THIRD DIVISION
G.R. No. 171428, November 11, 2013
ALEJANDRO V. TANKEH, Petitioners, v. DEVELOPMENT BANK OF THE PHILIPPINES, STERLING SHIPPING LINES, INC., RUPERTO V. TANKEH, VICENTE ARENAS, AND ASSET PRIVATIZATION TRUST, Respondent.
D E C I S I O N
LEONEN, J.:
This is a Petition for Review on Certiorari, praying that the assailed October 25, 2005 Decision and the February 9, 2006 Resolution of the Court of Appeals1 be reversed, and that the January 4, 1996 Decision of the Regional Trial Court of Manila, Branch 32 be affirmed. Petitioner prays that this Court grant his claims for moral damages and attorney’s fees, as proven by the evidence.
1) | A first mortgage must be obtained over the vessel, which by then had been renamed the M/V Sterling Ace; |
2) | Ruperto V. Tankeh, petitioner Dr. Alejandro V. Tankeh, Jose Marie Vargas, as well as respondents Sterling Shipping Lines, Inc. and Vicente Arenas should become liable jointly and severally for the amount of the loan; |
3) | The future earnings of the mortgaged vessel, including proceeds of Charter and Shipping Contracts, should be assigned to Development Bank of the Philippines; and |
4) | Development Bank of the Philippines should be assigned no less than 67% of the total subscribed and outstanding voting shares of the company. The percentage of shares assigned should be maintained at all times, and the assignment was to subsist as long as the assignee, Development Bank of the Philippines, deemed it necessary during the existence of the loan.3 |
x x x does hereby transfer and assign in favor of the ASSIGNEE (DBP), its successors and assigns, future earnings of the mortgaged M/V “Sterling Ace,” including proceeds of charter and shipping contracts, it being understood that this assignment shall continue to subsist for as long as the ASSIGNOR’S obligation with the herein ASSIGNEE remains unpaid.9
Here, we find –
- Plaintiff being promised by his younger brother, Ruperto V. Tankeh, 1,000 shares with par value of P1 Million with all the perks and privileges of being stockholder and director of SSLI, a new international shipping line;
- That plaintiff will be part of the administration and operation of the business, so with his son who is with the law firm Romulo Ozaeta Law Offices;
- But this was merely the come-on or appetizer for the Real McCoy or the primordial end of congregating the incorporators proposed - - that he sign the promissory note (Exhibit “C”), the mortgage contract (Exhibit “A”), and deed of assignment so SSLI could get the US $3.5 M loan from DBP to partially finance the importation of vessel M.V. “Golden Lilac” renamed M.V. “Sterling ACE”;
- True it is, plaintiff was made a stockholder and director and Vice-President in 1979 but he was never notified of any meeting of the Board except only once, and only to be introduced to the two (2) directors representing no less than 67% of the total subscribed and outstanding voting shares of the company. Thereafter, he was excluded from any board meeting, shorn of his powers and duties as director or Vice-President, and was altogether deliberately demeaned as an outsider.
- What kind of a company is SSLI who treated one of their incorporators, one of their Directors and their paper Vice-President in 1979 by preventing him access to corporate books, to corporate earnings, or losses, and to any compensation or remuneration whatsoever? Whose President and Treasurer did not submit the required SEC yearly report? Who did not remit to DBP the proceeds on charter mortgage contracts on M/V Sterling Ace?
- The M/V Sterling Ace was already in the Davao Port when it was then diverted to Singapore to be disposed on negotiated sale, and not by public bidding contrary to COA Circular No. 86-264 and without COA’s approval. Sterling Ace was seaworthy but was sold as scrap in Singapore. No foreclosure with public bidding was made in contravention of the Promissory Note to recover any deficiency should DBP seeks [sic] to recover it on the outstanding mortgage loan. Moreover the sale was done after the account and asset (nay, now only a liability) were transferred to APT. No approval of SSLI Board of Directors to the negotiated sale was given.
- Plaintiff’s letter to his brother President, Ruperto V. Tankeh, dated June 15, 1983 (Exhibit “D”) his letter thru his lawyer to DBP (Exhibit “J”) and another letter to it (Exhibit “K”) show no estoppel on his part as he consistently and continuously assailed the several injurious acts of defendants while assailing the Promissory Note itself x x x (Citations omitted) applying the maxim: Rencintiatio non praesumitur. By this Dr. Tankeh never waived the right to question the Promissory Note contract terms. He did not ratify, by concurring acts, express or tacit, after the reasons had surfaced entitling him to render the contract voidable, defendants’ acts in implementing or not the conditions of the mortgage, the promissory note, the deed of assignment, the lack of audit and accounting, and the negotiated sale of MV Sterling Ace. He did not ratify defendants [sic] defective acts (Art. 1396, New Civil Code (NCC).
