gotesco to industrial

8/10/2019 Gotesco to Industrial

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G.R. No. 201167 February 27, 2013

GOTESCO PROPERTIES, INC., JOSE C. GO, EVELYN GO,LOR!ES G. ORTIG", GEORGE GO, a#$ VICENTEGO,Petitioners,vs.SPOSES EGENIO a#$ "NGELIN"F"J"R!O,Respondents.

D E C I S I O N

PERL"S%&ERN"&E, J.:

Assailed in this Petition for Review on Certiorari under Rule 45of the Rules of Court is the ul! "", "#$$ De%ision$and&e'ruar! "(, "#$" Resolution"of the Court of Appeals )CA* inCA+.R. SP No. $$"(-$, whi%h affired with odifi%ation the

Au/ust "0, "##( De%ision1of the Offi%e of the President )OP*.

T'e Fa()*

On anuar! "4, $((5, respondent+spouses Eu/enio andAn/elina &a2ardo )Sps. &a2ardo* entered into a Contra%t to

Sell

4

)%ontra%t* with petitioner+%orporation otes%o Properties,In%. )PI* for the pur%hase of a $##+s3uare eter lot identifiedas ot No. $1, lo%6 No.7, Phase No. I8 of Ever/reenE9e%utive 8illa/e, a su'division pro2e%t owned and developed'! PI lo%ated at Deparo Road, Novali%hes, Caloo%an Cit!.:he su'2e%t lot is a portion of a 'i//er lot %overed '! :ransferCertifi%ate of :itle ):C:* No. "44""#5)other title*.

;nder the %ontra%t, Sps. &a2ardo undertoo6 to pa! thepur%hase pri%e of P$"7,###.## within a $#+!ear period,in%ludin/ interest at the rate of nine per%ent )(+#5#1#7+$11$(.

Sps. &a2ardo averred that PI violated Se%tion "#(ofPresidential De%ree No. (50$#)PD (50* due to its failure to%onstru%t and provide water fa%ilities, iproveents,

infrastru%tures and other fors of developent in%ludin/ watersuppl! and li/htin/ fa%ilities for the su'division pro2e%t. :he!also alle/ed that PI failed to provide 'oundar! ar6s for ea%hlot and that the other title in%ludin/ the su'2e%t lot had note%hni%al des%ription and was even levied upon '! the an/6oSentral n/ Pilipinas )SP* without their 6nowled/e. :he! thuspra!ed that PI 'e ordered to e9e%ute the deed, to deliver the%orrespondin/ %ertifi%ate of title and the ph!si%al possession ofthe su'2e%t lot within a reasona'le period, and to developEver/reen E9e%utive 8illa/e? or in the alternative, to %an%eland@or res%ind the %ontra%t and refund the total pa!entsade plus le/al interest startin/ anuar! "###.

&or their part, petitioners aintained that at the tie of thee9e%ution of the %ontra%t, Sps. &a2ardo were a%tuall! awarethat PIs %ertifi%ate of title had no te%hni%al des%riptionins%ri'ed on it. Nonetheless, the title to the su'2e%t lot was freefro an! liens or en%u'ran%es.$$Petitioners %laied that thefailure to deliver the title to Sps. &a2ardo was 'e!ond thei%ontrol$"'e%ause while PIs petition for ins%ription of te%hni%ades%ription )RC Case No. 4"$$* was favora'l! /ranted $1'!the Re/ional :rial Court of Caloo%an Cit!, ran%h $1$ )R:CCaloo%an*, the sae was reversed$4'! the CA? this %aused thedela! in the su'division of the propert! into individual lots with

individual titles. iven the fore/oin/ in%idents, petitioners thusar/ued that Arti%le $$($ of the Civil Code )Code* B theprovision on whi%h Sps. &a2ardo an%hor their ri/ht of res%ission

B reained inappli%a'le sin%e the! were a%tuall! willin/ to%opl! with their o'li/ation 'ut were onl! prevented fro doin/so due to %ir%ustan%es 'e!ond their %ontrol. Separatel!petitioners pointed out that SPs adverse %lai@lev! whi%hwas annotated lon/ after the e9e%ution of the %ontra%t hadalread! 'een settled.

T'e Ru+#- o )'e /LR&%ENCRFO

On &e'ruar! (, "##0, the =;R+ENCR&O issued aDe%ision$5in favor of Sps. &a2ardo, holdin/ that PIs

o'li/ation to e9e%ute the %orrespondin/ deed and to deliver thetransfer %ertifi%ate of title and possession of the su'2e%t loarose and thus 'e%ae due and deanda'le at the tie Sps&a2ardo had full! paid the pur%hase pri%e for the su'2e%t lotConse3uentl!, PIs failure to eet the said o'li/ation%onstituted a su'stantial 'rea%h of the %ontra%t whi%h perfor%ewarranted its res%ission. In this re/ard, Sps. &a2ardo were/iven the option to re%over the one! the! paid to PI in theaount of P$7-,0"-.-1, plus le/al interest re%6oned fro dateof e9tra+2udi%ial deand in Septe'er "##" until full! paidPetitioners were li6ewise held 2ointl! and solidaril! lia'le for thepa!ent of oral and e9eplar! daa/es, attorne!s fees andthe %osts of suit.

T'e Ru+#- o )'e /LR& &oar$ o Co**o#er*

On appeal, the =;R oard of Coissioners affired thea'ove rulin/ in its Au/ust 1, "##0 De%ision,$7findin/ that thefailure to e9e%ute the deed and to deliver the title to Sps&a2ardo aounted to a violation of Se%tion "5 of PD (50 whi%htherefore, warranted the refund of pa!ents in favor of Sps&a2ardo.

T'e Ru+#- o )'e OP

On further appeal, the OP affired the =;R rulin/s in itsAu/ust "0, "##( De%ision.$0In so doin/, it ephasied theandator! tenor of Se%tion "5 of PD (50 whi%h re3uires the

deliver! of title to the 'u!er upon full pa!ent and found thaPI un2ustifia'l! failed to %opl! with the sae.

T'e Ru+#- o )'e C"

On petition for review, the CA affired the a'ove rulin/s withodifi%ation, fi9in/ the aount to 'e refunded to Sps. &a2ardoat the prevailin/ ar6et value of the propert! $-pursuant to therulin/ in Solid Homes v. Tan )Solid Homes*.$(

T'e Pe))o#
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Petitioners insist that Sps. &a2ardo have no ri/ht to res%ind the%ontra%t %onsiderin/ that PIs ina'ilit! to %opl! therewithwas due to reasons 'e!ond its %ontrol and thus, should not 'eheld lia'le to refund the pa!ents the! had re%eived. &urther,sin%e the individual petitioners never parti%ipated in the a%ts%oplained of nor found to have a%ted in 'ad faith, the! shouldnot 'e held lia'le to pa! daa/es and attorne!s fees.

T'e Cour)* Ru+#-

:he petition is partl! eritorious.

A. Sps. Fajardos right to rescind

It is settled that in a %ontra%t to sell, the sellers o'li/ation todeliver the %orrespondin/ %ertifi%ates of title is siultaneousand re%ipro%al to the 'u!ers full pa!ent of the pur%hasepri%e."#In this relation, Se%tion "5 of PD (50, whi%h re/ulatesthe su'2e%t transa%tion, iposes on the su'division owner ordeveloper the o'li/ation to %ause the transfer of the%orrespondin/ %ertifi%ate of title to the 'u!er upon full pa!ent,to wit

Se%. "5. Issuance of Title. T'e o#er or $ee+o4er *'a++

$e+er )'e ))+e o )'e +o) or u#) )o )'e buyer u4o# u++4aye#) o )'e +o) or u#). No fee, e9%ept those re3uired forthe re/istration of the deed of sale in the Re/istr! of Deeds,shall 'e %olle%ted for the issuan%e of su%h title. In the event aort/a/e over the lot or unit is outstandin/ at the tie of theissuan%e of the title to the 'u!er, the owner or developer shallredee the ort/a/e or the %orrespondin/ portion thereofwithin si9 onths fro su%h issuan%e in order that the title overan! full! paid lot or unit a! 'e se%ured and delivered to the'u!er in a%%ordan%e herewith. )Ephasis supplied.*

In the present %ase, Sps. &a2ardo %lai that PI 'rea%hed the%ontra%t due to its failure to e9e%ute the deed of sale and todeliver the title and possession over the su'2e%t lot,

notwithstandin/ the full pa!ent of the pur%hase pri%e ade'! Sps. &a2ardo on anuar! $0, "### "$as well as the lattersdeand for PI to %opl! with the aforeentioned o'li/ationsper the letter""dated Septe'er $7, "##". &or its part,petitioners proffer that PI %ould not have %oitted an!'rea%h of %ontra%t %onsiderin/ that its purported non+%oplian%e was lar/el! ipelled '! %ir%ustan%es 'e!ond its%ontrol i.e., the le/al pro%eedin/s %on%ernin/ the su'division ofthe propert! into individual lots. =en%e, a'sent an! su'stantial'rea%h, Sps. &a2ardo had no ri/ht to res%ind the %ontra%t.

:he Court does not find erit in petitioners %ontention.

