Fil-Estate Properties, INc. vs. Go (GR No. 165164)

SECOND DIVISION

RESOLUTION

QUISUMBING, J.:

For review on certiorari are the Decision^[1] dated June 9, 2004 of the Court of Appeals in CA-G.R. SP No. 79624, and its Resolution^[2] dated August 3, 2004, denying the motion for reconsideration.

The basic facts in this case are undisputed.

On December 29, 1995, petitioner Fil-Estate Properties, Inc. (Fil-Estate) entered into a contract to sell a condominium unit to respondent spouses Gonzalo and Consuelo Go at “Eight Sto. Domingo Place,” a condominium project of petitioner located on Sto.Domingo Avenue, Quezon City. The spouses paid a total of P3,439,000.07 of the full contract price set at P3,620,000.00.

Because petitioner failed to develop the condominium project, on August 4, 1999, the spouses demanded the refund of the amount they paid, plus interest. When petitioner did not refund the spouses, the latter filed a complaint against petitioner for reimbursement of P3,620,000 representing the lump sum price of the condominium unit, plus interest, P100,000 attorney’s fees, and expenses of litigation before the Housing and Land Use Regulatory Board (HLURB).

In answer, petitioner claimed that respondents had no cause of action since the delay in the construction of the condominium was caused by the financial crisis that hit the Asian region, a fortuitous event over which petitioner had no control.

On July 18, 2000, the HLURB Regional Director approved the decision of the Housing and Land Use Arbiter in favor of the spouses Go. The HLURB ratiocinated that the Asian financial crisis that resulted in the depreciation of the peso is not a fortuitous event as any fluctuation in the value of the peso is a daily occurrence which is foreseeable and its deleterious effects avoided by economic measures. The HLURB went on to say that when petitioner discontinued the development of its condominium project, it failed to fulfill its contractual obligations to the spouses. And following Article 1475^[3] of the Civil Code, upon perfection of the contract, the parties, here the spouses Go, may demand performance. And under Article 1191^[4] of the same code, should one of the parties, in this instance Fil-Estate, fail to comply with the obligation, the aggrieved party may choose between fulfillment or rescission of the obligation, with damages in either case. Inasmuch as Fil-Estate could no longer fulfill its obligation, the spouses Go may ask for rescission of the contract with damages. The dispositive portion of the decision reads:

WHEREFORE, the foregoing considered, judgment is hereby rendered as follows:

1. Ordering the respondent, Fil-Estate Properties, Inc., to refund to the complainants, P3,439,000.07 (the amount proved) plus 12% interest thereon reckoned from 09 August 1999 (the date the respondent received the demand letter) until the same is fully paid.

2. Ordering the respondent to pay to the complainants P25,000.00 attorney’s fees as and by way of damages.

All other claims and counterclaims are dismissed.

IT IS SO ORDERED.^[5]

The Board of Commissioners of the HLURB denied petitioner’s petition for review and consequent motion for reconsideration.^[6] The Office of the President dismissed petitioner’s appeal and denied its motion for reconsideration.^[7]

On appeal, asserting that both the HLURB and the Office of the President committed reversible errors, Fil-Estate asked the Court of Appeals to set aside the orders it is appealing.

The Court of Appeals affirmed the actions taken by the HLURB and the Office of the President and declared that the Asian financial crisis could not be considered a fortuitous event and that respondents’ right is provided for in Section 23^[8] of Presidential Decree (P.D.) No. 957, otherwise known as “The Subdivision and Condominium Buyers’ Protective Decree.” The appellate court also noted that there was yet no crisis in 1995 and 1996 when the project should have been started, and petitioner cannot blame the 1997 crisis for failure of the project, nor for even not starting it, because the project should have been completed by 1997.

The appellate court denied petitioner’s motion for reconsideration.

Hence, this petition raising two issues for our resolution as follows:

I.

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE ASIAN FINANCIAL CRISIS IS NOT A FORTUITOUS EVENT THAT WOULD EXCUSE THE DELIVERY BY PETITIONER OF THE SUBJECT CONDOMINIUM UNIT TO RESPONDENTS.

II.

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING PETITIONER LIABLE FOR THE PAYMENT OF ATTORNEY’S FEES.^[9]

On the first issue, did the Court of Appeals err in ruling that the Asian financial crisis was not a fortuitous event?

Petitioner, citing Article 1174^[10] of the Civil Code, argues that the Asian financial crisis was a fortuitous event being unforeseen or inevitable. Petitioner likewise cites Servando v. Philippine Steam Navigation Co.,^[11] to bolster its case. Petitioner explains that the extreme economic exigency and extraordinary currency fluctuations could not have been reasonably foreseen and were beyond the contemplation of both parties when they entered the contract. Petitioner further asserts that the resultant economic collapse of the real estate industry was unforeseen by the whole Asia and if it was indeed foreseeable, then all those engaged in the real estate business should have foreseen the impending fiasco. Petitioner adds that it had not committed any fraud; that it had all the required government permits; and that it had not abandoned the project but only suspended the work. It also admits its obligation to complete the project. It says that it had in fact asked the HLURB for extension to complete it.^[12]

In their Comment, respondents submit that the instant petition be rejected outright for the reason that petitioner has not raised any question of law in the instant petition. The questions of whether or not the Asian financial crisis is a fortuitous event, and whether or not attorney’s fees should be granted, are questions of facts which the Court of Appeals recognized as such.

Respondent spouses reiterate that contrary to what petitioner avers, the delay in the construction of the building was not attributable to the Asian financial crisis which happened in 1997^[13] because petitioner did not even start the project in 1995 when it should have done, so that it could have finished it in 1997, as stipulated in the contract.

Preliminarily, respondents bring to the attention of this Court the strange discrepancy in the dates of notarization of the Certification of Non-Forum Shopping and the Affidavit of Service both notarized on September 24, 2004, while the Secretary’s Certification was notarized a day earlier on September 23, 2004. However, we shall not delve into technicalities, but we shall proceed with the resolution of the issues raised on the merits.

Indeed, the question of whether or not an event is fortuitous is a question of fact. As a general rule, questions of fact may not be raised in a petition for review for as long as there is no variance between the findings of the lower court and the appellate court, as in this case where the HLURB, the Office of the President, and the Court of Appeals were agreed on the fact.