The foregoing and the following essays, supported by evidence, the fraud committed by plaintiff’s brother before the several documents were signed (SEC documents, Promissory Note, Mortgage (MC) Contract, assignment (DA)), namely:Without these insidious, devastating and alluring words, without the machinations used by defendant Ruperto V. Tankeh upon the doctor, without the inducement and promise of ownership of shares and the exercise of administrative and operating functions, and the partial financing by one of the best financial institutions, the DBP, plaintiff would not have agreed to join his brother; and the safeguarding of the Bank’s interest by its nominated two (2) directors in the Board added to his agreeing to the new shipping business. His consent was vitiated by the fraud before the several contracts were consummated.
- Ruperto V. Tankeh approaches his brother Alejandro to tell the latter of his new shipping business. The project was good business proposal [sic].
- Ruperto tells Alejandro he’s giving him shares worth ?1 Million and he’s going to be a Director.
- He tells his brother that he will be part of the company’s Administration and Operations and his eldest son will be in it, too.
- Ruperto tells his brother they need a ship, they need to buy one for the business, and they therefore need a loan, and they could secure a loan from DBP with the vessel brought to have a first mortgage with DBP but anyway the other two directors and comptroller will be from DBP with a 67% SSLI shares voting rights.
This alone convenes [sic] this Court to annul the Promissory Note as it relates to plaintiff himself.
Plaintiff also pleads annulment on ground of equity. Article 19, NCC, provides him the way as it requires every person, in the exercise of his rights and performance of his duties, to act with justice, give everyone his due, and observe honesty and good faith (Velayo vs. Shell Co. of the Phils., G.R. L-7817, October 31, 1956). Not to release him from the clutch of the Promissory Note when he was never made a part of the operation of the SSLI, when he was not notified of the Board Meetings, when the corporation nary remitted earnings of M/V Sterling Ace from charter or shipping contracts to DBP, when the SSLI did not comply with the deed of assignment and mortgage contract, and when the vessel was sold in Singapore (he, learning of the sale only from the newspapers) in contravention of the Promissory Note, and which he questioned, will be an injustice, inequitable, and even iniquitous to plaintiff. SSLI and the private defendants did not observe honesty and good faith to one of their incorporators and directors. As to DBP, the Court cannot put demerits on what plaintiff’s memorandum has pointed out:chanRoblesvirtualLawlibraryWhile defendant DBP did not exercise the caution and prudence in the discharge of their functions to protect its interest as expected of them and worst, allowed the perpetuation of the illegal acts committed in contrast to the virtues they publicly profess, namely: “palabra de honor, delicadeza, katapatan, kaayusan, pagkamasinop at kagalingan” Where is the vision banking they have for our country?Had DBP listened to a cry in the wilderness – that of the voice of the doctor – the doctor would not have allowed the officers and board members to defraud DBP and he would demand of them to hew and align themselves to the deed of assignment.
Prescinding from the above, plaintiff’s consent to be with SSLI was vitiated by fraud. The fact that defendant Ruperto Tankeh has not questioned his liability to DBP or that Jose Maria Vargas has been declared in default do not detract from the fact that there was attendant fraud and that there was continuing fraud insofar as plaintiff is concerned. Ipinaglaban lang ni Doctor ang karapatan niya. Kung wala siyang sense of righteous indignation and fairness, tatahimik na lang siya, sira naman ang pinangangalagaan niyang pangalan, honor and family prestige [sic] (Emphasis provided).35
x x x
All of the defendants’ counterclaims and cross-claims x x x including plaintiff’s and the other defendants’ prayer for damages are not, for the moment, sourced and proven by substantial evidence, and must perforce be denied and dismissed.
WHEREFORE, this Court, finding and declaring the Promissory Note (Exhibit “C”) and the Mortgage Contract (Exhibit “A”) null and void insofar as plaintiff DR. ALEJANDRO V. TANKEH is concerned, hereby ANNULS and VOIDS those documents as to plaintiff, and it is hereby further ordered that he be released from any obligation or liability arising therefrom.
All the defendants’ counterclaims and cross-claims and plaintiff’s and defendants’ prayer for damages are hereby denied and dismissed, without prejudice.
SO ORDERED.36
x x x
In all the complaints from the original through the first, second and third amendments, the plaintiff imputes fraud only to defendant Ruperto, to wit:
4. That on May 12, 1981, due to the deceit and fraud exercised by Ruperto V. Tankeh, plaintiff, together with Vicente L. Arenas, Jr. and Jose Maria Vargas signed a promissory note in favor of the defendant, DBP, wherein plaintiff bound himself to jointly and severally pay the DBP the amount of the mortgage loan. This document insofar as plaintiff is concerned is a simulated document considering that plaintiff was never a real stockholder of Sterling Shipping Lines, Inc. (Emphasis provided)
More allegations of deceit were added in the Second Amended Complaint, but they are also attributed against Ruperto:
6. That THE DECEIT OF DEFENDANT RUPERTO V. TANKEH IS SHOWN BY THE FACT THAT when the Sterling Shipping Lines, Inc. was organized in 1980, Ruperto V. Tankeh promised plaintiff that he would be a part of the administration staff so that he could oversee the operation of the company. He was also promised that his son, a lawyer, would be given a position in the company. None of these promsies [sic] was complied with. In fact he was not even allowed to find out the data about the income and expenses of the company.
