Figuera vs. Ang (2016)

JENNEFER FIGUERA, as substituted by ENHANCE VISA SERVICES, INC vs. MARIA REMEDIOS ANG

G.R. No. 204264, June 29, 2016

BRION, J.:

Facts: Petitioner Ang is the owner of a business named "Enhance Immigration and Documentation Consultants" (EIDC). In 2004, Ang executed a Deed transferring all of her business rights over the EIDC to Figuera for ₱150,000.00 and that Ang shall pay the bills for electricity, telephone, office rentals, and the employees’ salaries up to the month of December 2004. Without Ang’s consent, Figuera paid all the utility bills amounting to ₱107,903.21. In 2005, Figuera tendered only the amount of ₱42,096.79 to Ang, after deducting the amount of ₱107,903.21 from the ₱150,000.00. Ang refused to accept the payment.

Thus, Figuera filed a complaint for specific performance before the RTC of Cebu City against Ang. Figuera consigned the amount of ₱42,096.79 to the RTC. Ang maintained that the amount due pursuant to the Deed is ₱150,000.00 and not just ₱42,096.79.

On May 19, 2005, Figuera conveyed all her rights and causes of action over EIDC in favor of the Enhance Visa Services, Inc. (EVSI).

The RTC and CA ruled that for the tender of payment and consignation to be valid, Figuera must tender the full amount of ₱150,000.00 rather than just ₱42,096.79. Ang is not obliged to accept an amount less than what is agreed upon in the Deed.

Issues: 1) Whether or not legal subrogation took place despite the absence of Ang’s consent to Figuera’s payment of the EIDC bills.

2) Whether or not there was a valid tender of payment and consignation.

Rulings: 1) Yes, there was legal subrogation. There is legal subrogation when a person interested in the fulfilment of the obligation pays, even without the knowledge of the debtor. There is compensation when (1) each one of the debtors is bound principally, and that the debtor is at the same time a principal creditor of the other; (2) both debts consist of a sum of money, or if the things due be consumable, they be of the same kind and also of the same quality if the latter has been stated; (3) both debts are due; (4) both debts are liquidated and demandable; and (5) there be no retention or controversy over both debts commenced by third persons and communicated in due time to the debtor.18 When all these elements are present, compensation takes effect by operation of law and extinguishes both debts to the corresponding amount, even though both parties are without knowledge of the compensation.

All the elements of legal compensation are present in this case.

First, in the assignment of business rights, Figuera stood as Ang’s debtor for the consideration amounting to ₱150,000.00. Figuera, on the other hand, became Ang’s creditor for the amount of ₱107, 903.21 through Figuera’s subrogation to the rights of Ang’s creditors against the latter.

Second, both debts consist of a sum of money, which are both due, liquidated, and demandable.

Finally, neither party alleged that there was any claim raised by third persons against said obligation. In effect, even without the knowledge and consent of Ang or Figuera, their obligation as to the amount of ₱107,903.21 had already been extinguished. Consequently, Figuera owes Ang the remaining due amount of ₱42,096.79.

2. Yes, the tender of payment and consignation were valid. To be valid, the tender of payment must be absolute and must cover the amount due. In this case, the remaining amount due in Figuera's obligation is P42,096.79. Due to the creditor's refusal, without any just cause, to the valid tender of payment, the debtor is released from her obligation by the consignation of the thing or sum due.

Ration Decidendi: The consent or approval of the debtor is required only if a third person who is not interested in the fulfilment of the obligation pays such. On the other hand, no such requirement exists in cases of payment by a person interested in the fulfilment of the obligation.

Gist: The Court resolves the petition for review on certiorari under Rule 45 of the Rules of Court filed by petitioner Figuera assailing the June 29, 2012 Decision and the September 28, 2012 Resolution of the Court of Appeals of Cebu City.

Pryce Properties Corporation vs. Spouses Octobre Case Digest

Pryce Properties Corporation vs. Sps. Sotero Octobre, Jr., et al.

G.R. No. 186976. December 7, 2016

Facts

Octobre (Spouses Octobre) signed a Reservation Agreement with petitioner Pryce Properties Corporation (Pryce) for the purchase of two lots with a total of 742 square meters located in Puerto Heights Village, Puerto Heights, Cagayan de Oro City. The parties subsequently executed a Contract to Sell over the lot for the price of P2,897,510.00 on January 7, 1998. On February 4, 2004, Pryce issued a certification that Spouses Octobre had fully paid the purchase price and amortization interests, as well as the transfer fees and other charges in relation to the property, amounting to a total of P4,292,297.92. But Pryce had yet to deliver the certificates of title, which prompted Spouses Octobre to formally demand its delivery. Despite repeated demands, Pryce failed to comply. Thus, on May 18, 2004, Spouses Octobre filed a complaint before the Housing and Land Use Regulatory Board (HLURB), for specific performance, revocation of certificate of registration, refund of payments, damages and attorney's fees.