Worthy of note, in a previous case, Asian Construction and Development Corporation v. Philippine Commercial International Bank,^[14] the Court had said that the 1997 financial crisis that ensued in Asia did not constitute a valid justification to renege on obligations. We emphatically stressed the same view in Mondragon Leisure and Resorts Corporation v. Court of Appeals,^[15] that the Asian financial crisis in 1997 is not among the fortuitous events contemplated under Article 1174 of the Civil Code.

Also, we cannot generalize that the Asian financial crisis in 1997 was unforeseeable and beyond the control of a business corporation. It is unfortunate that petitioner apparently met with considerable difficulty e.g. increase cost of materials and labor, even before the scheduled commencement of its real estate project as early as 1995. However, a real estate enterprise engaged in the pre-selling of condominium units is concededly a master in projections on commodities and currency movements and business risks. The fluctuating movement of the Philippine peso in the foreign exchange market is an everyday occurrence, and fluctuations in currency exchange rates happen everyday, thus, not an instance of caso fortuito.

Are respondents entitled to reimbursement of the amount paid, plus interest and attorney’s fees?

Yes. Section 23 of P.D. No. 957 is clear on this point.

It will be noted that respondents sent a demand letter dated August 4, 1999 to Fil-Estate asking for the return of “the total amount paid including amortization interests” and “legal interest due thereon.”^[16] The latter did not respond favorably, and so the spouses filed a complaint demanding the reimbursement of P3,620,000 representing the lump sum price of the condominium unit with interest at the legal rate, and P100,000 attorney’s fees. But the respondents actually sought the refund of P3,620,000.00, the lump sum cost of the condominium, more than their actual payment of P3,439,000.07. We are thus constrained to award onlyP3,439,000.07, representing the sum of their actual payments plus amortization interests and interest at legal rate which is 6% per annum from the date of demand on August 4, 1999. We are not unaware that the appellate court pegged the interest rate at 12% on the basis of Resolution No. R-421, Series of 1988 of the HLURB. But, conformably with our ruling in Eastern Shipping Lines, Inc. v. Court of Appeals,^[17] the award of 12% interest on the amount of refund must be reduced to 6%.

Moreover, we are constrained to modify the Court of Appeals’ grant of attorney’s fees from P25,000 to P100,000 as just and equitable since respondents were compelled to secure the services of counsel over eight years to protect their interest due to petitioner’s delay in the performance of their clear obligation.

WHEREFORE, the petition is DENIED for lack of merit. Petitioner is hereby ordered (1) to reimburse respondentsP3,439,000.07 at 6% interest starting August 4, 1999 until full payment, and (2) to pay respondents P100,000.00 attorney’s fees. Costs against petitioner.

SO ORDERED.

Herbosa vs. CA (GR No. 119086, 25 Jan 2002)

Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 119086 January 25, 2002

EMMANUEL G. HERBOSA and ROSEMARIE L. HERBOSA, petitioners,
vs.
COURT OF APPEALS (Fifteenth Division), and PROFESSIONAL VIDEO EQUIPMENT a Division of Solid Distributors, Inc.,respondents.

x---------------------------------------------------------x

G. R. No. 119087 January 25, 2002

EMMANUEL G. HERBOSA and ROSEMARIE L. HERBOSA, petitioners,
vs.
COURT OF APPEALS (Fifteenth Division) and SOLID CORPORATION, respondents.

DE LEON, JR., J.:

This is a Petition for Review on Certiorari of the decision¹ of the Court of Appeals in CA-G.R. CV Nos. 15346 and 15093 promulgated on October 20, 1994 which reversed the decision of the trial court in Civil Case No. R-82-4389² while affirming in toto the decision of the trial court in Civil Case No. R-83-21786,³ respectively, and the resolution⁴ promulgated on February 7, 1995 which denied the subsequent motion for reconsideration.

The facts show that on January 25, 1982 petitioner spouses sued Professional Video Equipment (PVE for brevity), a division of private respondent Solid Distributors, Inc., for breach of contract with damages⁵ with the Regional Trial Court of Manila, Branch 39, docketed as Civil Case No. R-82-4389. The case stemmed from the failure of PVE to record on video the petitioners' wedding celebration allegedly due to the gross negligence of its crew as well as the lack of supervision on the part of the general manager of the PVE. Petitioners also alleged that said failure on the part of PVE to perform its obligation caused deep disappointment, anxiety and an irreparable break in the continuity of an established family tradition of recording by film or slide historical and momentous family events especially wedding celebrations and for which they were entitled to be paid actual, moral and exemplary damages including attorney's fees.

In its Answer,⁶ PVE claimed that it had diligently supervised its VTR crew in the video recording of petitioners' wedding and reception and that its crew acted in good faith and with due care and proper diligence of a good father of a family.

After trial the lower court rendered a decision⁷ on January 3, 1983 in favor of the petitioners, the dispositive portion of which reads:

FOR ALL THE FOREGOING CONSIDERATIONS, the Court hereby renders judgment, ordering defendant to pay the plaintiffs actual, moral and exemplary damages in the amount of P100,000.00, P10,000.00 for attorney's fees and to pay the costs of these proceedings.

For insufficiency of evidence, the counterclaim is hereby DISMISSED.

SO ORDERED.

Complications arose when the petitioners moved for execution on June 23, 1983 of the above judgment for failure of PVE to file a motion for reconsideration despite, as petitioners alleged, the mailing to its former counsel a copy of the decision by registered mail.⁸

PVE opposed the motion,⁹ and on July 27, 1983 filed a petition for relief from judgment¹⁰ under Rule 38 of the Rules of Court essentially alleging that it failed to receive notice of the said judgment sought to be executed and that said failure was due to fraud and accident when the mail matter was posted in a post office box which was not registered in the name of PVE's former counsel.

In an order¹¹ dated November 10, 1983, the trial court denied the petition for relief from judgment and ordered the issuance of a writ of execution.

Consequently, PVE filed a notice of appeal¹² from the order of November 10, 1983. In addition, it filed a motion for reconsideration¹³ of the said order insofar as it directed the issuance of a writ of execution.

