Tag: Breach of Contract

Subdivision Developers’ Unmet Promises: Buyers’ Rights to Suspend Payments

This case affirms the right of subdivision lot buyers to suspend amortization payments when developers fail to fulfill their contractual obligations to complete promised amenities. The Supreme Court emphasizes that developers cannot unilaterally avoid their commitments due to economic factors or the absence of residents. This decision underscores the importance of developers fulfilling their promises to homebuyers and provides a clear legal basis for buyers to protect their rights when developers fall short.

Broken Promises and Unbuilt Dreams: Can Subdivision Buyers Suspend Payments?

In Tagaytay Realty Co., Inc. vs. Arturo G. Gacutan, the Supreme Court addressed the critical issue of developers failing to deliver on their promises to construct amenities in subdivisions. This case arose from a contract to sell a residential lot in Foggy Heights Subdivision, where Tagaytay Realty Co., Inc. (the developer) expressly undertook to complete roads, water and electrical systems, and recreational facilities within two years from July 15, 1976. The undertaking specified that failure to complete the development would allow the buyer, Arturo G. Gacutan, to suspend payments without incurring penalties.

Gacutan suspended his amortization payments in 1979, citing the lack of completed amenities. Despite repeated requests for updates, the developer did not respond and later demanded full payment with interest and penalties. This led Gacutan to file a suit for specific performance, seeking to pay the balance without interest and penalties, and to receive the property title. The developer argued that unforeseen economic factors justified their non-performance, invoking Article 1267 of the Civil Code, which addresses situations where fulfilling contractual obligations becomes excessively difficult. However, the Housing and Land Use Regulatory Board (HLURB), the Office of the President (OP), and ultimately the Court of Appeals (CA) ruled in favor of Gacutan, prompting the developer to appeal to the Supreme Court.

The Supreme Court upheld the lower courts’ decisions, emphasizing the developer’s statutory and contractual obligations. The Court referred to Section 20 of Presidential Decree No. 957, which mandates developers to complete subdivision projects, including amenities, within one year of license issuance. The court pointed out that Tagaytay Realty Co., Inc. did not comply with this legal obligation, instead opting to suspend construction unilaterally to avoid maintenance expenses. This decision was not driven by insurmountable difficulties but by a desire to save costs, ultimately disadvantaging lot buyers like Gacutan.

The Court rejected the developer’s reliance on Article 1267 of the Civil Code, noting that the conditions for its application were not met. Article 1267 states that:

When the service has become so difficult as to be manifestly beyond the contemplation of the parties, the obligor may also be released therefrom, in whole or in part.

For Article 1267 to apply, the event or change in circumstances must be unforeseeable, make performance extremely difficult (but not impossible), be due to no fault of the parties, and involve a future prestation. The Court found that the developer’s difficulties were not unforeseeable and that the unilateral suspension of construction preceded the economic downturn of 1983. The Court underscored that mere inconvenience or increased expenses do not justify relief from contractual obligations.

The Court also addressed the issue of interest and penalties on the unpaid balance. While Gacutan was deemed liable for the stipulated annual interest of 12%, he was not required to pay the penalty. The contract to sell stipulated a 12% annual interest on outstanding balances. The court held that the annual interest, designed to compensate the developer for waiting to receive the total principal amount over the installment period, was valid and enforceable. This interest is part of the agreed-upon financial structure of the installment plan.

However, the 1% monthly penalty for late payments was waived because the developer’s failure to complete the subdivision development by July 15, 1978, justified the suspension of amortization payments. This waiver was further supported by the developer’s lack of objection to the suspension of payments. As such, the court distinguished between the amortization interest, which was deemed a valid component of the installment agreement, and the penalty, which was unenforceable due to the developer’s non-compliance with their contractual obligations.

The court cited Relucio v. Brillante-Garfin to illustrate the economic rationale behind installment pricing:

Vendor and vendee are legally free to stipulate for the payment of either the cash price of a subdivision lot or its installment price. Should the vendee opt to purchase a subdivision lot via the installment payment system, he is in effect paying interest on the cash price, whether the fact and rate of such interest payment is disclosed in the contract or not. The contract for the purchase and sale of a piece of land on the installment payment system in the case at bar is not only quite lawful; it also reflects a very wide spread usage or custom in our present day commercial life.

In summary, the Court affirmed that while the buyer had the right to suspend payments due to the developer’s failure to provide the promised amenities, the buyer was still obligated to pay the annual interest stipulated in the contract. This interest was deemed part of the inherent cost of purchasing the property on an installment basis and was distinct from penalties, which were waived due to the developer’s breach of contract. This ruling ensures that buyers’ rights are protected when developers fail to fulfill their obligations, while also recognizing the validity of agreed-upon financial terms within the contract.

Finally, the Court dismissed the argument of laches, which asserts that a party has unreasonably delayed asserting a right. The Court observed that Gacutan had made consistent written demands upon the developer, demonstrating that he had not abandoned his claim. His actions negated any implication of bad faith or lack of diligence, confirming his continuous assertion of his rights under the contract.

The Supreme Court’s decision underscores the importance of developers fulfilling their contractual promises to homebuyers. It provides a clear legal basis for buyers to withhold payments when developers fail to deliver promised amenities, ensuring that developers are held accountable for their obligations. This ruling serves as a reminder of the binding nature of contracts and the need for both parties to act in good faith.

FAQs

What was the key issue in this case?	The key issue was whether a subdivision lot buyer could suspend amortization payments due to the developer’s failure to complete promised amenities. The court examined the developer’s obligations and the buyer’s rights in such a scenario.
What did the developer promise in the contract?	The developer, Tagaytay Realty Co., Inc., promised to complete the development of roads, curbs, gutters, drainage, water and electrical systems, as well as amenities like a swimming pool, pelota court, and clubhouse within two years from July 15, 1976.
Why did the buyer suspend his payments?	The buyer, Arturo G. Gacutan, suspended his payments because the developer failed to construct the promised amenities within the agreed-upon timeframe. He cited the developer’s non-compliance with the contractual undertaking as the reason for withholding payments.
What was the developer’s defense?	The developer argued that unforeseen economic factors, such as the depreciation of the Philippine Peso and increased construction costs, made it excessively difficult to fulfill their obligations. They invoked Article 1267 of the Civil Code as justification for non-performance.
How did the Supreme Court rule on the developer’s defense?	The Supreme Court rejected the developer’s defense, stating that the conditions for applying Article 1267 of the Civil Code were not met. The court emphasized that the developer’s difficulties were not unforeseeable and that their decision to suspend construction was primarily driven by cost-saving measures.
Was the buyer required to pay interest on the unpaid balance?	Yes, the buyer was required to pay the stipulated annual interest of 12% on the unpaid balance. The court considered this interest a valid component of the installment agreement, compensating the developer for the deferred payment of the principal amount.
Was the buyer required to pay penalties?	No, the buyer was not required to pay penalties. The court found that the developer’s failure to complete the subdivision development justified the suspension of amortization payments, leading to a waiver of the penalty charges.
What is laches, and did it apply in this case?	Laches is the failure or neglect to assert a right within a reasonable time, warranting a presumption that the party has abandoned or declined to assert it. The court ruled that laches did not apply because the buyer had made consistent written demands upon the developer, demonstrating that he had not abandoned his claim.

This case highlights the legal responsibilities of subdivision developers and the rights of buyers when those responsibilities are not met. By affirming the buyer’s right to suspend payments while still requiring the payment of interest, the Supreme Court balanced the interests of both parties, reinforcing the importance of contractual compliance and good faith in real estate transactions.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Tagaytay Realty Co., Inc. vs. Arturo G. Gacutan, G.R. No. 160033, July 01, 2015

July 1, 2015

Breach of Contract: Unilateral Termination and the Importance of Contractual Compliance

In Angel V. Talampas, Jr. v. Moldex Realty, Inc., the Supreme Court ruled that Moldex Realty, Inc. breached its contract with Angel V. Talampas, Jr. Construction by unilaterally terminating their agreement without a valid contractual basis. This decision underscores the principle that contracts have the force of law between parties and must be complied with in good faith, emphasizing the importance of adhering to the stipulated conditions for termination and the consequences of failing to do so.

When Business Decisions Clash with Contractual Obligations: Who Bears the Cost of a Project Redesign?

Angel V. Talampas, Jr. (AVTJ Construction), owned by the petitioner, entered into a contract with Moldex Realty, Inc. (respondent) to develop a residential subdivision known as Metrogate Silang Estates. AVTJ Construction was responsible for roadworks, earthworks, and site grading for a contract price of P10,500,000.00. The project commenced on January 14, 1993, with an expected completion within 300 calendar days. However, on May 14, 1993, the project manager requested a suspension due to changes in the subdivision plan, leading to a three-week standstill. Subsequently, Moldex Realty decided to terminate the contract, citing a “business decision” as the reason.

