actually prejudiced when the complaint was filed by ABS-CBN."
Its motion for reconsideration having been denied, ABS-CBN filed the
petition in this case, contending that the Court of Appeals gravely
erred in
I
. . . RULING THAT THERE WAS NO PERFECTED
CONTRACT BETWEEN PETITIONER AND PRIVATE
RESPONDENT
VIVA
NOTWITHSTANDING
PREPONDERANCE
OF
EVIDENCE
ADDUCED
BY
PETITIONER TO THE CONTRARY.
II
. . . IN AWARDING ACTUAL AND COMPENSATORY
DAMAGES IN FAVOR OF PRIVATE RESPONDENT RBS.
III
. . . IN AWARDING MORAL AND EXEMPLARY DAMAGES
IN FAVOR OF PRIVATE RESPONDENT RBS.
IV
. . . IN AWARDING ATTORNEY'S FEES IN FAVOR OF RBS.
ABS-CBN claims that it had yet to fully exercise its right of first
refusal over twenty-four titles under the 1990 Film Exhibition
Agreement, as it had chosen only ten titles from the first list. It insists
ABS-CBN further contends that there was no clear basis for the
awards of moral and exemplary damages. The controversy involving
ABS-CBN and RBS did not in any way originate from business
transaction between them. The claims for such damages did not arise
from any contractual dealings or from specific acts committed by
ABS-CBN against RBS that may be characterized as wanton,
fraudulent, or reckless; they arose by virtue only of the filing of the
complaint, An award of moral and exemplary damages is not
warranted where the record is bereft of any proof that a party acted
On the other hand, RBS asserts that there was no perfected contract
between ABS-CBN and VIVA absent any meeting of minds between
them regarding the object and consideration of the alleged contract.
It affirms that the ABS-CBN's claim of a right of first refusal was
correctly rejected by the trial court. RBS insist the premium it had
paid for the counterbond constituted a pecuniary loss upon which it
may recover. It was obliged to put up the counterbound due to the
injunction procured by ABS-CBN. Since the trial court found that ABSCBN had no cause of action or valid claim against RBS and, therefore
not entitled to the writ of injunction, RBS could recover from ABS-CBN
the premium paid on the counterbond. Contrary to the claim of ABSCBN, the cash bond would prove to be more expensive, as the loss
would be equivalent to the cost of money RBS would forego in case
the P30 million came from its funds or was borrowed from banks.
I.
The first issue should be resolved against ABS-CBN. A contract is a
meeting of minds between two persons whereby one binds himself to
give something or to render some service to another 37 for a
consideration. there is no contract unless the following requisites
concur: (1) consent of the contracting parties; (2) object certain
which is the subject of the contract; and (3) cause of the obligation,
which is established. 38 A contract undergoes three stages:
(a) preparation, conception, or generation, which is the
period of negotiation and bargaining, ending at the
moment of agreement of the parties;
(b) perfection or birth of the contract, which is the
moment when the parties come to agree on the terms
of the contract; and
(c) consummation or death, which is the fulfillment or
performance of the terms agreed upon in the
contract. 39
Contracts that are consensual in nature are perfected upon mere
meeting of the minds, Once there is concurrence between the offer
and the acceptance upon the subject matter, consideration, and
terms of payment a contract is produced. The offer must be certain.
To convert the offer into a contract, the acceptance must be absolute
and must not qualify the terms of the offer; it must be plain,
unequivocal, unconditional, and without variance of any sort from the
proposal. A qualified acceptance, or one that involves a new
proposal, constitutes a counter-offer and is a rejection of the original
offer. Consequently, when something is desired which is not exactly
what is proposed in the offer, such acceptance is not sufficient to
generate consent because any modification or variation from the
terms of the offer annuls the offer. 40
When Mr. Del Rosario of VIVA met with Mr. Lopez of ABS-CBN at the
Tamarind Grill on 2 April 1992 to discuss the package of films, said
package of 104 VIVA films was VIVA's offer to ABS-CBN to enter into a
new Film Exhibition Agreement. But ABS-CBN, sent, through Ms.
A. Yes, sir.
obligor acted with good faith or otherwise, It case of good faith, the
damages recoverable are those which are the natural and probable
consequences of the breach of the obligation and which the parties
have foreseen or could have reasonably foreseen at the time of the
constitution of the obligation. If the obligor acted with fraud, bad
faith, malice, or wanton attitude, he shall be responsible for all
damages which may be reasonably attributed to the nonperformance of the obligation. 53 In crimes and quasi-delicts, the
defendant shall be liable for all damages which are the natural and
probable consequences of the act or omission complained of,
whether or not such damages has been foreseen or could have
reasonably been foreseen by the defendant. 54
Actual damages may likewise be recovered for loss or impairment of
earning capacity in cases of temporary or permanent personal injury,
or for injury to the plaintiff's business standing or commercial
credit. 55
The claim of RBS for actual damages did not arise from contract,
quasi-contract, delict, or quasi-delict. It arose from the fact of filing of
the complaint despite ABS-CBN's alleged knowledge of lack of cause
of action. Thus paragraph 12 of RBS's Answer with Counterclaim and
Cross-claim under the heading COUNTERCLAIM specifically alleges:
12. ABS-CBN filed the complaint knowing fully well that
it has no cause of action RBS. As a result thereof, RBS
suffered actual damages in the amount of
P6,621,195.32. 56
Needless to state the award of actual damages cannot be
comprehended under the above law on actual damages. RBS could
only probably take refuge under Articles 19, 20, and 21 of the Civil
Code, which read as follows:
Art. 19. Every person must, in the exercise of his rights
and in the performance of his duties, act with justice,
give everyone his due, and observe honesty and good
faith.
The elements of abuse of right under Article 19 are the following: (1)
the existence of a legal right or duty, (2) which is exercised in bad
faith, and (3) for the sole intent of prejudicing or injuring another.
Article 20 speaks of the general sanction for all other provisions of
law which do not especially provide for their own sanction; while
Article 21 deals with acts contra bonus mores, and has the following
elements; (1) there is an act which is legal, (2) but which is contrary
to morals, good custom, public order, or public policy, and (3) and it
is done with intent to injure. 72
Verily then, malice or bad faith is at the core of Articles 19, 20, and
21. Malice or bad faith implies a conscious and intentional design to
do a wrongful act for a dishonest purpose or moral obliquity. 73 Such
must be substantiated by evidence. 74
There is no adequate proof that ABS-CBN was inspired by malice or
bad faith. It was honestly convinced of the merits of its cause after it
had undergone serious negotiations culminating in its formal
submission of a draft contract. Settled is the rule that the adverse
result of an action does not per se make the action wrongful and
subject the actor to damages, for the law could not have meant to
impose a penalty on the right to litigate. If damages result from a
person's exercise of a right, it is damnum absque injuria. 75
WHEREFORE, the instant petition is GRANTED. The challenged
decision of the Court of Appeals in CA-G.R. CV No, 44125 is hereby
No pronouncement as to costs.
SO ORDERED.
SECOND DIVISION
April 20, 2001
purchase price to enable him and his wife to settle their obligation
with the Ramoses.1wphi1.nt
On 11 August 1978 the option period expired and the exclusive right
of petitioner to buy the property of respondent spouses ceased. The
subsequent meetings and negotiations, specifically on 11 and 23
August 1978, between the parties only showed the desire of
respondent spouses to sell their property to petitioner. Also, on 14
September 1978 when respondent spouses sent a telegram to
petitioner demanding full payment of the purchase price on even
date simply demonstrated an inclination to give her preference to
buy subject property. Collectively, these instances did not indicate
that petitioner still had the exclusive right to purchase subject
property. Verily, the commencement of negotiations between
respondent spouses and respondent SUNVAR clearly manifested that
their offer to sell subject property to petitioner was no longer
exclusive to her.
We cannot subscribe to the argument of petitioner that respondent
spouses extended the option period when they extended the
authority of their until 31 August 1978. The extension of the contract
of agency could not operate to extend the option period between the
parties in the instant case. The extension must not be implied but
categorical and must show the clear intention of the
parties.1wphi1.nt
As to whether respondent spouses were at fault for the nonconsummation of their contract with petitioner, we agree with the
appellate court that they were not to be blammed. First, within the
option period, or on 4 August 1978, it was respondent spouses and
not petitioner who initiated the meeting at the Office of The Register
of Deeds of Makati. Second, that the Ramoses filed to appear on 4
August
1978
was
beyond
the
control
of
respondent
spouses. Third, the succeeding meetings that transpired to
consummate the contract were all beyond the option period and, as
declared by the Court of Appeals, the question of who was at fault
was already immaterial. Fourth, even assuming that the meetings
were within the option period, the presence of petitioner was not
enough as she was not even prepared to pay the purchase price in
cash as agreed upon. Finally, even without the presence of the
Ramoses, petitioner could have easily made the necessary payment
in cash as the price of the property was already set at P34.00 per
square meter and payment of the mortgage could every well be left
to respondent spouses.
Petitioner further claims that when respondent spouses sent her a
telegram demanding full payment of the purchase price on 14
September 1978 it was an acknowledgment of their contract to sell,
thus denying them the right to claim otherwise.
We do not agree. As explained above, there was no contract to sell
between petitioner and respondent spouses to speak of. Verily, the
telegram could not operate to estop them from claiming that there
was such contract between them and petitioner. Neither could it
mean that respondent spouses extended the option period. The
telegram only showed that respondent spouses were willing to give
petitioner a chance to buy subject property even if it no longer
exclusive.
The option period having expired and acceptance was not effectively
made by petitioner, the purchase of subject property by respondent
SUNVAR was perfectly valid and entered into in good faith. Petitioner
claims that in August 1978 Hermigildo Sanchez, the son of
respondent spouses agent, Marcosa Snachez, informed Marixi Prieto,
a member of the Board of Directors of respondent SUNVAR, that the
property was already sold to petitioner. Also, petitioner maintains
that on 5 September 1978 respondent Cuenca met with her and
offered to buy the property from her at P45.00 per square meter.
Petitioner contends that these incidents, including the annotation of
her Adverse Claim on the title of subject property on 15 September
1978 show that respondent SUNVAR was aware of the perfected sale
between her and respondent spouses, thus making respondent
SUNVAR a buyer in bad faith.
Petitioner is not correct. The dates mentioned, at least 5 and 15
September 1978, are immaterial as they were beyond the option
period given to petitioner. On the other hand, the referral
to sometime in August 1978 in the testimony of Hermigildo Sanchez
as emphasized by petitioner in her petition is very vague. It could be
within or beyond the option period. Clearly then, even assuming that
the meeting with Marixi Prieto actually transpired, it could not
necessarily mean that she knew of the agreement between petitioner
December 6, 2006
DECISION
AUSTRIA-MARTINEZ, J.:
The Petition for Review on Certiorari under Rule 45 before this Court
assails the January 29, 2002 Decision1 and June 27, 2002
Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No.
520083 which reversed and set aside the September 14, 1995
Decision4 of the Regional Trial Court, Branch 22, General Santos City
(RTC) in Civil Case No. 4553.
As culled from the records, the facts are as follows:
The Special Assets Management Department (SAMD) of the
Philippine National Bank (PNB) issued an advertisement for the sale
thru bidding of certain PNB properties in Calumpang, General Santos
City, including Lot No. 17, covered by TCT No. T-15042, consisting of
22,780
square
meters,
with
an
advertised
floor
price
ofP1,409,000.00, and Lot No. 19, covered by TCT No. T-15036,
consisting of 41,190 square meters, with an advertised floor price
of P2,268,000.00.5 Bidding was subject to the following conditions: 1)
that cash bids be submitted not later than April 27, 1989; 2) that said
bids be accompanied by a 10% deposit in managers or cashiers
check; and 3) that all acceptable bids be subject to approval by PNB
authorities.
In a June 28, 1990 letter6 to the Manager, PNB-General Santos
Branch, Reynaldo Villanueva (Villanueva) offered to purchase Lot Nos.
17 and 19 for P3,677,000.00. He also manifested that he was
depositing P400,000.00 to show his good faith but with the
understanding that said amount may be treated as part of the
payment of the purchase price only when his offer is accepted by
him
over
said
property
and
returning
his
deposit
of P580,000.00.15 Undaunted, Villanueva attempted to deliver
postdated checks covering the balance of the purchase price but PNB
refused the same.
Hence, Villanueva filed with the RTC a Complaint 16 for specific
performance and damages against PNB. In its September 14, 1995
Decision, the RTC granted the Complaint, thus:
WHEREFORE, judgment is rendered in favor of the plaintiff and
against the defendant directing it to do the following:
1. To execute a deed of sale in favor of the plaintiff over Lot 19
comprising 41,190 square meters situated at Calumpang, General
Santos City covered by TCT No. T-15036 after payment of the balance
in cash in the amount of P2,303,300.00;
2. To pay the plaintiff P1,000,000.00 as moral damages; P500,000.00
as attorneys fees, plus litigation expenses and costs of the suit.
SO ORDERED.17
The RTC anchored its judgment on the finding that there existed a
perfected contract of sale between PNB and Villanueva. It found:
The following facts are either admitted or undisputed:
The defendant through Vice-President Guevara negotiated with the
plaintiff in connection with the offer of the plaintiff to buy Lots 17 &
19. The offer of plaintiff to buy, however, was accepted by the
defendant only insofar as Lot 19 is concerned as exemplified by its
letter dated July 6, 1990 where the plaintiff signified his concurrence
after conferring with the defendants vice-president. The conformity
of the plaintiff was typewritten by the defendants own people where
the plaintiff accepted the price of P2,883,300.00. The defendant also
issued a receipt to the plaintiff on the same day when the plaintiff
paid the amount ofP200,000.00 to complete the downpayment
of P600,000.00 (Exhibit "F" & Exhibit "I"). With this development, the
plaintiff was also given the go signal by the defendant to improve Lot
19 because it was already in effect sold to him and because of that
the defendant fenced the lot and completed his two houses on the
property.18
The
RTC
also
pointed
out
that
Villanuevas P580,000.00
downpayment was actually in the nature of earnest money
acceptance of which by PNB signified that there was already a
sale.19 The RTC further cited contemporaneous acts of PNB
purportedly indicating that, as early as July 25, 1990, it considered
Lot 19 already sold, as shown by Guevaras July 25, 1990 letter (Exh.
"H")20 to another interested buyer.
PNB appealed to the CA which reversed and set aside the September
14, 1995 RTC Decision, thus:
WHEREFORE, the appealed decision is REVERSED and SET ASIDE and
another rendered DISMISSING the complaint.
SO ORDERED.21
According to the CA, there was no perfected contract of sale because
the July 6, 1990 letter of Guevara constituted a qualified acceptance
of the June 28, 1990 offer of Villanueva, and to which Villanueva
replied on July 11, 1990 with a modified offer. The CA held:
In the case at bench, consent, in respect to the price and manner of
its payment, is lacking. The record shows that appellant, thru
Guevaras July 6, 1990 letter, made a qualified acceptance of
appellees letter-offer dated June 28, 1990 by imposing an asking
price of P2,883,300.00 in cash for Lot 19. The letter dated July 6,
1990 constituted a counter-offer (Art. 1319, Civil Code), to which
appellee made a new proposal,i.e., to pay the amount
of P2,883,300.00 in staggered amounts, that is, P600,000.00 as
downpayment and the balance within two years in quarterly
amortizations.
A qualified acceptance, or one that involves a new proposal,
constitutes a counter-offer and a rejection of the original offer (Art.
