THIRD DIVISION

[G.R. No. 97785. March 29, 1996]

PHILIPPINE COMMERCIAL INTERNATIONAL BANK, petitioner, vs. COURT OF
APPEALS and RORY W. LIM, respondents.
DECISION
FRANCISCO, J.:

This is a petition for review on certiorari seeking the reversal of the Decision of the Court
of Appeals in CA-G.R. No. 18843 promulgated on July 30, 1990, and the Resolution dated
March 11, 1991, affirming with modification the judgment of the Regional Trial Court of
Gingoog City which held petitioner Philippine Commercial International Bank (PCIB) liable
for damages resulting from its breach of contract with private respondent Rory W. Lim.
Disputed herein is the validity of the stipulation embodied in the standard application
form/receipt furnished by petitioner for the purchase of a telegraphic transfer which relieves
it of any liability resulting from loss caused by errors or delays in the course of the discharge
of its services.
The antecedent facts are as follows:
On March 13, 1986, private respondent Rory Lim delivered to his cousin Lim Ong Tian
PCIB Check No. JJJ 24212467 in the amount of P200,000.00 for the purpose of obtaining
a telegraphic transfer from petitioner PCIB in the same amount. The money was to be
transferred to Equitable Banking Corporation, Cagayan de Oro Branch, and credited to
private respondents account at the said bank. Upon purchase of the telegraphic transfer,
petitioner issued the corresponding receipt dated March 13, 1986 [T/T No. 284] which
contained the assailed provision, to wit:
[1]

AGREEMENT
xxx xxx xxx
In case of fund transfer, the undersigned hereby agrees that such transfer will be made without any
responsibility on the part of the BANK, or its correspondents, for any loss occasioned by errors, or
delays in the transmission of message by telegraph or cable companies or by the correspondents or
agencies, necessarily employed by this BANK in the transfer of this money, all risks for which are
assumed by the undersigned.
Subsequent to the purchase of the telegraphic transfer, petitioner in turn issued and
delivered eight (8) Equitable Bank checks to his suppliers in different amounts as payment
for the merchandise that he obtained from them. When the checks were presented for
payment, five of them bounced for insufficiency of funds, while the remaining three were
held overnight for lack of funds upon presentment. Consequent to the dishonor of these
checks, Equitable Bank charged and collected the total amount of P1, 100.00 from private
respondent. The dishonor of the checks came to private respondents attention only on April
2, 1986, when Equitable Bank notified him of the penalty charges and after receiving letters
[2]

[3]

[4]

from his suppliers that his credit was being cut-off due to the dishonor of the checks he
issued.
Upon verification by private respondent with the Gingoog Branch Office of petitioner
PCIB, it was confirmed that his telegraphic transfer (T/T No. 284) for the sum of P200,000.00
had not yet been remitted to Equitable Bank, Cagayan de Oro branch. In fact, petitioner
PCIB made the corresponding transfer of funds only on April 3, 1986, twenty one (21) days
after the purchase of the telegraphic transfer on March 13,1986.
Aggrieved, private respondent demanded from petitioner PCIB that he be compensated
for the resulting damage that he suffered due to petitioners failure to make the timely transfer
of funds which led to the dishonor of his checks. In a letter dated April 23, 1986, PCIBs
Branch Manager Rodolfo Villarmia acknowledged their failure to transmit the telegraphic
transfer on time as a result of their mistake in using the control number twice and the
petitioner banks failure to request confirmation and act positively on the disposition of the
said telegraphic transfer.
[5]

Nevertheless, petitioner refused to heed private respondents demand prompting the

latter
to
file
a
complaint
for
damages
with
the Regional Trial Court of Gingoog City on January 16, 1987. In his complaint, private
respondent alleged that as a result of petitioners total disregard and gross violation of its
contractual obligation to remit and deliver the sum of Two Hundred Thousand Pesos
(P200,000.00) covered by T/T No. 284 to Equitable Banking Corporation, Cagayan de Oro
Branch, private respondents checks were dishonored for insufficient funds thereby causing
his business and credit standing to suffer considerably for which petitioner should be
ordered to pay damages.
[6]

[7]

Answering the complaint, petitioner denied any liability to private respondent and
interposed as special and affirmative defense the lack of privity between it and private
respondent as it was not private respondent himself who purchased the telegraphic transfer
from petitioner. Additionally, petitioner pointed out that private respondent is nevertheless
bound by the stipulation in the telegraphic transfer application/form receipt which provides:
[8]

x x x. In case of fund transfer, the undersigned hereby agrees that such transfer will be made
without any responsibility on the part of the BANK, or its correspondents, for any loss occasioned
by errors or delays in the transmission of message by telegraph or cable companies or by
correspondents or agencies, necessarily employed by this BANK in the transfer of this money, all
risks for which are assumed by the undersigned.
According to petitioner, they utilized the services of RCPI-Gingoog City to transmit the
message regarding private respondents telegraphic transfer because their telex machine
was out of order at that time. But as it turned out, it was only on April 3, 1986 that petitioners
Cagayan de Oro Branch had received information about the said telegraphic transfer.
[9]

In its decision dated July 27, 1988 the Regional Trial Court of Gingoog City held
petitioner liable for breach of contract and struck down the aforecited provision found in
petitioners telegraphic transfer application form/receipt exempting it from any liability and
declared the same to be invalid and unenforceable. As found by the trial court, the provision
amounted to a contract of adhesion wherein the objectionable portion was unilaterally
[10]

inserted by petitioner in all its application forms without giving any opportunity to the
applicants to question the same and express their conformity thereto. Thus, the trial court
adjudged petitioner liable to private respondent for the following amounts:
[11]

WHEREFORE, judgment is hereby rendered in favor of plaintiff and against the defendant,
ordering the latter to pay the former as follows:
P960,000.00 as moral damages;
P50,000.00 as exemplary damages;
P40,000.00 as attorneys fees; and
P1,100.00 as reimbursement for the surcharges paid by plaintiff to the Equitable Banking
Corporation, plus costs, all with legal interest of 6% per annum from the date of this
judgment until the same shall have been paid in full.
[12]

Upon appeal by petitioner to the Court of Appeals, respondent court affirmed with
modifications the judgment of the trial court and ordered as follows:
WHEREFORE, premises considered, judgment is hereby rendered affirming the appealed decision
with modification, as follows:
The defendant-appellant is ordered to pay to the plaintiff-appellee the following:
1. The sum of Four Hundred Thousand (P400,000.00) Pesos as/for moral damages;
2. The sum of Forty Thousand (P40,000.00) Pesos as exemplary damage to serve as an example for
the public good;
3. The sum of Thirty Thousand (P30,000.00) Pesos representing attorneys fees;
4. The sum of One Thousand One Hundred (P1,100.00) Pesos as actual damage, and
5. To pay the costs.

