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G.R. No. 177086 : Albert M. Ching, et al. v. Felix M. Bantolo, et al.

G.R. No. 177086 : Albert M. Ching, et al. v. Felix M. Bantolo, et al.

PHILIPPINE SUPREME COURT DECISIONS

SECOND DIVISION

G.R. No. 177086 : December 5, 2012

ALBERT M. CHING and ROMEO J. BAUTISTA, Petitioners, v. FELIX M. BANTOLO, ANTONIO O. ADRIANO and EULOGIO STA. CRUZ, JR., substituted by his children, represented by RAUL STA. CRUZ, JR., Respondents.

D E C I S I O N

DEL CASTILLO, J.:

"It is essential that for damages to be awarded, a claimant must satisfactorily prove during the trial that they have a factual basis, and that the defendants acts have a casual connection to them."1ςrνll

This Petition for Review on Certiorari2ςrνll under Rule 45 of the Rules of Court assails the Decision3ςrνll dated July 31, 2006 and the Resolution4ςrνll dated March 12, 2007 of the Court of Appeals (CA) in CA-G.R. CV No. 79886.

Factual Antecedents

Respondents Felix M. Bantolo (Bantolo), Antonio O. Adriano and Eulogio Sta. Cruz,5ςrνll Jr. are owners of several parcels of land situated in Tagaytay City, to wit:

Registered owner:

Felix M. Bantolo - Original Certificates of Title (OCT) Nos. 787,

788, 789 & 799

Antonio O. Adriano - OCT Nos. 793, 805, 806 & 807

Eulogio Sta. Cruz, Jr. - OCT Nos. 790, 791, 800 & 801.6ςrνll

On April 3, 2000, respondents executed in favor of petitioners Albert Ching (Ching) and Romeo J. Bautista a Special Power of Attorney (SPA)7ςrνll authorizing petitioners to obtain a loan using respondents properties as collateral. Pertinent portions of the SPA are reproduced below:

1. To borrow money and apply for and secure a loan on their account with any bank or financial institution in such sum or sums which the herein Attorney-in-fact shall [deem] fit and advisable and the maximum extent of which shall be the loanable value of our real properties based on the attached appraisal report of Asian Appraisal Co., Inc. dated March 24, 1995 on the "Fair Market

Value Appraisal" of said realties and/or parcels of land registered in our names respectively in the Registry of Deeds of Tagaytay City and located thereat, to wit:


Registrant
1. OCT NO. OP-790Eulogio Sta. Cruz, Jr.
2. OCT NO. OP-791-do-
3. OCT NO. OP-800-do-
4. OCT NO. OP-801-do-
5. OCT NO. OP-793Antonio O. Adriano
6. OCT NO. OP-805-do-
7. OCT NO. OP-806-do-
8. OCT NO. OP-807-do-
9. OCT NO. OP-787Felix M. Bantolo
10. OCT NO. OP-788-do-
11. OCT NO. OP-789-do-
12. OCT NO. OP-799-do-

the photocopies of which certificates of title are hereto attached and made integral parts hereof, and we hereby authorize and/or vest authority unto the herein attorney-in-fact to deed, convey, and transfer by way of first mortgage all our rights of ownership and interest over the said parcels as technically described in and covered by the aforementioned original certificates of title in favor of any bank or financial institution of their choice, judgment and discretion subject to the usual conditions or such other terms which may be imposed by said bank or financial institutions, in order to secure and ensure the repayment of any loan indebtedness or obligation which our herein attorneys-in-fact may obtain by virtue of this power and authority with the further authority to receive the proceeds of such loan whether in cash, check or other bills of exchange with the corresponding obligation on the part of the attorney-in-fact to account for or render an accounting of the loan proceeds to us or in our favor;

2. To sign, execute, and deliver any deed or deeds of real estate mortgage over the aforestated parcels of land and the certificates of title covering the same in favor of the lending bank or financial institution or to secure any surety agreement, bond or undertaking with any Surety Company who may issue a surety or performance bond to ensure the repayment of any loan taken or obtained by our herein Attorneys-in-fact pursuant to the herein special power of attorney;

3. To do and perform any or all acts which may be necessary to carry out and/or implement the foregoing powers and authority vested by us unto aforenamed attorney-in-fact.

