conflicts cases 3-7-15

8/9/2019 Conflicts Cases 3-7-15

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BANK OF THE PHILIPPINE ISLANDS

VS. BENJAMIN PINEDA

G.R. No. L-62441

156 SCRA 404

FACTS:

Southern Industrial Project (SIP) and/or Bacong

purchased the vessels SS "Southern Comet," SS "SouthernExpress" and SS "Southern ope," thru !inancing !urnished #de!endant Peoples Ban$ and %rust Compan#, no& the Ban$ o! the Philippine Islands' %o secure the pa#ment o! &hatever amounts ma# e dis ursed !or the a!oresaid purpose, the saidvessels &ere mortgaged to Peoples Ban$ and %rust Compan#'

or the operation o! the said vessels, these &ere placed under the oo$ing agenc# o! de!endant Interocean ShippingCorporation, &ith the underta$ing that the !reight revenues!rom their charter and operation shall e deposited &ith the%rust epartment o! Peoples Ban$ and %rust Compan# andthat dis ursements made there !rom shall e covered #vouchers earing the approval o! SIP' *s Peoples Ban$ and%rust Compan# and SIP &ere not satis!ied &ith the amount o! revenues eing deposited &ith the said Ban$, it eing

suggested that diversions thereo! &ere eing made, +regorio *' Concon o! SIP and/or Bacong and oman *-an-a o! Peoples Ban$ and %rust Compan#, organi-ed S'*' +acet, Inc'to manage and supervise the operation o! the vessels &ithE-e$iel P' %oeg as the manager thereo!' *ccordingl#, on

*ugust . , .011, a 2anagement Contract &as entered intoet&een SIP and +*CE%, Inc', placing the supervision and

management o! the a!orementioned vessels in the hands o! +*CE%, Inc', &hich &as to run !or a period o! six (1) months,rene&a le at the &ill o! the parties, &ithout ho&ever,terminating the oo$ing agenc# o! Interocean ShippingCorporation' 3i$e&ise, under the terms o! said 2anagementContract, the Peoples Ban$ and %rust Compan# &asdesignated as depositor# o! all revenues coming !rom theoperation o! the su ject vessels there # ena ling it to controlall expenses o! +*CE%, Inc', since the# &in all e dra&nagainst said deposit'

uring the period comprising 2arch .1, .014 and *ugust 5 , .014, +*CE% and Interocean in per!orming their o ligations under said 2anagement Contract, contracted theservices o! herein plainti!!6appellee, Benjamin Pineda doing

usiness under the name and st#le "Pioneer Iron 7or$s," tocarr# out repairs, !a rication and installation o! necessar# partsin said vessels in order to ma$e them sea&orth# and in good&or$ing operation' *ccordingl#, repairs on the vessels &eremade' 3a or and materials supplied in connection there&ith,amounted to P89, 55'4:, P.8,.9.'4 o! &hich &as advanced

# Interocean, there # leaving a alance o! P15,:0 '0 ' or this alance, Interocean issued three chec$s and the third one!or P .4,;44' 4' 7hen these chec$s &ere ho&ever presentedto the dra&ee, Peoples Ban$ and %rust Compan#, the# &eredishonored as de!endant Interocean stopped pa#ment thereon'

2ean&hile and # reason o! the ina ilit# o! SIP and/or Bacong to pa# their mortgage inde tedness &hich &as pastdue since .019, the mortgagee Peoples Ban$ and %rustCompan# threatened to !oreclose the mortgage on saidvessels' In order to avoid the inconvenience and expense o! imminent !oreclosure proceedings, SIP and/or Bacong soldsaid vessels to Peoples Ban$ # &a# o! dacion en pago ' %hesale is evidenced # three (;) deeds o! sale all dated n the other hand,Interocean Shipping Corporation and S'*' +acet undenia l#mere agents o! the o&ner, a disclosed principal, cannot e heldlia le !or repairs made on the vessels to $eep them in goodrunning condition in order to earn revenue, there eing nosho&ing that said agents exceeded their authorit#'

Dltimatel# there!ore, the issue &hich remains is,&hether or not People s Ban$, no& Ban$ o! P'I' eing thepurchaser o! said vessels, is jointl# and severall# lia le !or theoutstanding alance o! said repairs, admittedl# a lien on theproperties in uestion'


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It appears that Ban$ o! P'I' see$s shelter in a deed o! "Con!irmation o! > ligation" entered into et&een u#er andseller e!ore the execution o! a deed o! sale et&een them'Bu#er, Ban$ o! P'I', maintains that it has the option o! &hether or not to pa# the o ligations listed thereunder, one o! &hich isthe repairs underta$en # private respondent, as in!erred !romthe phrase that the o&ner o! the vessels merel# authori-edpetitioner an$ to pa# certain expenses and charges inconnection &ith said vessels' %he latter stressed the !act thatno&here in said deed &as the an$ placed under o ligation topa# an# o! the listed inde tedness o! the o&ner'

%he cardinal rule in the interpretation o! contracts is tothe e!!ect that the intention o! the contracting parties shouldal&a#s prevail ecause their &ill has the !orce o! la& et&eenthem ( asilag vs' odrigue-, et al', 10 Phil' 5.4 F.0;0G? Sec'.:, ule .;: o! the Ae& ules o! Court)' %hus, in order to

judge the intention o! the contracting parties, regard must ehad principall# to their acts oth contemporaneous andsu se uent to the contract (*tlantic +ul! Co' vs' Insular +overnment, .: Phil' .11 F.0:8G), "the circumstances under &hich it &as made, including the situation o! the su ject thereo! and o! the parties to it, ma# e sho&n, so that the judge ma#

e placed in the position o! those &hose language he is tointerpret'" (Sec' .., ule .;: o! the Ae& ules o! Court)' It has

een held that once this intention o! the parties has eenascertained, it ecomes an integral part o! the contract asthough it has een originall# expressed therein in une uivocalterms (Aielson = Co', Inc' vs' 3epanto Consolidated 2iningCo', .8 SC * .:9: F.011.)' 3i$e&ise, &ell settled is the !actthat in construing a &riting particularl# a &ritten agreement, thereason ehind the circumstances surrounding its execution areo! paramount importance to place the interpreter in thesituation o! the parties concerned at the time the &riting &asexecuted (Hicente +otamco ermanos vs' Shot&ell ;8 SC *.:4 F.04.G),

It is undisputed that S'*' +acet, Inc', the managingcorporation, is onl# a creation o! +regorio *' Concon o! Southern Industrial Projects, Inc' and o! oman *-an-a o! People s Ban$ and %rust Compan# o viousl# !or the protectiono! their respective interests on the properties in uestion, a!ter

oth expressed dissatis!action &ith the amount o! revenueeing deposited &ith the said an$ &hich suggests that

diversions thereo! &ere eing made' %hus, although it &as SIPand +*CE% &hich entered into the 2anagement Contract, it&as expressl# stipulated thereunder, among others, that+*CE% ma# not orro& mone# !or the hus anding o! vessels&ithout special authorit# !rom the petitioner an$' In addition,all o!!ice records &ere re uired to e su ject to inspection andcomplete audit # the latter, including all remittances made #the Shipper to the oo$ing agent' >ther&ise stated, petitioner &as alread# in control o! the vessels as earl# as *ugust . ,.011, the date the 2anagement Contract &as signed

( ecision, C* +' Ao' 11;1 6 ), ( ollo, p' 58)' In !act, thecontract itsel! !or the repairs o! the vessels &hich is no& theone o! contention, &as entered into # +*CE% and

IA%E >CE*A &ith private respondent Benjamin Pineda &iththe approval o! petitioner Ban$' %his lends credence to theclaim o! Pineda that he &as led to elieve that he &ill e paidthe corresponding amount !or the repairs, as in !act he &aspaid &ith chec$s &hich &ere later dishonored'

%he records sho& that SIP incurred de ts # reasono! these vessels not onl# here in the Philippines ut also in Standard Eastern &hich attached saidvessels in ther !undamental rules in the interpretation o! contracts no less important than those alread# indicated are tothe e!!ect that &here the terms are dou t!ul, the variousstipulations o! a contract shall e interpreted together,attri uting to the dou t!ul ones that sense &hich ma# result!rom all o! them ta$en jointl# (*rt' .;49, Civil Code), and i! some stipulation o! an# contract should admit o! severalmeanings, it shall e understood as having that import &hich ismost ade uate to render it e!!ectual (*rt' .;4;, Civil Code) andthe &ords &hich ma# have di!!erent signi!ications shall eunderstood in that &hich is most in $eeping &ith the nature ando ject o! the contract (*rt' .;4 , Civil Code)' %he reason !or these rules is that it must e presumed that the parties hadintended an e!!ective act and not one that is impractica le or illusor# (Caguioa Comments and Cases on Civil 3a&, p'

05,.08; Ed')'

It &ill e o served that the deed o! "Con!irmation o! > ligation" is ut a part or a corollar# to the deeds o! sale o! the three vessels' In !act, speci!ic re!erence thereto &as made

# said deeds o! sale as to the settlement o! o ligations,among &hich are the repairs in uestion' Said provision in the

deeds o! sale reads

*n# amount or amounts that the Ban$ hasvoluntaril# paid and/or has een compelledto pa#, or herea!ter &ill voluntaril# and/or &ill

e compelled to pa# !or an# encum rance,claim, lien or particular average in order tosave the vessel !rom an# legal sei-ure or suits # third parties, and !or an# repair,supplies, provisions, accrued salaries andallotment o! cre&, cost o! ailing out o! thevessel, and an# other expenses or accountso! the said vessel, shall e !or the account o! Southern and/or Bacong in accordance &iththeir agreement preceding this conve#anceexecuted on


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K!"#$!% &" Ro'(#%)*+ ,6 P #$ 21/

FACTS:

PROCED RAL FACTS: %his is an appeal ta$en # thede!endant6petitioner ( asilag) !rom the decision o! the Court o!

