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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. 109125 December 2, 1994

ANG YU ASUNCION, ARTHUR GO AND EH TIONG, petitioners,vs.THE HON. COURT O! APPEA"S #$% &UEN REA"TY DE'E"OPMENT CORPORATION, respondents.

Antonio M. Albano for petitioners.

Umali, Soriano & Associates for private respondent.

'ITUG, J.:

Assailed, in this petition for review, is the decision of the Court of Appeals, dated 04 ece!ber "##", in CA$%.R.&P No. '()4* settin+ aside and declarin+ without force and effect the orders of eecution of the trial court, dated)0 Au+ust "##" and '- &epte!ber "##", in Civil Case No. -$4"0*.

/he antecedents are recited in +ood detail b the appellate court thusl1

2n 3ul '#, "#- a &econd A!ended Co!plaint for &pecific Perfor!ance was filed b An+ uAsuncion and 5eh /ion+, et al., a+ainst Bobb Cu 6n7ien+, Rose Cu 6n7ien+ and 3ose /an beforethe Re+ional /rial Court, Branch )", Manila in Civil Case No. -$4"0*, alle+in+, a!on+ others,that plaintiffs are tenants or lessees of residential and co!!ercial spaces owned b defendantsdescribed as Nos. ()0$() 2n+pin &treet, Binondo, Manila8 that the have occupied said spaces

since "#)* and have been reli+iousl pain+ the rental and co!plin+ with all the conditions ofthe lease contract8 that on several occasions before 2ctober #, "#(, defendants infor!edplaintiffs that the are offerin+ to sell the pre!ises and are +ivin+ the! priorit to ac9uire thesa!e8 that durin+ the ne+otiations, Bobb Cu 6n7ien+ offered a price of P($!illion while plaintiffs!ade a counter offer of P*$!illion8 that plaintiffs thereafter as:ed the defendants to put their offerin writin+ to which re9uest defendants acceded8 that in repl to defendant;s letter, plaintiffs wrotethe! on 2ctober '4, "#( as:in+ that the specif the ter!s and conditions of the offer to sell8that when plaintiffs did not receive an repl, the sent another letter dated 3anuar ', "#- withthe sa!e re9uest8 that since defendants failed to specif the ter!s and conditions of the offer tosell and because of infor!ation received that defendants were about to sell the propert, plaintiffswere co!pelled to file the co!plaint to co!pel defendants to sell the propert to the!.

efendants filed their answer denin+ the !aterial alle+ations of the co!plaint and interposin+ aspecial defense of lac: of cause of action.

After the issues were 7oined, defendants filed a !otion for su!!ar 7ud+!ent which was +rantedb the lower court. /he trial court found that defendants; offer to sell was never accepted b theplaintiffs for the reason that the parties did not a+ree upon the ter!s and conditions of theproposed sale, hence, there was no contract of sale at all. Nonetheless, the lower court ruled thatshould the defendants subse9uentl offer their propert for sale at a price of P""$!illion or below,plaintiffs will have the ri+ht of first refusal. /hus the dispositive portion of the decision states1

2RE, 7ud+!ent is hereb rendered in favor of the defendants anda+ainst the plaintiffs su!!aril dis!issin+ the co!plaint sub7ect to the

afore!entioned condition that if the defendants subse9uentl decide to offer theirpropert for sale for a purchase price of Eleven Million Pesos or lower, then theplaintiffs has the option to purchase the propert or of first refusal, otherwise,defendants need not offer the propert to the plaintiffs if the purchase price ishi+her than Eleven Million Pesos.

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&2 2RERE.

A++rieved b the decision, plaintiffs appealed to this Court inCA$%.R. C? No. '""'). @n a decision pro!ul+ated on &epte!ber '", "##0 penned b 3ustice&e+undino %. Chua and concurred in b 3ustices ?icente ?. Mendoa and >ernando A.&antia+o, this Court affir!ed with !odification the lower court;s 7ud+!ent, holdin+1

@n resu!e, there was no !eetin+ of the !inds between the parties concernin+ thesale of the propert. Absent such re9uire!ent, the clai! for specific perfor!ancewill not lie. Appellants; de!and for actual, !oral and ee!plar da!a+es will

li:ewise fail as there eists no 7ustifiable +round for its award. &u!!ar 7ud+!entfor defendants was properl +ranted. Courts !a render su!!ar 7ud+!ent whenthere is no +enuine issue as to an !aterial fact and the !ovin+ part is entitled toa 7ud+!ent as a !atter of law %arcia vs. Court of Appeals, "-( &CRA "*. Allre9uisites obtainin+, the decision of the court a quo is le+all 7ustifiable.

2RE, findin+ the appeal un!eritorious, the 7ud+!ent appealed fro! ishereb A>>@RME, but sub7ect to the followin+ !odification1 /he courta quointhe aforestated decision +ave the plaintiffs$appellants the ri+ht of first refusal onlif the propert is sold for a purchase price of Eleven Million pesos or lower8however, considerin+ the !ercurial and uncertain forces in our !ar:et econo!toda.

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Presented before the Court is a Motion for Eecution filed b plaintiff representedb Att. Antonio Albano. Both defendants Bobb Cu 6n7ien+ and Rose Cu 6n7ien+represented b Att. ?icente &ison and Att. Anacleto Ma+no respectivel weredul notified in toda;s consideration of the !otion as evidenced b the rubbersta!p and si+natures upon the cop of the Motion for Eecution.

/he +ist of the !otion is that the ecision of the Court dated &epte!ber '", "##0as !odified b the Court of Appeals in its decision in CA %.R. C?$'""'), andelevated to the &upre!e Court upon the petition for review and that the sa!e wasdenied b the hi+hest tribunal in its resolution dated Ma (, "##" in %.R. No.

$#-'-(, had now beco!e final and eecutor. As a conse9uence, there was anEntr of 3ud+!ent b the &upre!e Court as of 3une (, "##", statin+ that theaforesaid !odified decision had alread beco!e final and eecutor.

@t is the observation of the Court that this propert in dispute was the sub7ect oftheNotice of Lis Pendens and that the !odified decision of this Court pro!ul+atedb the Court of Appeals which had beco!e final to the effect that should thedefendants decide to offer the propert for sale for a price of P"" Million or lower,and considerin+ the !ercurial and uncertain forces in our !ar:et econo! toda,the sa!e ri+ht of first refusal to herein plaintiffsFappellants in the event that thesub7ect propert is sold for a price in ecess of Eleven Million pesos or !ore.

2RE, defendants are hereb ordered to eecute the necessar eed of&ale of the propert in liti+ation in favor of plaintiffs An+ u Asuncion, 5eh /ion+and Arthur %o for the consideration of P"* Million pesos in reco+nition of plaintiffs;ri+ht of first refusal and that a new /ransfer Certificate of /itle be issued in favor ofthe buer.

All previous transactions involvin+ the sa!e propert notwithstandin+ the issuanceof another title to Buen Realt Corporation, is hereb set aside as havin+ beeneecuted in bad faith.

&2 2RERE.

2n &epte!ber '', "##" respondent 3ud+e issued another order, the dispositive portion of whichreads1

2RE, let there be

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A not too recent develop!ent in real estate transactions is the adoption of such arran+e!ents as the ri+ht of firstrefusal, a purchase option and a contract to sell. >or read reference, we !i+ht point out so!e funda!entalprecepts that !a find so!e relevance to this discussion.

An obli+ation is a 7uridical necessit to +ive, to do or not to do Art. 115, !ivil !ode. /he obli+ation is constitutedupon the concurrence of the essential ele!ents thereof, vi"1 a /he vinculum #uris or#uridical tie which is theefficient cause established b the various sources of obli+ations law, contracts, 9uasi$contracts, delicts and9uasi$delicts8 b the ob#ect which is the prestation or conduct8 re9uired to be observed to +ive, to do or not todo8 and c the sub#ect$persons who, viewed fro! the de!andabilit of the obli+ation, are the active obli+eeand the passive obli+or sub7ects.

A!on+ the sources of an obli+ation is a contract Art. ""*-, Civil Code, which is a !eetin+ of !inds between twopersons whereb one binds hi!self, with respect to the other, to +ive so!ethin+ or to render so!e service Art.")0*, Civil Code. A contract under+oes various sta+es that include its ne+otiation or preparation, its perfectionand, finall, its consu!!ation. Ne%otiation covers the periodfrom the ti!e the prospective contractin+ partiesindicate interest in the contract tothe ti!e the contract is concluded perfected. /heperfection of the contractta:es place upon the concurrence of the essential ele!ents thereof. A contract which is consensual as toperfection is so established upon a !ere !eetin+ of !inds, i.e., the concurrence of offer and acceptance, on theob7ect and on the cause thereof. A contract which re9uires, in addition to the above, the deliver of the ob7ect ofthe a+ree!ent, as in a pled+e or commodatum, is co!!onl referred to as a real contract. @n a solemn contract,co!pliance with certain for!alities prescribed b law, such as in a donation of real propert, is essential in orderto !a:e the act valid, the prescribed for! bein+ thereb an essential ele!ent thereof. /he sta+e

of consummationbe+ins when the parties perfor! their respective underta:in+s under the contract cul!inatin+ inthe etin+uish!ent thereof.

6ntil the contract is perfected, it cannot, as an independent source of obli+ation, serve as a bindin+ 7uridicalrelation. @n sales, particularl, to which the topic for discussion about the case at bench belon+s, the contract isperfected when a person, called the seller, obli+ates hi!self, for a price certain, to deliver and to transferownership of a thin+ or ri+ht to another, called the buer, over which the latter a+rees. Article "4* of the CivilCode provides1

Art. "4*. B the contract of sale one of the contractin+ parties obli+ates hi!self to transfer theownership of and to deliver a deter!inate thin+, and the other to pa therefor a price certain in!one or its e9uivalent.

A contract of sale !a be absolute or conditional.

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bilateral pro!ise to sell and to bu ensues and both parties are then reciprocall bound to co!pl with theirrespective underta:in+s.+

et us elucidate a little. A ne+otiation is for!all initiated b an offer. An i!perfect pro!ise )policitacion*is !erelan offer. Public advertise!ents or solicitations and the li:e are ordinaril construed as !ere invitations to !a:eoffers or onl as proposals. /hese relations, until a contract is perfected, are not considered bindin+co!!it!ents. /hus, at an ti!e prior to the perfection of the contract, either ne+otiatin+ part !a stop thene+otiation. /he offer, at this sta+e, !a be withdrawn8 the withdrawal is effective i!!ediatel after its!anifestation, such as b its !ailin+ and not necessaril when the offeree learns of the withdrawal audico vs.Arias, 4) Phil. '-0. urther!ore, whether private respondent Buen Realt evelop!ent Corporation, the alle+ed purchaser of thepropert, has acted in +ood faith or bad faith and whether or not it should, in an case, be considered bound torespect the re+istration of the lis pendens in Civil Case No. -$4"0* are !atters that !ust be independentl

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addressed in appropriate proceedin+s. Buen Realt, not havin+ been i!pleaded in Civil Case No. -$4"0*,cannot be held sub7ect to the writ of eecution issued b respondent 3ud+e, let alone ousted fro! the ownershipand possession of the propert, without first bein+ dul afforded its da in court.

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"" &ee Article ")"* and ")", Civil Code8 Madri+al G Co. vs. &tevenson G Co., "* Phil. )8&alon+a vs. >errales, "0* &CRA )*#.

"' Art. "#. Ever person !ust, in the eercise of his ri+hts and in the perfor!ance of his duties,act with 7ustice, +ive everone his due, and observe honest and +ood faith.

