cases for private corporations

7/18/2019 Cases for Private Corporations

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CASES FOR PRIVATE CORPORATIONS

I. HISTORICAL BACKGROUND1. The Corporation La

!. The Corporation Co"e

G.R. No. 1#$%&' O(to)er 1*+ !$$,

CECILIA CASTILLO+ OSCAR DEL ROSARIO+ ARTURO S. FLORES+ -ER-ES NAVARRO+

ARIA ANTONIA TEPLO an" EDICAL CENTER PARA/A0UE+ INC.+ petitioners,

vs.

ANGELES BALINGHASA+ RENATO BERNABE+ ALODIA DEL ROSARIO+ ROEO

FUNTILA+ TERESITA GAANILO+ RUSTICO 2IENE3+ ARACELI44 2O+ ESERALDAEDINA+ CECILIA ONTALBAN+ VIRGILIO OBLEPIAS+ CARENCITA PARRENO+

CESAR REES+ RENALDO SAVET+ SERAPIO TACCAD+ VICENTE VALDE3+ SALVACION

VILLAORA+ an" HUBERTO VILLAREAL+ respondents.

D E C I S I O N

0UISUBING+ J.:

For review on certiorari is the Partia5 26"78ent1 dated November 26, 2001 in Civi Case No. 01!01"0,

o# the $e%iona &ria Co'rt ($&C) o# *ara+a'e Cit-, ranch 2/. &he tria co'rt decared the Febr'ar-

, 2001, eection o# the board o# directors o# the edica Center *ara+a'e, Inc. (C*I) vaid. &he

*artia 3'd%ment dismissed petitioners4 #irst ca'se o# action, speci#ica-, to ann' said eection #or

deprivin% petitioners their votin% ri%hts and to be voted on as members o# the board.

&he #acts, as c'ed #rom records, are as #oows5

*etitioners and the respondents are stochoders o# C*I, with the #ormer hodin% Cass 77 shares and

the atter ownin% Cass 787 shares.

C*I is a domestic corporation with o##ices at Dr. 8. Santos 8ven'e, S'cat, *ara+a'e Cit-. It was

or%ani9ed sometime in September 1::. 8t the time o# its incorporation, 8ct No. 1"/, the od



Corporation ;aw was sti in #orce and e##ect. 8rtice <II o# C*I4s ori%ina 8rtices o# Incorporation,

as approved b- the Sec'rities and E=chan%e Commission (SEC) on October 26, 1::, reads as #oows5

SE<EN&>. &hat the a'thori9ed capita stoc o# the corporation is &?O I;;ION (*2,000,000.00)

*ESOS, *hiippine C'rrenc-, divided into &?O &>O@S8ND (2,000) S>8$ES at a par va'e o# *100

each share, whereb- the ONE &>O@S8ND S>8$ES iss'ed to, and s'bscribed b-, the incorporatin%

stochoders sha be cassi#ied as Cass 8 shares whie the other ONE &>O@S8ND 'niss'ed shares

sha be considered as Cass shares. On- hoders o# Cass 8 shares can have the ri%ht to vote and the

ri%ht to be eected as directors or as corporate o##icers.2 (Stress s'ppied)

On 3'- A1, 11, 8rtice <II o# the 8rtices o# Incorporation o# C*I was amended, to read th's5

SE<EN&>. &hat the a'thori9ed capita stoc o# the corporation is FI<E I;;ION (*/,000,000.00)

*ESOS, divided as #oows5

C;8SS NO. OF S>8$ES *8$ <8;@E

787 1,000 *1,000.00

77 ",000 *1,000.00

On- hoders o# Cass 8 shares have the ri%ht to vote and the ri%ht to be eected as directors or as

corporate o##icers.A (Emphasis s'ppied)

&he #ore%oin% amendment was approved b- the SEC on 3'ne :, 1A. ?hie the amendment %ranted the

ri%ht to vote and to be eected as directors or corporate o##icers on- to hoders o# Cass 787 shares,

hoders o# Cass 77 stocs were %ranted the same ri%hts and privie%es as hoders o# Cass 787 stocs

with respect to the pa-ment o# dividends.

On September , 12, 8rtice <II was a%ain amended to provide as #oows5

SE<EN&>5 &hat the a'thori9ed capita stoc o# the corporation is &>I$&B &?O I;;ION *ESOS

(*A2,000,000.00) divided as #oows5

C;8SS NO. OF S>8$ES *8$ <8;@E

787 1,000 *1,000.00

77 A1,000 1,000.00

E=cept when otherwise provided b- aw, on- hoders o# Cass 787 shares have the ri%ht to vote and the

ri%ht to be eected as directors or as corporate o##icers" (Stress and 'nderscorin% s'ppied).



&he SEC approved the #ore%oin% amendment on September 22, 1A.

On Febr'ar- , 2001, the sharehoders o# C*I hed their ann'a stochoders4 meetin% and eection #or

directors. D'rin% the co'rse o# the proceedin%s, respondent $'stico 3imene9, citin% 8rtice <II, as

amended, and notwithstandin% C*I4s histor-, decared over the obections o# herein petitioners, that

no Cass 77 sharehoder was 'ai#ied to r'n or be voted 'pon as a director. In the past, C*I had seen

hoders o# Cass 77 shares voted #or and serve as members o# the corporate board and some Cass 77

share owners were in #act nominated #or eection as board members. Nonetheess, 3imene9 went on to

anno'nce that the candidates hodin% Cass 787 shares were the winners o# a seats in the corporate

board. &he petitioners protested, caimin% that 8rtice <II was n' and void #or deprivin% them, as

Cass 77 sharehoders, o# their ri%ht to vote and to be voted 'pon, in vioation o# the Corporation Code

(atas *ambansa %. 6), as amended.

On arch 22, 2001, a#ter their protest was %iven short shri#t, herein petitioners #ied a Compaint #or

In'nction, 8cco'ntin% and Dama%es, doceted as Civi Case No. C<!01!01"0 be#ore the $&C o#

*ara+a'e Cit-, ranch 2/. Said compaint was #o'nded on two (2) principa ca'ses o# action, name-5

a. 8nn'ment o# the decaration o# directors o# the C*I made d'rin% the Febr'ar- , 2001 8nn'a

Stochoders4 eetin%, and #or the cond'ct o# an eection whereat a stochoders, irrespective o# the

cassi#ication o# the shares the- hod, sho'd be a##orded their ri%ht to vote and be voted #or and

b. Stochoders4 derivative s'it chaen%in% the vaidit- o# a contract entered into b- the oard o#

Directors o# C*I #or the operation o# the 'traso'nd 'nit./

S'bse'ent-, the compaint was amended to impead C*I as part-!painti## #or p'rposes on- o# the

second ca'se o# action.

e#ore the tria co'rt, the herein petitioners ae%ed that the- were deprived o# their ri%ht to vote and to

be voted on as directors at the ann'a stochoders4 meetin% hed on Febr'ar- , 2001, beca'se

respondents had erroneo's- reied on 8rtice <II o# the 8rtices o# Incorporation o# C*I, despite

8rtice <II bein% contrar- to the Corporation Code, th's n' and void. 8dditiona-, respondents were

in estoppe, beca'se in the past, petitioners were aowed to vote and to be eected as members o# the

board. &he- #'rther caimed that the privie%e %ranted to the Cass 787 sharehoders was more in the

nat're o# a ri%ht %ranted to #o'nder4s shares.



In their 8nswer, the respondents averred that the provisions o# 8rtice <II cear- and cate%orica- state

that on- hoders o# Cass 787 shares have the e=c'sive ri%ht to vote and be eected as directors and

o##icers o# the corporation. &he- denied that the e=c'sivit- was intended on- as a privie%e %ranted to

#o'nder4s shares, as no s'ch proviso is #o'nd in the 8rtices o# Incorporation. &he respondents #'rther

caimed that the e=c'sivit- o# the ri%ht %ranted to Cass 787 hoders cannot be de#eated or impaired b-

an- s'bse'ent e%isative enactment, e.g.the New Corporation Code, as the 8rtices o# Incorporation is

an intra!corporate contract between the corporation and its members between the corporation and its

stochoders and amon% the stochoders. &he- s'bmit that to aow Cass 77 sharehoders to vote and

be eected as directors wo'd constit'te a vioation o# C*I4s #ranchise or charter as %ranted b- the

State.

8t the pre!tria, the tria co'rt r'ed that a partia 'd%ment co'd be rendered on the #irst ca'se o# action

and re'ired the parties to s'bmit their respective position papers or memoranda.

On November 26, 2001, the $&C rendered the *artia 3'd%ment, the dispositive portion o# which reads5

?>E$EFO$E, viewed in the i%ht o# the #ore%oin%, the eection hed on Febr'ar- , 2001 is <8;ID as

the hoders o# C;8SS 77 shares are not entited to vote and be voted #or and this case based on the

First Ca'se o# 8ction is DISISSED.

SO O$DE$ED.6

In #indin% #or the respondents, the tria co'rt r'ed that corporations had the power to cassi#- their

shares o# stocs, s'ch as 7votin% and non!votin%7 shares, con#ormab- with Section 6: o# the

Corporation Code o# the *hiippines. It pointed o't that 8rtice <II o# both the ori%ina and amended

8rtices o# Incorporation cear- provided that on- Cass 787 sharehoders co'd vote and be voted #or

to the e=c'sion o# Cass 77 sharehoders, the e=ception bein% in instances provided b- aw, s'ch as

those en'merated in Section 6, para%raph 6 o# the Corporation Code. &he $&C #o'nd merit in the

respondents4 theor- that the 8rtices o# Incorporation, which de#ines the ri%hts and imitations o# a its

sharehoders, is a contract between C*I and its sharehoders. It is th's the aw between the parties and

sho'd be strict- en#orced as to them. It br'shed aside the petitioners4 caim that the Cass 787

sharehoders were in estoppe, as the eection o# Cass 77 sharehoders to the corporate board ma- be

deemed as a mere act o# benevoence on the part o# the o##icers. Fina-, the co'rt br'shed aside the

7#o'nder4s shares7 theor- o# the petitioners #or ac o# #act'a basis.



>ence, this petition s'bmittin% the soe e%a iss'e o# whether or not the Co'rt a quo, in renderin% the

*artia 3'd%ment dated November 26, 2001, has decided a 'estion o# s'bstance in a wa- not in accord

with aw and 'rispr'dence considerin% that5

1. @nder the Corporation Code, the e=c'sive votin% ri%ht and ri%ht to be voted %ranted b- the 8rtices

o# Incorporation o# the C*I to Cass 8 sharehoders is n' and void, or aread- e=tin%'ished

2. >ence, the decaration o# directors made d'rin% the Febr'ar- , 2001 8nn'a Stochoders4 eetin%

on the basis o# the p'rported e=c'sive votin% ri%hts is n' and void #or havin% been done witho't the

bene#it o# an eection and in vioation o# the ri%hts o# painti##s and Cass sharehoders and

A. *er#orce, another eection sho'd be cond'cted to eect the directors o# the C*I, this time a##ordin%

the hoders o# Cass shares #' votin% ri%ht and the ri%ht to be voted.

&he iss'e #or o'r reso'tion is whether or not hoders o# Cass 77 shares o# the C*I ma- be deprived

o# the ri%ht to vote and be voted #or as directors in C*I.

e#ore 's, petitioners assert that 8rtice <II o# the 8rtices o# Incorporation o# C*I, which denied

them votin% ri%hts, is n' and void #or bein% contrar- to Section 6 o# the Corporation Code. &he- point

o't that Section 6 prohibits the deprivation o# votin% ri%hts e=cept as to pre#erred and redeemabe shares

on-. >ence, 'nder the present aw on corporations, a sharehoders, re%ardess o# cassi#ication, other

than hoders o# pre#erred or redeemabe shares, are entited to vote and to be eected as corporate

directors or o##icers. Since the Cass 77 sharehoders are not cassi#ied as hoders o# either pre#erred or

redeemabe shares, then it necessari- #oows that the- are entited to vote and to be voted #or as

directors or o##icers.

&he respondents, in t'rn, maintain that the %rant o# e=c'sive votin% ri%hts to Cass 787 shares is cear-

provided in the 8rtices o# Incorporation and is in accord with Section / o# the Corporation ;aw (8ct

No. 1"/), which was the prevaiin% aw when C*I was incorporated in 1::. &he- iewise s'bmit

that as the 8rtices o# Incorporation o# C*I is in the nat're o# a contract between the corporation and

its sharehoders and Section 6 o# the Corporation Code co'd not retroactive- app- to it witho't

vioatin% the non!impairment ca'se10 o# the Constit'tion.

?e #ind merit in the petition.



?hen 8rtice <II o# the 8rtices o# Incorporation o# C*I was amended in 12, the phrase 7e=cept

when otherwise provided b- aw7 was inserted in the provision %overnin% the %rant o# votin% powers to

Cass 787 sharehoders. &his partic'ar amendment is reevant #or it speas o# a aw providin% #or

e=ceptions to the e=c'sive %rant o# votin% ri%hts to Cass 787 stochoders. ?hich aw was the

amendment re#errin% to &he determination o# which aw to app- is necessar-. &here are two aws

bein% cited and reied 'pon b- the parties in this case. In this instance, the aw in #orce at the time o# the

12 amendment was the Corporation Code (.*. %. 6), not the Corporation ;aw (8ct No. 1"/),

which had been repeaed b- then.

?e #ind and so hod that the aw re#erred to in the amendment to 8rtice <II re#ers to the Corporation

Code and no other aw. 8t the time o# the incorporation o# C*I in 1::, the ri%ht o# a corporation to

cassi#- its shares o# stoc was sanctioned b- Section / o# 8ct No. 1"/. &he aw repeain% 8ct No.

1"/, .*. %. 6, retained the same %rant o# ri%ht o# cassi#ication o# stoc shares to corporations, b'twith a si%ni#icant chan%e. @nder Section 6 o# .*. %. 6, the re'irements and restrictions on votin%

ri%hts were e=picit- provided #or, s'ch that 7no share ma- be deprived o# votin% ri%hts e=cept those

cassi#ied and iss'ed as 7pre#erred7 or 7redeemabe7 shares, 'ness otherwise provided in this Code7 and

that 7there sha awa-s be a cass or series o# shares which have compete votin% ri%hts.7 Section 6 o#

the Corporation Code bein% deemed written into 8rtice <II o# the 8rtices o# Incorporation o# C*I, it

necessari- #oows that 'ness Cass 77 shares o# C*I stocs are cear- cate%ori9ed to be

7pre#erred7 or 7redeemabe7 shares, the hoders o# said Cass 77 shares ma- not be deprived o# their

votin% ri%hts. Note that there is nothin% in the 8rtices o# Incorporation nor an iota o# evidence on record

to show that Cass 77 shares were cate%ori9ed as either 7pre#erred7 or 7redeemabe7 shares. &he on-

possibe conc'sion is that Cass 77 shares #a 'nder neither cate%or- and th's, 'nder the aw, are

aowed to e=ercise votin% ri%hts.

One o# the ri%hts o# a stochoder is the ri%ht to participate in the contro and mana%ement o# the

corporation that is e=ercised thro'%h his vote. &he ri%ht to vote is a ri%ht inherent in and incidenta to

the ownership o# corporate stoc, and as s'ch is a propert- ri%ht. &he stochoder cannot be deprived o#

the ri%ht to vote his stoc nor ma- the ri%ht be essentia- impaired, either b- the e%isat're or b- the

corporation, witho't his consent, thro'%h amendin% the charter, or the b-!aws.11

Neither do we #ind merit in respondents4 position that Section 6 o# the Corporation Code cannot app- to

C*I witho't r'nnin% a#o' o# the non!impairment ca'se o# the i o# $i%hts. Section 1" 12 o# the

Corporation Code e=press- provides that it sha app- to corporations in e=istence at the time o# the



e##ectivit- o# the Code. >ence, the non!impairment ca'se is inappicabe in this instance. ?hen 8rtice

<II o# the 8rtices o# Incorporation o# C*I were amended in 12, the board o# directors and

stochoders m'st have been aware o# Section 6 o# the Corporation Code and intended that 8rtice <II

be constr'ed in harmon- with the Code, which was then aread- in #orce and e##ect. Since Section 6 o#

the Corporation Code e=press- prohibits the deprivation o# votin% ri%hts, e=cept as to 7pre#erred7 and

7redeemabe7 shares, then 8rtice <II o# the 8rtices o# Incorporation cannot be constr'ed as %rantin%

e=c'sive votin% ri%hts to Cass 787 sharehoders, to the pre'dice o# Cass 77 sharehoders, witho't

r'nnin% a#o' o# the etter and spirit o# the Corporation Code.