7. THAT THE DECEIT OF RUPERTO V. TANKEH IS ALSO SHOWN BY THE FACT THAT PLAINTIFF WAS INVITED TO ATTEND THE BOARD MEETING OF THE STERLING SHIPPING LINES INC. ONLY ONCE, WHICH WAS FOR THE SOLE PURPOSE OF INTRODUCING HIM TO THE TWO DIRECTORS OF THE DBP IN THE BOARD OF THE STERLING SHIPPING LINES, INC., NAMELY, MR. JESUS MACALINAG AND MR. GIL CORPUS. THEREAFTER HE WAS NEVER INVITED AGAIN. PLAINTIFF WAS NEVER COMPENSATED BY THE STERLING SHIPPING LINES, INC. FOR HIS BEING A SO-CALLED DIRECTOR AND STOCKHOLDER.
x x x
8-A THAT A WEEK AFTER SENDING THE ABOVE LETTER PLAINTIFF MADE EARNEST EFFORTS TOWARDS A COMPROMISE BETWEEN HIM AND HIS BROTHER RUPERTO V. TANKEH, WHICH EFFORTS WERE SPURNED BY RUPERTO V. TANKEH, AND ALSO AFTER THE NEWS OF THE SALE OF THE ‘STERLING ACE’ WAS PUBLISHED AT THE NEWSPAPER, PLAINTIFF TRIED ALL EFFORTS TO CONTACT RUPERTO V. TANKEH FOR THE PURPOSE OF ARRIVING AT SOME COMPROMISE, BUT DEFENDANT RUPERTO V. TANKEH AVOIDED ALL CONTACTS WITH THE PLAINTIFF UNTIL HE WAS FORCED TO SEEK LEGAL ASSISTANCE FROM HIS LAWYER.
In the absence of any allegations of fraud and/or deceit against the other defendants, namely, the DBP, Vicente Arenas, Sterling Shipping Lines, Inc., and the Asset Privatization Trust, the plaintiff’s evidence thereon should only be against Ruperto, since a plaintiff is bound to prove only the allegations of his complaint. In any case, no evidence of fraud or deceit was ever presented against defendants DBP, Arenas, SSLI and APT.
As to the evidence against Ruperto, the same consists only of the testimony of the plaintiff. None of his documentary evidence would prove that Ruperto was guilty of fraud or deceit in causing him to sign the subject promissory note.39
x x x
Analyzing closely the foregoing statements, we find no evidence of fraud or deceit. The mention of a new shipping lines business and the promise of a free 1,000-share and directorship in the corporation do not amount to insidious words or machinations. In any case, the shipping business was indeed established, with the plaintiff himself as one of the incorporators and stockholders with a share of 4,000, worth P4,000,000.00 of which P1,000,000.00 was reportedly paid up. As such, he signed the Articles of Incorporation and the corporation’s By-Laws which were registered with the Securities and Exchange Commission in April 1979. It was not until May 12, 1981 that he signed the questioned promissory note. From his own declaration at the witness stand, the plaintiff signed the promissory note voluntarily. No pressure, force or intimidation was made to bear upon him. In fact, according to him, only a messenger brought the paper to him for signature. The promised shares of stock were given and recorded in the plaintiff’s name. He was made a director and Vice-President of SSLI. Apparently, only the promise that his son would be given a position in the company remained unfulfilled. However, the same should have been threshed out between the plaintiff and his brother, defendant Ruperto, and its non-fulfillment did not amount to fraud or deceit, but was only an unfulfilled promise.
It should be pointed out that the plaintiff is a doctor of medicine and a seasoned businessman. It cannot be said that he did not understand the import of the documents he signed. Certainly he knew what he was signing. He should have known that being an officer of SSLI, his signing of the promissory note together with the other officers of the corporation was expected, as the other officers also did. It cannot therefore be said that the promissory note was simulated. The same is a contract validly entered into, which the parties are obliged to comply with.40 (Citations omitted)
Fraud is never presumed but must be proved by clear and convincing evidence, mere preponderance of evidence not even being adequate. Contentions must be proved by competent evidence and reliance must be had on the strength of the party’s evidence and not upon the weakness of the opponent’s defense. The plaintiff clearly failed to discharge such burden.41 (Citations omitted)
Certiorari is a remedy designed for the correction of errors of jurisdiction, not errors of judgment. In Pure Foods Corporation v. NLRC, we explained the simple reason for the rule in this light: When a court exercises its jurisdiction, an error committed while so engaged does not deprive it of the jurisdiction being exercised when the error is committed x x x. Consequently, an error of judgment that the court may commit in the exercise of its jurisdiction is not correct[a]ble through the original civil action of certiorari.
x x x
Even if the findings of the court are incorrect, as long as it has jurisdiction over the case, such correction is normally beyond the province of certiorari. Where the error is not one of jurisdiction, but of an error of law or fact a mistake of judgment, appeal is the remedy.
x x x fraud when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to.