") /he decision referred to reads1

@n resu!e, there was no !eetin+ of the !inds between the parties concernin+ the sale of thepropert. Absent such re9uire!ent, the clai! for specific perfor!ance will not lie. Appellants;

de!and for actual, !oral and ee!plar da!a+es will li:ewise fail as there eists no 7ustifiable+round for its award. &u!!ar 7ud+!ent for defendants was properl +ranted. Courts !a rendersu!!ar 7ud+!ent when there is no +enuine issue as to an !aterial fact and the !ovin+ part isentitled to a 7ud+!ent as a !atter of law %arcia vs. Court of Appeals, "-( &CRA "*. Allre9uisites obtainin+, the decision of the court a quois le+all 7ustifiable.

2RE, findin+ the appeal un!eritorious, the 7ud+!ent appealed fro! is herebA>>@RME, but sub7ect to the followin+ !odification1 /he court a quoin the aforestated decision,+ave the plaintiffs H considerin+ the !ercurial and uncertain forces in our !ar:et econo! toda.

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Republic of the PhilippinesSUPREME COURT

Manila

>@R&/ @?@&@2N

G.R. No. 1255(1 !ebr/#r 12, 199*

O'AN "AND, petitioner,vs.COURT O! APPEA"S #$% EUGENIO UESADA INC., respondents.

HERMOSISIMA, R., J.:

/his is a petition for review on certiorarito reverse and set aside the decision of the Court of Appeals in C.A.$%.R.C? No. 4-*"*.

Petitioner 3ovan and, @nc. is a corporation en+a+ed in the real estate business. @ts President and Chair!an ofthe Board of irectors is one 3oseph &.

Private respondent Eu+enio Iuesada is the owner of the I Buildin+ located on an 0" s9. !. lot at the corner ofMahali+ue &treet and Rial Avenue, &ta. Cru, Manila. /he propert is covered b /C/ No. ---#( of theRe+istr of eeds of Manila.

Petitioner learned fro! co$petitioner Consolacion P. Mendoa that private respondent was sellin+ the aforesaidMahali+ue propert. /hus, petitioner throu+h 3oseph & !ade a written offer, dated 3ul '-, "#- for P"0.'*

!illion. /his first offer was not accepted b Conrado Iuesada, the %eneral Mana+er of private respondent.3oseph & sent a second written offer dated 3ul )", "## for the sa!e price but inclusive of an underta:in+ topa the docu!entar sta!p ta, transfer ta, re+istration fees and notarial char+es. Chec: No. '4-04, dated3ul )", "##, for one !illion pesos drawn a+ainst the Philippine Co!!ercial and @ndustrial Ban: PC@B wasenclosed therewith as earnest !one. /his second offer, with earnest !one, was a+ain re7ected b ConradoIuesada. 6ndaunted, 3oseph &, on Au+ust "0, "##, sent a third written offer for twelve !illion pesos with asi!ilar chec: for one !illion pesos as earnest !one. Annotated on this third letter$offer was the phraseDReceived ori+inal, #$4$#D beside which appears the si+nature of Conrado Iuesada.

2n the basis of this annotation which petitioner insists is the proof that there alread eists a valid, perfecteda+ree!ent to sell the Mahali+ue propert, petitioner filed with the trial court, a co!plaint for specific perfor!anceand collection of su! of !one with da!a+es. =owever, the trial court held that1

. . . the business encounters between 3oseph & and Conrado Iuesada had not passed thene+otiation sta+e relatin+ to the intended sale b the defendant corporation of the propert in9uestion. . . . As the court finds, there is nothin+ in the record to point that a contract was everperfected. @n fact, there is nothin+ in writin+ which is indispensabl necessar in order that theperfected contract could be enforced under the &tatute of >rauds. 1

&ince the trial court dis!issed petitioner;s co!plaint for lac: of cause of action, petitioner appealed ' torespondent Court of Appeals before which it assi+ned the followin+ errors1

". /he Court a quofailed to appreciate that there was alread a perfected contract of salebetween 3ovan and, @nc. and the private respondentJ8

'. /he Court a quoerred in its conclusion that there was no i!plied acceptance of the offer bappellants to appellee Kprivate respondentJ8

). /he Court a quowas in error where it concluded that the contract of sale was unenforceable8

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4. /he Court a quofailed to rule that appellant KpetitionerJ Mendoa is entitled to her bro:er;sco!!ission.(

Respondent court placed petitioner to tas: on their assi+n!ent of errors and concluded that not an of the!7ustifies a reversal of the trial court decision.

rauds have not been co!plied with. 6nder the said provision, an a+ree!ent for the sale of realpropert or of an interest therein, to be enforceable, !ust be in writin+ and subscribed b the part char+ed or ban a+ent thereof.

Petitioner also asseverates that the failure of Conrado Iuesada to return the chec: for one !illion pesos,

translates to i!plied acceptance of its third letter$offer. @t, however, does not rebut the findin+ of the trial court thatprivate respondent was returnin+ the chec: but petitioner refused to accept the sa!e and that when ConradoIuesada subse9uentl sent it bac: to petitioner throu+h re+istered !ail, the latter failed to clai! its !ail fro! thepost office.

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>inall, we fittin+l appl here the oft$repeated doctrine that the factual findin+s of the trial court, especiall asre+ards the credibilit of witnesses, are conclusive upon this court, unless the case falls under the7urisprudentiall established eceptions. But this is a case that tenders no eceptional circu!stance8 rather, wefind the observations of the trial court to be le+all sound and valid1

. . . 3oseph &;s testi!on is not i!pressive because of several inconsistencies herein pointed out. 2nthe !atter of earnest !one, the sa!e appears to be the idea solel of the KpetitionerJ, assu!in+ thathe had intended to bind the KpetitionerJ corporation. @n the written second offer . . . he had stated thatthe chec: of P"M had been enclosed attached therewith. /he sa!e chec: . . . was a+ain !entionedto be enclosed attached in the third written offer under date Au+ust "0, "## . . . . & testified in his

direct ea!ination that he had personall +iven this chec: to Conrado Iuesada. But on crossea!ination, he reversed hi!self b sain+ that the chec: was +iven thru his Kco$petitionerJ Mendoa.Ea!inin+ the third written offer, it appears that when it was first tpewritten, this P""M was noted tohave been corrected, and that as per his testi!on, & had increased it to P"'M. /his is the reasonaccordin+ to & wh there was a superi!position of the nu!ber D"'D over the nu!ber D""D to !eanP"'M as the revised consideration for the sale of the propert in 9uestion.)

Respondent court thus concluded that1

. . . KsinceJ the !atter of evaluation of the credibilit of witnessKesJ is addressed to the trial court andunless clearl contrar to the records before 6s, the findin+s of the said court are entitled to +reatrespondent on appeal, . . . it was 3oseph &;s idea to offer the earnest !one, and the evidence toshow that 3oseph & accepted the sa!e, is wantin+. . . .*

and accordin+l affir!ed the trial court 7ud+!ent appealed fro!.

As shown elucidated above, we a+ree with the findin+s and conclusions of the trial court and the respondentcourt. Neither has petitioner posited an new issues in the instant petition that warrant the further eercise b thiscourt of its review powers.

2RE, pre!ises considered, this petition is EN@E.

Costs a+ainst petitioner.

Padilla, 8ellosillo, @itu% and 0apunan, ;;., concur.

!oo-$o-e

" As 9uoted in the ecision of the Court of Appeals dated 3une ', "##(, pp. )$4, 7ollo, pp. #$"0.

' Appeal was doc:eted as CA$%.R C? No. 4-*"* and raffled to the Eleventh ivision with!e!bers1 Associate 3ustices Minerva P. %ona+a$Rees, Ra!on 6. Mabutas, 3r. and &alvador3. ?alde, 3r.

) ecision of the Court of Appeals, supra, p. 4, 7ollo. p. "0.

4 ') &CRA (0' "##4.

* 7ollo, p. **.

( :d., p. -, 7ollo, p. ").

- :d., p. #, 7ollo, p. "*.

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Republic of the PhilippinesSUPREME COURT

Manila

/=@R @?@&@2N

G.R. No. +)**4 A/3/- 21, 1991

ENEDINA PRES"EY, petitioner,vs.&E"AIR 'I""AGE ASSOCIATION, INC., #$% THE HON. COURT O! APPEA"S, respondents.

Ale#andro dela 7osa for petitioner.

;. @icente . Sison for private respondent.

GUTIERRE, R., J.:p

/his is a petition for review of the decision of the Court of Appeals pro!ul+ated on Nove!ber ', "# affir!in+the decision of the Re+ional /rial Court in toto. /he dispositive portion of the decision reads1

2RE, the defendants are en7oined per!anentl fro! usin+ the propert in 9uestion asapan de sal store or fro! usin+ it for an other co!!ercial purposes8 the defendants are orderedto pa, 7ointl and severall, the plaintiff the su! of P),0).** with le+al interest fro! >ebruar #,"#" until the said su! is full paid and the defendants are further ordered to pa, 7ointl andseverall, the su! of P4,*00.00 as and for attorne;s fees. Rollo, p. )0

/he facts as stated b the Court of Appeals are as follows1

A co!plaint for specific perfor!ance and da!a+es with preli!inar in7unction was filed bplaintiff$appellee, Bel$Air ?illa+e Association, @nc. BA?A for short a+ainst /eofilo Al!endras andRollo Al!endras now both deceased and substituted b defendant$appellant Enedina Preslefor violation of the eed Restrictions of Bel$Air &ubdivision that the sub7ect house and lot shall beused onl for residential and not for co!!ercial purposes and for non$pa!ent of associationdues to plaintiff BA?A a!ountin+ to P),0).**.

/he Al!endrases were at the ti!e of the filin+ of the action the re+istered owners of a house andlot located at "0' 3upiter &treet, Bel$Air ?illa+e, Ma:ati, Metro Manila. As such re+istered owners,the were !e!bers of plaintiff BA?A pursuant to the eed Restrictions annotated in their title/C/ No. -)("( over the propert in 9uestion and defendant Presle, as lessee of the propert,is the owner and operator of ;=ot Pan de &al &tore; located in the sa!e address.

At the ti!e the Al!endrases bou+ht their propert in 9uestion fro! Ma:ati evelop!entCorporation, the eed Restrictions Eh. DCD was alread annotated in their title Eh. DBDprovidin+ a!on+ others ;that the lot !ust be used onl for residential purpose; Eh. DB$"D andDB$'D.

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assess!ents to BA?A for such services as securit, +arba+e collection and !aintenance andrepair of 3upiter &treet. =owever, when the services were withdrawn b appellee BA?A, therewas no !ore reason for the latter to de!and pa!ent of such dues and assess!ents. 7ollo, pp.)0$)"

After due hearin+ on the !erits, the trial court rendered the decision in favor of BA?A which was affir!ed b therespondent Court of Appeals.

2n 3anuar '0, "##, the Court of Appeals denied the Motion for Reconsideration.

Conse9uentl, the petitioner filed the instant petition with this Court raisin+ the followin+ issues, to wit1

A

/=E R6@N% 2> RE&P2NEN/ C26R/ 2> APPEA& @& N2/ @N ACC2RANCE /=@& =2N2RABE &6PREME C26R/PR2M6%A/E ECEMBER '',"# @N RE &AN%AAN%, BE$A@R ?@A%E A&&2C@A/@2N@NC. v. @N/ERME@A/E APPEA/E C26R/ AN AAA C2RP2RA/@2N %.R. N2. -""(#8BE$A@R ?@A%E A&&2C@A/@2N @NC. v. /EN2R@2, E/ A.$%.R. N2. -4)-(8 BE$A@R A@R?@A%E A&&2C@A/@2N, @NC. v. C26R/ 2> APPEA& AN R2M6AEL, E/ A %.R. N2.-()#48 BE$A@R ?@A%E A&&2C@A/@2N @NC. v. C26R/ 2> APPEA& AN >@E, E/ A.$%.R. N2. -"'8 BE$A@R ?@A%E A&&2C@A/@2N, @NC. v. C26R/ 2> APPEA& AN

M2NCA, E/ A.$%.R. N2. ''", 26R& @N /=E CA&E A/ BAR @N >A?2R 2> PE/@/@2NER.