1319, id.). Consequently, when something is desired which is not
exactly what is proposed in the offer, such acceptance is not
sufficient to generate consent because any modification or variation
from the terms of the offer annuls the offer (Tolentino, Commentaries
and Jurisprudence on the Civil Code of the Philippines, 6 th ed., 1996,
p. 450, cited in ABS-CBN Broadcasting Corporation v. Court of
Appeals, et al., 301 SCRA 572).
On June 28, 1990, petitioner made an offer to buy Lot No. 17 and Lot
No. 19 for an aggregate price ofP3,677,000.00. It is noted that this
offer exactly corresponded to the April 1989 invitation to bid issued
by respondent in that the proposed aggregate purchase price for Lot
Nos. 17 and 19 matched the advertised floor prices for the same
properties. However, it cannot be said that the June 28, 1990 letter of
petitioner was an effective acceptance of the April 1989 invitation to
bid for, by its express terms, said invitation lapsed on April 27,
1989.28 More than that, the April 1989 invitation was subject to the
condition that all sealed bids submitted and accepted be approved
by respondents higher authorities.
Petitioner Villanueva now assails before this Court the January 29,
2002 Decision and June 27, 2002 Resolution of the CA. He assigns
five issues which may be condensed into two: first, whether a
perfected contract of sale exists between petitioner and respondent
PNB; and second, whether the conduct and actuation of respondent
constitutes bad faith as to entitle petitioner to moral and exemplary
damages and attorneys fees.
The Court sustains the CA on both issues.
Contracts of sale are perfected by mutual consent whereby the seller
obligates himself, for a price certain, to deliver and transfer
ownership of a specified thing or right to the buyer over which the
latter agrees.24 Mutual consent being a state of mind, its existence
may only be inferred from the confluence of two acts of the parties:
an offer certain as to the object of the contract and its consideration,
and an acceptance of the offer which is absolute in that it refers to
the exact object and consideration embodied in said offer. 25 While it
is impossible to expect the acceptance to echo every nuance of the
offer, it is imperative that it assents to those points in the offer
which, under the operative facts of each contract, are not only
material but motivating as well. Anything short of that level of
mutuality produces not a contract but a mere counter-offer awaiting
acceptance.26 More particularly on the matter of the consideration of
the contract, the offer and its acceptance must be unanimous both
on the rate of the payment and on its term. An acceptance of an offer
which agrees to the rate but varies the term is ineffective. 27
To determine whether there was mutual consent between the parties
herein, it is necessary to retrace each offer and acceptance they
made.
Thus, the June 28, 1990 letter of petitioner was an offer to buy
independent of the April 1989 invitation to bid. It was a definite offer
as it identified with certainty the properties sought to be purchased
and fixed the contract price.
However, respondent replied to the June 28, 1990 offer with a July 6,
1990 letter that only Lot No. 19 is available and that the price
therefor is now P2,883,300.00. As the CA pointed out, this reply was
certainly not an acceptance of the June 28, 1990 offer but a mere
counter-offer. It deviated from the original offer on three material
points: first, the object of the proposed sale is now only Lot No. 19
rather than Lot Nos. 17 and 19; second, the area of the property to
be sold is still 41,190 sq. m but an 8,797-sq. m portion is now part of
a public road; and third, the consideration is P2,883,300 for one lot
rather than P3,677,000.00 for two lots. More important, this July 6,
1990 counter-offer imposed two conditions: one, that petitioner
submit a revised offer to purchase based on the quoted price; and
two, that the sale of the property be approved by the Board of
Directors and subjected to other terms and conditions imposed by
the Bank on the sale of acquired assets.
In reply to the July 6, 1990 counter-offer, petitioner signed his July 11,
1990 conformity to the quoted price ofP2,883,300.00 but inserted the
term "downpayment of P600,000.00 and the balance payable in two
years at quarterly amortization." The CA viewed this July 11, 1990
conformity not as an acceptance of the July 6, 1990 counter-offer but
a
further
counter-offer
for,
while
petitioner
accepted
the P2,883,300.00 price for Lot No. 19, he qualified his acceptance by
proposing a two-year payment term.
Petitioner does not directly impugn such reasoning of the CA. He
merely questions it for taking up the issue of whether his July 11,
1990 conformity modified the July 6, 1990 counter-offer as this was
allegedly never raised during the trial nor on appeal.29
Such argument is not well taken. From beginning to end, respondent
denied that a contract of sale with petitioner was ever perfected. 30 Its
defense was broad enough to encompass every issue relating to the
concurrence of the elements of contract, specifically on whether it
consented to the object of the sale and its consideration. There was
nothing to prevent the CA from inquiring into the offers and counteroffers of the parties to determine whether there was indeed a
perfected contract between them.
Moreover, there is merit in the ruling of the CA that the July 11, 1990
marginal note was a further counter-offer which did not lead to the
perfection of a contract of sale between the parties. Petitioners own
June 28, 1990 offer quoted the price of P3,677,000.00 for two lots but
was silent on the term of payment. Respondents July 6, 1990
counter-offer quoted the price of P2,833,300.00 and was also silent
on the term of payment. Up to that point, the term or schedule of
payment was not on the negotiation table. Thus, when petitioner
suddenly introduced a term of payment in his July 11, 1990 counteroffer, he interjected into the negotiations a new substantial matter on
which the parties had no prior discussion and over which they must
yet agree.31 Petitioners July 11, 1990 counter-offer, therefore, did not
usher the parties beyond the negotiation stage of contract making
towards its perfection. He made a counter-offer that required
acceptance by respondent.
As it were, respondent, through its Board of Directors, did not accept
this last counter-offer. As stated in its October 11, 1990 letter to
with the payments he had advanced, his July 11, 1990 counter-offer
was still subject to consideration by respondent.
Not only that, in the same Exh. "2-a" as well as in his June 28, 1990
offer, petitioner referred to his payments as mere "deposits." Even
O.R. No. 16997 refers to petitioners payment as mere deposit. It is
only in the debit notice issued by PNB-General Santos Branch where
petitioners payment is referred to as "downpayment". But then, as
we said, PNB-General Santos Branch has no authority to bind
respondent by its interpretation of the nature of the payment made
by petitioner.
DECISION
CORAZON
CATALAN,
LIBRADA
CATALAN-LIM,
EULOGIO
CATALAN, MILA CATALAN-MILAN, ZENAIDA CATALAN, ALEX
CATALAN, DAISY CATALAN, FLORIDA CATALAN and GEMMA
CATALAN, Heirs of the late FELICIANO CATALAN, Petitioners,
vs.
JOSE BASA, MANUEL BASA, LAURETA BASA, DELIA BASA,
Heirs
of
the
late
PUNO, C.J.:
This is a petition for review on certiorari under Rule 45 of the Revised
Rules of Court of the Court of Appeals decision in CA-G.R. CV No.
66073, which affirmed the judgment of the Regional Trial Court,
Branch 69, Lingayen, Pangasinan, in Civil Case No. 17666, dismissing
the Complaint for Declaration of Nullity of Documents, Recovery of
Possession and Ownership, and damages.
The facts, which are undisputed by the parties, follow:
On October 20, 1948, FELICIANO CATALAN (Feliciano) was discharged
from active military service. The Board of Medical Officers of the
Department of Veteran Affairs found that he was unfit to render
military service due to his "schizophrenic reaction, catatonic type,
which incapacitates him because of flattening of mood and affect,
preoccupation with worries, withdrawal, and sparce (sic) and
pointless speech."1
On September 28, 1949, Feliciano married Corazon Cerezo. 2
On June 16, 1951, a document was executed, titled "Absolute Deed of
Donation,"3 wherein Feliciano allegedly donated to his sister
MERCEDES CATALAN(Mercedes) one-half of the real property
described, viz:
A parcel of land located at Barangay Basing, Binmaley, Pangasinan.
Bounded on the North by heirs of Felipe Basa; on the South by Barrio
Road; On the East by heirs of Segundo Catalan; and on the West by
Roman Basa. Containing an area of Eight Hundred One (801) square
meters, more or less.
The donation was registered with the Register of Deeds. The Bureau
of Internal Revenue then cancelled Tax Declaration No. 2876, and, in
lieu thereof, issued Tax Declaration No. 18080 4 to Mercedes for the
initio, the subsequent Deed of Absolute Sale to Delia and Jesus Basa
should likewise be nullified, for Mercedes Catalan had no right to sell
the property to anyone. BPI raised doubts about the authenticity of
the deed of sale, saying that its registration long after the death of
Mercedes Catalan indicated fraud. Thus, BPI sought remuneration for
incurred damages and litigation expenses.
On August 14, 1997, Feliciano passed away. The original complaint
was amended to substitute his heirs in lieu of BPI as complainants in
Civil Case No. 17666.
On December 7, 1999, the trial court found that the evidence
presented by the complainants was insufficient to overcome the
presumption that Feliciano was sane and competent at the time he
executed the deed of donation in favor of Mercedes Catalan. Thus,
the court declared, the presumption of sanity or competency not
having been duly impugned, the presumption of due execution of the
donation in question must be upheld.14 It rendered judgment, viz:
WHEREFORE, in view of the foregoing considerations, judgment is
hereby rendered:
1. Dismissing plaintiffs complaint;
2. Declaring the defendants Jesus Basa and Delia Basa the
lawful owners of the land in question which is now declared in
their names under Tax Declaration No. 12911 (Exhibit 4);
3. Ordering the plaintiff to pay the defendants Attorneys fees
of P10,000.00, and to pay the Costs.(sic)
SO ORDERED.15
Petitioners challenged the trial courts decision before the Court of
Appeals via a Notice of Appeal pursuant to Rule 41 of the Revised
Rules of Court.16 The appellate court affirmed the decision of the trial
court and held, viz:
In sum, the Regional Trial Court did not commit a reversible error in
disposing that plaintiff-appellants failed to prove the insanity or
28, 1948 does not prove that he was not insane at the time he made
the questioned donation. They further argue that the donations
Feliciano executed in favor of his successors (Decision, CA-G.R. CV
No. 66073) also cannot prove his competency because these
donations were approved and confirmed in the guardianship
proceedings.19 In addition, petitioners claim that the Deed of Absolute
Sale executed on March 26, 1979 by Mercedes Catalan and her
children Jesus and Delia Basa is simulated and fictitious. This is
allegedly borne out by the fact that the document was registered
only on February 20, 1992, more that 10 years after Mercedes
Catalan had already died. Since Delia Basa and Jesus Basa both knew
that Feliciano was incompetent to enter into any contract, they
cannot claim to be innocent purchasers of the property in
question.20 Lastly, petitioners assert that their case is not barred by
prescription or laches under Article 1391 of the New Civil Code
because they had filed their case on April 1, 1997, even before the
four year period after Felicianos death on August 14, 1997 had
begun.21
The petition is bereft of merit, and we affirm the findings of the Court
of Appeals and the trial court.
A donation is an act of liberality whereby a person disposes
gratuitously a thing or right in favor of another, who accepts it. 22 Like
any other contract, an agreement of the parties is essential. Consent
in contracts presupposes the following requisites: (1) it should be
intelligent or with an exact notion of the matter to which it refers; (2)
it should be free; and (3) it should be spontaneous. 23 The parties'
intention must be clear and the attendance of a vice of consent, like
any contract, renders the donation voidable.24
In order for donation of property to be valid, what is crucial is the
donors capacity to give consent at the time of the donation.
Certainly, there lies no doubt in the fact that insanity impinges on
consent freely given.25 However, the burden of proving such
incapacity rests upon the person who alleges it; if no sufficient proof
to this effect is presented, capacity will be presumed. 26
A thorough perusal of the records of the case at bar indubitably
shows that the evidence presented by the petitioners was insufficient
courts correctly held that Feliciano was of sound mind at that time
and that this condition continued to exist until proof to the contrary
was adduced.30 Sufficient proof of his infirmity to give consent to
contracts was only established when the Court of First Instance of
Pangasinan declared him an incompetent on December 22, 1953. 31
SECOND DIVISION
PUNO, J.:
This is a petition for review of the Decision of the Court of Appeals in
CA-G.R. No. 51340-R entitled "Mariano T. Lim, et al., vs. Lorenzo O.
Tan, et al., dated July 28, 1908. 1
The case involves the partition of the properties of the deceased
spouse Tan Quico and Josefa Oraa. The former died on May 11, 1932
and the latter on August 6, 1932. Both died intestate. They left some
ninety six (96) hectares of land located in the municipality of
Guinobatan and Camalig Albay. 2
The late spouses were survived by four (4) children: Cresencia,
Lorenzo, Hermogenes and Elias. Elias died on May 2, 1935 without
issue. Cresencia died on December 20, 1967. 3 She was survived by
her husband, Lim Chay Sing, 4 and children, Mariano, Jaime, Jose
Jovita, Anacoreta, Antonietta, Ruben, Benjamin and Rogelio. They are
the petitioners in the case at bench.
The sad spectacle of the heirs squalling over the properties of their
deceased parents was again replayed in the case at bench. The
protagonists were the widower and children of Cresencia on one side,
and Lorenzo and Hermogenes on the other side.
The late Cresencia and Lorenzo had contrasting educational
background. Cresencia only reached the second grade of elementary
school. She could not read or write in English. On the other hand,
Lorenzo is a lawyer and a CPA.
Petitioners, heirs of Cresencia, alleged that since the demise of the
spouses Tan Quico and Josefa Oraa, the subject properties had been
administered by respondent Lorenzo. They claimed that before her
death, Cresencia had demanded their partition from Lorenzo. 5 After
Cresencia's death, they likewise clamored for their partition. 6 Their
efforts proved fruitless. They failed Civil Case No. 3676.
Respondent Lorenzo and Hermogenes adamant stance against
partition is based on various contentions. Principally, they urge: (1)
that the properties had already been partitioned, albeit, orally; and
(2) during her lifetime, the late Cresencia had sold and conveyed all
her interests in said properties to respondent Lorenzo. They cited as
evidence the "Deed of Confirmation of Extra Judicial Settlement of
the Estate of Tan Quico and Josefa Oraa" 7 and a receipt of payment. 8
The trial court decided in favor of the petitioners. It rejected the
alleged oral petition in light of the contrary testimony of respondent
Hermogenes. It voided the "Deed of Confirmation of Extra Judicial
Settlement of the Estate of Tan Quico and Josefa Oraa and Sale" 9 on
the ground that it was not understood by the late Cresencia when
she signed it.
On appeal, the respondent Court of Appeals, voting 4-1, reversed. It
held there was evidence to establish that the subject properties had
been previously partitioned. It ruled that respondent Lorenzo was not
shown to have exercised any undue influence over the late
Crescencia when she signed the said Deed of Confirmation, etc.
Dissatisfied, petitioners filed this petition for review by certiorari.
They submit:
I. THE FINDING OR CONCLUSION DRAWN BY THE
HONORABLE COURT OF APPEALS THAT
THE EVIDENCE ON RECORD ALSO
SHOWS THAT THE TERMS OF EXH. "E"
(ALSO EXH. "1" IN ENGLISH) WERE READ
TO CRESENCIANA O. TAN IN THE BICOL
DIALECT,
EXPLAINED
TO
AND
UNDERSTOOD BY HER, BEFORE SHE
SIGNED THE SAME.