This termination led AVTJ Construction to demand payment for equipment rentals incurred during the suspension and compensation for lost opportunity due to the contract’s premature end. When Moldex Realty refused, AVTJ Construction filed a complaint for breach of contract and damages. The core of the dispute revolved around whether Moldex Realty had the right to unilaterally terminate the contract based on a “business decision” and whether AVTJ Construction was entitled to damages for the termination.

The Regional Trial Court (RTC) initially ruled in favor of AVTJ Construction, finding Moldex Realty liable for breach of contract and fraud for failing to disclose the lack of a conversion clearance certificate from the Department of Agrarian Reform (DAR). The RTC awarded damages including unpaid equipment rentals, unrealized profits, and moral and exemplary damages. However, the Court of Appeals (CA) reversed the RTC’s decision, dismissing the complaint for lack of cause of action, stating that AVTJ Construction had agreed to the termination. The CA also dismissed the fraud allegation, arguing that the lack of conversion clearance did not in itself amount to fraud.

The Supreme Court (SC) addressed the issues of unilateral contract termination and entitlement to damages. The Court emphasized that contracts have the force of law between the parties and must be complied with in good faith. Article 1159 of the Civil Code states this principle clearly, solidifying the binding nature of agreements.

In analyzing the termination clause, the SC referred to paragraph 8 of the contract, which outlined specific conditions under which the owner (Moldex Realty) could terminate the agreement. Paragraph 8.1 explicitly states the scenarios that constitute default by the contractor, justifying termination. These scenarios included bankruptcy, non-compliance with plans, or failure to provide qualified personnel or materials. Moldex Realty’s termination due to a redesign of the subdivision plan did not fall under these stipulated conditions, rendering the termination a breach of contract.

The Court highlighted that AVTJ Construction was ready and willing to fulfill its obligations, as evidenced by a letter dated June 1, 1993. This letter sought confirmation on the project’s status, indicating the contractor’s commitment to continuing the work. The SC found that the termination violated the agreement because the reason cited was not a stipulated cause for unilateral termination.

Furthermore, the Supreme Court scrutinized the allegation of mutual termination. Moldex Realty argued that a meeting on May 21, 1993, resulted in an agreement between the parties to terminate the contract. However, the Court found this claim unsupported by sufficient evidence. The lack of documentation, such as meeting minutes, raised doubts about the alleged agreement. Even if such a meeting occurred, the subsequent actions and communications of AVTJ Construction did not demonstrate consent to the termination.

The Supreme Court also addressed the argument that AVTJ Construction ratified the termination by accepting payments. The Court emphasized that consent requires a meeting of the minds, with an absolute acceptance of the offer. In this case, AVTJ Construction’s acceptance of payments was not absolute, as they continued to demand additional compensation for equipment rentals and lost opportunities. This constituted a qualified acceptance, or a counter-offer, which Moldex Realty did not accept.

Article 1319 of the Civil Code states: “Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract.”

Based on the breach of contract, the SC addressed the issue of damages. The Court awarded AVTJ Construction P1,485,000.00 for equipment rentals incurred during the suspension of construction works. The Court reasoned that the suspension order came from Moldex Realty, and the equipment remained idle on-site under the premise of a temporary suspension. The SC also awarded P1,723,125.01 as compensation for lost opportunity. This compensation was calculated by subtracting payments already made from the total contract price and then applying a 20% rate, deemed reasonable given the circumstances and the time elapsed before the contract’s termination.

Regarding the allegations of fraud and bad faith, the Supreme Court took a different stance. AVTJ Construction claimed that Moldex Realty deliberately failed to disclose the project’s lack of a conversion clearance from the DAR. However, the Court found no evidence that Moldex Realty had a legal or contractual obligation to disclose this information. Article 1339 of the Civil Code clarifies that fraud requires a duty to disclose facts. Since no such duty existed, the Court did not find Moldex Realty guilty of fraud. Consequently, the Court denied the awards for moral and exemplary damages, as well as attorney’s fees, as these require a showing of bad faith or fraud.

Article 1339 of the Civil Code states that “failure to disclose facts, when there is a duty to reveal them, as when the parties are bound by confidential relations, constitutes fraud.”

The Supreme Court’s decision in this case highlights the critical importance of adhering to contractual stipulations, especially regarding termination clauses. It underscores that a party cannot unilaterally terminate a contract without a valid contractual basis. The ruling also illustrates the requirements for proving mutual consent and ratification, emphasizing the need for absolute acceptance of contract modifications. Furthermore, the case clarifies the elements of fraud in contractual settings, requiring a duty to disclose information. The Court also provides valuable insights into the calculation of damages for breach of contract, including compensation for lost opportunities.

FAQs

What was the key issue in this case?	The key issue was whether Moldex Realty breached its contract with Angel V. Talampas, Jr. Construction by unilaterally terminating the agreement without a valid contractual basis and whether AVTJ Construction was entitled to damages.
Why did Moldex Realty terminate the contract?	Moldex Realty terminated the contract due to a “business decision” related to the redesign of the Metrogate Silang Estates subdivision plan.
Did the Supreme Court find the termination valid?	No, the Supreme Court found the termination invalid because it was not based on any of the stipulated grounds for unilateral termination outlined in the contract.
What damages were awarded to AVTJ Construction?	The Supreme Court awarded AVTJ Construction P1,485,000.00 for equipment rentals incurred during the suspension of construction works and P1,723,125.01 as compensation for lost opportunity.
Did the Court find Moldex Realty guilty of fraud?	No, the Court did not find Moldex Realty guilty of fraud because there was no legal or contractual obligation to disclose the lack of a conversion clearance from the DAR.
What is required for a valid contract termination?	A valid contract termination requires adherence to the stipulated conditions outlined in the contract, especially regarding termination clauses.
What constitutes consent to contract termination?	Consent to contract termination requires a meeting of the minds, with an absolute acceptance of the offer to terminate, without any qualified acceptance or counter-offer.
What is the significance of Article 1159 of the Civil Code?	Article 1159 of the Civil Code states that contracts have the force of law between the parties and must be complied with in good faith.
What is the importance of a conversion clearance in this case?	The conversion clearance was a point of contention, but the court ruled that Moldex Realty was not obligated to disclose that information to AVTJ.

The Supreme Court’s decision in Angel V. Talampas, Jr. v. Moldex Realty, Inc. reinforces the sanctity of contracts and the need for parties to adhere strictly to their terms. This case serves as a reminder of the potential financial consequences of unilaterally terminating agreements without a legitimate contractual basis, emphasizing the importance of carefully reviewing and understanding the conditions outlined in contracts before entering into them.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: ANGEL V. TALAMPAS, JR. VS. MOLDEX REALTY, INC., G.R. No. 170134, June 17, 2015

June 17, 2015

Res Judicata: Preventing Repeated Lawsuits Over the Same Breach of Contract

The Supreme Court held that a party cannot file multiple lawsuits based on the same breach of contract. This decision reinforces the principle of res judicata, which prevents the splitting of a single cause of action into multiple suits. It ensures that all claims arising from a single breach must be brought in one action, promoting judicial efficiency and protecting defendants from harassment. This ruling clarifies that a ‘non-waiver clause’ in a compromise agreement cannot override the public policy against the multiplicity of suits.

Riviera’s Royalty Rift: Can a Second Lawsuit Revive a Settled Dispute?

Riviera Golf Club, Inc. (Riviera Golf) and CCA Holdings, B.V. (CCA Holdings) entered into a Management Agreement and a Royalty Agreement. Riviera Golf later terminated these agreements, leading to a dispute over unpaid fees and damages. CCA Holdings initially filed a complaint for unpaid fees, which was resolved through a compromise agreement. Subsequently, CCA Holdings filed a second complaint seeking damages for the premature termination of the agreements, claiming lost profits for the unexpired term. This second complaint raised the question of whether res judicata barred the subsequent action. Riviera Golf argued that the second complaint was based on the same cause of action as the first, violating the rule against splitting a single cause of action.

The core legal question was whether the second complaint was indeed barred by res judicata, considering the previous settlement and a ‘non-waiver clause’ in their compromise agreement. To delve into this, the principle of res judicata, meaning “a matter adjudged,” is crucial. It dictates that a final judgment on the merits by a court of competent jurisdiction is conclusive as to the rights of the parties and their privies in all subsequent suits. The Rules of Court, specifically Rule 39, Section 47(b) and (c), embodies this principle.

SEC. 47. Effect of judgments or final orders. — The effect of a judgment or final order rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows:

(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity; and,

(c) In any other litigation between the same parties or their successors in interest, that only is deemed to have been adjudged in a former judgment or final order which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto.

The Supreme Court emphasized that res judicata requires several elements to be met: a final judgment, a court with jurisdiction, a judgment on the merits, and identity of parties, subject matter, and causes of action between the first and second lawsuits. In this case, the first three elements were not in dispute. The Court focused on the fourth element, particularly the identity of subject matter and causes of action.

The Court scrutinized the allegations in both complaints and determined that they indeed involved the same parties and subject matter. While the first case sought unpaid fees and the second claimed damages for premature termination, both stemmed from the same Management and Royalty Agreements. This meant that they shared a common root, satisfying the requirement of identical subject matter.