B

/=E R6@N% 2> RE&P2NEN/ C26R/ 2> APPEA& A36%@N% PE/@/@2NER&2@AR@ @ABE /2%E/=ER AC/&.

C

/=E R6@N% 2> RE&P2NEN/ C26R/ 2> APPEA& A36%@N% PE/@/@2NER&2@AR@ @ABE /2 PA A//2RNE;& >EE& @& AC/6ABA&@&. 7ollo, p. ""$"'

urin+ the pendenc of the case with this Court, petitioner Enedina >o Presle died on 3anuar 4, "##". &hewas substituted b her two dau+hters as heirs, na!el 2livia ?. Piaro and Consuelo ?. acson.

/he issues raised in the instant petition have alread been dealt with in the consolidated cases decided b thisCourt pro!ul+ated on ece!ber '', "# entitled San%alan%, et al.vs. :ntermediate Appellate !ourt and Aala!orporation, %.R. No. -""(#8 8el$Air @illa%e Association, :nc. v. :ntermediate Appellate !ourt and 7osario de;esus >enorio and !ecilia on"alve", %.R. No. -4)-(8 8el$Air v. !ourt of Appeals and Bduardo and 8uena7omualde", %.R. No. -()#48 8A@A v.!ourt of Appeals, olors =ille and ;. 7omero Associates , %.R. No.

-"'8 and 8A@A v. !ourt of Appeals, @ioleta Moncal and Ma#al evelopment !orp., %.R. No. ''". "(&CRA ()4 K"#J

Apparentl, when the respondent court pro!ul+ated the 9uestioned decision on Nove!ber ', "# the&an+alan+ case had not et been decided b this Court. @t was however, aware of the pendin+ case as it !ade!ention of the several cases brou+ht to court b BA?A a+ainst the aforesaid co!!ercial establish!ents.

/he petitioner in the instant case is si!ilarl situated as the private respondents in %.R. Nos. -4)-(8 -()#48-"' and ''" who converted their residential ho!es to co!!ercial establish!ents8 hence, BA?A filed suitsa+ainst the! to enforce the eeds of Restrictions annotated in their titles which provide a!on+ others, Dthat thelot !ust be used onl for residential purposes.D

/he Court in the San%alan% case, however, held1

... @n the &an+alan+ case, we absolve the Aala Corporation pri!aril owin+ to our findin+ that isnot liable for the openin+ of 3upiter &treet to the +eneral public. @nsofar as these petitions are

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concerned, we li:ewise eculpate the private respondents, not onl because of the fact that3upiter &treet is not covered b the restrictive ease!ents based on the ;deed restrictions; butchiefl because the National %overn!ent itself, throu+h the Metro Manila !ommission )MM!*,'ad reclassified ;upiter Street into a C'i%' densit commercial )!$+* "one,; &ee rollo, %.R. No.-""(#, :d., ""- pursuant to its 2rdinance No. "$0" =ence, the petitioners have no cause ofaction on the stren+th alone of the said deed restrictions. p. ((-8 E!phasis supplied

@n the instant petition, BA?A assails the Court;s decision in the San%alan% case, !ore specificall the Court;sinterpretation of 2rdinance No. "$0" passed b the Metro Manila Co!!ission MMC on March "4, "#". @tavers that due to the !ultitude of issues raised and the nu!erous pleadin+s filed b the different contendin+

parties, the Court was !isled and unfortunatel erred in concludin+ that 3upiter &treet was reclassified as a Dhi+hdensit co!!ercial C$) oneD when in fact, it is still considered as a DR$" residential one.D

@f indeed private respondent;s observations were accurate, the Court will certainl not hesitate to correct thesituation and the case at bar would be the proper occasion to do so. ilinvest v.Court of Appeals, "' &CRA ((4 K"##0J No new onin+ re$classification, ordinance, certification to the effect or7urisprudence for that !atter was brou+ht to the attention of this Court which would necessaril co!pel us to ta:ea second loo: at the &an+alan+ Case. /he Court can not reverse a precedent and rule favorabl for the privaterespondent on the stren+th of !ere inferences.

/he respondent court in the case at bar was not at all entirel wron+ in upholdin+ the eed of Restrictionsannotated in the title of the petitioners. @t held that the provisions of the eed of Restrictions are in the nature ofcontractual obli+ations freel entered into b the parties. 6ndoubtedl, the are valid and can be enforced a+ainstthe petitioner. =owever, these contractual stipulations on the use of the land even if said conditions are annotatedon the torrens title can be i!paired if necessar to reconcile with the le+iti!ate eercise of police power. 2rti+asG Co. i!ited Partnership v. >eati Ban: and /rust Co., #4 &CRA *)) K"#-#J.

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Republic of the PhilippinesSUPREME COURT

Manila

>@R&/ @?@&@2N

G.R. No. "(005) A/3/- (0, 19++

MARCE"O AGCAOI"I, plaintiff$appelleevs.

GO'ERNMENT SER'ICE INSURANCE SYSTEM, defendant$appellant.

Artemio L. A%caoili for plaintiff$appellee.

Dffice of t'e overnment !orporate !ounsel for defendant$appellant.

NAR'ASA, J.:

/he appellant %overn!ent &ervice @nsurance &ste!, %&@&, for short havin+ approved the application of the

appellee A+caoili for the purchase of a house and lot in the %&@& =ousin+ Pro7ect at Nan+:a Mari:ina, Rial,sub7ect to the condition that the latter should forthwith occup the house, a condition that A+acoili tried to fulfill butcould not for the reason that the house was absolutel uninhabitable8 A+caoili, after pain+ the first install!entand other fees, havin+ thereafter refused to !a:e further pa!ent of other stipulated install!ents until %&@& had!ade the house habitable8 and appellant havin+ refused to do so, optin+ instead to cancel the award andde!and the vacation b A+caoili of the pre!ises8 and A+caoili havin+ sued the %&@& in the Court of >irst@nstance of Manila for specific perfor!ance with da!a+es and havin+ obtained a favorable 7ud+!ent, the casewas appealled to this Court b the %&@&. @ts appeal !ust fail.

/he essential facts are not in dispute. Approval of A+caoili;s afore!entioned application for purchase 1wascontained in a letter 2addressed to A+caoili and si+ned b %&@& Mana+er Archi!edes ?illanueva in behalf of theChair!an$%eneral Mana+er, readin+ as follows1

Please be infor!ed that our application to purchase a house and lot in our %&@& =ousin+ Pro7ectat Nan+:a, Mari:ina, Rial, has been approved b this 2ffice. ot No. '(, Bloc: No. 4 ',to+ether with the housin+ unit constructed thereon, has been allocated to ou.

ou are, therefore, advised to occup the said house i!!ediatel.

@f ou fail to occup the sa!e within three ) das fro! receipt of this notice, our applicationshall be considered auto!aticall disapproved and the said house and lot will be awarded toanother applicant.

A+caoili lost no ti!e in occupin+ the house. =e could not sta in it, however, and had to leave the ver net da,

because the house was nothin+ !ore than a shell, in such a state of inco!pleteness that civilied occupation wasnot possible1 ceilin+, stairs, double wallin+, li+htin+ facilities, water connection, bathroo!, toilet :itchen, draina+e,were ineistent. A+caoili did however as: a ho!eless friend, a certain ?illanueva, to sta in the pre!ises asso!e sort of watch!an, pendin+ co!pletion of the construction of the house. A+caoili thereafter co!plained tothe %&@&, to no avail.

/he %&@& as:ed A+caoili to pa the !onthl a!ortiations and other fees. A+caoili paid the first !onthlinstall!ent and the incidental fees, (but refused to !a:e further pa!ents until and unless the %&@& co!pletedthe housin+ unit. irst @nstance of Manila for specific perfor!ance andda!a+es. 5Pendin+ the action, a written protest was lod+ed b other awardees of housin+ units in the sa!esubdivision, re+ardin+ the failure of the &ste! to co!plete construction of their own houses. )3ud+!ent was in

due course rendered ,*

on the basis of the evidence adduced b A+caoili onl, the %&@& havin+ opted todispense with presentation of its own proofs. /he 7ud+!ent was in A+caoili;s favor and contained the followin+dispositions, +to wit1

" eclarin+ the cancellation of the award of a house and lot in favor of plaintiff MarianoA+caoili ille+al and void8

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' 2rderin+ the defendant %&@& to respect and enforce the aforesaid award to the plaintiffrelative to ot No. '(, Bloc: No. 4 ' of the %overn!ent &ervice @nsurance &ste! %&@& lowcost housin+ pro7ect at Nan+:a Mari:ina, Rial8

) 2rderin+ the defendant to co!plete the house in 9uestion so as to !a:e the sa!e habitableand authoriin+ it defendant to collect the !onthl a!ortiation thereon onl after said houseshall have been co!pleted under the ter!s and conditions !entioned in Ehibit A 8and

4 2rderin+ the defendant to pa P"00.00 as da!a+es and P)00.00 as and for attorne;s fees,and costs.

Appellant %&@& would have this Court reverse this 7ud+!ent on the ar+u!ent thatH

" A+caoili had no ri+ht to suspend pa!ent of a!ortiations on account of the inco!pleteness of his housin+unit, since said unit had been sold Din the condition and state of co!pletion then eistin+ ... and he is dee!ed tohave accepted the sa!e in the condition he found it when he accepted the award8D and assu!in+ indefinitenessof the contract in this re+ard, such circu!stance precludes a 7ud+!ent for specific perfor!ance. 9

' Perfection of the contract of sale between it and A+caoili bein+ conditioned upon the latter;s i!!ediateoccupanc of the house sub7ect thereof, and the latter havin+ failed to co!pl with the condition, no contract everca!e into eistence between the! 810

) A+caoili;s act of placin+ his ho!eless friend, ?illanueva, in possession, Dwithout the prior or subse9uent:nowled+e or consent of the defendant %&@&D operated as a repudiation b A+caoili of the award and adeprivation of the %&@& at the sa!e ti!e of the reasonable rental value of the propert. 11

A+caoili;s offer to bu fro! %&@& was contained in a printed for! drawn up b the latter, entitled DApplication toPurchase a =ouse andFor ot.D A+caoili filled up the for!, si+ned it, and sub!itted it. 12/he acceptance of theapplication was also set out in a for! !i!eo+raphed also prepared b the %&@&. As alread !entioned, thisfor! sent to A+caoili, dul filled up, advised hi! of the approval of his Dapplication to purchase a house and lot inour %&@& =ousin+ Pro7ect at NAN%5A, MAR@5@NA, R@LA,D and that Dot No. '(, Bloc: No. 4 ', to+ether withthe housin+ unit constructed thereon, has been allocated to ou.D Neither the application for! nor the acceptanceor approval for! of the %&@& H nor the notice to co!!ence pa!ent of a !onthl a!ortiations, which a+ainrefers to Dthe house and lot awardedD H contained an hint that the house was inco!plete, and was bein+ sold

Das is,D i.e., in whatever state of co!pletion it !i+ht be at the ti!e. 2n the other hand, the condition eplicitli!posed on A+caoili H Dto occup the said house i!!ediatel,D or in an case within three ) das fro! notice,otherwise his Dapplication shall be considered auto!aticall disapproved and the said house and lot will beawarded to another applicantD H would i!pl that construction of the house was !ore or less co!plete, and itwas b reasonable standards, habitable, and that indeed, the awardee should sta and live in it8 it could not beinterpreted as !eanin+ that the awardee would occup it in the sense of a pioneer or settler in a rude wilderness,!a:in+ do with whatever he found available in the envirorn!ent.