Pryce was unable to deliver the titles to Spouses Octobre because it had previously transferred custody of the titles, along with others pertaining to the same development project, to China Banking Corporation (China Bank) as part of the Deed of Assignment executed on June 27, 1996 under which Pryce obligated itself to deliver to China Bank the "contracts to sell and the corresponding owner's duplicate copies of the transfer certificates of title, tax declaration, real estate tax receipts and all other documents and papers relating to the assigned receivables until such receivables are paid or repurchased by Pryce. The titles to the lots purchased by Spouses Octobre were among those held in custody by China Bank. When Pryce defaulted in its loan obligations to China Bank sometime in May 2002, China Bank refused to return the titles to Pryce.

The HLURB Arbiter ordered Pryce to refund the payments made by the spouses with legal interest and to pay the latter compensatory damages amounting to P30,000.00, attorney's fees and costs of suit.

On appeal, the HLURB Board of Commissioners modified the Decision by ordering Pryce to pay the redemption value to China Bank so that the latter may release the titles covering the lots purchased by Spouses Octobre. In default thereof, Pryce shall refund the payments with legal interest. The HLURB Board upheld the grant of compensatory damages, attorney's fees and costs to Spouses Octobre. Pryce moved for reconsideration but it was denied.

Thereafter, Pryce appealed the case to the Office of the President, which affirmed in full the HLURB Board's Decision. Undeterred, Pryce elevated the case to the Court of Appeals which denied the petition for review and affirmed the Office of the President's Decision.

Pryce went to the Supreme Court primarily arguing that the Court of Appeals erred in upholding the award of compensatory damages because Spouses Octobre failed to present competent proof of the actual amount of loss.

Issue

Whether a breach of contract automatically triggers the award of actual or compensatory damages.

Ruling

No. To be entitled to compensatory damages, the amount of loss must therefore be capable of proof and must be actually proven with a reasonable degree of certainty, premised upon competent proof or the best evidence obtainable. The burden of proof of the damage suffered is imposed on the party claiming the same, who should adduce the best evidence available in support thereof.

It is clear that the amount paid by Spouses Octobre to Pryce as purchase price for the lots has been adequately proved. There is no dispute that Spouses Octobre are entitled to such amount with legal interest. The issue being raised by Pryce is only with respect to the P30,000.00 awarded as compensatory damages.

The records of this case are bereft of any evidentiary basis for the award of P30,000.00 as compensatory damages. When the HLURB Arbiter initially awarded the amount, it merely mentioned that “[Spouses Octobre] are entitled to compensatory damages, which is just and equitable in the circumstances, even against an obligor in good faith since said damages are the natural and probable consequences of the contractual breach committed.” On the other hand, the Court of Appeals justified the award of compensatory damages by stating that "it is undisputed that petitioner Pryce committed breach of contract in failing to deliver the titles 'to respondents [Spouses] Octobre which necessitated the award of compensatory damages.

In the absence of adequate proof, compensatory damages should not have been awarded. Nonetheless, we find that nominal damages, in lieu of compensatory damages, are proper in this case. Under Article 2221, nominal damages may be awarded in order that the plaintiffs right, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered. xxx xxx. So long as there is a violation of the right of the plaintiff-whether based on law, contract, or other sources of obligations-an award of nominal damages is proper. Proof of bad faith is not required. The BLURB Arbiter and the Court of Appeals appear to have confused nominal damages with compensatory damages, since their justifications more closely fit the former.

It is undisputed that Pryce failed to deliver the titles to the lots subject of the Contract to Sell even as Spouses Octobre had already fully settled the purchase price. Its inability to deliver the titles despite repeated demands undoubtedly constitutes a violation of Spouses Octobre's right under their contract. That Pryce had transferred custody of the titles to China Bank pursuant to a Deed of Assignment is irrelevant, considering that Spouses Octobre were not privy to such agreement.

In fine, contractual breach is sufficient to justify an award for nominal damages but not compensatory damages.

WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 103615 are MODIFIED in that nominal damages in the amount of P30,000.00 are awarded in lieu of compensatory damages.

Tabasondra vs. Spouses Constantino Case Digest

Arsenio Tabasondra, et al. vs. Sps. Conrado Constantino, et al.