BASED ON THE FACTS STATED IN THE JUDGMENT
QUOTING "THE PERTINENT TESTIMONIES ON THIS
POINT" OR BOTH DEFENDANTS IS MANIFESTLY
INCORRECT, AS THE SAME FALL FAR SHORT OF THE
MANDATORY REQUIREMENT OF ART. 1332, CIVIL CODE,
THAT THE TERMS THEREOF SHOULD BE FULLY
EXPLAINED TO THE ILLITERATE CRESENCIA O. TAN
WHO DID NOT KNOW HOW TO READ AND WRITE IN
ENGLISH.
II. THE CONCLUSION DRAWN BY THE HONORABLE
COURT OF APPEALS THAT THERE WAS NO UNDUE
INFLUENCE EXERTED ON CRESENCIA O. TAN BY HER
(LAWYER-CPA) BROTHER LORENZO O. TAN BASED ON
FACTS STATED IN THE QUESTIONED JUDGMENT IS
CLEARLY INCORRECT, AS IT IS CONTRARY TO THE
PROVISION OF ART. 1337, CIVIL CODE.
11
The general rule is that factual findings of lower courts are accorded
great respect by this court on review of their decisions. In the petition
at bench, we are constrained to re-examine these findings
considering the contrarieties in the findings made by the appellate
court and the trial court. Indeed, even the Decision of the appellate
court is not a unanimous but a mere majority decision.
The first issue is whether or not the subject properties had already
been partitioned among the heirs of tan Quico and Josefa Oraa. The
private respondents alleged that the properties had been orally
partitioned in 1930. 10Their evidence on this score, however, leaves
much to be desired. It is only respondent Lorenzo who stubbornly
insisted that the said properties had already been divided. However,
brother Hermogenes, the other respondent, gave a different
testimony. We quote his testimony:
A I and my brother.
COURT:
A I prepared it.
Strike it out.
the
A Yes, sir.
It is contended, by these exhibits, that Cresenciana O.
Tan wanted to buy Lot 202-5-41-T at No. 53 Bignay,
Project 2, Quezon City, with the proceeds of the sale to
defendant Lorenzo O. Tan of a portion of Lot 7671
located in Singtan, Guinobatan, Albay, which is alleged
to be the share of said Cresenciana O. Tan.
April 4, 2011
(B)
in considering it unfair to expect respondents who are not
lawyers to make judicial consignation after herein petitioner
allegedly refused to accept payment of the balance of the
purchase price.
(C)
in upholding the validity of the contract, "Kasunduan sa
Bilihan ng Karapatan sa Lupa," despite the lack of spousal
consent, (underscoring supplied)
the time the contract is entered into, the object of the sale is capable
of being made determinate without the necessity of a new or further
agreement between the parties.9 As the above-quoted portion of the
kasunduan shows, there is no doubt that the object of the sale is
determinate.
Clutching at straws, petitioner proffers lack of spousal consent. This
was raised only on appeal, hence, will not be considered, in the
present case, in the interest of fair play, justice and due process. 10
Respecting the argument that
respondents
complaint
against
Barcena11 enlightens:
SO ORDERED.
EN BANC
The Facts
On November 20, 1973, the government, through the Commissioner
of Public Highways, signed a contract with the Construction and
Development Corporation of the Philippines ("CDCP" for brevity) to
reclaim certain foreshore and offshore areas of Manila Bay. The
contract also included the construction of Phases I and II of the
Manila-Cavite Coastal Road. CDCP obligated itself to carry out all the
works in consideration of fifty percent of the total reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued
Presidential Decree No. 1084 creating PEA. PD No. 1084 tasked PEA
"to reclaim land, including foreshore and submerged areas," and "to
develop, improve, acquire, x x x lease and sell any and all kinds of
lands."1 On the same date, then President Marcos issued Presidential
Decree No. 1085 transferring to PEA the "lands reclaimed in the
foreshore and offshore of the Manila Bay"2 under the Manila-Cavite
Coastal Road and Reclamation Project (MCCRRP).
July 9, 2002
On April 25, 1995, PEA entered into a Joint Venture Agreement ("JVA"
for brevity) with AMARI, a private corporation, to develop the
Freedom Islands. The JVA also required the reclamation of an
additional 250 hectares of submerged areas surrounding these
islands to complete the configuration in the Master Development
Plan of the Southern Reclamation Project-MCCRRP. PEA and AMARI
entered into the JVA through negotiation without public bidding. 4 On
April 28, 1995, the Board of Directors of PEA, in its Resolution No.
1245, confirmed the JVA.5On June 8, 1995, then President Fidel V.
Ramos, through then Executive Secretary Ruben Torres, approved the
JVA.6
On November 29, 1996, then Senate President Ernesto Maceda
delivered a privilege speech in the Senate and denounced the JVA as
the "grandmother of all scams." As a result, the Senate Committee
on Government Corporations and Public Enterprises, and the
Committee on Accountability of Public Officers and Investigations,
conducted a joint investigation. The Senate Committees reported the
results of their investigation in Senate Committee Report No. 560
dated September 16, 1997.7 Among the conclusions of their report
are: (1) the reclaimed lands PEA seeks to transfer to AMARI under the
JVA are lands of the public domain which the government has not
classified as alienable lands and therefore PEA cannot alienate these
lands; (2) the certificates of title covering the Freedom Islands are
thus void, and (3) the JVA itself is illegal.
On December 5, 1997, then President Fidel V. Ramos issued
Presidential Administrative Order No. 365 creating a Legal Task Force
to conduct a study on the legality of the JVA in view of Senate
Committee Report No. 560. The members of the Legal Task Force
were the Secretary of Justice, 8 the Chief Presidential Legal
Counsel,9 and the Government Corporate Counsel.10 The Legal Task
Force upheld the legality of the JVA, contrary to the conclusions
reached by the Senate Committees.11
On
April
4
and
5,
1998,
the Philippine
Daily
Inquirer and Today published reports that there were on-going
renegotiations between PEA and AMARI under an order issued by
then President Fidel V. Ramos. According to these reports, PEA
Director Nestor Kalaw, PEA Chairman Arsenio Yulo and retired Navy
Officer Sergio Cruz composed the negotiating panel of PEA.
After several motions for extension of time, 13 PEA and AMARI filed
their Comments on October 19, 1998 and June 25, 1998, respectively.
Meanwhile, on December 28, 1998, petitioner filed an Omnibus
Motion: (a) to require PEA to submit the terms of the renegotiated
PEA-AMARI contract; (b) for issuance of a temporary restraining
order; and (c) to set the case for hearing on oral argument. Petitioner
filed a Reiterative Motion for Issuance of a TRO dated May 26, 1999,
which the Court denied in a Resolution dated June 22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course to
the petition and required the parties to file their respective
memoranda.
On March 30, 1999, PEA and AMARI signed the Amended Joint
Venture Agreement ("Amended JVA," for brevity). On May 28, 1999,
that petitioner has not shown that he will suffer any concrete injury
because of the signing or implementation of the Amended JVA. Thus,
there is no actual controversy requiring the exercise of the power of
judicial review.
The petitioner has standing to bring this taxpayer's suit because the
petition seeks to compel PEA to comply with its constitutional duties.
There are two constitutional issues involved here. First is the right of
citizens to information on matters of public concern. Second is the
application of a constitutional provision intended to insure the
equitable distribution of alienable lands of the public domain among
Filipino citizens. The thrust of the first issue is to compel PEA to
disclose publicly information on the sale of government lands worth
billions of pesos, information which the Constitution and statutory
law mandate PEA to disclose. The thrust of the second issue is to
prevent PEA from alienating hundreds of hectares of alienable lands
of the public domain in violation of the Constitution, compelling PEA
to comply with a constitutional duty to the nation.
Moreover, the petition raises matters of transcendental importance
to the public. In Chavez v. PCGG,28 the Court upheld the right of a
citizen to bring a taxpayer's suit on matters of transcendental
importance to the public, thus "Besides, petitioner emphasizes, the matter of recovering the
ill-gotten wealth of the Marcoses is an issue of 'transcendental
importance to the public.' He asserts that ordinary taxpayers
have a right to initiate and prosecute actions questioning the
validity of acts or orders of government agencies or
instrumentalities, if the issues raised are of 'paramount public
interest,' and if they 'immediately affect the social, economic
and moral well being of the people.'
Moreover, the mere fact that he is a citizen satisfies the
requirement of personal interest, when the proceeding
involves the assertion of a public right, such as in this case.
He invokes several decisions of this Court which have set
aside the procedural matter of locus standi, when the subject
of the case involved public interest.
xxx
In Taada v. Tuvera, the Court asserted that when the issue
concerns a public right and the object of mandamus is to
obtain the enforcement of a public duty, the people are
regarded as the real parties in interest; and because it is
sufficient that petitioner is a citizen and as such is interested
in the execution of the laws, he need not show that he has
any legal or special interest in the result of the action. In the
aforesaid case, the petitioners sought to enforce their right to
be informed on matters of public concern, a right then
recognized in Section 6, Article IV of the 1973 Constitution, in
connection with the rule that laws in order to be valid and
enforceable must be published in the Official Gazette or
otherwise effectively promulgated. In ruling for the
petitioners' legal standing, the Court declared that the right
they sought to be enforced 'is a public right recognized by no
less than the fundamental law of the land.'
Legaspi v. Civil Service Commission, while reiterating Taada,
further declared that 'when a mandamus proceeding involves
the assertion of a public right, the requirement of personal
interest is satisfied by the mere fact that petitioner is a citizen
and, therefore, part of the general 'public' which possesses
the right.'
Further, in Albano v. Reyes, we said that while expenditure of
public funds may not have been involved under the
questioned contract for the development, management and
operation of the Manila International Container Terminal,
'public interest [was] definitely involved considering the
important role [of the subject contract] . . . in the economic
development of the country and the magnitude of the
financial consideration involved.' We concluded that, as a
consequence, the disclosure provision in the Constitution
would constitute sufficient authority for upholding the
petitioner's standing.
Similarly, the instant petition is anchored on the right of the
people to information and access to official records,
Also, AMARI contends that petitioner cannot invoke the right at the
pre-decisional stage or before the closing of the transaction. To
support its contention, AMARI cites the following discussion in the
1986 Constitutional Commission:
acquired and owned all lands and territories in the Philippines except
those he disposed of by grant or sale to private individuals.
The 1935, 1973 and 1987 Constitutions adopted the Regalian
doctrine substituting, however, the State, in lieu of the King, as the
owner of all lands and waters of the public domain. The Regalian
doctrine is the foundation of the time-honored principle of land
ownership that "all lands that were not acquired from the
Government, either by purchase or by grant, belong to the public
domain."43 Article 339 of the Civil Code of 1889, which is now Article
420 of the Civil Code of 1950, incorporated the Regalian doctrine.
Ownership and Disposition of Reclaimed Lands
The Spanish Law of Waters of 1866 was the first statutory law
governing the ownership and disposition of reclaimed lands in the
Philippines. On May 18, 1907, the Philippine Commission enacted Act
No. 1654 which provided for the lease, but not the sale, of
reclaimed lands of the government to corporations and
individuals. Later, on November 29, 1919, the Philippine Legislature
approved Act No. 2874, the Public Land Act, which authorized the
lease, but not the sale, of reclaimed lands of the government
to corporations and individuals. On November 7, 1936, the
National Assembly passed Commonwealth Act No. 141, also known
as the Public Land Act, which authorized the lease, but not the
sale, of reclaimed lands of the government to corporations
and individuals. CA No. 141 continues to this day as the general
law governing the classification and disposition of lands of the public
domain.
The Spanish Law of Waters of 1866 and the Civil Code of
1889
Under the Spanish Law of Waters of 1866, the shores, bays, coves,
inlets and all waters within the maritime zone of the Spanish territory
belonged to the public domain for public use. 44 The Spanish Law of
Waters of 1866 allowed the reclamation of the sea under Article 5,
which provided as follows:
Act No. 2874 did not prohibit private parties from reclaiming parts of
the sea pursuant to Section 5 of the Spanish Law of Waters of 1866.
Lands reclaimed from the sea by private parties with government
permission remained private lands.
Dispositions under the 1935 Constitution
On May 14, 1935, the 1935 Constitution took effect upon its
ratification by the Filipino people. The 1935 Constitution, in adopting
the Regalian doctrine, declared in Section 1, Article XIII, that
"Section 1. All agricultural, timber, and mineral lands of the
public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy and other natural
resources of the Philippines belong to the State, and their
disposition, exploitation, development, or utilization shall be
limited to citizens of the Philippines or to corporations or
associations at least sixty per centum of the capital of which
is owned by such citizens, subject to any existing right, grant,
lease, or concession at the time of the inauguration of the
Government established under this Constitution. Natural
resources, with the exception of public agricultural
land, shall not be alienated, and no license, concession, or
lease for the exploitation, development, or utilization of any of
Act
No.
141
of
the
Philippine
and may at any time and in like manner transfer such lands
from one class to another, 53 for the purpose of their
administration and disposition.
Sec. 7. For the purposes of the administration and disposition
of alienable or disposable public lands, the President, upon
recommendation by the Secretary of Agriculture and
Commerce, shall from time to time declare what lands
are open to disposition or concession under this Act.
National
been met before the land could be disposed of. But even
then, the foreshore and lands under water were not to
be alienated and sold to private parties. The
disposition of the reclaimed land was only by lease.
The land remained property of the State." (Emphasis
supplied)
As observed by Justice Puno in his concurring opinion,
"Commonwealth Act No. 141 has remained in effect at present."
The State policy prohibiting the sale to private parties of government
reclaimed, foreshore and marshy alienable lands of the public
domain, first implemented in 1907 was thus reaffirmed in CA No. 141
after the 1935 Constitution took effect. The prohibition on the sale of
foreshore lands, however, became a constitutional edict under the
1935 Constitution. Foreshore lands became inalienable as natural
resources of the State, unless reclaimed by the government and
classified as agricultural lands of the public domain, in which case
they would fall under the classification of government reclaimed
lands.
After the effectivity of the 1935 Constitution, government reclaimed
and marshy disposable lands of the public domain continued to be
only leased and not sold to private parties. 56 These lands
remained sui generis, as the only alienable or disposable lands of
the public domain the government could not sell to private parties.
Since then and until now, the only way the government can sell to
private parties government reclaimed and marshy disposable lands
of the public domain is for the legislature to pass a law authorizing
such sale. CA No. 141 does not authorize the President to reclassify
government reclaimed and marshy lands into other non-agricultural
lands under Section 59 (d). Lands classified under Section 59 (d) are
the only alienable or disposable lands for non-agricultural purposes
that the government could sell to private parties.
Moreover,
Section
60
of
CA
No.
141 expressly requires
congressional authority before lands under Section 59 that the
government previously transferred to government units or entities
could be sold to private parties. Section 60 of CA No. 141 declares
that
"Sec. 60. x x x The area so leased or sold shall be such as
shall, in the judgment of the Secretary of Agriculture and
Natural Resources, be reasonably necessary for the purposes
for which such sale or lease is requested, and shall not exceed
one hundred and forty-four hectares: Provided, however, That
this limitation shall not apply to grants, donations, or transfers
made to a province, municipality or branch or subdivision of
the Government for the purposes deemed by said entities
conducive to the public interest;but the land so granted,
donated, or transferred to a province, municipality or
branch or subdivision of the Government shall not be
alienated, encumbered, or otherwise disposed of in a
manner affecting its title, except when authorized by
Congress: x x x." (Emphasis supplied)
The congressional authority required in Section 60 of CA No. 141
mirrors the legislative authority required in Section 56 of Act No.
2874.