The trial court gave due course to PVE's appeal¹⁴ but it took no action on the motion for reconsideration of the order, thus a writ of execution was issued and an auction sale of certain personal properties levied upon by the deputy sheriff of the trial court was scheduled on December 8, 1983.

On December 3, 1983 PVE filed a petition for injunction with the Court of Appeals, docketed as AC-G.R. SP No. 02155, to restrain the scheduled auction sale. Although a temporary restraining order was issued by the appellate court, the same was served one hour late, at 4:30 o'clock in the afternoon on the day of the auction sale on December 8, 1983. As a result, the personal properties which had been levied upon were sold to Atty. Santiago Gabionza, Jr. as the highest bidder.¹⁵

In view of the auction sale held on December 8, 1983, the trial court recalled¹⁶ on May 10, 1984 its previous order giving due course to the appeal from its order dated November 10, 1983. The action taken by the trial court prompted PVE to file a separate petition for mandamus¹⁷with the Court of Appeals, docketed as AC-G.R. SP No.03470, to compel the respondent trial court to give due course to its appeal.

Meanwhile, on December 13, 1983, private respondent Solid Corporation, filed a complaint for damages¹⁸ with the Regional Trial Court of Manila, Branch 54, docketed as Civil Case No. R-83-21786, against Deputy Sheriff Angel Borja and the petitioners. Solid Corporation essentially alleged in its complaint that it was the true owner of the electronic appliances valued at One Hundred Thirty Nine Thousand Eight Hundred Pesos (P139,800.00) which were levied upon and subsequently sold at public auction on December 8, 1983 for the satisfaction of the judgment in Civil Case No. R-82-4389 in favor of the petitioners; that the levy on execution and the subsequent auction sale were illegal; and that it suffered actual and compensatory damages in the sum of One Hundred Thirty Nine Thousand Eight Hundred Pesos (P139,800.00), moral damages in the sum of One Million Pesos (P1,000,000.00), exemplary damages in the sum of One Million Pesos (P1,000,000.00) and attorney's fees of Two Hundred Thousand Pesos (P200,000.00).

On January 18, 1984, petitioners filed an Answer¹⁹ specifically denying that Solid Corporation was the owner of the personal properties levied upon and subsequently sold at public auction on December 8, 1983. They claimed that the showroom and offices located at 1000 J. Bocobo Street corner Kalaw Street, Ermita, Manila where the subject personal properties were then on display were owned and operated by respondent Solid Distributors, Inc., a sister company of Solid Corporation, Inc.; and that both corporations had interlocking directors, officers and principal stockholders.

On September 6, 1984, the Court of Appeals rendered a consolidated decision²⁰ in AC - G.R. SP No. 02155 and AC - G.R. SP No. 03470, the dispositive portion of which reads:

WHEREFORE, the petition for injunction and mandamus are GRANTED and (1) the sheriff's sale is nullified and the respondents Emmanuel and Rosemarie Herbosa are ordered to deliver the proceeds of the sale to the Solid Corporation, Inc. and (2) the respondent court is hereby ordered to give due course to the petitioner's appeal in Civil Case No. 137541. Costs against the private respondents.

Petitioners appealed the above judgment of the appellate court to this Court through a petition for review on certiorari, docketed as G. R. Nos. 69008-09, but which we denied in a resolution dated December 17, 1984 for lack of merit. Forthwith, the trial court granted on June 23, 1987 the subsequent motion of herein respondent Solid Corporation for summary judgment in Civil Case No. R-83-21786. The dispositive portion of the decision²¹ of the trial court reads:

WHEREFORE, summary judgment is hereby rendered in favor of the plaintiff, ordering the private defendants Emmanuel G. Herbosa and Rosemarie L. Herbosa to deliver to the plaintiff the amount of P139,800.(00) as the proceeds of the sale of plaintiff's properties and attorney's fees of P10,000.00, plus costs.

Considering that the defendant First Integrated Bonding Co., Inc. is not a party in the aforesaid Court of Appeals' cases, the judgment therein does not bind the defendant and therefore the case as against it is hereby dismissed.

SO ORDERED.

The appeal taken by the petitioner spouses to the Court of Appeals of the said Decision of the trial court in Civil Case No. R-83-21786 and the earlier appeal filed by respondent Solid Distributors, Inc. in Civil Case No. R-82-4389, respectively docketed as CA-G.R. CV Nos. 15093 and 15346, were ordered consolidated by the appellate court in its Resolution²² dated February 23, 1988.

On October 20, 1994 the Court of Appeals rendered its consolidated Decision,²³ in CA-G.R. CV Nos. 15093 and 15346, the dispositive portion of which reads:

"WHEEREFORE, the Court renders judgment:

(1) In CA-G.R. CV No. 15346, REVERSING the appealed decision, and, accordingly, DISMISSING plaintiff's complaint and defendant's counterclaim;

(2) In CA-G.R. CV No. 15093, AFFIRMING in toto the decision appealed from. The Court sentences defendants Emmanuel G. Herbosa and Rosemarie L. Herbosa to pay plaintiff Solid Corporation the amount of One Hundred Thirty Nine Thousand Eight Hundred (P139,800.00), pesos, as the proceeds of the sale of plaintiff's property, and Ten Thousand (P10,000.00), pesos, as attorney's fees, plus costs.

In both cases, we make no special pronouncement as to costs in this instance.

SO ORDERED."

The Court of Appeals denied the motion for reconsideration filed by the petitioner spouses on November 14, 1994 for having been allegedly filed out of time.²⁴

Dissatisfied, petitioner spouses filed the instant petition²⁵ raising the following assignment of errors:

I

THE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONERS' MOTION FOR RECONSIDERATION DATED NOVEMBER 11, 1994 WAS FILED OUT OF TIME WHEN IT RELIED ON THE CASE OF IMPERIAL VICTORY SHIPPING AGENCY vs. NLRC (200 SCRA 178) WHICH IS CLEARLY INAPPLICABLE IN THE CASE AT BAR.