Furthermore, the Supreme Court found an identity of causes of action. A single cause of action, the Court explained, cannot be divided into multiple suits. Section 4, Rule 2 of the Rules of Court, prohibits the splitting of a single cause of action, stating that if two or more suits are instituted on the basis of the same cause of action, the filing of one or a judgment upon the merits in any one is a ground for dismissal of the others.

Section 4. Splitting a single cause of action; effect of. – If two or more suits are instituted on the basis of the same cause of action, the filing of one or a judgment upon the merits in any one is available as a ground for the dismissal of the others.

The Court highlighted that both complaints arose from the same wrongful act—violations of the Management and Royalty Agreements. Though the reliefs sought differed, the underlying cause remained the same: Riviera Golf’s breach of contract. This conclusion was further supported by the fact that the same evidence was used to support both complaints, including the Management Agreement, Royalty Agreement, and communications regarding the termination.

The ‘same evidence test’ is critical in determining the presence of identity of cause of action. The Court referenced Esperas v. The Court of Appeals, stating that the ultimate test is whether the same evidence would support the cause of action in both cases. In this instance, the documentary evidence presented in both actions aimed at establishing the breach of the Management and Royalty Agreements. This alignment further solidified the Court’s determination of identical causes of action.

The Court emphasized that when the first complaint was filed, the breach of the agreements was already complete and total. Both the non-payment of fees and the premature termination had occurred before the initial lawsuit. Therefore, CCA Holdings should have included all claims arising from the breach in the first complaint. Allowing a second, separate claim would constitute a prohibited splitting of a single cause of action.

Addressing the ‘non-waiver clause’ in the compromise agreement, the Court declared it null and void. While compromise agreements are generally binding, they must not contravene the law or public policy. The clause in question allowed the filing of complaints based on the same cause of action, thus permitting the splitting of causes of action and undermining res judicata. The Court emphasized that the principle of res judicata is rooted in public policy against the multiplicity of suits.

Public policy is firmly set against unnecessary multiplicity of suits; the rule of res judicata, like that against splitting causes of action, are all applications of the same policy, that matters once settled by a Court’s final judgment should not thereafter be invoked against. Relitigation of issues already settled merely burdens the Courts and the taxpayers, creates uneasiness and confusion, and wastes valuable time and energy that could be devoted to worthier cases. As the Roman maxim goes, Non bis in idem.

The Court concluded that upholding the ‘non-waiver clause’ would legitimize the splitting of causes of action and negate the prohibition against res judicata, which is contrary to public policy. Therefore, the Court invalidated the clause, reinforcing the importance of adhering to established legal principles.

FAQs

What is res judicata?	Res judicata is a legal principle that prevents the same parties from relitigating issues that have already been decided by a court. It aims to avoid multiple lawsuits based on the same cause of action.
What is splitting a cause of action?	Splitting a cause of action refers to filing multiple lawsuits based on the same set of facts and legal claims. This practice is prohibited to ensure judicial efficiency and prevent harassment of defendants.
What was the key issue in this case?	The key issue was whether the second complaint filed by CCA Holdings was barred by res judicata, considering the prior settlement and the ‘non-waiver clause’. The Court had to determine if there was an identity of causes of action between the two suits.
What is the ‘same evidence’ test?	The ‘same evidence’ test determines if there is an identity of causes of action. If the same evidence supports both the present and former causes of action, then an identity of causes of action likely exists.
Why did the Court invalidate the ‘non-waiver clause’?	The Court invalidated the ‘non-waiver clause’ because it allowed the splitting of causes of action, which is contrary to public policy and the principle of res judicata. Such clauses cannot override established legal principles designed to prevent the multiplicity of suits.
What are the elements of res judicata?	The elements of res judicata are: (1) a final judgment, (2) a court with jurisdiction, (3) a judgment on the merits, and (4) identity of parties, subject matter, and causes of action between the first and second lawsuits. All these elements must be present for res judicata to apply.
What was the basis for CCA Holdings’s complaints?	Both complaints filed by CCA Holdings were based on the Management and Royalty Agreements. The first sought unpaid fees, while the second sought damages for premature termination.
What is the public policy behind res judicata?	The public policy behind res judicata is to prevent the multiplicity of suits. It aims to ensure that matters once settled by a court’s final judgment should not be relitigated.

In conclusion, this case underscores the importance of bringing all related claims in a single lawsuit and adhering to the principle of res judicata. It clarifies that contractual clauses cannot override established public policy aimed at preventing the multiplicity of suits. This ruling serves as a reminder that all damages stemming from a single breach of contract should be claimed in one action to avoid being barred by res judicata.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Riviera Golf Club, Inc. vs. CCA Holdings, B.V., G.R. No. 173783, June 17, 2015

June 17, 2015

Breach of Seafarer Employment Contracts: Management Prerogative vs. Contractual Obligations

The Supreme Court held that a shipping company breached its contract with a seafarer when it failed to deploy him due to the foreign principal’s decision to promote another candidate. This ruling underscores that management prerogatives have limits and cannot override existing contractual obligations, especially when doing so violates the rights of employees under valid agreements. The case clarifies the balance between an employer’s right to manage its operations and its duty to honor employment contracts, ensuring that seafarers are protected from arbitrary decisions that deprive them of their livelihoods.

Sailing Away from a Promise: Can Management Override a Seafarer’s Contract?

This case revolves around Wilhilm Hilario, who was hired as a bosun by Abosta Ship Management for a foreign vessel. Despite a duly approved contract, Hilario was never deployed because the foreign principal decided to promote someone already on board. The central legal question is whether the company’s failure to deploy Hilario constituted a breach of contract, entitling him to damages, or whether the foreign principal’s decision was a valid exercise of management prerogative.

The core issue lies in the tension between an employer’s **management prerogative** and the binding nature of a perfected employment contract. Management prerogative refers to the inherent right of employers to control and manage their enterprises effectively. This includes the right to select and promote employees, as highlighted in *San Miguel Corporation v. Ubaldo*:

“[M]anagement prerogatives [are upheld] so long as they are exercised in good faith for the advancement of the employer’s interest, and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements.”

However, this prerogative is not absolute. It is limited by existing laws, principles of equity, and the obligation to act in good faith. As stated in *Peckson v. Robinsons Supermarket Corporation*, management prerogatives must align with “equity and substantial justice.” This means employers cannot use their management rights to unjustly deprive employees of their contractual rights.

In Hilario’s case, the Supreme Court found that Abosta Ship Management’s failure to deploy him was a breach of contract. The Court emphasized that the employment contract was perfected when both parties agreed to its terms, creating mutual rights and obligations. The foreign principal’s change of mind was not a valid reason to disregard the contract, especially since Hilario had given up other employment opportunities based on the promise of deployment. This principle is echoed in *Santiago v. CF Sharp Crew Management, Inc.*: “[N]either the manning agent nor the employer can simply prevent a seafarer from being deployed without a valid reason.”

The Court reasoned that allowing the company to unilaterally rescind the contract based on a mere change of heart would undermine the stability and security of employment contracts, especially for overseas Filipino workers (OFWs). This would also contravene the state’s policy of protecting and promoting the welfare of Filipino workers, as enshrined in the Labor Code. The court noted that:

“The unilateral and unreasonable failure to deploy respondent constitutes breach of contract, which gives rise to a liability to pay actual damages. The sanctions provided for non-deployment do not end with the suspension or cancellation of license or the imposition of a fine and the return of all documents at no cost to the worker. They do not forfend a seafarer from instituting an action for damages against the employer or agency that has failed to deploy him.”

Furthermore, the Court highlighted the joint and solidary liability of the recruitment agency (Abosta Ship Management) with the foreign employer. This liability, as stipulated in Section 1, paragraph f (3) of Rule II of the POEA Rules and Regulations, ensures that the aggrieved worker can seek recourse from the local agency for any violations of the employment contract. This provision reinforces the protection afforded to OFWs and underscores the accountability of local agencies in upholding the terms of employment agreements.

To illustrate the concept of joint and solidary liability, consider this: if the foreign principal fails to pay the seafarer’s salary, the seafarer can pursue the entire claim against the local recruitment agency. The agency, in turn, can seek reimbursement from the foreign principal, but the seafarer is not obligated to wait for that process. This arrangement ensures that the seafarer receives prompt compensation for any breach of contract.

Ultimately, the Supreme Court’s decision affirmed the Court of Appeals’ ruling, ordering Abosta Ship Management to pay Hilario his salary for the nine-month duration of the contract. The Court emphasized that while management prerogative is a legitimate right, it must be exercised within the bounds of the law and with due regard for the rights of employees. The case serves as a reminder to employers and recruitment agencies that employment contracts are binding agreements that cannot be easily disregarded based on a mere change of mind.