Art. 1339. Failure to disclose facts, when there is a duty to reveal them, as when the parties are bound by confidential relations, constitutes fraud. (n)
Art. 1340. The usual exaggerations in trade, when the other party had an opportunity to know the facts, are not in themselves fraudulent. (n)
Art. 1341. A mere expression of an opinion does not signify fraud, unless made by an expert and the other party has relied on the former’s special knowledge. (n)
Art. 1342. Misrepresentation by a third person does not vitiate consent, unless such misrepresentation has created substantial mistake and the same is mutual. (n)
Art. 1343. Misrepresentation made in good faith is not fraudulent but may constitute error. (n)
In order that fraud may make a contract voidable, it should be serious and should not have been employed by both contracting parties.
Incidental fraud only obliges the person employing it to pay damages. (1270)
Fraud refers to all kinds of deception -- whether through insidious machination, manipulation, concealment or misrepresentation -- that would lead an ordinarily prudent person into error after taking the circumstances into account. In contracts, a fraud known as dolo causante or causal fraud is basically a deception used by one party prior to or simultaneous with the contract, in order to secure the consent of the other. Needless to say, the deceit employed must be serious. In contradistinction, only some particular or accident of the obligation is referred to by incidental fraud or dolo incidente, or that which is not serious in character and without which the other party would have entered into the contract anyway.53
Some of the instances where this Court found the existence of causal fraud include: (1) when the seller, who had no intention to part with her property, was "tricked into believing" that what she signed were papers pertinent to her application for the reconstitution of her burned certificate of title, not a deed of sale; (2) when the signature of the authorized corporate officer was forged; or (3) when the seller was seriously ill, and died a week after signing the deed of sale raising doubts on whether the seller could have read, or fully understood, the contents of the documents he signed or of the consequences of his act.55 (Citations omitted)
x x x from all the foregoing x x x plaintiff did actually represent to defendant that he was the holder of the exclusive franchise. The defendant was made to believe, and he actually believed, that plaintiff had the exclusive franchise. x x x The record abounds with circumstances indicative that the fact that the principal consideration, the main cause that induced defendant to enter into the partnership agreement with plaintiff, was the ability of plaintiff to get the exclusive franchise to bottle and distribute for the defendant or for the partnership. x x x The defendant was, therefore, led to the belief that plaintiff had the exclusive franchise, but that the same was to be secured for or transferred to the partnership. The plaintiff no longer had the exclusive franchise, or the option thereto, at the time the contract was perfected. But while he had already lost his option thereto (when the contract was entered into), the principal obligation that he assumed or undertook was to secure said franchise for the partnership, as the bottler and distributor for the Mission Dry Corporation. We declare, therefore, that if he was guilty of a false representation, this was not the causal consideration, or the principal inducement, that led plaintiff to enter into the partnership agreement.
But, on the other hand, this supposed ownership of an exclusive franchise was actually the consideration or price plaintiff gave in exchange for the share of 30 percent granted him in the net profits of the partnership business. Defendant agreed to give plaintiff 30 per cent share in the net profits because he was transferring his exclusive franchise to the partnership. x x x.
Plaintiff had never been a bottler or a chemist; he never had experience in the production or distribution of beverages. As a matter of fact, when the bottling plant being built, all that he suggested was about the toilet facilities for the laborers.
We conclude from the above that while the representation that plaintiff had the exclusive franchise did not vitiate defendant’s consent to the contract, it was used by plaintiff to get from defendant a share of 30 per cent of the net profits; in other words, by pretending that he had the exclusive franchise and promising to transfer it to defendant, he obtained the consent of the latter to give him (plaintiff) a big slice in the net profits. This is the dolo incidente defined in article 1270 of the Spanish Civil Code, because it was used to get the other party’s consent to a big share in the profits, an incidental matter in the agreement.57
Under Article 1338 of the Civil Code, there is fraud when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to. In order that fraud may vitiate consent, it must be the causal (dolo causante), not merely the incidental (dolo incidente), inducement to the making of the contract. In Samson v. Court of Appeals, causal fraud was defined as “a deception employed by one party prior to or simultaneous to the contract in order to secure the consent of the other.”