&he respondents then tae the tac that the phrase 7e=cept when otherwise provided b- aw7 #o'nd in

the amended 8rtices is on- a handwritten insertion and co'd have been inserted b- an-bod- and that

no board reso'tion was ever passed a'thori9in% or approvin% said amendment.

Said contention is not #or this Co'rt to pass 'pon, invovin% as it does a #act'a 'estion, which is not

proper in this petition. In an appea via certiorari, on- 'estions o# aw ma- be reviewed.1A esides,

respondents did not add'ce pers'asive evidence, b't on- bare ae%ations, to s'pport their s'spicion.

&he pres'mption that in the amendment process, the ordinar- co'rse o# b'siness has been

#oowed1" and that o##icia d't- has been re%'ar- per#ormed1/ on the part o# the SEC, appies in this

case.

9HEREFORE+ the petition is GRANTED. &he *artia 3'd%ment dated November 26, 2001 o# the

$e%iona &ria Co'rt o# *ara+a'e Cit-, ranch 2/, in Civi Case No. 01!01"0 is REVERSED AND

SET ASIDE. No prono'ncement as to costs.

SO ORDERED.

II. CONCEPTS1. De:inition o: Corporation

SECOND DIVISION

UNITED PARAGON INING G.R. No. 1#$%#%CORPORATION+ Petitioner, *resent5

*@NO, J . , Chairperson,

; <er=6= ; S8NDO<8;!@&IE$$EG,

CO$ON8,



8GC@N8, and

8$CI8, JJ .COURT OF APPEALS+ :or8er1!th DIVISION+ ATT. URLP. ENDE3 an" CESARIO>1? F. *rom'%ated5ERITA+

Re=pon"ent=. 8'%'st ", 2006

@ ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ;@

D E C I S I O N

GARCIA+ J .

8ssaied and so'%ht to be set aside in this petition #or review 'nder $'e "/ o# the $'es o#

Co'rt is the DecisionH2 dated 3'- 2", 2001 o# the Co'rt o# 8ppeas (C8), as reiterated in its

$eso'tionHA o# November :, 2001, dismissin% the petition #or certiorari with pra-er #or a temporar-

restrainin% order and preiminar- in'nction thereat #ied b- the herein petitioner in C8!.$. S* No.

"""/0, entited United Paragon Mining Corporation, represented by Feliciano M. Daniel v. Atty.

Murly P. Mendez, in his capacity as Accredited oluntary Arbitrator, !egion , and Cesario F. "r#ita.

&he #acts5

*rior to the instant controvers-, private respondent Cesario F. Ermita (Cesario, #or brevit-) was

a re%'ar empo-ee worin% as a #oreman o# petitioner @nited *ara%on inin% Corporation (@*C,

herea#ter).

On 3an'ar- 1, 16, Cesario received a termination etter bearin% date 3an'ar- 16,

16 and si%ned b- @*C4s *ersonne S'perintendent, Feiciano . Danie, in#ormin%Cesario that

his empo-ment as #oreman is terminated e##ective thirt- da-s a#ter his receipt o# the etter. 8s stated

in the etter, the termination was on acco'nt o# Cesario4s vioation o# compan- r'es a%ainst in#iction

o# bodi- in'ries on a co!empo-ee, it bein% ae%ed therein that Cesario in#icted bodi- in'ries on a

co!empo-ee, a certain 3err- $omero, as we as #or 'naw#'- possessin% a dead- weapon, a boo,

a%ain in vioation o# compan- r'es.

8s a res't o# the termination, the matter was bro'%ht to the %rievance machiner- as mandated

'nder the Coective ar%ainin% 8%reement e=istin% at that time between @*C and the @nited

*ara%on S'pervisors @nion. >avin% #aied to reach a settement thereat, the parties a%reed to s'bmit

http://sc.judiciary.gov.ph/jurisprudence/2006/august2006/G.R.%20No.%20150959.htm#_ftn1








the disp'te to vo'ntar- arbitration. 8ccordin%-, the compaint #or ie%a dismissa was re#erred to

<o'ntar- 8rbitrator 8tt-. 'r- *. ende9 o# the Nationa Conciiation and ediation oard,

$e%iona ranch No. <, ;e%aspi Cit-, whereat the same was doceted as <8 Case No. $/!6/:!0"!

002!6.

On Febr'ar- 2, 1:, <o'ntar- 8rbitrator ende9 rendered a decisionH" in Cesario4s #avor,

statin% that atho'%h the proced'ra re'irements in the termination o# an empo-ee had been

compied with, the termination o# Cesario was 'n'sti#ied beca'se it was arrived at thro'%h %ross

misapprehension o# #acts. E=pains the <o'ntar- 8rbitrator5

8n ana-sis o# the tenor o# the termination etter wo'd seem to indicate that Ceasario

Ermita was separated #rom service simp- beca'se his e=panation was not acceptabe to the

compan-. Stated more b'nt-, Ermita was terminated not beca'se there was a de#inite #indin%

o# #act reative to his s'pposed c'pabiit-, b't beca'se his answer did not #ind #avor with

mana%ement.

=== === ===

&he evidence on record partaes o# the 'ncorroborated statement o# 3err- $omero

caimin% that he was assa'ted b- HCesario. &his caim has been disp'ted and is denied b-

HCesario in the statement e=ec'ted b- him on 3an'ar- 2, 16 as we as in his written

e=panation (8nne= 6, $espondentJs *osition *aper).

On this point, it can be ar%'ed that since this is a case o# oneJs word a%ainst another, the

best that co'd be said o# mana%ementJs evidence is that it has achieved a eve at an e'i!poise

with that o# the Constit'tion. &he spirit o# prevaiin% 'rispr'dence as we as a ibera

interpretation o# the new Constit'tiona provision on abor, wo'd mandate that where a do'bt

e=ists, the same sho'd be resoved in #avor o# abor. &he position o# HCesario appears to have

been stren%thened b- the doc'ment oint- si%ned b- Hhim and 3err- $omero, the s'pposed

victim o# the assa't char%ed.

&his amicabe settement wo'd serve to ne%ate the char%e o# ph-sica in'r- a%ainst

HCesario as a basis #or termination, it appearin% that even Hhis s'pposed victim, 3err-

$omero, who has been made to appear as a compainant in the proceedin%s which res'ted in

the termination etter, has admitted in this amicabe settement (8nne= 8, CompainantJs





*osition *aper) that 7hindi namin% sinasad-a -on at iton% %inawa namin% s'at na ito a- si-a

an% ma%papat'na- na a-os amin% daawa at waan% probema sa isaJt isa.7

&his admission, that comes no ess #rom the s'pposed acc'ser o# HCesario, cear-

estabishes the #act that whatever ma- have happened between them on New BearJs eve was

somethin% that neither o# them wi#'- and vo'ntari- did. Since it has been estabished that

the s'pposed sc'##e between HCesario and $omero was 7hindi sinasad-a,7 then it wo'd

necessari- #oow that there co'd not have been a wi#' and vo'ntar- assa't b- HCesario

'pon $omero. &his sit'ation is #'rther rendered more p'99in% b- the #act that the s'spected

assaiant was himse# the bearer o# the te!tae mars o# in'r-.

=== === ===

It has been estabished to the satis#action o# this 8rbitrator that the boo seen that ni%ht

was 'sed to chop wood to be b'rnt in the bon#ire. &his statement b- peope who happened to

be 'nbiased and disinterested remains 'ncontested and 'ndisp'ted.

F'rther, the preponderance o# evidence shows that it was not HCesario who 'sed said

boo, b't his son.

=== === ===

On these points, it is the #indin% o# this 8rbitrator, and it is so r'ed, that Ceasario

Ermita was 'n'sti#iab- terminated.H/ (?ords in bracets s'ppied).

On the basis o# the above, the <o'ntar- 8rbitrator, in his a#orementioned decision o# Febr'ar- 2,

1:, ordered Cesario4s reinstatement, to wit5

?>E$EFO$E, 'd%ment is hereb- iss'ed orderin% respondent @nited *ara%on inin%

Corporation to immediate- reinstate Ceasario F. Ermita to his #ormer position prior to the

termination witho't oss o# seniorit- nor interr'ption o# service, and to pa- said Ceasario F.

Ermita his bac wa%es, inc'din% s'ch other #rin%e bene#its as he wo'd have been entited to,

#rom the date o# his termination e##ective Febr'ar- 1:, 16 'p to the time o# act'a

reinstatement. 8ttorne-Js #ees are hereb- %ranted e'ivaent to 10 per cent o# s'ch monetar-

award as the compainant is entited to.





For ac o# merit, a other caims #or dama%es are hereb- dismissed.

SO O$DE$ED.

In time, @*C moved #or a reconsideration o# the decision inso#ar as it ordered Cesario4s

reinstatement which @*C so'%ht to avert b- o##erin% separation pa- instead. @*C cites the#oowin% a%ainst the decreed reinstatement5 1) Cesario4s position has aread- been #ied 'p and

2) reinstatement is no on%er appropriate in view o# the s'pposed strained reations between Cesario

and @*C.

In his Order H6 o# 8pri 22, 1:, the <o'ntar- 8rbitrator denied the desired reconsideration

stressin% that @*C4s mana%ement misapprehended the #acts when it ca'sed Cesario4s termination,

which cannot s'pport the caim o# the e=istence o# strained reations between him and the corporation.

@nsatis#ied, @*C, thr' its *ersonne S'perintendent Feiciano . Danie, eevated the case to

the C8 on a *etition #or Certiorari with *ra-er #or &emporar- $estrainin% Order and In'nction,

thereat doceted as C8!.$. S* No. """/0, assertin% that the <o'ntar- 8rbitrator committed %rave

ab'se o# discretion, erroneo's interpretation o# the aw and denia o# s'bstantia 'stice.

In the herein assaied DecisionH: dated 3'- 2", 2001, the C8, witho't %oin% into the merits o#

the petition, dismissed the same on the #oowin% %ro'nds5

1) &he petition #or certiorari was not the proper remed- in order to see review or n'i#-

decisions or #ina orders iss'ed b- the ;abor 8rbiter

2) &he veri#ication in the petition is ine##ective and ins'##icient beca'se it was mere-

si%ned b- the compan-Js *ersonne S'perintendent witho't ae%in% or showin% that he is

a'thori9ed #or the said p'rpose and that the veri#ication was based on nowed%e and

in#ormation

A) &he petitionerJs %ro'nd o# %rave ab'se o# discretion, erroneo's interpretation o# the aw and

denia o# 'stice are act'a- dwein% on the appreciation o# #acts, which cannot be entertained

in a petition #or certiorari.








?ith its motion #or reconsideration havin% been denied b- the C8 in its $eso'tion o# November

:, 2001,H petitioner @*C is now with this Co'rt via the present reco'rse, s'bmittin% #or o'r

consideration the #oowin% 'estions5

I

?>E&>E$ O$ NO& &>E CO@$& OF 8**E8;S E$$ED IN DISISSIN &>E

*E&I&ION 8F&E$ FINDIN &>8& &>E *$O*E$ $EEDB S>O@;D >8<E EEN 8

*E&I&ION FO$ $E<IE? ON CE$&IO$8$I 8ND NO& 8 *E&I&ION FO$ CE$&IO$8$I

II

?>E&>E$ O$ NO& &>E *@;IC $ES*ONDEN& CO@$& OF 8**E8;S E$$ED IN

DISISSIN &>E *E&I&ION 8F&E$ FINDIN &>8& &>E <E$IFIC8&ION *O$&IONOF &>E *E&I&ION ?8S INEFFEC&I<E 8ND INS@FFICIEN& IN &>E 8SENCE OF

8;;E8&ION O$ S>O?IN &>8& FE;ICI8NO D8NIE;, 8S *E$SONNE;

S@*E$IN&ENDEN& ?8S D@;B 8@&>O$IGED &O FI;E &>E *E&I&ION

III

?>E&>E$ O$ NO& &>E *@;IC $ES*ONDEN& CO@$& OF 8**E8;S E$$ED IN

DISISSIN &>E *E&I&ION 8F&E$ FINDIN &>8& &>E *E&I&ION ;8CKS E$I&EC8@SE I& D?E;;ED ON &>E 8**$ECI8&ION OF F8C&S ?>IC> IS NO& *$O*E$

IN *E&I&ION FO$ CE$&IO$8$I.

&he reco'rse m'st have to be DENIED, no reversibe error havin% been committed b- the C8 in

its chaen%ed decision.

?e start with the basic concept that a corporation, ie petitioner @*C, has no power e=cept

those e=press- con#erred on it b- the Corporation Code and those that are impied or incidenta to its

e=istence. In t'rn, a corporation e=ercises said powers thro'%h its board o# directors andLor its d'-

a'thori9ed o##icers and a%ents. It has th's been observed that the power o# a corporation to s'e and be

s'ed in an- co'rt is od%ed with its board o# directors that e=ercises its corporate powers. In t'rn,

ph-sica acts o# the corporation, ie the si%nin% o# doc'ments, can be per#ormed on- b- nat'ra

persons d'- a'thori9ed #or the p'rpose b- the corporate b-!aws or b- a speci#ic act o# the board o#

directors.H








It is petitioner4s post're that there is no necessit- #or a board reso'tion a'thori9in% its

*ersonne S'perintendent to #ie in its beha# the certiorari petition in C8!.$. S* No. """/0 beca'se

said petition arose o't o# the abor disp'te #ied a%ainst it and its *ersonne S'perintendent, Feiciano

. Danie. It is ar%'ed that in Cesario4s compaint #or ie%a dismissa, Danie was made a co!

respondent o# the corporation. @pon this premise, @*C ar%'es that Danie has a the ri%ht to answer

the compaint and to appea an 'n#avorabe 'd%ment therein, which he act'a- did, in his capacit- as

the corporation4s *ersonne S'perintendent and as its representative. *oddin% on, petitioner contends

that were the C8 to insist that Danie co'd not represent the corporation, it #oows that the

proceedin%s be#ore the <o'ntar- 8rbitrator co'd on- be bindin% as a%ainst Danie beca'se the

compan- then co'd not have been d'- represented in said proceedin%s.

&hro'%ho't the proceedin%s be#ore the <o'ntar- 8rbitrator, that is, #rom the #iin% o# the position

papers 'p to the #iin% o# the motion #or reconsideration, @*C was d'- represented b- its co'nse,8tt-. 8rchimedes O. Banto. &r'e it is that Cesario4s compaint #or ie%a dismissa was #ied a%ainst

the corporation and Danie. It appears obvio's to 's, however, that Danie was mere- a nomina

part- in that proceedin%s, as in #act he was impeaded thereat in his capacit- as @*C4s *ersonne

S'perintendent who si%ned the termination etter. For s're, Cesario4s compaint contains no ae%ation

whatsoever #or speci#ic caim or char%e a%ainst Danie in whatever capacit-. 8s it is, Danie was not

in an-wa- a##ected b- the o'tcome o# the ie%a dismissa case beca'se on- the corporation was

made iabe therein to Cesario. ein% not a rea part-!in!interest, Danie has no ri%ht to #ie the

petition in C8!.$. S* No. """/0 in beha# o# the corporation witho't an- a'thorit- #rom its board o#

directors. It is basic in aw that a corporation has a e%a personait- entire- separate and distinct #rom

that o# its o##icers and the atter cannot act #or and on its beha# witho't bein% so a'thori9ed b- its

%overnin% board.

In Pre#iu# Marble !esources, $nc. v. Court o% Appeals,H10 we made it cear that in the absence

o# an a'thorit- #rom the board o# directors, no person, not even the o##icers o# the corporation, can

vaid- bind the atter5

?e a%ree with the #indin% o# p'bic respondent Co'rt o# 8ppeas, that Min the absence

o# an- board reso'tion #rom its board o# directors the Hsic a'thorit- to act #or and in beha# o#

the corporation, the present action m'st necessar- #ai. &he power o# the corporation to s'e

and be s'ed in an- co'rt is od%ed with the board o# directors that e=ercises its corporate

powers. &h's, the iss'e o# a'thorit- and the invaidit- o# painti##!appeant4s s'bscription





which is sti pendin%, is a matter that is aso addressed, considerin% the premises, to the so'nd

'd%ment o# the Sec'rities and E=chan%e Commission.

iven the reait- that the petition in C8!.$. S* No. """/0 was #ied b- Danie in beha# o# and

in representation o# petitioner @*C witho't an enabin% reso'tion o# the atter4s board o# directors,

that petition was #ata- de#ective, inc'sive o# the veri#ication and the certi#ication o# non!

#or'm shoppin% e=ec'ted b- Danie himse#.