FAQs

What was the key issue in this case?	The key issue was whether the shipping company breached its contract with the seafarer by failing to deploy him and whether the foreign principal’s decision to promote another candidate was a valid exercise of management prerogative.
What is management prerogative?	Management prerogative is the inherent right of employers to control and manage their enterprises effectively, including the right to select and promote employees. However, it is not absolute and must be exercised in good faith and within the bounds of the law.
What does joint and solidary liability mean in this context?	Joint and solidary liability means that the local recruitment agency and the foreign employer are both responsible for any violations of the employment contract. The seafarer can pursue the entire claim against either party, ensuring prompt compensation.
What kind of damages was the seafarer awarded?	The seafarer was awarded actual damages, which included his salary for the nine-month duration of the contract. These damages compensate him for the pecuniary loss he suffered due to the company’s failure to deploy him.
Why was the company not allowed to promote someone else?	Because the position was already filled when the company made an employment contract with the seafarer.
What is the POEA’s role in overseas employment contracts?	The POEA (Philippine Overseas Employment Administration) approves and regulates overseas employment contracts to protect Filipino workers. It ensures that the terms of the contract comply with the law and that workers are adequately protected.
Does a ‘change of mind’ qualify as a valid reason for non-deployment?	No, a mere change of mind on the part of the employer or foreign principal does not constitute a valid reason for non-deployment. The contract is already perfected and binding, and the seafarer has a right to its fulfillment.
What is the impact of this ruling on OFWs?	This ruling reinforces the protection afforded to OFWs by ensuring that their employment contracts are honored and that they can seek recourse for breaches of contract. It also underscores the accountability of local recruitment agencies in upholding the terms of employment agreements.

In conclusion, this case clarifies that while employers have the right to manage their businesses, they cannot do so at the expense of their employees’ contractual rights. The decision underscores the importance of upholding employment contracts and ensuring that overseas Filipino workers are protected from arbitrary decisions that deprive them of their livelihoods. The Court’s emphasis on joint and solidary liability further strengthens the safety net for OFWs, providing them with a reliable avenue for seeking redress when their rights are violated.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Abosta Ship Management vs. Wilhilm M. Hilario, G.R. No. 195792, November 24, 2014

June 15, 2015

Corporate Responsibility: Enforcing Contracts Despite Technicalities

The Supreme Court affirmed that a party who enters into a contract with an ostensible corporation is estopped from denying its corporate existence, even if technicalities regarding the corporation’s registration or naming are present. This means individuals and businesses must honor their agreements with entities they recognize as corporations, preventing them from evading obligations based on minor discrepancies or later-discovered issues with the corporation’s legal status. This ruling reinforces the principle of good faith in contractual dealings and protects the reasonable expectations of parties who rely on the apparent corporate status of the entities they transact with.

Hangar Hassles: Can a Technicality Ground a Contract?

In Priscilo B. Paz v. New International Environmental Universality, Inc., the central issue revolved around whether Captain Priscilo B. Paz could evade his contractual obligations to New International Environmental Universality, Inc. (NIEU) by arguing that the corporation’s legal status was questionable. The case arose from a Memorandum of Agreement (MOA) where Paz, as officer-in-charge of an aircraft hangar, allowed NIEU to use the hangar space. A dispute ensued, leading Paz to terminate the MOA prematurely. Paz then claimed NIEU lacked the legal capacity to sue, questioning its corporate existence and naming inconsistencies.

The Regional Trial Court (RTC) found Paz liable for breach of contract, a decision affirmed by the Court of Appeals (CA). Paz appealed to the Supreme Court, reiterating his arguments about NIEU’s legal personality and the necessity of including Captain Allan J. Clarke, NIEU’s president, as an indispensable party. The Supreme Court was tasked with determining whether Paz could renege on his contractual obligations based on these technicalities, and whether the lower courts erred in holding him liable for breach of contract.

The Supreme Court denied the petition, upholding the CA’s decision. The Court emphasized the principle of corporation by estoppel, enshrined in Section 21 of the Corporation Code, which states:

SEC. 21. Corporation by estoppel. – All persons who assume to act as a corporation knowing it to be without authority to do so shall be liable as general partners for all debts, liabilities and damages incurred or arising as a result thereof: Provided, however, That when any such ostensible corporation is sued on any transaction entered by it as a corporation or on any tort committed by it as such, it shall not be allowed to use as a defense its lack of corporate personality.

One who assumes an obligation to an ostensible corporation as such, cannot resist performance thereof on the ground that there was in fact no corporation.

The Court found that Paz had indeed recognized NIEU as a corporation when he entered into the MOA, referring to the hangar space usage as being for “company aircraft/helicopter.” Furthermore, Paz’s letters and rental payments issued to NIEU further solidified this recognition. Therefore, he was estopped from denying NIEU’s corporate existence to evade his contractual responsibilities.

The Court also addressed the issue of Captain Clarke’s role and whether he was an indispensable party. It concluded that Clarke acted merely as an agent of NIEU, representing the corporation in the MOA. An indispensable party is one whose presence is essential for a complete determination of the case. Since Clarke’s participation was limited to representing NIEU, he had no independent rights or liabilities arising from the contract, and his presence was not necessary for the resolution of the dispute.

The Supreme Court underscored that it is not a trier of facts and generally defers to the factual findings of the lower courts, provided those findings are supported by substantial evidence. In this case, the CA correctly determined that Paz had breached the MOA by effectively evicting NIEU from the hangar space before the agreement’s expiration. Paz’s actions, such as blocking access to the hangar and disconnecting utilities, constituted a clear violation of the MOA’s terms.

The Court highlighted the importance of adhering to contractual obligations and the legal remedies available when disputes arise. Instead of resorting to self-help by unilaterally terminating the MOA and evicting NIEU, Paz should have sought legal recourse through the courts to address any perceived violations of the agreement.

This case serves as a reminder of the binding nature of contracts and the legal consequences of breaching them. Parties must honor their agreements and seek appropriate legal channels to resolve disputes, rather than taking matters into their own hands. The principle of corporation by estoppel prevents individuals from exploiting technicalities to avoid their contractual obligations, fostering fairness and stability in commercial transactions. The ruling also clarifies the role of agents in contractual agreements, emphasizing that their actions bind the principal, not themselves, unless they have independent rights or liabilities.

FAQs

What was the key issue in this case?	The key issue was whether Captain Paz could avoid his contractual obligations by claiming the company he contracted with, New International Environmental Universality, Inc., lacked legal personality due to alleged corporate irregularities.
What is the principle of ‘corporation by estoppel’?	Corporation by estoppel prevents a party who has dealt with an entity as if it were a corporation from later denying its corporate existence to avoid obligations. This principle, codified in Section 21 of the Corporation Code, ensures fairness in contractual dealings.
Why was Captain Clarke not considered an indispensable party?	Captain Clarke, as president of NIEU, acted merely as an agent of the corporation in the MOA. He had no independent rights or liabilities arising from the contract, making his presence unnecessary for resolving the dispute.
What actions did Captain Paz take that constituted a breach of contract?	Captain Paz breached the MOA by blocking access to the hangar space, disconnecting utilities, and effectively evicting NIEU before the agreement’s expiration. These actions violated the terms of the lease and justified the finding of breach of contract.
What should Captain Paz have done instead of unilaterally terminating the MOA?	Instead of self-help, Captain Paz should have sought legal recourse through the courts to address any perceived violations of the MOA’s terms. This could have involved seeking an injunction or rescission of the agreement.
What was the basis for the Supreme Court’s decision to affirm the lower courts?	The Supreme Court affirmed the lower courts based on the principle of corporation by estoppel, the factual findings of breach of contract, and the legal principle that agents do not have independent liabilities when acting on behalf of a corporation.
What does this case teach about honoring contracts?	This case emphasizes the importance of honoring contractual obligations and seeking legal remedies to resolve disputes. Parties cannot exploit technicalities to avoid their responsibilities and must respect the terms of their agreements.
How did the court determine that Paz recognized NIEU as a corporation?	The court determined Paz recognized NIEU as a corporation based on his own words in the MOA and subsequent letters, where he referred to the hangar being used for “company” purposes, and by accepting rental payments made to the corporation.

This case provides valuable insights into the application of corporation by estoppel and the responsibilities of parties entering into contracts with corporate entities. It underscores the importance of upholding contractual obligations and seeking appropriate legal remedies when disputes arise, rather than resorting to self-help measures.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: PRISCILO B. PAZ VS. NEW INTERNATIONAL ENVIRONMENTAL UNIVERSALITY, INC., G.R. No. 203993, April 20, 2015

April 20, 2015

Parol Evidence Rule: Unveiling True Intent in Contractual Disputes

The Supreme Court held that the Parol Evidence Rule does not bar the admission of evidence to clarify ambiguities or to show that a written agreement fails to express the true intent of the parties. This ruling allows courts to consider evidence beyond the written contract itself to determine the real agreement, especially when there are allegations of mistake or imperfection in the written terms. This decision reinforces the principle that contracts should reflect the actual understanding and intentions of all parties involved.