A perusal of the re%ords shows that PI a%3uired the su'2e%t

propert! on >ar%h $#, $((" throu/h a Deed of Partition andE9%han/e"1e9e%uted 'etween it and Andres Pa%he%o)Andres*, the forer re/istered owner of the propert!. PI wasissued :C: No. "44""# on >ar%h $7, $((" 'ut the sae didnot 'ear an! te%hni%al des%ription."4=owever, no plausi'lee9planation was advan%ed '! the petitioners as to wh! thepetition for ins%ription )do%6eted as RC Case No. 4"$$* datedanuar! 7, "###,"5was filed onl! after alost ei/ht )-* !earsfro the a%3uisition of the su'2e%t propert!.

Neither did petitioners suffi%ientl! e9plain wh! PI too6 nopositive a%tion to %ause the iediate filin/ of a new petitionfor ins%ription within a reasonable time fro noti%e of the ul!$5, "##1 CA De%ision whi%h disissed PIs earlier petition

'ased on te%hni%al defe%ts, this notwithstandin/ Sps. &a2ardosfull pa!ent of the pur%hase pri%e and prior deand fodeliver! of title. PI filed the petition 'efore the R:C+Caloo%anran%h $"" )do%6eted as RC Case No. C+5#"7* onl!on November 23, 2006,"7followin/ re%eipt of the letter"0dated&e'ruar! $#, "##7 and the filin/ of the %oplaint on >a! 1"##7, alternativel! see6in/ refund of pa!ents. Fhile the%ourt a uode%ided the latter petition for ins%ription in itsfavor,"-there is no showin/ that the sae had attained finalit!or that the approved te%hni%al des%ription had in fa%t 'eenannotated on :C: No. "44""#, or even that the su'division

plan had alread! 'een approved.

>oreover, despite petitioners alle/ation"(that the %lai of SPhad 'een settled, there appears to 'e no %an%ellation of theannotations1#in PIs favor. Clearl!, the lon/ dela! in theperforan%e of PIs o'li/ation fro date of deand onSepte'er $7, "##" was unreasona'le and un2ustified. I%annot therefore 'e denied that PI su'stantiall! 'rea%hed its%ontra%t to sell with Sps. &a2ardo whi%h there'! a%%ords thelatter the ri/ht to res%ind the sae pursuant to Arti%le $$($ ofthe Code, vi!

AR:. $$($. :he power to res%ind o'li/ations is iplied inre%ipro%al ones, in %ase one of the o'li/ors should not %opl!

with what is in%u'ent upon hi.

:he in2ured part! a! %hoose 'etween the fulfillent and theres%ission of the o'li/ation, with the pa!ent of daa/es ineither %ase. =e a! also see6 res%ission, even after he has%hosen fulfillent, if the latter should 'e%oe ipossi'le.

:he %ourt shall de%ree the res%ission %laied, unless there 'e2ust %ause authoriin/ the fi9in/ of a period.

:his is understood to 'e without pre2udi%e to the ri/hts of thirdpersons who have a%3uired the thin/, in a%%ordan%e witharti%les $1-5 and $1-- and the >ort/a/e aw.

B. Effects of rescission

At this 2un%ture, it is noteworth! to point out that res%issiondoes not erel! terinate the %ontra%t and release the partiesfro further o'li/ations to ea%h other, 'ut a'ro/ates the%ontra%t fro its in%eption and restores the parties to theiori/inal positions as if no %ontra%t has 'eenade.1$Conse3uentl!, utual restitution, whi%h entails thereturn of the 'enefits that ea%h part! a! have re%eived as aresult of the %ontra%t, is thus re3uired.1":o 'e sure, it has 'eensettled that the effe%ts of res%ission as provided for in Arti%le$1-5 of the Code are e3uall! appli%a'le to %ases under Arti%le$$($, to wit

9 9 9 9

5u)ua+ re*))u)o# * reure$ # (a*e* #o+#- re*(**o#u#$er "r)(+e 111."#w$hi":his eans 'rin/in/ the parties 'a%6 totheir ori/inal status prior to the in%eption of the %ontra%t. Arti%le$1-5 of the Civil Code provides, thus

AR:. $1-5. Re*(**o# (rea)e* )'e ob+-a)o# )o re)ur# )'e)'#-* '(' ere )'e ob8e() o )'e (o#)ra(), )o-e)'er )')'er ru)*, a#$ )'e 4r(e )' )* #)ere*)9 (o#*eue#)+y, )(a# be (arre$ ou) o#+y 'e# 'e 'o $ea#$* re*(**o#(a# re)ur# 'a)eer 'e ay be ob+-a)e$ )o re*)ore.
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Neither shall res%ission ta6e pla%e when the thin/s whi%h arethe o'2e%t of the %ontra%t are le/all! in the possession of thirdpersons who did not a%t in 'ad faith.

In this %ase, indenit! for daa/es a! 'e deanded frothe person %ausin/ the loss.

T'* Cour) 'a* (o#**)e#)+y ru+e$ )'a) )'* 4ro*o#a44+e* )o re*(**o# u#$er "r)(+e 111

Sin%e Arti%le $1-5 of the Civil Code e9pressl! and %learl!states that Gres%ission %reates the o'li/ation to return thethin/s whi%h were the o'2e%t of the %ontra%t, to/ether with theirfruits, and the pri%e with its interest,G the Court finds no

2ustifi%ation to sustain petitioners position that said Arti%le $1-5does not appl! to res%ission under Arti%le $$($. 9 9911)Ephasis supplied? %itations oitted.*

In this li/ht, it %annot 'e denied that onl! PI 'enefited frothe %ontra%t, havin/ re%eived full pa!ent of the %ontra%t pri%eplus interests as earl! as anuar! $0, "###, while Sps. &a2ardoreained pre2udi%ed '! the persistin/ non+deliver! of thesu'2e%t lot despite full pa!ent. As a ne%essar! %onse3uen%e,%onsiderin/ the propriet! of the res%ission as earlier dis%ussed,

Sps. &a2ardo ust 'e a'le to re%over the pri%e of the propert!pe//ed at its prevailin/ ar6et value %onsistent with theCourts pronoun%eent in Solid Homes,14vi!

Indeed, there would 'e un2ust enri%hent if respondents SolidHomes, Inc. % &urita Soliven are ade to pa! onl! thepur%hase pri%e plus interest. It is definite that the value of thesu'2e%t propert! alread! es%alated after alost two de%adesfro the tie the petitioner paid for it. Eu)y a#$ 8u*)(e$()a)e )'a) )'e #8ure$ 4ar)y *'ou+$ be 4a$ )'e ar:e)a+ue o )'e +o), o)'er*e, re*4o#$e#)* So+$ /oe*, I#(.; Pur)a So+e# ou+$ e#r(' )'e*e+e* a) )'e earitie Or/aniation )I>O*. &or this purpose, the partiese9e%uted two %ontra%ts.

:he first %ontra%t partl! reads5

:hat in %onsideration of the pa!ent herein entioned to 'eade '! the &irst Part! )defendant*, the Se%ond Part! a/reesto furnish, suppl!, install and inte/rate the ost odern
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IN:ERA:ED RIDE SS:E> lo%ated at Northwestern;niversit! >OCJ OA: in a%%ordan%e with the /eneral%onditions, plans and spe%ifi%ations of this %ontra%t.

:he se%ond %ontra%t essentiall! %ontains the sae ters and%onditions as follows7

:hat in %onsideration of the pa!ent herein entioned to 'eade '! the &irst Part! )defendant*, the Se%ond Part! a/reesto furnish, suppl!, install K inte/rate the ost odern

IN:ERA:ED RIDE SS:E> lo%ated at Northwestern;niversit! >OCJ OA: in a%%ordan%e with the /eneral%onditions, plans and spe%ifi%ations of this %ontra%t.

:O:A COS: PhP "0#,###.##)Ephasis in the ori/inal*

Coon to 'oth %ontra%ts are the followin/ provisions )$* theIS and its %oponents ust 'e %opliant with the I>O andC=ED standard and with anuals for siulators@a2ore3uipent? )"* the %ontra%ts a! 'e terinated if one part!%oits a su'stantial 'rea%h of its underta6in/? and )1* an!dispute under the a/reeent shall first 'e settled utuall!'etween the parties, and if settleent is not o'tained, resort

shall 'e sou/ht in the %ourts of law.

Su'se3uentl!, Northwestern paid P$ illion as down pa!entto Enterprises. :he forer then assued possession ofNorthwesterns old IS as trade+in pa!ent for its servi%e.:hus, the 'alan%e of the %ontra%t pri%e reained at P$.(0illion.0

:wo onths after the e9e%ution of the %ontra%ts, Enterprises te%hni%ians delivered various aterials to thepro2e%t site. =owever, when the! started installin/ the%oponents, respondent halted the operations. Enterprisesthen as6ed for an e9planation.-

Northwestern 2ustified the wor6 stoppa/e upon its findin/ thatthe delivered e3uipent were su'standard.(It e9plainedfurther that Enterprises violated the ters and %onditions ofthe %ontra%ts, sin%e the delivered %oponents )$* were old? )"*did not have instru%tion anuals and warrant! %ertifi%ates? )1*%ontained indi%ations of 'ein/ re%onditioned a%hines? and )4*did not eet the I>O and C=ED standards. :hus,Northwestern deanded %oplian%e with the a/reeent andsu//ested that Enterprises eet with the forersrepresentatives to iron out the situation.