&r'e, ampe 'rispr'dence e=ists to the e##ect that s'bse'ent and s'bstantia compiance o# a

petitioner ma- ca #or the rea=ation o# the r'es o# proced're in the interest o# 'stice. H11 't to merit

the Co'rtJs ibera consideration, petitioner m'st show reasonabe ca'se 'sti#-in% non!compiance

with the r'es and m'st convince the Co'rt that the o'tri%ht dismissa o# the petition wo'd de#eat the

administration o# 'stice.H12 >ere, petitioner has not ade'ate- e=pained its #ai're to have the

certi#ication a%ainst #or'm shoppin% si%ned b- its d'- a'thori9ed o##icer. Instead, it mere- persisted

in its thesis that it was not necessar- to show proo# that its *ersonne S'perintendent was d'-

a'thori9ed to #ie that petition and to si%n the veri#ication thereo# and the certi#ication

a%ainst #or'mshoppin% despite the absence o# the necessar- board a'thori9ation, thereb- repeatin% in

the process its basic s'bmission that C8!.$. S* No. """/0 is mere- a contin'ation o# the

proceedin%s be#ore the <o'ntar- 8rbitrator and that its *ersonne S'perintendent was impeaded as

one o# the respondents in Cesario4s compaint #or ie%a dismissa.

?ith the view we tae o# this case, we deem it 'nnecessar- to address petitioner4s other %rievances.

9HEREFORE, the instant petition is DENIED and the assaied C8 decision and reso'tion

are AFFIRED.

Costs a%ainst petitioner.

SO ORDERED.

!. ADVANTAGES AND DISADVANTAGES OF CORPORATE FOR

a Fo6r Ba=i( A"<anta7e= o: Corporate Or7aniationi Stron7 Le7a5 Per=ona5it

G.R. No. L;'&'!' Apri5 1*+ 1%*%








2OSE REO+ 2R.+ petitioner,

vs.THE HON. INTEREDIATE APPELLATE COURT an" E.B. ARCHA TRANSPORTCOPAN+ INC.+ repre=ente" ) APIFANIO B. ARCHA+ respondents.

&rbos, Cabusora, Du#lao ' (ta. Ana %or petitioner.

GANCACO+ J.:

8 corporation is an entit- separate and distinct #rom its stochoders. ?hie not in #act and in reait- a

person, the aw treats a corporation as tho'%h it were a person b- process o# #iction or b- re%ardin% it as

an arti#icia person distinct and separate #rom its individ'a stochoders. 1

>owever, the corporate #iction or the notion o# e%a entit- ma- be disre%arded when it 7is 'sed to de#eat

p'bic convenience, 'sti#- wron%, protect #ra'd, or de#end crime7 in which instances 7the aw wi re%ard

the corporation as an association o# persons, or in case o# two corporations, wi mer%e them into one.7

&he corporate #iction ma- aso be disre%arded when it is the 7mere ater e%o or b'siness cond'it o# a

person.7 ! &here are man- occasions when this Co'rt pierced the corporate vei beca'se o# its 'se to

protect #ra'd and to 'sti#- wron%. &he herein petition #or review o# a. reso'tion o# the Intermediate

8ppeate Co'rt dated Febr'ar- , 1" seein% the reversa thereo# and the reinstatement o# its earier

decision dated 3'ne A0, 1A in 8C!.$. No. 6"6!$ , cas #or the appication o# the #ore%oin%

principes.

In the atter part o# December, 1:: the board o# directors o# 8ron C'stoms roera%e Corporation

(hereina#ter re#erred to as 8ron), composed o# petitioner 3ose $emo, 3r., Ernesto a+ares, Feiciano

Coprada, 3emina Coprada, and Dario *'n9aan with ;'cia ;acaste as Secretar-, adopted a reso'tion

a'thori9in% the p'rchase o# thirteen (1A) tr'cs #or 'se in its b'siness to be paid o't o# a oan the

corporation ma- sec're #rom an- endin% instit'tion. #

Feiciano Coprada, as *resident and Chairman o# 8ron, p'rchased thirteen tr'cs #rom private

respondent on 3an'ar- 2/, 1: #or and in consideration o# */2/,000.00 as evidenced b- a deed o#

abso'te sae. ' In a side a%reement o# the same date, the parties a%reed on a downpa-ment in the amo'nt

o# */0,000.00 and that the baance o# *":/,000.00 sha be paid within si=t- (60) da-s #rom the date o#

the e=ec'tion o# the a%reement. &he parties aso a%reed that 'nti said baance is #'- paid, the down

pa-ment o# */0,000.00 sha accr'e as rentas o# the 1A tr'cs and that i# 8ron #ais to pa- the baance

within the period o# 60 da-s, then the baance sha constit'te as a chatte mort%a%e ien coverin% said



car%o tr'cs and the parties ma- aow an e=tension o# A0 da-s and therea#ter private respondent ma- as

#or a revocation o# the contract and the reconve-ance o# a said tr'cs. &

&he obi%ation is #'rther sec'red b- a promissor- note e=ec'ted b- Coprada in #avor o# 8ron. It is stated

in the promissor- note that the baance sha be paid #rom the proceeds o# a oan obtained #rom the

Deveopment an o# the *hiippines (D*) within si=t- (60) da-s. * 8#ter the apse o# 0 da-s, private

respondent tried to coect #rom Coprada b't the atter promised to pa- on- 'pon the reease o# the D*

oan. *rivate respondent sent Coprada a etter o# demand dated a- 10, 1:. % In his rep- to the said

etter, Coprada reiterated that he was app-in% #or a oan #rom the D* #rom the proceeds o# which

pa-ment o# the obi%ation sha be made. 1$

eanwhie, two o# the tr'cs were sod 'nder a pacto de retro sae to a certain r. ais o# the *erpet'a

;oans and Savin%s an at acaran. &he sae was a'thori9ed b- a board reso'tion made in a meetin%

hed on arch 1/, 1:. 11

@pon in'ir-, private respondent #o'nd that no oan appication was ever #ied b- 8ron with D*. 1!

In the meantime, 8ron paid rentas o# */00.00 a da- p'rs'ant to a s'bse'ent a%reement, #rom 8pri 2:,

1: (the end o# the 0!da- period to pa- the baance) to a- A1, 1:. &herea#ter, no more renta

pa-ments were made.

On 3'ne 1:, 1:, Coprada wrote private respondent be%%in% #or a %race period o# 'nti the end o# the

month to pa- the baance o# the p'rchase price that he wi 'pdate the rentas within the wee and in case

he #ais, then he wi ret'rn the 1A 'nits sho'd private respondent eect to %et bac the same. 1 *rivate

respondent, thro'%h co'nse, wrote 8ron on 8'%'st 1, 1: demandin% the ret'rn o# the 1A tr'cs and

the pa-ment o# *2/,000.00 bac rentas coverin% the period #rom 3'ne 1 to 8'%'st 1, 1:. 1,

8%ain, Coprada wrote private respondent on 8'%'st , 1: asin% #or another %race period o# 'p to

8'%'st A1, 1: to pa- the baance, statin% as we that he is e=pectin% the approva o# his oan

appication #rom a certain #inancin% compan-, and that ten (10) tr'cs have been ret'rned to a%ba%,

Novaiches. 1# On December , 1:, Coprada in#ormed private respondent anew that he had ret'rned ten

(10) tr'cs to a%ba% and that a reso'tion was passed b- the board o# directors con#irmin% the deed o#

assi%nment to private respondent o# *":/,000 #rom the proceeds o# a oan obtained b- 8ron #rom the

State Investment >o'se, Inc. 1'



In d'e time, private respondent #ied a compiant #or the recover- o# */2/,000.00 or the ret'rn o# the 1A

tr'cs with dama%es a%ainst 8ron and its o##icers and directors, Feiciano Coprada, Dario D. *'n9aan,

3emina Coprada, ;'cia ;acaste, ?i#redo ;a-'%, 8rcadio de a Cr'9, Francisco Cave, <icente artine9,

*aci#ico Doario and petitioner with the then Co'rt o# First Instance o# $i9a. On- petitioner answered

the compaint den-in% an- participation in the transaction and ae%in% that 8ron has a distinct corporate

personait-. >e was, however, decared in de#a't #or his #ai're to attend the pre!tria.

In the meanwhie, petitioner sod a his shares in 8ron to Coprada. It aso appears that 8ron amended

its artices o# incorporation thereb- chan%in% its name to 8ron &ransport Internationa, Inc. which

ass'med the iabiit- o# 8ron to private respondent.

8#ter an e) parte reception o# the evidence o# the private respondent, a decision was rendered on October

2, 10, the dispositive part o# which reads as #oows5

Findin% the evidence s'##icient to prove the case o# the painti##, 'd%ment is hereb- rendered in #avor o#

the painti## and a%ainst the de#endants, orderin% them oint- and severa- to pa-

a the p'rchase price o# the tr'cs in the amo'nt o# */2/,000.00 with ... e%a rate (o# interest) #rom the

#iin% o# the compaint 'nti the #' amo'nt is paid

b rentas o# a%ba% propert- at *1,000.00 a month #rom 8'%'st 1: 'nti the premises is ceared o#

the said tr'cs

c attorne-s #ees o# *10,000.00, and

d costs o# s'it.

&he */0,000.00 %iven as down pa-ment sha pertain as rentas o# the tr'cs #rom 3'ne 1 to 8'%'st 1,

1: which is *2/,000.00 (see demand etter o# 8tt-. 8niano E=hibit 7&7) and the remainin% *2/,000.00

sha be #rom 8'%'st 1, 1: 'nti the tr'cs are removed tota- #rom the pace.7 1&

8 motion #or new tria #ied b- petitioner was denied so he appeaed to the then Intermediate 8ppeate

Co'rt (I8C) wherein in d'e co'rse a decision was rendered on 3'ne A0, 1 A settin% aside the said

decision as #ar as petitioner is concemed. >owever, 'pon a motion #or reconsideration #ied b- private

respondent dent, the I8C, in a reso'tion dated Febr'ar- ,1", set aside the decision dated 3'ne A0,



1A. &he appeate co'rt entered another decision a##irmin% the appeaed decision o# the tria co'rt, with

costs a%ainst petitioner.

>ence, this petition #or review wherein petitioner raises the #oowin% iss'es5

I. &he Intermediate 8ppeate Co'rt (I8C) erred in disre%ardin% the corporate #iction and in hodin% the petitioner persona- iabe #or the obi%ation o# the Corporation which decision is patent- contrar- to aw

and the appicabe decision thereon.

II. &he Intermediate 8ppeate Co'rt (I8C) committed %rave error o# aw in its decision b- sanctionin%

the mer%er o# the personait- o# the corporation with that o# the petitioner when the atter was hed iabe

#or the corporate debts. 1*

?e reverse.

&he environmenta #acts o# this case show that there is no co%ent basis to pierce the corporate vei o#

8ron and hod petitioner persona- iabe #or its obi%ation to private respondent. ?hie it is tr'e that in

December, 1:: petitioner was sti a member o# the board o# directors o# 8ron and that he participated

in the adoption o# a reso'tion a'thori9in% the p'rchase o# 1A tr'cs #or the 'se in the broera%e b'siness

o# 8ron to be paid o't o# a oan to be sec'red #rom a endin% instit'tion, it does not appear that said

reso'tion was intended to de#ra'd an-one and more partic'ar- private respondent. It was Coprada,

*resident and Chairman o# 8ron, who ne%otiated with said respondent #or the p'rchase o# 1A car%o

tr'cs on 3an'ar- 2/, 1:. It was Coprada who si%ned a promissor- note to %'arantee the pa-ment o# the

'npaid baance o# the p'rchase price o't o# the proceeds o# a oan he s'pposed- so'%ht #rom the D*.

&he word 7?EJ in the said promissor- note m'st re#er to the corporation which Coprada represented in

the e=ec'tion o# the note and not its stochoders or directors. *etitioner did not si%n the said promissor-

note so he cannot be persona- bo'nd thereb-.

&h's, i# there was an- #ra'd or misrepresentation that was #oisted on private respondent in that there was

a #orthcomin% oan #rom the D* when it #act there was none, it is Coprada who sho'd acco'nt #or the

same and not petitioner.

8s to the sae thro'%h pacto de retro o# the two 'nits to a third person b- the corporation b- virt'e o# a

board reso'tion, petitioner asserts that he never si%ned said reso'tion. e that as it ma-, the sae is not

inherent- #ra'd'ent as the 1A 'nits were sod thro'%h a deed o# abso'te sae to 8ron so that the



corporation is #ree to dispose o# the same. O# co'rse, it was stip'ated that in case o# de#a't in pa-ment to

private respondent o# the baance o# the consideration, a chatte mort%a%e ien sha% be constit'ted on the

1A 'nits. Nevertheess, said mort%a%e is a prior ien as a%ainst the pacto de retro sae o# the 2 'nits.

8s to the amendment o# the artices o# incorporation o# 8ron thereb- chan%in% its name to 8ron

&ransport Internationa, Inc., petitioner ae%es that the chan%e o# corporate name was in order to inc'de

tr'cin% and container -ard operations in its c'stoms broera%e o# which private respondent was d'-

in#ormed in a etter. 1%Indeed, the new corporation con#irmed and ass'med the obi%ation o# the od

corporation. &here is no indication o# an attempt on the part o# 8ron to evade pa-ment o# its obi%ation

to private respondent.

&here is the #act that petitioner sod his shares in 8ron to Coprada d'rin% the pendenc- o# the case. Since

petitioner has no persona obi%ation to private respondent, it is his inherent ri%ht as a stochoder to

dispose o# his shares o# stoc an-time he so desires.

ention is aso made o# the ae%ed 7d'mpin%7 o# 10 'nits in the premises o# private respondent at

a%ba%, Novaiches which to the mind o# the Co'rt does not prove #ra'd and instead appears to be an

attempt on the part o# 8ron to attend to its obi%ations as re%ards the said tr'cs. 8%ain petitioner has no

part in this.

I# the private respondent is the victim o# #ra'd in this transaction, it has not been cear- shown that

petitioner had an- part or participation in the perpetration o# the same. Fra'd m'st be estabished b- cear

and convincin% evidence. I# at a, the principa character on whom #a't sho'd be attrib'ted is Feiciano

Coprada, the *resident o# 8ron, whom private respondent deat with persona- a thro'%h o't.

Fort'nate-, private respondent obtained a 'd%ment a%ainst him #rom the tria co'rt and the said

'd%ment has on% been #ina and e=ec'tor-.

?>E$EFO$E, the petition is $8N&ED. &he 'estioned reso'tion o# the Intermediate 8ppeate Co'rt

dated Febr'ar- ,1" is hereb- set aside and its decision dated 3'ne A0,1A settin% aside the decision o#

the tria co'rt dated October 2, 10 inso#ar as petitioner is concemed is hereb- reinstated and a##irmed,

witho't costs.

SO O$DE$ED.

FIRST DIVISION



2OSE F. ANACOP+ HARISH .$. Nos. 1621"!1:

C. RANANI+ CHANDRU P.PESSUAL an" AUREEN. RANANI+ *resent5

*etitioners,

Davide, 3r., C.J . (Chairman),

P'is'mbin%, ! vers's ! Bnares!Santia%o,

Carpio, and

89c'na, JJ.E0UITABLE PCIBANK+ LAVINELOUNGE9EAR ANUFACTURINGINC.+ PHILIPPINE FIRE AND ARINEINSURANCE CORPORATION an"FIRST LEPANTO;TAISHO *rom'%ated5INSURANCE CORPORATION+ $espondents. 8'%'st 2/, 200/

= !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! =

DECISION

NARES;SANTIAGO+ J .5

$espondent ;avine ;o'n%ewear an'#act'rin%, Inc. (M;avine) ins'red its b'idin%s and s'ppies

a%ainst #ire with *hiippine Fire and arine Ins'rance Corporation (M*hiFire), $i9a S'ret- and

Ins'rance Compan- (M$i9a S'ret-), &abacaera Ins'rance Compan- (M&ICO), First ;epanto!&aisho

Ins'rance Corporation (MFirst ;epanto), E'itabe Ins'rance Corporation (ME'itabe Ins'rance), and

$eiance Ins'rance Corporation (M$eiance Ins'rance). E=cept #or *oic- No. 1A: iss'ed b- First

;epanto, a the poicies provide that5

;oss, i# an-, 'nder this poic- is pa-abe to E'itabe anin% Corporation!reenhis

ranch, as their interest ma- appear s'bect to the terms, conditions, ca'ses and warranties

'nder this poic-. (@nderscorin% s'ppied)

On 8'%'st 1, 1, a #ire %'tted ;avine4s b'idin%s and their contents th's caims were made

a%ainst the poicies. 8s #o'nd b- the O##ice o# the Ins'rance Commission, the ins'rance proceeds pa-abe

to ;avine is *112,2"/,A2".A".H1

;avine was then represented b- >arish C. $amnani (M>arish) b't his a'thorit- was withdrawn

on arch 1:, 2000 b- the oard o# Directors d'e to his ae%ed #ai're to acco'nt #or the ins'rance

http://sc.judiciary.gov.ph/jurisprudence/2005/aug2005/162814_17.htm#_ftn1




proceeds. Chandr' C. $amnani (MChandr') was appointed in his stead and was desi%nated, to%ether with

8tt-. ario 8. 8%'inado, as ;avine4s representatives in ne%otiatin% with the ins'rance companies.