One reason for the congressional authority is that Section 60 of CA
No. 141 exempted government units and entities from the maximum
area of public lands that could be acquired from the State. These
government units and entities should not just turn around and sell
these lands to private parties in violation of constitutional or
statutory limitations. Otherwise, the transfer of lands for nonagricultural purposes to government units and entities could be used
to circumvent constitutional limitations on ownership of alienable or
disposable lands of the public domain. In the same manner, such
transfers could also be used to evade the statutory prohibition in CA
No. 141 on the sale of government reclaimed and marshy lands of
the public domain to private parties. Section 60 of CA No. 141
constitutes by operation of law a lien on these lands.57
(2) Those which belong to the State, without being for public
use, and are intended for some public service or for the
development of the national wealth.
x x x.
Art. 422. Property of public dominion, when no longer
intended for public use or for public service, shall form part of
the patrimonial property of the State."
Again, the government must formally declare that the property of
public dominion is no longer needed for public use or public service,
before the same could be classified as patrimonial property of the
State.59 In the case of government reclaimed and marshy lands of the
public domain, the declaration of their being disposable, as well as
the manner of their disposition, is governed by the applicable
provisions of CA No. 141.
Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not
repeal Section 5 of the Spanish Law of Waters of 1866. Private parties
could still reclaim portions of the sea with government permission.
However, thereclaimed land could become private land only if
classified as alienable agricultural land of the public
domain open to disposition under CA No. 141. The 1935 Constitution
prohibited the alienation of all natural resources except public
agricultural lands.
Like the Civil Code of 1889, the Civil Code of 1950 included as
property of public dominion those properties of the State which,
without being for public use, are intended for public service or the
"development of the national wealth." Thus, government
reclaimed and marshy lands of the State, even if not employed for
public use or public service, if developed to enhance the national
wealth, are classified as property of public dominion.
owned, managed,
government;
controlled
and/or
operated
by
the
Under the Amended JVA, AMARI will reimburse PEA the sum of
P1,894,129,200.00 for PEA's "actual cost" in partially reclaiming the
Freedom Islands. AMARI will also complete, at its own expense, the
reclamation of the Freedom Islands. AMARI will further shoulder all
the reclamation costs of all the other areas, totaling 592.15 hectares,
still to be reclaimed. AMARI and PEA will share, in the proportion of
70 percent and 30 percent, respectively, the total net usable area
which is defined in the Amended JVA as the total reclaimed area less
30 percent earmarked for common areas. Title to AMARI's share in
the net usable area, totaling 367.5 hectares, will be issued in the
name of AMARI. Section 5.2 (c) of the Amended JVA provides that
"x x x, PEA shall have the duty to execute without delay the
necessary deed of transfer or conveyance of the title
pertaining to AMARI's Land share based on the Land Allocation
Plan. PEA, when requested in writing by AMARI, shall
then cause the issuance and delivery of the proper
certificates of title covering AMARI's Land Share in the
name of AMARI, x x x; provided, that if more than seventy
percent (70%) of the titled area at any given time pertains to
AMARI, PEA shall deliver to AMARI only seventy percent (70%)
of the titles pertaining to AMARI, until such time when a
corresponding proportionate area of additional land pertaining
to PEA has been titled." (Emphasis supplied)
Indisputably, under the Amended JVA AMARI will acquire and
own a maximum of 367.5 hectares of reclaimed land which
will be titled in its name.
To implement the Amended JVA, PEA delegated to the unincorporated
PEA-AMARI joint venture PEA's statutory authority, rights and
privileges to reclaim foreshore and submerged areas in Manila Bay.
Section 3.2.a of the Amended JVA states that
"PEA hereby contributes to the joint venture its rights and
privileges to perform Rawland Reclamation and Horizontal
Development as well as own the Reclamation Area, thereby
granting the Joint Venture the full and exclusive right,
authority and privilege to undertake the Project in accordance
with the Master Development Plan."
The Amended JVA is the product of a renegotiation of the original JVA
dated April 25, 1995 and its supplemental agreement dated August
9, 1995.
The Threshold Issue
The threshold issue is whether AMARI, a private corporation, can
acquire and own under the Amended JVA 367.5 hectares of reclaimed
foreshore and submerged areas in Manila Bay in view of Sections 2
and 3, Article XII of the 1987 Constitution which state that:
"The fact that the Roppongi site has not been used for a long
time for actual Embassy service does not automatically
convert it to patrimonial property. Any such conversion
happens only if the property is withdrawn from public use
(Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481
[1975]. A property continues to be part of the public
domain, not available for private appropriation or
ownership 'until there is a formal declaration on the
part of the government to withdraw it from being
such'(Ignacio v. Director of Lands, 108 Phil. 335 [1960]."
(Emphasis supplied)
PD No. 1085, issued on February 4, 1977, authorized the issuance of
special land patents for lands reclaimed by PEA from the foreshore or
submerged areas of Manila Bay. On January 19, 1988 then President
Corazon C. Aquino issued Special Patent No. 3517 in the name of PEA
for the 157.84 hectares comprising the partially reclaimed Freedom
Islands. Subsequently, on April 9, 1999 the Register of Deeds of the
Municipality of Paranaque issued TCT Nos. 7309, 7311 and 7312 in
the name of PEA pursuant to Section 103 of PD No. 1529 authorizing
the issuance of certificates of title corresponding to land patents. To
this day, these certificates of title are still in the name of PEA.
PD No. 1085, coupled with President Aquino's actual issuance of a
special patent covering the Freedom Islands, is equivalent to an
official proclamation classifying the Freedom Islands as alienable or
disposable lands of the public domain. PD No. 1085 and President
Aquino's issuance of a land patent also constitute a declaration that
the Freedom Islands are no longer needed for public service. The
Freedom Islands are thus alienable or disposable lands of the
public domain, open to disposition or concession to qualified
parties.
At the time then President Aquino issued Special Patent No. 3517,
PEA had already reclaimed the Freedom Islands although
subsequently there were partial erosions on some areas. The
government had also completed the necessary surveys on these
islands. Thus, the Freedom Islands were no longer part of Manila Bay
but part of the land mass. Section 3, Article XII of the 1987
Constitution classifies lands of the public domain into "agricultural,
principle of land ownership that "all lands that were not acquired
from the government, either by purchase or by grant, belong to the
public domain."77
Article 5 of the Spanish Law of Waters must be read together with
laws subsequently enacted on the disposition of public lands. In
particular, CA No. 141 requires that lands of the public domain must
first be classified as alienable or disposable before the government
can alienate them. These lands must not be reserved for public or
quasi-public purposes.78 Moreover, the contract between CDCP and
the government was executed after the effectivity of the 1973
Constitution which barred private corporations from acquiring any
kind of alienable land of the public domain. This contract could not
have converted the Freedom Islands into private lands of a private
corporation.
Presidential Decree No. 3-A, issued on January 11, 1973, revoked all
laws authorizing the reclamation of areas under water and revested
solely in the National Government the power to reclaim lands.
Section 1 of PD No. 3-A declared that
"The provisions of any law to the contrary
notwithstanding, the reclamation of areas under water,
whether foreshore or inland, shall be limited to the
National Government or any person authorized by it
under a proper contract. (Emphasis supplied)
x x x."
PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866
because reclamation of areas under water could now be undertaken
only by the National Government or by a person contracted by the
National Government. Private parties may reclaim from the sea only
under a contract with the National Government, and no longer by
grant or permission as provided in Section 5 of the Spanish Law of
Waters of 1866.
Executive Order No. 525, issued on February 14, 1979, designated
PEA as the National Government's implementing arm to undertake
"all reclamation projects of the government," which "shall be
not. This means that PEA needs authorization from DENR before PEA
can undertake reclamation projects in Manila Bay, or in any part of
the country.
DENR also exercises exclusive jurisdiction over the disposition of all
lands of the public domain. Hence, DENR decides whether reclaimed
lands of PEA should be classified as alienable under Sections 6 81 and
782 of CA No. 141. Once DENR decides that the reclaimed lands
should be so classified, it then recommends to the President the
issuance of a proclamation classifying the lands as alienable or
disposable lands of the public domain open to disposition. We note
that then DENR Secretary Fulgencio S. Factoran, Jr. countersigned
Special Patent No. 3517 in compliance with the Revised
Administrative Code and Sections 6 and 7 of CA No. 141.
In short, DENR is vested with the power to authorize the reclamation
of areas under water, while PEA is vested with the power to
undertake the physical reclamation of areas under water, whether
directly or through private contractors. DENR is also empowered to
classify lands of the public domain into alienable or disposable lands
subject to the approval of the President. On the other hand, PEA is
tasked to develop, sell or lease the reclaimed alienable lands of the
public domain.
Clearly, the mere physical act of reclamation by PEA of foreshore or
submerged areas does not make the reclaimed lands alienable or
disposable lands of the public domain, much less patrimonial lands of
PEA. Likewise, the mere transfer by the National Government of lands
of the public domain to PEA does not make the lands alienable or
disposable lands of the public domain, much less patrimonial lands of
PEA.
Absent two official acts a classification that these lands are
alienable or disposable and open to disposition and a declaration that
these lands are not needed for public service, lands reclaimed by PEA
remain inalienable lands of the public domain. Only such an official
classification and formal declaration can convert reclaimed lands into
alienable or disposable lands of the public domain, open to
disposition under the Constitution, Title I and Title III 83of CA No. 141
and other applicable laws.84
"Section
302.
Financing,
Construction,
Maintenance,
Operation, and Management of Infrastructure Projects by the
Private Sector. x x x
xxx
In case of land reclamation or construction of industrial
estates, the repayment plan may consist of the grant of a
portion or percentage of the reclaimed land or the industrial
estate constructed."
Although Section 302 of the Local Government Code does not contain
a proviso similar to that of the BOT Law, the constitutional
restrictions on land ownership automatically apply even though not
expressly mentioned in the Local Government Code.
Thus, under either the BOT Law or the Local Government Code, the
contractor or developer, if a corporate entity, can only be paid with
leaseholds on portions of the reclaimed land. If the contractor or
developer is an individual, portions of the reclaimed land, not
exceeding 12 hectares96 of non-agricultural lands, may be conveyed
to him in ownership in view of the legislative authority allowing such
conveyance. This is the only way these provisions of the BOT Law
and the Local Government Code can avoid a direct collision with
Section 3, Article XII of the 1987 Constitution.
not dispose of private lands but alienable lands of the public domain.
Only when qualified private parties acquire these lands will the lands
become private lands. In the hands of the government agency
tasked and authorized to dispose of alienable of disposable
lands of the public domain, these lands are still public, not
private lands.
Furthermore, PEA's charter expressly states that PEA "shall hold
lands of the public domain" as well as "any and all kinds of lands."
PEA can hold both lands of the public domain and private lands.
Thus, the mere fact that alienable lands of the public domain like the
Freedom Islands are transferred to PEA and issued land patents or
certificates of title in PEA's name does not automatically make such
lands private.
To allow vast areas of reclaimed lands of the public domain to be
transferred to PEA as private lands will sanction a gross violation of
the constitutional ban on private corporations from acquiring any
kind of alienable land of the public domain. PEA will simply turn
around, as PEA has now done under the Amended JVA, and
transfer several hundreds of hectares of these reclaimed and still to
be reclaimed lands to a single private corporation in only one
transaction. This scheme will effectively nullify the constitutional ban
in Section 3, Article XII of the 1987 Constitution which was intended
to diffuse equitably the ownership of alienable lands of the public
domain among Filipinos, now numbering over 80 million strong.
This scheme, if allowed, can even be applied to alienable agricultural
lands of the public domain since PEA can "acquire x x x any and all
kinds of lands." This will open the floodgates to corporations and
even individuals acquiring hundreds of hectares of alienable lands of
the public domain under the guise that in the hands of PEA these
lands are private lands. This will result in corporations amassing huge
landholdings never before seen in this country - creating the very evil
that the constitutional ban was designed to prevent. This will
completely reverse the clear direction of constitutional development
in this country. The 1935 Constitution allowed private corporations to
acquire not more than 1,024 hectares of public lands. 105 The 1973
Constitution prohibited private corporations from acquiring any kind
lands of the public domain that have been titled but still cannot be
alienated or encumbered unless expressly authorized by Congress.
The need for legislative authority prevents the registered land of the
public domain from becoming private land that can be disposed of to
qualified private parties.
The Revised Administrative Code of 1987 also recognizes that lands
of the public domain may be registered under the Torrens System.
Section 48, Chapter 12, Book I of the Code states
"Sec. 48. Official Authorized to Convey Real Property.
Whenever real property of the Government is authorized by
law to be conveyed, the deed of conveyance shall be
executed in behalf of the government by the following:
(1) x x x
(2) For property belonging to the Republic of the
Philippines, but titled in the name of any political
subdivision
or
of
any
corporate
agency
or
instrumentality, by the executive head of the agency or
instrumentality." (Emphasis supplied)
Thus, private property purchased by the National Government for
expansion of a public wharf may be titled in the name of a
government corporation regulating port operations in the country.
Private property purchased by the National Government for
expansion of an airport may also be titled in the name of the
government agency tasked to administer the airport. Private property
donated to a municipality for use as a town plaza or public school site
may likewise be titled in the name of the municipality. 106 All these
properties become properties of the public domain, and if already
registered under Act No. 496 or PD No. 1529, remain registered land.
There is no requirement or provision in any existing law for the deregistration of land from the Torrens System.
Private lands taken by the Government for public use under its power
of eminent domain become unquestionably part of the public
domain. Nevertheless, Section 85 of PD No. 1529 authorizes the
Register of Deeds to issue in the name of the National Government
Considering that the Amended JVA is null and void ab initio, there is
no necessity to rule on this last issue. Besides, the Court is not a trier
of facts, and this last issue involves a determination of factual
matters.
WHEREFORE, the petition is GRANTED. The Public Estates Authority
and
Amari
Coastal
Bay
Development
Corporation
are PERMANENTLY ENJOINED from implementing the Amended
Joint
Venture
Agreement
which
is
hereby
declared NULL and VOID ab initio.
Manila-Cavite Coastal Road. CDCP obligated itself to carry out all the
works in consideration of fifty percent of the total reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued
Presidential Decree No. 1084 creating PEA. PD No. 1084 tasked PEA
"to reclaim land, including foreshore and submerged areas," and "to
develop, improve, acquire, x x x lease and sell any and all kinds of
lands."1 On the same date, then President Marcos issued Presidential
Decree No. 1085 transferring to PEA the "lands reclaimed in the
foreshore and offshore of the Manila Bay"2 under the Manila-Cavite
Coastal Road and Reclamation Project (MCCRRP).
SO ORDERED.
EN BANC
G.R. No. 133250
July 9, 2002
FRANCISCO
I.
CHAVEZ, petitioner,
vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY
DEVELOPMENT CORPORATION, respondents.
CARPIO, J.:
This is an original Petition for Mandamus with prayer for a writ of
preliminary injunction and a temporary restraining order. The petition
seeks to compel the Public Estates Authority ("PEA" for brevity) to
disclose all facts on PEA's then on-going renegotiations with Amari
Coastal Bay and Development Corporation ("AMARI" for brevity) to
reclaim portions of Manila Bay. The petition further seeks to enjoin
PEA from signing a new agreement with AMARI involving such
reclamation.