Instead of heedin/ this su//estion, Enterprises filed on -Septe'er "##4 a Coplaint$#for 'rea%h of %ontra%t andpra!ed for the followin/ sus P$.(0 illion, representin/ the

aount that it would have earned, had Northwestern notstopped it fro perforin/ its tas6s under the two %ontra%ts? atleast P$##,### as oral daa/es? at least P$##,### '! wa!of e9eplar! daa/es? at least P$##,### as attorne!s feesand liti/ation e9penses? and %ost of suit. Petitioner alle/ed thatNorthwestern 'rea%hed the %ontra%ts '! orderin/ the wor6stoppa/e and thus preventin/ the installation of the aterialsfor the IS.

Northwestern denied the alle/ation. In its defense, it assertedthat sin%e the e3uipent delivered were not in a%%ordan%e withthe spe%ifi%ations provided '! the %ontra%ts, all su%%eedin/wor6s would 'e futile and would entail unne%essar! e9penses.=en%e, it pra!ed for the res%ission of the %ontra%ts and ade a

%opulsor! %ounter%lai for a%tual, oral, and e9eplar!daa/es, and attorne!s fees.

:he R:C held 'oth parties at fault. It found that Northwesternundul! halted the operations, even if the %ontra%ts %alled for a%opleted pro2e%t to 'e evaluated '! the C=ED. In turn, the'rea%h %oitted '! Enterprises %onsisted of the deliver!of su'standard e3uipent that were not %opliant with I>Oand C=ED standards as re3uired '! the a/reeent.

Invo6in/ the e3uita'le prin%iple that Gea%h part! ust 'ear itsown loss,G the trial %ourt treated the %ontra%ts as ipossi'le operforan%e without the fault of either part! or as havin/ 'eendissolved '! utual %onsent. Conse3uentl!, it ordered utuarestitution, whi%h would there'! restore the parties to theiori/inal positions as follows$$

A%%ordin/l!, plaintiff is here'! ordered to restore to thedefendant all the e3uipent o'tained '! reason of the &irsContra%t and refund the downpa!ent of P$,###,###.## to thedefendant? and for the defendant to return to the plaintiff thee3uipent and aterials it withheld '! reason of the non%ontinuan%e of the installation and inte/ration pro2e%t. In theevent that restoration of the old e3uipent ta6en fro

defendants preises is no lon/er possi'le, plaintiff is here'!ordered to pa! the appraised value of defendants olde3uipent at P$,###,###.##. i6ewise, in the event tharestoration of the e3uipent and aterials delivered '! theplaintiff to the defendant is no lon/er possi'le, defendant ishere'! ordered to pa! its appraised value at P$,#"0,4-#.##.

>oreover, plaintiff is li6ewise ordered to restore and return althe e3uipent o'tained '! reason of the Se%ond Contra%t, or irestoration or return is not possi'le, plaintiff is ordered to pa!the value thereof to the defendant.

SO ORDERED.

A//rieved, 'oth parties appealed to the CA. Fith ea%h of thepointin/ a fin/er at the other part! as the violator of the%ontra%ts, the appellate %ourt ultiatel! deterined that Enterprises was the one /uilt! of su'stantial 'rea%h and lia'lefor attorne!s fees.

:he CA appre%iated that sin%e the parties essentiall! sou/ht tohave an IS %opliant with the C=ED and I>O standards, itwas Enterprises deliver! of defe%tive e3uipent thaateriall! and su'stantiall! 'rea%hed the %ontra%ts. Althou/hthe %ontra%ts %onteplated a %opleted pro2e%t to 'eevaluated '! C=ED, Northwestern %ould not 2ust sit idl! '!when it was apparent that the %oponents delivered weresu'standard.

:he CA held that Northwestern onl! e9er%ised ordinar!pruden%e to prevent the inevita'le re2e%tion of the ISdelivered '! Enterprises. i6ewise, the appellate %ourdisre/arded petitioners e9%use that the e3uipent deliveredi/ht not have 'een the %oponents intended to 'e installedfor it would 'e %ontrar! to huan e9perien%e to delivee3uipent fro Hueon Cit! to aoa/ Cit! with no intention touse it.

:his tie, appl!in/ Arti%le $$($ of the Civil Code, the CAde%lared the res%ission of the %ontra%ts. It then pro%eeded toaffir the R:Cs order of utual restitution. Additionall!, the
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appellate %ourt /ranted P5#,### to Northwestern '! wa! ofattorne!s fees.

efore this Court, petitioner rehashes all the ar/uents he hadraised in the %ourts a 3uo.$"=e aintains his pra!er for a%tualdaa/es e3uivalent to the aount that he would have earned,had respondent not stopped hi fro perforin/ his tas6sunder the two %ontra%ts? oral and e9eplar! daa/es?attorne!s fees? liti/ation e9penses? and %ost of suit.

=en%e, the pertinent issue to 'e resolved in the instant appealis whether the CA /ravel! erred in )$* findin/ su'stantial'rea%h on the part of Enterprises? )"* refusin/ petitioners%lais for daa/es, and )1* awardin/ attorne!s fees toNorthwestern.

RLING OF T/E CORT

Su'stantial rea%hes of the Contra%ts

Althou/h the R:C and the CA %on%urred in orderin/ restitution,the %ourts a 3uo, however, differed on the 'asis thereof. :heR:C applied the e3uita'le prin%iple of utual fault, while theCA applied Arti%le $$($ on res%ission.

:he power to res%ind the o'li/ations of the in2ured part! isiplied in re%ipro%al o'li/ations, su%h as in this %ase. On thiss%ore, the CA %orre%tl! applied Arti%le $$($, whi%h providesthus

:he power to res%ind o'li/ations is iplied in re%ipro%al ones,in %ase one of the o'li/ors should not %opl! with what isin%u'ent upon hi.

:he in2ured part! a! %hoose 'etween the fulfillent and theres%ission of the o'li/ation, with the pa!ent of daa/es ineither %ase. =e a! also see6 res%ission, even after he has

%hosen fulfillent, if the latter should 'e%oe ipossi'le.

:he %ourt shall de%ree the res%ission %laied, unless there 'e2ust %ause authoriin/ the fi9in/ of a period.

:he two %ontra%ts re3uire no less than su'stantial 'rea%h'efore the! %an 'e res%inded. Sin%e the %ontra%ts do notprovide for a definition of su'stantial 'rea%h that wouldterinate the ri/hts and o'li/ations of the parties, we appl! thedefinition found in our 2urispruden%e.

:his Court defined in Cannu v. alan/$1that su'stantial, unli6esli/ht or %asual 'rea%hes of %ontra%t, are fundaental'rea%hes that defeat the o'2e%t of the parties in enterin/ into

an a/reeent, sin%e the law is not %on%erned with trifles.$4

:he 3uestion of whether a 'rea%h of %ontra%t is su'stantialdepends upon the attendin/ %ir%ustan%es.$5

In the %ase at 'ar, the parties e9pli%itl! a/reed that theaterials to 'e delivered ust 'e %opliant with the C=EDand I>O standards and ust 'e %oplete with anuals. Asidefro these %lear provisions in the %ontra%ts, the %ourts a 3uosiilarl! found that the intent of the parties was to repla%e theold IS in order to o'tain C=ED a%%reditation forNorthwesterns aritie+related %ourses.

A%%ordin/ to C=ED >eorandu Order )C>O* No. $#, Seriesof $(((, as aended '! C>O No. $1, Series of "##5, an!siulator used for siulator+'ased trainin/ shall 'e %apa'le osiulatin/ the operatin/ %apa'ilities of the ship'oarde3uipent %on%erned. :he siulation ust 'e a%hieved at alevel of ph!si%al realis appropriate for trainin/ o'2e%tivesin%lude the %apa'ilities, liitations and possi'le errors of su%he3uipent? and provide an interfa%e throu/h whi%h a trainee%an intera%t with the e3uipent, and the siulatedenvironent.

iven these %onditions, it was thus in%u'ent upon Enterprises to suppl! the %oponents that would %reate an ISthat would effe%tivel! fa%ilitate the learnin/ of the students.

=owever, Enterprises isera'l! failed in eetin/ itsresponsi'ilit!. As %ontained in the findin/s of the CA and theR:C, petitioner supplied su'standard e3uipent when idelivered %oponents that )$* were old? )"* did not haveinstru%tion anuals and warrant! %ertifi%ates? )1* 'oreindi%ations of 'ein/ re%onditioned a%hines? and, all told, )4*i/ht not have et the I>O and C=ED standards. =i/hli/htin/the defe%ts of the delivered aterials, the CA 3uotedrespondents testionial eviden%e as follows$7

H In parti%ular whi%h of these e3uipent of C=EDre3uireents were not %oplied withL

A :he Radar >aa, 'e%ause the! delivered onl! $#+in%h PPIthat is the onitor of the Radar. :hat is $7+in%h and the/!ro%opass with two )"* repeaters and the histor! %ard. :he/!ro%opass + there is no ar6er, there is no odel, there isno serial nu'er, no /i'al, no /!ros%ope and a 'ul' to wor6it properl! to point the true North 'e%ause it is ver! iportant tothe Cadets to learn where is the true North 'ein/ indi%ated '!the >aster !ro%opass.

9 9 9 9

H >r. Fitness, one of the defe%ts !ou noted down in thishistor! %ard is that the aster /!ro%opass had no /i'als/!ros%ope and 'alls and was repla%ed with an ordinar! ele%tri%otor. So what is the Ipli%ation of thisL

A e%ause those /i'als, 'alls and the /!ros%ope it let the/!ro%opass to wor6 so it will point the true North 'ut the!'ein/ repla%ed with the ordinar! otor used for to!s so it wilnot indi%ate the true North.