G.R. No. 196403. December 7, 2016

Facts

The parties herein were the children of the late Cornelio Tabasondra from two marriages. The respondents Tarcila Tabasondra-Constantino and the late Sebastian Tabasondra were the children of Cornelio by his first wife, Severina; the petitioners, namely: Arsenio Tabasondra, Fernando Tabasondra, Cornelio Tabasondra, Jr., Mirasol Tabasondra-Mariano, Fausta Tabasondra-Tapacio, Myrasol Tabasondra-Romero, Marlene Tabasondra-Maniquil, and Guillermo Tabasondra, were children of Cornelio by his second wife, Sotera.

Valentina, and Valeriana, all surnamed Tabasondra. were siblings. They were also the registered owners of the three (3) parcels of land located at Dalayap, Tarlac City, identified as Lot No. 2536, containing an area of seventy-seven thousand one hundred and forty-seven (77,147) sq. m.; Lot No. 3155, with an area of thirteen thousand six hundred fifty-nine (13,659) sq. m.; and, Lot No. 3159, with an area of nine thousand five hundred forty-six (9,546) sq. m., covered by Transfer Certificate of Title (TCT) No. 106012.

Cornelio died on March 15, 1991, while Valentina and Valeriana both died single on August 19, 1990 and August 4, 1998, respectively. They all died intestate and without partitioning the property covered by TCT No. 106012. Thus, the Plaintiffs-Appellees and the Defendants-Appellants, as descendants of Cornelio, possessed and occupied the property.

On August 22, 2002, the Plaintiffs-Appellees filed the complaint below against the Defendants-Appellant claiming that the parcels of land are owned in common by them and the Defendants-Appellants but the latter does not give them any share in the fruits thereof. Hence, they asked for partition but the Defendants-Appellants refused without valid reasons.

In their Answer, the Defendants-Appellants averred that they do not object to a partition provided that the same should be made only with respect to Cornelio' s share. They contended that they already own the shares of Valentina and Valeriana in the subject land by virtue of the Deed of Absolute Sale that the said sisters executed in their favor on August 18, 1982.

The RTC rendered a judgment in favor of the plaintifft, ordering [the] partition of the three (3) parcels of land covered by TCT No. 16012 among the compulsory and legal heirs of Cornelio, Valentina[,] and Valeriana, all surnamed Tabasondra.

On November 30, 2010, the CA promulgated the decision affirming the RTC with modification in that the partition and the accounting is ordered to be made only with respect to a thirty-three thousand four hundred fifty point sixty-six (33,450.66) sq.m. portion of the property.

Issue

Whether the CA correctly ordered the partition and accounting with respect to only 33,450.66 square meters of the property registered under TCT No. 10612.

Ruling

Yes. There is no question that the total area of the three lots owned in common by Cornelio, Valentina and Valeriana was 100,352 square meters; and that each of the co-owners had the right to one-third of such total area. It was established that Valentina and Valeriana executed the Deed of Absolute Sale, whereby they specifically disposed of their shares in the property registered under TCT No. 10612 in favor of Sebastian Tabasondra and Tarcila Tabasondra.

The Court upheld the right of Valentina and Valeriana to thereby alienate .. their pro indiviso shares to Sebastian and Tarcila even without the knowledge or consent of their co-owner Cornelio because the alienation covered the disposition of only their respective interests in the common property. According to Article 493 of the Civil Code, each co-owner "shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved," but "the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership." Hence, the petitioners as the successors-in-interest of Cornelio could not validly assail the alienation by Valentina and Valeriana of their shares in favor of the respondents.

The SC affirmed the CA's ruling that there is no denying that the RTC erred in granting the complaint and ordering a partition without qualifying that such should not include the shares previously pertaining to Valeria and Valentina. Simply put, since the aggregate area of the subject property is one hundred thousand three hundred fifty-two (100,352) sq.m., it follows that Cornelio, Valentina, and Valeriana each has a share equivalent to thirty-three thousand four hundred fifty point sixty-six (33,450.66) sq. m. portion thereof. Accordingly, when Valentina and Valeriana sold their shares, the Defendants-Appellants became co-owners with Cornelio. Perforce, upon Cornelia's death, the only area that his heirs, that is, the Plaintiffs-Appellees and the Defendants-Appellants, are entitled to and which may be made subject of partition is only a thirty three thousand four hundred fifty point sixty-six (33,450.66) sq.m. portion of the property.