The Facts
On November 20, 1973, the government, through the Commissioner
of Public Highways, signed a contract with the Construction and
Development Corporation of the Philippines ("CDCP" for brevity) to
reclaim certain foreshore and offshore areas of Manila Bay. The
contract also included the construction of Phases I and II of the
On April 25, 1995, PEA entered into a Joint Venture Agreement ("JVA"
for brevity) with AMARI, a private corporation, to develop the
Freedom Islands. The JVA also required the reclamation of an
additional 250 hectares of submerged areas surrounding these
islands to complete the configuration in the Master Development
Plan of the Southern Reclamation Project-MCCRRP. PEA and AMARI
entered into the JVA through negotiation without public bidding. 4 On
April 28, 1995, the Board of Directors of PEA, in its Resolution No.
1245, confirmed the JVA.5On June 8, 1995, then President Fidel V.
Ramos, through then Executive Secretary Ruben Torres, approved the
JVA.6
On November 29, 1996, then Senate President Ernesto Maceda
delivered a privilege speech in the Senate and denounced the JVA as
the "grandmother of all scams." As a result, the Senate Committee
on Government Corporations and Public Enterprises, and the
Committee on Accountability of Public Officers and Investigations,
conducted a joint investigation. The Senate Committees reported the
results of their investigation in Senate Committee Report No. 560
dated September 16, 1997.7 Among the conclusions of their report
are: (1) the reclaimed lands PEA seeks to transfer to AMARI under the
JVA are lands of the public domain which the government has not
On
April
4
and
5,
1998,
the Philippine
Daily
Inquirer and Today published reports that there were on-going
renegotiations between PEA and AMARI under an order issued by
then President Fidel V. Ramos. According to these reports, PEA
Director Nestor Kalaw, PEA Chairman Arsenio Yulo and retired Navy
Officer Sergio Cruz composed the negotiating panel of PEA.
On April 13, 1998, Antonio M. Zulueta filed before the Court
a Petition for Prohibition with Application for the Issuance of a
Temporary Restraining Order and Preliminary Injunction docketed as
G.R. No. 132994 seeking to nullify the JVA. The Court dismissed the
petition "for unwarranted disregard of judicial hierarchy, without
prejudice to the refiling of the case before the proper court." 12
On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity)
as a taxpayer, filed the instant Petition for Mandamus with Prayer for
the Issuance of a Writ of Preliminary Injunction and Temporary
Restraining Order. Petitioner contends the government stands to lose
billions of pesos in the sale by PEA of the reclaimed lands to AMARI.
Petitioner prays that PEA publicly disclose the terms of any
renegotiation of the JVA, invoking Section 28, Article II, and Section 7,
Article III, of the 1987 Constitution on the right of the people to
information on matters of public concern. Petitioner assails the sale
to AMARI of lands of the public domain as a blatant violation of
Section 3, Article XII of the 1987 Constitution prohibiting the sale of
alienable lands of the public domain to private corporations. Finally,
After several motions for extension of time, 13 PEA and AMARI filed
their Comments on October 19, 1998 and June 25, 1998, respectively.
Meanwhile, on December 28, 1998, petitioner filed an Omnibus
Motion: (a) to require PEA to submit the terms of the renegotiated
PEA-AMARI contract; (b) for issuance of a temporary restraining
order; and (c) to set the case for hearing on oral argument. Petitioner
filed a Reiterative Motion for Issuance of a TRO dated May 26, 1999,
which the Court denied in a Resolution dated June 22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course to
the petition and required the parties to file their respective
memoranda.
On March 30, 1999, PEA and AMARI signed the Amended Joint
Venture Agreement ("Amended JVA," for brevity). On May 28, 1999,
the Office of the President under the administration of then President
Joseph E. Estrada approved the Amended JVA.
Due to the approval of the Amended JVA by the Office of the
President, petitioner now prays that on "constitutional and statutory
grounds the renegotiated contract be declared null and void." 14
The Issues
PEA and AMARI claim the petition is now moot and academic because
AMARI furnished petitioner on June 21, 1999 a copy of the signed
Amended JVA containing the terms and conditions agreed upon in the
renegotiations. Thus, PEA has satisfied petitioner's prayer for a public
disclosure of the renegotiations. Likewise, petitioner's prayer to
enjoin the signing of the Amended JVA is now moot because PEA and
AMARI have already signed the Amended JVA on March 30, 1999.
Moreover, the Office of the President has approved the Amended JVA
on May 28, 1999.
Petitioner counters that PEA and AMARI cannot avoid the
constitutional issue by simply fast-tracking the signing and approval
of the Amended JVA before the Court could act on the issue.
Presidential approval does not resolve the constitutional issue or
remove it from the ambit of judicial review.
We rule that the signing of the Amended JVA by PEA and AMARI and
its approval by the President cannot operate to moot the petition and
divest the Court of its jurisdiction. PEA and AMARI have still to
implement the Amended JVA. The prayer to enjoin the signing of the
Amended JVA on constitutional grounds necessarily includes
preventing its implementation if in the meantime PEA and AMARI
have signed one in violation of the Constitution. Petitioner's principal
basis in assailing the renegotiation of the JVA is its violation of
Section 3, Article XII of the Constitution, which prohibits the
government from alienating lands of the public domain to private
corporations. If the Amended JVA indeed violates the Constitution, it
is the duty of the Court to enjoin its implementation, and if already
implemented, to annul the effects of such unconstitutional contract.
The Amended JVA is not an ordinary commercial contract but one
which seeks to transfer title and ownership to 367.5 hectares
of reclaimed lands and submerged areas of Manila Bay to a
single private corporation. It now becomes more compelling for
the Court to resolve the issue to insure the government itself does
not violate a provision of the Constitution intended to safeguard the
national patrimony. Supervening events, whether intended or
accidental, cannot prevent the Court from rendering a decision if
there is a grave violation of the Constitution. In the instant case, if
the Amended JVA runs counter to the Constitution, the Court can still
prevent the transfer of title and ownership of alienable lands of the
public domain in the name of AMARI. Even in cases where
supervening events had made the cases moot, the Court did not
hesitate to resolve the legal or constitutional issues raised to
formulate controlling principles to guide the bench, bar, and the
public.17
Also, the instant petition is a case of first impression. All previous
decisions of the Court involving Section 3, Article XII of the 1987
Constitution,
or
its
counterpart
provision
in
the
1973
Constitution,18 covered agricultural
landssold
to
private
corporations which acquired the lands from private parties. The
duty to make the public disclosure, and was even in breach of this
legal duty, petitioner had the right to seek direct judicial intervention.
Third issue: whether the petition merits dismissal for nonexhaustion of administrative remedies.
Also, AMARI contends that petitioner cannot invoke the right at the
pre-decisional stage or before the closing of the transaction. To
support its contention, AMARI cites the following discussion in the
1986 Constitutional Commission:
(b) Upon completion of such plats and plans the GovernorGeneral shall give notice to the public that such parts
of the lands so made or reclaimed as are not needed
for public purposes will be leased for commercial and
business purposes, x x x.
xxx
(b) Foreshore;
(c) Marshy lands or lands covered with water
bordering upon the shores or banks of navigable lakes
or rivers;
(d) Lands not included in any of the foregoing classes.
x x x.
Sec. 58. The lands comprised in classes (a), (b), and (c)
of section fifty-six shall be disposed of to private
parties by lease only and not otherwise, as soon as the
Governor-General, upon recommendation by the
Secretary of Agriculture and Natural Resources, shall
declare that the same are not necessary for the public
service and are open to disposition under this
chapter. The lands included in class (d) may be disposed
of by sale or lease under the provisions of this Act."
(Emphasis supplied)
Section 6 of Act No. 2874 authorized the Governor-General to
"classify lands of the public domain into x x x alienable or
disposable"47 lands. Section 7 of the Act empowered the GovernorGeneral to "declare what lands are open to disposition or
concession." Section 8 of the Act limited alienable or disposable lands
only to those lands which have been "officially delimited and
classified."
Section 56 of Act No. 2874 stated that lands "disposable under this
title48 shall be classified" as government reclaimed, foreshore and
marshy lands, as well as other lands. All these lands, however, must
be suitable for residential, commercial, industrial or other
productive non-agricultural purposes. These provisions vested
upon the Governor-General the power to classify inalienable lands of
the public domain into disposable lands of the public domain. These
provisions also empowered the Governor-General to classify further
On May 14, 1935, the 1935 Constitution took effect upon its
ratification by the Filipino people. The 1935 Constitution, in adopting
the Regalian doctrine, declared in Section 1, Article XIII, that
"Section 1. All agricultural, timber, and mineral lands of the
public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy and other natural
resources of the Philippines belong to the State, and their
disposition, exploitation, development, or utilization shall be
limited to citizens of the Philippines or to corporations or
associations at least sixty per centum of the capital of which
is owned by such citizens, subject to any existing right, grant,
lease, or concession at the time of the inauguration of the
Government established under this Constitution. Natural
resources, with the exception of public agricultural
land, shall not be alienated, and no license, concession, or
lease for the exploitation, development, or utilization of any of
the natural resources shall be granted for a period exceeding
twenty-five years, renewable for another twenty-five years,
except as to water rights for irrigation, water supply, fisheries,
or industrial uses other than the development of water power,
in which cases beneficial use may be the measure and limit of
the grant." (Emphasis supplied)
The 1935 Constitution barred the alienation of all natural resources
except public agricultural lands, which were the only natural
resources the State could alienate. Thus, foreshore lands, considered
part of the State's natural resources, became inalienable by
constitutional fiat, available only for lease for 25 years, renewable for
another 25 years. The government could alienate foreshore lands
only after these lands were reclaimed and classified as alienable
agricultural lands of the public domain. Government reclaimed and
marshy lands of the public domain, being neither timber nor mineral
lands, fell under the classification of public agricultural
lands.50 However, government reclaimed and marshy lands, although
subject to classification as disposable public agricultural lands, could
only be leased and not sold to private parties because of Act No.
2874.
Act
No.
141
of
the
Philippine
National
(b) Foreshore;
Sec. 60. Any tract of land comprised under this title may be
leased or sold, as the case may be, to any person,
corporation, or association authorized to purchase or lease
public lands for agricultural purposes. x x x.
Sec. 61. The lands comprised in classes (a), (b), and (c)
of section fifty-nine shall be disposed of to private
parties by lease only and not otherwise, as soon as the
President, upon recommendation by the Secretary of
Under the Amended JVA, AMARI will reimburse PEA the sum of
P1,894,129,200.00 for PEA's "actual cost" in partially reclaiming the
Freedom Islands. AMARI will also complete, at its own expense, the
reclamation of the Freedom Islands. AMARI will further shoulder all
the reclamation costs of all the other areas, totaling 592.15 hectares,
still to be reclaimed. AMARI and PEA will share, in the proportion of
70 percent and 30 percent, respectively, the total net usable area
which is defined in the Amended JVA as the total reclaimed area less
30 percent earmarked for common areas. Title to AMARI's share in
the net usable area, totaling 367.5 hectares, will be issued in the
name of AMARI. Section 5.2 (c) of the Amended JVA provides that
"x x x, PEA shall have the duty to execute without delay the
necessary deed of transfer or conveyance of the title
pertaining to AMARI's Land share based on the Land Allocation
Plan. PEA, when requested in writing by AMARI, shall
then cause the issuance and delivery of the proper
certificates of title covering AMARI's Land Share in the
name of AMARI, x x x; provided, that if more than seventy
percent (70%) of the titled area at any given time pertains to
AMARI, PEA shall deliver to AMARI only seventy percent (70%)
of the titles pertaining to AMARI, until such time when a
corresponding proportionate area of additional land pertaining
to PEA has been titled." (Emphasis supplied)
PEA confirms that the Amended JVA involves "the development of the
Freedom Islands and further reclamation of about 250 hectares x x
x," plus an option "granted to AMARI to subsequently reclaim another
350 hectares x x x."66
In short, the
hectares. Only
project have
hectares are
Bay.
of the public domain to PEA does not make the lands alienable or
disposable lands of the public domain, much less patrimonial lands of
PEA.
Absent two official acts a classification that these lands are
alienable or disposable and open to disposition and a declaration that
these lands are not needed for public service, lands reclaimed by PEA
remain inalienable lands of the public domain. Only such an official
classification and formal declaration can convert reclaimed lands into
alienable or disposable lands of the public domain, open to
disposition under the Constitution, Title I and Title III 83of CA No. 141
and other applicable laws.84
PEA's Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that as alienable or disposable
lands of the public domain, the reclaimed lands shall be disposed of
in accordance with CA No. 141, the Public Land Act. PEA, citing
Section 60 of CA No. 141, admits that reclaimed lands transferred to
a branch or subdivision of the government "shall not be alienated,
encumbered, or otherwise disposed of in a manner affecting its
title, except when authorized by Congress: x x x."85 (Emphasis by
PEA)
In Laurel vs. Garcia,86 the Court cited Section 48 of the Revised
Administrative Code of 1987, which states that
"Sec. 48. Official Authorized to Convey Real Property.
Whenever real property of the Government is authorized by
law to be conveyed, the deed of conveyance shall be
executed in behalf of the government by the following: x x x."
Thus, the Court concluded that a law is needed to convey any real
property belonging to the Government. The Court declared that "It is not for the President to convey real property of the
government on his or her own sole will. Any such
conveyance must be authorized and approved by a law
enacted by the Congress. It requires executive and
legislative concurrence." (Emphasis supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute the
legislative authority allowing PEA to sell its reclaimed lands. PD No.
1085, issued on February 4, 1977, provides that
"The land reclaimed in the foreshore and offshore area
of Manila Bay pursuant to the contract for the reclamation
and construction of the Manila-Cavite Coastal Road Project
between the Republic of the Philippines and the Construction
and Development Corporation of the Philippines dated
November 20, 1973 and/or any other contract or reclamation
covering the same area is hereby transferred, conveyed
and assigned to the ownership and administration of
the Public Estates Authority established pursuant to PD
No. 1084; Provided, however, That the rights and interests of
the Construction and Development Corporation of the
Philippines pursuant to the aforesaid contract shall be
recognized and respected.
Henceforth, the Public Estates Authority shall exercise the
rights and assume the obligations of the Republic of the
Philippines (Department of Public Highways) arising from, or
incident to, the aforesaid contract between the Republic of the
Philippines
and
the
Construction
and
Development
Corporation of the Philippines.
In consideration of the foregoing transfer and assignment, the
Public Estates Authority shall issue in favor of the Republic of
the Philippines the corresponding shares of stock in said entity
with an issued value of said shares of stock (which) shall be
deemed fully paid and non-assessable.
The Secretary of Public Highways and the General Manager of
the Public Estates Authority shall execute such contracts or
agreements, including appropriate agreements with the
Construction and Development Corporation of the Philippines,
as may be necessary to implement the above.
Special land patent/patents shall be issued by the
Secretary of Natural Resources in favor of the Public
Estates Authority without prejudice to the subsequent
PEA may also sell its alienable or disposable lands of the public
domain to private individuals since, with the legislative authority,
there is no longer any statutory prohibition against such sales and
the constitutional ban does not apply to individuals. PEA, however,
cannot sell any of its alienable or disposable lands of the public
domain to private corporations since Section 3, Article XII of the 1987
Constitution expressly prohibits such sales. The legislative authority
benefits only individuals. Private corporations remain barred from
acquiring any kind of alienable land of the public domain, including
government reclaimed lands.
The provision in PD No. 1085 stating that portions of the reclaimed
lands could be transferred by PEA to the "contractor or his assignees"
(Emphasis supplied) would not apply to private corporations but only
to individuals because of the constitutional ban. Otherwise, the
provisions of PD No. 1085 would violate both the 1973 and 1987
Constitutions.