4. GIVING and GRANTING, as well as ratifying and confirming all acts and things which our said Attorney-in-fact will do and perform or has done and performed in or about the premises which acts and things done or performed or still to be done or performed are, for all legal intents and purpose are our own as if we ourselves were personally present.8ςrνll

Without notice to petitioners, respondents executed a Revocation of Power of Attorney9ςrνll effective at the end of business hours of July 17, 2000.10ςrνll

On July 18, 2000, the Philippine Veterans Bank (PVB) approved the loan application of petitioner Ching in the amount of P25 million for a term of five years subject to certain conditions, to wit:

1) Third party mortgages acceptable. Within one (1) year, however, all mortgaged properties should be in the name of American Boulevard or Albert Ching;

2) Submission of new tax declarations free from claimants;

3) Submission of certification/clearance from DENR that said properties are not subject to forest reserve;

4) To require right of way of at least 6 meters wide which can be used as an actual access road.11ςrνll

On July 31, 2000, petitioner Ching thru a letter12ςrνll informed respondents of the approval of the loan.13ςrνll

Sometime in the first week of August 2000, petitioners learned about the revocation of the SPA.14ςrνll Consequently, petitioners sent a letter15ςrνll to respondents demanding that the latter comply with the agreement by annulling the revocation of the SPA.16ςrνll

On September 8, 2000, petitioners filed before the Regional Trial Court (RTC) of Quezon City a Complaint17ςrνll for Annulment of Revocation of SPA, Enforcement of SPA and/or interest in the properties covered by said SPA and Damages against respondents. Petitioners later amended18ςrνll the Complaint, docketed as Q00-41851, to include an alternative prayer to have them declared as the owners of one-half of the properties covered by the SPA.19ςrνll

Petitioners alleged that the SPA is irrevocable because it is a contract of agency coupled with interest.20ςrνll According to them, they agreed to defray the costs or expenses involved in processing the loan because respondents promised that they would have an equal share in the proceeds of the loan or the subject properties.21ςrνll

In their Answer,22ςrνll respondents contended that petitioners have no cause of action.23ςrνllRespondents alleged that they executed the SPA in favor of petitioners because of their assurance that they would be able to get a loan in the amount of P50 million and that P30 million would be given to respondents within a months time.24ςrνll When the one-month period expired, respondents complained to petitioner Ching and asked him to advance the amount of P500,000.00.25ςrνll Petitioner Ching acceded to their request on the condition that they hand over to him the original titles for safekeeping.26ςrνllRespondents, in turn, asked petitioner Ching to give them P1 million in exchange for the titles.27ςrνll Petitioner Ching agreed and so they gave him the titles.28ςrνll However, he never gave them the money.29ςrνll They asked him to return the titles, but he refused.30ςrνll Later, they were informed that the loan was approved in the amount of P25 million and that their share would be P6 million.31ςrνll Since it was not the amount agreed upon, respondents revoked the SPA and demanded the return of the titles.32ςrνll

Ruling of the Regional Trial Court

On December 18, 2002, the RTC rendered a Decision33ςrνll in favor of petitioners. It upheld the validity of the SPA and declared its revocation illegal and unjust.34ςrνll But although the SPA was declared valid, the RTC held that it could no longer be enforced because the circumstances present at the time of its execution have changed.35ςrνll For this reason, the RTC found respondents liable for all the damages caused by the illegal revocation.36ςrνll The RTC also declared petitioners owners of one-half of the subject properties.37ςrνll As to the deficiency in the payment of the docket fees, if any, the RTC ruled that it would be considered a lien on the judgment.38ςrνll Thus:chanroblesvirtuallawlibrary

WHEREFORE, premises considered, judgment is hereby rendered declaring the petitioners to be the owners of 50% or one-half, pro-indiviso, of all the parcels of lands covered by OCT Nos. OP-787, OP-788, OP-789, OP-799, OP-793, OP-805, OP-806, OP-807, OP-790, OP-791, OP-800 and OP-801.