SO ORDERED.

[13]

A motion for reconsideration was filed by petitioner but respondent Court of Appeals
denied the same.
[14]

Still unconvinced, petitioner elevated the case to this Court through the instant petition
for review on certiorari invoking the validity of the assailed provision found in the application
form/receipt exempting it from any liability in case of loss resulting from errors or delays in
the transfer of funds.
Petitioner mainly argues that even assuming that the disputed provision is a contract of
adhesion, such fact alone does not make it invalid because this type of contract is not
absolutely prohibited. Moreover, the terms thereof are expressed clearly, leaving no room
for doubt, and both contracting parties understood and had full knowledge of the same.

Private respondent however contends that the agreement providing non-liability on

petitioners part in case of loss caused by errors or delays despite its recklessness and
negligence is void for being contrary to public policy and interest.
[15]

A contract of adhesion is defined as one in which one of the parties imposes a readymade form of contract, which the other party may accept or reject, but which the latter cannot
modify. One party prepares the stipulation in the contract, while the other party merely
affixes his signature or his adhesion thereto, giving no room for negotiation and depriving
the latter of the opportunity to bargain on equal footing. Nevertheless, these types of
contracts have been declared as binding as ordinary contracts, the reason being that the
party who adheres to the contract is free to reject it entirely. It is equally important to stress,
though, that the Court is not precluded from ruling out blind adherence to their terms if the
attendant facts and circumstances show that they should be ignored for being obviously too
one-sided.
[16]

[17]

[18]

[19]

[20]

On previous occasions, it has been declared that a contract of adhesion may be struck
down as void and unenforceable, for being subversive to public policy, only when the weaker
party is imposed upon in dealing with the dominant bargaining party and is reduced to the
alternative of taking it or leaving it, completely deprived of the opportunity to bargain on
equal footing. And when it has been shown that the complainant is knowledgeable enough
to have understood the terms and conditions of the contract, or one whose stature is such
that he is expected to be more prudent and cautious with respect to his transactions, such
party cannot later on be heard to complain for being ignorant or having been forced into
merely consenting to the contract.
[21]

[22]

The factual backdrop of the instant case, however, militates against applying the
aforestated pronouncements. That petitioner failed to discharge its obligation to transmit
private respondents telegraphic transfer on time in accordance with their agreement is
already a settled matter as the same is no longer disputed in this petition. Neither is the
finding of respondent Court of Appeals that petitioner acted fraudulently and in bad faith in
the performance of its obligation, being contested by petitioner. Perforce, we are bound by
these factual considerations.
Having established that petitioner acted fraudulently and in bad faith, we find it
implausible to absolve petitioner from its wrongful acts on account of the assailed provision
exempting it from any liability. In Geraldez vs. Court of Appeals, it was unequivocally
declared that notwithstanding the enforceability of a contractual limitation, responsibility
arising from a fraudulent act cannot be exculpated because the same is contrary to public
policy. Indeed, Article 21 of the Civil Code is quite explicit in providing that [a]ny person who
willfully causes loss or injury to another in a manner that is contrary to morals, good customs
or public policy shall compensate the latter for the damage. Freedom of contract is subject
to the limitation that the agreement must not be against public policy and any agreement or
contract made in violation of this rule is not binding and will not be enforced.
[23]

[24]

The prohibition against this type of contractual stipulation is moreover treated by law as
void which may not be ratified or waived by a contracting party. Article 1409 of the Civil
Code states:
ART. 1409. The following contracts are inexistent and void from the beginning:

(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or
public policy;
xxx xxx xxx
These contracts cannot be ratified. Neither can the right to set up the defense of illegality be
waived.
Undoubtedly, the services being offered by a banking institution like petitioner are imbued
with public interest. The use of telegraphic transfers have now become commonplace
among businessmen because it facilitates commercial transactions. Any attempt to
completely exempt one of the contracting parties from any liability in case of loss
notwithstanding its bad faith, fault or negligence, as in the instant case, cannot be
sanctioned for being inimical to public interest and therefore contrary to public policy.
Resultingly, there being no dispute that petitioner acted fraudulently and in bad faith, the
award of moral and exemplary damages were proper.
[25]

[26]

But notwithstanding petitioners liability for the resulting loss and damage to private
respondent, we find the amount of moral damages adjudged by respondent court in the sum
of P400,000.00 exorbitant. Bearing in mind that moral damages are awarded, not to
penalize the wrongdoer, but rather to compensate the claimant for the injuries that he may
have suffered, we believe that an award of Two Hundred Thousand Pesos (P200,000.00)
is reasonable under the circumstances.
[27]

WHEREFORE, subject to the foregoing modification reducing the amount awarded as

moral damages to the sum of Two Hundred Thousand Pesos (P200,000.00), the appealed
decision is hereby AFFIRMED.
SO ORDERED.

FIRST DIVISION
SPS. EDGAR AND DINAH G.R. No. 161319
OMENGAN,
Petitioners, Present:
-versusPHILIPPPINE NATIONAL BANK,
HENRY M. MONTALVO AND
MANUEL S. ACIERTO,*
Respondents. Promulgated:
January 23, 2007
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CORONA, J.
This petition for review on certiorari[1] seeks a review and reversal of the Court of Appeals (CA)
decision[2] and resolution[3] in CA-G.R. CV No. 71302.
In October 1996, the Philippine National Bank (PNB) Tabuk (Kalinga) Branch approved
petitioners-spouses application for a revolving credit line of P3 million. The loan was secured by
two residential lots in Tabuk, Kalinga-Apayao covered by Transfer Certificate of Title (TCT)
Nos. 12954 and 12112. The certificates of title, issued by the Registry of Deeds of the Province
of Kalinga-Apayao, were in the name of Edgar[4] Omengan married to Dinah Omengan.
The first P2.5 million was released by Branch Manager Henry Montalvo on three separate
dates. The release of the final half million was, however, withheld by Montalvobecause of a letter
allegedly sent by Edgars sisters. It read:
Appas, Tabuk
Kalinga
7 November 1996
The Manager
Philippine National Bank
Tabuk Branch
Poblacion, Tabuk
Kalinga

Sir:
This refers to the land at Appas, Tabuk in the name of our brother, Edgar Omengan,
which was mortgaged to [the] Bank in the amount of Three Million Pesos
(P3,000,000.00), the sum of [P2.5 Million] had already been released and received by
our brother, Edgar.
In this connection, it is requested that the remaining unreleased balance of [half a
million pesos] be held in abeyance pending an understanding by the rest of the brothers
and sisters of Edgar. Please be informed that the property mortgaged, while in the
name of Edgar Omengan, is owned in co-ownership by all the children of the late
Roberto and Elnora Omengan. The lawyer who drafted the document registering
the subject property under Edgars name can attest to this fact. We had a prior
understanding with Edgar in allowing him to make use of the property as
collateral, but he refuses to comply with such arrangement. Hence, this letter.
(emphasis ours)