/here was then a perfected contract of sale between the parties8 there had been a !eetin+ of the !inds upon thepurchase b A+caoili of a deter!inate house and lot in the %&@& =ousin+ Pro7ect at Nan+:a Mari:ina, Rial at adefinite price paable in a!ortiations at P)".*( per !onth, and fro! that !o!ent the parties ac9uired the ri+htto reciprocall de!and perfor!ance. 1(@t was, to be sure, the dut of the %&@&, as seller, to deliver the thin+ sold

in a condition suitable for its en7o!ent b the buer for the purpose conte!plated , 14in other words, to deliverthe house sub7ect of the contract in a reasonabl livable state. /his it failed to do.

@t sold a house to A+caoili, and re9uired hi! to i!!ediatel occup it under pain of cancellation of the sale. 6nderthe circu!stances there can hardl be an doubt that the house conte!plated was one that could be occupied forpurposes of residence in reasonable co!fort and convenience. /here would be no sense to re9uire the awardeeto i!!ediatel occup and live in a shell of a house, a structure consistin+ onl of four walls with openin+s, and aroof, and to theorie, as the %&@& does, that this was what was intended b the parties, since the contract did notclearl i!pose upon it the obli+ation to deliver a 'abitable 'ouse, is toadvocate an absurdit, the creation of anunfair situation. B an ob7ective interpretation of its ter!s, the contract can onl be understood as i!posin+ onthe %&@& an obli+ation to deliver to A+caoili a reasonabl habitable dwellin+ in return for his underta:in+ to pathe stipulated price. &ince %&@& did not fulfill that obli+ation, and was not willin+ to put the house in habitable

state, it cannot invo:e A+caoili;s suspension of pa!ent of a!ortiations as cause to cancel the contract betweenthe!. @t is aio!atic that Din reciprocal obli+ations, neither part incurs in dela if the other does not co!pl or isnot read to co!pl in a proper !anner with what is incu!bent upon hi!.D 15

Nor !a the %&@& succeed in 7ustifin+ its cancellation of the award to A+caoili b the clai! that the latter had notco!plied with the condition of occupin+ the house within three ) das. /he record shows that A+caoili did tr to

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fulfill the condition8 he did tr to occup the house but found it to be so uninhabitable that he had to leave it thefollowin+ da. =e did however leave a friend in the structure, who bein+ ho!eless and hence willin+ to acceptshelter even of the !ost rudi!entar sort, a+reed to sta therein and loo: after it. /hus the ar+u!ent that A+caoilibreached the a+ree!ent b failin+ to occup the house, and b allowin+ another person to sta in it without theconsent of the %&@&, !ust be re7ected as devoid of !erit.

>inall, the %&@& should not be heard to sa that the a+ree!ent between it and A+caoili is silent, or i!precise asto its eact prestation Bla!e for the i!precision cannot be i!puted to A+caoili8 it was after all the %&@& whichcaused the contract to co!e into bein+ b its written acceptance of A+caoili;s offer to purchase, that offer bein+contained in a printed for! supplied b the %&@&. &aid appellant havin+ caused the a!bi+uit of which it would

now !a:e capital, the 9uestion of interpretation arisin+ therefro!, should be resolved a+ainst it.

@t will not do, however, to dispose of the controvers b si!pl declarin+ that the contract between the parties hadnot been validl cancelled and was therefore still in force, and that A+caoili could not be co!pelled b the %&@&to pa the stipulated price of the house and lot sub7ect of the contract until and unless it had first co!pletedconstruction of the house. /his would leave the contract han+in+ or in suspended ani!ation, as it were, A+caoiliunwillin+ to pa unless the house were first co!pleted, and the %&@& averse to co!pletin+ construction, which isprecisel what has been the state of affairs between the parties for !ore than twent '0 ears now. 2n theother hand, assu!in+ it to be feasible to still finish the construction of the house at this ti!e, to co!pel the %&@&to do so so that A+caoili;s prestation to pa the price !i+ht in turn be de!anded, without !odifin+ the pricetherefor, would not be 9uite fair. /he cost to the %&@& of co!pletion of construction at present priceswould !a:ethe stipulated price disproportionate, unrealistic.

/he situation calls for the eercise b this Court of its e9uit 7urisdiction, to the end that it !a render complete#usticeto both parties.

As we . . reaffir!ed in Air Manila, @nc. vs. Court of @ndustrial Relations ) &CRA *-#, *# K"#-J.DE9uit as the co!ple!ent of le+al 7urisdiction see:s to reach and do co!plete 7ustice where courtsof law, throu+h the infleibilit of their rules and want of power to adapt their 7ud+!ents to the specialcircu!stances of cases, are inco!petent so to do. E9uit re+ards the spirit of and not the letter, theintent and not the for!, the substance rather than the circu!stance, as it is variousl epressed bdifferent courts... D 1)

@n this case, the Court can not re9uire specific perfor!ance of the contract in 9uestion accordin+ to its literal

ter!s, as this would result in ine9uit. /he prevailin+ rule is that in decreein+ specific perfor!ance e9uitre9uires1*H

... not onl that the contract be 7ust and e9uitable in its provisions, but that the conse9uences ofspecific perfor!ance li:ewise be e9uitable and 7ust. /he +eneral rule is that this e9uitable reliefwill not be +ranted if, under the circu!stances of the case, the result of the specific enforce!entof the contract would be harsh, ine9uitable, oppressive, or result in an unconscionable advanta+eto the plaintiff . .

@n the eercise of its e9uit 7urisdiction, the Court !a ad7ust the ri+hts of parties in accordance with thecircu!stances obtainin+ at the ti!e of rendition of 7ud+!ent, when these are si+nificantl different fro! thoseeistin+ at the ti!e of +eneration of those ri+hts.

/he Court is not restricted to an ad7ust!ent of the ri+hts of the parties as the eisted when suit wasbrou+ht, but will +ive relief appropriate to events occurin+ endin+ the suit. 1+

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estate contract, it has been held that where the currenc in which the plaintiff had contracted to pahad +reatl depreciated before enforce!ent was sou+ht, the relief would be denied unless theco!plaint would underta:e to pa the e9uitable value of the land. older of Ehibits,p.".

) 2.R. No. "(**, 2ct. "0, "#((.

4 Eh. , >older of Ehibits, p. 4.

* oc:eted as Civil Case No. (#4"-.

( /he letter was sent thru the awardees; D&a!ahan+ a:as n+ Mahihirap,D cop havin+ been!ar:ed at the trial as Eh. >8 to the letter was attached a resolution of said &a!ahan adopted atits !eetin+ of 3ul '), "#(- and to which, in turn, was appended a ) pa+e list of unco!pletedhouses with a specification of ite!s not co!pleted.

- B =on. Manuel P. Barcelona, presidin+ over Br. ?@@@ of the C>@ of Manila8 Record on Appeal,pp. ''$'*, Rollo, p. ").

Parenthetical insertions @dentifin+ the parties, supplied.

# Appellant;s brief, pp. ""$"4.

"0 :d., pp. -$.

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"" Appellant;s brief, pp. $"0.

"' Eh. E.

@) Art. "4-*, Civil Code8 Pacific 2+en G Acetlene Co. v. Central Ban:, )- &CRA (*.

"4 i! v. de los &antos, &CRA -#.

@* Art. ""(#, last para+raph, Civil Code.

"( Cristobal vs. Melchor, "0" &CRA *-, (*.

"- --" A!. 3ur. 'd, "0".

" )0C.3.&. #'#.

"# '- A! 3ur. 'd. ".

'0 Art. "#, Civil Code1 DEver person !ust, in the eercise of his ri+hts and in the perfor!ance ofhis duties, act with 7ustice, +ive everone his due, and observe and +ood faith.D

'" -" A!. 3ur. 'd, "'0.

'' A!. 3ur. 'nd ('$('#1 D/heir is a +eneral principle that a court of e9uit will balance thee9uities; between the parties in deter!inin+ what, if an, relief to +ive. . . /hus, for ea!ple,wherein the effect of the onl relief which can be +ranted to protect the plaintiff will be destructiveof the defendants; business, which would be lawful but for the har! it does to the plaintiff, relief!a be refused if, on a balancin+ of the respective interests, that of the defendant is found to berelativel i!portant, and that of the plaintiff relativel insi+nificant. . .D

') Record on Appeal, p. *8 Rollo, p. ").

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Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-49494 May 31, 1979

NELIA G. PONCE and VICENTE C. PONCE, petitioners,

vs.THE HONORABLE COURT O APPEALS, and !ESUSA B. AABLE, respondents.

Romeo L. Mendoza & Gallardo S. Tongohan for petitioners.

Ramon M. Velayo for private respondent.

MELENCIO-HERRERA, J.:

This is a Petition for ertiorari see!in" to set aside the Resolution of the ourt of #ppeals, dated $une %, &'(%,reconsiderin" its Decision dated Dece)ber &(, &'(( and reversin" the *ud")ent of the ourt of First Instance of

Manila in favor of petitioners as +ell as the Resolutions, dated $ul -, &'(% and Nove)ber (, &'(%, denin"petitioners/ Motion for Reconsideration.

The factual bac!"round of the case is as follo+s0

On $une 1, &'-', private respondent $esusa 2. #fable, to"ether +ith Felisa 3. Mendo4a and Ma. #urora . Di5oe6ecuted a pro)issor note in favor of petitioner Nelia 7. Ponce in the su) of P%&8,%-%.8, Philippine urrenc,paable, +ithout interest, on or before $ul 1&, &'-'. It +as further provided therein that should the indebtednessbe not paid at )aturit, it shall dra+ interest at &9 per annu), +ithout de)and: that should it be necessar tobrin" suit to enforce pa)ent of the note, the debtors shall pa a su) e;uivalent to &Nelia 7. Ponce and herhusband? filed, on $ul (, &'(

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On Dece)ber &1, &'((, the ourt of #ppeals"rendered *ud")ent affir)in" the decision of the trial ourt. In aResolution dated Februar (, &'(%, the ourt of #ppeals,""denied respondent/s Motion for Reconsideration.o+ever, in a Resolution dated $une %, &'(%, the ourt of #ppeals actin" on the Second Motion for Reconsiderationfiled b private respondent, set aside the Decision of Dece)ber &1, &'((, reversed the *ud")ent of the trial ourtand dis)issed the o)plaint. The ourt of #ppeals opined that the intent of the parties +as that the pro)issornote +as paable in =S dollars, and, therefore, the transaction +as ille"al +ith neither part entitled to recoverunder the in pari delictorule.

Their Motions for Reconsideration havin" been denied in the Resolutions dated $ul -, &'(% and Nove)ber (,&'(%, petitioners filed the instant Petition raisin" the follo+in" #ssi"n)ents of Error.

I

TE RESPONDENT O=RT OF #PPE#3S ERRED IN ON3=DIN7 T#T TE PROMISSOR NOTE EVIDENIN7 TETR#NS#TION OF TE P#RTIES IS P##23E IN =.S. DO33#RS TERE2 DETERMININ7 TE INTENT OF TE P#RTIESO=TSIDE OF TEIR PROMISSOR NOTE DESPITE 3#G OF SOHIN7 T#T IT F#I3ED TO EPRESS TE TR=E INTENTOR #7REEMENT OF TE P#RTIES #ND ITS P##2I3IT IN PI3IPPINE PESOS HI IS EPRESSED, #MON7 OTERS,2 ITS 3E#R #ND PREISE TERMS.

II

TE RESPONDENT O=RT, OF #PPE#3S ERRED IN O3DIN7 T#T REP=23I #T J', OTERHISE GNOHN #SI#N#T TO #SS=RE =NIFORM V#3=E TO PI3IPPINE OINS #ND =RREN,/ OVERS TE TR#NS#TION OF TEP#RTIES EREIN.

III

TE RESPONDENT O=RT OF #PPE#3S ERRED IN NOT FINDIN7 T#T PRIV#TE RESPONDENT $ES=S# 2. #F#23EO=3D NOT F#VOR#23 #V#I3 ERSE3F OF TE DEFENSE OF #33E7ED #PP3I#2I3IT OF REP=23I #T J' #ND

TE DOTRINE OF IN P#RI DE3ITO #S TESE HERE NOT P3E#DED NOR #DOPTED 2 ER IN TE TRI#3.