*ppeals &hich modi!ied that rendered # the court o! irstInstance o! Bataan' %he said court held that the contract isentirel# null and void and &ithout e!!ect? that the plainti!!s6respondents ( odrigue-, et'al'), then appellants, are theo&ners o! the disputed land, &ith its improvements, in commono&nership &ith their rother +avino odrigue-, hence, the#are entitled to the possession thereo!? that the de!endant6petitioner should #ield possession o! the land in their !avor, &ithall the improvements thereon and !ree !rom an# lien'

S BSTANTIVE FACTS: %he parties entered into a contract o! loan to &hich has an accompan#ing accessor# contract o! mortgage' %he executed accessor# contract involved theimprovements on a piece land, the land having een ac uired

# means o! homestead' Petitioner !or his part accepted thecontract o! mortgage'

Believing that there are no violations to the prohi itions in thealienation o! lands Petitioner, acting in good !aith too$possession o! the land' %o &it, the Petitioner has no $no&ledgethat the enjo#ment o! the !ruits o! the land is an element o! thecredit transaction o! *ntichresis'

ISS ES:

.' 7hether or not the principal contract entered into is nulland void'

5' 7hether or not the su se uent contract is null and void'

;' 7hether or not the asilag is a possessor in good !aith o! the land'

HELD:

.' %he cardinal rule in the interpretation o! contracts is to thee!!ect that the intention o! the contracting parties should al&a#sprevail ecause their &ill has the !orce o! la& et&een them'

*rticle .58. (no& *rt' .;4:) o! the Civil Code consecrates thisrule and provides, that i! the terms o! a contract are clear andleave no dou t as to the intention o! the contracting parties, theliteral sense o! its stipulations shall e !ollo&ed? and i! the&ords appear to e contrar# to the evident intention o! thecontracting parties, the intention shall prevail' %he contractshould e interpreted in accordance &ith these rules' *s theterms thereo! are clear and leave no room !or dou t, it should

e interpreted according to the literal meaning o! its clauses'

%he &ords used # the contracting parties in the contractclearl# sho& that the# intended to enter into the principalcontract o! loan in the amount o! P.,:::, &ith interest at .5 per cent per annum, and into the accessor# contract o! mortgage

o! the improvements on the land ac uired as homestead, theparties having moreover, agreed upon the pacts and conditionsstated in the deed' In other &ords, the parties entered into acontract o! mortgage o! the improvements on the land ac uiredas homestead, to secure the pa#ment o! the inde tedness !or P.,::: and the stipulated interest thereon'

*nother !undamental rule in the interpretation o! contracts, notless important than those indicated, is to the e!!ect that theterms, clauses and conditions contrar# to la&, morals andpu lic order should e separated !rom the valid and legal

contract and &hen such separation can e made ecause the#are independent o! the valid contract &hich expresses the &illo! the contracting parties'

Principal contract is that o! loan and the accessor# that o! mortgage o! the improvements upon the land ac uired as ahomestead' %here is no uestion that the !irst o! these contractis valid as it is not against the la&'

5' Parties entered into another ver al contract &here # thepetitioner &as authori-ed to ta$e possession o! the land, toreceive the !ruits thereo! and to introduce improvementsthereon, provided that he &ould renounce the pa#ment o! stipulated interest and he &ould assume pa#ment o! the land

tax' %he possession # the petitioner and his receipt o! the!ruits o! the land, considered as integral elements o! thecontract o! antichresis, are illegal and void agreements

ecause the contract o! antichresis is a lien and such isexpressl# prohi ited # section ..1 o! *ct Ao' 5849'

;' espite the !oregoing, SC !ound the de!endant6petitioner asilag as a possessor o! the land in good !aith' Sec 9;; o! the

Civil Code o! the Philippines provides JEver# person &ho isuna&are o! an# !la& in his title or in the manner o! itsac uisition # &hich it is invalidated shall e deemed apossessor o! good !aith'K *nd in this case, the petitioner actedin good !aith' +ood !aith ma# e a asis o! excusa le ignoranceo! the la&, the petitioner acted in good !aith in his enjo#ment o! the !ruits o! the land to &hich &as done through his apparentac uisition thereo!'


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epu lic o! the PhilippinesS PREME CO RT

2anila

EA B*AC

G.R. No. L-2251 M!( 2/ 1 /1

VICENTE GOTAMCO HERMANOSpetitioner,vs'IRMA ROHDE SHOT3ELL !""#" *' *( )" !7'ANSELMO M. SHOT3ELL respondents'

Jose W. Diokno for petitioner.

Nicolas Belmonte for respondents.

DI8ON J.:

%he case at ar &as commenced in the Court o! irst Instance o! 2anila # lrma ohde Shot&ell, assisted # her hus and,

*ASE32> 2' Shot&ell, against the partnership Hicente +otamco

ermanos L hereina!ter re!erred to simpl# as +otamco L !or the!inal li uidation and pa#ment o! the unpaid alance o! a pre6&ar loan, secured # mortgage, granted to the latter &a# ac$ in .051

# 7illiam E, the appealed judgment is modi!ied andde!endant is here # ordered to pa# plainti!!s the sum o! P95,949'9 &ith interests at 8@ per annum !rom 2a# .,

.091 until !ull pa#ment, and the costs' e!endant scounterclaim is dismissed'

%he Court o! *ppeals made the !ollo&ing !indings o! !act

%he loan &as originall# !or P8 ,:::':: earing interest at0@ per annum and &as secured # a mortgage on realestate situated in 2anila' Initiall#, the loan &as pa#a le&ithin three #ears !rom e ruar# 59, .051, ut the period&as several times extended at the re uest o! the de tor,the last extension eing !or t&o #ears !rom e ruar# 59,.095' %he rate o! interest &as reduced to 8@ per #ear !rom .0;5' Be!ore the last &ar, onl# the interests &erepaid, uarterl#, up to the third uarter o! .09. (Exhs' : to


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ohde, (the same plainti!! Irma), stating the receipt o! P95,:::':: on account o! the principal and P.,.5:':: onaccount o! the interests !rom n the uestion o! total condonation o! interests the trial court s!inding against petitioner &as a!!irmed # the Court o! *ppeals &hoalso !ound and declared that there had een no such totalcondonation o! interests at all' 7hile the !indings o! !act o! theCourt o! *ppeals are not revie&a le on appeal, &e havenevertheless care!ull# considered the opposing vie&s expounded

# the parties in their rie!s in relation to this particular matter, invie& o! its decisive in!luence upon the resolution o! this appeal'

*!ter doing so, &e !eel satis!ied that oth courts &ere right'

Petitioner s case rests entirel# on the testimon# o! +o 3ang, itsgeneral manager, &hich the Court o! *ppeals !ound to e un&orth#o! credence' %he !ollo&ing portion o! the appealed decision !ull#

justi!ies said court s opinion

*t !irst +o 3ang testi!ied that the total condonation &asgranted in &riting, and &hen pressed !or the &riting hepointed to Exhi it ? ut, &hen he reali-ed that Exhi it dealt onl# &ith :@ reduction and did not even mentiontotal condonation, he changed his testimon# sa#ing thattotal condonation &as ver all# re uested # the de tor and ver all# granted # the creditor also in .095 in theearl# part o! the cto er,.09; to ecem er, .09 ' %his is incredi le'

3ending additional support to the Court o! *ppeals decision on thepoint under consideration are the !ollo&ing !acts

(a) It is not disputed that et&een the mortgage 7illiam


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*ttorne# Shot&ell L to &hom the matter o! accepting the pa#ment&as re!erred # his parents6in6la&, 2r' = 2rs' ohde L rought upthe un!airness o! petitioner s pa#ing its o ligation in nthe asis o! all such evidence, the Court o! *ppeals declared thatthe revaluation o! the pa#ments alread# mentioned as &ell asrespondent s right to the unpaid interests &as not intended # theparties to depend upon the enactment o! a la& providing !or suchrevaluation' 7e uote hereunder &ith approval the considerationsmade # said court as &ell as its conclusion upon this issue

7as the right to revaluate the .099 pa#ments dependentupon the enactment o! a la& &hich &ould providethere!or In thus contending, de!endant argued that tothis e!!ect is the &ording o! the post li eration receiptsand release o! mortgage' In maintaining the contrar#,

plainti!!s alleged that the said &ritings do not clearl#express the true intention o! the parties, &hich clearl#appears considering the circumstances surrounding their execution' %o this end, evidence &as properl# admitted' Itis &ell settled that in construing a &riting, particularl# a&ritten agreement, the reason ehind and thecircumstances surrounding its execution are o! paramount importance to place the interpreter in thesituation o! the parties concerned at the time the &riting&as executed' %his rings us to a revie& o! the !acts andcircumstances attendant upon the post li eration receiptsand the release o! mortgage'