II

THE COURT OF APPEALS ERRED WHEN, IN CA-G.R. CV NO. 15346, IT REVERSED THE FINDING OF THE TRIAL COURT THAT PRIVATE RESPONDENT "PVE" IS GUILTY OF GROSS NEGLIGENCE IN THE PERFORMANCE OF ITS OBLIGATION BY SOLELY RELYING ON THE TRIAL COURT'S STATEMENT THAT PRIVATE RESPONDENT "PVE" FAILED TO PRESENT AN IOTA OF PROOF THAT IT EXERCISED EXTRAORDINARY CARE IN THE PROPER MAINTENANCE OF ITS EQUIPMENT USED IN THE COVERAGE.

III

THE COURT OF APPEALS ERRED WHEN, IN CA-G.R. CV NO. 15346, IT TOTALLY SET ASIDE THE TRIAL COURT'S AWARD OF ACTUAL, MORAL, AND EXEMPLARY DAMAGES IN THE AMOUNT OF P100,000.00 AS WELL AS ATTORNEY'S FEES IN THE AMOUNT OF P10,000.00 PLUS COSTS OF SUIT, IN FAVOR OF THE SPOUSES HERBOSA FOR HAVING ALLEGEDLY NO BASIS BOTH IN FACT AND IN LAW.

IV

THE COURT OF APPEALS ALSO ERRED WHEN, WITHOUT ANY LAWFUL BASIS, IT ERRONEOUSLY AFFIRMED, IN CA-G.R. CV NO. 15093, THE DECISION OF THE TRIAL COURT WHICH RENDERED SUMMARY JUDGMENT IN THE ENTIRE CASE NOTWITHSTANDING THE APPARENT EXISTENCE OF A GENUINE ISSUE OF FACT CONCERNING THE OWNERSHIP OF PERSONAL PROPERTY LEVIED UPON WHICH ISSUE CLEARLY REMAINS UNAFFECTED BY THE DECISION OF THE COURT OF APPEALS IN CA-G.R. SP NOS. 02155 AND 03470.

Petitioners contend that their motion for reconsideration was filed within the reglementary period inasmuch as the ruling in the case ofImperial Victory Shipping Agency v. NLRC²⁶ cited in the questioned resolution of the appellate court dated February 7, 1995 was superseded by the decision of the Supreme Court in the case of Ramon Aquino v. NLRC.²⁷

They also contend that the ruling of the Court of Appeals in CA-G.R. CV No. 15346 to the effect that the degree of diligence required under the contract was that of diligence of a good father of a family, and not extraordinary diligence as opined by the trial court, does not negate the finding of the lower court that breach of contract due to gross negligence on the part of PVE was duly proven by the petitioners. Due to the presence of gross negligence on the part of PVE (a division of respondent Solid Distributors, Inc.), petitioners are entitled to an award of actual, moral and exemplary damages including attorney's fees and costs.

Additionally, petitioners contend that the summary judgment rendered by the trial court in Civil Case No. R-83-21786 was improper since the question of ownership of the levied personal properties to satisfy the judgment in Civil Case No. R-82-4389 remains unaffected by the decision of the Court of Appeals in AC-G.R. SP Nos. 02155 and 03470 which merely declared that the execution of the said judgment was void for being premature.

On the other hand, both private respondents Solid Distributors, Inc. and Solid Corporation invoke the ruling in the case of Azores v. SEC²⁸which affirmed our ruling in the cases of Bank of America, NT and SA v. Gerochi, Jr., et al.,²⁹ and Imperial Victory Shipping Agency v. NLRC³⁰ such that if the last day to appeal fell on a Saturday, the act was still due on that day. While private respondents concede that rules of procedure are intended to promote substantial justice, they emphasized that the perfection of appeal in the manner and within the period permitted by law is not only mandatory but jurisdictional.

Private respondents also invoke the well-settled rule that only questions of law may be entertained on appeal. By questioning in the instant petition public respondent appellate court's appreciation of the evidence on the issue of diligence, petitioners, in effect, raised questions of fact which cannot be done by the Supreme Court, on appeal, as it is not a trier of facts. After having determined by the Court of Appeals that no cause of action exists against private respondent PVE, there appears to be no basis for an award of damages contrary to the contention of the petitioners in the third assignment of error.

Lastly, private respondents maintain that summary judgment was properly rendered in Civil Case No. R-83-21786 in view of the Decision of the Court of Appeals in AC-G.R. SP Nos. 02155 and 03470 promulgated on September 6, 1984 which was affirmed by the Supreme Court in a resolution dated December 17, 1984. The said decision, which is the law of the case, mandates that the petitioners were to deliver the proceeds of the sheriff's auction sale to herein private respondent Solid Corporation.

Hence, the issues are:

1. Whether or not the motion for reconsideration filed by the petitioners on November 14, 1994 was filed beyond the reglementary period.

2. Whether or not the petitioners are entitled to award of damages arising from breach of contract of service in Civil Case No. R-82-4389.

3. Whether or not the trial court correctly rendered summary judgment in Civil Case No. R-83-21786 in favor of respondent Solid Corporation.

In denying petitioners' motion for reconsideration filed on November 14, 1994, the Court of Appeals ruled that the petitioners had only until November 12, 1994, which was a Saturday, within which to file a motion for reconsideration of its Decision dated October 20, 1994 in CA-G.R. CV Nos. 15346 and 15093 inasmuch as they had been furnished notice of its said decision on October 28, 1994. The appellate court cited the case of Imperial Victory Shipping where it was held that "if the last day to appeal fell on a Saturday, the act was still due on that day and not on the next succeeding business day".

It should be noted, however, that even in the cases³¹ invoked by the private respondents, we have already made pronouncements therein that, as early as January 23, 1993, this Court had issued an order directing court offices closed on Saturdays so that when the last day for filing of a pleading should fall on a Saturday, the same should be done on the following Monday, provided the latter is not a holiday. Significantly, the motion for reconsideration which was filed by the petitioners on November 14, 1994 came after the issuance of our said order. Consequently, respondent appellate court should not have denied outright petitioners' motion for reconsideration since the last day for the filing thereof fell on November 12, 1994, which was a Saturday, when the Receiving and Docket Section and the Cashier Section of the Court of Appeals were closed.