Also, fraud must be serious and its existence must be established by clear and convincing evidence. (Citations omitted)59
Fraud must also be discounted, for according to the Civil Code:Art. 1338. There is fraud when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which without them, he would not have agreed to.To quote Tolentino again, the “misrepresentation constituting the fraud must be established by full, clear, and convincing evidence, and not merely by a preponderance thereof. The deceit must be serious. The fraud is serious when it is sufficient to impress, or to lead an ordinarily prudent person into error; that which cannot deceive a prudent person cannot be a ground for nullity. The circumstances of each case should be considered, taking into account the personal conditions of the victim.”61
Art. 1344. In order that fraud may make a contract voidable, it should be serious and should not have been employed by both contracting parties.
It is axiomatic that a question of fact is not appropriate for a petition for review on certiorari under Rule 45. This rule provides that the parties may raise only questions of law, because the Supreme Court is not a trier of facts. Generally, we are not duty-bound to analyze again and weigh the evidence introduced in and considered by the tribunals below. When supported by substantial evidence, the findings of fact of the Court of Appeals are conclusive and binding on the parties and are not reviewable by this Court, unless the case falls under any of the following recognized exceptions: (1) When the conclusion is a finding grounded entirely on speculation, surmises and conjectures; (2) When the inference made is manifestly mistaken, absurd or impossible; (3) Where there is a grave abuse of discretion; (4) When the judgment is based on a misapprehension of facts; (5) When the findings of fact are conflicting; (6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (7) When the findings are contrary to those of the trial court; (8) When the findings of fact are conclusions without citation of specific evidence on which they are based; (9) When the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondents; and (10) When the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and contradicted by the evidence on record. (Emphasis provided)63
Amendment to conform to or authorize presentation of evidence. — When issues not raised by the pleadings are tried with the express or implied consent of the parties they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure to amend does not effect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so with liberality if the presentation of the merits of the action and the ends of substantial justice will be subserved thereby. The court may grant a continuance to enable the amendment to be made. (5a)
ATTY. VELAYO: How did you get involved in the business of the Sterling Shipping Lines, Incorporated” [sic]
DR. TANKEH: Sometime in the year 1980, I was approached by Ruperto Tankeh mentioning to me that he is operating a new shipping lines business and he is giving me free one thousand shares (1,000) to be a director of this new business which is worth one million pesos (P1,000,000.00.),
ATTY. VELAYO: Are you related to Ruperto V. Tankeh?
DR. TANKEH: Yes, sir. He is my younger brother.
ATTY. VELAYO: Did you accept the offer?
DR. TANKEH: I accepted the offer based on his promise to me that I will be made a part of the administration staff so that I can oversee the operation of the business plus my son, the eldest one who is already a graduate lawyer with a couple of years of experience in the law firm of Romulo Ozaeta Law Offices (TSN, April 28, 1988, pp. 10-11.).65
x x x
2. That on May 12, 1981, due to the deceit and fraud exercised by Ruperto V. Tankeh, plaintiff, together with Vicente L. Arenas, Jr. and Jose Maria Vargas, signed a promissory note in favor of the defendant DBP, wherein plaintiff bound himself to jointly and severally pay the DBP the amount of the mortgage loan. This document insofar as plaintiff is concerned is a simulated document considering that plaintiff was never a real stockholder of the Sterling Shipping Lines, Inc.
3. That although plaintiff’s name appears in the records of Sterling Shipping Lines, Inc. as one of its incorporators, the truth is that he had never invested any amount in said corporation and that he had never been an actual member of said corporation. All the money supposedly invested by him were put by defendant Ruperto V. Tankeh. Thus, all the shares of stock under his name in fact belongs to Ruperto V. Tankeh. Plaintiff was invited to attend the board meeting of the Sterling Shipping Lines, Inc. only once, which was for the sole purpose of introducing him to the two directors of the DBP, namely, Mr. Jesus Macalinag and Mr. Gil Corpus. Thereafter he was never invited again. Plaintiff was never compensated by the Sterling Shipping Lines, Inc. for his being a so-called director and stockholder. It is clear therefore that the DBP knew all along that plaintiff was not a true stockholder of the company.
4. That THE DECEIT OF DEFENDANT RUPERTO V. TANKEH IS SHOWN BY THE FACT THAT when the Sterling Shipping Lines, Inc. was organized in 1980, Ruperto V. Tankeh promised plaintiff that he would be a part of the administration staff so that he could oversee the operation of the company. He was also promised that his son, a lawyer, would be given a position in the company. None of these promises was complied with. In fact, he was not even allowed to find out the data about the income and expenses of the company.