IV

TE RESPONDENT O=RT OF #PPE#3S ERRED IN NOT FINDIN7 #SS=MIN7 #R7=ENDO T#T REP=23I #T J'OVERS TE P#RTIES TR#NS#TION, T#T TE Doctrine OF IN P#RI DE3ITO DOES NOT #PP3 #ND TE P#RTIES#7REEMENT H#S NOT N=33 #ND VOID P=RS=#NT TO TE R=3IN7 IN OT#VIO #. G#3#3O VS. #3FREDO $. 3=K, NO.C((%, $=3 1&, &'(a? transactions +ere the funds involved are the proceeds of loans or invest)ents )ade directlor indirectl, throu"h bona fide inter)ediaries or a"ents, b forei"n "overn)ents, their a"encies andinstru)entalities, and international financial and ban!in" institutions so lon" as the funds are Identifiable, as havin"e)anated fro) the sources enu)erated above: >b? transactions affectin" hi"h priorit econo)ic pro*ects fora"ricultural industrial and po+er develop)ent as )a be deter)ined b the National Econo)ic ouncil +hich arefinanced b or throu"h forei"n funds: >c? for+ard e6chan"e transactions entered into bet+een ban!s or bet+eenban!s and individuals or *uridical persons: >d? i)portCe6port and other international ban!in" financial invest)ent

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and industrial transactions. Hith the e6ception of the cases enu)erated in ite)s >a? >b?, >c? and >d? in the fore"oin"provision, in, +hich cases the ter)s of the parties/ a"ree)ent sha" appl, every other domestic oligationheretofore or hereafter incurred whether or not any such provision as to payment is contained therein or madewith% respect thereto$ shall e discharged upon payment in any coin or currency which at the time of payment islegal tender for pulic and private detsProvided, That if the obli"ation +as incurred prior to the enact)ent of this#ct and re;uired pa)ent in a particular !ind of coin or currenc other than Philippine currenc, it shall bedischar"e in Philippine currenc )easured at the prevailin" rates of e6chan"e at the ti)e the obli"ation +asincurred, e6cept in case of a loan )ade in forei"n currenc stipulated to be paable in the currenc in +hich casethe rate of e6chan"e prevailin" at the ti)e of the stipulated date of pa)ent shall prevail #ll coin and currenc,includin" entral 2an! notes, heretofore and hereafter issued and d b the 7overn)ent of the Philippines shall bele"al tender for all debts, public and private. >#s a)ended b R# 8&&'-8?.

8 Galalo vs. 3u4, 18 SR# 11( >&'(

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THIRD DIVISION

SPOUSES LUIGI M. GUANIO andANNA HERNANDEZ-GUANIO,

Petitioners,

G.R. No. 190601

- ve!"! -

Pe!en#$

CARPIO MORALES,

Chairperson, J.,

BRION,

BERSAMIN,

VILLARAMA, JR., and SERENO,JJ.

MA%ATI SHANGRI-LA HOTEL

and RESORT, IN&., a'!o do(n)

*"!(ne!! "nde #+e nae o Po"')a#ed$

SHANGRI-LA HOTEL MANILA,

Respondent. February 7, 2011

x x

D E & I S I O N

&ARPIO MORALES,J.

F!r "#e$r %edd$n& re'e("$!n !n Ju)y 2*, 2001, +(!u+e+ Lu$&$ M. uan$! and Anna

-ernandeuan$! /(e"$"$!ner+ b!!ed a" "#e S#an&r$)a -!"e) Maa"$ /"#e #!"e).

Pr$!r "! "#e een", Maa"$ S#an&r$La -!"e) 3 Re+!r", In'. /re+(!nden" +'#edu)ed an

$n$"$a) 4!!d "a+"$n&. Pe"$"$!ner+ ')a$5 "#a" "#ey re6ue+"ed "#e #!"e) "! (re(are 4!r +een

(er+!n+ "#e "%! !4 "#e5, "#e$r re+(e'"$e (aren"+, and "#e %edd$n& '!!rd$na"!r. A" "#e

+'#edu)ed 4!!d "a+"$n&, #!%eer, re+(!nden" (re(ared 4!r !n)y +$x.

Pe"$"$!ner+ $n$"$a))y '#!+e a +e" 5enu %#$'# $n')uded b)a' '!d, $n& (ra%n+ and an&e)

#a$r (a+"a %$"# %$)d 5u+#r!!5 +au'e 4!r "#e 5a$n '!ur+e %#$'# '!+" P1,000.00 (er (er+!n.

8#ey %ere, #!%eer, &$en an !("$!n $n %#$'# +a)5!n, $n+"ead !4 $n& (ra%n+, %!u)d be $n

"#e 5enu a" P9:0.00 (er (er+!n. 8#ey $n 4a'" (ar"!! !4 "#e +a)5!n.

8#ree day+ be4!re "#e een", a 4$na) 4!!d "a+"$n& "!! ()a'e. Pe"$"$!ner+ aer "#a" "#e

+a)5!n +ered %a+ #a)4 "#e +$e !4 %#a" "#ey %ere +ered dur$n& "#e $n$"$a) 4!!d "a+"$n&; and

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%#en 6uer$ed ab!u" $", "#e #!"e) 6u!"ed a 5u'# #$er (r$'e /P1,200.00 4!r "#e +$e "#a" %a+

$n$"$a))y +ered "! "#e5. 8#e (ar"$e+ een"ua))y a&reed !n a 4$na) (r$'e P1,1:0 (er (er+!n.

A day be4!re "#e een" !r !n Ju)y 27, 2001, "#e (ar"$e+ 4$na)$ed and 4!r&ed "#e$r

'!n"ra'".+ re(re+en"a"$e+, Ca"er$n&

?$re'"!r Bea Mar6ue and Sa)e+ Mana&er 8e++a A)are, d$d n!" +#!% u( de+($"e "#e$r

a++uran'e "#a" "#ey %!u)d; "#e$r &ue+"+ '!5()a$ned !4 "#e de)ay $n "#e +er$'e !4 "#e

d$nner; 'er"a$n $"e5+ )$+"ed $n "#e (ub)$+#ed 5enu %ere unaa$)ab)e; "#e #!"e)>+ %a$"er+ %ere

rude and una(!)!&e"$' %#en '!n4r!n"ed ab!u" "#e de)ay; and de+($"e A)are>+ (r!5$+e "#a"

"#ere %!u)d be n! '#ar&e 4!r "#e ex"en+$!n !4 "#e re'e("$!n bey!nd 12@00 5$dn$", "#ey %ere

b$))ed and (a$d P*,000 (er #!ur 4!r "#e "#ree#!ur ex"en+$!n !4 "#e een" u( "! @00 A.M. "#e

nex" day.

Pe"$"$!ner+ 4ur"#er ')a$5 "#a" "#ey br!u" %$ne and )$6u!r $n a''!rdan'e %$"# "#e$r!(en bar arran&e5en", bu" "#e+e %ere n!" +ered "! "#e &ue+"+ %#! %ere 4!r'ed "! (ay 4!r

"#e$r dr$n+.

Pe"$"$!ner+ "#u+ +en" a )e""er'!5()a$n" "! "#e Maa"$ S#an&r$)a -!"e) and Re+!r", In'.

/re+(!nden" and re'e$ed an a(!)!&e"$' re()y 4r!5 r$+"er Sen++!n, "#e #!"e)>+ Exe'u"$e

A++$+"an" Mana&er $n '#ar&e !4 F!!d and Beera&e. 8#ey neer"#e)e++ 4$)ed a '!5()a$n" 4!r

brea'# !4 '!n"ra'" and da5a&e+ be4!re "#e Re&$!na) 8r$a) C!ur" /R8C !4 Maa"$ C$"y.

In $"+ An+%er, re+(!nden" ')a$5ed "#a" (e"$"$!ner+ re6ue+"ed a '!5b$na"$!n !4 $n&

(ra%n+ and +a)5!n, #en'e, "#e (r$'e %a+ $n'rea+ed "! P1,200.00 (er (er+!n, bu" d$+'!un"ed

a"P1,1:0.00; "#a" '!n"rary "! (e"$"$!ner+> ')a$5, Mar6ue and A)are %ere (re+en" dur$n& "#e

een", a)be$" "#ey %ere n!" (er5anen")y +"a"$!ned "#erea" a+ "#ere %ere "#ree !"#er #!"e)

4un'"$!n+; "#a" %#$)e "#ere %a+ a de)ay $n "#e +er$'e !4 "#e 5ea)+, "#e +a5e %a+ !''a+$!ned

by "#e +udden $n'rea+e !4 &ue+"+ "! 70 4r!5 "#e &uaran"eed ex(e'"ed 5$n$5u5 nu5ber !4

&ue+"+ !4 :0 "! a 5ax$5u5 !4 *0, a+ +"a"ed $n "#e Ban6ue" Een" Order /BEO; + 4a"#er, $) uan$!.

Re+(e'"$n& "#e be)a"ed +er$'e !4 5ea)+ "! +!5e &ue+"+, re+(!nden" a""r$bu"ed $" "! "#e

$n+$+"en'e !4 (e"$"$!ner+> %edd$n& '!!rd$na"!r "#a" 'er"a$n &ue+"+ be +ered 4$r+".

On Sen++!n>+ )e""er, re+(!nden", deny$n& $" a+ an ad5$++$!n !4 )$ab$)$"y, ')a$5ed "#a" $"

%a+ 5ean" "! 5a$n"a$n &!!d%$)) "! $"+ 'u+"!5er+.

By ?e'$+$!n !4 Au&u+" 17, 200D, Bran'# 1* !4 "#e Maa"$ R8C rendered ud&5en" $n

4a!r !4 (e"$"$!ner+, d$+(!+$n& a+ 4!))!%+@

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-EREFORE, (re5$+e+ '!n+$dered, ud&5en" $+ #ereby rendered $n 4a!r !4 "#e

()a$n"$44+ and a&a$n+" "#e de4endan" !rder$n& "#e de4endan"+ "! (ay "#e ()a$n"$44 "#e 4!))!%$n&@

1 8#e a5!un" !4 P:0,000.00 by %ay !4 a'"ua) da5a&e+;

2 8#e a5!un" !4 P2:0,000.00 4!r and a+ 5!ra) da5a&e+;

8#e a5!un" !4 P100,000.00 a+ exe5()ary da5a&e+;

8#e a5!un" !4 P100,000.00 4!r and a+ a""!rney>+ 4ee+.

$"# '!+"+ a&a$n+" "#e de4endan".

SO OR?ERE?. 5!"$!n 4!r re'!n+$dera"$!n #a$n& been den$ed by Re+!)u"$!n !4 N!e5ber1*, 2009, "#e (re+en" (e"$"$!n 4!r re$e% %a+ 4$)ed.

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8#e C!ur" 4$nd+ "#a" +$n'e (e"$"$!ner+> '!5()a$n" ar!+e 4r!5 a '!n"ra'", "#e d!'"r$ne !4

(r!x$5a"e 'au+e 4$nd+ n! a(()$'a"$!n "! $"@

8#e d!'"r$ne !4 (r!x$5a"e 'au+e $+ a(()$'ab)e !n)y $n a#(on! o /"a!(-de'(#!, n!" $n

a'"$!n+ $n!)$n& brea'# !4 '!n"ra'" . x x x 8#e d!'"r$ne $+ a de$'e 4!r $5(u"$n& )$ab$)$"y "! a

(er+!n %#ere "#ere $+ n! re)a"$!n be"%een #$5 and an!"#er (ar"y. In +u'# a 'a+e, "#e !b)$&a"$!n

$+ 'rea"ed by )a% $"+e)4. Bu", %#ere "#ere $+ a (reex$+"$n& '!n"ra'"ua) re)a"$!n be"%een "#e

(ar"$e+, $" $+ "#e (ar"$e+ "#e5+e)e+ %#! 'rea"e "#e !b)$&a"$!n, and "#e 4un'"$!n !4 "#e )a% $+

5ere)y "! re&u)a"e "#e re)a"$!n "#u+ 'rea"ed.