As a result of Valentina and Valeriana's alienation in favor of Sebastian and Tarcila of their pro indiviso shares in the three lots, Sebastian and Tarcila became co-owners of the 100,352-square meter property with Cornelio (later on, with the petitioners who were the successors-in-interest of Cornelio). In effect, Sebastian and Tarcila were co-owners of two-thirds of the property, with each of them having one-third pro indiviso share in the three lots, while the remaining one-third was co-owned by the heirs of Cornelio, namely, Sebastian, Tarcila and the petitioners.

Although the CA correctly identified the co-owners of the three lots, it did not segregate the 100,352-square meter property into determinate portions among the several co-owners.

Accordingly, there is a need to remand the case to the court of origin for the purpose of identifying and segregating, by metes and bounds, the specific portions of the three lots assigned to the co-owners, and to effect the physical partition of the property in the following proportions: Tarcila, one-,, third; the heirs of Sebastian, one-third; and the petitioners (individually), along with Tarcila and the heirs of Sebastian (collectively), one-third. That physical partition was required, but the RTC and the CA uncharacteristically did not require it. Upon remand, therefore, the R TC should comply with the express terms of Section 2, Rule 69 of the Rules of Court.

Should the parties be unable to agree on the partition, the next step for the R TC will be to appoint not more than three competent and disinterested persons as commissioners to make the partition, and to command such commissioners to set off to each party in interest the part and proportion of the property as directed in this decision.

WHEREFORE, the Court AFFIRMS WITH MODIFICATION the decision of the Court of Appeals promulgated on November 30, 2010 in CA-G.R. CV No. 92920 in that the accounting is to be made only with respect to the fruits of the one-third portion of the property still under the co-ownership of all the parties; REMANDS the case to the Regional Trial Court, Branch 64, in Tarlac City for further proceedings in accordance with •this decision, and to determine the technical metes and bounds and description of the proper share of each co-owner of the property covered by Transfer Certificate of Title No. 10612, including the improvements thereon, in accordance with the Civil Code and Rule 69 of the Rules of Court; and ORDERS the petitioners to pay the costs of suit.

Spouse Pontigon vs. Heirs of Meliton Sanchez, et al. Case Digest

Sps. Luisito Pontigon and Leodegaria Sanchez-Pontigon vs. Heirs of Meliton Sanchez, et al.

G.R. No. 221513. December 5, 2016

Facts

Meliton Sanchez Meliton had been the owner of a 24-hectare parcel of land situated in Gutad, Floridablanca, Pampanga. Said property was duly-registered in his name under Original Certificate of Title (OCT) No. 207 issued on October 15, 1938.

On August 11, 1948, Meliton died intestate, leaving the subject property to his surviving heirs, his three children, namely: Apolonio, Flaviana, and Juan, all surnamed Sanchez. Petitioner Leodegaria Sanchez-Pontigon (Leodegaria) is the daughter of Juan and petitioner Luisito Pontigon (Luisi to) is the husband of Leodegaria. The respondents herein, who are all represented by Teresita S. Manalansan (Teresita), are Meliton's grandchildren with Flaviana.

On September 17, 2000, the respondents filed a Complaint for Declaration of Nullity of Title and Real Estate Mortgage with Damages against petitioners, docketed as Civil Case No. G-06-3792 before the Regional Trial Court (RTC), Branch 49 of Guagua, Pampanga.6 Respondents posited that the property in issue had never been partitioned among the heirs of Meliton, but when respondents verified with the Register of Deeds of Pampanga (RD) the status of the parcels of land sometime in August 2000, they discovered that OCT No. 207 was nowhere to be found -what was only with the RD's custody was the owner's copy of OCT No. 207, free of any annotation of cancellation or description of any document that could have justified the transfer of the property covered. Despite this fact, petitioners, even without any document of conveyance, were able to transfer the title of the subject lot to their names, resulting in the issuance of Transfer Certificate of Title (TCT) No. 162403-R on May 21, 1980 covering the same parcel of land. Hence, respondents, argued that the transfer of title to petitioners was fraudulent and invalid, and that petitioners merely held title over the subject property in trust for Meliton's heirs.

In their Answer, petitioners denied the material allegations in the Complaint. They countered that the conveyance in their favor is evidenced by an Extra-judicial Settlement of Estate of Meliton Sanchez and Casimira Baluyut with Absolute Sale (Extrajudicial Settlement) that was prepared and notarized by Atty. Emiliano Malit on November 10, 1979.

Petitioners also raised the defense that twenty (20) years had already passed from the issuance of TCT No. 162403-R on May 21, 1980 before respondents lodged their Complaint. Petitioners would file on October 10, 2002 a motion to dismiss reiterating the defense that respondents' action is already barred by prescription.

Issues:

1. Whether respondents' cause of action is barred by prescription.
2. Whether the CA erred in ruling that TCT No. 162403-R is a nullity because of the irregularities that attended its issuance.