Very truly yours,

(Sgd.) Shirley O. Gamon (Sgd.) Imogene O. Bangao
(Sgd.) Caroline O. Salicob (Sgd.) Alice O. Claver[5]

Montalvo was eventually replaced as branch manager by Manuel Acierto who released the
remaining half million pesos to petitioners on May 2, 1997. Acierto also recommended the
approval of a P2 million increase in their credit line to the Cagayan Valley Business Center Credit
Committee in Santiago City.
The credit committee approved the increase of petitioners credit line (from P3 million to P5
million), provided Edgars sisters gave their conformity. Acierto informed petitioners of the
conditional approval of their credit line.
But petitioners failed to secure the consent of Edgars sisters; hence, PNB put on hold the release
of the additional P2 million.
On October 7, 1998, Edgar Omengan demanded the release of the P2 million. He claimed that
the condition for its release was not part of his credit line agreement with PNB because it was
added without his consent. PNB denied his request.

On March 3, 1999, petitioners filed a complaint for breach of contract and damages against PNB
with the Regional Trial Court (RTC), Branch 25 in Tabuk, Kalinga. After trial, the court decided
in favor of petitioners.
Accordingly, judgment is hereby rendered finding in favor of [petitioners.] [PNB is
ordered]:
1)
To release without delay in favor of [petitioners] the amount of P2,000,000.00
to complete the P5,000,000.00 credit line agreement;
2)
To pay [petitioners] the amount of P2,760,000.00 representing the losses and/or
expected income of the [petitioners] for three years;
3)
To pay lawful interest, until the amount aforementioned on paragraphs 1 and 2
above are fully paid; and
4)

To pay the costs.

SO ORDERED.[6]

The CA, however, on June 18, 2003, reversed and set aside the RTC decision dated April 21,
2001.[7]
Petitioners now contend that the CA erred when it did not sustain the finding of breach of contract
by the RTC. [8]
The existence of breach of contract is a factual matter not usually reviewed in a petition filed
under Rule 45. But since the RTC and the CA had contradictory findings, we are constrained to
rule on this issue.
Was there a breach of contract? There was none.
Breach of contract is defined as follows:
[It] is the failure without legal reason to comply with the terms of a contract. It is also
defined as the [f]ailure, without legal excuse, to perform any promise which forms the
whole or part of the contract.[9]

In this case, the parties agreed on a P3 million credit line. This sum was completely released to
petitioners who subsequently applied[10] for an increase in their credit line. This was conditionally
approved by PNBs credit committee. For all intents and purposes, petitioners sought an additional
loan.
The condition attached to the increase in credit line requiring petitioners to acquire the conformity
of Edgars sisters was never acknowledged and accepted by petitioners. Thus, as to the additional
loan, no meeting of the minds actually occurred and no breach of contract could be attributed to
PNB. There was no perfected contract over the increase in credit line.
[T]he business of a bank is one affected with public interest, for which reason the bank should
guard against loss due to negligence or bad faith. In approving the loan of an applicant, the bank
concerns itself with proper [information] regarding its debtors. [11] Any investigation previously
conducted on the property offered by petitioners as collateral did not preclude PNB from
considering new information on the same property as security for a subsequent loan. The credit
and property investigation for the original loan of P3 million did not oblige PNB to grant and
release any additional loan. At the time the original P3 million credit line was approved, the title
to the property appeared to pertain exclusively to petitioners. By the time the application for an
increase was considered, however, PNB already had reason to suspect petitioners claim of
exclusive ownership.
A mortgagee can rely on what appears on the certificate of title presented by the
mortgagor and an innocent mortgagee is not expected to conduct an exhaustive
investigation on the history of the mortgagors title. This rule is strictly applied to
banking institutions. xxx
Banks, indeed, should exercise more care and prudence in dealing even with
registered lands, than private individuals, as their business is one affected with
public interest. xxx Thus, this Court clarified that the rule that persons dealing
with registered lands can rely solely on the certificate of title does not apply to
banks.[12] (emphasis supplied)

Here, PNB had acquired information sufficient to induce a reasonably prudent person to inquire
into the status of the title over the subject property. Instead of defending their position, petitioners
merely insisted that reliance on the face of the certificate of title (in their name) was

sufficient. This principle, as already mentioned, was not applicable to financial institutions like
PNB.
In truth, petitioners had every chance to turn the situation in their favor if, as they said, they
really owned the subject property alone, to the exclusion of any other owner(s).Unfortunately, all
they offered were bare denials of the co-ownership claimed by Edgars sisters.
PNB exercised reasonable prudence in requiring the above-mentioned condition for the
release of the additional loan. If the condition proved unacceptable to petitioners, the parties could
have discussed other terms instead of making an obstinate and outright demand for the release of
the additional amount. If the alleged co-ownership in fact had no leg to stand on, petitioners could
have introduced evidence other than a simple denial of its existence.
Since PNB did not breach any contract and since it exercised the degree of diligence
expected of it, it cannot be held liable for damages.
WHEREFORE, the decision and resolution of the Court of Appeals in CA-G.R. CV No. 71302
are hereby AFFIRMED.
Costs against petitioners.
SO ORDERED.

FIRST DIVISION

SPOUSES ELVIRA AND CESAR DUMLAO,

G.R. No. 131491

Petitioners,

Promulgated:

-versusMARLON REALTY CORPORATION,

August 17, 2007

Respondent.

x-----------------------------------------------------------------------------------------x
DECISION
SANDOVAL-GUTIERREZ, J.:
For our resolution is the instant Petition for Review on Certiorari under Rule 45 of the
1997 Rules of Civil Procedure, as amended, assailing the Decision [1] dated August 25, 1997 and
Resolution[2] dated November 13, 1997 rendered by the Court of Appeals in CA-G.R. SP No.
43366, entitled MARLON REALTY CORPORATION, petitioner, v. HON. JUDGE REGIONAL TRIAL
COURT OF PARAAQUE, BRANCH 258 and ELVIRA D. DUMLAO, ET AL., respondents.
The following facts are undisputed:
On November 26, 1991, spouses Elvira and Cesar Dumlao, petitioners, and Marlon Realty
Corporation, respondent, entered into a Contract to Sell[3] involving a 109 square meter lot
in Welcome Village, Paraaque City. The terms of payment are:
1.
Petitioners shall pay respondent P218,000.00 as cost of the lot;
2.

The sum of P61,000.00 shall be paid upon the signing of the contract; and

3.

The balance of P157,000.00 shall be paid with interest at 24% per annum
within six (6) months.

Petitioners paid P61,000.00 as downpayment upon the signing of the contract. In the
meantime, interest began to accrue on the P157,000.00 balance of the purchase price.