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"#e ab+en'e !4 +u'# n!"$'e, (ara&ra(# . +#a)) a(()y $n "#e een" !4 under a""endan'e. In a!e

#+e a#"a' n"*e o a##endee! eeed #+e (n(" )"aan#eed n"*e

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*4 #en 2een# 5107, #+e HOTEL !+a'' not (n an4 8a4 *e +e'd '(a*'e o an4 damage or

inconvenience8+(+ a4 *e a"!ed #+ee*4. T+e ENGAGER !+a'' a'!o "nde#ae #o

adv(!e #+e )"e!#! o #+e !(#"a#(on and #ae 2o!(#(ve !#e2! #o eed4 #+e !ae. '!n"ra'" (r!$de,

re+(!nden" 4r!5 )$ab$)$"y 4!r any da5a&e !r $n'!nen$en'e !''a+$!ned "#ereby.

A+ 4!r (e"$"$!ner+> ')a$5 "#a" re+(!nden" de(ar"ed 4r!5 $"+ verbala&ree5en" %$"#

(e"$"$!ner+, "#e +a5e 4a$)+, &$en "#a" "#e %r$""en '!n"ra'" %#$'# "#e (ar"$e+ en"ered $n"! "#e

day be4!re "#e een", be$n& "#e )a% be"%een "#e5.

Re+(e'"$n& "#e )e""er !4 Sen++!n !n %#$'# "#e "r$a) '!ur" #ea$)y re)$ed a+ ad5$++$!n !4

re+(!nden">+ )$ab$)$"y bu" %#$'# "#e a((e))a"e '!ur" bru+#ed a+$de, "#e C!ur" 4$nd+ "#e

a((e))a"e '!ur">+ +"an'e $n !rder. I" $+ n!" un'!55!n $n "#e #!"e) $ndu+"ry "! re'e$e

'!55en"+, 'r$"$'$+5+ !r 4eedba' !n "#e +er$'e $" de)$er+. I" $+ a)+! 'u+"!5ary 4!r #!"e)

5ana&e5en" "! "ry "! +5!!"# ru44)ed 4ea"#er+ "! (re+ere &!!d%$)) a5!n& $"+ ')$en"e)e.

Kalalo v. Luz #!)d+:

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I4 I 5ay, K!ur -!n!r, "#a" %a+ "#e )e""er da"ed Au&u+" , 2001, (re$!u+)y 5ared a+

()a$n"$44>+ ex#$b$"+, K!ur -!n!r. #a" $+ "#e (r!'edure !4 "#e #!"e) %$"# re+(e'" "!

'u+"!5er '!n'ern

A G(!n re'e$(" !4 "#e '!n'ern 4r!5 "#e &ue+" !r ')$en", %e a'n!%)ed&e re'e$(" !4 +u'#

'!n'ern, and a+ (ar" !4 (r!'edure $n +er$'e $ndu+"ry (ar"$'u)ar)y Maa"$ S#an&r$)a %e

a(!)!&$e 4!r %#a"eer $n'!nen$en'e bu" a" "#e +a5e "$5e +ay$n&, "#a" !4 '!ur+e, %e

%!u)d &! "#r!u 'er"a$n $ne+"$&a"$!n and &e" ba' "! "#e5 4!r "#e 4eedba' %$"#

%#a"eer '!n'ern "#ey 5ay #ae.

K!ur -!n!r, I u+" )$e a" "#$+ (!$n" 5ar "#e ex#$b$"+, K!ur -!n!r, "#e )e""er da"edAu&u+" , 2001 $den"$4$ed by "#e %$"ne++, K!ur -!n!r, "! be 5ared a+ Ex#$b$" 1 and

"#e +$&na"ure !4 Mr. r$+"er Sen++!n be 5ared a+ Ex#$b$" 1A. a5.

#a" 5ae+ y!u +ay "#a" "#$+ (r!'edure %a+ 4!))!%ed

A A+ I 5en"$!ned ear)$er, %e (r!ed "#a" %e d$d a'n!%)ed&e "#e '!n'ern !4 "#e ')$en" $n"#$+ 'a+e and %e d$d e5(#a"$e 4r!5 "#e ')$en" and a(!)!&$ed, and a" "#e +a5e "$5e

&!" ba' "! "#e5 $n %#a"eer $ne+"$&a"$!n %e #ae.

K!u +a$d "#a" y!u a(!)!&$ed, %#a" d$d y!u a(!)!&$e 4!r

A e)), 4$r+" !4 a)) $" $+ a +"andard "#a" %e a(!)!&$e, r$" Be$n& $n "#e +er$'e $ndu+"ry,

$" $+ a (ra'"$'e "#a" %e a(!)!&$e $4 "#ere $+ any $n'!nen$en'e, +! "#e (ur(!+e 4!r

a(!)!&$$n& $+ 5a$n)y "! +#!% e5(a"#y and "! en+ure "#e ')$en" "#a" %e are #ear$n&

"#e5 !u" and "#a" %e %$)) d! a be""er $ne+"$&a"$!n and $" $+ n!" $n any %ay "#a" %e are

ad5$""$n& any 4au)".+ )e""er 5$" #ae '!neyed.

8#e ex'u)(a"!ry ')au+e n!"%$"#+"and$n&, "#e C!ur" n!"e+ "#a" re+(!nden" '!u)d #ae

5ana&ed "#e +$"ua"$!n be""er, $" be$n& #e)d $n #$ e+"ee5 $n "#e #!"e) and +er$'e $ndu+"ry.

$en re+(!nden">+ a+" ex(er$en'e, $" $+ +a4e "! (re+u5e "#a" "#$+ $+ n!" $"+ 4$r+" en'!un"er

%$"# b!!ed een"+ ex'eed$n& "#e &uaran"eed '!er. I" $+ n!" auda'$!u+ "! ex(e'" "#a" 'er"a$n

5ea+ure+ #ae been ()a'ed $n 'a+e "#$+ (red$'a5en" 'r!(+ u(. 8#a" re&ard)e++ !4 "#e+e5ea+ure+, re+(!nden" +"$)) re'e$ed '!5()a$n"+ a+ $n "#e (re+en" 'a+e, d!e+ n!" a5u+e.

Re+(!nden" ad5$""ed "#a" "#ree #!"e) 4un'"$!n+ '!$n'$ded %$"# (e"$"$!ner+> re'e("$!n.

8! "#e C!ur", "#e de)ay $n +er$'e 5$" #ae been a!$ded !r 5$n$5$ed $4 re+(!nden"

exer'$+ed (re+'$en'e $n +'#edu)$n& een"+. N! )e++ "#an 6ua)$"y +er$'e +#!u)d be de)$ered

e+(e'$a))y $n een"+ %#$'# (!++$b$)$"y !4 re(e"$"$!n $+ ')!+e "! n$). Pe"$"$!ner+ are n!" ex(e'"ed

"! &e" 5arr$ed "%$'e $n "#e$r )$4e"$5e+.

In "#e (re+en" (e"$"$!n, under '!n+$dera"$!n+ !4 e6u$"y, "#e C!ur" dee5+ $" u+" "! a%ard"#e a5!un" !4 P:0,000.00 by %ay !4 n!5$na) da5a&e+ "! (e"$"$!ner+, 4!r "#e d$+'!54$"ure "#a"

"#ey %ere +ube'"ed "! dur$n& "! "#e een".

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en"$")ed "! re+(e'" !4 #$+ d$&n$"y, (er+!na)$"y, (r$a'y and (ea'e !4 5$nd.+ ?$$+$!n.

&ON&HITA &ARPIO MORALES

ssociate Justice

Chairperson

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&ERTI;I&ATION

Pur+uan" "! Se'"$!n 1, Ar"$')e VIII !4 "#e C!n+"$"u"$!n, and "#e ?$$+$!n C#a$r(er+!n>+

A""e+"a"$!n, I 'er"$4y "#a" "#e '!n')u+$!n+ $n "#e ab!e de'$+$!n #ad been rea'#ed $n

'!n+u)"a"$!n be4!re "#e 'a+e %a+ a++$&ned "! "#e %r$"er !4 "#e !($n$!n !4 "#e C!ur">+ ?$$+$!n.

RENATO &. &ORONA

Chief Justice

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&EC2N @?@&@2N

6G.R. No. 11112*. /7 2), 199)8

MR. MRS. ENGRACIO !A&RE, R.:#$% POR!IRIO CA&I",petitioners,vs.COURT O! APPEA"S, THE ;ORD !OR THE ;OR"D CHRISTIAN!E""O;SHIP, INC., AMY"INE ANTONIO, OHN RICHARDS, GONA"OGONA"ES, 'ICENTE '. UE, R., IC"I CORDO'A, AR"ENE GOOCCO,A"&ERTO ROabre, 3r. and his wife were owners of a "#' !odel Mada!inibus. /he used the bus principall in connection with a bus service for school children whichthe operated in Manila. /he couple had a driver, Porfirio 3. Cabil, who! the hired in "#", aftertrin+ hi! out for two wee:s. =is 7ob was to ta:e school children to and fro! the &t. &cholasticasColle+e in Malate, Manila.

2n Nove!ber ', "#4 private respondent

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after a series of i!pacts. /he bus ca!e to rest off the road. A coconut tree which it had hit fell onit and s!ashed its front portion.

&everal passen+ers were in7ured. Private respondent A!line Antonio was thrown on the floorof the bus and pinned down b a wooden seat which ca!e off after bein+ unscrewed. @t too: threepersons to safel re!ove her fro! this position. &he was in +reat pain and could not !ove.

/he driver, petitioner Cabil, clai!ed he did not see the curve until it was too late. =e said hewas not fa!iliar with the area and he could not have seen the curve despite the care he too: indrivin+ the bus, because it was dar: and there was no si+n on the road. =e said that he saw the

curve when he was alread within "* to )0 !eters of it. =e alle+edl slowed down to )0 :ilo!etersper hour, but it was too late.

/he in+aen police investi+ated the incident the net da, Nove!ber ), "#4. 2n the basis oftheir findin+ the filed a cri!inal co!plaint a+ainst the driver, Porfirio Cabil. /he case was laterfiled with the in+aen Re+ional /rial Court. Petitioners >abre paid 3esus Escano P",*00.00 forthe da!a+e to the latters fence. 2n the basis of Escanos affidavit of desistance the case a+ainstpetitioners >abre was dis!issed.

A!line Antonio, who was seriousl in7ured, brou+ht this case in the R/C of Ma:ati, MetroManila. As a result of the accident, she is now sufferin+ fro! paraple+ia and is per!anentlparaled fro! the waist down. urin+ the trial she described the operations she underwent andadduced evidence re+ardin+ the cost of her treat!ent and therap. @!!ediatel after the accident,she was ta:en to the Naareth =ospital in Ba$a, in+aen. As this hospital was not ade9uatele9uipped, she was transferred to the &to. Nio =ospital, also in the town of Ba$a, where she was+iven sedatives. An $ra was ta:en and the da!a+e to her spine was deter!ined to be toosevere to be treated there. &he was therefore brou+ht to Manila, first to the Philippine %eneral=ospital and later to the Ma:ati Medical Center where she underwent an operation to correct thedislocation of her spine.

@n its decision dated April "-, "##, the trial court found that1

N! '!n$n'$n& e$den'e %a+ +#!%n "#a" "#e 5$n$bu+ %a+ (r!(er)y '#e'ed 4!r "rae) "! a )!n&

d$+"an'e "r$( and "#a" "#e dr$er %a+ (r!(er)y +'reened and "e+"ed be4!re be$n& ad5$""ed 4!re5()!y5en". Indeed, a)) "#e e$den'e (re+en"ed #ae +#!%n "#e ne&)$&en" a'" !4 "#e de4endan"+

%#$'# u)"$5a"e)y re+u)"ed "! "#e a''$den" +ube'" !4 "#$+ 'a+e.