*t the time, certain measures &ere under consideration# the +overnment to solve the pro lem rought a out

# the pa#ments in


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&ould e enacted' >n the part o! de!endant de tor, there&as no justi!ication !or it to demand or re uire thecreditor to agree to such &aiver' %he more so, ta$ing intoconsideration the old standing !riendl# relations andmutual con!idence &hich still continued et&een the

ohdes and the +otamcos at that time' Construction&hich &ould amount to impairment or loss o! right is not!avored? conservation and preservation, not &aiver,a andonment or !or!eiture o! a right, is the rule'

%he release o! mortgage, Exhi it , as aptl# stated #

the trial court, merel# li!ted the mortgage lien, and &asnot intended to extinguish the o ligation? this &as le!tsu sisting !or &hatever &ould e the alance upon !inalli uidation, although &ithout an# more collateral tosecure the same, as the creditor relied upon the solvenc#o! the de!endant'

%here is logic and verit# in plainti!!s version andShot&ell s testimon# that the post li eration receipts andthe release o! mortgage &ere not intended to ma$e therevaluation o! the .099 pa#ments and the collection o! the interests !rom >cto er, .09; to ecem er, .09 ,dependent upon the enactment o! a la& or upon theadoption o! the Ballant#ne proposal # the legislature?and that &hat the parties had in mind &as that the#

should &ait !or the !inal action o! the +overnment on thematter inasmuch as it &ould provide !or a &a#, such as&ith respect to the rates or e uivalent o! the n the other hand, the testimon# o! +o 3ang,de!endant s lone &itness on the matter, leaves much to

e desired in point o! credi ilit#' is evasive andinconsistent ans&ers and his !eigned incredi leignorance o! the existence o! the Ballant#ne proposal,&hich &as given general pu licit# in the 2anilane&spapers and has ecome o! common $no&ledge and&as o! paramount importance to him eing partner andgeneral manager o! de!endant &hich paid in


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7 E E > E, the appealed decision is here # a!!irmed, &ithcosts'


2anila

% I IHISI>A

G.R. No. 155694 A)%)" 16 2004

REP BLIC OF THE PHILIPPINES R* (*"*7 *' * SOCIASEC RIT; S;STEM petitioner,vs'JERR; V. DAVID respondent'

E C I S I > A

PANGANIBAN J.:

Dnder the terms o! the su ject Contract, "actual possession"cannot e e uated &ith "actual occupanc#'" Inasmuch as thehousing unit &as ph#sicall# occupied # parties other than thoseintended to e ene!ited # the housing program o! the SocialSecurit# S#stem, there &as a clear violation o! the Contract' Sincerespondent did not compl# &ith his o ligations, rescission isproper'

T * C!"*

Be!ore us is a Petition !or evie& . under ule 9 o! the ules o!

Court, assailing the >cto er 0, 5::5 ecision5

o! the Court o! *ppeals (C*) in C*6+ CH Ao' 1.;49' %he appellate courtdisposed as !ollo&s

"3HEREFORE , the instant appeal is DENIED !or lac$ o! merit' %he decision o! the egional %rial Court, Que-onCit#, Branch .: , in Civil Case Ao' Q601654:;. is here #AFFIRMED'" ;

T * F! "

%he C* narrated the !acts thus

"x x x F espondentG


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o! Possession &ith FPGra#er !or Issuance o! a 7rit o! Possession, an examination o! its od# sho&s that thepra#er &as actuall# !or the rescission o! the deed o! conditional sale' or this reason, the court ordered theamendment o! the complaint and in compliance thereto,FpetitionerG su mitted its amended complaint on 2arch.0, .004'

"F espondentG avid denied the alleged violations o! thedeed o! conditional sale, stating that BuenaventuraPenus, alluded to # the FpetitionerG as possessor6

occupant o! the su ject propert#, &as in !act a careta$er until and a!ter the necessar# renovations andmodi!ications on the house &ere made'

"In a F Gecision dated > E E '

"In dismissing the complaint, the court ruled that theFpetitionerG !ailed to prove that the FrespondentGpurchased the su ject propert# !or the use and ene!it o! another undisclosed part# and not !or his exclusive use,or that the de!endant sold, assigned, encum ered,mortgaged, leased, su leased or in an# manner alteredor disposed o! the su ject propert# or his rights thereto atan# other time' In arriving at its F Gecision, the lo&er court considered the testimon# o! the FrespondentG that&hen the su ject propert# &as delivered to him on>cto er 5;, .005, the unit &as not ha ita le so he had toma$e a !e& constructions thereon' e secured theservices o! his cousin, Buenaventura Penus, to e thecareta$er &hile construction on the house &as going on'7ith this, the court concluded that possession, as acondition o! the deed o! sale et&een the parties, &assu!!icientl# satis!ied'

"*ggrieved, FPetitionerG SSS rought FanG appeal Fto theC*G, arguing that the court a &uo erred in holding thatFrespondentG did not violate the terms and conditions o! the eed o! Conditional Sale and in conse uentl#dismissing the case' "9

R)$#7% o< * Co)( o< A *!$"

*!!irming the trial court, the C* ruled that &hile other persons hadeen !ound occup#ing the su ject propert#, no proo! &as adduced# petitioner to prove that the# had ta$en possession o! it on their

o&n ehal! and not merel# as respondent s careta$ers' %heappellate court added that ecause o! the s ualid condition o! thepropert# &hen it &as delivered, respondent had to ma$eimprovements thereon as &ell as as$ Penus, and later on >den

omingo, to sta# there as careta$ers'

%hrough his careta$ers, respondent &as deemed to have occupiedand possessed the propert# as re uired # the eed o! Sale

et&een him and petitioner' %he C* concluded that the propert#had clearl# een su ject to respondent s &ill, a !act e uivalent topossession under *rticle ;. o! the Civil Code'

ence, this Petition ' 1

I"")*"

In its 2emorandum, petitioner raises this sole issue "&hether theCourt o! *ppeals committed reversi le error in a!!irming the

ecision o! the trial court holding that respondent did not violatethe terms and conditions o! the eed o! Conditional Sale'" 4

T * Co)( =" R)$#7%

%he Petition is meritorious'

So$* I"")*:Violation of the Terms and Conditions

of the Deed of Conditional Sale

Petitioner avers that respondent violated the terms and conditionso! the eed o! Conditional Sale, &hen he !ailed to "actuall# occup#and possess the propert# at all times" 8 and allo&ed other personsto do so ' 0

It argues that contrar# to the rulings o! the trial and the appellatecourts, the eed o! Conditional Sale re uired "actual ph#sicalpossession at all times," not just simple possession' It contendsthat the material occupation o! the propert# # other persons rancounter to the o jective o! the Social Securit# S#stem (SSS)housing program to restrict the use and enjo#ment o! the housingunits to SSS emplo#ees and their immediate !amilies onl#'

Petitioner li$e&ise su mits that the appellate court erred inelieving the claim o! respondent that the house &as uninha ita le

&hen it &as delivered to him in .005' is claim &as elied # hisacceptance o! the propert# &ithout protest, as &ell as # the !actthat his alleged careta$ers had lived there !rom .005 to .001'Petitioner adds that he should have used his availa le mone# toimprove the propert#, i! the unit &as indeed unliva le, instead o! !ull# settling in advance in ecem er .005 the unpaid alance o! its purchase price'

Propriety of Review

*t the outset, the Court stresses that a uestion o! la& has arisen!rom petitioner s contention that simple possession under *rticle

;. o! the Civil Code is not the same as "actual occupanc# andpossession at all times," as re uired o! respondent under the

eed' Such uestion 66 o! &hat la&, rule or principle is to govern agiven state o! !acts 66 is decidedl# one o! la& ' .: It ma# e raised inthis appeal # certiorari under ule 9 o! the ules o! Court'

Rules of Contract Interpretation

Certain rules o! contract interpretation come to mind at this point''irst , in construing a contract, it is a !undamental tas$ to ascertainthe intention o! the contracting parties' .. *s a rule, such intention isdetermined # loo$ing at the &ords used 66 at all the &ords rather than at a particular &ord or t&o? and at &ords in context rather than just &ords standing alone' .5

Indeed, under *rticle .;49 o! the Civil Code, "the variousstipulations o! a contract shall e interpreted together, attri uting tothe dou t!ul ones that sense &hich ma# result !rom all o! themta$en jointl#'" (econd , the ascertained intention o! the parties isdeemed an integral part o! the contract, as though it has eenoriginall# expressed in une uivocal terms ' .; *nd t!ird , thereasona leness o! the result o tained, a!ter anal#sis andconstruction o! a contract, must also e care!ull# considered' .9

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%he conditions that &ere allegedl# violated # respondent arecontained in paragraph .: o! the eed o! Conditional Sale, as!ollo&s

".:' %he Contract shall !urther FprovideG the !ollo&ingterms and conditions

(a) )!e *+ND++ is making t!is purc!ase for !is,!er o n e-clusive use and enefit and not for t!e use and enefit of anot!er undisclosed

party,parties ?