Sand, Permits, and Promises: When Unwritten Understandings Shape Contractual Obligations

This case, Spouses Bonifacio and Lucia Paras v. Kimwa Construction and Development Corporation, revolves around a contract dispute concerning the supply of aggregates. Lucia Paras, a concessionaire of a sand and gravel permit, entered into an agreement with Kimwa Construction, a construction firm, for the supply of 40,000 cubic meters of aggregates. After Kimwa only hauled 10,000 cubic meters, Spouses Paras sued for breach of contract, claiming Kimwa had violated the agreement. The core legal question is whether Kimwa was obligated to haul the entire 40,000 cubic meters by a specific date, even though the written contract did not explicitly state this obligation.

The trial court initially ruled in favor of Spouses Paras, finding that Kimwa was aware of the limited duration of Lucia’s special permit and should have hauled the agreed amount within that period. However, the Court of Appeals reversed this decision, citing the **Parol Evidence Rule**. The Parol Evidence Rule, as enshrined in Rule 130, Section 9 of the Revised Rules on Evidence, generally prohibits the introduction of extrinsic evidence to vary, contradict, or add to the terms of a written agreement that is complete and unambiguous. The appellate court reasoned that the written agreement was clear and did not obligate Kimwa to haul the entire quantity by a specific date.

The Supreme Court disagreed with the Court of Appeals’ interpretation. The Court emphasized that the Parol Evidence Rule is not absolute. It acknowledged exceptions where parol evidence is admissible. These exceptions, outlined in Rule 130, Section 9, include situations where there is an intrinsic ambiguity, mistake, or imperfection in the written agreement; where the written agreement fails to express the true intent and agreement of the parties; where the validity of the written agreement is in question; or where there are other terms agreed to by the parties after the execution of the written agreement. In essence, the court acknowledged that sometimes, what is written down does not tell the whole story.

In this case, the Supreme Court found that Spouses Paras had sufficiently pleaded an exception to the Parol Evidence Rule. The Court noted that the spouses’ complaint asserted that the written agreement did not reflect the parties’ true understanding, which was that Kimwa was required to haul the entire quantity of aggregates before Lucia’s special permit expired. Because the spouses had raised the issue of the agreement’s failure to reflect the true intent of the parties, the Supreme Court held that it was proper for the trial court to consider parol evidence to ascertain the true terms of the agreement. This is consistent with the principle that courts should strive to give effect to the actual intentions of the contracting parties.

The Court scrutinized the circumstances surrounding the agreement. It emphasized that Kimwa was aware of the limited duration of Lucia’s special permit. The permit, presented as evidence, clearly stated that Lucia’s authority to extract aggregates was valid for only six months, expiring on May 15, 1995. The Court reasoned that it was logical to conclude that Kimwa’s commitment to haul 40,000 cubic meters was contingent upon hauling it before the permit’s expiration. The court stated:

Bound as she was by the Special Permit, petitioner Lucia Paras needed to make it eminently clear to any party she was transacting with that she could supply aggregates only up to May 15, 1995 and that the other party’s hauling must be completed by May 15, 1995. She was merely acting with due diligence, for otherwise, any contract she would enter into would be negated; any commitment she would make beyond May 15, 1995 would make her guilty of misrepresentation, and any prospective income for her would be rendered illusory.

Building on this principle, the Supreme Court highlighted that the agreement stated that the aggregates were for the exclusive use of Kimwa. This exclusivity, coupled with Kimwa’s awareness of the permit’s expiration, suggested that Kimwa had a corresponding obligation to haul the entire quantity within the permit’s validity. The Court emphasized that rational human behavior dictates that Lucia would not have bound her entire business to Kimwa without a reciprocal commitment from Kimwa to haul the agreed-upon amount. Therefore, the court looked beyond the literal words of the contract to consider the overall context and the parties’ intentions.

In essence, the Supreme Court prioritized substance over form. While acknowledging the importance of written contracts, the Court recognized that such contracts may not always fully capture the parties’ true intentions. The Court’s decision underscores the importance of carefully considering all relevant evidence, including parol evidence, to ensure that contractual disputes are resolved in a manner that is fair and equitable to all parties involved. This approach contrasts with a rigid adherence to the written word, which could lead to unjust outcomes.

The practical implications of this ruling are significant. It provides a safeguard against the potential for parties to exploit ambiguities or omissions in written contracts to avoid their obligations. It reinforces the principle that contracts should be interpreted in a manner that reflects the parties’ true intentions, rather than a strict, literal reading of the text. This decision benefits parties who may have relied on unwritten understandings or promises when entering into a contract.

The ruling also highlights the importance of clear and comprehensive contract drafting. To avoid future disputes, parties should ensure that their written agreements accurately reflect all material terms and conditions, including any deadlines or specific obligations. However, even with well-drafted contracts, disputes can arise, and the Supreme Court’s decision provides a framework for resolving such disputes in a fair and equitable manner.

FAQs

What was the key issue in this case?	The key issue was whether the Parol Evidence Rule barred the admission of evidence to prove that Kimwa was obligated to haul 40,000 cubic meters of aggregates by a specific date, even though the written contract did not explicitly state this obligation.
What is the Parol Evidence Rule?	The Parol Evidence Rule generally prohibits the introduction of extrinsic evidence to vary, contradict, or add to the terms of a written agreement that is complete and unambiguous. This rule aims to preserve the integrity of written contracts by preventing parties from later attempting to alter their terms with oral or other extrinsic evidence.
What are the exceptions to the Parol Evidence Rule?	The exceptions to the Parol Evidence Rule include situations where there is an ambiguity, mistake, or imperfection in the written agreement; where the written agreement fails to express the true intent of the parties; where the validity of the written agreement is in question; or where there are other terms agreed to by the parties after the execution of the written agreement.
Why did the Supreme Court rule in favor of Spouses Paras?	The Supreme Court ruled in favor of Spouses Paras because they had successfully pleaded an exception to the Parol Evidence Rule by alleging that the written agreement did not reflect the parties’ true understanding. The Court also considered Kimwa’s awareness of the limited duration of Lucia’s special permit.
What evidence did the Court consider beyond the written agreement?	The Court considered the circumstances surrounding the agreement, including Kimwa’s awareness of the limited duration of Lucia’s special permit, the fact that the aggregates were for Kimwa’s exclusive use, and the parties’ conduct.
What is the practical implication of this ruling?	The ruling provides a safeguard against the potential for parties to exploit ambiguities or omissions in written contracts to avoid their obligations. It reinforces the principle that contracts should be interpreted in a manner that reflects the parties’ true intentions.
What should parties do to avoid similar disputes in the future?	To avoid similar disputes, parties should ensure that their written agreements accurately reflect all material terms and conditions, including any deadlines or specific obligations. Clear and comprehensive contract drafting is essential.
What was the significance of the special permit in this case?	The special permit was significant because it demonstrated that Kimwa was aware of the limited time frame in which Lucia could supply the aggregates. This knowledge was crucial in establishing that Kimwa had an obligation to haul the aggregates before the permit expired.

In conclusion, the Supreme Court’s decision in Spouses Bonifacio and Lucia Paras v. Kimwa Construction and Development Corporation reaffirms the principle that courts should strive to ascertain and give effect to the true intentions of contracting parties, even when those intentions are not fully expressed in the written agreement. This decision highlights the importance of considering the context and surrounding circumstances of a contract to ensure a fair and equitable outcome.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Spouses Paras v. Kimwa Construction, G.R. No. 171601, April 08, 2015

April 8, 2015

When Negligence and Defective Workmanship Lead to Liability: FAJ Construction vs. Saulog

The Supreme Court in FAJ Construction & Development Corporation v. Susan M. Saulog held that a construction company was liable for damages due to defective workmanship, delays, and unjustified abandonment of a project. This ruling underscores the importance of fulfilling contractual obligations in construction agreements. It serves as a reminder to contractors about the potential financial repercussions of failing to meet agreed-upon standards and timelines. This case emphasizes that construction companies must ensure quality and punctuality to avoid liability for actual damages, penalties for delay, and other financial burdens.

Broken Promises: How FAJ Construction’s Actions Led to Costly Consequences

This case began with an agreement between FAJ Construction and Development Corporation (FAJ Construction) and Susan M. Saulog for the construction of a residential building. The agreed contract price was P12,500,000.00, with payments to be made on a progress billing basis after inspection by Saulog. Construction commenced, and Saulog paid FAJ Construction a total of P10,592,194.80. However, Saulog refused to pay progress billing statements amounting to P851,601.58 due to alleged defective work. FAJ Construction then terminated the contract and demanded payment, which Saulog refused, claiming the work was defective. This dispute led to a legal battle, highlighting the critical importance of fulfilling contractual obligations and the potential liabilities arising from defective performance.