On November 4, 1992, the Urban Bank informed respondent corporation that petitioners
loan of P148,000.00, intended as payment for their obligation, was approved. However, the
bank imposed the following conditions: the amount shall be released only after its mortgage

lien shall have been registered in the Registry of Deeds and annotated on petitioners land title;
and that respondent must first execute a deed of absolute sale in favor of petitioners.

On November 26, 1992, the parties entered into a Compromise Agreement[4] whereby
petitioners agreed to pay respondent, on or before March 26, 1993, the amount
of P38,203.33 representing the accrued interest as of that date on the P157,000.00 balance of
the purchase price; and that respondent shall execute a Deed of Sale to facilitate the transfer of
title to petitioners. On the same day, petitioners paid the buyers equity of P9,000.00.

On December 1, 1992, respondent, pursuant to the Compromise Agreement, executed

a Deed of Sale[5] in favor of petitioners. But they refused to pay the interest agreed upon despite
respondents repeated demand.

On January 26, 1995, respondent filed with the Metropolitan Trial Court (MTC), Branch
78, Paraaque City a complaint for a sum of money against petitioners. The MTC, in its
Decision[6] dated June 17, 1996, dismissed the complaint, holding that it is for specific
performance cognizable by the Regional Trial Court (RTC).

On appeal by respondent, the RTC, Branch 258, Paraaque City rendered its Decision
dated November 19, 1996 affirming the MTC judgment dismissing the complaint not on the
ground of lack of jurisdiction, but for lack of cause of action. [7]

Petitioners filed a motion for reconsideration but it was denied by the RTC in its Order
of February 04, 1997.

On February 28, 1997, respondent filed with the Court of Appeals a petition for review. In
its Decision dated August 25, 1997, the appellate court held that respondents complaint is for a
sum of money, the Contract to Sell being a unilateral acknowledgment of an existing debt on
petitioners part. The dispositive portion of the Decision reads:

WHEREFORE, premises considered, the petition is hereby given DUE COURSE and the assailed
Decision dated November 19, 1996 of the RTC of Paraaque, Branch 258, and its Order dated February 4,
1997 denying therein plaintiffs Motion for Reconsideration, as well as the Decision dated June 17, 1996
of the Metropolitan Trial Court of Paraaque, Branch 78, are REVERSED and SET ASIDE.
A new judgment is hereby entered ordering defendant spouses Cesar and Elvira Dumlao to pay
the sum of P109,929.79 representing the accumulated interests as of January 6, 1995with interest at 2%
per month computed from January 6, 1995.
SO ORDERED.[8]

Petitioners filed a motion for reconsideration but it was denied by the Court of Appeals
in its Resolution dated November 13, 1997.

Hence, this petition.

The issue for our resolution is whether petitioners are liable to pay interest on the balance
of the purchase price.

Petitioners insist that they are not liable to pay interest since the loan proceeds were
released, not to petitioners, but directly to respondent; and that pending the release, no interest
should accrue.

Petitioners arguments are misplaced.

Obligations arising from contracts have the force of law between the contracting parties
and should be complied with in good faith.[9] We must look into the terms of the contract to
determine the respective obligations of the parties thereto. If the terms of a contract are clear
and leave no doubt upon the contracting parties intention, then such terms should be applied
in their literal meaning.[10]

In this case, there is no question that the parties voluntarily entered into a Contract to
Sell a parcel of land. The terms of payment of the purchase price are clear and unambiguous,
thus:

SECOND That in consideration of the agreement to sell the above described property, the VENDEE
obligates himself/herself to pay the VENDOR the sum of TWO HUNDRED EIGHTEEN THOUSAND
(P218,000.00) PESOS, Philippine Currency from the date of execution of this contract until paid as follows:
a) The amount of SIXTY ONE THOUSAND xxx (P61,000.00) PESOS when this contract is signed, and
b)

The balance of ONE HUNDRED FIFTY SEVEN THOUSAND (P157,000.00) PESOS shall be paid
with interest at 24% per annum to be computed based on the outstanding and payable
balance, as of the date of downpayment, within a period of SIX (6) MONTHS x x x. Any
installment not paid on or before the due date, or within the grace period of five (5) days
thereafter, shall bear a penalty of 2% per month based on the remaining unpaid monthly
installments. Note: As per agreement, the amount of P148,000.00 is receivable thru an
URBAN BANK Letter of Guaranty (Pag-ibig Loan)

THIRD That demand for payment by the VENDOR is not necessary to make the VENDEE incur delay
(default). Note: Buyers equity is P9,000.00.

Pursuant to the above agreement, it is clear that a 24% interest per annum on the balance
of P157,000.00 shall be paid to respondent by petitioners. Having signed the contract,
petitioners are bound to comply with its terms and conditions in good faith. We reiterate that
the contract is the law between them.

We observe that respondent, faithful to its part of the bargain, executed a deed of sale in
favor of petitioners. In fact, a Transfer Certificate of Title was already issued in their
names. Fairness demands that petitioners also fulfill their obligation to pay interest on the
balance of the purchase price.

WHEREFORE, we DENY the petition. The assailed Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 43366 are AFFIRMED.

Costs against petitioners.

SO ORDERED.

THIRD DIVISION

MIGUEL SORIANO, JR. and

JULIETA SORIANO,
Petitioners,

G. R. No. 130348
Promulgated:

- versus ANTERO SORIANO and VIRGINIA

SORIANO,

September 3, 2007

Respondents.
x--------------------------------------------------x
DECISION
CHICO-NAZARIO, J.:
In this Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court, as amended,
petitioner spouses Miguel Soriano, Jr. and Julieta Soriano seek: (1) the reversal of the 18 August
1997 Decision[2] of the Court of Appeals, in CA-G.R. SP No. 44365; (2) the dismissal of the
complaint for ejectment filed by herein respondents; and (3) the issuance of a temporary
restraining order enjoining the Metropolitan Trial Court (MeTC) and herein respondents, and all
persons acting in behalf of the latter, from conducting proceedings relative to the writs of
execution and demolition issued in Civil Cases No. 3856 and No. 94-0001 until final resolution
of the present petition.
The assailed Court of Appeals decision affirmed in toto an earlier Decision[3] of the
Regional Trial Court (RTC), Branch 255, Las Pias, dated 3 April 1997, in two consolidated cases,
Civil Cases No. 96-0148 and No. 96-0148(A), affirming in toto the Joint Decision[4] of the MeTC,
Branch 79, Las Pias, dated 15 April 1996, in Civil Cases No. 3856 and No. 94-0001.
The case filed before the MeTC involved a Complaint[5] for Ejectment filed by respondents,
spouses Antero Soriano and Virginia Soriano, before the MeTC, Branch 79, Las Pias, on 24
February 1994. In said complaint, respondents prayed for the following relief against
petitioners, spouses Miguel Soriano, Jr. and Julieta Soriano:
1] To vacate the premises covered by TCT NO. S33221 of the Register of Deeds of
the Province of Rizal.
2] Ordering the defendants to pay the plaintiffs for the use of the premises, from January
1994 up to the dates defendants vacates (sic) the premises, the amount of Two Thousand Six
Hundred Sixty Two Pesos (P2,662.00) per month plus 12% per annum with an increment of 10%
every three (3) years beginning 1994.