*rior to the reease o# the proceeds, the ins'rance companies re'ired ;avine to si%n a (*orn

(tate#ent in Proo% o% +oss and (ubrogation Agree#ent H2 whereb- the #ormer wo'd be absoved #rom

their iabiities 'pon pa-ment o# the proceeds to E'itabe an. On- >arish si%ned the doc'ment whie

the rest o# ;avine4s directors re#'sed to si%n.

Notwithstandin% Chandr'4s re'est that pa-ments be made #irst to ;avine who sha therea#ter pa-

E'itabe an as the atter4s interest ma- appear, certain ins'rance companies reeased the proceeds

direct- to E'itabe an th's Chandr' #ied, in behal% o% +avine, a *etition #or the Iss'ance o# a ?rit o#

*reiminar- In'nction with *ra-er #or a &emporar- $estrainin% Order HA be#ore the $e%iona &ria Co'rt

($&C) o# *asi% Cit-, a%ainst *hiFire, $i9a S'ret-, &ICO, First ;epanto and E'itabe an. &he case

was doceted as Civi Case No. 62: and ra##ed to ranch :1 presided b- 3'd%e Ceso D. ;avi+a.

>arish, 3ose F. anacop, Chandr' *. *ess'ma, a'reen . $amnani and Savador Corte9+ moved

to interveneH" caimin% the- were ;avine4s inc'mbent directors and that >arish was ;avine4s a'thori9ed

representative.H/ &he- discaimed Chandr'4s desi%nation as president o# ;avine as we as his and 8tt-.

8%'inado4s a'thorit- to #ie the action. &he- aso denied havin% re#'sed to si%n the Sworn Statement in

*roo# o# ;oss and S'bro%ation 8%reement.H6

On Febr'ar- 1", 2001, the tria co'rt %ranted the motion #or intervention H: and therea#ter

denied ;avine4s motion #or reconsideration.H

In their respective 8nswer with Comp'sor- Co'ntercaim, $i9a S'ret- stated its wiin%ness to

pa- the ins'rance proceeds b't on- to the ri%ht#' caimant,H whie E'itabe an ae%ed it had

s'##icient- estabished the amo'nt o# its caim and as bene#iciar- o# the ins'rance poicies, it was entited

to coect the proceeds.H10

&he intervenors in their 8mended 8nswer!in!InterventionH11 with cross!caim a%ainst the

ins'rance companies ae%ed that as o# 8'%'st 1, 1, ;avine4s obi%ations to E'itabe an

amo'nted to *:1,000,000.00 and since E'itabe Ins'rance and $eiance Ins'rance have aread- paid

the ban more than this amo'nt, respondent ins'rance companies sho'd be ordered to immediate-























deiver to ;avine the remainin% ins'rance proceeds thro'%h the intervenors and to pa- interests

thereon #rom the time o# s'bmission o# proo# o# oss.

In its 8nswer H12 dated a- 22, 2001 to ;avine4s compaint and the intervenors4 cross!caim, First

;epanto ae%ed that its share in the combined proceeds was *16,1"/,:60.11, o# which *6,000,000.00 had

aread- been paid to E'itabe an. It withhed pa-ment o# the baance since it co'd not determine to

whom it sho'd be made. It #'rther ae%ed that the intervenors had no personait- to intervene and pra-ed

#or the o'tri%ht dismissa o# their cross!caim a%ainst the ins'rance companies.

&his was re#'ted b- the intervenors who ae%ed that since ;avine and petitioners were aread-

iti%atin%, it was too ate #or First ;epanto to #ie an action #or interpeader. &he- stressed that the atter

m'st now deiver the baance o# the ins'rance proceeds to either E'itabe an or ;avine, thro'%h

the intervenors.H1A

On 3'ne 1, 2001, *hiFire #ied its 8nswer H1" admittin% iabiit- in the amo'nt o#

*12,16,60.0, o# which *",2,A2./2 had been paid to E'itabe an b't withhed pa-in% the

baance 'nti the ri%ht#' caimant has been determined. &ICO did not #ie an answer to ;avine4s

compaint and was decared in de#a't.H1/

8#ter pre!tria, the intervenors #ied a Second 8mended 8nswer!in!InterventionH16 ae%in% that

;avine4s iabiities to E'itabe an were e=tin%'ished since it received proceeds e=ceedin% the

amo'nt o# ;avine4s obi%ations. &h's, the rea estate mort%a%es %iven as sec'rit- there#or be reeased

and the e=cess amo'nt ret'rned to ;avine.

E'itabe an denied that ;avine4s obi%ations were #'- paid, and averred that the oans were

sec'red not on- b- the ins'rance poicies and the rea estate mort%a%es b't aso b- severa s'ret-

a%reements e=ec'ted b- >arish and a'reen $amnani. &he ban pra-ed that5 (a) the ins'rance

companies be ordered to deiver to it the proceeds o# the poicies andLor #or ;avine to be directed to

pa- the o'tstandin% oans (b) the spo'ses >arish and a'reen $amnani be hed soidari- iabe #or

the pa-ment o# the o'tstandin% obi%ations o# ;avine and (c) the mort%a%ed properties be #orecosed

in case o# #ai're o# ;avine, the ins'rers and s'reties to #'- satis#- the oan obi%ations.H1:















In a $ep-,H1 the intervenors denied that ;avine ac'ired #'rther oans #rom the ban #or the -ears

1 and 1. &he promissor- notes ae%ed- pertainin% to these oans were obtained prior to 1 and

the s'ret- a%reements si%ned b- >arish and a'reen $amnani were consoidated in a S'ret- 8%reement

dated 3an'ar- 2:, 1:H1 and that the oan covered b- *N No. &;!>!:!022 had been #'- paid.

In the meantime, E'itabe an and First ;epanto mani#ested in open co'rt that another pre!tria

sho'd be cond'cted on the intervenors4 cross!caim 'nder the Second 8mended 8nswer!in!Intervention

b't the tria co'rt denied the same and proceeded with the hearin% o# the case.H20

On 8pri 2, 2002, the tria co'rt rendered a decision, the dispositive part o# which reads5

?>E$EFO$E, 'd%ment is hereb- rendered5

1. DISISSIN the Compaint dated 3an'ar- 22, 2001, #or ac o# merit, with

costs a%ainst Chandr' C. $amnani.

2. O$DE$IN the de#endant an to re#'nd to painti## thro'%h the

Intervenors the amo'nt o# *6/,1,A6.0/ representin% the overpa-ment as act'a or

compensator- dama%es, with e%a rate o# interest at si= (6Q) per cent per ann'm #rom the

date o# this decision 'nti #' pa-ment.

A. O$DE$IN5

a. De#endant *hiippine Fire and arine Ins'rance Corporation to pa-

painti## thro'%h Intervenors the tota amo'nt o# *1/,111,6:0." representin%

'npaid ins'rance proceeds as act'a or compensator- dama%es, with twent-!nine

(2Q) per cent interest per ann'm #rom October 1, 1 'nti #' pa-ment.

b. De#endant $i9a S'ret- and Ins'rance Compan- to pa- painti##

thro'%h Intervenors the amo'nt o# *1:,100,000.00 representin% 'npaid ins'rance

proceeds as act'a or compensator- dama%es, with twent-!nine (2Q) per cent

interest per ann'm #rom October 1, 1 'nti #' pa-ment.

c. De#endant First ;epanto!&aisho Ins'rance Corporation to pa-

painti## thro'%h Intervenors the tota amo'nt o# *1,2/0,000.00 representin%

'npaid ins'rance proceeds as act'a or compensator- dama%es, with twent-!nine

(2Q) per cent interest per ann'm #rom October 1, 1 'nti #' pa-ment.











d. De#endant &abacaera Ins'rance Compan- to pa- painti## thro'%h

Intervenors the amo'nt o# *2/,60,000.00 representin% 'npaid ins'rance proceeds

as act'a or compensator- dama%es, with twent-!nine (2Q) per cent interest per

ann'm #rom October 1, 1 'nti #' pa-ment.

". O$DE$IN a de#endants to pa-, oint- and severa-, painti## thro'%hIntervenors the amo'nt e'ivaent to ten (10Q) per cent o# the act'a dama%es d'e and

demandabe as and b- wa- o# attorne-4s #ees.

/. C8NCE;;IN the oan mort%a%e annotations and $E&@$NIN to

painti## thro'%h Intervenors &C& No. 2A06, CC& Nos. *&!1::1, *&!1::2 and *&!

1::A.

6. Costs o# s'it.

Co'ntercaims #ied b- painti## a%ainst intervenors and cross!caims #ied b- a

de#endants a%ainst intervenors and co'ntercaims are hereb- DISISSED #or ac o#

merit.

SO O$DE$ED.H21

On 8pri A, 2002, the intervenors #ied a otion #or E=ec'tion *endin% 8ppea H22 on the #oowin%

%ro'nds5 (a) &ICO was on the brin o# insovenc- (b) ;avine was in imminent dan%er o# e=tinction and

(c) an- appea #rom the tria co'rt4s 'd%ment wo'd be mere- diator-.

eanwhie, $i9a S'ret-, First ;epanto, E'itabe an and ;avine separate- #ied a Notice o#

8ppea.H2A *hiFire iewise #ied a Notice o# 8ppea,H2" a otion #or $econsideration (8d Ca'team),

H2/ and a otion to Dismiss.H26 *hiFire4s otion #or $econsideration and otion to Dismiss were denied

b- the tria co'rt on a- 1", 2002.H2:

?itho't #iin% a motion #or reconsideration #rom the decision o# the tria co'rt and even be#ore the

atter co'd r'e on the motion #or e=ec'tion pendin% appea, E'itabe an #ied on 8pri 2", 2002 a

*etition #or Certiorari, *rohibition and andam's (with *ra-er #or &emporar- $estrainin% Order and

*reiminar- In'nction)H2 be#ore the Co'rt o# 8ppeas doceted as C8!.$. S* No. :02. ;avine

aso #ied a *etition #or Certiorari with *ra-er #or &emporar- $estrainin% Order (&$O) and ?rit o#



















*reiminar- In'nctionH2 doceted as C8!.$. S* No. :022, a#ter it withdrew its Notice o#

8ppea. oth caimed that appea was not a pain, speed- and ade'ate remed- 'nder the circ'mstances.

3'd%e ;avi+a %ranted intervenors4 motion #or e=ec'tion pendin% appeaHA0 and iss'ed a writ o#

e=ec'tion on a- 20, 2002HA1

which was impemented the #oowin% da-. *ersona properties o# *hiFire

and First ;epanto were sei9ed the atter4s ban deposits %arnished whie rea properties beon%in% to

E'itabe an were evied 'pon. &he writ was not en#orced a%ainst $i9a S'ret- beca'se its corporate

name and operations were trans#erred to PE Ins'rance (*his.) Incorporation (MPE Ins'rance). HA2

First ;epanto assaied the tria co'rt4s order %rantin% e=ec'tion pendin% appea and the writ o#

e=ec'tion in a *etition #or CertiorariHAA be#ore the Co'rt o# 8ppeas doceted as C8!.$. S* No. :0"".

It ae%ed- did not #ie a motion #or reconsideration o# the tria co'rt4s order d'e to e=treme 'r%enc-, asthe on%oin% e=ec'tion o# the appeaed 'd%ment was threatenin% to para-9e its operations. e#ore on%,

*hiFire aso #ied a *etition #or Certiorari ?ith *ra-er #or &emporar- $estrainin% Order and ?rit o#

*reiminar- In'nction doceted as C8!.$. S* No. :0:, a%ainst the same order and writ o# e=ec'tion.

HA"

$i9a S'ret-, #or its part, did not #ie a petition 'nder $'e 6/ o# the $evised $'es o# Civi

*roced're b't maintained its ordinar- appea #rom the 8pri 2, 2002 decision o# the tria co'rt. >owever,

actin% on the report that $i9a S'ret- was now re!or%ani9ed as PE Ins'rance (*his.) Inc., 3'd%e ;avi+aiss'ed an Order dated a- 2:, 2002 directin% the impementation o# the ?rit o# E=ec'tion a%ainst PE

Ins'rance.HA/

S'bse'ent-, the certiorari petitions were consoidated be#ore the &enth Division o# the Co'rt o#

8ppeas, which there'pon %ranted ;avine4s pra-er #or the iss'ance o# a writ o# preiminar- in'nction

'pon postin% a */0 bond.HA6

In view o# the iss'ance o# the writ o# e=ec'tion b- the tria co'rt, E'itabe an #ied an

8mended andLor S'ppementa *etition #or Certiorari, *rohibition and andam's HA: in C8!.$. S* No.

:02 on 3'ne 11, 2002, assaiin% the tria co'rt4s order %rantin% e=ec'tion pendin% appea as we as the

iss'ance o# the writ o# e=ec'tion. In d'e co'rse, the Co'rt o# 8ppeas prom'%ated a consoidated

decision, the dispositive part o# which reads5
























?>E$EFO$E, premises considered, 'd%ment is hereb- rendered5

(1) SE&&IN 8SIDE the decision dated 8pri 2, 2001

(2) decarin% N@;; and <OID the Specia Order dated a- 1:, 2002 and the

?rit o# E=ec'tion dated a- 20, 2002

(A) remandin% the case to the ower co'rt #or the cond'ct o# pre!tria

con#erence on the Second 8mended 8nswer!in!Intervention and the s'bse'ent peadin%s

#ied in reation thereto and

(") in the event that the ower co'rt decides that ;avine is the one entited to

the proceeds o# the ins'rance poicies, pa-ment thereo# sho'd be withhed, s'bect to the

o'tcome o# the decision on the iss'e on the ri%ht#' members o# the oard o# Directors o#

;avine which is pendin% be#ore the intra!corporate co'rt.

SO O$DE$ED.HA

On arch 1:, 200", the appeate co'rt iss'ed a reso'tion amendin% its earier decision as

#oows5

?>E$EFO$E, premises considered, this Co'rt hereb- resoves to5

1. CO$$EC& para%raph 1 o# the dispositive portion o# the Consoidated

Decision dated a- 2, 200A to re#ect the correct date o# the 'estioned decision o# theco'rt a 'o which is 8pri 2, 2002 and not 8pri 2, 2001

2. C;8$IFB para%raph A o# the Consoidated Decision in the sense that the

case is remanded to the ower co'rt to enabe to ( sic) the parties to amend their respective

peadin%s and iss'es, as ma- be necessar- and cond'ct pre!tria anew and other

proceedin%s to the e=c'sion o# the intervenors in view o# the r'in% that the atter sho'd

not have been aowed to intervene in the case

A. a) ;IF& the order o# ev- and %arnishment on the rea and persona

properties and ban deposits o# E'itabe *CIan b) ;IF& the %arnishment on the ban

acco'nts o# *hiippine Fire and arine Ins'rance Corporation which were made p'rs'ant

to the Specia Order dated a- 1:, 2002 and the ?rit o# E=ec'tion dated a- 20, 2002

which were decared n' and void in this Co'rt4s Consoidated Decision and

/. DENB E'itabe *CIan4s motion to dis'ai#- respondent 3'd%e Ceso

;avi+a #rom hearin% the case 'pon its remand to the ower co'rt.





SO O$DE$ED.HA

@pon proper motion, the Co'rt o# 8ppeas aso s'bse'ent- ordered the i#tin% o# the order o#

ev- and notice o# %arnishment on the rea properties and ban deposits o# First ;epanto in a reso'tion

dated 8pri 20, 200".

E'itabe an then #ied a petition #or review be#ore this Co'rt doceted as .$. Nos. 162"2!"/

assaiin% the appeate co'rt4s reso'tion inso#ar as it denied the ban4s motion to dis'ai#- 3'd%e

;avi+a. >owever, the &hird Division o# this Co'rt denied the petitionH"0 and its s'bse'ent motion #or

reconsideration.H"1

On the other hand, the intervenors R now petitioners R too this reco'rse 'nder $'e "/ ae%in%

that5

I. &>E CO@$& OF 8**E8;S E$$ED IN I<IN D@E CO@$SE &O &>E

*E&I&ION FO$ CE$&IO$8$I OF EP@I&8;E *CI8NK IN C8!.$. S* NO.