H So what happens if it will not indi%ate the true NorthL

A It is ver! 'i/ pro'le for ! %adets 'e%ause the! ust, to

learn into s%hool where is the true North and what is thae3uipent to 'e used on 'oard.

H One of the defe%ts is that the steerin/ wheel was that of anordinar! autoo'ile. And what is the ipli%ation of thisL

A e%ause. on 'oard >aa, we are usin/ the real steerin/wheel and the %adets will 'e ipli%ated if the! will noti%e thathe ship have the sae steerin/ wheel as the %ar so it is notadvisa'le for the.
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H. And another one is that the /!ro%opass repeater was onl!refur'ished and it has no serial nu'er. Fhat is wron/ withthatL

A It should 'e ori/inal >aa 'e%ause this /!ro repeater, itust to repeat also the true North 'ein/ indi%ated '! the>aster !ro Copass so it will not wor6 properl!, I dont 6nowit will wor6 properl!. );nders%orin/ supplied*

Evidentl!, the aterials delivered were less li6el! to pass the

C=ED standards, 'e%ause the navi/ation s!ste to 'einstalled i/ht not a%%uratel! point to the true north? and thesteerin/ wheel delivered was one that %ae fro anautoo'ile, instead of one used in ships. o/i%all!, '! nostret%h of the ia/ination %ould these for part of the ostodern IS %opliant with the I>O and C=ED standards.

Even in the instant appeal, Enterprises does not refute thatthe e3uipent it delivered was su'standard. =owever, itreiterates its re2e%ted e9%use that Northwestern should haveade an assessent onl! after the %opletion of theIS.$0:hus, petitioner stresses that it was Northwestern that'rea%hed the a/reeent when the latter halted the installationof the aterials for the IS, even if the parties had

%onteplated a %opleted pro2e%t to 'e evaluated '! C=ED.=owever, as aptl! %onsidered '! the CA, respondent %ould not2ust Gsit still and wait for su%h da! that its a%%reditation a! not'e /ranted '! C=ED due to the apparent su'standarde3uipent installed in the 'rid/e s!ste.G$-:he appellate %ourt%orre%tl! ephasied that, '! that tie, 'oth parties wouldhave in%urred ore %osts for nothin/.

iven that petitioner, without 2ustifi%ation, supplied su'standard%oponents for the new IS, it is thus %lear that its violationwas not erel! in%idental, 'ut dire%tl! related to the essen%e ofthe a/reeent pertainin/ to the installation of an IS %opliantwith the C=ED and I>O standards.

Conse3uentl!, the CA %orre%tl! found su'stantial 'rea%h on thepart of petitioner.

In %ontrast, Northwesterns 'rea%h, if an!, was %hara%teried'! the appellate %ourt as sli/ht or %asual. "$! wa! of ne/ativedefinition, a 'rea%h is %onsidered %asual if it does notfundaentall! defeat the o'2e%t of the parties in enterin/ intoan a/reeent. &urtherore, for there to 'e a 'rea%h to 'e/inwith, there ust 'e a Gfailure, without le/al e9%use, to perforan! proise whi%h fors the whole or part of the %ontra%t.G""

=ere, as dis%ussed, the stoppa/e of the installation was2ustified. :he a%tion of Northwestern %onstituted a le/al e9%useto prevent the hi/hl! possi'le re2e%tion of the IS. =en%e, 2ustas the CA %on%luded, we find that Northwestern e9er%isedordinar! pruden%e to avert a possi'le wasta/e of tie, effort,resour%es and also of theP".( illion representin/ the value ofthe new IS.

A%tual Daa/es, >oral and E9eplar! Daa/es, andAttorne!s &ees

As 'etween the parties, su'stantial 'rea%h %an %learl! 'eattri'uted to Enterprises."#w$hi"Conse3uentl!, it is not the in2uredpart! who %an %lai daa/es under Arti%le $$0# of the CivilCode. &or this reason, we %on%ur in the result of the CAsDe%ision den!in/ petitioner a%tual daa/es in the for of lostearnin/s, as well as oral and e9eplar! daa/es.

Fith respe%t to attorne!s fees, Arti%le ""#- of the Civil Codeallows the /rant thereof when the %ourt dees it 2ust ande3uita'le that attorne!s fees should 'e re%overed. An award oattorne!s fees is proper if one was for%ed to liti/ate and in%ure9penses to prote%t ones ri/hts and interest '! reason of anun2ustified a%t or oission on the part of the part! fro whothe award is sou/ht."1

Sin%e we affir the CAs findin/ that it was not Northwestern'ut Enterprises that 'rea%hed the %ontra%ts withou

2ustifi%ation, it follows that the appellate %ourt %orre%tl! awardedattorne!s fees to respondent. Nota'l!, this liti/ation %ould havealto/ether 'een avoided if petitioner heeded respondentssu//estion to ai%a'l! settle? or, 'etter !et, if in the first pla%epetitioner delivered the ri/ht aterials as re3uired '! the%ontra%ts.

IN 8IEF :=EREO&, the assailed "0 ul! "##( De%ision of theCourt of Appeals in CA+.R. C8 No. --(-( is here'!

A&&IR>ED.

SO ORDERED.

OPTI55 !EVELOP5ENT &"N?,Petitioner,

vs.SPOSES &ENIGNO V. JOVELL"NOS a#$ LOR!ES RJOVELL"NOS,Respondents.

D E C I S I O N

PERL"S%&ERN"&E, J.:

Assailed in this petition for review on %ertiorari$are theDe%ision"dated >a! "(, "##( and Resolution1dated Au/us$#, "##( of the Court of Appeals )CA* in CA+.R. SP No$#44-0 whi%h reversed the De%ision4dated De%e'er "0"##0 of the Re/ional :rial Court of Caloo%an Cit!, ran%h $"-)R:C* in Civil Case No. C+"$-70 that, in turn, affired the

De%ision5dated une -, "##0 of the >etropolitan :rial Courtran%h 51 of that sae %it! )>e:C* in Civil Case No. #7+"--1#orderin/ respondents+spouses eni/no and ourdesovellanos )Sps. ovellanos* to, inter alia,va%ate the preisesof the propert! su'2e%t of this %ase.

:he &a%ts

On April "7, "##5, Sps. ovellanos entered into a Contra%t toSell7with Palera =oes, In%. )Palera =oes* for thepur%hase of a residential house and lot situated in lo%6 1, ot$4, 8illa Ale/ria Su'division, Caloo%an Cit! )su'2e%t propert!for a total %onsideration of P$,#$5,###.##. Pursuant to the%ontra%t, Sps. ovellanos too6 possession of the su'2e%

propert! upon a down pa!ent of P($,5##.##, underta6in/ topa! the reainin/ 'alan%e of the %ontra%t pri%e in e3uaonthl! installents of P$1,$#0.## for a period of $# !earsstartin/ une $", "##5.0

On Au/ust "", "##7, Palera =oes assi/ned all its ri/htstitle and interest in the Contra%t to Sell in favor of petitioneOptiu Developent an6 )Optiu* throu/h a Deed o

Assi/nent of even date.-

On April $#, "##7, Optiu issued a Noti%e of Delin3uen%!and Can%ellation of Contra%t to Sell(for Sps. ovellanoss
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failure to pa! their onthl! installents despite several writtenand ver'al noti%es.$#

In a final Deand etter dated >a! "5, "##7,$$Optiure3uired Sps. ovellanos to va%ate and deliver possession ofthe su'2e%t propert! within seven )0* da!s whi%h, however,reained unheeded. =en%e, Optiu filed, on Nove'er 1,"##7, a %oplaint for unlawful detainer$"'efore the >e:C,do%6eted as Civil Case No. #7+"--1#. Despite havin/ 'eenserved with suons, to/ether with a %op! of the

%oplaint,$1

Sps. ovellanos failed to file their answer within thepres%ri'ed re/leentar! period, thus proptin/ Optiu toove for the rendition of 2ud/ent.$4

:hereafter, Sps. ovellanos filed their opposition with otion toadit answer, 3uestionin/ the 2urisdi%tion of the %ourt, aon/others. &urther, the! filed a >otion to Reopen and Set theCase for Preliinar! Conferen%e, whi%h the >e:C denied.

:he >e:C Rulin/

In a De%ision$5dated une -, "##0, the >e:C ordered Sps.ovellanos to va%ate the su'2e%t propert! and pa! Optiureasona'le %opensation in the aount of P5,###.## for its

use and o%%upation until possession has 'een surrendered. Itheld that Sps. ovellanoss possession of the said propert!was '! virtue of a Contra%t to Sell whi%h had alread! 'een%an%elled for non+pa!ent of the stipulated onthl! installentpa!ents. As su%h, their Gri/hts of possession over the su'2e%tpropert! ne%essaril! terinated or e9pired and hen%e, their%ontinued possession thereof %onstituteMd unlawful detainer.G$7

Dissatisfied, Sps. ovellanos appealed to the R:C, %laiin/that Optiu %ounsel ade the 'elieve that a %oproisea/reeent was 'ein/ prepared, thus their de%ision not toen/a/e the servi%es of %ounsel and their %on%oitant failure tofile an answer.$0

:he! also assailed the 2urisdi%tion of the >e:C, %laiin/ thatthe %ase did not erel! involve the issue of ph!si%alpossession 'ut rather, 3uestions arisin/ fro their ri/hts undera %ontra%t to sell whi%h is a atter that is in%apa'le ofpe%uniar! estiation and, therefore, within the 2urisdi%tion ofthe R:C.$-

:he R:C Rulin/

In a De%ision$(dated De%e'er "0, "##0, the R:C affired the>e:Cs 2ud/ent, holdin/ that the latter did not err in refusin/to adit Sps. ovellanos s 'elatedl! filed answer %onsiderin/the andator! period for its filin/. It also affired the >e:Csfindin/ that the a%tion does not involve the ri/hts of the

respe%tive parties under the %ontra%t 'ut erel! the re%over!of possession '! Optiu of the su'2e%t propert! after thespouses default."#

A//rieved, Sps. ovellanos oved for re%onsideration whi%hwas, however, denied in a Resolution "$dated une "0, "##-.=en%e, the petition 'efore the CA reiteratin/ that the R:Cerred in affirin/ the de%ision of the >e:C with respe%t to

)a* the non+adission of their answer to the%oplaint? and

)'* the 2urisdi%tion of the >e:C over the %oplaint forunlawful detainer.""