3] Payment of attorneys fees in the amount of Ten Thousand Pesos (P10,000.00) and Three
Thousand Pesos (P3,000.00) per appearance.[6]

Essentially, the facts are:

On 5 October 1981, respondents, spouses Antero Soriano and Virginia Soriano, and
petitioners, spouses Miguel Soriano, Jr. and Julieta Soriano, as lessors and lessees respectively,
entered into a 20-year period Contract of Lease[7] over a 420 square meter parcel of land[8] situated
at Pamplona, Las Pias, Metro Manila. The leased property was intended as the site of a building
still to be constructed at that time, to be used exclusively by the LESSEE in that area.[9]
Part of the terms and conditions of said contract was a provision against the sublease or
assignment by the lessees of the subject property to third persons absent the written consent of
the lessors, viz:
6. The LESSEE shall not sublease or assign the leased area or any portion thereof, without
first securing the written consent of the LESSOR;

Alleging violation of the aforequoted condition, on 24 February 1994, respondents filed a

complaint for ejectment against petitioners before the MeTC, Branch 79, LasPias, docketed as
Civil Case No. 3856. In the complaint, respondents averred that:
7] That sometime December 1993, the defendants (sic) spouses were surprised to learn that
the lessees, under the guise of being the owner, were subleasing the same to third persons.
8] That plaintiffs secured a copy of the Contract of Lease entered into by the defendants
and a certain Marilou P. Del Castillo x x x.
9] That upon further investigation, the plaintiffs were further surprised to learn that the
premises were likewise being leased to a Beauty Parlor, Photography Shop, Auto Supply Dealer
and a Money Changer.
10] That the subleasing of the premises was made by the lessees sans the implied or express
consent of the Lessors.
xxxx
12] That on December 1993, plaintiffs sent to the defendants a Notice to Vacate x x x.
13] That up to the present time, the defendants has (sic) not yet vacated the premises.[10]

As proof of the above-quoted allegations, respondents offered in evidence the following:

1) a copy of a contract[11] of lease executed by and between Miguel Soriano, Jr. and Marilou P.
Del Castillo on 3 July 1993; 2) the affidavit of Marilou P. Del Castillo essentially corroborating
the averments in the complaint respecting the Contract of Lease between her and petitioners; 3)
various affidavits of third parties with whom petitioners allegedly subleased various portions of
the subject property; and 4) a Questioned Document Report by the National Bureau of
Investigation (NBI) stating that the signature of Marilou P. Del Castillo on the Joint Venture
Agreement presented by respondents was a forgery.
On the other hand, petitioners denied violating the subject contract of lease they signed
with respondents and contradicted the existence of the alleged sublease agreement with one
Marilou P. Del Castillo, as well as those with various other third persons. Petitioners, instead,
maintain that what existed between them and the third parties, including Marilou P. Del Castillo,
were joint venture agreements; and that the Contract of Lease between Marilou P. Del Castillo
and petitioners was a falsified document considering that the signatures of
petitioner Julieta Soriano, the witnesses and of the Notary Public were all claimed to be forgeries.
Petitioners then presented the supposed Joint Venture Agreement[12] entered into by and between
them and Marilou P. Del Castillo.
In the interregnum, before the complaint for ejectment could be resolved by the MeTC,
petitioners filed a petition for consignation of rental fees for the period of January to June 1994
with the MeTC. The claim for consignation, docketed as Civil Case No. 94-0001, was grounded
on the contention that respondents refused to encash the checks paid to them for the rent of the
subject property.
The MeTC consolidated the two civil actions, they being closely related.
On 15 April 1996, the MeTC promulgated a Joint Decision on the consolidated cases. The
trial court found in favor of respondents. The dispositive of the consolidated ruling reads:
WHEREFORE, judgment is rendered in favor of the plaintiffs and against defendants
ordering the latter and all persons claiming rights under them to vacate the premises in question
and surrender possession thereof to the former; to pay plaintiff the sum of P2,662.00 a month from
January, 1994 and monthly thereafter until the subject premises is actually vacated; to pay
plaintiff P10,000.00 as reasonable attorneys fees and cost of suit.
The consignation case is ordered dismissed together with the counterclaim without
pronouncement as to costs.[13]

Based on the arguments and evidence presented by the parties, the MeTC found that the
contract that existed between petitioners and Marilou P. Del Castillo was a sub-lease contract and
not a joint venture agreement. Much weight was given by said trial court on the following
documentary evidence: 1) affidavit of Marilou P. Del Castillo stating that the contract she entered
into with Julieta Soriano was a sublease agreement, especially as said affidavit was corroborated
by the affidavits of two other witnesses; and 2) the Questioned Document Report No. 843-1094
issued by the NBI stating that the signature of Marilou P. Del Castillo on the Joint Venture
Agreement presented by petitioners was a forgery. It ratiocinated that:
It is this court (sic) considered view that the defendants failed to overcome the presumption
of validity of contract. They having the one who put in issue the genuineness and due execution
of the sub contract of lease have the burden of proof to prove otherwise. On the part of the
plaintiffs, they have proven at the very least, that the Joint Venture Agreement has a semblance of
forgery.
Defendants negative assertion of facts cannot be given more weight than that of plaintiffs
positive stand. What the court has in mind in setting the clarificatory hearing is to illicit from
Marilou del Castillo which contract did she enter into with Julieta Soriano, face to face with the
defendants and plaintiffs. This way the Court would be in a position to observe the demeanor of
all the parties concern (sic) as well as the intended witness herself. It was however unfortunate that
it did not materialize.[14]

Anent the issue of consignation, the MeTC held that there was no valid tender of
payment, viz:
In the consignation case, it appears from the evidence of defendants that it was sometime
in the third week of December, 1993 that they tendered to the plaintiffs checks representing rentals
from January to June, 1994. Clearly, when the defendants tender payment as a prerequisite of
consignation, the rentals are not yet due. Valid tender of payment therefore is wanting.[15]

On appeal to the RTC, the assailed joint decision was affirmed in toto in a decision
promulgated on 3 April 1997. In acknowledging that the contract of lease between petitioners and
respondents was indeed violated, the RTC gave premium to the letter of one Ma. Lourdes R.
Acebedo, Executive Vice-President of Acebedo Optical Co., Inc. dated 22 October
1993. According to the RTC, the letter-proposal[16] embodies the provisions of a lease agreement
for a period of one month as well as the conformity of petitioner Julieta Soriano. The subject
letter is hereunder quoted in full:
October 22, 1993
Ms. JULIET[A] B. SORIANO

House of Abraham Bldg.