:02 8ND &>E *E&I&ION FO$ CE$&IO$8$I OF ;8<INE IN C8!.$. S*

NO. :022 NO&?I&>S&8NDIN &>8& &>E O$DIN8$B ODE OF 8**E8;

@NDE$ SEC&ION 2, $@;E "1 OF &>E $E<ISED $@;ES OF CO@$& >8D

8;$E8DB EEN 8<8I;ED OF B &>E.

II. &>E CO@$& OF 8**E8;S COI&&ED 8N E$$O$ IN <OIDIN &>E

DECISION OF &>E &$I8; CO@$& D8&ED 8*$I; 2, 2002 FO$ ;8CK OF

*$E!&$I8; ON &>E *E&I&IONE$S 8ENDED 8NS?E$!IN!

IN&E$<EN&ION NO&?I&>S&8NDIN &>8& 8 *$E!&$I8; ?8S 8;$E8DB

CONC;@DED 8ND &>E *8$&IES >8<E 8;$E8DB 8DD@CED &>EI$

$ES*EC&I<E E<IDENCES IN &>E &$I8;.

III. &>E CO@$& OF 8**E8;S $8<E;B E$$ED IN >O;DIN &>8&

*E&I&IONE$S ?>O 8$E &>E $I>&F@; EE$S OF &>E O8$D OF

DI$EC&O$S C8NNO& IN&E$<ENE &O *$OSEC@&E &>E 8C&ION FI;EDB ;8<INE &>$O@> 8 INO$I&B S&OCK>O;DE$ ?>O >8S NO

8@&>O$I&B &>E$EFO$.

I<. &>E CO@$& OF 8**E8;S E$$ED IN SE&&IN 8SIDE &>E DECISION OF

&>E &$I8; CO@$& 8ND F$@S&$8&E &>E FINDINS &>8& EP@I&8;E

*CI8NK IS NO& EN&I&;ED &O C;8I &>E INS@$8NCE *$OCEEDS

SINCE &>E ;O8N OF ;8<INE &O I& >8D 8;$E8DB EEN F@;;B *8ID









8S IN F8C& &>E$E ?8S 8N O<E$*8BEN& ?>IC> @S& E

$E&@$NED &O ;8<INE.

<. &>E CO@$& OF 8**E8;S COI&&ED 8N E$$O$ IN <OIDIN &>E

?$I& OF EEC@&ION *ENDIN 8**E8; NO&?I&>S&8NDIN &>8& &>E

3@DEN& ;I8I;I&B IS 8DI&&ED @& I&S S8&ISF8C&ION IS

?I&>>E;D B <I$&@E OF &>E F;ISB 8**E8;.H"2

&he petition is part- meritorio's.

On the #irst assi%ned error, we a%ree that the Co'rt o# 8ppeas sho'd have dismissed C8!.$. S*

Nos. :022 and :02. 8 per'sa o# these petitions show that E'itabe an and ;avine inappropriate-

#ied the petitions #or certiorari when appea was cear- a pain, speed- and ade'ate remed- #rom the

decision o# the tria co'rt. In #act, both #ied their respective notices o# appea #rom the tria co'rt4s

decision, atho'%h ;avine ater withdrew its notice o# appea. &he- there#ore cannot be aowed to

'estion the same decision on the merits and aso invoe the e=traordinar- remed- o# certiorari.

Sim'taneo's #iin% o# a petition #or certiorari 'nder $'e 6/ and an ordinar- appea 'nder $'e "1

o# the $evised $'es o# Civi *roced're cannot be aowed since one remed- wo'd necessari- cance o't

the other. &he e=istence and avaiabiit- o# the ri%ht o# appea proscribes resort to certiorari beca'se one

o# the re'irements #or avaiment o# the atter is precise- that there sho'd be no appea.H"A It is

eementar- that #or certiorari to prosper, it is not eno'%h that the tria co'rt committed %rave ab'se o#

discretion amo'ntin% to ac or e=cess o# 'risdiction the re'irement that there is no appea, nor an-

pain, speed- and ade'ate remed- in the ordinar- co'rse o# aw m'st iewise be satis#ied.H""

In the instant case, E'itabe an and ;avine assaied the tria co'rt4s decision

thro'%h certiorari b- ae%in% that 3'd%e ;avi+a was biased. 8ccordin% to E'itabe an, 3'd%e

;avi+a4s partiait- was evident in his re#'sa to iss'e and serve s'mmons on 3ethma Inc. and in

cond'ctin% pre!tria on petitioners4 Second 8mended 8nswer!in!Intervention. On the other hand, ;avine

ae%ed that 3'd%e ;avi+a disre%arded mandator- provisions o# the $'es o# Co'rt when he aowed

petitioners to intervene that he aso resoved the iss'e o# corporate representation between the two %ro'ps

o# directors o# ;avine when he had no 'risdiction over the s'bect matter.









Cear-, the #ore%oin% ae%ations are proper 'nder $'e "1. It sho'd be pointed o't that when

E'itabe an and ;avine #ied their respective petitions be#ore the Co'rt o# 8ppeas on 8pri 2", 2002,

the tria co'rt had aread- rendered on 8pri 2, 2002 a 'd%ment on the merits. oth had notice o# said

#ina 'd%ment as the- even #ied notices o# appea with the tria co'rt. &his on- %oes to show that

E'itabe an and ;avine 'nwittin%- reco%ni9ed ordinar- appea as the proper remed- in seein%

reversa o# the assaied decision.

It is we!setted that the remed- to obtain reversa or modi#ication o# the 'd%ment on the merits is

appea. &his is tr'e even i# the error, or one o# the errors, ascribed to the tria co'rt renderin% the 'd%ment

is its ac o# 'risdiction over the s'bect matter, or the e=ercise o# power in e=cess thereo#, or %rave ab'se

o# discretion in the #indin%s o# #act or o# aw set o't in the decision. H"/ &h's, whie it ma- be tr'e that a

#ina order or 'd%ment was rendered 'nder circ'mstances that wo'd otherwise 'sti#- resort to a speciacivi action 'nder $'e 6/, the atter wo'd nonetheess be 'navaiin% i# there is an appea or another

pain, speed- and ade'ate remed- in the ordinar- co'rse o# aw.

E'itabe an, however, posits that in certain e=ceptiona cases, certiorari ma- be aowed even

with the avaiabiit- o# an appea, s'ch as where vaid and compein% considerations wo'd warrant the

same or where ri%id appication o# the r'es wo'd res't in a mani#est #ai're or miscarria%e o# 'stice, as

in this case.

E'itabe an4s reiance on "state o% (alud Ji#enez v. Philippine ")port Processing oneH"6 is

mispaced. In that case, resort b- the respondent to a specia civi action was 'sti#ied, even as the

re%ementar- period #or the proper remed- o# appea had aread- apsed, beca'se the assaied order o# the

tria co'rt set aside an e=propriation order that had on% become #ina and e=ec'tor-. &he Co'rt decared

therein that the tria co'rt cear- acted be-ond its 'risdiction #or it cannot modi#- a #ina and e=ec'tor-

order. &he 'estioned order o# the tria co'rt in that case was a patent n'it-.

In contrast, E'itabe an has not shown an- vaid or e=traordinar- circ'mstance that wo'd

'sti#- immediate resort to certiorari. It simp- ae%ed %rave ab'se o# discretion on the part o# the tria

'd%e as p'rported- shown b- a pattern o# 'estionabe r'in%s in #avor o# petitioners. >owever, these

r'in%s ma- not be corrected b- certiorarino matter how irre%'ar or erroneo's the- mi%ht be. I# the co'rt







has 'risdiction over the s'bect matter and o# the person, its r'in%s 'pon a 'estions invoved are

within its 'risdiction and ma- be corrected on- b- an appea #rom the #ina decision. H":

8nother compein% reason #or dismissin% C8!.$. Nos. :022 and :02 is that E'itabe an

and ;avine act'a- en%a%ed in #or'm!shoppin%. 8s pointed o't b- petitioners, there is indeed paraeism

between the instant case and Che#phil ")port ' $#port Corp. v. CA.H"

In Che#phil , *CIan #ied a specia civi action #or certiorari a%ainst #ina orders o# the tria

co'rt, even as its co!parties iewise bro'%ht an ordinar- appea #rom the same #ina orders. 8tho'%h

*CIan did not oin its co!parties in the atter4s appea and instead separate- #ied its own petition 'nder

$'e 6/, the Co'rt nonetheess #o'nd *CIan4s acts as constit'tin% #or'm!shoppin%5

?e view with septicism *CI4s contention that it did not oin the consorti'm

beca'se it Thonest- beieved that certiorari was the more e##icacio's and speed- reie#

avaiabe 'nder the circ'mstances.4 $'e 6/ o# the $evised $'es o# Co'rt is not di##ic't to

'nderstand. Certiorari is avaiabe on- i# there is no appea or other pain, speed- and

ade'ate remed- in the ordinar- co'rse o# aw. >ence, in instit'tin% a separate petition #or

certiorari, *CI has deiberate- resorted to #or'm!shoppin%.

...

It aarms 's to reai9e that we have to constant- repeat o'r warnin% a%ainst #or'm!

shoppin%. ?e cannot over!emphasi9e its i!e##ects, one o# which is apt- demonstrated inthe case at bench wherewe are con#ronted with two divisions o# the Co'rt o# 8ppeas

iss'in% contradictor- decisions . . .

For'm!shoppin% or the act o# a part- a%ainst whom an adverse 'd%ment has been

rendered in one #or'm, o# seein% another (and possib- #avorabe) opinion in another

#or'm (other than b- appea or the specia civi action o# certiorari), or the instit'tion o#

two (2) or more actions or proceedin%s %ro'nded on the same ca'se on the s'pposition that

one or the other co'rt wo'd mae a #avorabe disposition has been characteri9ed as an act

o# mapractice that is prohibited and condemned as tri#in% with the Co'rts and ab'sin%

their processes. It constit'tes improper cond'ct which tends to de%rade the administrationo# 'stice. It has aso been apt- described as deporabe beca'se it adds to the con%estion

o# the aread- heavi- b'rdened docets o# the co'rts. (@nderscorin% s'ppied) H"

&h's, i# we aow the instant petitions o# E'itabe an and ;avine to prosper, this Co'rt wo'd

be con#ronted with the spectace o# two (2) appeate co'rt decisions (one on the specia civi actions

bro'%ht b- E'itabe an and ;avine, and another on the ordinar- appeas taen b- $i9a S'ret-,

E'itabe an and the other respondents) deain% with the same s'bect matter, iss'es, and parties.









Needess to sa-, this is e=act- the pernicio's e##ect that the r'es a%ainst #or'm!shoppin% see to avoid.

Conse'ent-, thecertiorari petitions o# E'itabe an and ;avine m'st be str'c down #or bein%

anathema to the order- administration o# 'stice.

In view o# the precedin% disc'ssion, we #ind it no on%er necessar- to disc'ss petitioners4 second

to #o'rth assi%ned errors. &he propriet- o# the intervention, the ac o# pre!tria and the e=tent o#

E'itabe an4s interests in the ins'rance proceeds, amon% others, are iss'es that m'st proper- be

resoved in the ordinar- appeas. E=cept #or ;avine which apparent- withdrew its notice o# appea, a the

other respondents appeaed the decision o# the tria co'rt 'nder $'e "1. &hese appeas m'st conse'ent-

be aowed to proceed.

8nent petitioners4 #i#th assi%ned error, we #ind that the Co'rt o# 8ppeas did not err in %ivin% d'eco'rse and in %rantin% the petitions in C8!.$. S* Nos. :0: and :0"". &hese certiorari petitions

initiated b- *hiFire and First ;epanto were directed a%ainst the tria co'rt4s orders %rantin% e=ec'tion

pendin% appea and the concomitant iss'ance o# a writ o# e=ec'tion. &he proper reco'rse to be taen #rom

these orders is a specia civi action #or certiorari 'nder $'e 6/, p'rs'ant to Section 1, $'e "1 o# the

$evised $'es o# Civi *roced're.H/0

Certiorari ies a%ainst an order %rantin% e=ec'tion pendin% appea where the same is not #o'nded

'pon %ood reasons. &he #act that the osin% part- had aso appeaed #rom the 'd%ment does not bar

the certiorari proceedin%s, as the appea co'd not be an ade'ate remed- #rom s'ch premat're

e=ec'tion. 8dditiona-, there is no #or'm!shoppin% where in one petition a part- 'estions the order

%rantin% the motion #or e=ec'tion pendin% appea and at the same time 'estions the decision on the

merits in a re%'ar appea be#ore the appeate co'rt. 8#ter a, the merits o# the main case are not to be

determined in a petition 'estionin% e=ec'tion pendin% appea and vice versa.H/1

&he %enera r'e is that on- 'd%ments which have become #ina and e=ec'tor- ma- be e=ec'ted.

H/2 >owever, discretionar- e=ec'tion o# appeaed 'd%ments ma- be aowed 'nder Section 2 (a) o# $'e

A o# the $evised $'es o# Civi *roced're 'pon conc'rrence o# the #oowin% re'isites5 (a) there m'st

be a motion b- the prevaiin% part- with notice to the adverse part- (b) there m'st be a %ood reason #or

e=ec'tion pendin% appea and (c) the %ood reason m'st be stated in a specia order. H/A &he -ardstic

remains the presence or the absence o# %ood reasons consistin% o# e=ceptiona circ'mstances o# s'ch











'r%enc- as to o'twei%h the in'r- or dama%e that the osin% part- ma- s'##er, sho'd the appeaed

'd%ment be reversed ater.H/" Since the e=ec'tion o# a 'd%ment pendin% appea is an e=ception to the

%enera r'e, the e=istence o# %ood reasons is essentia.H//

In the case at bar, petitioners insist that e=ec'tion pendin% appea is 'sti#ied beca'se respondent

ins'rance companies admitted their iabiities 'nder the ins'rance contracts and th's have no reason to

withhod pa-ment.

?e are not pers'aded. &he #act that the ins'rance companies admit their iabiities is not a

compein% or s'perior circ'mstance that wo'd warrant e=ec'tion pendin% appea. On the contrar-,

admission o# their iabiities and wiin%ness to deiver the proceeds to the proper part- miitate a%ainst

e=ec'tion pendin% appea since there is itte or no dan%er that the 'd%ment wi become i'sor-.

&here is iewise no merit in petitioners4 contention that the appeas are mere- diator- beca'se,

whie the ins'rance companies admitted their iabiities, the matter o# how m'ch is owin% #rom each o#

them and who is entited to the same remain 'nsetted. It sho'd be noted that respondent ins'rance

companies are 'estionin% the amo'nts awarded b- the tria co'rt #or bein% over and above the amo'nt

ascertained b- the O##ice o# the Ins'rance Commission. &here are aso three parties caimin% the

ins'rance proceeds, name-5 petitioners, E'itabe an, and ;avine as represented b- the %ro'p o#

Chandr'.

esides, that the appea is mere- diator- is not a %ood reason #or %rantin% e=ec'tion pendin%

appea. 8s hed in -F Corporation v. "dsa (hangrila /otel 5H/6

... it is not #or the tria 'd%e to determine the merit o# a decision he rendered as this is the

roe o# the appeate co'rt. >ence, it is not within competence o# the tria co'rt, in

resovin% a motion #or e=ec'tion pendin% appea, to r'e that the appea is patent- diator-

and re- on the same as basis #or #indin% %ood reasons to %rant the motion. On- an

appeate co'rt can appreciate the diator- intent o# an appea as an additiona %ood reason

in 'phodin% an order #or e=ec'tion pendin% appea...H/:

;ast-, petitioners assert that ;avine4s #inancia distress is s'##icient reason to order e=ec'tion

pendin% appea. Citin% -or0a v. Court o% Appeals,H/ the- caim that e=ec'tion pendin% appea ma- be

%ranted i# the prevaiin% part- is aread- o# advanced a%e and in dan%er o# e=tinction.