Likewise, respondent PVE or respondent Solid Distributors, Inc. may not validly thwart the petitioners' instant petition for review of the decision of the Court of Appeals in CA-G.R. CV No. 15346 by arguing that the principal issue as to the existence of negligence involves a question of fact which cannot be raised on appeal. The general rule that only questions of law may be raised on appeal in a petition for review under Rule 45 of the Rules of Court admits of certain exceptions, namely: a) when the conclusion is a finding grounded entirely on speculations, surmises, or conjectures; b) when the inference made is manifestly mistaken, absurd, or impossible; c) where there is a grave abuse of discretion; d) when the judgment is based on a misapprehension of facts; e) when the findings of fact are conflicting; f) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same are contrary to the admissions of both appellant and appellee; g) when the findings of the Court of Appeals are contrary to those of the trial court; h) when the findings of fact are conclusions without citation of specific evidence on which they are based; I) when the finding of fact of the Court of Appeals is premised on the supposed absence of evidence but is contradicted by the evidence on record; and j) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion.³² Notably, the Court of Appeals and the trial court arrived at conflicting findings of fact in Civil Case No. R-82-4389 which is an action for breach of contract and damages and the appeal therefrom, thus necessitating further review of the evidence by this Court.

It appears from the evidence adduced that the petitioner spouses contracted the services of PVE (a division of respondent Solid Distributors, Inc.) for the betamax coverage of their then forthcoming wedding celebration scheduled in the morning of October 11, 1980. Pursuant to the contract³³ PVE undertook to record on betamax format the wedding celebration of the petitioners starting with the pre-departure activities of the bride at her residence, followed by the wedding ceremony and the reception which had an approximate playback time of sixty (60) to ninety (90) minutes. Petitioners paid PVE the amount of One Thousand Four Hundred Twenty-Three Pesos (P1,423.00) as downpayment while the balance of One Thousand Five Hundred Thirty-Two Pesos (P1,532.00) was to be paid upon receipt of the finished video tape.

Accordingly, on October 11, 1980 at around 6:30 o'clock in the morning³⁴ the PVE crew composed of the cameraman, Vedastro Sulit, VTR (video tape recorder) operator, Michael Rodriguez, and the driver and lightman, Felix Baguio, arrived at the residence of the bride at 1694 M. H. Del Pilar Street, Ermita, Manila. They recorded the pre-departure activities of the bride before leaving for the Malate Church along Mabini Street, Malate, Manila where the wedding ceremonies were held at 9:00 o'clock in the morning. Thereafter, the crew proceeded to the Manila Hotel in Intramuros, Manila, where the wedding reception followed at 10:30 o'clock in the morning.

On October 13, 1980, however, Ben Zarate, studio manager of PVE, informed the petitioners that the videotape coverage of their wedding celebration was damaged due to mechanical defect in their equipment. On October 19, 1980 PVE general manager, Eric Sycip, confirmed the damage and proposed to do a video tape production of their wedding celebration through photographs or a video coverage of any event of similar significance.³⁵ In addition, Eric Sycip sent a check³⁶ representing the amount of the downpayment which the petitioners did not accept. Deeply aggrieved, the petitioners rejected both of the proposed alternatives since, according to them, a video tape production through photographs was not going to compensate for the betamax or film coverage of their actual wedding celebration and that there could be no event of similar significance insofar as petitioners are concerned.

PVE, a division of respondent Solid Distributors, Inc., disclaimed any liability for the damaged videotape by invoking force majeure or fortuitous event and asserted that a defective transistor caused the breakdown in its video tape recorder. However, said respondent failed to substantiate its bare allegation by presenting in evidence the alleged defective transistor before the trial court. Instead, it presented another component³⁷ of the same kind. Having invoked fortuitous event, it was incumbent upon said respondent to adduce sufficient and convincing proof to establish its defense.

At any rate, in order that fortuitous event may exempt PVE or respondent Solid Distributors, Inc. from liability, it is necessary that it be free from negligence.³⁸ The record shows, however, that the alleged malfunctioning of the video tape recorder occurred at the beginning of the video coverage at the residence of the bride. The PVE crew miserably failed to detect the defect in the video tape recorder and that they discovered the same rather too late after the wedding reception at the Manila Hotel.

There appeared to be no valid reason why the alleged defect in the video tape recorder had gone undetected. There was more than sufficient time for the PVE crew to check the video tape recorder for the reason that they arrived at the bride's residence at 6:30 o'clock in the morning while they departed for the wedding ceremonies at the Malate Church at 9:00 o'clock in the morning. Besides, PVE was admittedly furnished earlier by the petitioners with a copy of the script³⁹ of the scenes to be recorded so that it could prepare and organize its contracted task. PVE studio manager Ben Zarate even testified that ordinarily, the standard playback test to monitor the functioning of the video tape recorder was required at every opportunity. In the instant case, a playback test on three (3) occasions, preferably at the beginning, middle and towards the end portions of the video coverage would have been sufficient.⁴⁰

Based on the investigation allegedly conducted by its officers, PVE or respondent Solid Distributors, Inc. claimed that its crew, whom it never presented to testify during the trial of the case, allegedly conducted a playback test at the residence of the bride and that the next playback test was conducted after the wedding reception at the Manila Hotel where the defect in the video tape recorder was allegedly discovered for the first time.⁴¹ A review of the records however, raised doubts as to whether the crew actually conducted a playback test at the residence of the bride. A very minimal portion, lasting only for two and one half (2 ½) minutes, of the pre-departure activities at the residence of the bride had been recorded while the rest of the video tape was damaged. This strongly suggests that any alleged defect in the video tape recorder could have easily been detected by the PVE crew at the residence of the bride had a sufficient playback test been conducted therein prior to their departure for the wedding ceremonies at the Malate Church. The pertinent portion of the stenographic notes of the trial is reproduced, thus:

Interpreter:

We are about to witness the video coverage of the Herbosa Wedding on the television set. (V)iew on (sic) the M. H. del Pilar and what is in focus is a residence No. 1694. What is shown is the facade of the De Leon residence, the residence of the bride, Rosemarie de Leon; next in focus is apparently a bedroom of the bride. What is shown on screen now is that she was being made up by her artist and hairdresser in preparation for the forthcoming wedding. She is wearing an electric blue dressing gown.