281 Real Street, Pamplona
Las Pias, Metro Manila
Dear Ms. Soriano:
This is to formalize the discussion arranged by our Messrs. Ernesto Victa and Ramil Mendoza for
us to use the front space of your establishment in connection with our Project: Oplan Silip Mata
from October 23 to November 23, 1993. That upon your conforme of this proposal letter we are to
pay the amount of three thousand five hundred (P3,500.00) pesos Philippine Currency for the use
of the space. Furthermore (sic) we will pay you the sum of twenty (P20.00) pesos per day for
electric consumption.
We hope you will find the foregoing proposal acceptable by signifying your conforme on the space
provided below. We thank you for your accommodation for this project.

Very truly yours,

ACEBEDO OPTICAL CO., INC.
By: (Sgd.)
MA. LOURDES R. ACEBEDO
Executive Vice-President

Conforme:

(Sgd.)
JULIET[A] B. SORIANO

For the court, the existence of the letter bolsters the claim of respondents that portions of the
subject property were indeed subleased to third parties without their concurrence, in definite
violation of the provisions of the contract of lease.
On 7 April 1997, petitioners, through their counsel, the law firm Rico & Associates, received
their copy of the decision of the RTC.
On 17 April 1997, or ten days later, petitioners moved for the reconsideration of the RTC
decision.
On 6 May 1997, the RTC denied[17] petitioners motion for reconsideration.

On 28 May 1997, petitioners received a copy of the aforesaid denial. On the other hand,
petitioners counsel received a copy of the same on 2 June 1997.
On 6 June 1997, from the adverse decision of the RTC, petitioners counsel went on to file
a motion for extension of time to file petition for review before the Court of Appeals. On 18 June
1997, petitioners filed the petition for review docketed as CA-G.R. SP No. 44365.
Meanwhile, on 20 June 1997, acting on respondents Motion for Execution of Judgment
dated 7 April 1997, the RTC rendered an Order,[18] the full text of which is quoted hereunder:
It appears in the record that the defendants were served with a copy of the decision of this
Court on April 7, 1997. The running of the period to appeal, however, was interrupted when the
defendants filed their motion for reconsideration on April 17, 1997. So that from April 7, 1997 up
to the filing of the motion for reconsideration on April 17, 1997, ten (10) days have already been
consumed, and there are but five (5) days remaining within which to perfect appeal or [file] petition
for review. The order dated May 6, 1997, denying defendants (sic) motion for reconsideration, was
received by the defendants, through their collaborating counsel, Atty. Miguel Soriano, on May 28,
1997. So that if the defendants received the order on the said date, they have but up to June 2,
1997 to interpose a petition. As no appeal or petition for review was perfected up to this date, as
admitted by Atty. Soriano in open court on said date (in the afternoon), then the decision of this
Court has already become final and executory.
WHEREFORE, and in view of the foregoing, the motion for execution of judgment
dated April 7, 1997, filed by the plaintiffs, is hereby granted.
By authority of the ruling in Salientes vs. Intermediate Appellate Court (246 SCRA 150)
and other related cases already decided, whereby execution of decisions in ejectment cases falls
within the jurisdiction of the inferior court, and not the appellate court, let the record of this case
be remanded to the Metropolitan Trial Court, Branch 79, Las Pias City, for execution of the
judgment.

On 18 August 1997, the appellate court rendered a Decision denying the petition, the
dispositive portion of which states that:
WHEREFORE, foregoing considered, the petition for review is hereby DENIED for lack
of merit and the appealed decision is hereby AFFIRMED in toto.
The Motion for Extension of Time to Reply filed by petitioners and the ex-parte (sic)
motion for deposit of monthly rental are hereby DENIED for being moot and academic.
The injunction granted is hereby permanently lifted.
Cost against petitioners.[19]

The Court of Appeals denied petitioners recourse on two grounds: 1) for being filed out of
time, that is:
Petitioners did not file their petition for review within the reglementary period. Petitioners
filed a motion for extension to file Petition for Review. But this said motion was filed only onJune
6, 1997, when the 15-days reglementary period has expired (citation omitted).[20]

and 2) for lack of merit considering that:

The existence of this contract of lease of petitioners with Marilou del Castillo is in clear
violation of the contract of lease of petitioners and private respondents. [21]

The Issues
Hence, the present course of action, by which petitioners fundamentally seek to reverse the
ruling of the Court of Appeals on the following grounds[22]:
I.
THE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT THE PETITION WAS
FILED OUT OF TIME AS PETITIONERS WERE BOUND BY THE SERVICE OF THE
ORDER OF THE RTC DENYING PETITIONERS MOTION FOR RECONSIDERATION
UPON PETITIONER (ATTY. MIGUEL SORIANO), AND NOT UPON THE UNDERSIGNED
LAW FIRM WHICH HAS FILED A FORMAL ENTRY OF APPEARANCE AS COUNSEL
FOR PETITIONERS IN THE PROCEEDINGS A QUO;
II.
THE COURT OF APPEALS SERIOUSLY MISAPPRECIATTED AND IMPROPERLY GAVE
CREDENCE TO THE CONTRACT OF LEASE DATED 3 JULY 1993 WHICH WAS
INTRODUCED IN EVIDENCE, BUT SIGNIFICANTLY ADMITTED TO BE A FORGERY,
BY PRIVATE RESPONDENTS; [and]
III.
THE COURT OF APPEALS TOTALLY IGNORED AND COMPLETELY DISREGARDED
THE CLEAR AND CONVINCING EVIDENCE ON RECORD PROVING BEYOND
PERADVENTURE THAT PETITIONERS DID NOT VIOLATE THEIR CONTRACT OF
LEASE DATED 5 OCTOBER 1981 WITH PRIVATE RESPONDENTS, IN THAT, WHAT
WAS
ACTUALLY
ENTERED
INTO
BETWEEN
PETITIONERS
AND
MARILOU DEL CASTILLO WAS A JOINT VENTURE AGREEMENT.