Rulings

Respondents' action is already

barred by prescription

The May 28, 2003 Order of the RTC denying petitioners' motion to dismiss on the ground of prescription cannot be sustained. To recall, the RTC held that as co-owners of the subject property, a trust relation was established between the parties when petitioners fraudulently obtained title over the same. An action anchored on this relation of trust is imprescriptible, or so the RTC ruled.

We find this ruling of the RTC not in accord with law and jurisprudence. Under the Torrens System as enshrined in P.D. No. 1529, the decree of registration and the certificate of title issued become incontrovertible upon the expiration of one ( 1) year from the date of entry of the decree of registration, without prejudice to an action for damages against the applicant or any person responsible for the fraud. However, actions for reconveyance based on implied trusts may be allowed beyond the one-year period.

Thus, an action for reconveyance of a parcel of land based on implied or constructive trust prescribes in ten (10) years, the point of reference being the date of registration of the deed or the date of the issuance of the certificate of title over the property.

By way of additional exception, the Court, in a catena of cases, has permitted the filing of an action for reconveyance despite the lapse of more than ten (10) years from the issuance of title. The common denominator of these cases is that the plaintiffs therein were in actual possession of the disputed land, converting the action from reconveyance of property into one for quieting of title. Imprescriptibility is accorded to cases for quieting of title since the plaintiff has the right to wait until his possession is disturbed or his title is questioned before initiating an action to vindicate his right.

A perusal of respondents' Complaint, though, reveals that the allegations contained therein do not include possession of the contested property as an ultimate fact. As such, the present case could only be one for reconveyance of property, not for quieting of title. Accordingly, respondents should have commenced the action within ten (10) years reckoned from May 21, 1980, the date of issuance of TCT No. 162403-R, instead of on September 17, 2000 or more than twenty (20) years thereafter.

Irregularities in the issuance of TCT

No. 162403-R would not necessarily invali-

date the same

Proceeding now to the issue on whether or not the nullification of TCT No. 162403-R is-warranted, it must be borne in mind that the assailed document of title, as a government issuance, enjoys the presumption of regularity. 68 It was then incumbent upon the respondents to prove, by preponderant evidence, that the issuance of TCT No. 162403-R on May 21, 1980 was attended by fraud as they claim.

Respondents endeavored to overcome the burden of evidence in proving their allegation of fraud by presenting as witness Myrna Guinto, an employee of the RD of Pampanga, who testified that the original copy of OCT No. 207, the parent title of TCT No. 162403-R, is not in their custody as it is missing in their vault, and that the owner's duplicate certificate in its stead does not bear any annotation of cancelation or encumbrance.

We are inclined, however, to give more credence to the explanation given by the Registrar of Deeds, Loma Salangsang-Dee, that the presence of the owner's duplicate certificate in their vault signifies that there was most likely a transaction registered with the office concerning the same. Indeed, there could not be any other plausible reason except that it was as a result of the transaction that owner's duplicate certificate was surrendered to the RD.

Respondents, in the instant case, miserably failed to prove that petitioners were parties to the perceived fraud. Basic are the tenets that he who alleges must prove, and that mere allegation is not evidence and is not equivalent to proof. Here, the allegations relating to petitioners' participation to the fraud were nothing more than general averments that were never fleshed out to more specific fraudulent acts, let alone substantiated by the evidence on record.

Succinctly, we conclude from the foregoing disquisitions that: respondents' action has already prescribed and absent proof of complicity in the alleged fraud that attended the issuance of TCT No. 162403-R, petitioners' rights under the said document of title cannot be impaired.

WHEREFORE, premises considered, the instant petition is hereby GRANTED. The Entry of Judgment September 14, 2015 in CA-G.R. CV No. 100188 is hereby LIFTED. The March 26, 2015 Decision and September 14, 2015 Resolution of the Court of Appeals in CA-G.R. CV No. 100188, as well as the Decision dated June 28, 2012 and the Order dated December 14, 2012 in Civil Case No. G-06-3792 before the Regional Trial Court, Branch 49 of Guagua, Pampanga, are hereby REVERSED and SET ASIDE. Let a new judgment be issued:

1. Upholding the validity of Transfer Certificate of Title No. 162403-R registered in the name of petitioners Luisito and Leodegaria Pontigon; and
2. Dismissing the Complaint for Declaration of Nullity of Title and Real Estate Mortgage for lack of merit.

Philippine Stock Exchange, Inc. vs. Litonjua & Litonjua, Jr. Case Digest

Philippine Stock Exchange, Inc. vs. Antonio K. Litonjua and Aurelio K. Litonjua, Jr.