Court:

It would seem that at this juncture, the picture is clear as shown on the television.

Interpreter:

Then, the other members of the entourage is also in focus. They are shown to be made-up by the artist. At this juncture, it is still visible that the screen is clear, then suddenly, there is complete darkness, and snatches on the screen which has a span of about…

Atty. Agcaoili:

May we stipulate that the good tape your Honor, lasted for only two and a half minutes?

Atty. Mendoza:

Agreed, your Honor.

Atty. Agcaoili:

And that from this point, the cassette is blurred and you cannot see any visible figure on the cassette tape. May we note the ringing sound apparently a telephone ringing which will indicate that the audio pick-up is being taken or at least, the audio was working. After four minutes of complete blurred, there appears to be snatches of the bride's face and again, it has faded into complete non-appearance of the subject being taken.

Court:

In other words, no pictures registered after the few snatches of the bride.⁴²

The misfortune that befell the then newly-wed couple, petitioners herein, could have been avoided by a timely exercise of minimum prudence by the crew of PVE who are all employees of respondent Solid Distributors, Inc. to check any possible mechanical defect in the video tape recorder. The defect could have been detected earlier and remedial measures could have been made to ensure full video tape coverage of the petitioners' wedding celebration. But PVE or respondent Solid Distributors, Inc. did not. We take judicial notice of the short distance between the office of PVE or respondent Solid Distributors, Inc. at 1000 J. Bocobo corner Kalaw Streets, Ermita, Manila, on one hand, and the locations of the required video tape coverage at the residence of the bride at M. H. Del Pilar Street, Ermita, Manila, the Malate Church and the Manila Hotel. The failure to record on videotape the wedding celebration of the petitioners constitutes malicious breach of contract as well as gross negligence on the part of respondent Solid Distributors, Inc.

PVE or respondent Solid Distributors, Inc. cannot seek refuge under Article 2180 of the New Civil Code by claiming that it exercised due care in the selection and supervision of its employees and that its employees are experienced in their respective trade. That defense, as provided in the last paragraph of Article 2180 of the New Civil Code, may be availed of only where the liability arises from culpa aquilana and not fromculpa contractual such as in the case at bar.⁴³

However, the award of damages to the petitioners cannot be lumped together as was done by the trial court. It is basic that the claim for actual, moral and exemplary damages as well as attorney's fees must each be independently identified and justified.⁴⁴ In this connection, Article 1170 of the New Civil Code provides that "those who in the performance of their obligations are guilty of fraud, negligence or delay,and those who in any manner contravene the tenor thereof, are liable for damages." For failure of PVE, a division of respondent Solid Distributors, Inc., to comply with its obligation under the video tape coverage contract, petitioners are entitled to actual damages at least in the amount of One Thousand Four Hundred Twenty-Three Pesos (P1,423.00) representing their downpayment in that contract.

Ordinarily, moral damages cannot be recovered in an action for breach of contract because such an action is not among those expressly mentioned in Article 2219⁴⁵ of the New Civil Code. However, moral damages are recoverable for breach of contract where the breach was wanton, reckless, malicious or in bad faith, oppressive or abusive.⁴⁶ The wanton and reckless failure and neglect to timely check and remedy the video tape recorder by the PVE crew who are all employees of respondent Solid Distributors, Inc. indicates a malicious breach of contract and gross negligence on the part of said respondent in the discharge of its contractual obligations. Consequently, the petitioners who suffered mental anguish and tortured feelings thereby, are entitled to an award of One Hundred Thousand Pesos (P100,000.00) as moral damages.

In the case of Go v. Court of Appeals⁴⁷ we emphasized that "(i)n our society, the importance of a wedding ceremony cannot be underestimated as it is the matrix of the family and, therefore, an occasion worth reliving in the succeeding years." Further, we reiterate the following pronouncements therein where we also awarded moral damages on account of a malicious breach of contract similar to the case at bar, to wit:

Considering the sentimental value of the tapes and the fact that the event therein recorded—a wedding which in our culture is a significant milestone to be cherished and remembered—could no longer be reenacted and was lost forever, the trial court was correct in awarding the appellees moral damages albeit in the amount of P75,000.00 xxx in compensation for the mental anguish, tortured feelings, sleepless nights and humiliation that the appellees suffered and which under the circumstances could be awarded as allowed under Articles 2271 and 2218 of the Civil Code.

The award of exemplary damages which is hereby fixed in the amount of Forty Thousand Pesos (P40,000.00) is justified, under the premises, to serve as a warning to all entities engaged in the same business to observe good faith and due diligence in the fulfillment of their contractual obligations. Additionally, the award of attorney's fees in the amount of Ten Thousand Pesos (P10,000.00) is also proper in accordance with Article 2208⁴⁸ of the Civil Code.

Anent the third issue, we hold that the Court of Appeals, in CA-G.R. CV No. 15346, did not err in sustaining the summary judgment rendered by the trial court in Civil Case No. R-83-21786. The test for propriety of a motion for summary judgment is whether the pleadings, affidavits and exhibits in support of the motion are sufficient to overcome the opposing papers and to justify the finding that, as a matter of law, there is no defense to the action or claim which is clearly meritorious.⁴⁹

The decision of the Court of Appeals in AC G.R. SP Nos. 02155 and 03470, for injunction and mandamus, specifically commands herein petitioners to "deliver the proceeds of the (auction) sale to Solid Corporation" due to the nullity of the sheriff's sale on December 8, 1983 for being premature. The said decision of the Court of Appeals became final and executory after this Court, in G.R. Nos. 69008 and 69009, denied on December 17, 1984 the appeal therefrom instituted by herein petitioners.