The Courts Ruling

A cursory reading of the petition promptly discloses that at the core of the controversy are
merely two issues. One involves a procedural matter, that is, whether or not the petition filed
before the Court of Appeals was done in due time; and the other entails an issue of substance
anent the existence of a contract of (sub)lease between petitioners and Marilou P. Del Castillo in
violation of the contract of lease between petitioners and respondents.
Anent the first issue, the appellate court rationalized its finding that the petition filed before
it was filed beyond the reglementary period within which to file a petition for review by stating
thus:
Rico & Associates Law Office, counsel of petitioners, claimed that it received the copy of
the order denying the motion for reconsideration only on June 2, 1997.
Records show however, that petitioner Atty. Miguel Soriano received a copy of the order
of denial on May 28, 1997. x x x.
xxxx
In this case, petitioner Atty. Miguel Soriano appeared as counsel for petitioners.
xxxx
The five (5) days remaining period to appeal should therefore be counted from May 28,
1997, when petitioner Atty. Soriano received a copy of the Order of Denial and not on June 2,
1997, when Rico & Associated Law Office received its notice. [23]

Petitioners naturally dispute the foregoing findings. They counter that the above is clearly
based on a deliberate misapprehension of the true facts. [24] Petitioners argue that as early as
November 1995, before the MeTC, the law firm Rico & Associates Law Office had already
entered[25] its appearance as their counsel of record; that as stated therein, the address of said law
firm is 4th Floor, Cattleya Condominium, 235 Salcedo St., Legaspi Village, Makati City; that
petitioner Atty. Miguel Soriano never filed a formal appearance as counsel[26] for himself and his
wife, Julieta Soriano, much less used his residence address (No. 79 Sterling Avenue, Sterling Life
Avenue, Pamplona, Las Pias, Metro Manila) as his forwarding address for purposes of court
notices[27]; that, assuming for the sake of argument, even if petitioner Atty. Miguel Soriano did
enter his provisional appearance as counsel for himself and his wife by appearing in some court
proceedings and signing pleadings, still, he did so for Rico & Associates Law Office with office
address at Rm. 407 Cattleya Condominium, 235 Salcedo St., Legaspi Village, Makati City; and
that, all court notices, except the order of denial of petitioners Motion for Reconsideration, were
never sent to petitioner Atty. Miguel Soriano at his residence address. [28] Thus, petitioners

construe that, it is therefore highly anomalous why the RTC sent its Order dated 6 May 1997 to
petitioner Atty. Miguel Soriano at his residence address. [29]
Respondents insist, however, that the date of receipt of the RTCs order denying petitioners
motion for reconsideration should be considered 28 May 1997, the date of receipt thereof by
petitioner Atty. Miguel Soriano, because the latter has entered his appearance as collaborating
counsel in the subject case and signed several pleadings filed before the MeTC. Respondents
further contend that, notice to him is effective notice to the attorney of record; [30] and, thus,
petitioner Atty. Miguel Soriano cannot escape his own representations to serve his insidious
purposes.[31]
As to the procedural issue, we hold that the petition before the Court of Appeals was timely
filed.
In practice, service means the delivery or communication of a pleading, notice or some
other paper in a case, to the opposite party so as to charge him with receipt of it and subject him
to its legal effect.[32] The purpose of the rules on service is to make sure that the party being served
with the pleading, order or judgment is duly informed of the same so that he can take steps to
protect his interests; i.e., enable a party to file an appeal or apply for other appropriate reliefs
before the decision becomes final.[33] Pursuant to Section 2, Rule 13 of the 1997 Rules of Civil
Procedure, as amended, service of court processes, inter alia, is made in the following manner,
to wit:
SEC. 2. Filing and service, defined. Filing is the act of presenting the pleading or other
paper to the clerk of court.
Service is the act of providing a party with a copy of the pleading or paper concerned. If
any party has appeared by counsel, service upon him shall be made upon his counsel or one of
them, unless service upon the party himself is ordered by the court. Where one counsel appears for
several parties, he shall only be entitled to one copy of any paper served upon him by the opposite
side.

As mentioned above, the general rule is, where a party appears by attorney in an action or
proceeding in a court of record, all notices required to be given therein must be given to the
attorney of record; and service of the courts order upon any person other than the counsel of
record is not legally effective and binding upon the party, nor may it start the corresponding
reglementary period for the subsequent procedural steps that may be taken by the
attorney.[34] Notice should be made upon the counsel of record at his exact given address, [35] to

which notice of all kinds emanating from the court should be sent in the absence of a proper and
adequate notice to the court of a change of address. [36]
Said differently, when a party is represented by counsel of record, service of orders and
notices must be made upon said attorney; and notice to the client and to any other lawyer, not the
counsel of record, is not notice in law.[37]
In the case at bar, the fact that petitioner Atty. Miguel Soriano, Jr. may have appeared as
counsel for himself and his wife in the proceedings before the MeTC, or signed some pleadings
filed before the court, is of no moment. Firstly, despite the allegation of respondents, nothing in
the record shows that petitioner Atty. Miguel Soriano, Jr. formally entered his appearance as
collaborating counsel for himself and co-petitioner Julieta Soriano. Secondly, though some
pleadings filed for petitioners bear the signature of petitioner Atty. Miguel Soriano, Jr. as author
thereof, still, such pleadings equally display that the authorship was in behalf of the law firm Rico
& Associates Law Office and its address 4thFloor, Cattleya Condominium, 235 Salcedo St.,
Legaspi Village, Makati City - as stated on record, the law firm which appears to be the formal
counsel of petitioners. Further, it does not appear that there was any substitution of counsel, or
that service upon petitioner Atty. Miguel Soriano, Jr. had been specifically ordered by the
RTC. Interestingly, though, as professed by petitioners, the order of denial of the motion for
reconsideration of the decision of the RTC was the ONLY court process sent to petitioner Atty.
Miguel Soriano, Jr. This would show that it was petitioners counsel of record, Rico & Associates
Law Office, that, as a rule, received correspondence, notices and processes respecting the subject
case. Accordingly, the counsel of record of petitioners, Rico & Associates Law Office, is
presumed to be still and the only one authorized to receive court processes, inter alia. Notice of
the denial of petitioners motion for reconsideration of the RTCs decision, served upon the Rico
& Associates Law Office, was the formal notice to petitioners.For all legal intents and purposes,
the service of that notice was the trigger that started the running of the remaining five-day
reglementary period within which to file the petition to the appellate court or, at the very least, a
motion for extension of time to file said pleading.
Considering the prior disquisition, therefore, petitioners are deemed to have received a
copy of the subject denial by the RTC of their motion for reconsideration on 2 June 1997 when
their counsel of record, Rico & Associates Law Office, received the same. The remaining fiveday period within which to file the petition with the appellate court should have been counted
from that date. The last day, therefore, was 7 June 1997. Clearly, the petition interposed before
the Court of Appeals on 6 June 1997 was filed in due time. Otherwise, to consider the operative

