.R. No.

168523 March 9, 2011

Spouses FERNANDO and ANGELINA EDRALIN, Petitioners,

vs.
PHILIPPINE VETERANS BANK, Respondent.

DECISION

DEL CASTILLO, J.:

The right to possess a property follows the right of ownership; consequently, it would be illogical to
hold that a person having ownership of a parcel of land is barred from seeking possession thereof.

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,1 assailing the
Decision2 dated June 10, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 89248. The
dispositive portion of the assailed Decision reads:

WHEREFORE, premises considered, the present petition is hereby GIVEN DUE COURSE and the
writ prayed for accordingly GRANTED. The assailed Orders dated November 8, 2004 and January
28, 2005 dismissing the ex-parte petition for issuance of writ of possession and denying petitioner’s
motion for reconsideration, respectively, are hereby ANNULLED and SET ASIDE. Respondent
Judge is hereby DIRECTED to issue the writ of possession prayed for by the petitioner Philippine
Veterans Bank over the subject property covered by TCT No. 78332 of the Registry of Deeds for
Parañaque City, Metro Manila.

No pronouncement as to costs.

SO ORDERED.3

Factual Antecedents

Respondent Philippine Veterans Bank (Veterans Bank) is a commercial banking institution created
under Republic Act (RA) No. 3518,4 as amended by RA No. 7169.5

On February 5, 1976, Veterans Bank granted petitioner spouses Fernando and Angelina Edralin
(Edralins) a loan in the amount of Two Hundred Seventy Thousand Pesos (₱270,000.00). As
security thereof, petitioners executed a Real Estate Mortgage (REM)6 in favor of Veterans Bank over
a real property situated in the Municipality of Parañaque and registered in the name of petitioner
Fernando Edralin. The mortgaged property is more particularly described in Transfer Certificate of
Title (TCT) No. 204889. The REM was registered with the Registry of Deeds of the Province of
Rizal.7 The REM and its subsequent amendments8 were all duly annotated at the back of TCT No.
204889.9

The Edralins failed to pay their obligation to Veterans Bank. Thus, on June 28, 1983, Veterans Bank
filed a Petition for Extrajudicial Foreclosure10 of the REM with the Office of the Clerk of Court and Ex-
Officio Sheriff of Rizal.

In due course, the foreclosure sale was held on September 8, 1983, in which the Ex-Officio Sheriff of
Rizal sold the mortgaged property at public auction. Veterans Bank emerged as the highest bidder at
the said foreclosure sale and was issued the corresponding Certificate of Sale.11 The said Certificate
of Sale was registered with the Registry of Deeds of the Province of Rizal and annotated at the back
of TCT No. 204889 under Entry No. 83-62953/T-No. 43153-A on October 25, 1983.12

Upon the Edralins’ failure to redeem the property during the one-year period provided under Act No.
3135, Veterans Bank acquired absolute ownership of the subject property. Consequently, Veterans
Bank caused the consolidation of ownership of the subject property in its name on January 19,
1994.13 The Register of Deeds of Parañaque, Metro Manila cancelled TCT No. 204889 under the
name of Fernando Edralin and replaced it with a new transfer certificate of title, TCT No. 78332,14 in
the name of Veterans Bank on February 3, 1994.

Despite the foregoing, the Edralins failed to vacate and surrender possession of the subject property
to Veterans Bank. Thus, on May 24, 1996, Veterans Bank filed an Ex-Parte Petition for the Issuance
of a Writ of Possession, docketed as Land Registration Case (LRC) No. 06-060 before Branch 274
of the Regional Trial Court (RTC) of Parañaque City. The same, however, was dismissed for
Veterans Bank’s failure to prosecute.15

On July 29, 2003, Veterans Bank again filed an Ex-Parte Petition for Issuance of Writ of
Possession,16 this time docketed as Land Registration Case No. 03-0121, before the RTC of
Parañaque City. Veterans Bank divulged in its Certification against Forum-Shopping17 that the earlier
case, LRC No. 96-060, involving the same subject matter and parties, was dismissed.