FAJ Construction filed a civil case against Saulog for collection of sum of money and damages. Saulog counterclaimed, alleging defective work and delays, seeking damages for repairs and lost rentals. The Regional Trial Court (RTC) initially dismissed FAJ Construction’s complaint due to their failure to prosecute the case diligently. The Court of Appeals (CA) affirmed the dismissal, and the Supreme Court (SC) denied FAJ Construction’s subsequent petition. The RTC then ruled in favor of Saulog on her counterclaim, awarding damages for actual losses, lost rentals, moral damages, exemplary damages, penalties for delay, and attorney’s fees. FAJ Construction appealed to the CA, which affirmed the RTC’s decision with modifications, removing the awards for lost rentals, moral damages, exemplary damages, and attorney’s fees.

The Supreme Court’s decision hinged on several key legal principles. Firstly, the principle of res judicata played a significant role. The Court emphasized that its prior denial of FAJ Construction’s petition in G.R. No. 166336, which questioned the dismissal of their complaint for failure to prosecute, was an adjudication on the merits. This meant that FAJ Construction could not re-litigate the issue of the dismissal of their complaint. As the Court noted, minute resolutions dismissing actions constitute actual adjudications on the merits, resulting from thorough deliberation.

Building on this principle, the Court also addressed the issue of negligence on the part of FAJ Construction’s counsel. The general rule is that a client is bound by the actions of their counsel. The Court found no reason to deviate from this rule, noting that FAJ Construction was itself neglectful in prosecuting its case and continued to retain the same counsel despite being aware of the counsel’s shortcomings. This underscores the importance of clients actively monitoring their legal representation and ensuring diligent prosecution of their cases. It serves as a caution that clients cannot simply blame their lawyers for adverse outcomes if they themselves were also negligent.

The Court also upheld the CA’s finding that FAJ Construction violated the construction agreement due to defective and incomplete work, delays, and unjustified abandonment of the project. This determination was based on the factual findings of both the RTC and the CA, which the Supreme Court found no reason to disturb. The factual issues surrounding the breach of contract are generally not reviewable in a petition filed under Rule 45, emphasizing the Supreme Court’s role as primarily a reviewer of legal questions rather than a trier of facts.

Regarding the testimony of architect Rhodora Calinawan, the Court found no ground to doubt her credibility. Calinawan’s testimony corroborated existing evidence, such as photographs and Saulog’s testimony, which collectively proved the defects in FAJ Construction’s work and the state of the construction after abandonment. The Court highlighted that an expert qualification was unnecessary to testify on readily apparent defects, as even a layperson could discern the substandard quality of the construction. The Court in Engr. Dueñas v. Guce-Africa, 618 Phil. 10, 18-19 (2009) emphasized the distinction between questions of law and questions of fact:

A question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. For a question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. The resolution of the issue must rest solely on what the law provides on the given set of circumstances.

Moreover, because Saulog suffered damages due to FAJ Construction’s actions, the principle of damnum absque injuria (damage without injury) did not apply. This principle generally holds that a person who suffers damage without any legal wrong committed by another cannot recover damages. However, this principle does not apply when there is an abuse of a person’s right, as was the case here.

The Court also addressed the issue of delay and the imposed penalties. The construction agreement stipulated a 240-day construction period from the notice to proceed. FAJ Construction exceeded this period, continuing work as late as November 22, 2000, and then abandoning the project. The agreed penalty for each day of delay was P12,500.00. Although FAJ Construction was delayed for approximately 270 days, which would have resulted in a liquidated damages assessment of P3,375,000.00, the courts awarded a lesser amount of P1,387,500.00, which the Court found reasonable.

The principle of contractual obligations being the law between the parties is paramount. As the court stated, “The penalty for delay is agreed upon by the parties themselves. The fact that appellant was already delayed in the completion of the duplex is undisputed.” This underscores the importance of adhering to contractual stipulations and the potential consequences of breaching those agreements.

Finally, the Court upheld the imposition of 6% interest per annum on the awarded amounts. This interest was to be calculated from the filing of the complaint until full satisfaction, aligning with the principle that when an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court. In Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013, 703 SCRA 439, 458 the court provided guidelines for the imposition of legal interest, stating that:

When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum from the filing of the complaint until its full satisfaction.

In summary, the Supreme Court denied FAJ Construction’s petition, affirming the CA’s decision. This ruling highlights the legal consequences of defective workmanship, delays, and unjustified abandonment in construction contracts. Contractors must ensure they fulfill their contractual obligations to avoid liability for damages and penalties.

FAQs

What was the key issue in this case?	The key issue was whether FAJ Construction was liable for damages due to defective workmanship, delays, and unjustified abandonment of a construction project. The Supreme Court affirmed the lower courts’ decisions finding FAJ Construction liable.
*What is res judicata, and how did it apply in this case?*	Res judicata prevents the re-litigation of issues already decided in a prior case. In this case, the Supreme Court had previously denied FAJ Construction’s petition questioning the dismissal of their complaint, thus barring them from re-litigating that issue.
Why was FAJ Construction held responsible for their counsel’s negligence?	The general rule is that a client is bound by the actions of their counsel. The Court found that FAJ Construction was also neglectful and continued to retain the same counsel despite knowing their shortcomings, thus they were held responsible.
*What is the principle of damnum absque injuria?*	Damnum absque injuria means damage without injury, and it generally holds that a person who suffers damage without any legal wrong committed by another cannot recover damages. This principle did not apply because FAJ Construction committed a legal wrong by breaching the construction agreement.
How was the penalty for delay calculated in this case?	The construction agreement stipulated a penalty of P12,500.00 for each day of delay. Although FAJ Construction was delayed for approximately 270 days, resulting in P3,375,000.00 in liquidated damages, the courts awarded a lesser amount of P1,387,500.00.
What type of evidence was used to prove the defective workmanship?	Evidence included the testimony of architect Rhodora Calinawan, photographs of the defects, and the testimony of Susan Saulog. Calinawan’s testimony corroborated the existing evidence, proving the defects in FAJ Construction’s work.
What was the interest rate imposed on the damages awarded?	The Court imposed a 6% interest per annum on the awarded amounts. This interest was calculated from the filing of the complaint until full satisfaction.
What is the main takeaway for contractors from this case?	Contractors must fulfill their contractual obligations, including ensuring quality workmanship and timely completion of projects. Failure to do so can result in liability for damages and penalties.
Can a client ever be excused from the mistakes of their counsel?	While generally a client is bound by their counsel’s actions, in cases of gross negligence by the lawyer the court may step in. However, the client must not be neglectful as well.

This case serves as a crucial reminder of the importance of fulfilling contractual obligations in the construction industry. By adhering to agreed-upon standards and timelines, contractors can avoid costly legal battles and maintain their reputation for quality work. The principles outlined in FAJ Construction & Development Corporation v. Susan M. Saulog continue to shape the landscape of construction law, emphasizing accountability and the protection of client interests.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: FAJ Construction & Development Corporation v. Susan M. Saulog, G.R. No. 200759, March 25, 2015

March 25, 2015

Financial Hardship Is Not a Valid Excuse for Breaching a Lease Agreement: Rebus Sic Stantibus Doctrine

The Supreme Court ruled that a lessee cannot unilaterally terminate a lease agreement due to financial difficulties, even if those difficulties arose from a major economic crisis. The principle of rebus sic stantibus, which allows for contract termination when unforeseen events make performance extremely difficult, does not apply to situations where the obligation is to pay money, as this does not constitute an impossible service. This decision reinforces the stability of contractual obligations and clarifies the limited circumstances under which parties can be excused from fulfilling their agreements due to economic hardship.

Can Economic Downturn Justify Breaking a Lease? Examining the Limits of Contractual Obligations

This case revolves around a lease agreement between Comglasco Corporation (Comglasco), a company selling and repairing automobile windshields, and Santos Car Check Center Corporation (Santos), the owner of a showroom in Iloilo City. Comglasco leased Santos’s showroom for five years, starting August 16, 2000. However, on October 4, 2001, Comglasco informed Santos that it would be terminating the lease effective December 1, 2001, citing business reverses allegedly caused by the 1997 Asian financial crisis.

Santos refused to accept the pre-termination, insisting on the five-year contract term. Comglasco vacated the premises on January 15, 2002, ceasing all rental payments. Santos then filed a lawsuit for breach of contract. Comglasco argued that Article 1267 of the Civil Code, embodying the principle of rebus sic stantibus, excused them from their obligations due to the economic downturn making the service (rental payments) excessively difficult. The trial court ruled in favor of Santos, ordering Comglasco to pay unpaid rentals, attorney’s fees, litigation expenses, and exemplary damages. The Court of Appeals (CA) affirmed the decision but reduced the attorney’s fees and removed the awards for litigation expenses and exemplary damages.

The Supreme Court (SC) addressed whether the Asian financial crisis justified Comglasco’s pre-termination of the lease and whether the lower courts correctly applied the principle of rebus sic stantibus. The SC also considered whether the trial court properly rendered a judgment on the pleadings and whether Comglasco was entitled to a credit for advance rentals and deposits.