date of receipt of the RTC Order denying petitioners motion for reconsideration to be 28 May
1997 -- when said order was received by petitioner Atty. Miguel Soriano, Jr., who albeit appeared
as a collaborating counsel as well -- is to violate Section 2 of Rule 13 of the Rules of Court. As
amended, that provision states that when party is represented by counsel, service of process must
be made on counsel and not on the party.
Time and again, we have stressed that the rules of procedure are used only to help secure
and not override substantial justice.[38] If a stringent application of the rules would hinder rather
than serve the demands of substantial justice, the former must yield to the latter.[39]
Apropos the substantial issue involved in the case at bar, petitioners contend that that the
appellate court erred in holding that they subleased a portion of the subject property to Marilou
P. Del Castillo in gross violation of the contract of lease executed between petitioners and
respondents. They argue that the finding of the Court of Appeals that there exists a contract of
(sub)lease between petitioners and Marilou P. Del Castillo is founded on a falsified contract of
(sub)lease, as the signature of the witnesses and notary public therein were forgeries; thus, the
contract of (sub)lease being a falsehood, the complaint of respondents is groundless. Moreover,
petitioners maintain that what really exists between them and Marilou P. Del Castillo is a joint
venture agreement which in no way violates the provision concerning subleasing.
Respondents argue against the above and stress that the signatures were,
indeed, falsified, and that it was petitioner Julieta Soriano who was behind such deception.
In its assailed decision, the Court Appeals explained that:
The signatures of the witnesses and the notary public in the contract of lease entered into by
petitioners and Marilou Del Castillo are indeed false. But by offering this document with the false
signatures of the witnesses and notary public, it cannot be concluded that private respondents
resorted to falsehood.
As explained by private respondents, the document was prepared by petitioners.
Marilou del Castillo also explained that when petitioners delivered to her the contract of
lease, the witnesses had already signed the same and after signing, petitioner Julieta Soriano signed
the name of notary public Noberto Malit, Sr. and sealed the document with the notarial seal of
Norberto Malit. Marilou del Castillo claimed that petitioner Julieta Soriano signs (sic) for Norberto
Malit because the latter is a law partner of petitioner Atty. Miguel Soriano.
We give credence to this testimony of Marilou del Castillo. It is a common knowledge and
practice that it is the lessor who prepares the contract which would govern the lease of the lessee.
The lessee usually signs.

This is especially true in this case because petitioner Atty. Miguel Soriano, the lessor is a
lawyer who knows the know-hows on the preparation of the contract of lease.
Being the lessor of the leased premises (between petitioners and Marilou del Castillo) and
being a lawyer at the same time, it would indeed be possible, basing it from usual experience, that
petitioners were the ones who prepared their contract of lease with Marilou del Castillo.
As such, private respondents cannot be said to have resorted to falsehood. Private
respondents merely offered as evidence the document prepared by petitioners. The same could not
be considered as fraud in the presentation of their cause.[40]

Further, the appellate court elucidated that, though containing false signatures,
nevertheless, the state of affairs will not warrant a ruling that there was no valid contract of lease
between petitioners and Marilou Del Castillo, [41] for the reason that said forgeries do not affect
the existence of a valid contract. The law requires only the consent of contracting parties x x x
Consents (sic) of the witness or that of the notary public are (sic) not needed for the perfection of
(a) contract.[42]
On the whole, the petition is devoid of merit.
At the outset, in imputing as error the appellate courts appreciation of the genuineness of
two supposed contracts executed by petitioners and Marilou P. Del Castillo, i.e., the Contract of
(Sub)Lease vis--vis the Joint Venture Agreement, petitioners are plainly bringing into play
questions of fact and the appreciation of evidence already made by no less than three courts of
law below. In a manner of speaking, petitioners would have us review once again the factual
determinations of the MeTC, as affirmed by not one court, but two higher courts already the RTC
and the Court of Appeals. It has been consistently held that under Section 1, Rule 45 of the Rules
of Court, as amended, in an appeal to this Court by way of a petition for review on certiorari,
only questions of law must be raised by the petitioner;[43] that is, our jurisdiction in a petition for
review on certiorari is limited to reviewing and correcting only errors of law, not of fact, the only
power of the Court being to determine if the legal conclusions drawn from the findings of fact are
correct.[44] The Court is not expected or required to examine or refute the oral and documentary
evidence submitted by the parties.[45]
Of course, this Court may be minded to review the factual findings of the Court of Appeals,
but only in the presence of any of the following circumstances: (1) the conclusion is grounded on
speculations, surmises or conjectures;[46] (2) the interference is manifestly mistaken, absurd or
impossible;[47] (3) there is grave abuse of discretion;[48] (4) the judgment is based on a

misapprehension of facts;[49] (5) the findings of fact are conflicting;[50] (6) there is no citation of
specific evidence on which the factual findings are based;[51] (7) the findings of fact are
contradicted by the presence of evidence on record;[52] (8) the findings of the Court of Appeals
are contrary to those of the trial court;[53] (9) the Court of Appeals manifestly overlooked certain
relevant and undisputed facts that, if properly considered, would justify a different
conclusion;[54] (10) the findings of the Court of Appeals are beyond the issues of the case;[55] and
(11) such findings are contrary to the admissions of both parties. [56]
Alas, we find none of the exceptions to be present in the case at bar; therefore, we see no
reason to depart from the general rule. The findings of fact of the three courts are fully
substantiated by the evidence extant on record.
The foregoing discussion notwithstanding, we have reviewed the records of the case at
bar and find no reversible error committed by the Court of Appeals concerning the merits of the
present petition. Without need to go into the fundamentals of the mendacity surrounding the
signature of the witnesses and the notary public found on the subject contract of (sub)lease, the
resolution of the present controversy is uncomplicated. It boils down to the consent of
petitioner Julieta Soriano and Marilou P. Del Castillo as evidenced by the legitimate signatures
thereon. It has been proved adequately to this Court that there exists a valid contract of
(sub)lease between petitioners and Marilou P. Del Castillo. The concurrence of the fact that the
latter acknowledges having signed the contract along with petitioner Julieta Soriano, and of the
fact that the signatures of the witnesses and notary public are forgeries, do not negate the
presence of a valid contract of (sub)lease. The signatures of the witnesses and the notary public
are considered necessary simply to make the contract binding on third parties. It would have
been a different matter had petitioners alleged and offered evidence to show that the
signatures of petitioner Julieta Soriano and Marilou P. Del Castillo, parties to the contract of
(sub)lease, were forgeries as well which would mean that parties to the assailed contract did
not give their consent. Absence of consent between the parties means that there was no
contract of (sub)lease; hence, petitioners would not be deemed to have violated the prohibition
on sublease, which was barred by the contract of lease between them and respondents.

In fine, as correctly held by no less than three courts, there exists a contract of (sub)lease
between petitioners and a third party, which is in clear violation of the prohibition contained in
the contract of lease entered into by petitioners and respondents.

WHEREFORE, premises considered, the instant petition is DENIED. The assailed 18 August
1997 Decision of the Court of Appeals in CA-G.R. SP No. 44365, is hereby AFFIRMED. Costs
against petitioners. SO ORDERED.