5. THAT THE DECEIT OF RUPERTO V. TANKEH IS ALSO SHOWN BY THE FACT THAT PLAINTIFF WAS INVITED TO ATTEND THE BOARD MEETING OF THE STERLING SHIPPING LINES, INC. ONLY ONCE, WHICH WAS FOR THE SOLE PUPOSE OF INTRODUCING HIM TO THE TWO DIRECTORS OF THE DBP IN THE BOARD OF THE STERLING SHIPPING LINES, INC., NAMELY, MR. JESUS MACALINAG AND MR. GIL CORPUS. THEREAFTER HE WAS NEVER INVITED AGAIN. PLAINTIFF WAS NEVER COMPENSATED BY THE STERLING SHIPPING LINES, INC. FOR HIS BEING A SO-CALLED DIRECTOR AND STOCKHOLDER.
6. That in 1983, upon realizing that he was only being made a tool to realize the purposes of Ruperto V. Tankeh, plaintiff officially informed the company by means of a letter dated June 15, 1983 addressed to the company that he has severed his connection with the company, and demanded among others, that the company board of directors pass a resolution releasing him from any liabilities especially with reference to the loan mortgage contract with the DBP and to notify the DBP of his severance from the Sterling Shipping Lines, Inc.
8-A. THAT A WEEK AFTER SENDING THE ABOVE LETTER, PLAINTIFF MADE EARNEST EFFORTS TOWARDS A COMPROMISE BETWEEN HIM AND HIS BROTHER RUPERTO V. TANKEH, WHICH EFFORTS WERE SPURNED BY RUPERTO V. TANKEH, AND ALSO AFTER THE NEWS OF THE SALE OF THE “STERLING ACE” WAS PUBLISHED AT THE NEWSPAPER [sic], PLAINTIFF TRIED ALL EFFORTS TO CONTACT RUPERTO V. TANKEH FOR THE PURPOSE OF ARRIVING AT SOME COMPROMISE, BUT DEFENDANT RUPERTO V. TANKEH AVOIDED ALL CONTACTS [sic] WITH THE PLAINTIFF UNTIL HE WAS FORCED TO SEEK LEGAL ASSISTANCE FROM HIS LAWYER.66
COMES NOW defendant RUPERTO V. TANKEH, through the undersigned counsel, and to the Honorable Court, most respectfully alleges:
x x xx x x
- That paragraph 4 is admitted that herein answering defendant together with the plaintiff signed the promissory note in favor of DBP but specifically denied that the same was done through deceit and fraud of herein answering defendant the truth being that plaintiff signed said promissory note voluntarily and with full knowledge of the consequences thereof; it is further denied that said document is a simulated document as plaintiff was never a real stockholder of the company, the truth being those alleged in the special and affirmative defenses;
- That paragraphs 5,6,7,8 and 8-A are specifically denied specially the imputation of deceit and fraud against herein answering defendant, the truth being those alleged in the special and affirmative defenses;
SPECIAL AND AFFIRMATIVE DEFENSES x x x
- The complaint states no cause of action as against herein answering defendant;
- The Sterling Shipping Lines, Inc. was a legitimate company organized in accordance with the laws of the Republic of the Philippines with the plaintiff as one of the incorporators;
- Plaintiff as one of the incorporators and directors of the board was fully aware of the by-laws of the company and if he attended the board meeting only once as alleged, the reason thereof was known only to him;
- The Sterling Shipping Lines, Inc. being a corporation acting through its board of directors, herein answering defendant could not have promised plaintiff that he would be a part of the administration staff;
- As member of the board, plaintiff had all the access to the data and records of the company; further, as alleged in the complaint, plaintiff has a son who is a lawyer who could have advised him;
- Assuming plaintiff wrote a letter to the company to sever his connection with the company, he should have been aware that all he had to do was sell all his holdings in the company;
- Herein answering defendant came to know only of plaintiff’s alleged predicament when he received the summons and copy of the complaint; x x x.67
Art. 1340. The usual exaggerations in trade, when the other party had an opportunity to know the facts, are not in themselves fraudulent.Given the standing and stature of the petitioner, he was in a position to ascertain more information about the contract.
Notwithstanding the fact that Songco’s statement as to the probable output of his crop was disingenuous and uncandid, we nevertheless think that Sellner was bound and that he must pay the price stipulated. The representation in question can only be considered matter of opinion as the cane was still standing in the field, and the quantity of the sugar it would produce could not be known with certainty until it should be harvested and milled. Undoubtedly Songco had better experience and better information on which to form an opinion on this question than Sellner. Nevertheless the latter could judge with his own eyes as to the character of the cane, and it is shown that he measured the fields and ascertained that they contained 96 1/2 hectares.
x x x
The law allows considerable latitude to seller’s statements, or dealer’s talk; and experience teaches that it is exceedingly risky to accept it at its face value. The refusal of the seller to warrant his estimate should have admonished the purchaser that that estimate was put forth as a mere opinion; and we will not now hold the seller to a liability equal to that which would have been created by a warranty, if one had been given.
x x x
It is not every false representation relating to the subject matter of a contract which will render it void. It must be as to matters of fact substantially affecting the buyer’s interest, not as to matters of opinion, judgment, probability, or expectation. (Long vs. Woodman, 58 Me., 52; Hazard vs. Irwin, 18 Pick. [Mass.], 95; Gordon vs. Parmelee, 2 Allen [Mass.], 212; Williamson vs. McFadden, 23 Fla., 143, 11 Am. St. Rep., 345.) When the purchaser undertakes to make an investigation of his own, and the seller does nothing to prevent this investigation from being as full as he chooses to make it, the purchaser cannot afterwards allege that the seller made misrepresentations. (National Cash Register Co. vs. Townsend, 137 N. C., 652, 70 L. R. A., 349; Williamson vs. Holt, 147 N. C., 515.)