( ) %he purpose o! the sale shall e to aid theHEA EE in ac uiring a house and lot !or himsel!/hersel! and/or his/her immediate !amil#,and not to provide him/her &ith a means !or speculation or pro!it # a !uture assignment o! his/her right herein ac uired or the resale o! theP >PE %N su ject o! this Contract' %here!ore,the HEA EE, &ithin the !irst IHE ( ) #ears o! the existence o! this contract agrees not to sell,assign, encum er, mortgage, lease, su 6let or in an# manner alter or dispose o! the propert#su ject hereo!, or his rights thereto, at an# time,in &hole or in part' *!ter the IHE ( ) #ear period, HEA EE shall have the right to the !ulldisposal o! the propert#, provided that,HEA EE has een a le to !ull# pa# all o! his/her o ligations herein' o&ever, the!oregoing not&ithstanding, the HEA EE ma# xx x at an# time &ith prior consent o! theHEA > trans!er his right to the P >PE %Nto an# eligi le emplo#ee o! the HEA > ,su ject, ho&ever, to the right o! !irst re!usal #the HEA > &ho ma# re!und to the HEA EEall o! his/her installment pa#ments and thevalue o! su stantial improvements introduced

# him/her i! an#, as appraised # theHEA > ?

(c) )!e *+ND++/ and !is !eirs and,or

successors/ s!all actually occupy and e in possession of t!e PR0P+R)1 at all times ?

(d) %he HEA EE shall not o struct or inter!erein an# manner &hatsoever &ith the right o! theHEA > or an# o! its dul# authori-edrepresentatives to inspect, surve#, repair, la#&ater pipes, gas, electric and telephone lines or other &or$s o! similar purposes?

(e) %he HEA EE shall a ide # and compl#&ith the Hendor s >ccupanc# ules and

egulations the terms and conditions o! &hichare made an integral part hereo! # re!erence,as &ell as that issued # an# other governmental authorit# &hich ma#, !rom time totime, e promulgated in regard to the use andpreservation o! the house and lot?

(!) %he HEA EE &arrants in !ull the truth o! therepresentation made in his/her *pplication or E2P3>NEE >DSIA+ 3>*A, the terms o! &hich are li$e&ise made an integral part hereo!

# re!erence'

"%he violation o! an# o! the conditions herein stipulatedshall e considered as a reach o! this Contract, andshall su ject the HEA EE to the penalties provided !or inparagraphs (..) and (.5) hereo!, including administrative

sanctions, &hen &arranted, in the event x x x theHEA EE has een !ound to have committed amisrepresentation/!alsi!ication in his/her application !or anEmplo#ee ousing 3oan'" .

ctual !ccupancy and Possession at ll Times

Plainl#, the primar# intention ehind the a ove6 uoted stipulationsis to restrict the sale, the use and the ene!it o! the housing unitsto SSS emplo#ees and their immediate !amilies onl#' %his o jectiveis in line &ith that o! the SSS housing loan program 66 to aid itsemplo#ees in ac uiring their o&n d&elling units at a lo& cost ' .1

Such intent, dra&s li!e also !rom the social justice polic# o! *..1., as amended, other&ise $no&n as the "Social Securit#S#stem 3a&" granting direct housing loans to covered emplo#eesand giving priorit# to lo&6income groups' .4

Indeed, the a ove goal is con!irmed # the re uirement thatrespondent6vendee and his heirs or assigns must actuall# occup#and possess the propert# at all times? # the proscription that hemust not sell, assign, encum er, mortgage, lease, su let or in an#manner alter or dispose o! the propert# !or the !irst !ive ( ) #ears?and # the !urther proviso that he ma# alienate or trans!er hisrights thereto at an# time prior to !ull pa#ment, ut onl# to petitioner under its right o! !irst re!usal or to an# other eligi le SSS emplo#ee'%hese restrictive covenants are undenia l# valid under *rticle.;:1 .8 o! the Civil Code'

%he use o! the conjunctive and in su paragraph (c) is not # an#chance a surplusage' Aeither is it meant to e &ithout an# legalsigni!ication' Its use is con!irmator# o! the restrictive intent that thehouses provided # petitioner should e !or the exclusive use and

ene!it o! the SSS emplo#ee6 ene!iciar#'

It is easil# discerni le, there!ore, that oth "actual occupanc#" and"possession at all times" 66 not just one or the other 66 &ereimposed as conditions upon respondent' %he &ord and 66 &hetherit is used to connect &ords, phrases or !ull sentences 66 must eaccepted in its common and usual meaning as " inding together and as relating to one another'" .0 And implies a conjunction,

joinder or union' 5:

%hus, respondent had to compl# &ith not one, ut t&o, concurringconditions 66 actual occupanc# and possession at all times' %he

uestion is, did he

7e rule that he did not'

"o ctual !ccupancy

'irst , actual possession is not the same as actual occupanc#'ence, it &as an error on the part o! the lo&er courts to hold that

the re uirement o! possession alone &as a su!!icient compliance&ith the conditions under su paragraphs (a) and (c)'

Dnder the la&, 5. "FpGossession is ac uired # the materialoccupation o! a thing or the exercise o! a right, or # the !act that itis su ject to the action o! our &ill, or # the proper acts and legal!ormalities esta lished !or ac uiring such right'" *s such, actualpossession consists in the mani!estation o! acts o! dominion over propert# o! such a nature as a part# &ould naturall# exercise over his o&n 55 66 as &hen respondent himsel! is ph#sicall# in occupationo! the propert#, or even &hen another person &ho recogni-es the!ormer s rights as o&ner is in occupanc# ' 5; In short, possessioncan e either "actual" or merel# constructive'

>n the other hand, actual occupanc# connotes "something real, or actuall# existing, as opposed to something merel# possi le, or to

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something &hich is presumptive or constructive'" 59 Dnli$epossession, it can onl# e actual or real, not constructive'

(econd , the uncontroverted !act remains that it &as notrespondent and/or his immediate !amil#, ut Penus and his &i!e,&ho had lived in the propert# since .005? and that it &as !romPenus that omingo too$ over possession in .001' %hus, &hile itma# e conceded that respondent "possessed" the propert#through his careta$ers, there is no escaping the !act that he and/or his immediate !amil# did not "actuall# occup#" it? and that heallo&ed other persons to ene!it !rom its use' In his letter to SSS

*ssistant *dministrator *mador 2onteiro on NEE>DSIA+ 3>*A, t!is Contract s!all e deemed

annulled and cancelled &ithout prejudice o! the rights o! the parties under epu lic *ct Ao' 11 5, other&ise$no&n as the 2aceda 3a&, and shall entitle theHEA > to immediatel# repossess the propert# as i! this

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Contract &as never made? !or this purpose, the HEA EEshall e considered and treated as a tenant holding thepropert# &ithout the permission o! the HEA > , andmust peace!ull# vacate the premises immediatel# uponrepossession thereo! # the HEA > ' %he annulmentand cancellation o! this Contract and the right o! theHEA > to repossess the propert# shall ecomee!!ective upon mere &ritten notice thereo! to theHEA EE'

".5' In addition to the conse uences stated in the

immediatel# preceding paragraph, the HEA EE shall!or!eit in !avor o! the HEA > all the installments made,to stand as rent !or his/her occupation o! the propert#,li$e&ise su ject to the provisions o! epu lic *ct Ao'1 5'" 95 (Italics supplied)

o&ever, this Court holds that the !or!eiture provision under paragraph .5 does not appl# to the pa#ment made # respondent'%he plain and simple reason is that he did not pa# the purchaseprice # installment, ut instead paid it in !ull in ecem er .005 66t&o months a!ter the deliver# o! the unit' ence, that pa#ment &as

e#ond the am it o! epu lic *ct 1 5, other&ise $no&n as theealt# Installment Bu#er *ct or the 2aceda 3a&'

octrinall#, mutual restitution must !ollo& rescission' Dnder *rticle.;8 o! the Civil Code, "rescission creates the o ligation to returnthe things &hich &ere the o ject o! the contract, together &ith their !ruits, and the price &ith its interests x x x'" 9; 2oreover, "FtGorescind is to declare a contract void at its inception and to put anend to it as though it never &as'" 99 ence, rescission restores theparties to their relative positions, as i! no contract has een made'Paragraph .., cited a ove, supports the mutual restitution re uiredin rescission'

espondent is thus o liged to return the house and lot sold, as&ell as rental pa#ments he ma# have earned, i! an#' >n the other hand, petitioner is mandated to re!und to him his !ull pa#ment o! P.45,048'8 plus legal interest o! 1 percent per annum, as &ell asthe value o! su stantial improvements introduced # him, asappraised # petitioner' Indeed, stipulated in the eed is such

appraisal # the vendor,9

upon trans!er o! the propert# topetitioner or to an# o! its eligi le emplo#ees' %his condition isreasona l# and justl# applica le and proper in the present case'

3HEREFORE , this Petition is here # 2RAN)+D and the assailedecision (+) A(3D+ ' %he eed o! Conditional Sale is

CANC+44+D. Pet it ioner is 0RD+R+D to pa# respondentP.45,048'8 , plus the legal interest and the value o! an#su stantial improvements thereon' espondent is 0RD+R+D tovacate immediatel# Bloc$ .8, 3ot 8, SSS ousing, Aorth airvie&,Que-on Cit#? and to surrender possession thereo! to petitioner' Aocosts'

SO ORDERED.