-or0a is not appicabe to the case at bar beca'se its #act'a miie' is di##erent. In -or0a, the

prevaiin% part- was a nat'ra person who, at :6 -ears o# a%e, Mma- no on%er eno- the #r'it o# the

'd%ment be#ore he #ina- passes awa-.H/ ;avine, on the other hand, is a 'ridica entit- whose

e=istence cannot be iened to a nat'ra person. Its precario's #inancia condition is not b- itse# a

compein% circ'mstance warrantin% immediate e=ec'tion and does not o'twei%h the on% standin%

%enera poic- o# en#orcin% on- #ina and e=ec'tor- 'd%ments. H60

9HEREFORE, the petition is PARTIALL GRANTED. C8!.$. S* Nos. :022 and :02

are DISISSED. &he assaied decision o# the Co'rt o# 8ppeas dated a- 2, 200A

is AFFIRED inso#ar as it decared n' and void the Specia Order dated a- 1:, 2002 and the ?rit o#

E=ec'tion dated a- 20, 2002 o# the $e%iona &ria Co'rt!*asi% Cit-, ranch :1, in Civi Case No.62:.

SO ORDERED.

ii Centra5ie" ana7e8ent

G.R. No. 1,''$* O(to)er !+ !$$

SPOUSES CONSTANTE FIRE AND A3UCENA E. FIRE+ petitioners,vs.

UKAL ENTERPRISES AND DEVELOPENT CORPORATION+ respondent.

D E C I S I O N

CARPIO+ J.:

&he Case

&his is a petition #or review on certiorari o# the Decision1 dated A 3an'ar- 2001 o# the Co'rt o# 8ppeas in

C8!.$. C< No. 60:":. &he Co'rt o# 8ppeas reversed the Decision2 o# the $e%iona &ria Co'rt, ranch

22A, P'e9on Cit- (7tria co'rt7), which hed that there was no per#ected contract o# sae since there was

no consent on the part o# the seer.

&he Facts




http://www.lawphil.net/judjuris/juri2003/oct2003/gr_146608_2003.html#fnt1








*etitioner Spo'ses Constante and 89'cena Firme (7Spo'ses Firme7) are the re%istered owners o# a parce

o# andA (7*ropert-7) ocated on Dahia 8ven'e, Fairview *ar, P'e9on Cit-. $enato de Castro (7De

Castro7), the vice president o# 'a Enterprises and Deveopment Corporation (7'a Enterprises7)

a'thori9ed his #riend, &eodoro 8vies (78vies7), a broer, to ne%otiate with the Spo'ses Firme #or the

p'rchase o# the *ropert-.

On 2 arch 1/, 'a Enterprises #ied a compaint #or speci#ic per#ormance and dama%es with the

tria co'rt, ae%in% that the Spo'ses Firme rene%ed on their a%reement to se the *ropert-. &he compaint

ased the tria co'rt to order the Spo'ses Firme to e=ec'te the deed o# sae and to deiver the tite to the

*ropert- to 'a Enterprises 'pon pa-ment o# the a%reed p'rchase price.

D'rin% tria, 'a Enterprises presented #ive witnesses, name-, 8vies, De Castro, 8ntonio oreno,

3oce-n Napa and 8ntonio 8ncheta.

8vies testi#ied that De Castro a'thori9ed him to ne%otiate on beha# o# 'a Enterprises #or the p'rchase

o# the *ropert-. 8ccordin% to 8vies, he met with the Spo'ses Firme on 2A 3an'ar- 1/ and he presented

them with a dra#t deed o# sae" (7First Dra#t7) dated Febr'ar- 1/. &he First Dra#t o# the deed o# sae

provides5

DEED OF 8SO;@&E S8;E

KNO? 8;; EN B &>ESE *$ESEN&S5

&his DEED OF 8SO;@&E S8;E made and e=ec'ted b- and between the Spo'ses CONS&8N&E

FI$E and 8G@CEN8 E. FI$E, both o# e%a a%e, Fiipino citi9ens and with posta address at No.

1"/0 @nion, *aco, Cit- o# ania, hereina#ter caed the <ENDO$, and

@K8; EN&E$*$ISES and DE<E;O*EN& CO$*O$8&ION, a corporation d'- or%ani9ed and

re%istered in accordance with *hiippine ;aws, with b'siness address at Dahia 8ven'e, Fairview *ar,

P'e9on Cit-, herein represented b- its *$ESIDEN&, $S. GEN8ID8 8. DE C8S&$O, hereina#ter

caed the <ENDEE.

?I&NESSE&>5

&hat the <ENDO$ is the abso'te and re%istered owner o# a certain parce o# and ocated at Fairview

*ar, P'e9on Cit-, and more partic'ar- described as #oows5








8 parce o# and (;ot ", oc AA o# the consoidation!s'bdivision pan (;$C) *cs!12", Sheet No. I,

bein% a portion o# the consoidation o# ;ots "1!!2!8 and "1!!2!C, *sd!11A6 and ;ot (;$C) *cs!266/,

(;$C) ;$O) $ecord. No. 10A:), sit'ated in P'e9on Cit-, Isand o# ;'9on. o'nded on the NE., points

2 to / b- $oad ;ot 2", o# the consoidation!s'bdivision pan. e%innin% at a point mared 717 on pan,

bein% S. 6: de%. 2A4?., 2.0 m. #rom ;; I, p o# ontaban, $i9a thence N. / de%. A/4E.,

1:.A m. to point 2 thence S. /" de%. 224E., ".00 m. to point A thence S. 1" de%. 214E., 1:.: m. to point

" thence A de%. /64E., 1:.2 m. to point / thence N. / de%. 124 ?., 2A.A m. to point 6 thence N. " de%.

//4 ?., A".A/ m. to the point o# be%innin% containin% an area o# EI>& >@ND$ED 8ND SI (06)

SP@8$E E&E$S, more or ess.

<ENDO$4S tite thereto bein% evidenced b- &rans#er Certi#icate o# &ite No. 26"2"A iss'ed b- the

$e%ister o# Deeds o# P'e9on Cit-

&hat the <ENDO$, #or and in consideration o# the s'm o# &>$EE I;;ION &?O >@ND$ED

&?EN&B FO@$ &>O@S8ND *ESOS (*A,22",000.00) *hiippine C'rrenc-, to them in hand paid and

receipt whereo# is hereb- acnowed%ed, do hereb- SE;;, &$8NSFE$ and CON<EB 'nto the said

<ENDEE, its assi%ns, trans#erees and s'ccessors in interest the above described propert-, #ree #rom a

iens and enc'mbrances whatsoever

It is hereb- m't'a- a%reed that the <ENDEE sha bear a the e=penses #or the capita %ains ta=,

doc'mentar- stamps, doc'mentation, notari9ation, remova and reocation o# the s'atters, re%istration,

trans#er ta= and other #ees as ma- be re'ired b- aw

&hat the <ENDO$ sha pa- the rea estate ta= #or the c'rrent -ear and bac rea estate ta=es, char%es and

penaties i# there are an-.

IN ?I&NESS ?>E$EOF, we have here'nto a##i=ed o'r si%nat'res this UUUU da- o# Febr'ar-, 1/, at

P'e9on Cit-, *hiippines.

CONS&8N&E FI$E @K8; EN&E$*$ISES 8ND

DE<E;O*EN& CO$*.

B5

8G@CEN8 E. FI$E

<ENDO$

GEN8ID8 8. DE C8S&$O

*resident



= = =

&he Spo'ses Firme reected this First Dra#t beca'se o# severa obectionabe conditions, inc'din% the

pa-ment o# capita %ains and other %overnment ta=es b- the seer and the reocation o# the s'atters at the

seer4s e=pense. D'rin% their second meetin%, 8vies presented to the Spo'ses Firme another dra#t deed o#

sae/ (7Second Dra#t7) dated arch 1/. &he Spo'ses Firme ae%ed- accepted the Second Dra#t in view

o# the deetion o# the obectionabe conditions contained in the First Dra#t. 8ccordin% to 8vies, the

Spo'ses Firme were wiin% to se the *ropert- at *",000 per s'are meter. &he- then a%reed that

pa-ment wo'd be made at the Far East an and &r'st Compan- (7FE&C7), *adre Fa'ra ranch,

ania. >owever, the sched'ed pa-ment had to be postponed d'e to probems in the trans#er o# #'nds.

&he Spo'ses Firme ater in#ormed 8vies that the- were no on%er interested in sein% the *ropert-.6

De Castro testi#ied that he a'thori9ed 8vies to ne%otiate #or 'a Enterprises the p'rchase o# the

*ropert- owned b- the Spo'ses Firme. &he *ropert- was ocated beside the Dahia Commercia Compe=

owned b- 'a Enterprises. 8vies in#ormed him that the Spo'ses Firme a%reed to se the *ropert-

at *",000 per s'are meter, pa-abe in cash #or a 'mp s'm o# *A,22",000. F'rthermore, 'a

Enterprises a%reed to pa- the ta=es d'e and to 'ndertae the reocation o# the s'atters on the *ropert-.

For this p'rpose, 'a Enterprises appied #or a oan o#*",/00,000 which FE&C %ranted. 'a

Enterprises then reocated the #o'r #amiies s'attin% on the *ropert- at a cost o# *60,000 per #ami-.

8#ter the s'atters vacated the *ropert-, 'a Enterprises #enced the area, covered it with #iin%

materias, and constr'cted posts and riprap. 'a Enterprises spent appro=imate- *A00,000 #or these

improvements. In a etter : dated : arch 1/, 'a Enterprises o##ered to pa- the p'rchase price

o#*A,22",000 to the Spo'ses Firme 'pon e=ec'tion o# the trans#er doc'ments and deiver- o# the owner4s

d'picate cop- o# &C& No. 26"2"A. &he Spo'ses Firme did not accept this o##er b't instead sent 'a

Enterprises a etter demandin% that its worers vacate the *ropert-. 'a Enterprises then #ied a

compaint #or speci#ic per#ormance and dama%es.

8ntonio oreno, one o# the ae%ed s'atters on the *ropert-, testi#ied that he constr'cted his ho'se on

the *ropert- sometime in 12. On 26 Febr'ar- 1/, he was s'mmoned to%ether with the other s'atters

to a meetin% with 8vies re%ardin% their reocation. &he- a%reed to reocate provided the- wo'd be %iven

#inancia assistance o# *60,000 per #ami-. &h's, on 6 arch 1/, the s'atter #amiies were each

paid *60,000 in the presence o# De Castro and 8vies. &herea#ter, the- vo'ntari- demoished their

ho'ses and vacated the *ropert-.














3oce-n apa, the mana%er o# FE&C, *adre Fa'ra ranch, testi#ied that 'a Enterprises has been their

cient since 1". 8ccordin% to her, 'a Enterprises appied #or a oan o# *",/00,000 on the third wee

o# Febr'ar- 1/ ae%ed- to b'- a ot in Fairview. FE&C approved the oan on the ast wee o#

Febr'ar- and reeased the proceeds on the #irst wee o# arch.10

8ntonio 8ncheta (78ncheta7), baran%a- captain o# aran%a- Fairview, testi#ied that he was present when

one o# the o##icers o# 'a Enterprises, a certain $enato, paid each o# the #o'r s'atter #amiies

aro'nd *60,000 to*100,000. 8ncheta in#ormed Dr. Constante Firme that he tod the s'atters to eave

considerin% that the- aread- received pa-ment #or their reocation. 8ccordin% to 8ncheta, Dr. Constante

Firme m'st have mis'nderstood him and tho'%ht that the s'atters e#t thro'%h 8ncheta4s own e##orts.11

On the other hand, Dr. Constante Firme (7Dr. Firme7) was the soe witness #or the de#endant spo'ses.

Dr. Firme testi#ied that on A0 3an'ar- 1/, he and his wi#e met with 8vies at the 8ristocrat $esta'rant in

P'e9on Cit-. 8vies arran%ed the meetin% with the Spo'ses Firme invovin% their *ropert- in Fairview.

8vies o##ered to b'- the *ropert- at *2,/00 per s'are meter. &he Spo'ses Firme did not accept the o##er

beca'se the- were reservin% the *ropert- #or their chidren. On 6 Febr'ar- 1/, the Spo'ses Firme met

a%ain with 8vies 'pon the atter4s insistence. 8vies showed the Spo'ses Firme a cop- o# a dra#t deed o#

sae12 (7&hird Dra#t7) which 8vies prepared. &he &hird Dra#t o# the deed o# sae provides5

CON$8C& OF S8;E

KNO? 8;; EN B &>ESE *$ESEN&S5

&his 8$EEEN&, e=ec'ted this UUU da- o# Febr'ar-, 1/, b- and between the Spo'ses CONS&8N&E

FI$E and 8G@CEN8 E. FI$E, both o# e%a a%e, Fiipino citi9en and with posta address at

UUUUUUUUUU, P'e9on Cit-, hereina#ter re#erred to as the <ENDO$S, and @K8; EN&E$*$ISES and

DE<E;O*EN& CO$*O$8&ION, a corporation d'- or%ani9ed and re%istered in accordance with

*hiippine ;aws, with posta address at Fairview *ar, P'e9on Cit-, herein represented b- its *resident

and Chie# E=ec'tive O##icer, hereina#ter re#erred to as the <ENDEE.

?I&NESSE&>5

&hat #or and in consideration o# the s'm o# &>$EE I;;ION &?O >@ND$ED &?EN&B FO@$

&>O@S8ND *ESOS (*A,22",000.00), *hiippine C'rrenc-, pa-abe in the #orm hereina#ter e=pressed,

a%reed to se to the <ENDEE and the <ENDEE has a%reed to b'- #rom the <ENDO$S, a parce o# and









sit'ated at Dahia 8ven'e corner $oe= Street, Fairview *ar, P'e9on Cit-, containin% an area o# 06

S'are eters more or ess, o# which the <ENDO$S are the abso'te re%istered owners in accordance

with the ;and $e%istration 8ct, as evidenced b- &rans#er Certi#icate o# &ite No. 26"2"A iss'ed b- the

$e%ister o# Deeds o# P'e9on Cit-, more partic'ar- described and bo'nded as #oows5

(DESC$I*&ION 8ND O@ND8$IES OF *$O*E$&B)

&>E F@$&>E$ &E$S 8ND CONDI&IONS OF &>E CON&$8C& 8$E 8S FO;;O?S5

1. &he <ENDEE a%rees to pa- the <ENDO$S 'pon e=ec'tion o# this Contract the s'm o#

ONE I;;ION *ESOS (*1,000,000.00), *hiippine C'rrenc-, as downpa-ment and

a%rees to pa- the baance o# &?O I;;ION &?O >@ND$ED &?EN&B FO@$

&>O@S8ND *ESOS (*2,22",000.00) at the post o##ice address o# the <ENDO$S in

P'e9on Cit-, or s'ch other pace or O##ice as the <ENDO$S ma- desi%nate within a

period o# si=t- (60) da-s co'nted #rom the date o# this Contract

2. &he <ENDO$S have here'nto a'thori9ed the <ENDEE to mort%a%e the propert- and

s'bmit this Contract, to%ether with a certi#ied tr'e cop- o# the &C&, &a= Decaration, &a=

Cearance and <icinit-L;ot *an, with their ;endin% an. &he proceeds o# the

<ENDEE4S ;oan sha direct- be paid and remitted b- the an to the <ENDO$S

A. &he said parce o# and sha remain in the name o# the <ENDO$S 'nti the ;endin%

an o# the <ENDEE sha have iss'ed a ;etter 'arant- *a-ment in #avor o# the

<ENDO$S, at which time the <ENDO$S a%ree to e=ec'te a Deed o# 8bso'te Sae in

#avor o# the <ENDEE and ca'se the iss'ance o# the Certi#icate o# &ite in the name o# the

atter. &he Capita ains &a= and Doc'mentar- Stamps sha be char%ed #rom the

<ENDO$S in accordance with aw1a*phi1.n2t

". &he pa-ment o# the baance o# *2,22",000.00 b- the <ENDEE to the <ENDO$S sha

be within a period o# si=t- (60) da-s e##ective #rom the date o# this Contract. 8#ter the

apse o# 60 da-s and the oan has not -et been reeased d'e to #ort'ito's events the

<ENDEE sha pa- an interest o# the baance a month- interest based on e=istin% ban

rate 'nti said #ort'ito's event is no on%er present



/. &he <ENDEE sha remove and reocate the S'atters, however, s'ch act'a, reasonabe

and necessar- e=penses sha be char%ed to the <ENDO$S 'pon presentation o# receipts

and doc'ments to s'pport the act

6. &he <ENDEE sha be aowed #or a e%a p'rposes to tae possession o# the parce o#

and a#ter the e=ec'tion o# this Contract and pa-ment o# the downpa-ment

:. &he <ENDEE sha sho'der a e=penses ie the doc'mentation, re%istration, trans#er

ta= and reocation o# the propert-.