We are aware that where one party to a contract, having special or expert knowledge, takes advantage of the ignorance of another to impose upon him, the false representation may afford ground for relief, though otherwise the injured party would be bound. But we do not think that the fact that Songco was an experienced farmer, while Sellner was, as he claims, a mere novice in the business, brings this case within that exception.71
[In] all instances where a common cause of action is alleged against several defendants, some of whom answer and the others do not, the latter or those in default acquire a vested right not only to own the defense interposed in the answer of their co-defendant or co-defendants not in default but also to expect a result of the litigation totally common with them in kind and in amount whether favorable or unfavorable. The substantive unity of the plaintiffs’ cause against all the defendants is carried through to its adjective phase as ineluctably demanded by the homogeneity and indivisibility of justice itself.77
Article 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts. (1089a)
Article 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.
Article 21. Any person who wilfully causes loss or injury to another in manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage.
When a right is exercised in a manner not conformable with the norms enshrined in Article 19 and like provisions on human relations in the Civil Code, and the exercise results to [sic] the damage of [sic] another, a legal wrong is committed and the wrongdoer is held responsible.80
To recover moral damages in an action for breach of contract, the breach must be palpably wanton, reckless, malicious, in bad faith, oppressive or abusive.
Under the provisions of this law, in culpa contractual or breach of contract, moral damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of his contractual obligation and, exceptionally, when the act of breach of contract itself is constitutive of tort resulting in physical injuries.
Moral damages may be awarded in breaches of contracts where the defendant acted fraudulently or in bad faith.
Bad faith does not simply connote bad judgment or negligence, it imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty through some motive or interest or ill will that partakes of the nature of fraud.
x x x
The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. It is not enough that one merely suffered sleepless nights, mental anguish, serious anxiety as the result of the actuations of the other party. Invariably such action must be shown to have been willfully done in bad faith or will ill motive. Mere allegations of besmirched reputation, embarrassment and sleepless nights are insufficient to warrant an award for moral damages. It must be shown that the proximate cause thereof was the unlawful act or omission of the [private respondent] petitioners.
An award of moral damages would require certain conditions to be met, to wit: (1) first, there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) second, there must be culpable act or omission factually established; (3) third, the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) fourth, the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code. (Citations omitted)82
ART. 2229. Exemplary or corrective damages are imposed, by way of example or correction of the public good, in addition to moral, temperate, liquidated or compensatory damages.
ART. 2233. Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they should be adjudicated.
ART. 2234. While the amount of the exemplary damages need not be proven, the plaintiff must show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded x x x
Also known as ‘punitive’ or ‘vindictive’ damages, exemplary or corrective damages are intended to serve as a deterrent to serious wrong doings, and as a vindication of undue sufferings and wanton invasion of the rights of an injured or a punishment for those guilty of outrageous conduct. These terms are generally, but not always, used interchangeably. In common law, there is preference in the use of exemplary damages when the award is to account for injury to feelings and for the sense of indignity and humiliation suffered by a person as a result of an injury that has been maliciously and wantonly inflicted, the theory being that there should be compensation for the hurt caused by the highly reprehensible conduct of the defendant—associated with such circumstances as willfulness, wantonness, malice, gross negligence or recklessness, oppression, insult or fraud or gross fraud—that intensifies the injury. The terms punitive or vindictive damages are often used to refer to those species of damages that may be awarded against a person to punish him for his outrageous conduct. In either case, these damages are intended in good measure to deter the wrongdoer and others like him from similar conduct in the future.87
Endnotes:
* Designated Member per Raffle dated February 4, 2013.
1 C.A. G.R. CV No. 52643.
2 Rollo, p. 206.
3 Id. at 14.
4 Id, at 14.
5 Id. at 205.
6 Id. at 206.
7 Id. at 206.
8 Id. at 207.
9 Id. at 124.
10 Id. at 207.
11 Id. at 65-66.
12 Id. at 45.
13, (last visited August 15, 2013).
14Rollo, pp. 105-106.
15 Complaint dated July 22, 1987, Rollo, pp. 63-69; Amended Complaint dated September 14, 1987, Rollo, pp. 76-82; Second Amended Complaint dated October 30, 1987, Rollo, pp. 84-91; Amended Complaint dated April 16, 1991, Rollo, pp. 102-109.