G.R. No. 204014. December 5, 2016

Facts

On 20 April 1999, the Litonjua Group wrote a letter-agreement to Trendline Securities, Inc. (Trendline) through its President Priscilla D. Zapanta (Zapanta), confirming a previous agreement for the acquisition of the 85% majority equity of Trendline's membership seat in PSE. In a letter-confirmation dated 21 April 1999, the Litonjua Group undertook to pay the amount of Pl8,547,643.81 directly to PSE within three working days upon confirmation that it will be for the full settlement of all claims and outstanding obligations including interest of Trendline to lift its membership suspension and the resumption to normal trading operation. Further in the letter, Trendline was obligated to secure the approval and written confirmation of PSE for a new corporation to be incorporated that will own a seat.

On 29 April 1999, the PSE, through Atty. Ruben L. Almadro (Atty. Almadro), Vice-President for Compliance and Surveillance Department, sent a letter to Trendline advising the latter that PSE has resolved to accept the amount of Pl9,000,000.00 as full and final settlement of its outstanding obligation. In compliance, the Litonjua Group in a letter dated 12 May 1999, delivered to PSE through Atty. Almadro three check payments, all dated 13 May 1999 and payable to PSE, totaling to an amount of Pl9,000,000.00.

Despite several exchange of letters of conformity and delivery of checks representing payment of full settlement of Trendline's obligations, PSE failed to lift the suspension imposed on Trendline's seat. On 30 July 2006, the Litonjua Group, through a letter, requested PSE to reimburse the P19,000,000.00 it had paid with interest, upon knowledge that the specific performance by PSE of transferring the membership seat under the agreement will no longer be possible. PSE, however, refused to refund the claimed amount as without any legal basis. As a result, the Litonjua Group on 10 October 2006 filed a Complaint for Collection of Sum of Money with Damages against PSE before the RTC of Pasig City.

Declining reimbursement, PSE in its Answer Ad Cautelam raised primarily that it received the amount not from the Litonjua Group but from Trendline as a settlement of its obligation. It insisted that the cause of action of the Litonjua Group is against Trendline and not the exchange, the latter being a non-party to the letter agreement.

After conclusion of trial, the trial court rendered a decision granting that the Litonjua Group is entitled to claim a refund from PSE based on the principle of solutio indebiti as defined in Article No. 2154 of the New Civil Code.

On 23 May 2012, the CA affirmed, in the result, the challenged decision of the trial court. The appellate court principally relied on the principle of constructive trust instead of solutio indebiti as an appropriate remedy against the unjust enrichment of PSE.

Before this Court, PSE posits the following issues: ( 1) The contemporaneous and subsequent acts of the PSE are not tantamount to rendering the PSE a party to the letter-agreement; (2) the case of Smith, Bell and Co. is not applicable to the present case; (3) the provision of Article 1236 should not be read together with Article 1293; (4) Trendline should be considered as an indispensable party; (5) PSE was not unjustly enriched by its receipt of the amount of P19,000,000.00; (6) no constructive trust exists between the PSE and the Litonjua Group; and finally (7) the Litonjua Group is not entitled to exemplary damages.

Issues:

1. Whether PSE is considered a party to the letter-agreement.
2. Whether PSE is liable to return the payment received.
3. Whether the PSE is liable to pay exemplary damages.

Rulings:

1. No. PSE asserts that it is not a party in the letter-agreement due to the absence of any board resolution authorizing the corporation to be bound by the terms of the contract between Trendline and the Litonjua Group. In essence, it avers that no consent was given to be bound by the terms of the letter-agreement. We agree.

According to Article 1305 of the Civil Code, "a contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or render some service." For a contract to be binding: there must be consent of the contracting parties; the subject matter of the contract must be certain; and the cause of the obligation must be established. Admittedly in this case, no board resolution was issued to authorize PSE to become a party to the letter-agreement. From the foregoing, PSE is not considered as a party to the letter-agreement.

2. Yes. This is pursuant to the principles of unjust enrichment and estoppel; it is only but rightful to return the money received since PSE has no intention from the beginning to be a party to the agreement. There is unjust enrichment when a person unjustly retains a benefit to the loss of another, or when a person retains money or property of another against the fundamental principles of justice, equity and good conscience. The principle of unjust enrichment requires two conditions: ( 1) that a person is benefited without a valid basis or justification, and (2) that such benefit is derived at the expense of another. The main objective of the principle against unjust enrichment is to prevent one from enriching himself at the expense of another without just cause or consideration. Applying law and jurisprudence, the principle of unjust enrichment requires PSE to return the money it had received at the expense of the Litonjua Group since it benefited from the use of it without any valid justification.