The Edralins moved to dismiss18 the petition on the ground that the dismissal of LRC No. 96-060
constituted res judicata.

Ruling of the Regional Trial Court

The trial court denied the motion to dismiss explaining that the ground of failure to present evidence
is not a determination of the merits of the case hence does not constitute res judicata on the petition
for issuance of a writ of possession.19

Nevertheless, the trial court found no merit in the Veterans Bank’s application and dismissed the
same in its Order dated November 8, 2004.20 The trial court explained that, under paragraph (d) of
the REM, the Veterans Bank agreed to take possession of the Edralins’ property without any judicial
intervention. The court held that granting the writ of possession to the Veterans Bank will violate the
contractual agreement of the parties. Paragraph (d) reads:

(d) Effective upon the breach of any condition of this mortgage and in addition to the remedies
herein stipulated, the Mortgagee is hereby likewise appointed attorney-in-fact of the Mortgagor with
full powers and authority, with the use of force, if necessary to take actual possession of the
mortgaged property, without the necessity of any judicial order or any permission, or power, to
collect rents, to eject tenants, to lease or sell the mortgaged property or any part thereof, at a private
sale without previous notice or advertisement of any kind and execute the corresponding bills of
sale, lease or other agreement that may be deemed convenient, to make repairs or improvements
on the mortgaged property and pay for the same and perform any other act which the Mortgagee
may deem convenient for the proper administration of the mortgaged property. The payment of any
expenses advanced by the Mortgagee in connection with the purposes indicated herein is also
guaranteed by this Mortgage and such amount advanced shall bear interest at the rate of 12% per
annum. Any amount received from sale, disposal or administration above-mentioned may be applied
to the payment of the repairs, improvements, taxes and any other incidental expenses and
obligations and also the payment of the original indebtedness and interest thereof. The power herein
granted shall not be revoked during the life of this mortgage, and all acts that may be executed by
the Mortgagee by virtue of said power are hereby ratified. In addition to the foregoing, the Mortgagor
also hereby agrees, that the Auditor General shall withhold any money due or which may become
due the Mortgagor or debtor from the Government or from any of its instrumentalities, except those
exempted by law from attachment or execution, and apply the same in settlement of any and all
amount due to the Mortgagee;21

The trial court held that, assuming the contract allowed for the issuance of a writ of possession,
Veterans Bank’s right to seek possession had already prescribed. Without citing authority and
adequate explanation, the court held that Veterans Bank had only 10 years from February 24, 1983
to seek possession of the property.

Veterans Bank moved for the reconsideration22 of the adverse decision. It directed the court’s
attention to paragraph (c) of the real estate mortgage, which expressly granted the mortgagee the
right to avail itself of the remedy of extrajudicial foreclosure in case of the mortgagor’s default.
Paragraph (c) reads:

(c) If at any time the Mortgagor shall fail or refuse to pay the obligations herein secured, or any of the
amortizations of such indebtedness when due, or to comply with any of the conditions and
stipulations herein agreed, or shall, during the time this mortgage is in force, institute insolvency
proceedings or be involuntarily declared insolvent, or shall use the proceeds of this loan for
purposes other than those specified herein, or if this mortgage cannot be recorded in the
corresponding Registry of Deeds, then all the obligations of the Mortgagor secured by this Mortgage
and all the amortization thereof shall immediately become due, payable and defaulted, and the
Mortgagee may immediately foreclose this mortgage judicially in accordance with the Rules of Court,
or extra-judicially in accordance with Act No. 3135, as amended, and under Act 2612, as amended.
For the purpose of extra-judicial foreclosure the Mortgagor hereby appoints the Mortgagee his
attorney-in-fact to sell the property mortgaged under Act No. 3135, as amended, to sign all
documents and perform any act requisite and necessary to accomplish said purpose and to appoint
its substitutes as such attorney-in-fact with the same powers as above specified. x x x23

The motion for reconsideration was set for hearing on January 28, 2005. Due to a conflict of
schedule, Veterans Bank’s counsel moved24 to reset the hearing on its motion. In apparent denial of
the motion to reset, the trial court proceeded to deny Veterans Bank’s motion for reconsideration in
the Order dated January 28, 2005.25 The trial court reiterated that paragraph (d) of the REM allowed
Veterans Bank to take immediate possession of the property without need of a judicial order. It
would be redundant for the court to issue a writ of possession in its favor.