16 Id. at 85.
17 Id. at 64-65.
18 Id. at 65.
19 Id. at 124.
20 Id. at 125.
21 Id. at 207.
22 Id. at 90.
23 Id. at 89.
24 Id. at 89.
25 Id at 89.
26 Id. at 89.
27 Id. at 89.
28 Id. at 70-75, 92-98, 99-101, 111-118.
29 Id. at 73-74.
30 Id. at 70-75.
31 Id. at 99-101.
32 Id. at 113-114.
33 Id. at 121-122.
34 Id. at 123-197.
35 Id. at 192-195.
36 Id. at 195-196.
37 Id. at 39-60.
38 Id. at 49-51.
39 Id. at 53-54.
40 Id. at 56-57.
41 Id. at 58.
42 Id. at 61.
43 RULES OF COURT, Rule 65, Sec. 1:
Section 1. Petition for certiorari. — When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.
44 RULES OF COURT, Rule 45, Sec. 1:
Section 1. Filing of petition with Supreme Court. — A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth.
45 G.R. No. 172299, April 22, 2008, 552 SCRA 424, 440-441.
46Rollo, p. 18.
47RULES OF COURT, Rule 65, Section 1:
Section 1. Petition for certiorari. — When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.
48China Banking Corporation v. Cebu Printing and Packaging Corporation, G.R. No. 172880, August 11, 2010, 628 SCRA 154, 168 citing Tagle v. Equitable PCI Bank , G.R. No. 172299, April 22, 2008, 552 SCRA 424.
49 The petitioner received the denial of his Motion for Reconsideration on February 15, 2006. Petitioner had until March 2, 2006 within which to file the Petition. Petitioner filed a Motion for Extension of Time to File Petition for a period of thirty (30) days, which was granted by the Court. Petitioner had until April 2, 2006 to file his Petition. The Court received the Petition on March 20, 2006.
50 G.R. No. 108253, February 23, 1994, 230 SCRA 320.
51 Id. at 336 citing A.M. Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines 509 (Vol. IV, 1986) and Jurado, Comments and Jurisprudence on Obligations and Contracts, 438 (1987 Ed.).
52 502 Phil. 651, 669 (2005).
53 Id. at 669.
54 G.R. No. 167874, January 15, 2010, 610 SCRA 150.
55 Id. at 160.
56 93 Phil. 526 (1953).
57 Id. at 536-538.
58 G.R. No. 188288, January 16, 2012, 663 SCRA 57.
59 Id. at 81.
60 G.R. No. 90270, July 24, 1992, 211 SCRA 785.
61 Id. at 793 citing A.M. Tolentino, Commentaries on the Civil Code 508, 514 (Vol. IV, 1991).
62 G.R. No. 137582, August 29, 2012, 679 SCRA 191.
63 Id. citing Cirtek Employees Labor Union-Federation of Free Workers v. Cirtek Electronics, Inc., G.R. No. 190515, June 6, 2011, 650 SCRA 656, 660.
64Rollo, p. 15.
65Rollo, pp. 205-206.
66 Id. at 85-87.
67 Id. at 99-100.
68 Id. at 76.
69 Id. at 78.
70 37 Phil. 254 (1917).
71 Id. at 257-259.
72Geraldez v. Court of Appeals, supra note 50, at 336.
73Rollo, p. 100.
74 Id.
75 Id.
76 G.R. No. L-40098, August 29, 1975, 66 SCRA 425.
77 Id. at 458.
78People v. Lapura, 325 Phil. 346, 352 (1996).
79 G.R. No. 165828, August 24, 2011, 656 SCRA 60.
80 Id. at 83 citing Cebu Country Club, Inc. v. Elizagaque, G.R. No. 160273, January 18, 2008, 542 SCRA 65, 74-75.
81 405 Phil. 741 (2001).
82 Id. at 748-750.
83 Civil Code, Article 2219. Moral damages may be recovered in the following and analogous cases:
(1) A criminal offense resulting in physical injuries; (2) Quasi-delicts causing physical injuries; (3) Seduction, abduction, rape, or other lascivious acts; (4) Adultery or concubinage; (5) Illegal or arbitrary detention or arrest; (6) Illegal search; (7) Libel, slander or any other form of defamation; (8) Malicious prosecution; (9) Acts mentioned in Article 309; (10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
84Rollo, p. 214.
85 G.R. No. 184809, March 29, 2010, 617 SCRA 115.
86 G.R. No. 188106, November 25, 2009, 605 SCRA 807.
87 Id. at 126-127.
88Cervantes v. Court of Appeals, G.R. No. 125138, March 2, 1999, 304 SCRA 25, 33 citing J. C. Sangco, Philippine Law on Torts and Damages, 1034 (Vol. II, 1993).