3. Yes. In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they should be adjudicated. While the amount of the exemplary damages need not be proven, the plaintiff must show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded.

PSE, despite demands by the Litonjua Group, continuously refused to return the money received despite the fact that it received it without any legal right to do so. This conduct, as found by the trial court, falls within the purview of wanton, oppressive and malevolent in nature. Thus, absent any other compelling reason to overturn the findings, we uphold the award of exemplary damages.

WHEREFORE, the petition is DENIED. Accordingly, the Decision and Resolution of the Court of Appeals dated 23 May 2012 and 1 7 October 2012 respectively, upholding the 22 February 2010 Decision of the Regional Trial Court of Pasig City are hereby AFFIRMED WITH MODIFICATION. Philippine Stock Exchange is hereby ordered to pay the Litonjua Group the following amounts: 1. as to the imposition of legal interest to be imposed to the P19,000,000.00 from 12% to 6% per annum reckoned from the date of demand on 30 July 2006; 2. Exemplary damages in the amount of Pl,000,000.00; 3. Attorney's fees in the amount of Pl00,000.00; and 4. Cost of suit.

Ayson vs. Fil-Estate Properties, Inc., et al. Case Digest

Rosalie Sy Ayson vs. Fil-Estate Properties, Inc., et al.

G.R. No. 223254/G.R. No. 223269. December 1, 2016

Facts:

This case arose from a Complaint for recovery of possession and damages filed by Ayson against Fil-Estate and Fairways before the RTC, alleging that she is the registered owner of a 1,000-square meter parcel of land, more or less, located in Yapak, Malay, Aklan, i.e., the northwestern area of Boracay Island, denominated as Lot No. 14-S and covered by Transfer Certificate of Title (TCT) No. T-24562 (subject land). Sometime in June 1997, she discovered that Fil-Estate and Fairways illegally entered into the subject land and included it in the construction of its golf course without her prior consent and authorization. Despite receipt of a Notice to Cease and Desist from Ayson, Fil-Estate and Fairways continued their encroachment and development of the subject land making it now a part of the entire golf course. Thus, she was constrained to file the instant complaint.

Fil-Estate and Fairways maintain that the subject land was formerly owned by one Divina Marte Villanueva (Villanueva), with whom they entered into a Joint Venture Agreement (JVA) for the development of the Fairways and Bluewater Resort Golf and Country Club. Fil-Estate and Fairways explained that prior to the JV A, Villanueva sold portions of her property to various buyers, including Ayson, with the caveat that such portions may be used in a development project. In this light, Villanueva allegedly convinced her buyers to agree to a land swap should such development push through. When the project commenced, the other buyers readily agreed to said land swaps. Unfortunately, talks with Ayson stalled, prompting Fil-Estate and Fairways to "exclude" development work on the subject land. Nevertheless, Fil-Estate and Fairways commenced construction on the subject land, allegedly relying in good faith upon Villanueva's assurance that her other former buyers, e.g., Ayson, would eventually agree with the land swap agreements. According to Fil-Estate and Fairways, Ayson only signified her objection to the inclusion of the subject land in the development project when construction was almost finished.

RTC Ruling:

The RTC ruled in Ayson's favor and, accordingly, ordered Fil-Estate and Fairways to pay her the following amounts:

(a) US$100,000.00 or its Philippine Peso equivalent, representing the value of the subject land, plus P50,000.00 monthly rentals for the use and occupancy of said land starting December 1997 until the aforesaid value has been fully paid;

(b) P900,000.00 as actual damages;

(c)Pl,000,000.00 as moral damages;

(d) Pl,000,000.00 as exemplary damages;
(e) P300,000.00 as attorney's fees and other litigation expenses; and
(f) the costs of suit.

The RTC found that contrary to Fil-Estate and Fairways' assertions, Ayson never agreed to any future land swapping arrangement with Villanueva, considering that Ayson already paid Villanueva the amount of US$20,000.00 representing the purchase price of the subject land way back April 1994 (albeit the Deed of Sale14 was only executed on April 15, 1996), while the construction of the golf course was only conceptualized sometime in early 1995. As such, it was error for Fil-Estate and Fairways to merely rely on Villanueva's assurance that she will be able to convince her buyers to enter into a land swapping arrangement, especially considering that the title to the same was already in Ayson's name.

Fil-Estate and Fairways moved for reconsideration, which was, however, denied in an Order 17 dated February 6, 2009. Aggrieved, they appealed 18 to the CA.