2anila

EA B*AC

G.R. No. L- 60> A)%)" / 1 15

DIEGO LI?AN plainti!!6appellee,vs'MARCOS P. P NO ET AL. de!endants6appellants'

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5ariano +scueta for appellants.(. 4ope6 for appellee.

JOHNSON J. :

%he !acts upon &hich the decision in this case depends are as!ollo&s

(.) %he the plainti!!, in the month o! 2a#, .0:8, and !or a longtime prior thereto, &as the o&ner o! a certain parcel o! landparticularl# descri ed in paragraph 5 o! the complaint'

(5) %hat on the .1th da# o! 2a#, .0:8, the plainti!! executedthe !ollo&ing document, &hich con!erred upon the de!endant2arcos P' Puno the po&er, duties and o ligations thereincontained

I, iego 3iRan, o! age, married, a resident o! aet,Province o! *m os Camarines, Philippine Islands,and at the present time temporaril# residing in this cit#o! %arlac, capital o! the Province o! %arlac, P'I', set

!orth that I here # con!er su!!icient po&er, such as thela& re uires, upon 2r' 2arcos P' Puno, li$e&ise aresident o! this cit# o! %arlac, capital o! the Province o! %arlac, in order that in m# name and representationhe ma# administer the interest I possess &ithin thismunicipalit# o! %arlac, purchase, sell, collect and pa#,as &ell as sue and e sued e!ore an# authorit#,appear e!ore the courts o! justice and administrativeo!!icers in an# proceeding or usiness concerning thegood administration and advancement o! m# saidinterests, and ma#, in necessar# cases, appointattorne#s at la& or attorne#s in !act to represent him'

%he meaning, purport, and po&er con!erred # this documentconstitute the ver# gist o! the present action'

(;) %hat in


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con!ormit# &ith and not contrar# to the intent o! the contract'%he meaning o! generals &ords must e construed &ithre!erence to the speci!ic o ject to e accomplished and limited

# the recitals made in re!erence to such o ject'

7ith these general o servations in mind, ,let us examine theterms o! the po&er con!erred upon the de!endant Puno (Exhi it

*) and ascertain, i! possi le, &hat &as the real intent o! theplainti!!' %he lo&er court held that the "onl# po&er con!erred&as the po&er to administer'" eading the contract &e !ind it

sa#s that the plainti!! "I con!er ''' po&er ''' that ''' he ma#administer ''' purchase, sell, collect and pa# ''' in an#proceeding or usiness concerning the good administrationand advancement o! m# said interests'" %he &ords "administer,purchase, sell," etc', seem to e used coordinatel#' Each hase ual !orce &ith the other' %here seems to e no good reason!or sa#ing that Puno had authorit# to administer and not to sell&hen "to sell" &as as advantageous to the plainti!! in theadministration o! his a!!airs as "to administer'" %o hold that thepo&er &as "to administer" onl# &hen the po&er "to sell" &ase uall# con!erred &ould e to give to special &ords o! thecontract a special and limited meaning to the exclusion o! other general &ords o! e ual import'

%he record contains no allegation on proo! that Puno acted inad !aith or !raudulentl# in selling the land' It &ill e presumed

that he acted in good !aith and in accordance &ith his po&er ashe understood it' %hat his interpretation o! his po&er, asgathered !rom the contract (Exhi it *), is tena le cannot, &e

elieve, e success!ull# denied' In vie& o! that !act and vie& o! the !act that, so !ar as the record sho&s, the other de!endantsacted in good !aith, &e are o! the opinion that the contract,li erall# construed, as &e thin$ it should e, justi!ies theinterpretation given it # Puno' In reaching this conclusion, &ehave ta$en into account the !act that the plainti!! dela#ed hisaction to annul said sale !rom the month o!


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2anila

EA B*AC

G.R. No. L-1 012 O o *( 90 1 6/

VICTORIA J LIO plainti!!6appellant,vs'EMILIANO DALANDAN !7' MARIA DALANDAN de!endants6appellees'

Pedro 5agsalin and 0.5. 7errera for plaintiff8appellant.Cornelio R. 5agsarili for defendants8appellees.

SANCHE8 J.:

isputing the correctness o! the lo&er court s order o! *pril 50,.01. dismissing the complaint, plainti!! elevated the case . tothis Court on appeal'

Plainti!! s complaint L &hich de!endants, # a motion todismiss, success!ull# overturned in the court elo& L isplanted upon a document *nnex "*" o! the complaint, la eledin the national language "S*3*NS*N" (Statement)' It &as inthe !orm o! an a!!idavit su scri ed and s&orn to # one

Clemente alandan on Septem er 8, .0 :' B# the terms o! this &riting, Clemente alandan, deceased !ather o! de!endants Emiliano and 2aria alandan, ac$no&ledged thata !our6hectare piece o! riceland in 3as ac$no&ledged that a!our6hectare piece o! riceland in 3as PiRas, i-al elonging toHictoriana alandan, &hose onl# child and heir is plainti!! Hictoria I* ), sa pag$a$aem argo nglupa ni#ang i#ong $ung $a#a t nag$asundo $ami naa$o a# nanagot sa $an#a sa pag$aem argong i#on atipinanga$o $o sa $an#a na ang lupa ni#ang i#on nanaem argo ng dahil sa a$ing pananagutan a# a$ingpapalitan ng u$id din na ma# mahigit na *P*% (9) nahectarea (o humigit $umulang sa *P*% A* *B*A+BIA I)?

F%hat ecause o! this, and as agreed upon et&eenus, I accordingl# held m#sel! lia le to Hictoria


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land ut de!endants have re!used and until no& still re!use to!ix a speci!ic time &ithin &hich the# &ould deliver to plainti!! thea!orementioned parcels o! land'" Predicated upon the!oregoing allegations, plainti!! pra#ed !or judgment againstde!endants

(a) *djudging the herein plainti!! as o&ner o! the landdescri ed in paragraph 9 hereo!?

( ) ixing a time &ithin &hich de!endants should

deliver the said parcels o! land to the herein plainti!! as &ell as the !ruits thereo!?

(c) *djudging that upon the expiration o! the said timede!endants conve# and deliver to the herein plainti!! the said parcels o! land as &ell as the !ruits thereo!?

(d) >rdering the de!endants to pa# the plainti!! thesum o! P5,:::':: as attorne#s !ees?

(e) >rdering the de!endants to pa# the costs o! thesuit? and granting such other relie! and remed# asma# e just and e uita le in the premises'

e!endants met the complaint &ith a motion to dismissgrounded on (.) prescription o! plainti!! s action? (5) pendenc#o! another suit et&een the same parties !or the same cause?and (;) release and/or a andonment o! the claim set !orth inplainti!! s complaint'

B# its order o! *pril 50, .01., the lo&er court ruled thatplainti!! s suit, vie&ed either as an action !or speci!icper!ormance or !or the !ixing o! a term, had prescri ed'

eason the .:6#ear period !rom the date o! the document hadelapsed' %he lo&er court !ound it unnecessar# to pass uponthe other grounds !or the motion to dismiss' ence, thisappeal'

.' %he threshold pro lem, asic to an understand o! the issuesherein involved, is the meaning to e attached to the documentno& under revie&' Dndou tedl#, ad more !elicitous terms

een emplo#ed, the intention o! the parties could easil# eread' Dn!ortunatel#, ineptness o! expression exacts o! us anexamination o! the document' amiliar rules o! interpretation o! documents tell us that in ascertaining the intention o! theparties, the contents thereo! should not e interpretedpiecemeal? all parts, provisions or terms are to e considered?each paragraph clause or phrase must e read not in isolation,

ut in the light o! the entire &riting? dou t!ul ones should egiven that sense &hich ma# result !rom all o! them, consideredas a &hole' Such construction &ill e adopted as &ill result!rom an overall vie& o! the document itsel!'

It is, in this perspective that &e no& loo$ into the &riting' *dverting to paragraph 9 o! the deed, de!endants ta$e theposition that the deceased Clemente alandan simpl#"promised" to Hictoria


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o! the ene!iciar# thereo!, plainti!! Hictoria


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2anila

SEC>A IHISI>A

G.R. No. L-49/06 No&*@ *( 14 1 >6

NATIONAL PO3ER CORPORATION petitioner,vs'CO RT OF APPEALS !7' PHILIPPINE AMERICANGENERAL INS RANCE CO. INC.respondents'

Conrado 9. Crucillo for petitioner.

2regorio D. David for private respondent.