:he CA Rulin/

In an Aended De%ision"1dated >a! "(, "##(, the CAreversed and set aside the R:Cs de%ision, rulin/ to disissthe %oplaint for la%6 of 2urisdi%tion. It found that the%ontrovers! does not onl! involve the issue of possession 'utalso the validit! of the %an%ellation of the Contra%t to Sell and

the deterination of the ri/hts of the parties thereunder as welas the /overnin/ law, aon/ others, Repu'li% A%t No. )RA*755"."4

A%%ordin/l!, it %on%luded that the su'2e%t atter is one whi%h isin%apa'le of pe%uniar! estiation and thus, within the

2urisdi%tion of the R:C."5

;ndaunted, Optiu oved for re%onsideration whi%h wasdenied in a Resolution"7dated Au/ust $#, "##(. =en%e, theinstant petition, su'ittin/ that the %ase is one for unlawfudetainer, whi%h falls within the e9%lusive ori/inal 2urisdi%tion othe uni%ipal trial %ourts, and not a %ase in%apa'le ope%uniar! estiation %o/nia'le solel! '! the re/ional tria

%ourts.

:he Courts Rulin/

:he petition is eritorious. Fhat is deterinative of the natureof the a%tion and the %ourt with 2urisdi%tion over it are thealle/ations in the %oplaint and the %hara%ter of the reliesou/ht, not the defenses set up in an answer."0

A %oplaint suffi%ientl! alle/es a %ause of a%tion for unlawfudetainer if it re%ites that

)a* initiall!, possession of the propert! '! the

defendant was '! %ontra%t with or '! toleran%e of theplaintiff?

)'* eventuall!, su%h possession 'e%ae ille/al uponnoti%e '! plaintiff to defendant of the terination othe latters ri/ht of possession?

)%* thereafter, defendant reained in possession othe propert! and deprived plaintiff of the en2o!enthereof? and

)d* within one !ear fro the last deand ondefendant to va%ate the propert!, plaintiff instituted the%oplaint for e2e%tent."-

Corollaril!, the onl! issue to 'e resolved in an unlawful detaine%ase is ph!si%al or aterial possession of the propert!involved, independent of an! %lai of ownership '! an! of theparties involved."(

In its %oplaint, Optiu alle/ed that it was '! virtue of theApril "7, "##5 Contra%t to Sell that Sps. ovellanos wereallowed to ta6e possession of the su'2e%t propert!. =oweversin%e the latter failed to pa! the stipulated onthl!installents, notwithstandin/ several written and ver'al noti%esade upon the, it %an%elled the said %ontra%t as per theNoti%e of Delin3uen%! and Can%ellation dated April $#, "##7
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Fhen Sps. ovellanos refused to va%ate the su'2e%t propert!despite repeated deands, Optiu instituted the presenta%tion for unlawful detainer on Nove'er 1, "##7, or withinone !ear fro the final deand ade on >a! "5, "##7.

Fhile the R:C upheld the >e:Cs rulin/ in favor of Optiu,the CA, on the other hand, de%lared that the >e:C had no

2urisdi%tion over the %oplaint for unlawful detainer, reasonin/that the %ase involves a atter whi%h is in%apa'le of pe%uniar!estiation B i.e., the validit! of the %an%ellation of the Contra%t

to Sell and the deterination of the ri/hts of the parties underthe %ontra%t and law B and hen%e, within the 2urisdi%tion of theR:C. :he Court disa/rees. >etropolitan :rial Courts are%onditionall! vested with authorit! to resolve the 3uestion ofownership raised as an in%ident in an e2e%tent %ase wherethe deterination is essential to a %oplete ad2udi%ation of theissue of possession.1#Con%oitant to the e2e%tent %ourtsauthorit! to loo6 into the %lai of ownership for purposes ofresolvin/ the issue of possession is its authorit! to interpret the%ontra%t or a/reeent upon whi%h the %lai is preised. :hus,in the %ase of Oron%e v. CA,1$wherein the liti/ants opposin/%lais for possession was hin/ed on whether their writtena/reeent refle%ted the intention to enter into a sale or erel!an e3uita'le ort/a/e, the Court affired the propriet! of thee2e%tent %ourts e9aination of the ters of the a/reeent in

3uestion '! holdin/ that, G'e%ause etropolitan trial %ourts areauthoried to loo6 into the ownership of the propert! in%ontrovers! in e2e%tent %ases, it 'ehooved >:C ran%h 4$ toe9aine the 'ases for petitioners %lai of ownership thatentailed interpretation of the Deed of Sale with Assuption of>ort/a/e.G1"Also, in ;nion an6 of the Philippines v. >aunlad=oes, In%.11);nion an6*, %itin/ Sps. Refu/ia v. CA,14theCourt de%lared that >e:Cs have authorit! to interpret %ontra%tsin unlawful detainer %ases, vi.15

:he authorit! /ranted to the >e:C to preliinaril! resolve theissue of ownership to deterine the issue of possessionultiatel! allows it to interpret and enfor%e the %ontra%t ora/reeent 'etween the plaintiff and the defendant. :o den! the>e:C 2urisdi%tion over a %oplaint erel! 'e%ause the issueof possession re3uires the interpretation of a %ontra%t willeffe%tivel! rule out unlawful detainer as a reed!. As stated, inan a%tion for unlawful detainer, the defendants ri/ht to possessthe propert! a! 'e '! virtue of a %ontra%t, e9press or iplied?

%orollaril!, the terination of the defendants ri/ht to possesswould 'e /overned '! the ters of the sae %ontra%t.

Interpretation of the %ontra%t 'etween the plaintiff and thedefendant is inevita'le 'e%ause it is the %ontra%t that initiall!/ranted the defendant the ri/ht to possess the propert!? it isthis sae %ontra%t that the plaintiff su'se3uentl! %lais wasviolated or e9tin/uished, terinatin/ the defendants ri/ht topossess. Fe ruled in Sps. Refu/ia v. CA that B where theresolution of the issue of possession hin/es on a deterinationof the validit! and interpretation of the do%uent of title or an!other %ontra%t on whi%h the %lai of possession is preised,the inferior %ourt a! li6ewise pass upon these issues.

:he >e:Cs rulin/ on the ri/hts of the parties 'ased on itsinterpretation of their %ontra%t is, of %ourse, not %on%lusive, 'utis erel! provisional and is 'indin/ onl! with respe%t to theissue of possession. )Ephases supplied? %itations oitted*

In the %ase at 'ar, the unlawful detainer suit filed '! Optiua/ainst Sps. ovellanos for ille/all! withholdin/ possession ofthe su'2e%t propert! is siilarl! preised upon the %an%ellation

or terination of the Contra%t to Sell 'etween the. Indeed, itwas well within the 2urisdi%tion of the >e:C to %onsider theters of the parties a/reeent in order to ultiatel! deterinethe fa%tual 'ases of Optius possessor! %lais over thesu'2e%t propert!. Pro%eedin/ a%%ordin/l!, the >e:C held thaSps. ovellanoss non+pa!ent of the installents due hadrendered the Contra%t to Sell without for%e and effe%t, thusdeprivin/ the latter of their ri/ht to possess the propert! su'2e%of said %ontra%t.17:he fore/oin/ disposition aptl! s3uares withe9istin/ 2urispruden%e. As the Court siilarl! held in the ;nionan6 %ase, the sellers %an%ellation of the %ontra%t to se

ne%essaril! e9tin/uished the 'u!ers ri/ht of possession ovethe propert! that was the su'2e%t of the terinated a/reeent.1

8eril!, in a %ontra%t to sell, the prospe%tive seller 'inds hiselfto sell the propert! su'2e%t of the a/reeent e9%lusivel! to theprospe%tive 'u!er upon fulfillent of the %ondition a/reed uponwhi%h is the full pa!ent of the pur%hase pri%e 'ut reservin/ tohiself the ownership of the su'2e%t propert! despite deliver!thereof to the prospe%tive 'u!er.1-

:he full pa!ent of the pur%hase pri%e in a %ontra%t to sell is asuspensive %ondition, the non+fulfillent of whi%h prevents theprospe%tive sellers o'li/ation to %onve! title fro 'e%oin/effe%tive,1(as in this %ase. &urther, it is si/nifi%ant to note that

/iven that the Contra%t to Sell in this %ase is one whi%h has forits o'2e%t real propert! to 'e sold on an installent 'asis, thesaid %ontra%t is espe%iall! /overned '! B and thus, ust 'ee9ained under the provisions of B RA 755", or the GRealt!Installent u!er Prote%tion A%tG, whi%h provides for the ri/htsof the 'u!er in %ase of his default in the pa!ent of su%%eedin/installents. rea6in/ down the provisions of the law, theCourt, in the %ase of Rillo v. CA, 4#e9plained the e%hani%s o%an%ellation under RA 755" whi%h are 'ased ainl! on theaount of installents alread! paid '! the 'u!er under thesu'2e%t %ontra%t, to wit4$

iven the nature of the %ontra%t of the parties, the responden%ourt %orre%tl! applied Repu'li% A%t No. 755". Jnown as the

>a%eda aw, R.A. No. 755" re%o/nies in %onditional sales ofall 6inds of real estate )industrial, %oer%ial, residential* theri/ht of the seller to %an%el the %ontra%t upon non+pa!ent ofan installent '! the 'u!er, whi%h is sipl! an event thaprevents the o'li/ation of the vendor to %onve! title froa%3uirin/ 'indin/ for%e. It also provides the ri/ht of the 'u!eron installents in %ase he defaults in the pa!ent osu%%eedin/ installents, vi.