The requirement of public auction in the sale of reclaimed
lands
Assuming the reclaimed lands of PEA are classified as alienable or
disposable lands open to disposition, and further declared no longer
needed for public service, PEA would have to conduct a public
bidding in selling or leasing these lands. PEA must observe the
provisions of Sections 63 and 67 of CA No. 141 requiring public
auction, in the absence of a law exempting PEA from holding a public
auction.88 Special Patent No. 3517 expressly states that the patent is
issued by authority of the Constitution and PD No. 1084,
"supplemented by Commonwealth Act No. 141, as amended." This is
an acknowledgment that the provisions of CA No. 141 apply to the
disposition of reclaimed alienable lands of the public domain unless
otherwise provided by law. Executive Order No. 654, 89 which
authorizes PEA "to determine the kind and manner of payment for
the transfer" of its assets and properties, does not exempt PEA from
the requirement of public auction. EO No. 654 merely authorizes PEA
to decide the mode of payment, whether in kind and in installment,
but does not authorize PEA to dispense with public auction.
In the instant case, the only patent and certificates of title issued are
those in the name of PEA, a wholly government owned corporation
performing public as well as proprietary functions. No patent or
certificate of title has been issued to any private party. No one is
asking the Director of Lands to cancel PEA's patent or certificates of
title. In fact, the thrust of the instant petition is that PEA's certificates
of title should remain with PEA, and the land covered by these
certificates, being alienable lands of the public domain, should not be
sold to a private corporation.
Registration of land under Act No. 496 or PD No. 1529 does not vest
in the registrant private or public ownership of the land. Registration
is not a mode of acquiring ownership but is merely evidence of
ownership previously conferred by any of the recognized modes of
acquiring ownership. Registration does not give the registrant a
better right than what the registrant had prior to the
registration.102 The registration of lands of the public domain under
the Torrens system, by itself, cannot convert public lands into private
lands.103
Jurisprudence holding that upon the grant of the patent or issuance
of the certificate of title the alienable land of the public domain
automatically becomes private land cannot apply to government
units and entities like PEA. The transfer of the Freedom Islands to PEA
was made subject to the provisions of CA No. 141 as expressly stated
in Special Patent No. 3517 issued by then President Aquino, to wit:
"NOW, THEREFORE, KNOW YE, that by authority of the
Constitution of the Philippines and in conformity with the
provisions of Presidential Decree No. 1084, supplemented
by Commonwealth Act No. 141, as amended, there are
hereby granted and conveyed unto the Public Estates
Authority the aforesaid tracts of land containing a total area of
one million nine hundred fifteen thousand eight hundred
ninety four (1,915,894) square meters; the technical
description of which are hereto attached and made an integral
part hereof." (Emphasis supplied)
Thus, the provisions of CA No. 141 apply to the Freedom Islands on
matters not covered by PD No. 1084. Section 60 of CA No. 141
x x x ."
As the central implementing agency tasked to undertake reclamation
projects nationwide, with authority to sell reclaimed lands, PEA took
the place of DENR as the government agency charged with leasing or
selling reclaimed lands of the public domain. The reclaimed lands
being leased or sold by PEA are not private lands, in the same
manner that DENR, when it disposes of other alienable lands, does
not dispose of private lands but alienable lands of the public domain.
Only when qualified private parties acquire these lands will the lands
become private lands. In the hands of the government agency
tasked and authorized to dispose of alienable of disposable
lands of the public domain, these lands are still public, not
private lands.
Furthermore, PEA's charter expressly states that PEA "shall hold
lands of the public domain" as well as "any and all kinds of lands."
PEA can hold both lands of the public domain and private lands.
Thus, the mere fact that alienable lands of the public domain like the
Freedom Islands are transferred to PEA and issued land patents or
certificates of title in PEA's name does not automatically make such
lands private.
To allow vast areas of reclaimed lands of the public domain to be
transferred to PEA as private lands will sanction a gross violation of
the constitutional ban on private corporations from acquiring any
kind of alienable land of the public domain. PEA will simply turn
around, as PEA has now done under the Amended JVA, and
transfer several hundreds of hectares of these reclaimed and still to
be reclaimed lands to a single private corporation in only one
transaction. This scheme will effectively nullify the constitutional ban
in Section 3, Article XII of the 1987 Constitution which was intended
to diffuse equitably the ownership of alienable lands of the public
domain among Filipinos, now numbering over 80 million strong.
This scheme, if allowed, can even be applied to alienable agricultural
lands of the public domain since PEA can "acquire x x x any and all
kinds of lands." This will open the floodgates to corporations and
even individuals acquiring hundreds of hectares of alienable lands of
the public domain under the guise that in the hands of PEA these
lands are private lands. This will result in corporations amassing huge
landholdings never before seen in this country - creating the very evil
that the constitutional ban was designed to prevent. This will
completely reverse the clear direction of constitutional development
in this country. The 1935 Constitution allowed private corporations to
acquire not more than 1,024 hectares of public lands. 105 The 1973
Constitution prohibited private corporations from acquiring any kind
of public land, and the 1987 Constitution has unequivocally
reiterated this prohibition.
The contention of PEA and AMARI that public lands, once registered
under Act No. 496 or PD No. 1529, automatically become private
lands is contrary to existing laws. Several laws authorize lands of the
public domain to be registered under the Torrens System or Act No.
496, now PD No. 1529, without losing their character as public lands.
Section 122 of Act No. 496, and Section 103 of PD No. 1529,
respectively, provide as follows:
Act No. 496
"Sec. 122. Whenever public lands in the Philippine Islands
belonging to the x x x Government of the Philippine Islands
are alienated, granted, or conveyed to persons or the public
or private corporations, the same shall be brought
forthwith under the operation of this Act and shall become
registered lands."
PD No. 1529
"Sec. 103. Certificate of Title to Patents. Whenever public land
is by the Government alienated, granted or conveyed to any
person, the same shall be brought forthwith under the
operation of this Decree." (Emphasis supplied)
Based on its legislative history, the phrase "conveyed to any person"
in Section 103 of PD No. 1529 includes conveyances of public lands
to public corporations.
Alienable lands of the public domain "granted, donated, or
transferred to a province, municipality, or branch or subdivision of
There is no requirement or provision in any existing law for the deregistration of land from the Torrens System.
Private lands taken by the Government for public use under its power
of eminent domain become unquestionably part of the public
domain. Nevertheless, Section 85 of PD No. 1529 authorizes the
Register of Deeds to issue in the name of the National Government
new certificates of title covering such expropriated lands. Section 85
of PD No. 1529 states
"Sec. 85. Land taken by eminent domain. Whenever any
registered land, or interest therein, is expropriated or taken by
eminent domain, the National Government, province, city or
municipality, or any other agency or instrumentality
exercising such right shall file for registration in the proper
Registry a certified copy of the judgment which shall state
definitely by an adequate description, the particular property
or interest expropriated, the number of the certificate of title,
and the nature of the public use. A memorandum of the right
or interest taken shall be made on each certificate of title by
the Register of Deeds, and where the fee simple is taken, a
new certificate shall be issued in favor of the National
Government, province, city, municipality, or any other
agency or instrumentality exercising such right for the land so
taken. The legal expenses incident to the memorandum of
registration or issuance of a new certificate of title shall be for
the account of the authority taking the land or interest
therein." (Emphasis supplied)
Consequently, lands registered under Act No. 496 or PD No. 1529 are
not exclusively private or patrimonial lands. Lands of the public
domain may also be registered pursuant to existing laws.
or a joint venture, the fact remains that the Amended JVA requires
PEA to "cause the issuance and delivery of the certificates of title
conveying AMARI's Land Share in the name of AMARI."107
This stipulation still contravenes Section 3, Article XII of the 1987
Constitution which provides that private corporations "shall not hold
such alienable lands of the public domain except by lease." The
transfer of title and ownership to AMARI clearly means that AMARI
will "hold" the reclaimed lands other than by lease. The transfer of
title and ownership is a "disposition" of the reclaimed lands, a
transaction considered a sale or alienation under CA No. 141, 108 the
Government Auditing Code,109 and Section 3, Article XII of the 1987
Constitution.
The Regalian doctrine is deeply implanted in our legal system.
Foreshore and submerged areas form part of the public domain and
are inalienable. Lands reclaimed from foreshore and submerged
areas also form part of the public domain and are also inalienable,
unless converted pursuant to law into alienable or disposable lands of
the public domain. Historically, lands reclaimed by the government
are sui generis, not available for sale to private parties unlike other
alienable public lands. Reclaimed lands retain their inherent potential
as areas for public use or public service. Alienable lands of the public
domain, increasingly becoming scarce natural resources, are to be
distributed equitably among our ever-growing population. To insure
such equitable distribution, the 1973 and 1987 Constitutions have
barred private corporations from acquiring any kind of alienable land
of the public domain. Those who attempt to dispose of inalienable
natural resources of the State, or seek to circumvent the
constitutional ban on alienation of lands of the public domain to
private corporations, do so at their own risk.
We can now summarize our conclusions as follows:
AMARI makes a parting shot that the Amended JVA is not a sale to
AMARI of the Freedom Islands or of the lands to be reclaimed from
submerged areas of Manila Bay. In the words of AMARI, the Amended
JVA "is not a sale but a joint venture with a stipulation for
reimbursement of the original cost incurred by PEA for the earlier
reclamation and construction works performed by the CDCP under its
1973 contract with the Republic." Whether the Amended JVA is a sale
from the beginning." The Court must perform its duty to defend and
uphold the Constitution, and therefore declares the Amended JVA
null and void ab initio.
Seventh issue: whether the Court is the proper forum to raise
the issue of whether the Amended JVA is grossly
disadvantageous to the government.
Considering that the Amended JVA is null and void ab initio, there is
no necessity to rule on this last issue. Besides, the Court is not a trier
of facts, and this last issue involves a determination of factual
matters.
WHEREFORE, the petition is GRANTED. The Public Estates Authority
and
Amari
Coastal
Bay
Development
Corporation
are PERMANENTLY ENJOINED from implementing the Amended
Joint
Venture
Agreement
which
is
hereby
declared NULL and VOID ab initio.
SO ORDERED.
SECOND DIVISION
February 2, 2011
DECISION
PERALTA, J.:
Before this Court are two consolidated cases, namely, (1) Petition for
Review on Certiorari under Rule 45 of the Rules of Court, docketed as
G.R. No. 165851, filed by petitioner Manuel Catindig, represented by
Emiliano Catindig-Rodrigo, assailing the Decision 1 of the Court of
Appeals (CA) in CA-G.R. CV No. 65697, which affirmed the Decision of
the Regional Trial Court of Malolos, Bulacan in Civil Case No. 320-M95; and (2) Petition forCertiorari under Rule 65 of the Rules of Court,
docketed as G.R. No. 168875, filed by petitioner Silvino Roxas, Sr.,
represented by Felicisima Villafuerte Roxas, seeking to set aside the
Decision2 and Resolution3 of the CA in CA-G.R. CV No. 65697, which
affirmed the decision of the Regional Trial Court of Malolos, Bulacan
in Civil Case No. 320-M-95.
The property subject of this controversy pertains to a parcel of land
situated in Malolos, Bulacan, with an area of 49,139 square meters,
titled in the name of the late Rosendo Meneses, Sr., under Transfer
Certificate of Title (TCT) No. T-1749 (hereinafter referred to as the
Masusuwi Fishpond). Respondent Aurora Irene C. Vda. de Meneses is
the surviving spouse of the registered owner, Rosendo Meneses, Sr..
She was issued Letters of Administration over the estate of her late
husband in Special Proceedings Case No. 91498 pending before the
then Court of First Instance of the City of Manila, Branch 22. On May
17, 1995, respondent, in her capacity as administratrix of her
husband's estate, filed a Complaint for Recovery of Possession, Sum
of Money and Damages against petitioners Manuel Catindig and
Silvino Roxas, Sr. before the Regional Trial Court of Malolos, Bulacan,
to recover possession over the Masusuwi Fishpond.
Respondent alleged that in September 1975, petitioner Catindig, the
first cousin of her husband, deprived her of the possession over the
Masusuwi Fishpond, through fraud, undue influence and intimidation.
Since then, petitioner Catindig unlawfully leased the property to
petitioner Roxas. Respondent verbally demanded that petitioners
vacate the Masusuwi Fishpond, but all were futile, thus, forcing
respondent to send demand letters to petitioners Roxas and Catindig.
However, petitioners still ignored said demands. Hence, respondent
The trial court found that the Deed of Absolute Sale executed
between respondent and petitioner Catindig was simulated and
fictitious, and therefore, did not convey title over the Masusuwi
Fishpond to petitioner Catindig.1avvphi1 It gave due credence to the
testimony of respondent that petitioner Catindig convinced her to
sign the said deed of sale, because it was intended to be a mere
proposal subject to the approval of the trial court wherein the
proceedings for the settlement of the estate of Rosendo Meneses, Sr.
was still pending. The court a quo was further convinced that the
Deed of Absolute Sale lacked consideration, because respondent and
her children never received the stipulated purchase price for the
Masusuwi Fishpond which was pegged at PhP150,000.00. Since
ownership over the property never transferred to Catindig, the trial
court declared that he has no right to lease it to Roxas. The court also
found that petitioner Roxas cannot claim good faith in leasing the
Masusuwi Fishpond, because he relied on an incomplete and
unnotarized Deed of Sale.
Aggrieved, petitioners separately challenged the trial court's Decision
before the CA. The CA dismissed both the petitioners' appeals and
affirmed the RTC. The CA ruled that the trial court properly rejected
petitioners' reliance on the deed of absolute sale executed between
respondent and petitioner Catindig. The CA also found that since it is
settled that a Torrens title is a constructive notice to the whole world
of a property's lawful owner, petitioner Roxas could not invoke good
faith by relying on the Deed of Absolute Sale in favor of his lessor,
petitioner Catindig.
Hence, petitioner Catindig filed this Petition for Review on Certiorari
under Rule 45, raising the following issues:
ALLEGED
FRAUD
PRESCRIBED.
AND/OR
INTIMIDATION,
HAS
NOT
Respondent, on the other hand, insists that the deed of sale is not
merely voidable, but void for being simulated. Hence, she could not
have filed an action for annulment of contract under Articles 1390
and 1391 of the Civil Code, because this remedy applies to voidable
contracts. Instead, respondent filed an action for recovery of
possession of the Masusuwi Fishpond.
below. This is especially true where the trial court's factual findings
are adopted and affirmed by the CA as in the present case. Factual
findings of the trial court, affirmed by the CA, are final and conclusive
and may not be reviewed on appeal.5
The Court finds that there exists no reason for Us to disturb the trial
court's finding that the deed of sale was simulated. The trial court's
discussion on the said issue is hereby quoted:
After evaluating the evidence, both testimonial and documentary,
presented by the parties, this court is convinced that the Deed of
Absolute Sale relied upon by the defendants [petitioners herein] is
simulated and fictitious and has no consideration.
On its face, the Deed of Absolute sale (Exh. "G", Exh. "1") is not
complete and is not in due form. It is a 3-page document but with
several items left unfilled or left blank, like the day the document was
supposed to be entered into, the tax account numbers of the persons
appearing as signatories to the document and the names of the
witnesses. In other words, it was not witnessed by any one. More
importantly, it was not notarized. While the name Ramon E. Rodrigo,
appeared typed in the Acknowledgement, it was not signed by him
(Exhs. "G", "G-1", "G-4").
The questioned deed was supposedly executed in January, 1978.