Accordin+l, it +ave 7ud+!ent for private respondents holdin+1

C!n+$der$n& "#a" ()a$n"$44+ !rd 4!r "#e !r)d C#r$+"$an Fe))!%+#$(, In'. and M+. A5y)$ne

An"!n$! %ere "#e !n)y !ne+ %#! addu'ed e$den'e $n +u((!r" !4 "#e$r ')a$5 4!r da5a&e+, "#e

C!ur" $+ "#ere4!re n!" $n a (!+$"$!n "! a%ard da5a&e+ "! "#e !"#er ()a$n"$44+.

-EREFORE, (re5$+e+ '!n+$dered, "#e C!ur" #ereby render+ ud&5en" a&a$n+" de4endan"+ Mr.

3 Mr+. En&ra'$! Fabre, Jr. and P!r4$r$! Cab$) y Ja5$) (ur+uan" "! ar"$')e+ 217D and 21*0 !4 "#eC$$) C!de !4 "#e P#$)$(($ne+ and +a$d de4endan"+ are !rdered "! (ay !$n")y and +eera))y "! "#e

()a$n"$44+ "#e 4!))!%$n& a5!un"@

" P#),(*-."" as co!pensator and actual da!a+es8

' P*00,000.00 as the reasonable a!ount of loss of earnin+ capacit of plaintiff A!line Antonio8

) P'0,000.00 as !oral da!a+es8

4 P'0,000.00 as ee!plar da!a+es8 and

* '*Q of the recoverable a!ount as attornes fees8

( Costs of suit.

SO OR?ERE?.

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/he Court of Appeals affir!ed the decision of the trial court with respect to A!line Antonio butdis!issed it with respect to the other plaintiffs on the +round that the failed to prove theirrespective clai!s. /he Court of Appeals !odified the award of da!a+es as follows1

" P#),(*-."" as actual da!a+es8

' P(00,000.00 as co!pensator da!a+es8

) P*0,000.00 as !oral da!a+es8

4 P'0,000.00 as ee!plar da!a+es8

* P"0,000.00 as attornes fees8 and

( Costs of suit.

/he Court of Appeals sustained the trial courts findin+ that petitioner Cabil failed to eercisedue care and precaution in the operation of his vehicle considerin+ the ti!e and the place of theaccident. /he Court of Appeals held that the >abres were the!selves presu!ptivelne+li+ent. =ence, this petition. Petitioners raise the followin+ issues1

@.

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Pursuant to Arts. '"-( and '"0 of the Civil Code his ne+li+ence +ave rise to the presu!ptionthat his e!ploers, the >abres, were the!selves ne+li+ent in the selection and supervision of theire!ploee.

ue dili+ence in selection of e!ploees is not satisfied b findin+ that the applicant possesseda professional drivers license. /he e!ploer should also ea!ine the applicant for his9ualifications, eperience and record of service.K*Jue dili+ence in supervision, on the other hand,re9uires the for!ulation of rules and re+ulations for the +uidance of e!ploees and the issuance ofproper instructions as well as actual i!ple!entation and !onitorin+ of consistent co!pliance with

the rules.

K(J

@n the case at bar, the >abres, in allowin+ Cabil to drive the bus to a 6nion, apparentl did notconsider the fact that Cabil had been drivin+ for school children onl, fro! their ho!es to the &t.&cholasticas Colle+e in Metro Manila.K-J/he had hired hi! onl after a two$wee:apprenticeship. /he had tested hi! for certain !atters, such as whether he could re!e!ber thena!es of the children he would be ta:in+ to school, which were irrelevant to his 9ualification todrive on a lon+ distance travel, especiall considerin+ that the trip to a 6nion was his first. /heeistence of hirin+ procedures and supervisor policies cannot be casuall invo:ed to overturn thepresu!ption of ne+li+ence on the part of an e!ploer.KJ

Petitioners ar+ue that the are not liable because " an earlier departure !ade i!possible b

the con+re+ations delaed !eetin+ could have averted the !ishap and ' under the contract, the

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/his liabilit of the co!!on carriers does not cease upon proof that the eercised all thedili+ence of a +ood father of a fa!il in the selection and supervision of their e!ploees.

/he sa!e circu!stances detailed above, supportin+ the findin+ of the trial court and of theappellate court that petitioners are liable under Arts. '"-( and '"0 for quasi delict, full 7ustiffindin+ the! +uilt of breach of contract of carria+e under Arts. "-)), "-** and "-*# of the CivilCode.

&econdl, we sustain the award of da!a+es in favor of A!line Antonio. =owever, we thin:the Court of Appeals erred in increasin+ the a!ount of co!pensator da!a+es because private

respondents did not 9uestion this award as inade9uate. K""J/o the contrar, the award ofP*00,000.00 for co!pensator da!a+es which the Re+ional /rial Court !ade is reasonableconsiderin+ the contin+ent nature of her inco!e as a casual e!ploee of a co!pan and asdistributor of beaut products and the fact that the possibilit that she !i+ht be able to wor: a+ainhas not been foreclosed. @n fact she testified that one of her previous e!ploers had epressedwillin+ness to e!plo her a+ain.

"#e dr$er !4 an!"#er e#$')e, "#e dr$er+ a+ %e)) a+ "#e !%ner+ !4 "#e "%! e#$')e+ are !$n")y and

+eera))y )$ab)e 4!r da5a&e+. S!5e 5e5ber+ !4 "#e C!ur", "#!u, are !4 "#e $e% "#a" under "#e

'$r'u5+"an'e+ "#ey are )$ab)e !n *uasi+delict.

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@t is true that in P'ilippine 7abbit 8us Lines, :nc. v. !ourt of Appeals K'"Jthis Court eoneratedthe 7eepne driver fro! liabilit to the in7ured passen+ers and their fa!ilies while holdin+ theowners of the 7eepne 7ointl and severall liable, but that is because that case was epressl triedand decided eclusivel on the theor of culpa contractual. As this Court there eplained1

8#e "r$a) '!ur" %a+ "#ere4!re r$" $n 4$nd$n& "#a" Mana)! rance v. Carrascoso, " &CRA "**, "( "#((. Accord, &in+son v. Ban: of the Philippine @slands, ') &CRA"""-, """# "#(.

K)J/esti!on of Porfirio Cabil, /&N, p. "4, 2ct. '(, "#-.

K4J/esti!on of Pat. Chito Es!enda, /&N, pp. )-$), &ept. "', "#*.

K*JMetro Manila /ransit Corp. v. Court of Appeals, '') &CRA *'" "##)8 Ca!po v. Ca!arote, "00 Phil. 4*# "#*(.

K(J>ila!er Christian @nstitute v. @nter!ediate Appellate Court, '"' &CRA ()- "##'.

K-J/esti!on of Porfirio Cabil, /&N, p. -, 2ct. '(, "#-.

KJSupra note *.

K#Ja!ada v. Manila Railroad Co., )) Phil. , "4 "#"*.

K"0Je %u!an v. Court of Appeals, "( &CRA ("', (" "#8 Bascos v. Court of Appeals, ''" &CRA )" "##).

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K""JPhilippine Airlines v. Court of Appeals, ''( &CRA 4') "##).

K"'J%atchalian v. eli!, '0) &CRA "'( "##"8 Prudenciado v. Alliance /ransport &ste!, @nc., "4 &CRA 440 "#-.

K")Ja Mallorca v. Court of Appeals, "-* &CRA -)# "##.

K"4J'0' &CRA *-4 "##".

K"*J" &CRA '"( "##0.

K"(J"- &CRA ''4 "#((.

K"-J"(- &CRA )-# "#.

K"J'') &CRA *'" "##).

K"#J"( &CRA -4' "#((.

K'0J:d., at -4-.

K'"J"# &CRA "* "#.

K''J:d., at "-'$"-).

K')Ja Mallorca v. Court of Appeals, "- &CRA -)# "#((.

Rule , T' provides1 Alternative causes of action or defenses. A part !a set forth two or !ore state!ents of a

clai! or defense alternativel or hpotheticall, either in one cause of action or defense or in separate causes of action

or defenses.

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Republic of the PhilippinesSUPREME COURT

Manila

/=@R @?@&@2N

G.R. No. +(122 Oc-ober 19, 1990

ARTURO P. 'A"ENUE"A #$% HOSPITA"ITA N. 'A"ENUE"A, petitioners,vs.THE HONORA&"E COURT O! APPEA"S, &IEN'ENIDO M. ARAGON, RO&ERT E. PARNE"", CAR"OS .CATO"ICO #$% THE PHI"IPPINE AMERICAN GENERA" INSURANCE COMPANY, INC., respondents.

Albino 8. Ac'as for petitioners.

An%ara, Abello, !oncepcion, 7e%ala & !ru" for private respondents.

GUTIERRE, R., J.:

/his is a petition for review of the 3anuar '#, "# decision of the Court of Appeals and the April '-, "#resolution denin+ the petitioners; !otion for reconsideration, which decision and resolution reversed the decisiondated 3une '),"#( of the Court of >irst @nstance of Manila, Branch )4 in Civil Case No. "'""'( upholdin+ thepetitioners; causes of action and +rantin+ all the reliefs praed for in their co!plaint a+ainst private respondents.

/he antecedent facts of the case are as follows1

Petitioner Arturo P. ?alenuela ?alenuela for short is a %eneral A+ent of private respondent PhilippineA!erican %eneral @nsurance Co!pan, @nc. Phila!+en for short since "#(*. As such, he was authoried tosolicit and sell in behalf of Phila!+en all :inds of non$life insurance, and in consideration of services rendered

was entitled to receive the full a+ent;s co!!ission of )'.*Q fro! Phila!+en under the scheduled co!!issionrates Ehibits DAD and D"D. >ro! "#-) to "#-*, ?alenuela solicited !arine insurance fro! one of his clients, theelta Motors, @nc. ivision of Electronics Airconditionin+ and Refri+eration in the a!ount of P4.4 Million fro!which he was entitled to a co!!ission of )'Q Ehibit DBD. =owever, ?alenuela did not receive his fullco!!ission which a!ounted to P".( Million fro! the P4.4 Million insurance covera+e of the elta Motors. urin+the period "#-( to "#-, pre!iu! pa!ents a!ountin+ to P",#4(,(.00 were paid directl to Phila!+en and?alenuela;s co!!ission to which he is entitled a!ounted to P()',-)-.00.

@n "#--, Phila!+en started to beco!e interested in and epressed its intent to share in the co!!ission due?alenuela Ehibits D@@@D and D@@@$"D on a fift$fift basis Ehibit DCD. ?alenuela refused Ehibit DD.

2n >ebruar , "#- Phila!+en and its President, Bienvenido M. Ara+on insisted on the sharin+ of the

co!!ission with ?alenuela Ehibit E. /his was followed b another sharin+ proposal dated 3une ", "#-. 2n3une "(,"#-, ?alenuela fir!l reiterated his ob7ection to the proposals of respondents statin+ that1 D@t is with+reat reluctance that @ have to decline upon re9uest to si+nif ! confor!it to our alternative proposalre+ardin+ the pa!ent of the co!!ission due !e. =owever, @ have no choice for to do otherwise would beviolative of the A+enc A+ree!ent eecuted between our +oodselves.D Ehibit B$"

Because of the refusal of ?alenuela, Phila!+en and its officers, na!el1 Bienvenido Ara+on, Carlos Catolicoand Robert E. Parnell too: drastic action a+ainst ?alenuela. /he1 a reversed the co!!ission due hi! b notcreditin+ in his account the co!!ission earned fro! the elta Motors, @nc. insurance Ehibit D3D and D'D8 bplaced a+enc transactions on a cash and carr basis8 c threatened the cancellation of policies issued b hisa+enc Ehibits D=D to D=$'D8 and d started to lea: out news that ?alenuela has a substantial account withPhila!+en. All of these acts resulted in the decline of his business as insurance a+ent Ehibits DND, D2D, D5D and

D5$D. /hen on ece!ber '-, "#-, Phila!+en ter!inated the %eneral A+enc A+ree!ent of ?alenuelaEhibit D3D, pp. "$), ecision /rial Court dated 3une '), "#(, Civil Case No. "'""'(, Anne @, Petition.