Furthermore, [respondents] are ordered to pay petitioners jointly and solidarily the following sums, to wit:

1. As actual damages:

a. The amount covered by the receipts which the petitioners used in procuring the loan after the SPA was executed amounting to P949,960.40; and

b. The amount of P500,000.00 as actual damages for the amount paid out to the [respondents] in exchange for the original certificates of title;

2. As moral damages, the amount of Php500,000.00 in favor of Albert M. Ching;

3. As exemplary damages, the amount of Php100,000.00; and

4. As attorneys fees, the amount of Php100,000.00.

No costs.

SO ORDERED.39ςrνll

Aggrieved, respondents elevated the case to the CA.

Pending appeal, a Motion for Intervention with attached Petition-in-Intervention40ςrνll was filed by First Aikka Development, Inc. and Sadamu Watanabe. They alleged that respondents individually executed Deeds of Irrevocable SPAs authorizing Tagaytay and Taal Management Corporation (TTMC), represented by its Japanese President Wataru Minagawa, to sell, lease, mortgage, or administer the subject properties;41ςrνll and that by virtue of the said SPAs, they entered into a

Memorandum of Agreement and a Supplement to Memorandum of Agreement with respondents and TTMC, whereby respondents agreed to sell the subject property to them.42ςrνll Thus, they prayed that the Decision of the RTC be vacated and set aside, and that judgment be rendered in their favor.43ςrνll

Ruling of the Court of Appeals

On June 15, 2004, the CA issued a Resolution44ςrνll denying the Motion for Intervention for being filed out of time.

On July 31, 2006, the CA modified the Decision of the RTC. The CA ruled that petitioners are not entitled to one-half of the subject properties because it is contrary to human experience for a person to give one-half of his property to someone he barely knows.45ςrνll The CA likewise ruled that petitioners are not entitled to reimbursement because they failed to show that the receipts presented in evidence were incurred in relation to the loan application.46ςrνll As to the award of exemplary damages, the CA deleted the same because respondents did not act in a wanton, fraudulent, reckless, oppressive or malevolent manner.47ςrνll The decretal portion of the CA Decision reads:chanroblesvirtuallawlibrary

WHEREFORE, premises considered, the assailed decision is hereby MODIFIED as follows:

1. The Revocation of the Power of Attorney executed by the respondents is hereby declared null and void. The Special Power of Attorney dated April 3, 2000 is considered valid and subsisting;

2. The amount of P500,000.00 paid by the petitioner Ching to the respondents should be deducted from the amount to be loaned;

3. The expenses incurred and to be incurred in the processing of the loan application must be borne by the petitioners alone;

4. The petitioners are not entitled to the one-half of all the parcerls of land covered by OCT Nos. OP-787, OP-788, OP-789, OP-799, OP-793, OP-805, OP-806, OP-807, OP-790, OP-791, OP-800 and OP-801; and

5. The award of moral damages in the amount of P500,000.00 and attorneys fees in the amount of P100,000.00 are in order. The award of exemplary damages is deleted.

SO ORDERED.48ςrνll

Petitioners moved for reconsideration but the CA denied the same in a Resolution49ςrνll dated March 12, 2007.

Issues

Hence, this petition raising the following issues:

A.

WHETHER X X X THE CA ERRED IN RULING THAT PETITIONERS RECOVERY OF THE ACTUAL DAMAGES IN THE AMOUNT OF PHP500,000.00 BE MADE CONTINGENT UPON THE OBTENTION OF A LOAN THROUGH THE SUBJECT SPECIAL POWER OF ATTORNEY, WHICH THE RESPONDENTS, IN THE FIRST PLACE, REFUSED TO HONOR AND REVOKED IN BAD FAITH AND ILLEGALLY.

B.