)$* Fhere he has paid at least two !ears of installents,

)a* :o pa!, without additional interest, the unpaid installentsdue within the total /ra%e period earned '! hi, whi%h ishere'! fi9ed at the rate of one onth /ra%e period for ever!

one !ear of installent pa!ents ade

Provided, :hat this ri/ht shall 'e e9er%ised '! the 'u!er onl!on%e in ever! five !ears of the life of the %ontra%t and itse9tensions, if an!. )'* If the %ontra%t is %an%elled, the sellershall refund to the 'u!er the %ash surrender value of thepa!ents on the propert! e3uivalent to fift! per %ent of the totapa!ents ade and, after five !ears of installents, anadditional five per %ent ever! !ear 'ut not to e9%eed ninet! per%ent of the total pa!ents ade

Provided, :hat the a%tual %an%ellation of the %ontra%t shall ta6epla%e after %an%ellation or the deand for res%ission of the
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%ontra%t '! a notarial a%t and upon full pa!ent of the %ashsurrender value to the 'u!er.

Down pa!ents, deposits or options on the %ontra%t shall 'ein%luded in the %oputation of the total nu'er of installentsade.

)"* Fhere he has paid less than two !ears in installents, Se%.4. 9 9 9 the seller shall /ive the 'u!er a /ra%e period of not lessthan si9t! da!s fro the date the installent 'e%ae due. If

the 'u!er fails to pa! the installents due at the e9piration ofthe /ra%e period, the seller a! %an%el the %ontra%t after thirt!da!s fro re%eipt '! the 'u!er of the noti%e of %an%ellation orthe deand for res%ission of the %ontra%t '! a notarial a%t.)Ephasis and unders%orin/ supplied*

Pertinentl!, sin%e Sps. ovellanos failed to pa! their stipulatedonthl! installents as found '! the >e:C, the Courte9aines Optius %oplian%e with Se%tion 4 of RA 755",as a'ove+3uoted and hi/hli/hted, whi%h is the provisionappli%a'le to 'u!ers who have paid less than two )"* !ears+worth of installents. Essentiall!, the said provision providesfor three )1* re3uisites 'efore the seller a! a%tuall! %an%el thesu'2e%t %ontra%t first,the seller shall /ive the 'u!er a 60%$ay

-ra(e 4ero$ to 'e re%6oned fro the date the installent'e%ae due? second, the seller ust /ive the 'u!er a #o)(eo (a#(e++a)o#@$ea#$ or re*(**o# by #o)ara+ a()if the'u!er fails to pa! the installents due at the e9piration of thesaid /ra%e period? and third, the seller a! a%tuall! %an%el the%ontra%t onl! after thirt! )1#* da!s fro the 'u!ers re%eipt ofthe said noti%e of %an%ellation@deand for res%ission '!notarial a%t. In the present %ase, the 7#+da! /ra%e periodautoati%all! operated4"in favor of the 'u!ers, Sps. ovellanos,and too6 effe%t fro the tie that the aturit! dates of theinstallent pa!ents lapsed. Fith the said /ra%e periodhavin/ e9pired 'ereft of an! installent pa!ent on the part ofSps. ovellanos,41Optiu then issued a notaried Noti%e ofDelin3uen%! and Can%ellation of Contra%t on April $#, "##7.&inall!, in pro%eedin/ with the a%tual %an%ellation of the

%ontra%t to sell, Optiu /ave Sps. ovellanos an additionalthirt! )1#* da!s within whi%h to settle their arrears and reinstatethe %ontra%t, or sell or assi/n their ri/hts to another.44

It was onl! after the e9piration of the thirt! da! )1#* period didOptiu treat the %ontra%t to sell as effe%tivel! %an%elled Ba6in/ as it did a final deand upon Sps. ovellanos to va%atethe su'2e%t propert! onl! on >a! "5, "##7. :hus, 'ased on thefore/oin/, the Court finds that there was a valid and effe%tive%an%ellation of the Contra%t to Sell in a%%ordan%e with Se%tion4 of RA 755" and sin%e Sps. ovellanos had alread! lost theirri/ht to retain possession of the su'2e%t propert! as a%onse3uen%e of su%h %an%ellation, their refusal to va%ate andturn over possession to Optiu a6es out a valid %ase forunlawful detainer as properl! ad2ud/ed '! the >e:C.

F=ERE&ORE, the petition is RAN:ED. :he De%ision dated>a! "(, "##( and Resolution dated Au/ust $#, "##( of theCourt of Appeals in CA+.R. SP No. $#44-0 are SE: ASIDE.:he De%ision dated une -, "##0 of >etropolitan :rial Court,ran%h 51, Caloo%an Cit! in Civil Case No. #7+"--1# is here'!REINS:A:ED.

SO ORDERED.

G.R. No. 1>A7> Ja#uary 13, 201B

FIL%EST"TE PROPERTIES, INC. "N! FIL%EST"TENET=OR? INC.,Petitioners,vs.SPOSES CONR"!O "N! 5"RI" VICTORI"RONILLO,Respondents.

D E C I S I O N

PERED, J.:

efore the Court is a petition for review on %ertiorari underRule 45 of the $((0 Rules .of Civil Pro%edure assailin/ theDe%ision$of the Court of Appeals in CA+.R. SP No. $##45#whi%h affired the De%ision of the Offi%e of the President inO.P. Case No. #7+&+"$7.

As %ulled fro the re%ords, the fa%ts are as follow

Petitioner &il+Estate Properties, In%. is the owner anddeveloper of the Central Par6 Pla%e :ower while %o+petitione&il+Estate Networ6, In%. is its authoried ar6etin/ a/entRespondent Spouses Conrado and >aria 8i%toria Ron3uillopur%hased fro petitioners an -"+s3uare eter %ondoiniuunit at Central Par6 Pla%e :ower in >andalu!on/ Cit! for a pre+

sellin/ %ontra%t pri%e of &I8E >IION ONE =;NDREDSE8EN:+&O;R :=O;SAND ON )P5,$04,###.##*. On "(

Au/ust $((0, respondents e9e%uted and si/ned a ReservationAppli%ation A/reeent wherein the! deposited P"##,###.## asreservation fee. As a/reed upon, respondents paid the fuldownpa!ent of P$,55","##.## and had 'een pa!in/the P71,171.11 onthl! aortiations until Septe'er $((-.

;pon learnin/ that %onstru%tion wor6s had stoppedrespondents li6ewise stopped pa!in/ their onthl!aortiation. Claiin/ to have paid a total of P",$(-,(4(.(7 topetitioners, respondents throu/h two )"* su%%essive lettersdeanded a full refund of their pa!ent with interest. Fhentheir deands went unheeded, respondents were %onstrained

to file a Coplaint for Refund and Daa/es 'efore the=ousin/ and and ;se Re/ulator! oard )=;R*Respondents pra!ed for rei'urseent@refundof P",$(-,(4(.(7 representin/ the total aortiationpa!ents, P"##,###.## as and '! wa! of oral daa/esattorne!s fees and other liti/ation e9penses.

On "$ O%to'er "###, the =;R issued an Order of Defaulta/ainst petitioners for failin/ to file their Answer within there/leentar! period despite servi%e of suons."

Petitioners filed a otion to lift order of default and atta%hedtheir position paper attri'utin/ the dela! in %onstru%tion to the$((0 Asian finan%ial %risis. Petitioners denied %oittin/ fraud

or isrepresentation whi%h %ould entitle respondents to anaward of oral daa/es.

On $1 une "##", the =;R, throu/h Ar'iter Att!. oselito &>el%hor, rendered 2ud/ent orderin/ petitioners to 2ointl! andseverall! pa! respondents the followin/ aount

a* :he aount of :FO >IION ONE =;NDREDNINE:+EI=: :=O;SAND NINE =;NDRED&OR: NINE PESOS K (7@$## )P",$(-,(4(.(7* withinterest thereon at twelve per%ent )$"


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'* ONE =;NDRED :=O;SAND PESOS)P$##,###.##* as oral daa/es,

%* &I&: :=O;SAND PESOS )P5#,###.##* asattorne!s fees,

d* :he %osts of suit, and

e* An adinistrative fine of :EN :=O;SAND PESOS)P$#,###.##* pa!a'le to this Offi%e fifteen )$5* da!s

upon re%eipt of this de%ision, for violation of Se%tion"# in relation to Se%tion 1- of PD (50. 1

:he Ar'iter %onsidered petitioners failure to develop the%ondoiniu pro2e%t as a su'stantial 'rea%h of their o'li/ationwhi%h entitles respondents to see6 for res%ission with pa!entof daa/es. :he Ar'iter also stated that ere e%onoi%hardship is not an e9%use for %ontra%tual and le/al dela!.