/he petitioners sou+ht relief b filin+ the co!plaint a+ainst the private respondents in the court a quoCo!plaintof 3anuar '4, "#-#, Anne D>D Petition. After due proceedin+s, the trial court found1

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efendants tried to 7ustif the ter!ination of plaintiff Arturo P. ?alenuela as one of defendantP=@AM%EN;s %eneral A+ent b !a:in+ it appear that plaintiff Arturo P. ?alenuela has asubstantial account with defendant P=@AM%EN particularl elta Motors, @nc.;s Account, therebpre7udicin+ defendant P=@AM%EN;s interest Ehibits (,D""D,D""$ D"'$ ADandD")$AD.

efendants also invo:ed the provisions of the Civil Code of the Philippines Article "( and theprovisions of the %eneral A+enc A+ree!ent as their basis for ter!inatin+ plaintiff Arturo P.?alenuela as one of their %eneral A+ents.

/hat defendants; position could have been 7ustified had the ter!ination of plaintiff Arturo P.?alenuela was sic based solel on the provisions of the Civil Code and the conditions of the%eneral A+enc A+ree!ent. But the records will show that the principal cause of the ter!inationof the plaintiff as %eneral A+ent of defendant P=@AM%EN was his refusal to share his eltaco!!ission.

/hat it should be noted that there were several atte!pts !ade b defendant Bienvenido M.Ara+on to share with the elta co!!ission of plaintiff Arturo P. ?alenuela. =e had persistentlpursued the sharin+ sche!e to the point of ter!inatin+ plaintiff Arturo P. ?alenuela, and to !a:e!atters worse, defendants !ade it appear that plaintiff Arturo P. ?alenuela had substantialaccounts with defendant P=@AM%EN.

Not onl that, defendants have also started a to treat separatel the elta Co!!ission ofplaintiff Arturo P. ?alenuela, b to reverse the elta co!!ission due plaintiff Arturo P.?alenuela b not creditin+ or applin+ said co!!ission earned to the account of plaintiff ArturoP. ?alenuela, c placed plaintiff Arturo P. ?alenuela;s a+enc transactions on a Dcash and carrbasisD, d sendin+ threats to cancel eistin+ policies issued b plaintiff Arturo P. ?alenuela;sa+enc, e to divert plaintiff Arturo P. ?alenuela;s insurance business to other a+encies, and fto spread wild and !alicious ru!ors that plaintiff Arturo P. ?alenuela has substantial accountwith defendant P=@AM%EN to force plaintiff Arturo P. ?alenuela into a+reein+ with the sharin+of his elta co!!ission.D pp. #$"0, ecision, Anne ", Petition.

/hese acts of harrass!ent done b defendants on plaintiff Arturo P. ?alenuela to force hi! toa+ree to the sharin+ of his elta co!!ission, which cul!inated in the ter!ination of plaintiffArturo P. ?alenuela as one of defendant P=@AM%EN;s %eneral A+ent, do not 7ustif saidter!ination of the %eneral A+enc A+ree!ent entered into b defendant P=@AM%EN andplaintiff Arturo P. ?alenuela.

/hat since defendants are not 7ustified in the ter!ination of plaintiff Arturo P. ?alenuela as one oftheir %eneral A+ents, defendants shall be liable for the resultin+ da!a+e and loss of business ofplaintiff Arturo P. ?alenuela. Arts. '"##F''00, Civil Code of the Philippines. @bid, p. ""

/he court accordin+l rendered 7ud+!ent, the dispositive portion of which reads1

2RE, 7ud+!ent is hereb rendered in favor of the plaintiffs and a+ainst defendantsorderin+ the latter to reinstate plaintiff Arturo P. ?alenuela as its %eneral A+ent, and to paplaintiffs, 7ointl and severall, the followin+1

". /he a!ount of five hundred twent$one thousand nine hundred sit four and "(F"00 pesosP*'",#(4."( representin+ plaintiff Arturo P. ?alenuela;s elta Co!!ission with interest at thele+al rate fro! the ti!e of the filin+ of the co!plaint, which a!ount shall be ad7usted inaccordance with Article "'*0 of the Civil Code of the Philippines8

'. /he a!ount of sevent$five thousand pesos P-*,000.00 per !onth as co!pensatorda!a+es fro! "#0 until such ti!e that defendant Phila!+en shall reinstate plaintiff Arturo P.?alenuela as one of its +eneral a+ents8

). /he a!ount of three hundred fift thousand pesos P)*0,000.00 for each plaintiff as !oralda!a+es8

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4. /he a!ount of sevent$five thousand pesos P-*,000.00 as and for attorne;s fees8

*. Costs of the suit. @bid., P. "'

>ro! the aforesaid decision of the trial court, Bienvenido Ara+on, Robert E. Parnell, Carlos 5.Catolico and P=@AM%EN respondents herein, and defendants$appellants below, interposed anappeal on the followin+1

A&&@%NMEN/ 2> ERR2R&

@

/=E 2> AR/6R2 P. ?AENL6EA =AN2 26/&/AN@N% ACC26N/ ENAN/ P=@AM%EN A/ /=E /@ME 2> /=E/ERM@NA/@2N 2> /=E A%ENC.

@@

/=E 2> AR/6R2 P. ?AENL6EA @&EN/@/E /2 /=E >6 C2MM@&&@2N 2> )'.*Q 2N /=E E/A ACC26N/.

@@@

/=E 2 PA@N/@>>AR/6R2 P. ?AENL6EA @E AN /=A/ C2N&EI6EN/ E>ENAN/&ARE @ABE >2R AC/6A AN M2RA AMA%E&, A//2RNE& >EE& AN C2&/&.

@?

A&&6M@N% AR%6EN2 /=A/ /=E A AMA%E& A%A@N&/ E>ENAN/P=@AM%EN >AR/6R2 P. ?AENL6EA

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@n an event the principal;s power to revo:e an a+enc at will is so pervasive, that the &upre!eCourt has consistentl held that ter!ination !a be effected even if the principal acts in bad faith,sub7ect onl to the principal;s liabilit for da!a+es anon v. Antonio A. Bri!o G Co., 4' Phil. "))8Rees v. Mos9ueda, *) 2.%. '"* and @nfante ?. Cunanan, #) Phil. (#", cited in Paras, ?ol. ?,Civil Code of the Philippines Annotated K"#(J (#(.

/he lower court, however, thou+ht the ter!ination of ?alenuela as %eneral A+ent i!properbecause the record will show the principal cause of the ter!ination of the plaintiff as %eneralA+ent of defendant Phila!+en was his refusal to share his elta co!!ission. ecision, p. #8 p."), 7ollo, 4"

Because of the conflictin+ conclusions, this Court dee!ed it necessar in the interest of substantial 7ustice toscrutinie the evidence and records of the cases.

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and !one. @n the case of ?alenuela, he was able to build up an A+enc fro! scratch in "#(* to a hi+hlproductive enterprise with +ross billin+s of about /wo Million >ive =undred /housand Pesos P',*00,000.00pre!iu!s per annu!. /he records sustain the findin+ that the private respondent started to covet a share of theinsurance business that ?alenuela had built up, developed and nurtured to profitabilit throu+h over thirteen ")ears of patient wor: and perseverance.

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?alenuela liable.

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And on ece!ber '0, "#-, a state!ent of account with eactl the sa!e fi+ure was sent to ?alenuela.

@t was onl after the filin+ of the co!plaint that a radicall different state!ent of accounts surfaced in court.Certainl, Phila!+en;s own state!ents !ade b its own accountants over a lon+ period of ti!e and coverin+ea!inations !ade on four different occasions !ust prevail over unconfir!ed and unaudited state!ents !ade tosupport a position !ade in the course of defendin+ a+ainst a lawsuit.

@t is not correct to sa that ?alenuela should have presented its own records to refute the unconfir!ed andunaudited findin+ of the Banaria auditor. /he records of Phila!+en itself are the best refutation a+ainst fi+ures!ade as an afterthou+ht in the course of liti+ation. Moreover, ?alenuela as:ed for a !eetin+ where the fi+ures

would be reconciled. Phila!+en refused to !eet with hi! and, instead, ter!inated the a+enc a+ree!ent.

After off$settin+ the a!ount of P-44,"*#.0, be+innin+ balance as of 3ul "#--, b wa of credits representin+the co!!ission due fro! elta and other accounts, ?alenuela had overpaid Phila!+en the a!ount ofP*)0,040.)- as of Nove!ber )0, "#-. Phila!+en cannot later be heard to co!plain that it co!!itted a !ista:ein its co!putation. /he alle+ed error !a be +iven credence if co!!itted onl once. But as earlier stated, thereconciliation of accounts was arrived at four 4 ti!es on different occasions where Phila!+en was dulrepresented b its account eecutives. 2n the basis of these ad!issions and representations, Phila!+en cannotlater on assu!e a different posture and clai! that it was !ista:en in its representation with respect to the correctbe+innin+ balance as of 3ul "#-- a!ountin+ to P-44,"*#.0. /he Banaria audit report co!!issioned bPhila!+en is unreliable since its results are ad!ittedl based on an unconfir!ed and unaudited be+innin+balance of P",-*,"*.4) as of Au+ust '0,"#-(.

As so aptl stated b the trial court in its decision1

efendants also conducted an audit of accounts of plaintiff Arturo P. ?alenuela after thecontrovers has started. @n fact, after hearin+ plaintiffs have alread rested their case.

/he results of said audit were presented in Court to show plaintiff Arturo P. ?alenuela;saccountabilit to defendant P=@AM%EN. =owever, the auditor, when presented as witness in thiscase testified that the be+innin+ balance of their audit report was based on an unaudited a!ountof P",-*,"*.4) Ehibit 4($A as of Au+ust '0, "#-(, which was unverified and !erel suppliedb the officers of defendant P=@AM%EN.

Even defendants ver own Ehibit )$ A$), showed that plaintiff Arturo P. ?alenuela;s balance asof "#- a!ounted to onl P),(*.*#, not P'(,"'.4( as stated in defendant Bienvenido M.Ara+on;s letter dated ece!ber '0,"#- Ehibit "4 or P",*',(#.40 as reflected in defendant;sEhibit 4( Audit Report of Banaria dated ece!ber '4, "#0.

/hese +larin+ discrepanc sic in the accountabilit of plaintiff Arturo P. ?alenuela to defendantP=@AM%EN onl lends credence to the clai! of plaintiff Arturo P. ?alenuela that he has nooutstandin+ account with defendant P=@AM%EN when the latter, thru defendant Bienvenido M.Ara+on, ter!inated the %eneral A+enc A+ree!ent entered into b plaintiff Ehibit A effective3anuar )", "#-# see Ehibits D'D and D'$AD. Plaintiff Arturo P. ?alenuela has shown that as of2ctober )", "#-, he has overpaid defendant P=@AM%EN in the a!ount of P*),040.)- EhibitDEEED, which co!putation was based on defendant P=@AM%EN;s balance of P-44,"*#.0

furnished on several occasions to plaintiff Arturo P. ?alenuela b defendant P=@AM%ENEhibits =$", ??, ??$",

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+iven )'.*Q co!!issions. 6nder Article ''00 of the new Civil Code, Dinde!nification for da!a+es shallco!prehend not onl the value of the loss suffered, but also that of the profits which the obli+ee failed to obtain.D

/he circu!stances of the case, however, re9uire that the contractual relationship between the parties shall beter!inated upon the satisfaction of the 7ud+!ent. No !ore clai