The CA Ruling:

The CA affirmed the RTC ruling with modification reducing the award of damages as follows: (a) US$40,000.00 or its Philippine Peso equivalent, representing the value of the subject land, plus Pl,000.00 monthly rentals for the use and occupancy of said land starting December 1997 until the aforesaid value has been fully paid; ( b) P52,666.00 plus US$4,316.06 or its Philippine Peso equivalent as actual damages; (c) PS00,000.00 as moral damages; (d) P300,000.00 as exemplary damages; and (e) P200,000.00 as attorney's fees and other litigation expenses.

The CA held that despite recognizing Ayson as the registered owner of the subject land, Fil-Estate and Fairways still entered into the same and included it in its golf course development project without the former's prior knowledge and consent. In this regard, it held that Fil-Estate and Fairways should not have relied on Villanueva's assurances that she would secure Ayson's acquiescence to a land swap arrangement, but instead, exercised due diligence and prudence in taking steps to ensure that Ayson indeed agreed to the inclusion of her property in the golf course development project. Further, the CA agreed with the RTC that the subject land should no longer be returned to Ayson, and that Fil-Estate and Fairways should pay her its value instead.

Dissatisfied, both parties separately moved for reconsideration 22 assailing the valuation of the subject land as well as the other monetary awards.

Issues: Whether the awards of moral damages, exemplary damages, and attorney's fees in Ayson's favor and the corresponding amounts thereof, as well as the correctness of the valuation of the subject land at US$40,000.00 and the monthly rental therefor proper.

The Court's Ruling:

I.

To recapitulate, both the RTC and the CA found that Ayson is the undisputed owner of the subject land, as evidenced by TCT No. T-24562. Despite such knowledge, Fil-Estate and Fairways nevertheless chose to rely on Villanueva's empty assurances that she will be able to convince Ayson to agree on a land swap arrangement; and thereafter, proceeded to enter the subject land and introduce improvements thereon. The courts a quo further found that since such acts were without Ayson's knowledge and consent, she, thus: (a) suffered sleepless nights and mental anguish knowing that the property she and her husband had invested for their future retirement had been utilized by Fil-Estate and Fairways for their own sake; and (b) had to seek legal remedies to vindicate her rights. Thus, both lower courts concluded that Fil-Estate and Fairways' acts were done in bad faith and resulted in injury to Ayson; hence, they are liable for, inter alia, moral damages, exemplary damages, and attorney's fees.

Relatedly, the CA correctly reduced the awards for moral damages, exemplary damages, and attorney's fees to P500,000.00, P300,000.00, and P200,000.00, respectively, in light of the evidence adduced as well as the prevailing circumstances of the instant case. It must be stressed that "[ m ]oral damages are not meant to be punitive but are designed to compensate and alleviate the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar harm unjustly caused to a person." Similarly, exemplary damages are imposed "by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages" and are awarded "only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or malevolent manner." Lastly, attorney's fees should be reasonable in all cases where an award thereof is warranted under the circumstances.

In addition, a legal interest at the rate of six percent ( 6%) per annum should be imposed on all monetary awards to Ayson from the time of the finality of this Decision until fully paid.

II.

The Decision dated March 1, 2013 and the Resolution dated February 22, 2016 of the Court of Appeals in CA-G.R. CV. No. 03010 are hereby AFFIRMED with MODIFICATION as follows:

(a) petitioners Fil-Estate Properties, Inc. and Fairways & Bluewater Resort & Country Club, Inc. are ORDERED to jointly and solidarily pay Rosalie Sy Ayson the amounts of P52,666.00 and US$4,316.06 or its Philippine Peso equivalent as actual damages, P500,000.00 as moral damages, P300,000.00 as exemplary damages, and P200,000.00 as attorney's fees and litigation expenses, with legal interest at the rate of six percent ( 6%) per annum on all amounts due from finality of judgment until fully paid;

( b) the issue of the proper valuation of Lot No. 14-S covered by Transfer Certificate of Title No. T-24562 is REMANDED to the Regional Trial Court of Kalibo, Aklan, Branch 9 to determine its current market value, reasonable monthly rental, and the applicable interest rate thereon to be paid by Fil-Estate Properties, Inc. and Fairways & Bluewater Resort & Country Club, Inc.; and

( c) upon full payment of the ascertained current market value, monthly rental, and interests, Rosalie Sy Ayson shall execute the necessary documents to effectuate the transfer of Lot No. 14-S covered by Transfer Certificate of Title No. T-24562 to Fil-Estate Properties, Inc. and Fairways & Bluewater Resort & Country Club, Inc.