Defendant [petitioner herein] Catindig testified that his brother
Francisco Catindig was with him when plaintiff [respondent herein]
signed the document. The evidence, however, shows that Francisco
Catindig died on January 1, 1978 as certified to by the Office of the
Municipal Civil Registrar of Malolos, Bulacan and the Parish Priest of
Sta. Maria Assumpta Parish, Bulacan, Bulacan.
The document mentions 49,130 square meters, as the area sold by
plaintiff [respondent herein] and her two (2) children to defendant
[petitioner herein] Catindig. But this is the entire area of the property
as appearing in the title and they are not the only owners. The other
owner is Rosendo Meneses, Jr. [stepson of herein respondent] whose
name does not appear in the document. The declaration of defendant
[petitioner herein] Catindig that Rosendo Meneses, Jr. likewise sold
his share of the property to him in another document does not inspire
There is even more reason to apply this doctrine here, because the
subject Deed of Sale is not only unregistered, it is undated and
unnotarized.
filing
of
Petition
for
Review
received a copy of the May 20, 2005 Resolution of the CA denying the
motion for reconsideration on May 30, 2005. Instead of filing a
petition for review on certiorari under Rule 45 within 15 days from
receipt thereof,24 petitioner, in addition to his several motions for
extension, waited for almost four months before filing the instant
petition on September 22, 2005. Indubitably, the Decision and the
Resolution of the CA, as to petitioner Roxas, had by then already
become final and executory, and thus, beyond the purview of this
Court to act upon.25
It is settled that a decision that has acquired finality becomes
immutable and unalterable and may no longer be modified in any
respect, even if the modification is meant to correct erroneous
conclusions of fact or law and whether it will be made by the court
that rendered it or by the highest court of the land. 26 When a decision
becomes final and executory, the court loses jurisdiction over the
case and not even an appellate court will have the power to review
the said judgment. Otherwise, there will be no end to litigation and
this will set to naught the main role of courts of justice to assist in the
enforcement of the rule of law and the maintenance of peace and
order by settling justifiable controversies with finality.27
Finally, while it is true that this Court, in accordance with the liberal
spirit which pervades the Rules of Court and in the interest of justice,
may treat a Petition for Certiorari as having been filed under Rule 45,
the instant Petition cannot be treated as such, primarily because it
was filed way beyond the 15-day reglementary period within which to
file the Petition for Review.28 Though there are instances when
certiorari was granted despite the availability of appeal, 29 none of
these recognized exceptions were shown to be present in the case at
bar.
WHEREFORE, the petition in G.R. No. 165851 is DENIED. The
Decision of the Court of Appeals dated October 22, 2004 in CA-G.R.
CV No. 65697, which affirmed the decision of the Regional Trial Court
of Malolos, Bulacan in Civil Case No. 320-M-95, is AFFIRMED. The
petition in G.R. No. 168875 is DISMISSED. The Decision and the
Resolution of the Court of Appeals, dated October 22, 2004 and May
20, 2005, respectively, in CA-G.R. CV No. 65697, which affirmed the
EN BANC
G.R. No. 21943
ASKAY, plaintiff-appellant,
vs. FERNANDO A. COSALAN, defendant-appellee.
MALCOLM, J.:
The plaintiff in this case is Askay, an illiterate Igorrote between 70
and 80 years of age, residing in the municipal district of Tublay,
Province of Benguet, who at various time has been the owner of
mining property. The defendant is Fernando A. Cosalan, the nephew
by marriage of Askay, and municipal president of Tublay, who
likewise has been interested along with his uncle in mining
enterprises.
About 1907, Askay obtained title to the Pet Kel Mineral Claim located
in Tublay, Benguet. On November 23, 1914, if we are to accept
defendant's Exhibit 1, Askay sold this claim to Cosalan. Nine years
later, in 1923, Askay instituted action in the Court of First Instance of
Benguet to have the sale of the Pet Kel Mineral Claim adhered null, to
Now turning to Act No. 3107, its final section provides that "This Act
shall take effect on its approval." The Act was approved on March 17,
1923. Obviously, therefore, there being a special provision in Act No.
3107, it applies to the exclusion of the general provision contained in
the Administrative Code.
Recalling, therefore, that Act No. 3107 went into effect on March, 17,
1923, and that it was subsequent thereto, on April 16, 1923, that
Judge Harvey was authorized to hold court at Baguio, beginning with
May 2, 1923, appellant's argument along this line is found to be
without persuasive merit. We pass to the material issue which is one
of fact.
II. Plaintiff contends that the sale of the Pet Kel Mineral Claim was
accomplished through fraud and deceit on the part of the defendant.
Plaintiff may be right but in our judgment he has failed to established
his claim. Fraud must be both alleged and proved.
One facts exists in plaintiff's favor, and this is the age and ignorance
of the plaintiff who could be easily duped by the defendant, a man of
greater intelligence. Another fact is the inadequacy of the
consideration for the transfer which, according to the conveyance,
consisted of P1 and other valuable consideration, and which,
according to the oral testimony, in reality consisted of P107 in cash, a
bill fold, one sheet, one cow, and two carabaos. Gross inadequacy
naturally suggests fraud and is some evidence thereof, so that it may
be sufficient to show it when taken in connection with other
circumstances, such as ignorance or the fact that one of the parties
has an advantage over the other. But the fact that the bargain was a
hard one, coupled with mere inadequacy of price when both parties
are in a position to form an independent judgment concerning the
transaction, is not a sufficient ground for the cancellation of a
contract.
Against the plaintiff and in favor of the defendant, we have the
document itself executed in the presence of witnesses and before a
notary public and filed with the mining recorder. The notary public,
Nicanor Sison, and one of the attesting witnesses, Apolonio Ramos,
testified to the effect that in the presence of the plaintiff and the
defendant and of the notary public and the subscribing witnesses,
the deed of sale was interpreted to the plaintiff and that thereupon
he placed his thumb mark on the document. Two finger print experts,
Dr. Charles S. Banks and A. Simkus, have declared in depositions that
the thumb mark on Exhibit 1 is that of Askay. No less than four other
witnesses testified that at various times Askay had admitted to them
that he had sold the Pet Kel Mine to Fernando A. Cosalan.
Having in mind all of these circumstances, how can the plaintiff
expect the courts to nullify the deed of sale on mere suspicion?
Having waited nine years from the date when the deed was
executed, nine years from the time Fernando A. Cosalan started
developing the mine, nine years from the time Askay himself had
been deprived of the possession of the mine, and nine years
permitting of a third party to obtain a contract of lease from Cosalan,
how can this court overlook plaintiff's silent acquiescence in the legal
rights of the defendant? On the facts of record, the trial judge could
have done nothing less than dismiss the action.
We conclude therefore, that Judge Harvey had jurisdiction to try this
case, that his findings of fact are in accordance with the evidence,
that no prejudicial error was committed in the trial, and that the
complaint was properly dismissed. As a result, judgment is affirmed
with costs against the appellant. So ordered.
SECOND DIVISION
G.R. No. 174719
May 5, 2010
No pronouncement as to cost.
SO ORDERED.
Factual Antecedents
Lot No. 9 is a 1,007 square meter parcel of land located at Kinasangan, Pardo, Cebu City and fronting the Cebu provincial highway. The
lot originally belonged to Pastor Pacres (Pastor) who left it intestate to
his heirs6Margarita, Simplicia, Rodrigo, Francisco, Mario (petitioners
predecessor-in-interest)
and
Vearanda
(herein
petitioner).
Petitioners admitted that at the time of Pastors death in 1962, his
heirs were already occupying definite portions of Lot No. 9. The front
portion along the provincial highway was occupied by the co-owned
Pacres ancestral home,7 and beside it stood Rodrigos hut (also
fronting the provincial highway). Marios house stood at the back of
the ancestral house.8 This is how the property stood in 1968, as
confirmed by petitioner Valentinas testimony.
On the same year, the heirs leased 9 "the ground floor of the
[ancestral home] together with a lot area of 300 square meters
including the area occupied by the house" to respondent Hilario
Ramirez (Ramirez), who immediately took possession thereof.
the proper proceeding. Mario filed the intended action while Rodrigo
no longer pursued his objection.
The complaint for legal redemption, 20 filed by Mario and Vearanda,
was dismissed on the ground of improper exercise of the right. The
decision was affirmed by the appellate court 21 and attained finality in
the Supreme Court22 on December 28, 1992. The CA held that the
complaint was filed beyond the 30-day period provided in Article
1623 of the New Civil Code and failed to comply with the requirement
of consignation. It was further held that Ygoa built her house on Lot
No. 9 in good faith and it would be unjust to require her to remove
her house thereon.
On June 18, 1993, the Republic of the Philippines, through the
Department of Public Works and Highways (DPWH), expropriated the
front portion of Lot No. 9 for the expansion of the Cebu south road.
The petition for expropriation was filed in Branch 9 of the Regional
Trial Court of Cebu City and docketed as Civil Case No. CEB14150.23 As occupant of the expropriated portion, Ygoa moved to
withdraw her corresponding share in the expropriation payment.
Petitioners opposed the said motion. 24 The parties did not supply the
Court with the pleadings in the expropriation case; hence, we are
unaware of the parties involved and the issues presented therein.
However, from all indications, the said motion of Ygoa remains
unresolved.
On July 20, 1993, the Pacres siblings (Margarita and Francisco were
already deceased at that time and were only represented by their
heirs) executed a Confirmation of Oral Partition/Settlement of
Estate25 of Pastor Pacres. The relevant statements in the affidavit
read:
1. That our father the late Pastor Pacres died instestate at
Kinasang-an, Pardo, Cebu City on January 2, 1962;
2. That he left some real properties, one of which is a parcel of
land (Lot No. 9, PCS 07-01-000006, Cebu Cad., located at
Kinasang-an, Pardo, Cebu City);
legal redemption case, Marios heirs insist in the action for specific
performance that the heirs agreed on a partition prior to the sale.
They seek compliance with such agreement from their siblings
vendees, Ygoa and Ramirez, on the basis that the two were privy to
these agreements, hence bound to comply therewith. In compliance
with such partition, Ygoa and Ramirez should desist from claiming
any portion of the expropriation payment for the front lots.
Their other cause of action is directed solely at Ygoa, whom they
insist agreed to additional, albeit unwritten, obligations other than
the payment of the purchase price of the shares in Lot No. 9.
Vearanda and Marios heirs insist that Ygoa contracted with her
vendors to assume all obligations regarding the payment of past and
present estate taxes, survey Lot No. 9 in accordance with the oral
partition, and obtain separate titles for each portion. While these
obligations were not written into the deeds of sale, petitioners insist
it is not subject to the Statute of Frauds since these obligations were
allegedly partly complied with by Ygoa. They cite as evidence of
Ygoas compliance the survey of her purchased lots and payment of
realty taxes.
Respondents denied privity with the heirs oral partition. They further
maintained that no such partition took place and that the portions
sold to and occupied by them were located in front of Lot No. 9;
hence they are the ones entitled to the expropriation
payment.29 They sought damages from the unfounded suit leveled
against them. To discredit petitioners assertion of an oral partition,
respondents presented Exhibit No. 1, which petitioner Valentina
herself executed during her testimony. Exhibit No. 1 demonstrated
Valentinas recollection of the actual occupation of the Pacres
siblings, their heirs and vendees. The sketch undermined petitioners
allegation that the heirs partitioned the property and immediately
took possession of their allotted lots/shares. Ygoa also denied ever
agreeing to the additional obligations being imputed against her.
Our Ruling
Whether petitioners were able to prove the existence of the alleged
oral agreements such as the partition and the additional obligations
of surveying and titling
Issues
Petitioners formulated the following issues:34
1. Whether or not this complaint for specific performance,
damages and attorneys fee [sic] with a prayer for the
issuance of a restraining order and later on issuance of a writ
of permanent injunction is tenable.
2. Whether or not the area purchased and owned by
respondents in Lot No. 9 is located along or fronting the
national highway.
3. Whether or not the lower court committed grave abuse of
discretion by rendering a decision not in accord with laws and
applicable decisions of the Supreme Court, resulting to the
unrest of this case.
4. Whether or not it is lawful for the respondents to claim
ownership of the P220,000.00 which the government set aside
for the payment of the expropriated area in Lot No. 9, fronting
the highway, covered by the road widening.
Consolidated and simplified, the issues to be resolved are:
I
Whether petitioners were able to prove the existence of the alleged
oral agreements such as the partition and the additional obligations
of surveying and titling
II
Whether the issue of ownership regarding the front portion of Lot No.
9 and entitlement to the expropriation payment may be resolved in
this action
and appellate courts did not appreciate their evidence regarding the
existence of the alleged oral partition, the reality is that their
evidence is utterly unconvincing.
With respect to the alleged additional obligations which petitioners
seek to be enforced against respondent Ygoa, we likewise find that
the trial and appellate courts did not err in rejecting them. Petitioners
allege that when Ygoa bought portions of Lot No. 9 from petitioners
four siblings, aside from paying the purchase price, she also bound
herself to survey Lot No. 9 including the shares of the petitioners (the
non-selling siblings); to deliver to petitioners, free of cost, the titles
corresponding to their definite shares in Lot No. 9; and to pay for all
their past and present estate and realty taxes.45 According to
petitioners, Ygoa agreed to these undertakings as additional
consideration for the sale, even though they were not written in the
Deeds of Sale.
Like the trial and appellate courts, we find that these assertions by
petitioners have not been sufficiently established.
In the first place, under Article 1311 of the Civil Code, contracts take
effect only between the parties, their assigns and heirs (subject to
exceptions not applicable here). Thus, only a party to the contract
can maintain an action to enforce the obligations arising under said
contract.46 Consequently, petitioners, not being parties to the
contracts of sale between Ygoa and the petitioners siblings, cannot
sue for the enforcement of the supposed obligations arising from said
contracts.
It is true that third parties may seek enforcement of a contract under
the second paragraph of Article 1311, which provides that "if a
contract should contain some stipulation in favor of a third person, he
may demand its fulfillment." This refers to stipulations pour autrui, or
stipulations for the benefit of third parties. However, the written
contracts of sale in this case contain no such stipulation in favor of
the petitioners. While petitioners claim that there was an oral
stipulation, it cannot be proven under the Parol Evidence Rule. Under
this Rule, "[w]hen the terms of an agreement have been reduced to
writing, it is considered as containing all the terms agreed upon and
there can be, between the parties and their successors in interest, no
On the other hand, respondents charge petitioners with forumshopping on the ground that the issue of ownership had already been
submitted to the expropriation court. The trial court affirmed this
argument stating that petitioners resorted to forum-shopping, while
the appellate court ruled that it could not determine the existence of
forum-shopping considering that it was not provided with the
pleadings in the expropriation case.
We agree with the CA on this score. The parties did not provide the
Court with the pleadings filed in the expropriation case, which makes
it impossible to know the extent of the issues already submitted by
the parties in the expropriation case and thereby assess whether
there was forum-shopping.
Nonetheless, while we cannot rule on the existence of forumshopping for insufficiency of evidence, it is correct that the issue of
ownership should be litigated in the expropriation court. 50 The court
hearing the expropriation case is empowered to entertain the
conflicting claims of ownership of the condemned property and
adjudge the rightful owner thereof, in the same expropriation
case.51 This is due to the intimate relationship of the issue of
ownership with the claim for the expropriation payment. Petitioners
objection regarding respondents claim over the expropriation
payment should have been brought up in the expropriation court as
opposition to respondents motion. While we do not know if such
objection was already made,52 the point is that the proper venue for
such issue is the expropriation court, and not here where a different
cause of action (specific performance) is being litigated.