WHETHER X X X THE CA ERRED IN RULING THAT THE PETITIONERS ARE NOT ENTITLED TO ONE-HALF OF THE RESPONDENTS PROPERTIES DESPITE THE FINDING OF THE RTC THAT THE CONSIDERATION THEREFOR WAS THAT THE PETITIONERS SHALL PAY FOR THE LOAN TO BE OBTAINED UTILIZING THE RESPONDENTS PROPERTIES AND THE FINDING OF THE RTC THAT PETITIONER CHING, TO HIS GRAVE PREJUDICE, FAILED TO UTILIZE THE PROCEEDS OF THE LOAN FOR THE LATTERS BUSINESS PLAN AS WELL AS TO RECOVER HIS SHARE IN THE EXPENSES, WHICH PETITIONER CHING ADVANCED IN PROCURING THE LOAN.

C.

WHETHER X X X THE CA ERRED IN RULING THAT THE EXPENSES INCURRED AND TO BE INCURRED BY THE PETITIONERS IN APPLYING FOR A LOAN THROUGH THE SPA SHOULD BE BORNE BY THE PETITIONERS DESPITE THE EXISTENCE OF AN AGREEMENT TO THE CONTRARY BETWEEN THE PETITIONERS AND RESPONDENTS, THE EXISTENCE OF WHICH AGREEMENT WAS DULY FOUND BY THE RTC.

D.

WHETHER X X X THE CA ERRED IN RULING THAT RESPONDENTS ARE NOT LIABLE TO PAY EXEMPLARY DAMAGES FOR REVOKING THE SPA IN BAD FAITH ON THE RATIOCINATION THAT THE RESPONDENTS DID NOT ACT IN A WANTON, FRAUDULENT, RECKLESS, OPPRESSIVE OR MALEVOLENT MANNER BECAUSE THE RESPONDENTS WERE PURPORTEDLY UNSATISFIED WITH THE AMOUNT OF THE LOAN APPROVED.50ςrνll

Petitioners Arguments

Petitioners, in essence, seek the reinstatement of the Decision of the RTC.51ςrνll

They contend that the CAs directive that the actual damages in the amount of P500,000.00 be deducted from the amount to be loaned, is a conditional judgment, and thus, null and void.52ςrνll In addition, they claim that they are entitled to one-half of the subject properties,53ςrνll and to reimbursement of all expenses incurred in procuring the loan.54ςrνll Finally, they impute error on the part of the CA in deleting the award for exemplary damages, contending that the revocation was done by respondents in a malevolent and oppressive manner.55ςrνll

Respondents Arguments

Respondents, on the other hand, argue that the judgment was not conditional because the CA categorically declared respondents liable to return the amount of P500,000.00 to petitioner Ching.56ςrνll They insist that they never agreed to give petitioners one-half of their respective properties.57ςrνll Neither did they agree to reimburse petitioner Ching all the expenses incurred in obtaining the loan.58ςrνll

Petitioner Ching, in fact, admitted in court that he agreed to shoulder all the expenses.59ςrνll Also, petitioners are not entitled to exemplary damages because when respondents revoked the SPA, they did not act in a wanton, fraudulent, reckless, oppressive or malevolent manner.60ςrνll

Our Ruling

The petition is partly meritorious.

There is no question that the SPA executed by respondents in favor of petitioners is a contract of agency coupled with interest.61ςrνll This is because their bilateral contract depends upon the agency.62ςrνll Hence, it "cannot be revoked at the sole will of the principal."63ςrνll

The only issue therefore is the extent of the liability of respondents and the damages to be awarded to petitioners.

Petitioner Ching is entitled to actual
damages in the amount of P500,000.00
without any condition.

In exchange for his possession of the titles, petitioner Ching advanced the amount of P500,000.00 to respondents. Considering that the loan application with PVB did not push through, respondents are liable to return the said amount to petitioner Ching.

In ordering the award of P500,000.00, the CA decreed:chanroblesvirtuallawlibrary

2. The amount of P500,000.00 paid by the petitioner Ching to the respondents should be deducted from the amount to be loaned;64ςrνll

Obviously, the language employed by the CA made the judgment conditional. The return of the amount of P500,000.00 should not depend on the happening of a future event.65ςrνll Whether or not a loan is obtained by petitioners, respondents are liable to pay the amount of P500,000.00 as actual damages. Thus, the dispositive portion of the CA Decision should be modified by ordering respondents to pay actual damages in the amount of P500,000.00, without any condition.