PARAS J.:

%his is a petition !or revie& on certiorari see$ing to set aside(a) the judgment o! respondent Court o! *ppeals dated 2arch5 , .041 in C*6+' ' Ao' :..56 , entitled National Po er

Corporation/ Plaintiff8Appellee vs. )!e P!ilippine American3nsurance Company/ 3nc. Defendant8Appellant/ &hich reversedthe decision o! the Court o! irst Instance o! 2anila in CivilCase Ao' 4:8.. entitled :National Po er Corporation v. 'ar +astern +lectric/ 3nc./ et al '" and ( ) respondent s Court sresolution dated *pril .0, .041 den#ing petitioner AationalPo&er Corporation s 2otion !or econsideration (Petition, p'.;, ollo)'

%he undisputed !acts o! this case are as !ollo&s

%he Aational Po&er Corporation (APC) entered into a contract&ith the ar Eastern Electric, Inc' ( EI) on ecem er 51,.015 !or the erection o! the *ngat Balinta&a$ .. 6 76;6Phasetransmission lines !or the *ngat #droelectric Project' EEIagreed to complete the &or$ &ithin .5: da#s !rom the signingo! the contract, other&ise it &ould pa# APC P5::':: per calendar da# as li uidated damages, &hile APC agreed to pa#the sum o! P04,850':: as consideration' >n the other hand,Philippine *merican +eneral Insurance Co', Inc' (Philamgen)issued a suret# ond in the amount o! P;:,145':: !or the!aith!ul per!ormance o! the underta$ing # EEI, as re uired'

%he condition o! the ond reads

%he lia ilit# o! the P I3IPPIAE *2E IC*A+EAE *3 IASD *ACE C>2P*AN, IAC' under this

ond &ill expire >ne (.) #ear !rom !inal Completionand *cceptance and said ond &ill e cancelled ;:da#s a!ter its expiration, unless suret# is noti!ied o! an# existing o ligation thereunder' (Exhi it .6a)

in correlation &ith the provisions o! the construction contractet&een Petitioner and ar Eastern Electric, Inc' particularl#

the !ollo&ing provisions o! the Speci!ications' to &it

.' Par' .B65l elease o! Bond

.B65. elease o! Bond

%he Contractor s per!ormance ond &ill e released# the Aational Po&er Corporation at the expiration o!

one (.) #ear !rom the completion and !inal acceptanceo! the &or$, pursuant to the provisions o! *ct Ao';0 0, and su ject to the +eneral Conditions o! thiscontract' (Page 90, Printed ecord on *ppeal)? and

5' +P6.0 o! Speci!ications, &hich reads

(a) Should the Contractor !ail to complete theconstruction o! the &or$ as herein speci!ied andagreed upon, or i! the &or$ is a andoned, ''' theCorporation shall have the po&er to ta$e over the&or$ # giving notice in &riting to that e!!ect to theContractor and his sureties o! its intention to ta$e over the construction &or$'

( ) ''' It is expressl# agreed that in the event thecorporation ta$es over the &or$ !rom the Contractor,the latter and his ondsmen shall continue to e lia leunder this contract !or an# expense in the completiono! the &or$ in excess o! the contract price and the

ond !iled # the Contractor shall e ans&era le !or the same and !or an# and all damages that the


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Corporation ma# su!!er as a result thereo!' (pp' 41648,Printed ecord on *ppeal)

EEI started construction on ecem er 51, .015 ut on 2a#;:, .01;, oth EEI and Philamgen &rote APC re uesting theassistance o! the latter to complete the project due tounavaila ilit# o! the e uipment o! EEI' %he &or$ &asa andoned on n the same date, APC &rotePhilamgen in!orming it o! the &ithdra&al o! EEI !rom the &or$and !ormall# holding oth EEI and Philamgen lia le !or thecost o! the &or$ to e completed as o! n E, the de!endant ar Eastern Electric,Inc', is ordered to pa# the plainti!! the sum o! P4 ,:.0'81 plus interest at the legal rate !romSeptem er 5., .014 until !ull# paid' >ut o! saidamount, oth de!endants, ar Eastern Electric, Inc',and the Philippine *merican Insurance Compan#,Inc', are ordered to pa#, jointl# and severall#, theamount o! P;:,145':: covered # Suret# Bond Ao'51518, dated ecem er 51, .015, plus interest at thelegal rate !rom Septem er 5., .014 until !ull# paid,

Both de!endants are also ordered to pa# plainti!! thesum o! P;,:::':: as attorne# s !ees and costs'

>n appeal # Philamgen, the Court o! *ppeals reversed thelo&er court s decision and dismissed the complaint'

ence this petition'

espondent Philamgen !iled its comment on the petition on *ugust 1, .048 ( ollo, p' 15) in compliance &ith the resolutiondated A EA% C>D % > *PPE*3S E E IA>3 IA+ % *% PE%I%I>AE S >D3 *HE

+IHEA A>%ICE %> P IH*%E ESP>A EA%P I3*2+EA > *AN EMIS%IA+ >B3I+*%I>A7I% IA ;: *NS >2 EMPI *%I>A > % EB>A %> >3 S*I SD E%N 3I*B3E% E EDA E , ESPI%E PE%I%I>AE S %* IA+>HE > % E 7> *B*A >AE BN % EC>A% *C%> BE > E I%S C>2P3E%I>A'

II

*SSD2IA+ * +DEA > % *% PE%I%I>AES >D3 S%I33 A>%I N P IH*%E ESP>A EA%P I3*2+EA > *AN EMIS%IA+ >B3I+*%I>ADA E % E B>A ESPI%E % E %* E6>HE >7> BN PE%I%I>AE , ESP>A EA% C>D % >

*PPE*3S A>AE% E3ESS E E IA >3 IA+% *% PE%I%I>AE S 3E%%E *%E A EA% C>D % > *PPE*3S E E IA *BS>3HIA+ P IH*%E ESP>A EA% P I3*2+EA

>2 I%S 3I*BI3I%N DA E % E B>A '

%he decisive issue in this case is the correct interpretationand/or application o! the condition o! the ond relative to itsexpiration, in correlation &ith the provisions o! the constructioncontract, the !aith!ul per!ormance o! &hich, said ond &asissued to secure'

%he one o! contention in this case is the compliance &ith thenotice re uirement as a condition in order to hold the suret#lia le under the ond'

Petitioner claims that it has alread# complied &ith suchre uirement # virtue o! its notice dated


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ond, that there is a su sisting o ligation' Private respondent scontention is sustained # the Court o! *ppeals'

%he petition is impressed &ith merit'

*s correctl# assessed # the trial court, the evidence on recordsho&s that as earl# as 2a# ;:, .01;, Philamgen &as dul#in!ormed o! the !ailure o! its principal to compl# &ith itsunderta$ing' In !act, said notice o! !ailure &as also signed # its

*ssistant Hice President' >n > E E '

N#*$"o7 Co. I7 . &. L* !7 o Co7"o$#'! *' M#7#7% Co. ,18!$'#&!(

P!( #*":

plainti!!6appelant Aielson = Co

de!endant6appelle 3epanto Consolidated 2ining Co'

F! ":• *n operating agreement &as executed e!ore 7orld 7ar II (on ;:

n 51 '

• Shortl# a!ter the mines &ere li erated !rom the A and 3EP*A%>over the status o! the operating contract &hich as rene&edexpired in .094' Dnder the terms thereo!, the managementcontract shall remain in suspense in case !ortuitous event or !orcemajeure, such as &ar or civil commotion, adversel# a!!ects the&or$ o! mining and milling'

• >n 1 e ruar# .0 8, AIE3S>A rought an action against3EP*A%> to recover certain sums o! mone# representingdamages allegedl# su!!ered # the !ormer in vie& o! the re!usal o! the latter to compl# &ith the terms o! a management contract'

• %he %rial Court dismissed the complaint'

• %he Supreme Court reversed the decision' It held that the &ar suspended the contract # virtue o! the !orce majeure clause' *ndthat the intention o! the parties regarding the meaning and usageconcerning the force ma;eure clause meant the extension o! thesame !or a period e uivalent to the suspension'

• In this motion !or reconsideration, 3EP*A%> advances a ne&theor#' It no& asserts that the management contract in uestion isa contract o! agenc# such that it has the right to revo$e andterminate the said contract, as it did terminate the same, under the la& o! agenc#, and particularl# pursuant to *rticle .4;; o! the>ld Civil Code (*rticle .05: o! the Ae& Civil Code)'

I"")*:


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7hether or not the management agreement has een extended as aresult o! the supervening &ar

H*$':

%he pertinent portion o! the management contract (Exh' C) &hichre!ers to suspension should an# event constituting force ma;eurehappen appears in Clause II thereo! &hich &e uote hereunder

In the event o! inundations, !loodings o! the mine, t#phoon,earth ua$e or an# other !orce majeure, &ar, insurrection,civil commotion, organi-ed stri$e, riot, injur# to themachiner# or other event or cause reasona l# e#ond thecontrol o! AIE3S>A and &hich adversel# a!!ects the &or$ o! mining and milling? AIE3S>A shall report such !act to3EP*A%> and &ithout lia ilit# or reach o! the terms o! this

*greement, the same shall remain in suspense, &holl# or partiall# during the terms o! such ina ilit#'