WHEREFORE, judgment is hereby rendered as follows:

(1) In G.R. No. 119086, the appealed decision of the Court of Appeals in CA-G.R. CV No. 15346 is REVERSED. Private respondent Solid Distributors, Inc. is ordered to pay the petitioners One Thousand Four Hundred Twenty-Three Pesos (P1,423.00) as actual damages, One Hundred Thousand Pesos (P100,000.00) as moral damages, Forty Thousand Pesos (P40,000.00) as exemplary damages, and Ten Thousand Pesos (P10,000.00) by way of attorney's fees; and

(2) In G.R. No. 119087, the appealed decision of the Court of Appeals in CA-G.R. CV No. 15093 is AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

Remington Industrial Sales Corp. vs. Chinese Young Men's Christian Association (GR No. 171858, 22 Jan 2007)

Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 171858 January 22, 2007

REMINGTON INDUSTRIAL SALES CORPORATION, Petitioner,
vs.
CHINESE YOUNG MEN’S CHRISTIAN ASSOCIATION OF THE PHIL. ISLANDS, doing business under the name MANILA DOWNTOWN YMCA, Respondent.

D E C I S I O N

YNARES-SANTIAGO, J.:

This Petition for Review on Certiorari¹ assails the October 17, 2005 Decision² of the Court of Appeals in CA-G.R. SP No. 88599, which set aside the Decision³ of the Regional Trial Court of Manila (RTC-Manila), Branch 25 and reinstated the June 20, 2003 Decision⁴ of the Metropolitan Trial Court of Manila (MeTC-Manila), Branch 17, as well as its March 7, 2006 Resolution⁵ denying petitioner’s Motion for Reconsideration.

The antecedent facts show that petitioner Remington Industrial Sales Corporation (RISC) leased Units 964 and 966 on the ground floor and Unit 963 on the second floor of a building owned by respondent Manila Downtown YMCA in Binondo, Manila. Petitioner knocked down the partitions between the ground floor units and used the combined areas as its office, hardware store, and display shop for steel products. The combined units also served as a passageway to Unit 963, which in turn was utilized as petitioner’s staff room.

Because of a disagreement, petitioner sued respondent for the fixing of the period of the lease over the second floor unit.⁶ Thereafter, respondent filed an action to evict⁷ petitioner from said unit. The two cases were later consolidated before MeTC-Manila, Branch 26.

Meanwhile, on June 23, 1997, petitioner filed a Petition for Consignation of Rentals for the ground floor units at another branch of MeTC-Manila⁸ because respondent allegedly refused to receive its rent payments without just cause.⁹ However, during the hearing of the consignation case, petitioner filed a formal surrender of the two ground floor units effective on July 1, 1998,¹⁰ to which respondent manifested a "No Objection to the Turn Over or Surrender of the Leased Premises."¹¹ On July 9, 1998, after petitioner delivered two checks covering the rents due the ground floor units, the trial court issued an Order¹² declaring the consignation case closed.

Then, on August 11, 1998, the MeTC-Manila which heard the consolidated cases for the fixing of the lease period and ejectment rendered a Decision¹³ dismissing the latter and extending the period of lease over unit 963 for three years. Immediately subsequent thereto, petitioner filed a Motion to Constitute Passageway,¹⁴ alleging that Unit 963 does not have a direct access to the road except by passing through the vacated ground floor units.

On October 29, 1998, the trial court issued an Order directing a commissioner to conduct an ocular inspection of the subject building. After the commissioner had submitted a Report,¹⁵ but without resolving the propriety of a passageway, the MeTC-Manila forwarded the consolidated case on appeal to RTC-Manila, Branch 30, which rendered judgment granting petitioner a longer extension period of five years and ordering respondent to provide a two-meter passageway between Units 964 and 966. Respondent filed an appeal with the Court of Appeals.¹⁶

On September 19, 2003, the appellate court held that the lower courts had authority to fix an extension of the lease period. It found that although the lease contract had expired, petitioner’s continued occupation of Unit 963 resulted to a new lease on a month-to-month basis which subsisted for over a year; thus, while respondent had the right to seek its termination, petitioner was entitled to a judicial lengthening of its period based on equity. Nonetheless, the appellate court ordered petitioner to vacate the subject premises as the continuation of the lease was no longer tenable after the lapse of six years since the parties’ formal contract expired. It also noted that since the petitioner has already transferred to its own building, there is no more reason to continue the lease. Subsequently, the Court of Appeals issued a Resolution¹⁷ rendering petitioner’s Motion for Reconsideration moot as it has vacated the subject premises.¹⁸

Meanwhile, respondent filed two separate actions for ejectment of petitioner from Units 964 and 966 – the former before MeTC-Manila, Branch 20¹⁹ and the latter before MeTC-Manila, Branch 17.²⁰ Respondent alleged that petitioner did not actually surrender the ground floor units on July 1, 1998; instead it padlocked the doors thereto, refused to surrender the keys, and failed to pay rent despite demand. Both branches of MeTC-Manila separately ordered petitioner to vacate the premises and pay reasonable rent and attorney’s fees to respondent.

On appeal, the RTC-Manila, Branch 25 reversed the decision of MeTC-Manila, Branch 17, holding that:

Indeed, Remington’s act of padlocking Units 964 and 966 is an act of self-preservation. Since it continued to lease Unit 963 at the second floor after the surrender of the ground floor units, it required YMCA to provide it with a passageway to and from the second floor. The needed passageway was confirmed by the court-appointed commissioner in the consolidated cases for fixing of lease period and unlawful detainer. As the lessor, it is the obligation of YMCA to make Units (sic) 963 tenantable by providing [a] passageway to Remington. But it did not. Remington, therefore, had no choice but to keep the keys at the ground floor units only for the purpose of going to the leased unit at the second floor. The fact of the existence of another lease unit at the second floor is the important fact that the lower court failed to consider when it said that "the continued padlocking of the subject premises constitutes an unlawful withholding of plaintiff’s property" (p. 4, MTC decision). At any rate, Remington had filed in the consignation case with Branch 24 of the MTC a motion formally surrendering Units 964 and 966 at the ground floor, with no objection on the part of YMCA. Remington, therefore, already surrendered the possession of Units 964 and 966 to YMCA. In fact, Branch 24 of the MTC had put an end to the issue of possession of Units 964 and 966 by considering the petition for consignation closed. Since none of the parties questioned that order, it is now final. Consequently, this ejectment case involving Unit 966 at the ground floor is an indirect attack on the final decision in the consignation case, a re-adjudication of similar issues involving the ground floor units that have been decided with finality.

x x x x

Consequently, YMCA’s claim for back rentals from July 1, 1998 is also baseless.lavvphil.net

WHEREFORE, the decision of the lower court dated June 20, 2003 is hereby reversed and set aside. Consequently, the complaint for unlawful detainer involving Unit 966 at the ground floor of Manila Downtown YMCA Building, Benavidez St., Binondo, Manila is also dismissed for lack of merit.