IN ?I&NESS ?>E$EOF, we have here'nto a##i=ed o'r si%nat'res this UUUU da- o# Febr'ar-, 1/, at

P'e9on Cit-, *hiippines.

CONS&8N&E E. FI$E

<ENDO$

@K8; EN&E$*$ISES DE<. CO$*.

<ENDEE

B5

8G@CEN8 E. FI$E

<ENDO$

UUUUUUUUUUUUUUUUUUUUUUUU

*resident V Chie# E=ec'tive O##icer

= = =

&he Spo'ses Firme did not accept the &hird Dra#t beca'se the- #o'nd its provisions one!sided. &heSpo'ses Firme partic'ar- opposed the provision on the deiver- o# the *ropert-4s tite to 'a

Enterprises #or the atter to obtain a oan #rom the ban and 'se the proceeds to pa- #or the *ropert-. &he

Spo'ses Firme repeated- tod 8vies that the *ropert- was not #or sae when 8vies caed on 2 and "

arch 1/ re%ardin% the *ropert-. On 6 arch 1/, the Spo'ses Firme visited their *ropert- and

discovered that there was a hoow boc #ence on one side, concrete posts on another side and b'ners

occ'pied b- worers o# a certain Forante de Castro. On 11 arch 1/, Spo'ses Firme visited the

*ropert- a%ain with a s'rve-or. Dr. Firme taed with 8ncheta who tod him that the s'atters had

vo'ntari- demoished their shanties. &he Spo'ses Firme sent a etter 1A dated 20 arch 1/ to 'a

Enterprises demandin% remova o# the b'ners and vacation b- the occ'pants o# the *ropert-. On 22

arch 1/, the Spo'ses Firme received a etter 1" dated : arch 1/ #rom 'a Enterprises demandin%

that these the *ropert-.1/

On : 8'%'st 1, the tria co'rt rendered 'd%ment a%ainst 'a Enterprises as #oows5









?>E$EFO$E, in the i%ht o# the #ore%oin% premises, the above!entited case His hereb- DISISSED

and painti## @K8; EN&E$*$ISES DE<E;O*EN& CO$*O$8&ION is hereb- ordered to pa- the

de#endants Spo'ses Constante and 89'cena Firme5

1. the s'm o# &hree >'ndred &hirt- Five &ho'sand Nine >'ndred Si=t- Fo'r and 0L100

(*AA/,6".0) as and b- wa- o# act'a and compensator- dama%es

2. the s'm o# Five >'ndred &ho'sand *esos (*/00,000.00) as and b- wa- o# mora dama%es

A. the s'm o# One >'ndred &ho'sand *esos (*100,000.00) as and b- wa- o# attorne-4s #ees and

". the costs o# the s'it.

SO O$DE$ED.16

'a Enterprises appeaed to the Co'rt o# 8ppeas, which reversed and set aside the decision o# the tria

co'rt. &he dispositive portion o# the decision reads5

?>E$EFO$E, premises considered, the Decision, dated 8'%'st :, 1, is hereb- $E<E$SED and SE&

8SIDE. &he compaint is %ranted and the appeees are directed to hence#orth e=ec'te the Deed o#

8bso'te Sae trans#errin% the ownership o# the s'bect propert- to the appeant immediate- 'pon receipt

o# the p'rchase price o# *A,22",000.00 and to per#orm a s'ch acts necessar- and proper to e##ect the

trans#er o# the propert- covered b- &C& No. 26"2"A to appeant. 8ppeant is directed to deiver the

pa-ment o# the p'rchase price o# the propert- within si=t- da-s #rom the #inait- o# this 'd%ment. Costs

a%ainst appeees.

SO O$DE$ED.1:

>ence, the instant petition.1a345phi1.net

&he $'in% o# the &ria Co'rt

&he tria co'rt hed there was no per#ected contract o# sae. 'a Enterprises #aied to estabish that the

Spo'ses Firme %ave their consent to the sae o# the *ropert-. &he parties did not %o be-ond the ne%otiation

sta%e and there was no evidence o# meetin% o# the minds between the parties. F'rthermore, 8vies had no

vaid a'thorit- to bind 'a Enterprises in the sae transaction. @nder Sections 2A and A6 (No. :) o# the

Corporation Code, the corporate power to p'rchase a speci#ic propert- is e=ercised b- the oard o#







Directors o# the corporation. ?itho't an a'thori9ation #rom the oard o# Directors, 8vies co'd not

vaid- #inai9e the p'rchase o# the *ropert- on beha# o# 'a Enterprises. &here is no basis to app- the

Stat'te o# Fra'ds since there was no per#ected contract o# sae.

&he $'in% o# the Co'rt o# 8ppeas

&he Co'rt o# 8ppeas hed that the ac o# a board reso'tion a'thori9in% 8vies to act on beha# o# 'a

Enterprises in the p'rchase o# the *ropert- was c'red b- rati#ication. 'a Enterprises rati#ied the

p'rchase when it #ied the compaint #or the en#orcement o# the sae.

&he Co'rt o# 8ppeas aso hed there was a per#ected contract o# sae. &he appeate co'rt r'ed that the

Spo'ses Firme reveaed their intent to se the *ropert- when the- met with 8vies twice. &he Spo'ses

Firme reected the First Dra#t beca'se the- considered the terms 'nacceptabe. ?hen 8vies presented the

Second Dra#t witho't the obectionabe provisions, the Spo'ses Firme no on%er had an- ca'se #or

re#'sin% to se the *ropert-. On the other hand, the acts o# 'a Enterprises in #encin% the *ropert-,

constr'ctin% posts, reocatin% the s'atters and obtainin% a oan to p'rchase the *ropert- are

circ'mstances s'pportin% their caim that there was a per#ected contract o# sae.

&he Spo'ses Firme aowed 'a Enterprises to e=ercise acts o# ownership over the *ropert- when the

atter introd'ced improvements on the *ropert- and evicted the s'atters. &hese acts constit'te partia

per#ormance o# the contract o# sae that taes the ora contract o't o# the scope o# the Stat'te o# Fra'ds.

&he Iss'es

&he Spo'ses Firme raise the #oowin% iss'es5

1. ?>E&>E$ &>E CO@$& OF 8**E8;S E$$ED IN FINDIN &>8& &>E$E ?8S 8

*E$FEC&ED CON&$8C& OF S8;E E&?EEN *E&I&IONE$S 8ND $ES*ONDEN&

DES*I&E &>E 8DD@CED E<IDENCE *8&EN&;B &O &>E CON&$8$B

2. ?>E&>E$ &>E CO@$& OF 8**E8;S E$$ED IN NO& FINDIN &>8& &>E 8;;EED

CON&$8C& OF S8;E IS ENFO$CE8;E DES*I&E &>E F8C& &>8& &>E S8E IS

CO<E$ED B &>E S&8&@&E OF F$8@DS



A. ?>E&>E$ &>E CO@$& OF 8**E8;S E$$ED IN DIS$E8$DIN &>E F8C& &>8& I&

?8S NO& ;E8;;B 8ND F8C&@8;;B *OSSI;E FO$ $ES*ONDEN& &O *E$FEC& 8

CON&$8C& OF S8;E 8ND

". &>E CO@$& OF 8**E8;S E$$ED IN $@;IN &>8& &>E 8?8$D B &>E &$I8;

CO@$& OF O$8; 8ND CO*ENS8&O$B D88ES &O *E&I&IONE$S IS

I*$O*E$.1

&he $'in% o# the Co'rt

&he petition is meritorio's.

&he #'ndamenta 'estion #or reso'tion is whether there was a per#ected contract o# sae between the

Spo'ses Firme and 'a Enterprises. &his re'ires a review o# the #act'a and e%a iss'es o# this case.8s a r'e, on- 'estions o# aw are appeaabe to this Co'rt 'nder $'e "/ 1 o# the $'es o# Civi

*roced're. &he #indin%s o# #act b- the Co'rt o# 8ppeas are %enera- conc'sive and bindin% on the

parties and are not reviewabe b- this Co'rt.20 >owever, when the #act'a #indin%s o# the Co'rt o# 8ppeas

are contrar- to those o# the tria co'rt or when the in#erence made is mani#est- mistaen, this Co'rt has

the a'thorit- to review the #indin%s o# #act.21 ;iewise, this Co'rt ma- review #indin%s o# #act when the

'd%ment o# the Co'rt o# 8ppeas is premised on a misapprehension o# #acts.22 &his is the sit'ation in this

case.

?hether there was a per#ected contract o# sae

?e a%ree with the #indin% o# the tria co'rt that there was no per#ected contract o# sae. Cear-, the Co'rt

o# 8ppeas misapprehended the #acts o# the case in r'in% otherwise.

First, the records ind'bitab- show that there was no consent on the part o# the Spo'ses Firme. 8vies did

not present an- dra#t deed o# sae d'rin% his #irst meetin% with the Spo'ses Firme on A0 3an'ar-

1/.2A Dr. Firme was consistent in his testimon- that he and his wi#e reected the provisions o# the &hird

Dra#t presented b- 8vies d'rin% their second meetin% on 6 Febr'ar- 1/. &he Spo'ses Firme #o'nd the

terms and conditions 'nacceptabe and tod 8vies that the- wo'd not se the propert-. 2" 8vies showed

them on- one dra#t deed o# sae (&hird Dra#t) d'rin% their second and ast meetin% on 6 Febr'ar-

1/.2/ ?hen shown a cop- o# the First Dra#t, Dr. Firme testi#ied that it was not the deed o# sae shown to





















them b- 8vies d'rin% their second meetin% 26and that the &hird Dra#t was compete- di##erent #rom the

First Dra#t.2:

On the other hand, 8vies %ave con#ictin% testimon- as to what transpired d'rin% the two meetin%s with

the Spo'ses Firme. In his direct e=amination, 8vies testi#ied that d'rin% his #irst meetin% with the

Spo'ses Firme on 2A 3an'ar- 1/, he showed them the First Dra#t which the Spo'ses Firme

reected.2 On their second meetin%, 8vies showed the Spo'ses Firme the Second Dra#t, which the

Spo'ses Firme ae%ed- approved beca'se the obectionabe conditions contained in the First Dra#t were

aread- deeted. >owever, a per'sa o# the First Dra#t and the Second Dra#t wo'd show that both deeds o#

sae contain e=act- the same provisions. &he on- di##erence is that the date o# the First Dra#t is Febr'ar-

1/ whie that o# the Second Dra#t is arch 1/.

?hen 8vies testi#ied a%ain as reb'tta witness, his testimon- became more con#'sin%. 8vies testi#ied that

d'rin% his #irst meetin% with the Spo'ses Firme on A0 3an'ar- 1/, he showed them the &hird Dra#t,

which was not acceptabe to the atter.2 >owever, 'pon #'rther 'estionin% b- his co'nse, 8vies

conc'rred with Dr. Firme4s testimon- that he presented the &hird Dra#t (E=h. 7/7 E=h. 7;7) to the

Spo'ses Firme on- d'rin% their second meetin%. >e aso stated that he prepared and presented to the

Spo'ses Firme the First Dra#t (E=h. 7C7) and the Second Dra#t (E=h. 7C!17) d'rin% their #irst or second

meetin%. >e testi#ied5

8&&B. 8$P@ED85

P5 On pa%e 11 o# the tsn dated 8'%'st /, 1: a 'estion was posed 7>ow did -o' #ind this dra#t

the Contract o# Sae which was presented to -o' b- r. 8vies on the second meetin%7 &he

answer is 7On the #irst meetin%(sic), we #ind it tota- 'nacceptabe, sir.7A0 ?hat can -o' saon

this e#ore that, r. ?itness, what is this Contract o# Sae that -o' presented to r. 8vies on the

second meetin% Is this di##erent #rom the Contract o# Sae that was mared as E=hibit 7/!;7

P5 a- I see the doc'ment ")hibit 6 7 +A1

IN&E$*$E&E$5

?itness %oin% over the record.

8&&B. 8$P@ED85
















P5 $s that the sa#e docu#ent that *as presented by you to Mr. Fir#e on the second #eeting or

there is a di%%erent contract8

85 9his is the sa#e docu#ent 7 dra%t o% the docu#ent that $ sub#itted to the# during our second

#eeting. 9hat *as February. 9his *as the dra%t.

P5 ?hat abo't E=hibit C and C!1 Hwhich were identi#ied b- -o'. ?hen was this presented to Dr.

Firme

85 &his is the same.

P5 E=hibit C and C!1

85 Bes beca'se I prepared two doc'ments d'rin% o'r meetin%. One aread- with notaria, the one

witho't notaria pa%e and the other one with notaria pa%e aread-, so I prepared two doc'ments

b't with the same contents both were dated Febr'ar- o# 1/.A2

P5 So, -o' are re#errin% now to E=hibit C and C!1 #or the painti##

85 C!1 is aread- in the #ina #orm beca'se we a%reed aread- as to the date o# the pa-ment, so I

prepared aread- another doc'ment which is dated arch 1/.AA (Emphasis s'ppied)

In his cross!e=amination, 8vies a%ain chan%ed his testimon-. 8ccordin% to him, he presented the &hird

Dra#t to the Spo'ses Firme d'rin% their #irst meetin%.A" >owever, when he went over the records, he a%ain

chan%ed his answer and stated that he presented the &hird Dra#t d'rin% their second meetin%. A/

In his re!direct e=amination, 8vies %ave another version o# what he presented to the Spo'ses Firme

d'rin% the two meetin%s. 8ccordin% to him, he presented the &hird Dra#t d'rin% the #irst meetin%. On their

second meetin%, he presented the First and the Second Dra#ts to the Spo'ses Firme.A6

F'rthermore, 8vies admitted that the #irst proposa o# 'a Enterprises was at *2,/00 per s'are meter

#or the *ropert-.A: 't the First, Second and &hird Dra#ts o# the deed o# sae prepared b- 8vies a

indicated a p'rchase price o# *",000 per s'are meter or a 'mp s'm o# *A,22",000 (*",000 per s.m. =

06 s.m. W *A,22",000) #or the *ropert-. >ence, 8vies co'd not have presented an- o# these dra#t deeds

o# sae to the Spo'ses Firme d'rin% their #irst meetin%.


















Considerin% the %arin% inconsistencies in 8vies4 testimon-, it was proper #or the tria co'rt to %ive more

credence to the testimon- o# Dr. Firme.

Even a#ter the two meetin%s with 8vies, the Spo'ses Firme were #irm in their decision not to se the

*ropert-. 8vies caed the Spo'ses Firme twice a#ter their ast meetin%. &he Spo'ses Firme in#ormed

8vies that the- were not sein% the *ropert-.A 8vies himse# admitted this d'rin% his testimon-, th's5

P. Now, the ne=t 'estion which states5 7't did -o' not have an- occasion to ta to him a#ter

that second meetin%7 and the answer o# Dr. Firme is 7>e caed 'p a month a#ter, that4s arch 2,

1/.7 ?hat can -o' saon this

8. I caed him to in#orm him that the oan was aread- trans#erred #rom aati to *adre Fa'ra

ranch o# the Far East an, so I sched'ed aread- the pa-ment o# their propert-.

P. ?hen

8. On arch ", 1/.

P. 8nd then the ne=t 'estion which aso states5 7?hat did -o' taed (sic) abo't over the

teephone7 &he answer o# Dr. Firme was 7?hen I #o'nd o't that he was cain%, I tod him that

the propert- is not #or sae.7 ?hat can -o' saon this

A. /e #entioned that they are no longer interested to sell their property, perhaps the- wo'd ie a

hi%her price o# the propert-. &he- did not mention to me. I do not now what was their reason.

P. &he ne=t 'estion 7So, what happened ne=t7 &he answer is 7>e caed 'p two da-s ater,

arch " and m- wi#e answered the teephone and tod him that the propert- is not #or sae, sir.7

?hat can -o' saon this

8. 9hat is true. 9hat is *hat Mrs. Fir#e told #e during our conversation on the telephone that

they are no longer interested to sell the property %or obvious reason.

P. ?hen was that

8. arch ", 1/, -o'r honor.A (Emphasis s'ppied)









Si%ni#icant-, De Castro aso admitted that he was aware o# the Spo'ses Firme4s re#'sa to se the

*ropert-."0

&he con#'sin% testimon- o# 8vies taen to%ether with De Castro4s admission that he was aware o# the

Spo'ses Firme4s re#'sa to se the *ropert- rein#orces Dr. Firme4s testimon- that he and his wi#e never

consented to se the *ropert-.