Petitioners are not entitled to one-half
of the subject properties.

As to petitioners claim to one-half of the subject properties, we agree with the CA that:chanroblesvirtuallawlibrary

x x x it is far from human experience that a person will give half of his property to another person whom he barely knows. It is clear from the records of the case that the respondents do not know petitioner Ching. It was petitioner Bautista who introduced him to respondent Bantolo. The respondents agreed to give an SPA to Ching, because they were informed that the latter could help them secure a loan with their pieces of property as collateral. No one in his right mind would definitely agree to give half of his property to another. It is certain that they agreed that they would share in the proceeds of the loan but not in the property. Hence, petitioners are not entitled to one-half of the property.66ςrνll (Emphasis supplied)

In fact, other than petitioner Chings self-serving testimony,67ςrνll no evidence was presented to show that respondents agreed to give one-half of the properties to petitioners.

Petitioners are not entitled to
reimbursement of all the expenses
incurred in obtaining a loan.

Petitioner Ching testified in court that he agreed to shoulder all the expenses, to wit:chanroblesvirtuallawlibrary

Atty. Figueroa:chanroblesvirtuallawlibrary

Mr. Witness, during your testimony in the last hearing, you said that respondent Bantolo approached you and proposed a business transaction with you, basically using a property, parcels of land, as collateral for a bank loan, which you are supposed to take care of. Now, you also testified in the last hearing that you will personally take care of the loan application, and in fact, this loan application was approved by Philippine Veterans Bank. Now, by way of recapitulation, Mr. Witness, can you please tell us who will shoulder the expenses that will be incurred in the processing of this loan application?

A - I will shoulder everything.

Q - But you have an agreement with respondent Bantolo, and pursuant to this agreement, Mr. Witness, once the application for loan was approved, what will happen?

A - According to him, we will share 50-50 in the amount that we will pay and I have the option to choose between the money, if the same is small or to take the 50% of the property.

Q - That sharing agreement, Mr. Witness, is premised on the condition that the loan application will be approved. What happens, now, Mr. witness, if the loan is not approved by the bank? What happens specifically to the expenses that you have incurred in the processing of the loan application?

Atty. Noel:chanroblesvirtuallawlibrary

Objection, your Honor. That question was already asked. In fact, the witness started on a general term, without any condition, that he will shoulder all the expenses. He did not qualify whether the loan will be approved or not. It has been answered already.

Court:chanroblesvirtuallawlibrary

We are at the stage of direct examination. In the interest of truth, you answer.

A - I asked them about that but they told me that they dont have money to pay me, so I shouldered all the expenses. I took the risk of shouldering all the expenses.

Atty. Figueroa:chanroblesvirtuallawlibrary

You said you took the risk. Will you be more specific what do you mean by this risk that you took, as far as the expenses are concerned?

A - What I mean, sir, is that I will not be able to recover all my expenses if the loan is not granted by the Philippine Veterans Bank.68ςrνll (Emphasis supplied)

For this reason, we find that petitioners are not entitled to the reimbursement of the expenses they have incurred in applying for the loan.

Besides, petitioners failed to show that the receipts submitted as evidence were incurred in relation to the loan application.69ςrνll As aptly pointed out by the CA, majority of the receipts were incurred abroad and in connection with petitioner Chings business dealings.70ςrνll

Petitioners are not entitled to exemplary
damages.

Neither are petitioners entitled to exemplary damages.

Article 222971ςrνll of the Civil Code provides that exemplary damages may be imposed "by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages." They are, however, not recoverable as a matter of right.72ςrνll They are awarded only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.73ςrνll

In this case, we agree with the CA that although the revocation was done in bad faith, respondents did not act in a wanton, fraudulent, reckless, oppressive or malevolent manner. They revoked the SPA because they were not satisfied with the amount of the loan approved. Thus, petitioners are not entitled to exemplary damages.ςηαοblενιrυαllαωlιbrαr

WHEREFORE, the petition is hereby partially GRANTED. The assailed Decision dated July 31, 2006 and the Resolution dated March 12, 2007 of the Court of Appeals in CA-G.R. CV No. 79886 are hereby AFFIRMED with MODIFICATION that respondents are ordered to pay petitioner Ching actual damages in the amount P500,000.00.ςrαlαωlιbrαr

SO ORDERED.