SO ORDERED.²¹

Respondent filed a motion for reconsideration but was denied, hence it filed a petition for review before the Court of Appeals which reversed and set aside the October 11, 2004 Decision of the RTC-Manila and reinstated the Decision of MeTC-Manila. The Court of Appeals held that:

x x x Despite the RTC’s finding, however, the uncontroverted fact remains that RISC failed to surrender possession of the disputed units despite having manifested its willingness to do so under the Formal Surrender of Leased Premises. There is no escaping the fact that RISC continued to exercise control over the subject premises, which it admittedly used as a means of ingress and egress in going to Unit 963. It has been invariably held that actual possession consists in the manifestation of acts of dominion over property of such nature as a party would naturally exercise over his own, as when petitioner, in this particular case, is physically in occupation of the property (Republic vs. David, 436 SCRA 577 [2004], citing Republic vs. Court of Appeals, 335 SCRA 693 [2000]), Reyes vs. Court of Appeals, 315 SCRA 626 [1999]). For one, RISC’s claim of self-preservation is antithecal to disclaiming possession of the controversial premises.

Appropriately, considering that petitioner was effectively deprived of possession of the subject units through respondent’s act of padlocking the subject premises, petitioner had a cause of action to file a case for ejectment against RISC. x x x²²

Petitioner’s Motion for Reconsideration was denied, hence this Petition for Review on Certiorari, raising the following issues:

1. Whether or not RISC’s formal surrender on July 1, 1998 of the ground floor units, coupled with YMCA’s subsequent acts, constitutes effective surrender of those units;

2. Whether or not the use by RISC’s staffs, who held office at the second floor, of the key of the ground floor door, their only passageway to the street, is antithetical to RISC[‘s] surrender of the ground floor units; and

3. Whether or not respondent YMCA is guilty of forum shopping.²³

In a contract of lease, one of the parties binds himself to give to another the enjoyment or use of a thing for a price certain, and for a period which may be definite or indefinite.²⁴ Upon its termination, the lessee shall return the thing leased and the lessor shall resume possession thereto.²⁵

Under the law, possession is acquired by the material occupation of a thing or the exercise of a right, or by the fact that it is subject to the action of our will, or by the proper acts and legal formalities established for acquiring such right.²⁶ In short, possession can be either actual or merely constructive.²⁷

Actual possession consists in the manifestation of acts of dominion over property of such a nature as a party would naturally exercise over his own – as when respondent himself is physically in occupation of the property, or even when another person who recognizes the former’s rights as owner is in occupancy.²⁸ Constructive possession on the other hand, may be had through succession, donation, execution of public instruments, or the possession by a sheriff by virtue of a court order.²⁹

In the instant case, petitioner had effectively surrendered possession of Units 964 and 966 to respondent. It must be recalled that petitioner filed a "Formal Surrender of Leased Premises" effective July 1, 1998 at MeTC-Manila, Branch 24 to which respondent manifested a "No Objection to the Turn Over or Surrender of the Leased Premises at #954 [sic] and 966 Benavidez St., Binondo, Manila." On even date and in compliance with its stated undertaking, petitioner actually emptied and vacated the leased premises.

Respondent maintains that the padlocking of the main door of the ground floor units and the continued use thereof as petitioner’s passageway to and from the second floor unit virtually denied it of its right to possess Units 964 and 966.

We find otherwise. Petitioner’s "Formal Surrender of Leased Premises" on July 1, 1998 showed its intention to relinquish in favor of respondent its possession over Units 964 and 966. The filing of the same at MeTC-Manila, Branch 24 constitutes petitioner’s constructive delivery of the said premises effective July 1, 1998. Thereafter, petitioner actually emptied and vacated the premises. Therefore, from July 1, 1998, respondent could have taken legal and actual possession of Units 964 and 966. Respondent could have easily removed the padlock and occupied the premises in view of petitioner’s unconditional surrender of the premises.

On the other hand, petitioner’s request for a passageway was necessary to its adequate use of Unit 963, considering that it has no direct access to the road except through the ground floor units. However, respondent did not immediately start the construction of a passageway. It was therefore understandable, as found by the RTC-Manila, that petitioner kept the key to the door at the ground floor units because it was its only means of access to the road and to its rented unit at the second floor.

In view of the foregoing, the RTC-Manila properly dismissed respondent’s Complaint for Unlawful Detainer and claim for back rentals of Units 964 and 966.

On the issue of forum-shopping, we find that respondent is not guilty of forum shopping when it filed the ejectment cases despite the closure of the consignation case involving the same premises.

Forum-shopping is an act of a party against whom an adverse judgment or order has been rendered in one forum of seeking and possibly getting a favorable opinion in another forum, other than by appeal or special civil action for certiorari. It may also be the institution of two or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition. For it to exist, there should be (a) identity of parties, or at least such parties as would represent the same interest in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) identity of the two preceding particulars such that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata in the action under consideration.³⁰ Where the elements of litis pendentia are not present or where a final judgment in one case will not amount to res judicata in the other, there is no forum-shopping.³¹

In the instant case, although the parties and the subject premises in the instant case are the same with those in Civil Case No. 155897-CV, the causes of action in both cases are separate and distinct. The present case involves ejectment of petitioner from the leased premises, while the latter dealt with consignation of rents without any judicial ruling regarding the matter of possession of Units 964 and 966. Hence, respondent is not guilty of forum-shopping.

WHEREFORE, the instant petition is GRANTED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 88599 are SET ASIDE. The Decision of the Regional Trial Court of Manila, Branch 25 in Civil Case No. 03-107655 dismissing the unlawful detainer case for lack of merit is hereby REINSTATED and AFFIRMED.

SO ORDERED.