* care!ul scrutin# o! the clause a ove6 uoted &ill at once reveal that inorder that the management contract ma# e deemed suspended t&oevents must ta$e place &hich must e rought in a satis!actor# manner to the attention o! de!endant &ithin a reasona le time, to &it (.) theevent constituting the force ma;eure must e reasona l# e#ond thecontrol o! Aielson, and (5) it must adversel# a!!ect the &or$ o! miningand milling the compan# is called upon to underta$e' *s long as theset&o condition exist the agreement is deem suspended'

oes the evidence on record sho& that these t&o conditions hadexisted &hich ma# justi!# the conclusion that the managementagreement had een suspended in the sense entertained #appellant 3et us go to the evidence'

It is a matter that this Court can ta$e judicial notice o! that &ar supervened in our countr# and that the mines in the Philippines &ereeither destro#ed or ta$en over # the occupation !orces &ith a vie& totheir operation' %he 3epanto mines &ere no exception !or not &as themine itsel! destro#ed ut the mill, po&er plant, supplies on hand,e uipment and the li$e that &ere eing used there &ere destro#ed as&ell' %hus, the !ollo&ing is &hat appears in the 3epanto Compan#2ining eport dated 2arch .;, .091 su mitted # its President C' *'

e7itt to the de!endant . "In e ruar# o! .095, our mill, po&er plant,supplies on hand, e uipment, concentrates on hand, and mine, &eredestro#ed upon orders o! the D'S' *rm# to prevent their utili-ation #the enem#'" %he report also mentions the report su mitted # 2r'Blessing, an o!!icial o! Aielson, that "the original mill &as destro#ed in.095" and "the original po&er plant and all the installed e uipment&ere destro#ed in .095'" It is then undenia le that eginning e ruar#,.095 the operation o! the 3epanto mines stopped or ecamesuspended as a result o! the destruction o! the mill, po&er plant andother important e uipment necessar# !or such operation in vie& o! acause &hich &as clearl# e#ond the control o! Aielson and that as aconse uence such destruction adversel# a!!ected the &or$ o! miningand milling &hich the latter &as called upon to underta$e under themanagement contract' Conse uentl#, # virtue o! the ver# terms o! said contract the same ma# e deemed suspended !rom e ruar#,.095 and as o! that month the contract still had 1: months to go'

>n the other hand, the record sho&s that the de!endant admitted thatthe occupation !orces operated its mining properties su ject o! themanagement contract, 5 and !rom the ver# report su mitted #President e7itt it appears that the date o! the li eration o! the mine&as *ugust ., .09 although at the time there &ere still man# oo #traps' ; Similarl#, in a report su mitted # the de!endant to itsstoc$holders dated *ugust 5 , .098, the !ollo&ing appears "Nour

irectors ta$e pleasure in reporting that


22/53

reported to the Board o! irectors o! 3epanto Compan# as stated in theportion o! the minutes o! its Board o! irectors as uoted a ove, utalso the ruling laid do&n # our Supreme Court in some cases decidedsometime ago, to the e!!ect that the &ar does not have the e!!ect o! extending the term o! a contract that the parties ma# enter intoregarding a particular transaction, citing in this connection the cases o! *ictorias Planters Association v. *ictorias 5illing Company , . >'+'9:.:? Rosario (. *da. de 4acson/ et al. v. A elardo 2. Dia6 , 84 Phil'. :? and 4o C!ing y (o 1oung C!ong Co. v. Court of Appeals/ et al./8. Phil' 1:.'

%o olster up its theor#, appellee also contends that the evidenceregarding the alleged custom or usage in mining contract thatappellant s &itnesses tried to introduce &as incompetent ecause (a)said custom &as not speci!icall# pleaded? ( ) 3epanto made timel# andrepeated o jections to the introduction o! said evidence? (c) Aielson!ailed to sho& the essential elements o! usage &hich must e sho&n toexist e!ore an# proo! thereo! can e given to a!!ect the contract? and(d) the testimon# o! its &itnesses cannot prevail over the ver# terms o! the management contract &hich, as a rule, is supposed to contain allthe terms and conditions # &hich the parties intended to e ound'

It is here necessar# to anal#-e the contradictor# evidence &hich theparties have presented regarding the interpretation o! the forcema;eure clause in the management contract'

*t the outset, it should e stated that, as a rule, in the construction andinterpretation o! a document the intention o! the parties must e sought( ule .;:, Section .:, ules o! Court)' %his is the asic rule in theinterpretation o! contracts ecause all other rules are ut ancilliar# tothe ascertainment o! the meaning intended # the parties' *nd oncethis intention has een ascertained it ecomes an integral part o! thecontract as though it had een originall# expressed therein inune uivocal terms (Shoreline >il Corp' v' +u#, *pp' .80, So', ;98,cited in .4* C'ne pattern is to ascertain the contemporaneous and su se uent actso! the contracting parties in relation to the transaction under consideration (*rticle .;4., Civil Code)' In this particular case, it is&orth# o! note &hat *tt#' C' *' e7itt has stated in the special meetingo! the Board o! irectors o! 3epanto in the portion o! the minutesalread# uoted a ove &herein, as alread# stated, he expressed theopinion that the li!e o! the contract, i! not extended, &ould last onl# untilcto er 5:,.09 &herein apparentl# he changed his mind ecause there he statedthat the contract &as merel# suspended, ut not extended, # reasono! the &ar, contrar# to the opinion he expressed in the meeting o! theBoard o! irectors alread# adverted to, ut et&een the t&o opinionso! *tt#' e7itt 7e are inclined to give more &eight and validit# to the!ormer not onl# ecause such &as given # him against his o&ninterest ut also ecause it &as given e!ore the Board o! irectors o! 3epanto and in the presence, o! some Aielson o!!icials .: &ho, on thatoccasion &ere naturall# led to elieve that that &as the true meaning o! the suspension clause, &hile the second opinion &as merel# sel!6serving and &as given as a mere a!terthought'

*ppellee also claims that the issue o! true intent o! the parties &as notrought out in the complaint, ut anent this matter su!!ice it to state that

in paragraph Ao' .0 o! the complaint appellant pleaded that thecontract &as extended' .. %his is a su!!icient allegation considering thatthe rules on pleadings must as a rule e li erall# construed'

It is li$e&ise note&orth# that in this issue o! the intention o! the partiesregarding the meaning and usage concerning the force ma;eureclause, the testimon# adduced # appellant is uncontradicted' I! such&ere not true, appellee should have at least attempted to o!!er contradictor# evidence' %his it did not do' Aot even 3epanto sPresident, 2r' H' E' 3ednic$# &ho too$ the &itness stand, contradictedsaid evidence'

In holding that the suspension o! the agreement meant the extensiono! the same !or a period e uivalent to the suspension, 7e do not have

the least intention o! overruling the cases cited # appellee' 7e simpl#&ant to sa# that the ruling laid do&n in said cases does not appl# here

ecause the material !acts involved therein are not the same as thoseo taining in the present' %he rule o! stare decisis cannot e invo$ed&here there is no analog# et&een the material !acts o! the decisionrelied upon and those o! the instant case'

epu lic o! the PhilippinesS PREME CO RT2anila

% I IHISI>A

G.R. No. 15121/ S* *@ *( > 2006

SPO SES CESAR R. ROM LO !7' NENITA S. ROM LO petitioners,vs'SPO SES MOISES P. LA; G JR. !7' FELISARIN LA; G respondents'

E C I S I > A

TINGA J. :

%his is an appeal # certiorari under ule 9 o! the .004 ules o! Civil Procedure, assailing the Court o! *ppeals ecision . andesolution 5 in C*6+' ' CH Ao' 1;01 ' Said ecision reversed and

set aside the ecision ; o! the egional %rial Court ( %C), Branch5 8, ParaRa ue Cit#, &hich nulli!ied the eed o! * solute Sale andContract o! 3ease executed et&een herein petitioners andrespondents'

%he !ollo&ing !actual antecedents are matters o! record'

>n *pril .., .001, petitioners Spouses Cesar and Aenita omulo!iled a veri!ied Complaint !or Cancellation o! %itle, *nnulment o!

eed o! * solute Sale and Contract o! 3ease &ith amagesagainst respondents Spouses 2oises and elisarin 3a#ug' %hecomplaint &as doc$eted as Civil Case Ao' 016:.45 and ra!!led toBranch 5 8 o! the %C o! ParaRa ue ' 9

Petitioners averred in their complaint that sometime in .081, the#o tained !rom respondents a loan in the amount o! P :,:::'::&ith a monthl# interest o! .:@, &hich su se uentl# allooned toP 8:,505'::' %o secure the pa#ment o! the loan, respondentsallegedl# duped petitioners into signing a Contract o! 3ease and a

eed o! * solute Sale covering petitioners house and lot locatedat Phase II, B omes, Sucat, ParaRa ue and covered #%rans!er Certi!icate o! %itle (%C%) Ao' S64. 58' %he eed o!