Consent is one o# the essentia eements o# a vaid contract. &he Civi Code provides5

8rt. 1A1. &here is no contract 'ness the #oowin% re'isites conc'r5

1. Consent o# the contractin% parties

2. Obect certain which is the s'bect matter o# the contract

A. Ca'se o# the obi%ation which is estabished.

&he absence o# an- o# these essentia eements wi ne%ate the e=istence o# a per#ected contract o#

sae."1 &h's, where there is want o# consent, the contract is non!e=istent."2 8s hed in Saon%a, et a. v.

Farraes, et a.5"A

It is eementar- that consent is an essentia eement #or the e=istence o# a contract, and where it is

wantin%, the contract is non!e=istent. The e==en(e o: (on=ent i= the (on:or8it o: the partie= on theter8= o: the (ontra(t+ the a((eptan(e ) one o: the o::er 8a"e ) the other. &he contract to se is a

biatera contract. ?here there is mere- an o##er b- one part-, witho't the acceptance o# the other, there is

no consent. (Emphasis s'ppied)

In this case, the Spo'ses Firme #at- reected the o##er o# 8vies to b'- the *ropert- on beha# o# 'a

Enterprises. &here was there#ore no conc'rrence o# the o##er and the acceptance on the s'bect matter,

consideration and terms o# pa-ment as wo'd res't in a per#ected contract o# sae. "" @nder 8rtice 1":/ o#

the Civi Code, the contract o# sae is per#ected at the moment there is a meetin% o# minds on the thin%

which is the obect o# the contract and on the price.

8nother piece o# evidence which s'pports the contention o# the Spo'ses Firme that the- did not consent

to the contract o# sae is the #act the- never si%ned an- deed o# sae. I# the Spo'ses Firme were aread-













a%reeabe to the o##er o# 'a Enterprises as embodied in the Second Dra#t, then the Spo'ses Firme

co'd have simp- a##i=ed their si%nat'res on the deed o# sae, b't the- did not.

Even the e=istence o# a si%ned doc'ment p'rportin% to be a contract o# sae does not prec'de a #indin%

that the contract is invaid when the evidence shows that there was no meetin% o# the minds between the

seer and b'-er."/ In this case, what were o##ered in evidence were mere 'nsi%ned deeds o# sae which

have no probative va'e."6 'a Enterprises #aied to show the e=istence o# a per#ected contract o# sae b-

competent proo#.1:vvphi1.n2t

Second, there was no approva #rom the oard o# Directors o# 'a Enterprises as wo'd #inai9e an-

transaction with the Spo'ses Firme. 8vies did not have the proper a'thorit- to ne%otiate #or 'a

Enterprises. 8vies testi#ied that his #riend, De Castro, had ased him to ne%otiate with the Spo'ses Firme

to b'- the *ropert-.": De Castro, as 'a Enterprises4 vice president, testi#ied that he a'thori9ed 8vies to

b'- the *ropert-." >owever, there is no oard $eso'tion a'thori9in% 8vies to ne%otiate and p'rchase

the *ropert- on beha# o# 'a Enterprises."

It is the board o# directors or tr'stees which e=ercises amost a the corporate powers in a corporation.

&h's, the Corporation Code provides5

SEC. 2A. &he board o# directors or tr'stees. @ness otherwise provided in this Code, the corporate

powers o# a corporations #ormed 'nder this Code sha be e=ercised, a b'siness cond'cted and a

propert- o# s'ch corporations controed and hed b- the board o# directors or tr'stees to be eected #rom

amon% the hoders o# stoc, or where there is no stoc, #rom amon% the members o# the corporation, who

sha hod o##ice #or one (1) -ear and 'nti their s'ccessors are eected and 'ai#ied. = = =

SEC. A6. Corporate powers and capacit-. Ever- corporation incorporated 'nder this Code has the

power and capacit-5

= = =

:. &o p'rchase, receive, tae or %rant, hod, conve-, se, ease, ped%e, mort%a%e and otherwise dea with

s'ch rea and persona propert-, inc'din% sec'rities and bonds o# other corporations, as the transaction o#

a aw#' b'siness o# the corporation ma- reasonab- and necessari- re'ire, s'bect to the imitations

prescribed b- the aw and the Constit'tion.

= = =














@nder these provisions, the power to p'rchase rea propert- is vested in the board o# directors or tr'stees.

?hie a corporation ma- appoint a%ents to ne%otiate #or the p'rchase o# rea propert- needed b- the

corporation, the #ina sa- wi have to be with the board, whose approva wi #inai9e the transaction. /0 8

corporation can on- e=ercise its powers and transact its b'siness thro'%h its board o# directors and

thro'%h its o##icers and a%ents when a'thori9ed b- a board reso'tion or its b-!aws. /1 8s hed in 8F

$eat- V Deveopment, Inc. v. Dieseman Frei%ht Services, Co.5/2

Section 2A o# the Corporation Code e=press- provides that the corporate powers o# a corporations sha

be e=ercised b- the board o# directors. 3'st as a nat'ra person ma- a'thori9e another to do certain acts in

his beha#, so ma- the board o# directors o# a corporation vaid- dee%ate some o# its #'nctions to

individ'a o##icers or a%ents appointed b- it. &h's, contracts or acts o# a corporation m'st be made either

b- the board o# directors or b- a corporate a%ent d'- a'thori9ed b- the board. 8bsent s'ch vaid

dee%ationLa'thori9ation, the r'e is that the decarations o# an individ'a director reatin% to the a##airs o# the corporation, b't not in the co'rse o#, or connected with, the per#ormance o# a'thori9ed d'ties o# s'ch

director, are hed not bindin% on the corporation. (Emphasis s'ppied)

In this case, 8vies, who ne%otiated the p'rchase o# the *ropert-, is neither an o##icer o# 'a Enterprises

nor a member o# the oard o# Directors o# 'a Enterprises. &here is no oard $eso'tion a'thori9in%

8vies to ne%otiate and p'rchase the *ropert- #or 'a Enterprises. &here is aso no evidence to prove

that 'a Enterprises approved whatever transaction 8vies made with the Spo'ses Firme. In #act, the

president o# 'a Enterprises did not si%n an- o# the deeds o# sae presented to the Spo'ses Firme. Even

De Castro admitted that he had never met the Spo'ses Firme. /A Considerin% a these circ'mstances, it is

hi%h- improbabe #or 8vies to #inai9e an- contract o# sae with the Spo'ses Firme.

F'rthermore, the Co'rt notes that in the Compaint #ied b- 'a Enterprises with the tria co'rt, 8vies

si%ned/"the veri#ication and certi#ication o# non!#or'm shoppin%.// &he veri#ication and certi#ication o#

non!#or'm shoppin% was not accompanied b- proo# that 'a Enterprises a'thori9ed 8vies to #ie the

compaint on beha# o# 'a Enterprises.

&he power o# a corporation to s'e and be s'ed is e=ercised b- the board o# directors. 7&he ph-sica acts o#

the corporation, ie the si%nin% o# doc'ments, can be per#ormed on- b- nat'ra persons d'- a'thori9ed

#or the p'rpose b- corporate b-!aws or b- a speci#ic act o# the board o# directors.7/6

&he p'rpose o# veri#ication is to sec're an ass'rance that the ae%ations in the peadin% are tr'e and

correct and that it is #ied in %ood #aith./: &r'e, this re'irement is proced'ra and not 'risdictiona.



http://www.lawphil.net/judjuris/juri2002/jan2002/gr_111448_2002.html





















>owever, the tria co'rt sho'd have ordered the correction o# the compaint since 8vies was neither an

o##icer o# 'a Enterprises nor a'thori9ed b- its oard o# Directors to act on beha# o# 'a Enterprises.

?hether the Stat'te o# Fra'ds is appicabe

&he Co'rt o# 8ppeas hed that partia per#ormance o# the contract o# sae taes the ora contract o't o# thescope o# the Stat'te o# Fra'ds. &his conc'sion arose #rom the appeate co'rt4s erroneo's #indin% that

there was a per#ected contract o# sae. &he records show that there was no per#ected contract o# sae.

&here is there#ore no basis #or the appication o# the Stat'te o# Fra'ds. &he appication o# the Stat'te o#

Fra'ds pres'pposes the e=istence o# a per#ected contract./ 8rtice 1"0A o# the Civi Code provides5

8rt. 1"0A. &he #oowin% contracts are 'nen#orceabe, 'ness the- are rati#ied5

(1) &hose entered into in the name o# another person b- one who has been %iven no a'thorit- or e%a representation, or who has acted be-ond his powers

(2) &hose that do not comp- with the Stat'te o# Fra'ds as set #orth in this n'mber. In the

#oowin% cases an a%reement herea#ter made sha be 'nen#orceabe b- action, 'ness the same, or

some note or memorand'm thereo#, be in writin% and s'bscribed b- the part- char%ed or b- his

a%ent evidence, there#ore, o# the a%reement cannot be received witho't the writin%, or a secondar-

evidence o# its contents5

= = =

(e) 8n a%reement #or the easin% #or a on%er period than one -ear, or #or the sae o# rea propert-

or o# an interest therein

= = =

?hether 'a Enterprises is a b'ider in %ood #aith

'a Enterprises is not a b'ider in %ood #aith. &he Spo'ses Firme did not accept 8vies4 o##er to

p'rchase the *ropert-. 8vies testi#ied that when he caed the Spo'ses Firme on 2 arch 1/, Dr. Firme

in#ormed him that the- were no on%er interested in sein% the *ropert-. On " arch 1/, 8vies caed

a%ain and this time rs. Firme tod him that the- were not sein% the *ropert-. 8vies in#ormed De Castro






o# the re#'sa o# the Spo'ses Firme to se the *ropert-. >owever, 'a Enterprises sti proceeded in

reocatin% the s'atters and constr'ctin% improvements on the *ropert-. De Castro testi#ied5

8&&B. E3E$CI&O5

P5 &he tr'th o# the matter, r. ?itness, is that the post was constr'cted sometime ate 1". Is thatnot correct

85 No, sir. It is not tr'e.

P5 ;hen *as it constructed8

85 &hat arch.

P5 ?hen in arch

85 1/.

P5 ?hen in arch 1/

85 Fro# the period o% March <, 1==6 or t*o ><? *ee@s a%ter the re#oval o% the squatters.

P5 ;hen *ere the squatters re#oved8

?I&NESS5

85 March and B because there *ere %our >? squatters.

8&&B. E3E$CI&O5

P5 ?hen did -o' #ind o't that the Spo'ses Firme did not want to se the same

85 First wee o# arch 1/.

P5 In -o'r Compaint -o' said -o' #ind o't on arch A, 1/. Is that not correct

85 I cannot e=act- remember, sir.

8&&B. 8$P@ED85



In the Compaint it does not state arch A. a-be co'nse was thinin% o# this *ara%raph 6 which

states, 7?hen the propert- was rid o# the s'atters on arch 2, 1/ #or the doc'mentation and

pa-ment o# the sae, ===7.

8&&B. E3E$CI&O5

P5 (o, you %ound out on March <, 1==6 that the de%endants *ere no longer interested in selling to

you the property. $s that correct8

85 es, sir, because Mr. Aviles relayed it to #e.

P5 r. 8vies rea-ed to -o' that the Spo'ses Firme were no on%er interested in sein% to -o' the

propert- in arch 2, 1/. Is that correct

85 Bes, sir. r. 8vies tod me.

P5 In so man- words, r. ?itness, -o' earned that the Spo'ses Firme were no on%er interested

in sein% the propert- be#ore -o' spent ae%ed- a the s'm o# mone- #or the reocation o#

s'atters #or a this constr'ction that -o' are tein% this Co'rt now

?I&NESS5

85 &he re#'sa to se is not -et #orma and the aw-er sent a etter tenderin% #' pa-ment o# the

p'rchase price.

8&&B. E3E$CI&O5

P5 Bo' mean to sa- that -o' did not beieve r. 8vies when he tod -o' that the Spo'ses Firme

were no on%er sein% the propert-

85 No, sir.

P5 ?as there an-thin% #orma when -o' sa- the Spo'ses Firme a%reed to se the propert-

85 None, sir.



P5 8nd -et that time -o' beieve r. 8vies when he verba- tod -o' that the Sps. Firme a%reed

to se the propert- 8t what point o# the transaction with the Spo'ses Firme were -o' advised b-

-o'r aw-er

?I&NESS5

85 8t the time when there#'sed to se the ot.

8&&B. E3E$CI&O5

P5 ?as that be#ore the s'atters were reocated ae%ed- b- 'a Enterprises

85 Bes, sir.

P5 In #act, it was the aw-er who advised -o' to reocate the s'atters. Is it not tr'e

85 No, sir ./ (Emphasis s'ppied)

'a Enterprises is obvio's- a b'ider in bad #aith. No deed o# sae has been e=ec'ted in this case.

Despite the re#'sa o# the Spo'ses Firme to se the *ropert-, 'a Enterprises sti proceeded to

introd'ce improvements on the *ropert-. 'a Enterprises introd'ced improvements on the *ropert-

witho't the nowed%e and consent o# the Spo'ses Firme. ?hen the Spo'ses Firme earned abo't the

'na'thori9ed constr'ctions made b- 'a Enterprises on the *ropert-, the- advised the atter to desist

#rom #'rther acts o# trespass on their *ropert-.60

&he Civi Code provides5

8rt. "". >e who b'ids, pants or sows in bad #aith on the and o# another, oses what is b'it, panted or

sown witho't ri%ht o# indemnit-.

8rt. "/0. &he owner o# the and on which an-thin% has been b'it, panted or sown in bad #aith ma-demand the demoition o# the wor, or that the pantin% or sowin% be removed, in order to repace thin%s

in their #ormer condition at the e=pense o# the person who b'it, panted or sowed or he ma- compe the

b'ider or panter to pa- the price o# the and, and the owner the proper rent.

@nder these provisions the Spo'ses Firme have the #oowin% options5 (1) to appropriate what 'a

Enterprises has b'it witho't an- obi%ation to pa- indemnit- (2) to as 'a Enterprises to remove









what it has b'it or (A) to compe 'a Enterprises to pa- the va'e o# the and. 61 Since the Spo'ses

Firme are 'ndo'bted- not sein% the *ropert- to 'a Enterprises, the- ma- e=ercise an- o# the #irst

two options. &he- ma- appropriate what has been b'it witho't pa-in% indemnit- or the- ma- as 'a

Enterprises to remove what it has b'it at 'a Enterprises4 own e=pense.

'a Enterprises is not entited to reimb'rsement #or the e=penses inc'rred in reocatin% the s'atters.

'a Enterprises spent #or the reocation o# the s'atters even a#ter earnin% that the Spo'ses Firme were

no on%er interested in sein% the *ropert-. De Castro testi#ied that even tho'%h the Spo'ses Firme did not

re'ire them to remove the s'atters, the- chose to spend #or the reocation o# the s'atters since the-

were interested in p'rchasin% the *ropert-.62

?hether the Spo'ses Firme are entited to compensator- and mora dama%es

&he Co'rt a%rees with the Co'rt o# 8ppeas to deete the award #or compensator- and mora dama%es. In

awardin% act'a dama%es, the tria co'rt too into acco'nt the travein% e=penses inc'rred b- the Spo'ses

Firme who are aread- residin% in the @nited States. >owever, the tria co'rt #aied to consider the

testimon- o# Dr. Firme that the- norma- trave to the *hiippines more than once a -ear to visit their

chidren.6A &h's, the e=penses #or the ro'ndtrip ticets dated 16!1: co'd not be attrib'ted soe- #or

the attendance o# hearin%s in the case.

Nevertheess, an award o# nomina dama%es o# *A0,000 is warranted since 'a Enterprises vioated the

propert- ri%hts o# the Spo'ses Firme.6" &he Civi Code provides5

8rt. 2221. Nomina dama%es are ad'dicated in order that a ri%ht o# the painti##, which has been vioated

or invaded b- the de#endant, ma- be vindicated or reco%ni9ed, and not #or the p'rpose o# indemni#-in%

the painti## #or an- oss s'##ered b- him.

8rt. 2222. &he co'rt ma- award nomina dama%es in ever- obi%ation arisin% #rom an- so'rce en'merated

in artice 11/:, or in ever- case where an- propert- ri%ht has been invaded.

&he award o# dama%es is aso in accordance with 8rtice "/1 o# the Civi Code which states that the

andowner is entited to dama%es #rom the b'ider in bad #aith.6/

?>E$EFO$E, we SE& 8SIDE the Decision o# the Co'rt o# 8ppeas and $ENDE$ a new one5

1. Decarin% that there was no per#ected contract o# sae














2. Orderin% 'a Enterprises to pa- the Spo'ses Firme *A0,000 as nomina dama%es.

SO O$DE$ED.

iii Li8ite" Lia)i5it to In<e=tor= an" O::i(er=

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