This prompted Veterans Bank to file a Petition for Mandamus with Prayer for Issuance of a
Preliminary Mandatory Injunction26 before the CA.

First among its arguments, Veterans Bank maintained that it was the trial court’s ministerial duty27 to
grant a writ of possession to the mortgagee who has consolidated and registered the property in its
name.

Veterans Bank then assailed the trial court’s holding that its right to a writ of possession had already
prescribed. Respondent maintained that the writ can be issued at any time after the mortgagor failed
to redeem the foreclosed property.28

Lastly, Veterans Bank argued that, contrary to the trial court’s finding, it did not contract away its
right to an extrajudicial foreclosure under Act No. 3135, as amended, by the inclusion of paragraph
(d) in the REM. Veterans Bank pointed out that, as evidenced by paragraph (c) of the REM, it
expressly reserved the right to avail of the remedies under Act No. 3135.29
Ruling of the Court of Appeals30

The appellate court ruled in favor of Veterans Bank.

It held that the contractual provision in paragraph (d) to immediately take possession of the
mortgaged property without need of judicial intervention is distinct from the right to avail of
extrajudicial foreclosure under Section 7 of Act No. 3135, which was expressly reserved by Veterans
Bank in paragraph (c) of the REM. The fact that the two paragraphs do not negate each other is
evidenced by the qualifying phrase "in addition to the remedies herein stipulated" found in paragraph
(c).

Having availed itself of the remedy of extrajudicial foreclosure, Veterans Bank, as the highest bidder,
has the right to a writ of possession. This right may be availed of any time after the buyer
consolidates ownership. In fact, the issuance of the writ of possession is a ministerial function, the
right to which cannot be enjoined or stayed, even by an action for annulment of the mortgage or the
foreclosure sale itself.

The trial court’s ruling that Veterans Bank’s right to possess has prescribed is likewise erroneous. As
already stated, Veterans Bank’s right to possess the property is not based on their contract but on
Act No. 3135.

Since the issuance of a writ of possession is a ministerial act of the trial judge, mandamus lies to
compel the performance of the said duty.

Petitioners immediately filed this petition for review.

Issues

Petitioners submit the following issues for our consideration:

1. Whether mandamus was resorted to as a substitute for a lost appeal

2. Whether mandamus is the proper remedy to seek a review of the final orders of the trial
court

3. Whether the consolidation of ownership of the extrajudicially foreclosed property through a

Deed of Sale is in accordance with law

4. Whether the issuance of a writ of possession under Act [No.] 3135 is subject to the statute
of limitations31

Our Ruling

Propriety of the Remedy of Mandamus

Petitioners argue that Veterans Bank availed itself of the remedy of mandamus as a substitute for a
lost appeal.32Petitioners narrate the relevant dates that allegedly show the belatedness and
impropriety of the petition for mandamus. Veterans Bank received the Order dated November 8,
2004 on November 18, 2004, thus it had until December 3, 2004 to file a motion for reconsideration.
Since December 3, 2004 was declared a non-working holiday, Veterans Bank filed its motion for
reconsideration on the next working day, December 6, 2004. With the said dates, it had only one day
left from receipt of the January 28, 2005 Order, or until February 10, 2005, to file an appeal (citing
Section 2, Rule 22) of the Rules of Court. Since Veterans Bank did not file an appeal on the
following day, it had lost its right to appeal and the assailed orders allegedly attained finality.

Respondent counters that the issuance of a writ of possession is not an ordinary action for which the
rules on appeal apply. The writ being a mere motion or an order of execution, appeal is not the
proper remedy to question the trial court’s ruling. In fact, Section 1, Rule 41 of the Rules of Court
provides that no appeal may be taken from an order of execution, but Rule 65 special civil actions
are available.33 Given that the issuance of the writ of possession is a ministerial act of the judge,
respondent maintains that a petition for mandamus is the proper remedy.