Petitioners appealed the Ar'iters De%ision throu/h a petitionfor review pursuant to Rule II of the $((7 Rules of Pro%edureof =;R. On $0 &e'ruar! "##5, the oard of Coissionersof the =;R denied4the petition and affired the Ar'itersDe%ision. :he =;R reiterated that the depre%iation of the

peso as a result of the Asian finan%ial %risis is not a fortuitousevent whi%h will e9ept petitioners fro the perforan%e oftheir %ontra%tual o'li/ation.

Petitioners filed a otion for re%onsideration 'ut it wasdenied5on - >a! "##7. :hereafter, petitioners filed a Noti%e of

Appeal with the Offi%e of the President. On $- April "##0,petitioners appeal was disissed7'! the Offi%e of thePresident for la%6 of erit. Petitioners oved for are%onsideration 'ut their otion was denied0on "7 ul! "##0.

Petitioners sou/ht relief fro the Court of Appeals throu/h apetition for review under Rule 41 %ontainin/ the saear/uents the! raised 'efore the =;R and the Offi%e of the

President

I.

:=E =ONORAE O&&ICE O& :=E PRESIDEN: ERRED INA&&IR>IN :=E DECISION O& :=E =ONORAE=O;SIN AND AND ;SE RE;A:OR OARD ANDORDERIN PE:I:IONERS+APPEAN:S :O RE&;NDRESPONDEN:S+APPEEES :=E S;> O& P",$(-,(4(.(7FI:= $"< IN:ERES: &RO> - OC:OER $((- ;N:I&; PAID, CONSIDERIN :=A: :=E CO>PAIN:S:A:ES NO CA;SE O& AC:ION AAINS: PE:I:IONERS+

APPEAN:S.

II.

:=E =ONORAE O&&ICE O& :=E PRESIDEN: ERRED INA&&IR>IN :=E DECISION O& :=E O&&ICE EOFORDERIN PE:I:IONERS+APPEAN:S :O PARESPONDEN:S+APPEEES :=E S;> O& P$##,###.## AS>ORA DA>AES AND P5#,###.## AS A::ORNES &EESCONSIDERIN :=E ASENCE O& AN &AC:;A OREA ASIS :=ERE&OR.

III.

:=E =ONORAE O&&ICE O& :=E PRESIDEN: ERRED INA&&IR>IN :=E DECISION O& :=E =O;SIN AND AND;SE RE;A:OR OARD ORDERIN PE:I:IONERS

APPEAN:S :O PA P$#,###.## AS AD>INIS:RA:I8E&INE IN :=E ASENCE O& AN &AC:;A OR EA ASIS:O S;PPOR: S;C= &INDIN.-

On 1# ul! "##-, the Court of Appeals denied the petition forreview for la%6 of erit. :he appellate %ourt e%hoed the=;R Ar'iters rulin/ that Ga 'u!er for a

%ondoiniu@su'division unit@lot unit whi%h has not 'eendeveloped in a%%ordan%e with the approved%ondoiniu@su'division plan within the tie liit fo%opl!in/ with said developental re3uireent a! opt forei'urseent under Se%tion "# in relation to Se%tion "1 ofPresidential De%ree )P.D.* (50 9 9 9.G(:he appellate %oursupported the =;R Ar'iters %on%lusion, whi%h was affired'! the =;R oard of Coission and the Offi%e of thePresident, that petitioners failure to develop the %ondoiniupro2e%t is tantaount to a su'stantial 'rea%h whi%h warrants arefund of the total aount paid, in%ludin/ interest. :heappellate %ourt pointed out that petitioners failed to prove thathe Asian finan%ial %risis %onstitutes a fortuitous event whi%h%ould e9%use the fro the perforan%e of their %ontra%tuaand statutor! o'li/ations. :he appellate %ourt also affired the

award of oral daa/es in li/ht of petitioners un2ustifiedrefusal to satisf! respondents %lai and the le/alit! of theadinistrative fine, as provided in Se%tion "# of PresidentiaDe%ree No. (50.

Petitioners sou/ht re%onsideration 'ut it was denied in aResolution$#dated $$ De%e'er "##- '! the Court of Appeals.

A//rieved, petitioners filed the instant petition advan%in/su'stantiall! the sae /rounds for review

A.

:=E =ONORAE CO;R: O& APPEAS ERRED F=EN I:A&&IR>ED IN :O:O :=E DECISION O& :=E O&&ICE O&:=E PRESIDEN: F=IC= S;S:AINED RESCISSION ANDRE&;ND IN &A8OR O& :=E RESPONDEN:S DESPI:EACJ O& CA;SE O& AC:ION.

.

RAN:IN &OR :=E SAJE O& AR;>EN: :=A: :=EPE:I:IONERS ARE IAE ;NDER :=E PRE>ISES, :=E=ONORAE CO;R: O& APPEAS ERRED F=EN I:

A&&IR>ED :=E =;E A>O;N: O& IN:ERES: O& :FE8EPERCEN: )$"ED IN :O:O :=E DECISION O& :=EO&&ICE O& :=E PRESIDEN: INC;DIN :=E PA>EN:O& P$##,###.## AS >ORA DA>AES, P5#,###.## AS

A::ORNES &EES AND P$#,###.## AS AD>INIS:RA:I8E&INE IN :=E ASENCE O& AN &AC:;A OR EA ASIS:O S;PPOR: S;C= CONC;SIONS.$$

Petitioners insist that the %oplaint states no %ause of a%tion'e%ause the! alle/edl! have not %oitted an! a%t oisrepresentation aountin/ to 'ad faith whi%h %ould entitlerespondents to a refund. Petitioners %lai that there was a
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ere dela! in the %opletion of the pro2e%t and that the! onl!resorted to Gsuspension and reforattin/ as a testaent totheir %oitent to their 'u!ers.G Petitioners attri'ute thedela! to the $((0 Asian finan%ial %risis that 'efell the realestate industr!. Invo6in/ Arti%le $$04 of the New Civil Code,petitioners aintain that the! %annot 'e held lia'le for afortuitous event.

Petitioners %ontest the pa!ent of a hu/e aount of intereston a%%ount of suspension of developent on a pro2e%t. :he!

li6en their situation to a 'an6 whi%h this Court, in Overseasan6 v. Court of Appeals,$"ad2ud/ed as not lia'le to pa!interest on deposits durin/ the period that its operations areordered suspended '! the >onetar! oard of the Centralan6.

astl!, petitioners aver that the! should not 'e ordered to pa!oral daa/es 'e%ause the! never intended to %ause dela!,and a/ain 'laed the Asian e%onoi% %risis as the dire%t,pro9iate and onl! %ause of their failure to %oplete thepro2e%t. Petitioners su'it that oral daa/es should not 'eawarded unless so stipulated e9%ept under the instan%esenuerated in Arti%le ""#- of the New Civil Code. astl!,petitioners refuse to pa! the adinistrative fine 'e%ause thedela! in the pro2e%t was %aused not '! their own de%eptive

intent to defraud their 'u!ers, 'ut due to unforeseen%ir%ustan%es 'e!ond their %ontrol.

:hree issues are presented for our resolution $* whether ornot the Asian finan%ial %risis %onstitute a fortuitous event whi%hwould 2ustif! dela! '! petitioners in the perforan%e of their%ontra%tual o'li/ation? "* assuin/ that petitioners are lia'le,whether or not $"< interest was %orre%tl! iposed on the

2ud/ent award, and 1* whether the award of oral daa/es,attorne!s fees and adinistrative fine was proper.

It is apparent that these issues were repeatedl! raised '!petitioners in all the le/al fora. :he rulin/s were %onsistent thatfirst, the Asian finan%ial %risis is not a fortuitous event that

would e9%use petitioners fro perforin/ their %ontra%tualo'li/ation? se%ond, as a result of the 'rea%h %oitted '!petitioners, respondents are entitled to res%ind the %ontra%t andto 'e refunded the aount of aortiations paid in%ludin/interest and daa/es? and third, petitioners are li6ewiseo'li/ated to pa! attorne!s fees and the adinistrative fine.

:his petition did not present an! 2ustifi%ation for us to deviatefro the rulin/s of the =;R, the Offi%e of the President andthe Court of Appeals.

Indeed, the non+perforan%e of petitioners o'li/ation entitlesrespondents to res%ission under Arti%le $$($ of the New CivilCode whi%h states

Arti%le $$($. :he power to res%ind o'li/ations is iplied inre%ipro%al ones, in %ase one of the o'li/ors should not %opl!with what is in%u'ent upon hi.

:he in2ured part! a! %hoose 'etween the fulfillent and theres%ission of the o'li/ation, with pa!ent of daa/es in either%ase. =e a! also see6 res%ission, even after he has %hosenfulfillent, if the latter should 'e%oe ipossi'le.