Endnotes:


* Per Special Order No. 1384 dated December 4, 2012.

1ςrνll Coastal Pacific Trading, Inc. v. Southern Rolling Mills. Co., Inc., 529 Phil. 10, 40 (2006), citing Air Trance v. Court of Appeals, 253 Phil. 395, 402 (1989).

2ςrνll Rollo, pp. 25-87 with Annexes "A" to "F" inclusive.

3ςrνll Id. at 48-58; penned by Associate Justice Eliezer R. De Los Santos and concurred in by Associate Justices Fernanda Lampas Peralta and Myra Dimaranan Vidal.

4ςrνll Id. at 60; penned by Associate Justice Fernanda Lampas Peralta and concurred in by Associate Justices Noel G. Tijam and Myra Dimaranan-Vidal.

5ςrνll Substituted by his heirs (Id. at unnumbered page).

6ςrνll Id. at 48-49.

7ςrνll Records, pp. 7-8.

8ςrνll Id.

9ςrνll Id. at 28.

10ςrνll Rollo, p. 49

11ςrνll Id.

12ςrνll Records, p. 328.

13ςrνll Rollo, p. 50.

14ςrνll Records, p. 18.

15ςrνll Id. at 324.

16ςrνll Rollo, p. 50.

17ςrνll Records, pp. 1-6.

18ςrνll Id. at 16-21.

19ςrνll Id. at 19.

20ςrνll Id. at 17.

21ςrνll Id.

22ςrνll Id. at 44-50.

23ςrνll Id. at 45.

24ςrνll Id. at 46.

25ςrνll Id.

26ςrνll Id.

27ςrνll Id.

28ςrνll Id.

29ςrνll Id.

30ςrνll Id. at 47.

31ςrνll Id.

32ςrνll Id.

33ςrνll Rollo, pp. 68-87; penned by Judge Normandie B. Pizarro.

34ςrνll Id. at 79.

35ςrνll Id. at 82.

36ςrνll Id. at 79.

37ςrνll Id. at 82.

38ςrνll Id. at 86.

39ςrνll Id. at 86-87. Emphasis in the original.

40ςrνll CA rollo, 10-35.

41ςrνll Id. at 19-20.

42ςrνll Id. at 22-24.

43ςrνll Id. at 30-31.

44ςrνll Id. at 184-185; penned by Associate Justice Mario L. Guari III and concurred in by Associate Justices Rodrigo V. Cosico and Santiago Javier Ranada.

45ςrνll Rollo, p. 54.

46ςrνll Id. at 54-55.

47ςrνll Id. at 56.

48ςrνll Id. at 57-58.

49ςrνll Id. at 60.

50ςrνll Id. at 134-135.

51ςrνll Id. at 144.

52ςrνll Id. at 136-138.

53ςrνll Id. at 138- 141.

54ςrνll Id. at 141-142.

55ςrνll Id. at 143-144.

56ςrνll Id. at 159-162.

57ςrνll Id. at 162-166.

58ςrνll Id. at 166-172.

59ςrνll Id. at 166-168.

60ςrνll Id. at 172-177.

61ςrνll Id. at 53-54.

62ςrνll Republic of the Philippines v. Judge Evangelista, 504 Phil. 115, 121 (2005).

63ςrνll Id.

64ςrνll Rollo, p. 57.

65ςrνll Pascua v. Heirs of Segundo Simeon, 244 Phil. 1, 6 (1988).

66ςrνll Rollo, p. 54.

67ςrνll TSN, June 20, 2001, Direct Examination of petitioner Ching, pp. 5-6.

68ςrνll Id. at 5-7.

69ςrνll Rollo, p. 55.

70ςrνll Id.

71ςrνll Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages.

72ςrνll CIVIL CODE, Art. 2233 provides:

Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they should be adjudicated.

73ςrνll CIVIL CODE, Art. 2232 provides:

In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.

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