The Supreme Court denied Comglasco’s petition, upholding the CA’s decision that the economic downturn did not excuse Comglasco from fulfilling its obligations under the lease agreement. The Court relied on the precedent set in Philippine National Construction Corporation v. CA, which similarly involved the termination of a lease due to financial difficulties. The SC emphasized that the obligation to pay rentals falls under the prestation “to give” and is not covered by Article 1267 of the Civil Code, which applies to prestations “to do” where the service has become so difficult as to be manifestly beyond the contemplation of the parties.

The SC held that the principle of rebus sic stantibus is not an absolute application and does not automatically release parties from their contractual obligations. The Court stated that parties are presumed to have assumed the risks of unfavorable developments. In this case, Comglasco entered into the lease agreement in August 2000, more than three years after the onset of the Asian financial crisis, indicating that it was aware of the potential business risks.

Furthermore, the Court found that Comglasco’s Answer admitted the material allegations of Santos’s complaint, including the existence and validity of the lease agreement, the agreed-upon rental amounts, and Comglasco’s pre-termination of the lease. As such, the trial court properly resorted to a judgment on the pleadings. Comglasco could have moved for a summary judgment to adduce supporting evidence, but they did not, leading to the court’s decision based solely on the pleadings.

The Supreme Court addressed Comglasco’s claim for credit for advance rentals and deposits, stating that this issue was not raised in their Answer or appeal to the CA. Therefore, they were barred from raising it for the first time before the SC. As for attorney’s fees, the Court upheld the CA’s award, citing Article 2208(2) of the Civil Code, which allows for the recovery of attorney’s fees when the defendant’s act or omission compels the plaintiff to incur expenses to protect their interest. Comglasco’s unilateral pre-termination of the lease and refusal to pay rentals forced Santos to file a lawsuit, justifying the award of attorney’s fees.

FAQs

What was the key issue in this case?	The central issue was whether Comglasco could pre-terminate its lease agreement with Santos due to financial difficulties arising from the 1997 Asian financial crisis. The court examined the applicability of Article 1267 of the Civil Code regarding unforeseen events.
*What is the principle of rebus sic stantibus?*	Rebus sic stantibus is a doctrine that allows for the termination of a contract when unforeseen events make performance extremely difficult or virtually impossible. However, this principle is not absolute and applies only in exceptional circumstances.
Why did the Court rule against Comglasco’s claim?	The Court ruled against Comglasco because the obligation to pay rentals is a prestation “to give” and not covered by Article 1267, which applies to prestations “to do”. Furthermore, Comglasco entered the lease agreement after the onset of the financial crisis, assuming the associated risks.
What constitutes a judgment on the pleadings?	A judgment on the pleadings occurs when the answer fails to tender an issue or admits the material allegations of the adverse party’s pleading. In this case, Comglasco’s answer admitted the key elements of Santos’s complaint.
*What is the significance of the PNCC v. CA* case?**	The PNCC v. CA case set a precedent that financial difficulties do not automatically release a party from their contractual obligations, particularly in lease agreements. This precedent was instrumental in the Court’s decision in the Comglasco case.
Can a lessee terminate a lease due to financial hardship?	Generally, no. Financial hardship is not a valid legal excuse for terminating a lease agreement unless explicitly provided for in the contract. Lessees are expected to anticipate and manage business risks.
What is the relevance of Article 2208(2) of the Civil Code?	Article 2208(2) of the Civil Code justifies the award of attorney’s fees when the defendant’s act or omission has compelled the plaintiff to incur expenses to protect their interest. Comglasco’s breach of contract forced Santos to sue, warranting the attorney’s fees.
What should businesses learn from this case?	Businesses should understand that contractual obligations are binding and that economic downturns are not automatic excuses for non-performance. They should carefully assess risks before entering into agreements and include clauses addressing potential economic challenges.

This case underscores the importance of honoring contractual obligations, even in the face of economic hardship. The Supreme Court’s decision reinforces the principle that parties are expected to foresee and manage business risks, and that the rebus sic stantibus doctrine is not a blanket excuse for non-performance. The ruling serves as a reminder that sound legal advice and careful contract drafting are essential for protecting business interests and ensuring compliance with legal standards.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: COMGLASCO CORPORATION/AGUILA GLASS VS. SANTOS CAR CHECK CENTER CORPORATION, G.R. No. 202989, March 25, 2015

March 25, 2015

Breach of Contract and Trust: Examining Obligations in Film Licensing Agreements

In Ricardo C. Honrado v. GMA Network Films, Inc., the Supreme Court ruled that GMA Films failed to prove that Ricardo Honrado breached their TV Rights Agreement or any trust. The Court reinstated the trial court’s decision dismissing GMA Films’ complaint, emphasizing that the rejection and replacement of films under the agreement were contingent upon disapproval by the Movie and Television Review and Classification Board (MTRCB), not merely the subjective assessment of the broadcasting network. This decision underscores the importance of adhering to the specific terms outlined in contracts, particularly concerning the roles and responsibilities of each party, and clarifies the circumstances under which films can be rejected or replaced in licensing agreements.

Lights, Camera, Contract: When TV Rights Don’t Go as Planned

The case originated from a “TV Rights Agreement” between Ricardo C. Honrado and GMA Network Films, Inc. (GMA Films), where Honrado, as licensor, granted GMA Films the exclusive right to telecast 36 films for a fee of P60.75 million. Two films, Evangeline Katorse and Bubot, became central to the dispute. GMA Films sued Honrado to recover amounts paid for these films, alleging that Evangeline Katorse was rejected due to its short running time and that Honrado failed to remit the full payment for Bubot to its owner. This led GMA Films to claim breach of contract and implied trust. The Regional Trial Court initially dismissed GMA Films’ complaint, but the Court of Appeals (CA) reversed this decision, finding Honrado liable. The Supreme Court then reviewed the CA’s decision, focusing on whether Honrado had indeed breached the agreement and if an implied trust existed between the parties.

The Supreme Court emphasized that the Agreement stipulated MTRCB’s disapproval as the basis for rejecting and replacing a film. Paragraph 4 of the Agreement states:

The PROGRAMME TITLES listed above shall be subject to approval by the Movie and Television Review and Classification Board (MTRCB) and, in the event of disapproval, LICENSOR [Petitioner] will either replace the censored PROGRAMME TITLES with another title which is mutually acceptable to both parties or, failure to do such, a proportionate reduction from the total price shall either be deducted or refunded whichever is the case by the LICENSOR OR LICENSEE [GMA Films].

The court noted that GMA Films rejected Evangeline Katorse due to its short running time, not MTRCB disapproval. Honrado voluntarily replaced it with Winasak na Pangarap. However, GMA Films rejected the replacement, citing its “bold” content. The Supreme Court found this rejection invalid under the Agreement, which explicitly requires MTRCB’s intervention before a film can be rejected and replaced. The court pointed out that GMA Network’s assessment of the film’s content overstepped its role, which was limited to technical quality checks, as outlined in Paragraphs 3 and 4 of the Agreement.

The Supreme Court also addressed GMA Films’ claim for the balance of fees paid for Bubot, which Honrado allegedly did not fully remit to the film’s owner. GMA Films argued that Honrado’s failure to remit the full amount created an implied trust. The CA agreed, stating that the Agreement did not entitle Honrado to any commission. The Supreme Court, however, disagreed with this interpretation. The Court clarified that the Agreement was a licensing contract where Honrado, as licensor, transferred the exclusive right to telecast films to GMA Films for a fee. The Court found that stipulations for payment of commission are not inherent in the agreement unless the licensor acted as an agent for the film owners. This was not the case here.

The Supreme Court highlighted that GMA Films was not a party to the separate contractual arrangements between Honrado and the film owners. Thus, GMA Films had no standing to question Honrado’s compliance with those arrangements. The Court stated:

Being a stranger to such arrangements, GMA Films is no more entitled to complain of any breach by petitioner of his contracts with the film owners than the film owners are for any breach by GMA Films of its Agreement with petitioner.

The Court also found the award of attorney’s fees to Honrado by the trial court improper, stating that such awards must be fully elaborated in the body of the ruling, which was not done in this case. Article 2208(11) of the Civil Code allows attorney’s fees if the court deems it just and equitable, but such grounds must be explicitly justified.

The Supreme Court ultimately granted Honrado’s petition, setting aside the CA’s decision and reinstating the trial court’s decision with the modification that the award of attorney’s fees was deleted. This decision emphasizes the importance of adhering to the specific terms outlined in contracts and clarifies the roles and responsibilities of each party involved. It also underscores that a party cannot claim a breach of contract or trust based on arrangements to which they are not a party. The Supreme Court’s ruling serves as a reminder to parties entering into licensing agreements to clearly define the conditions under which films can be rejected or replaced and to respect the boundaries of their contractual obligations.