We also cannot agree with the trial courts order to partition the lot in
accordance with Exhibit No. 1 or the sketch prepared by petitioner
Valentina. To do so would resolve the issue of ownership over
portions of Lot No. 9 and effectively preempt the expropriation court,
based solely on actual occupation (which was the only thing which
Exhibit No. 1 could have possibly proved). It will be remembered that
Exhibit No. 1 is simply a sketch demonstrating the portions of Lot No.
9 actually occupied by the parties. It was offered simply to impeach
petitioners assertion of actual occupation in accordance with the
terms of the alleged oral partition.
Let it be made clear that our ruling, just like those of the trial court
and the appellate court, is limited to resolving petitioners action for
specific performance. Given the finding that petitioners failed to
prove the existence of the alleged oral partition and the alleged
additional consideration for the sale, they cannot compel
respondents to comply with these inexistent obligations. In this
connection, there is no basis for petitioners claim that the CA
Decision was incomplete by not definitively ruling on the ownership
over the front lots. The CA decision is complete. It ruled that
petitioners failed to prove the alleged obligations and are therefore
not entitled to specific performance thereof.
WHEREFORE, the petition is DENIED. The assailed October 28,
2005 Decision of the Court of Appeals in CA-G.R. No. 174719, as well
as its August 31, 2006 Resolution, are AFFIRMED.
SO ORDERED.
Manila
EN BANC
G.R. No. L-11240
The flaw in this argument lies in ignoring that under Article 1274,
liberality of the do or is deemed causa in those contracts that are of
"pure" beneficence; that is to say, contracts designed solely and
exclusively to procure the welfare of the beneficiary, without any
intent of producing any satisfaction for the donor; contracts, in other
words, in which the idea of self-interest is totally absent on the part
of the transferor. For this very reason, the same Article 1274 provides
that in remuneratory contracts, the consideration is the service or
benefit for which the remuneration is given; causa is not liberality in
these cases because the contract or conveyance is not made out of
pure beneficence, but "solvendi animo." In consonance with this
view, this Supreme Court in Philippine Long Distance Co. vs.
Jeturian * G.R. L-7756, July 30, 1955, like the Supreme Court of Spain
in its decision of 16 Feb. 1899, has ruled that bonuses granted to
employees to excite their zeal and efficiency, with consequent
benefit for the employer, do not constitute donation having liberality
for a consideration.
Here the facts as found by the Court of Appeals (and which we can
not vary) demonstrate that in making the donation in question, the
late Salvador P. Lopez was not moved exclusively by the desire to
benefit appellant Conchita Liguez, but also to secure her cohabiting
with him, so that he could gratify his sexual impulses. This is clear
from the confession of Lopez to the witnesses Rodriguez and Ragay,
that he was in love with appellant, but her parents would not agree
unless he donated the land in question to her. Actually, therefore, the
donation was but one part of an onerous transaction (at least with
appellant's parents) that must be viewed in its totality. Thus
considered, the conveyance was clearly predicated upon an
illicit causa.
Appellant seeks to differentiate between the alleged liberality of
Lopez, as causa for the donation in her favor, and his desire for
cohabiting with appellant, as motives that impelled him to make the
donation, and quotes from Manresa and the jurisprudence of this
Court on the distinction that must be maintained between causa and
motives (De Jesus vs. Urrutia and Co., 33 Phil. 171). It is well to note,
however that Manresa himself (Vol. 8, pp. 641-642), while
maintaining the distinction and upholding the inoperativeness of the
motives of the parties to determine the validity of the contract,
expressly excepts from the rule those contracts that are conditioned
upon the attainment of the motives of either party.
. . . distincion importantisima, que impide anular el contrato
por la sola influencia de los motivos a no ser que se hubiera
subordinando al cumplimiento de estos como condiciones la
eficacia de aquel.
The same view is held by the Supreme Court of Spain, in its decisions
of February 4, 1941, and December 4, 1946, holding that the motive
may be regarded as causa when it predetermines the purpose of the
contract.
In the present case, it is scarcely disputable that Lopez would not
have conveyed the property in question had he known that appellant
would refuse to cohabit with him; so that the cohabitation was an
implied condition to the donation, and being unlawful, necessarily
tainted the donation itself.
The Court of Appeals rejected the appellant's claim on the basis of
the well- known rule "in pari delicto non oritur actio" as embodied in
Article 1306 of 1889 (reproduced in Article 1412 of the new Civil
Code):
ART. 1412. If the act in which the unlawful or forbidden cause
consists does not constitute a criminal offense, the following
rules shall be observed:
(1) When the fault is on the part of both contracting parties,
neither may recover what he has given by virtue of the
contract, or demand the performance of the other's
undertaking;
(2) When only one of the contracting parties is at fault, he
cannot recover, what he has given by reason of the contract,
or ask for fulfillment of what has been promised him. The
other, who is not at fault, may demand the return of what he
has given without any obligation to comply with his promise.
In the case at bar the plaintiff could establish prima facie his
sole ownership by the bill of sale from Smith, Bell and Co. and
the official registration. The defendant, on his part, might
overthrow this title by proof through a certain subsequent
agreement between him and the plaintiff, dated March 16,
1902, that they had become owners in common of the vessel,
'the agreement not disclosing the illegal motive for placing
the formal title in the plaintiff. Such an ownership is not in
itself prohibited, for the United States courts recognize the
equitable ownership of a vessel as against the holder of a
legal title, where the arrangement is not one in fraud of the
law. (Weston vs. Penniman, Federal Case 17455; Scudder vs.
Calais Steamboat Company, Federal Case 12566.).
The prima facie donation inter vivos and its acceptance by the
donees having been proved by means of a public instrument,
and the donor having been duly notified of said acceptance,
the contract is perfect and obligatory and it is perfectly in
order to demand its fulfillment, unless an exception is proved
which is based on some legal reason opportunely alleged by
the donor or her heirs.
So long as the donation in question has not been judicially
proved and declared to be null, inefficacious, or irregular, the
land donated is of the absolute ownership of the donees and
consequently, does not form a part of the property of the
estate of the deceased Martina Lopez; wherefore the action
instituted demanding compliance with the contract, the
delivery by the deforciant of the land donated, or that it be,
prohibited to disturb the right of the donees, should not be
considered as incidental to the probate proceedings
aforementioned.
The case of Galion vs. Gayares, supra, is not in point. First, because
that case involved a stimulated transfer that case have no effect,
while a donation with illegal causa may produce effects under certain
circumstances where the parties are not of equal guilt; and again,
because the transferee in the Galion case took the property subject
to lis pendens notice, that in this case does not exist.
In view of the foregoing, the decisions appealed from are reversed
and set aside, and the appellant Conchita Liguez declared entitled to
so much of the donated property as may be found, upon proper
liquidation, not to prejudice the share of the widow Maria Ngo in the
conjugal partnership with Salvador P. Lopez or the legitimes of the
forced heirs of the latter. The records are ordered remanded to the
court of origin for further proceedings in accordance with this
opinion. Costs against appellees. So ordered.
SUPREME
Manila
EN BANC
COURT
plaintiff-appellant.
CASTRO, J.:
Justina Santos y Canon Faustino and her sister Lorenzo were the
owners in common of a piece of land in Manila. This parcel, with an
area of 2,582.30 square meters, is located on Rizal Avenue and
opens into Florentino Torres street at the back and Katubusan street
on one side. In it are two residential houses with entrance on
Florentino Torres street and the Hen Wah Restaurant with entrance on
Rizal Avenue. The sisters lived in one of the houses, while Wong
Heng, a Chinese, lived with his family in the restaurant. Wong had
been a long-time lessee of a portion of the property, paying a
monthly rental of P2,620.
On September 22, 1957 Justina Santos became the owner of the
entire property as her sister died with no other heir. Then already
well advanced in years, being at the time 90 years old, blind, crippled
and an invalid, she was left with no other relative to live with. Her
only companions in the house were her 17 dogs and 8 maids. Her
otherwise dreary existence was brightened now and then by the
visits of Wong's four children who had become the joy of her life.
Wong himself was the trusted man to whom she delivered various
amounts for safekeeping, including rentals from her property at the
corner of Ongpin and Salazar streets and the rentals which Wong
himself paid as lessee of a part of the Rizal Avenue property. Wong
also took care of the payment; in her behalf, of taxes, lawyers' fees,
In his answer, Wong insisted that the various contracts were freely
and voluntarily entered into by the parties. He likewise disclaimed
knowledge of the sum of P33,724.27, admitted receipt of P7,344.42
and P10,000, but contended that these amounts had been spent in
accordance with the instructions of Justina Santos; he expressed
readiness to comply with any order that the court might make with
respect to the sums of P22,000 in the bank and P3,000 in his
possession.
The case was heard, after which the lower court rendered judgment
as follows:
[A]ll the documents mentioned in the first cause of action,
with the exception of the first which is the lease contract of 15
November 1957, are declared null and void; Wong Heng is
condemned to pay unto plaintiff thru guardian of her property
the sum of P55,554.25 with legal interest from the date of the
filing of the amended complaint; he is also ordered to pay the
sum of P3,120.00 for every month of his occupation as lessee
under the document of lease herein sustained, from 15
November 1959, and the moneys he has consigned since then
shall be imputed to that; costs against Wong Heng.
Paragraph 5 of the lease contract states that "The lessee may at any
time withdraw from this agreement." It is claimed that this stipulation
offends article 1308 of the Civil Code which provides that "the
contract must bind both contracting parties; its validity or compliance
cannot be left to the will of one of them."
We have had occasion to delineate the scope and application of
article 1308 in the early case of Taylor v. Uy Tieng Piao.1 We said in
that case:
Article 1256 [now art. 1308] of the Civil Code in our opinion
creates no impediment to the insertion in a contract for
personal service of a resolutory condition permitting the
cancellation of the contract by one of the parties. Such a
stipulation, as can be readily seen, does not make either the
validity or the fulfillment of the contract dependent upon the
will of the party to whom is conceded the privilege of
cancellation; for where the contracting parties have agreed
that such option shall exist, the exercise of the option is as
much in the fulfillment of the contract as any other act which
may have been the subject of agreement. Indeed, the
cancellation of a contract in accordance with conditions
agreed upon beforehand is fulfillment.2
From this judgment both parties appealed directly to this Court. After
the case was submitted for decision, both parties died, Wong Heng
on October 21, 1962 and Justina Santos on December 28, 1964.
Wong was substituted by his wife, Lui She, the other defendant in this
case, while Justina Santos was substituted by the Philippine Banking
Corporation.
Q But, she did not follow your advice, and she went with the
contract just the same?
A She agreed first . . .
Q Agreed what?
A Agreed with my objectives that it is really onerous and that I
was really right, but after that, I was called again by her and
she told me to follow the wishes of Mr. Wong Heng.
xxx
xxx
xxx
xxx
xxx
Nor is there merit in the claim that her consent to the lease contract,
as well as to the rest of the contracts in question, was given out of a
mistaken sense of gratitude to Wong who, she was made to believe,
had saved her and her sister from a fire that destroyed their house
during the liberation of Manila. For while a witness claimed that the
sisters were saved by other persons (the brothers Edilberto and
Mariano Sta. Ana)13 it was Justina Santos herself who, according to
her own witness, Benjamin C. Alonzo, said "very emphatically" that
she and her sister would have perished in the fire had it not been for
Wong.14 Hence the recital in the deed of conditional option (Plff Exh.
7) that "[I]tong si Wong Heng ang siyang nagligtas sa aming
dalawang magkapatid sa halos ay tiyak na kamatayan", and the
equally emphatic avowal of gratitude in the lease contract (Plff Exh.
3).
As it was with the lease contract (Plff Exh. 3), so it was with the rest
of the contracts (Plff Exhs. 4-7) the consent of Justina Santos was
given freely and voluntarily. As Atty. Alonzo, testifying for her, said:
[I]n nearly all documents, it was either Mr. Wong Heng or
Judge Torres and/or both. When we had conferences, they
used to tell me what the documents should contain. But, as I
said, I would always ask the old woman about them and
invariably the old woman used to tell me: "That's okay. It's all
right."15
But the lower court set aside all the contracts, with the exception of
the lease contract of November 15, 1957, on the ground that they
are contrary to the expressed wish of Justina Santos and that their
considerations are fictitious. Wong stated in his deposition that he did
not pay P360 a month for the additional premises leased to him,
because she did not want him to, but the trial court did not believe
him. Neither did it believe his statement that he paid P1,000 as
consideration for each of the contracts (namely, the option to buy the
leased premises, the extension of the lease to 99 years, and the
fixing of the term of the option at 50 years), but that the amount was
returned to him by her for safekeeping. Instead, the court relied on
the testimony of Atty. Alonzo in reaching the conclusion that the
contracts are void for want of consideration.
Atty. Alonzo declared that he saw no money paid at the time of the
execution of the documents, but his negative testimony does not rule
out the possibility that the considerations were paid at some other
time as the contracts in fact recite. What is more, the consideration
need not pass from one party to the other at the time a contract is
executed because the promise of one is the consideration for the
other.16
With respect to the lower court's finding that in all probability Justina
Santos could not have intended to part with her property while she
was alive nor even to lease it in its entirety as her house was built on
it, suffice it to quote the testimony of her own witness and lawyer
who prepared the contracts (Plff Exhs. 4-7) in question, Atty. Alonzo:
The ambition of the old woman, before her death, according
to her revelation to me, was to see to it that these properties
be enjoyed, even to own them, by Wong Heng because Doa
Justina told me that she did not have any relatives, near or
far, and she considered Wong Heng as a son and his children
her grandchildren; especially her consolation in life was when
she would hear the children reciting prayers in Tagalog.17
She was very emphatic in the care of the seventeen (17) dogs
and of the maids who helped her much, and she told me to
see to it that no one could disturb Wong Heng from those
properties. That is why we thought of the ninety-nine (99)
years lease; we thought of adoption, believing that thru
adoption Wong Heng might acquire Filipino citizenship; being
the adopted child of a Filipino citizen.18
This is not to say, however, that the contracts (Plff Exhs. 3-7) are
valid. For the testimony just quoted, while dispelling doubt as to the
intention of Justina Santos, at the same time gives the clue to what
we view as a scheme to circumvent the Constitutional prohibition
against the transfer of lands to aliens. "The illicit purpose then
becomes the illegal causa"19 rendering the contracts void.
Taken singly, the contracts show nothing that is necessarily illegal,
but considered collectively, they reveal an insidious pattern to
subvert by indirection what the Constitution directly prohibits. To be
the reasons given by the court, we think that the claim of Justina
Santos totalling P37,235, as rentals due to her after deducting
various expenses, should be rejected as the evidence is none too
clear about the amounts spent by Wong for food29 masses30 and
salaries of her maids.31 His claim for P9,210.49 must likewise be
rejected as his averment of liquidation is belied by his own admission
that even as late as 1960 he still had P22,000 in the bank and P3,000
in his possession.
ACCORDINGLY, the contracts in question (Plff Exhs. 3-7) are annulled
and set aside; the land subject-matter of the contracts is ordered
returned to the estate of Justina Santos as represented by the
Philippine Banking Corporation; Wong Heng (as substituted by the
defendant-appellant Lui She) is ordered to pay the Philippine Banking
Corporation the sum of P56,564.35, with legal interest from the date
of the filing of the amended complaint; and the amounts consigned
in court by Wong Heng shall be applied to the payment of rental from
November 15, 1959 until the premises shall have been vacated by
his heirs. Costs against the defendant-appellant.