Respondent adds that, even if appeal were available, the same is not the plain, speedy and
adequate remedy to compel the performance of the ministerial act.34 Respondent maintains that
Section 3 of Rule 65 recognizes that the remedy of mandamus is available in conjunction with an
appeal. The qualifying phrase "and there is no appeal [available]," which appears in certiorari and
prohibition petitions, is conspicuously missing for petitions for mandamus.

We rule that mandamus is a proper remedy to compel the issuance of a writ of possession. The
purpose of mandamus is to compel the performance of a ministerial duty. A ministerial act is "one
which an officer or tribunal performs in a given state of facts, in a prescribed manner, in obedience to
the mandate of legal authority, without regard to or the exercise of his own judgment upon the
propriety or impropriety of the act done."35

The issuance of a writ of possession is outlined in Section 7 of Act No. 3135, as amended by Act No.
4118, which provides:

SEC. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of
First Instance of the province or place where the property or any part thereof is situated, to give him
possession thereof during the redemption period, furnishing bond in an amount equivalent to the use
of the property for a period of twelve months, to indemnify the debtor in case it be shown that the
sale was made without violating the mortgage or without complying with the requirements of [this]
Act. Such petition shall be made under oath and filed in form of an ex parte motion x x x and the
court shall, upon approval of the bond, order that a writ of possession issue, addressed to the
sheriff of the province in which the property is situated, who shall execute said order immediately.

During the period of redemption, the mortgagee is entitled to a writ of possession upon depositing
the approved bond. When the redemption period expires without the mortgagor exercising his right
of redemption, the mortgagor is deemed to have lost all interest over the foreclosed property, and
the purchaser acquires absolute ownership of the property. The purchaser’s right is aptly described
thus:

Consequently, the purchaser, who has a right to possession after the expiration of the redemption
period, becomes the absolute owner of the property when no redemption is made. In this regard, the
bond is no longer needed. The purchaser can demand possession at any time following the
consolidation of ownership in his name and the issuance to him of a new TCT. After consolidation of
title in the purchaser’s name for failure of the mortgagor to redeem the property, the purchaser’s
right to possession ripens into the absolute right of a confirmed owner. At that point, the issuance of
a writ of possession, upon proper application and proof of title becomes merely a ministerial function.
Effectively, the court cannot exercise its discretion.
Therefore, the issuance by the RTC of a writ of possession in favor of the respondent in this case is
proper. We have consistently held that the duty of the trial court to grant a writ of possession in such
instances is ministerial, and the court may not exercise discretion or judgment x x x36

With the consolidated title, the purchaser becomes entitled to a writ of possession and the trial court
has the ministerial duty to issue such writ of possession.37 Thus, "the remedy of mandamus lies to
compel the performance of [this] ministerial duty."38

Does the charter of Veterans Bank prohibit extrajudicial foreclosures?

Petitioners then assail Veterans Bank’s power to extrajudicially foreclose on mortgages. They
maintain that the legislature intended to limit Veterans Bank to judicial foreclosures only,39 citing
Section 18 of the Veterans Bank’s charter, RA No. 3518, which provides:

Section 18. Right of redemption of property foreclosed. – The mortgagor shall have the right, within
one year after the sale of the real estate as a result of the foreclosure of a mortgage, to redeem the
property by paying the amount fixed by the court in the order of execution, with interest thereon at
the rate specified in the mortgage, and all the costs and other judicial expenses incurred by the Bank
by reason of the execution and sale, and for the custody of said property.

Respondent counters that the inclusion of the phrase "fixed by the Court" in Section 18 of RA No.
3518 does not necessarily mean that only judicial foreclosures are available to Veterans Bank.
Moreover, resort to an extrajudicial foreclosure was voluntarily entered into by the contracting parties
in their REM.40

There is no merit in petitioners’ contention.