FAQs

What was the key issue in this case?	The central issue was whether Ricardo Honrado breached his TV Rights Agreement with GMA Films by not remitting the full payment for a film and by replacing another film without proper grounds as defined in the contract. The Supreme Court examined the specific terms of the agreement to determine the validity of GMA Films’ claims.
What was the contractual requirement for film replacement?	According to the Agreement, a film could only be rejected and replaced if it was disapproved by the Movie and Television Review and Classification Board (MTRCB). This was a critical factor in the Supreme Court’s decision.
*Why did GMA Films reject Evangeline Katorse?*	GMA Films rejected Evangeline Katorse because its running time was too short for telecast, not because it was disapproved by MTRCB. This reason for rejection was not in line with the terms of the Agreement.
What was the role of GMA Network in the film selection process?	GMA Network was responsible for conducting broadcast quality tests on the films. However, they overstepped their role when they assessed the content of Winasak na Pangarap, a task that fell under the purview of MTRCB.
*Did Honrado have to remit the entire fee for Bubot* to the film owner?**	The Supreme Court clarified that the TV Rights Agreement did not obligate Honrado to remit the entire fee for Bubot to the film owner. GMA Films was not a party to the separate agreement between Honrado and the film’s owner.
What is an implied trust, and did it apply in this case?	An implied trust arises when property is acquired through mistake or fraud, obligating the acquirer to act as a trustee for the benefit of the original owner. The Supreme Court did not find that an implied trust existed because GMA Films had no legitimate interest in the disposition of fees paid to Honrado.
Why was the award of attorney’s fees to Honrado deleted?	The award of attorney’s fees was deleted because the trial court did not adequately explain the justification for the award. The Supreme Court requires that such awards be fully elaborated in the body of the ruling.
What does this case teach about contract interpretation?	This case underscores the importance of adhering to the specific terms outlined in contracts. Courts will interpret contracts based on the clear language used and will not imply obligations or conditions that are not expressly stated.

The Supreme Court’s decision in Honrado v. GMA Network Films offers a valuable lesson in contract law, emphasizing the need for clarity and precision in defining the rights and obligations of parties. By adhering to the specific terms of the agreement and respecting the defined roles, parties can avoid costly and time-consuming litigation. This case serves as a reminder that contractual disputes often hinge on the precise language of the agreement and the adherence to the roles and responsibilities of each party involved.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Ricardo C. Honrado, vs. GMA Network Films, Inc., G.R. No. 204702, January 14, 2015

January 14, 2015

Delivery Disputes: When Actions Speak Louder Than Words in Sales Contracts

In a dispute over non-payment for delivered goods, the Supreme Court ruled that a buyer’s actions indicating acceptance of goods, even if not perfectly delivered according to the purchase order, can create an obligation to pay. This decision underscores that actual conduct, like using the delivered items, can override technical discrepancies in delivery instructions. For businesses, this means that accepting and using goods can imply an agreement to pay, regardless of initial delivery terms. This case clarifies the importance of promptly raising objections if delivered goods do not meet the agreed-upon conditions.

Bulk Bags and Broken Promises: Who Pays When Delivery Goes Wrong?

NFF Industrial Corporation sued G & L Associated Brokerage, Inc. and its general manager, Gerardo Trinidad, to recover payment for bulk bags delivered to Hi-Cement Corporation. NFF claimed that G & L ordered 2,000 bulk bags worth P760,000.00, but failed to pay despite deliveries made in July and August 1999. G & L countered that the bags were not delivered to their authorized representative as specified in the purchase order, and thus, they had no obligation to pay. The Regional Trial Court (RTC) initially ruled in favor of NFF, but the Court of Appeals (CA) reversed this decision, leading NFF to elevate the case to the Supreme Court.

The central issue before the Supreme Court was whether a valid delivery occurred, obligating G & L to pay for the bulk bags. This required the Court to examine the concept of “delivery” under the Law on Sales, as defined in the Civil Code. According to Article 1496, ownership of the thing sold is acquired by the vendee upon delivery. Article 1497 specifies that delivery occurs when the thing sold is placed in the control and possession of the vendee. Thus, actual delivery requires the absolute giving up of control and custody by the vendor and the assumption of the same by the vendee.

Art. 1497. The thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee.

The Supreme Court analyzed the evidence presented by both parties. NFF’s Sales Manager testified that deliveries were made and acknowledged by Mr. Trinidad. Specifically, the Sales Manager stated, “On July 30, 1999, we delivered four hundred pieces (400 pcs.) to Union Cement Manufacturing Plant under the company name G & L Associated Brokerage, your honor.” Furthermore, Mr. Trinidad confirmed the deliveries and followed up on the balance of the order. These communications indicated an acceptance of the deliveries, despite the bags not being delivered to the specified person in the Purchase Order.

Contrasting the arguments, the Court highlighted that G & L did not present sufficient evidence to support its claim of non-delivery. The Court noted the absence of any written demands or legal action taken by G & L to enforce the delivery, which was inconsistent with their claim of urgent need for the bags. Moreover, the payroll presented by G & L did not include the name of Ramil Ambrosio, the alleged authorized representative, during the period when the deliveries were made, undermining their claim that the bags were to be delivered to him.

The Supreme Court emphasized the significance of the delivery receipts, which Mr. Trinidad admitted to receiving. These receipts further supported the claim that deliveries were indeed made. Additionally, the Court cited Article 1585 of the Civil Code, which states that a buyer is deemed to have accepted the goods when they intimate acceptance to the seller or when they do any act inconsistent with the seller’s ownership. In this case, G & L’s use of the bulk bags for hauling cement was considered an act of dominion inconsistent with NFF’s ownership.

ARTICLE 1585. The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him, and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them.

The Court underscored the principle that it would not allow G & L to unjustly enrich itself at the expense of NFF. Given that G & L received the bulk bags and used them in their business operations, they were obligated to pay the agreed-upon price. The court pointed out the certification from Union Cement Corporation indicating that G & L was the sole user of tonner bags at their Bulacan plant, further solidifying the fact that the delivered bags were used by G & L.

In addressing the liability of Mr. Trinidad, the Court affirmed the RTC’s finding that he was merely sued in his capacity as General Manager of G & L. Absent any evidence of fraud or wrongdoing that would justify piercing the corporate veil, Mr. Trinidad could not be held personally liable for the company’s debt. The ruling aligns with established jurisprudence, which requires clear and convincing evidence to disregard the separate juridical personality of a corporation.

Based on these considerations, the Supreme Court reversed the decision of the Court of Appeals and reinstated the RTC’s ruling with modifications regarding the legal interest. The Court ordered G & L to pay NFF the sum of P760,000.00, representing the overdue accounts, along with legal interest computed from the date of the first demand on October 27, 1999, until fully paid. The interest rates were specified as twelve percent (12%) per annum until June 30, 2013, and six percent (6%) per annum thereafter, in accordance with prevailing jurisprudence.

FAQs

What was the key issue in this case?	The key issue was whether there was valid delivery of the bulk bags, which would obligate G & L Associated Brokerage to pay NFF Industrial Corporation. The court had to determine if G & L’s actions implied acceptance despite discrepancies in the delivery process.
What did the Supreme Court decide?	The Supreme Court ruled in favor of NFF Industrial Corporation, stating that G & L Associated Brokerage was obligated to pay for the bulk bags. The Court found that G & L’s conduct indicated acceptance of the deliveries despite the initial delivery terms.
How does the Civil Code define delivery?	According to Article 1497 of the Civil Code, delivery occurs when the thing sold is placed in the control and possession of the vendee. This means the vendor relinquishes control, and the vendee assumes control over the item.
What is the significance of Article 1585 of the Civil Code in this case?	Article 1585 states that a buyer is deemed to have accepted goods when they intimate acceptance or act inconsistently with the seller’s ownership. G & L’s use of the bulk bags was considered an act inconsistent with NFF’s ownership, implying acceptance.
Why was Gerardo Trinidad not held personally liable?	Gerardo Trinidad was not held personally liable because he was sued in his capacity as General Manager of G & L Associated Brokerage. There was no evidence presented that justified piercing the corporate veil, meaning there was no basis to disregard the company’s separate legal identity.
What evidence supported NFF’s claim of delivery?	NFF provided delivery receipts, sales invoices, and the testimony of its Sales Manager, who stated that deliveries were made and acknowledged by Mr. Trinidad. Additionally, Union Cement Corporation’s certification confirmed that G & L was the sole user of tonner bags at their Bulacan plant.
What was G & L’s main argument against payment?	G & L argued that the bulk bags were not delivered to their authorized representative as specified in the purchase order. They claimed that the deliveries did not conform to the agreed-upon terms.
What interest rates apply to the overdue accounts?	The legal interest rates are twelve percent (12%) per annum from October 27, 1999, to June 30, 2013, and six percent (6%) per annum from July 1, 2013, until the date of full payment, compounded annually. After that, a straight six percent (6%) interest is applied.

This case clarifies that acceptance and use of goods can create an obligation to pay, even if there are discrepancies in the delivery process. Businesses should promptly address any issues with delivered goods to avoid implied acceptance and potential payment disputes. The ruling emphasizes the importance of clear communication and documentation in sales transactions.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: NFF Industrial Corporation v. G & L Associated Brokerage and/or Gerardo Trinidad, G.R. No. 178169, January 12, 2015

January 12, 2015