>ore in point is Se%tion "1 of Presidential De%ree No. (50, therule /overnin/ the sale of %ondoinius, whi%h provides

Se%tion "1. Non+&orfeiture of Pa!ents. "#w$hi"No installenpa!ent ade '! a 'u!er in a su'division or %ondoiniupro2e%t for the lot or unit he %ontra%ted to 'u! shall 'e forfeitedin favor of the owner or developer when the 'u!er, after duenoti%e to the owner or developer, desists fro further pa!endue to the failure of the owner or developer to develop thesu'division or %ondoiniu pro2e%t a%%ordin/ to the approvedplans and within the tie liit for %opl!in/ with the saeSu%h 'u!er a!, at his option, 'e rei'ursed the total aountpaid in%ludin/ aortiation interests 'ut e9%ludin/ delin3uen%!interests, with interest thereon at the le/al rate. )Ephasis

supplied*.

Confora'l! with these provisions of law, respondents areentitled to res%ind the %ontra%t and deand rei'urseent forthe pa!ents the! had ade to petitioners.

Nota'l!, the issues had alread! 'een settled '! the Court inthe %ase of &il+Estate Properties, In%. v. Spouseso$1proul/ated on $0 Au/ust "##0, where the Court statedthat the Asian finan%ial %risis is not an instan%e of %aso fortuitoearin/ the sae fa%tual ilieu as the instant %ase, .R. No.$75$74 involves the sae %opan!, &il+Estate, al'eit a'out adifferent %ondoiniu propert!. :he %opan! li6ewiserene/ed on its o'li/ation to respondents therein '! failin/ to

develop the %ondoiniu pro2e%t despite su'stantial pa!enof the %ontra%t pri%e. &il+Estate advan%ed the sae ar/uentthat the $((0 Asian finan%ial %risis is a fortuitous event whi%h

2ustifies the dela! of the %onstru%tion pro2e%t. &irst off, the Cour%lassified the issue as a 3uestion of fa%t whi%h a! not 'eraised in a petition for review %onsiderin/ that there was novarian%e in the fa%tual findin/s of the =;R, the Offi%e of thePresident and the Court of Appeals. Se%ond, the Court %itedthe previous rulin/s of Asian Constru%tion and DevelopenCorporation v. Philippine Coer%ial International an6 $4and>ondra/on eisure and Resorts Corporation v. Court o

Appeals$5holdin/ that the $((0 Asian finan%ial %risis did not%onstitute a valid 2ustifi%ation to rene/e on o'li/ations. :heCourt e9pounded

Also, we %annot /eneralie that the Asian finan%ial %risis in$((0 was unforeseea'le and 'e!ond the %ontrol of a 'usiness%orporation. It is unfortunate that petitioner apparentl! et with%onsidera'le diffi%ult! e./. in%rease %ost of aterials and la'oreven 'efore the s%heduled %oen%eent of its real estatepro2e%t as earl! as $((5. =owever, a real estate enterpriseen/a/ed in the pre+sellin/ of %ondoiniu units is %on%ededl!a aster in pro2e%tions on %oodities and %urren%!oveents and 'usiness ris6s. :he flu%tuatin/ oveent othe Philippine peso in the forei/n e9%han/e ar6et is anever!da! o%%urren%e, and flu%tuations in %urren%! e9%han/erates happen ever!da!, thus, not an instan%e of %aso fortuito.$7

:he aforeentioned de%ision 'e%oes a pre%edent to future%ases in whi%h the fa%ts are su'stantiall! the sae, as in this%ase. :he prin%iple of stare de%isis, whi%h eans adheren%e to

2udi%ial pre%edents, applies.

In said %ase, the Court ordered the refund of the totaaortiations paid '! respondents plus 7< le/al interes%oputed fro the date of deand. :he Court also awardedattorne!s fees. Fe follow that rulin/ in the %ase 'efore us.

:he resultin/ odifi%ation of the award of le/al interest is, alsoin line with our re%ent rulin/ in Na%ar v. aller!&raes,$0e'od!in/ the aendent introdu%ed '! thean/6o Sentral n/ Pilipinas >onetar! oard in SP+>
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12/17

Cir%ular No. 0(( whi%h pe//ed the interest rate at 7ar%h $-, $(--, $5(SCRA "4*.

ACCORDIN, the petition is RAN:ED. :he 3uestionedde%ision of respondent appellate %ourt is SE: ASIDE and thede%ision of the trial %ourt is REINS:A:ED.

SO ORDERED.

INDUSTRIAL MANAGEMENT INTERNATIONAL

DEVELOPMENT CORP. (INIMACO),petitioner,vs. NATIONAL LABOR RELATIONS COMMISSION,

This is a petition for certiorariassailing the Resolutiondated September 4, 1991 issued by the National LaborRelations Commission in RAB!""#$11%4 on thealleged ground that it &ommitted a gra'e abuse ofdis&retion amounting to la&( of )urisdi&tion in upholdingthe Alias *rit of +e&ution issued by the Labor Arbiter-hi&h de'iated from the dispositi'e portion of the

.e&ision dated /ar&h 1#, 19%$, thereby holding thatthe liability of the si respondents in the &ase belo- issolidary despite the absen&e of the -ord 0solidary0 inthe dispositi'e portion of the .e&ision, -hen theirliability should merely be )ointS)&)

The fa&tual ante&edents are undisputed2Supreme

"n September 19%4, pri'ate respondent +nri3ue Sulit,So&orro /ahinay, +smeraldo egarido, Tita Ba&usmo,5ino Niere, !irginia Ba&us, Roberto Nemen6o, .ariogo,and Roberto Alegarbes 7led a &omplaint -ith the.epartment of Labor and +mployment, Regional


15/17

Arbitration Bran&h No !"" in Cebu City against 8ilipinasCarbon /ining Corporation, 5erardo Si&at, Antonio5on6ales, Chiu Chin 5in, Lo uan Chin, and petitioner"ndustrial /anagement .e'elopment Corporation:"N"/AC;9,># and .AR"; 5; thetotal a-ard of ,@99$1, or the totalaggregate a-ard of ;N+ DN.R+.T"RTE+"5T T;DSAN. 8"!+DN.R+. +"5TE+"5T +S;S AN.1=1## :1%,@%%1< to be deposited-ith this Commission -ithin ten :1#H

;n September , 19%$, petitioner 7led a 0/otion toIuash Alias *rit of +e&ution and Set Aside.e&ision,0GHalleging among others that the alias -rit ofee&ution altered and &hanged the tenor of the

de&ision by &hanging the liability of thereinrespondents from )oint to solidary, by the insertion ofthe -ords 0AN.=;R0 bet-een 0Antonio5on6ales="ndustrial /anagement .e'elopmentCorporation and 8ilipinas Carbon and /iningCorporation, et al0 o-e'er, in an order datedSeptember 14, 19%$, the Labor Arbiter denied themotion/isoedp

;n ;&tober >, 19%$, petitioner appealed G4Hthe LaborArbiters ;rder dated September 14, 19%$ to therespondent NLRC/isedp

The respondent NLRC dismissed the appeal in a

.e&isionG@Hdated August 1, 19%%, the pertinentportions of -hi&h read2

0"n matters aMe&ting labor rights andlabor )usti&e, -e ha'e al-ays adoptedthe liberal approa&h -hi&h fa'ors theeer&ise of labor rights and -hi&h isbene7&ial to labor as a means to gi'efull meaning and import to the&onstitutional mandate to aMordprote&tion to labor Considering thefa&tual &ir&umstan&es in this &ase,there is no doubt in our mind that therespondents herein are &alled upon to

pay, )ointly and se'erally, the &laims ofthe &omplainants as -as the lattersprayers "nasmu&h as respondentsherein ne'er &ontro'erted the &laims ofthe &omplainants belo-, there is noreason -hy &omplainants prayershould not be granted 8urther, in line-ith the po-ers granted to theCommission under Arti&le >1% :&< of theLabor &ode, to -ai'e any error, defe&tor irregularity -hether in substan&e orin form in a pro&eeding before Ds, *ehold that the *rit of +e&ution be gi'endue &ourse in all respe&ts0+dp
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16/17

;n Fuly 1, 19%9, petitioner 7led a 0/otion To CompelSheriM To A&&ept ayment ;f >,19%#@ Representing;ne Sith ro Rata Share of Respondent "N"/AC; As8ull and 8inal Satisfa&tion of Fudgment As to SaidRespondent0GHThe pri'ate respondents opposed themotion "n an ;rderG$Hdated August 1@, 19%9, the LaborArbiter denied the motion ruling thus2

0*+R+8;R+, responsi'e to theforegoing respondent "N"/AC;s

/otions are hereby .+N"+. The SheriMof this ;K&e is order :si&< to a&&ept"N"/AC;s tender payment :si&< of thesum of >,19%#@, as partialsatisfa&tion of the )udgment and topro&eed -ith the enfor&ement of theAlias *rit of +e&ution of the le'iedproperties, no- issued by this ;K&e,for the full and 7nal satisfa&tion of themonetary a-ard granted in the instant&ase

0S; ;R.+R+.0+dps&

etitioner appealed the abo'e ;rder of the LaborArbiter but this -as again dismissed by the respondentNLRC in its ResolutionG%Hdated September 4, 1991-hi&h held that2

0The arguments of respondent on the7nality of the dispositi'e portion of thede&ision in this &ase is beside the point*hat is important is that theCommission has ruled that the *rit of+e&ution issued by the Labor Arbiterin this &ase is proper "t is not really&orre&t to say that said *rit of+e&ution 'aried the terms of the

)udgment At most, &onsidering thenature of labor pro&eedings there -as,an ambiguity in said dispositi'e portion-hi&h -as subse3uently &lari7ed bythe Labor Arb

gotesco to industrial

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