* solute Sale purportedl# !acilitated the cancellation o! petitionerstitle on the house and lot and the issuance o! %C% Ao' 5:980 in thename o! respondents' %hus, petitioners pra#ed !or the nulli!icationo! the eed o! * solute Sale, the contract o! lease and %C% Ao'5:980, and the a&ard o! moral and exemplar# damages'

espondents denied petitioners allegations' In their *ns&er ,1 the#vouched !or the validit# o! the eed o! * solute Sale, particularl#

as having een voluntaril# executed # the parties !or the purposeo! extinguishing petitioners inde tedness to respondents' *sconsideration o! the sale, respondents allegedl# paid the amounto! P5::,:::':: in addition to the &riting o!! o! petitionerso ligation to them' %hat the# allo&ed petitioners to occup# thehouse and lot as lessees thereo! &as !ounded on the trust the#reposed on petitioners, claimed respondents ' 4

Prior to the !iling o! Civil Case Ao' 016:.45, respondent 2oises3a#ug,


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the house and lot and re!used to vacate the propert# despitedemand' %he 2etropolitan %rial Court (2e%C), Branch 44,ParaRa ue dismissed the complaint !or lac$ o! cause o! action' 8

%he %C, Branch 5 4, ParaRa ue, li$e&ise dismissed 2oisesappeal ased on its !inding that the parties did not intend to enter into a lease agreement ' 0 %he Court o! *ppeals denied 2oisespetition !or revie& on the ground o! late !iling ' .: Dpon elevation tothis Court, 2oises petition !or revie& on certiorari &as denied &ith!inalit# # this Court ' ..

>n E, the plainti!!s having een a le to provetheir claim # preponderance o! evidence, judgment ishere # rendered in their !avor and against spouses2oises P' 3a#ug and elisarin 3a#ug &here # theContract o! 3ease as &ell as the eed o! Sale allegedl#executed # the herein parties are here # declared AD33and H>I and o! no !orce and e!!ect and the egister o!

eeds o! the Cit# o! ParaRa ue is here # ordered tocancel %rans!er Certi!icate o! %itle Ao' 5:980 registeredin the names o! 2>ISES P' 3*ND+ married to

E3IS* IA 3*ND+ and to issue a ne& one in the nameo! Spouses Cesar ' omulo and Aenita S' omulo,upon the pa#ment o! the re uired !ees # the plainti!!s'

3i$e&ise, de!endants Spouses 2oises P' 3a#ug andelisarin 3a#ug are here # ordered to pa# jointl# andseverall# Spouses Cesar ' omulo and Aenita S'

omulo the !ollo&ing, to &it

.' %he amount o! P.::,:::':: as and # &a#o! moral damages?

5' %he amount o! P 8:,:::':: as exemplar#damages?

;' %he amount o! P :,:::':: as and # &a# o! attorne# s !ees? and

9' %he costs o! suit'

S> > E E ' .5

espondents elevated the matter to the Court o! *ppeals,uestioning, among others, the trial court s !inding that the contractet&een petitioners and respondents &as an e uita le mortgage ' .;

%he Court o! *ppeals reversed and set aside the %C ecision,mainl# on the ground that petitioners !ailed to present su!!icientevidence to prove their allegation that their signatures to the eedo! * solute Sale &ere o tained !raudulentl#' %heir motion !or reconsideration re u!!ed , .9 petitioners !iled the instant petitionraising the lone issue o! &hether or not the transaction et&eenthe parties constitutes an e uita le mortgage'

>n this issue, the %C and the Court o! *ppeals di!!er in opinion'%he trial court ased its declaration that an e uita le mortgage&as intended # the parties on the !inding that petitionersremained in possession o! the house and lot even a!ter thepropert# &as supposedl# sold to respondents' %he trial court also

gave evidentiar# &eight to the decisions o! the 2e%C and %Cdismissing the action !or ejectment in Civil Case Ao' 0955, &hereoth courts !ound that petitioners neither vacated the propert# nor

paid an# rental even a!ter the execution o! the eed o! * soluteSale' %he Court o! *ppeals disagreed and declared that ana solute sale &as contemplated # the parties ased on theexpress stipulations in the eed o! * solute Sale and on the actso! o&nership # respondents su se uent to its execution'

7hether or not the parties intended an e uita le mortgage is a!actual issue' *s a general rule, !actual revie& is e#ond theprovince o! this Court' >ne o! the exceptions to the rule isexempli!ied # the instant case &here the !actual !indings o! the

%C and Court o! *ppeals are contradictor#'

%hat petitioners o tained loans !rom respondents et&een .08and .084, &hich remained unpaid up to the time o! the executiono! the assailed eed o! * solute Sale, is esta lished' . %hapetitioners signed the assailed instrument is also not disputed'Indeed, the# admitted having signed said document uali!#ing,ho&ever, that the# &ere !orced # respondents to execute thesame !or the purpose o! securing their inde tedness torespondents ' .1 espondents, on the other hand, insisted that theparties executed the eed o! * solute Sale as an honest6to6goodness sales transaction'

espondents, ho&ever, admitted !urther that in addition to theamount o! P5::,:::':: stipulated in the eed o! * solute Sale,the parties agreed to &rite o!! petitioners loan as consideration o! the sale, although this clause &as not expressed in theinstrument' .4 rom respondents admission, it can e gathered thatthe assailed eed o! * solute Sale does not re!lect the truearrangement o! the parties' Ao&, is petitioners su mission that theparties actuall# agreed to su ject the house and lot as securit# !or their unpaid o ligation supported # the evidence id the partiesexecute the assailed eed o! * solute Sale &ith the intention o! su jecting petitioners house and lot covered # the deed as amere securit# !or the pa#ment o! their de t

%he !orm o! the instrument cannot prevail over the true intent o! theparties as esta lished # the evidence' 7e have also decreed thatin determining the nature o! a contract, courts are not ound # thetitle or name given # the parties' %he decisive !actor in evaluatingsuch agreement is the intention o! the parties, as sho&n notnecessaril# # the terminolog# used in the contract ut # their conduct, &ords, actions and deeds prior to, during andimmediatel# a!ter execution o! the agreement' .8 In order toascertain the intention o! the parties, their contemporaneous andsu se uent acts should e considered' >nce the intention o! theparties has een ascertained, that element is deemed as anintegral part o! the contract as though it has een originall#expressed in une uivocal terms' .0 *s such, documentar# and parolevidence ma# e su mitted and admitted to prove such intention'

*nd, in case o! dou t, a contract purporting to e a sale &ith rightto repurchase shall e construed as an e uita le mortgage' 5:

Bet&een .08 and .084, petitioner Aenita omulo ("Aenita")o tained !rom respondent elisarin 3a#ug (" elisarin") loans invarious amounts totaling around P ::,:::'::' Being close !riendsat that time, elisarin did not re uire an# &ritten instrument tosecure pa#ment, other than the title to the house and lot, &hichAenita handed to elisarin sometime in .088' 5. 7hen respondentsdemanded pa#ment o! the loan, petitioners de!aulted'Aevertheless, as admitted # 3a#ug, despite her repeateddemands, she allo&ed petitioners some more time &ithin &hich topa# their de ts' 55 elisarin claimed that eventuall# petitionerso!!ered their house and lot as pa#ment !or their de t ecausepetitioners no longer had an# mone#' 5; o&ever, even a!ter theexecution o! the assailed eed o! * solute Sale, respondentscontinued to grant petitioners loan accommodations as evidenced

# the three promissor# notes executed # petitioner Cesar omulo' 59

espondents continuing to lend mone# to petitioners does notma$e sense i! the intention o! the parties &as reall# to extinguish

petitioners outstanding o ligation' %he logical and inevita leconclusion is that respondents deemed it &ise to !ormali-e asecurit# instrument on petitioners house and lot # executing the

eed o! * solute Sale a!ter reali-ing that petitioners could nolonger !ull# satis!# their o ligation to respondents' *t that time, aspetitioners &ere hard6pressed to come up &ith !unds to pa# their loan, the# &ere hardl# in a position to argain' %he preponderanceo! evidence sho&s that the# signed $no&ing that said documentsdid not express their real intention, and i! the# did sonot&ithstanding this, it &as due to the urgent necessit# o! o taining!unds' "Aecessitous men are not, trul# spea$ing, !ree men? ut toans&er a present emergenc# &ill su mit to an# terms that thecra!t# ma# impose upon them'" 5 %he circumstances surroundingthe execution o! the eed o! * solute Sale, particularl# the !actthat respondents continued to extend some loans to petitioners

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a!ter its execution, precludes the Court !rom declaring that theparties intended the trans!er o! the propert# !rom one to the other

# &a# o! sale'

Consistent &ith the !oregoing state o! the evidence, *rticles .1:9and .1:5 o! the Civil Code come into pla#' %he articles provide that&hen the parties to a contract o! sale actuall# intended suchcontract to secure the pa#ment o! an o ligation, it shall epresumed to e an e uita le mortgage

*rt' .1:5' %he contract shall e presumed to e ane uita le mortgage in an# o! the !ollo&ing cases

.) 7hen the price o! a sale &ith right torepurchase is unusuall# inade uate?

5) 3 *7 * &*7'o( (*@!#7" #7 o""*""#o7!" $*""** o( o *( #"*

;) 7hen upon or a!ter the expiration o! the rightto repurchase, another instrument extendingthe period o! redemption or granting a ne&period is executed?

9) 7hen the vendor inds himsel! to pa# thetaxes on the thing sold?

) 7hen the purchaser retains !or himsel! a parto! the purchase price?

1) I7 !7 o *( !"* *(* # @! *

conflicts cases 3-7-15

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