The aforequoted Section 18 grants to mortgagors of Veterans Bank the right to redeem their
judicially foreclosed properties. This provision had to be included because in judicial foreclosures,
mortgagors generally do not have the right of redemption unless there is an express grant by law.41

But, contrary to petitioners’ averments, there is nothing in Section 18 which can be interpreted to
mean that Veterans Bank is limited to judicial foreclosures only, or that it cannot avail itself of the
benefits provided under Act No. 3135,42 as amended, allowing extrajudicial foreclosures.

Moreover, the availability of extra-judicial foreclosure to a mortgagee depends upon the agreement
of the contracting parties. Section 1 of Act No. 3135 provides:

Section 1. When a sale is made under a special power inserted in or attached to any real-estate
mortgage hereafter made as security for the payment of money or the fulfillment of any other
obligation, the provisions of the following sections shall govern as to the manner in which the sale
and redemption shall be effected, whether or not provision for the same is made in the power.
(Emphasis supplied.)

In the case at bar, paragraph (c) of the parties’ REM granted Veterans Bank the special power as
attorney-in-fact of the petitioners to perform all acts necessary for the purpose of extrajudicial
foreclosure under Act No. 3135. Thus, there is no obstacle preventing Veterans Bank from availing
itself of the remedy of extrajudicial foreclosure.

Was the consolidation of title done in accordance with law?

Petitioners argue that Veterans Bank is not entitled to a writ of possession because it failed to
properly consolidate its title over the subject property.43 They maintain that the Deed of Sale
executed by the Veterans Bank in the bank’s own favor during the consolidation of title constitutes a
pactum commissorium, which is prohibited under Article 2088 of the Civil Code.44

Respondent contends that petitioners never questioned the validity of the foreclosure proceedings or
the auction sale. The failure to do so resulted in the ripening of the consolidation of ownership.45

There is no merit in petitioners’ argument.

Pactum commissorium is "a stipulation empowering the creditor to appropriate the thing given as
guaranty for the fulfillment of the obligation in the event the obligor fails to live up to his undertakings,
without further formality, such as foreclosure proceedings, and a public sale."46 "The elements of
pactum commissorium, which enable the mortgagee to acquire ownership of the mortgaged property
without the need of any foreclosure proceedings, are: (1) there should be a property mortgaged by
way of security for the payment of the principal obligation, and (2) there should be a stipulation for
automatic appropriation by the creditor of the thing mortgaged in case of non-payment of the
principal obligation within the stipulated period."47

The second element is missing to characterize the Deed of Sale as a form of pactum commissorium.
Veterans Bank did not, upon the petitioners’ default, automatically acquire or appropriate the
mortgaged property for itself. On the contrary, the Veterans Bank resorted to extrajudicial
foreclosure and was issued a Certificate of Sale by the sheriff as proof of its purchase of the subject
property during the foreclosure sale. That Veterans Bank went through all the stages of extrajudicial
foreclosure indicates that there was no pactum commissorium.

Does the right to a writ of possession prescribe?

Petitioners assail the CA’s ruling that the issuance of a writ of possession does not prescribe.48 They
maintain that Articles 1139,49 1149,50 and 115051 of the Civil Code regarding prescriptive periods
cover all kinds of action, which necessarily include the issuance of a writ of possession. Petitioners
posit that, for purposes of the latter, it is the five-year prescriptive period provided in Article 1149 of
the Civil Code which applies because Act No. 3135 itself did not provide for its prescriptive period.
Thus, Veterans Bank had only five years from September 12, 1983, the date when the Certificate of
Sale was issued in its favor, to move for the issuance of a writ of possession.52

Respondent argues that jurisprudence has consistently held that a registered owner of the land,
such as the buyer in an auction sale, is entitled to a writ of possession at any time after the
consolidation of ownership.53

We cannot accept petitioners’ contention. We have held before that the purchaser’s right "to request
for the issuance of the writ of possession of the land never prescribes."54 "The right to possess a
property merely follows the right of ownership,"55 and it would be illogical to hold that a person having
ownership of a parcel of land is barred from seeking possession thereof. In Calacala v. Republic of
the Philippines,56 the Republic was the highest bidder in the public auction but failed for a long period
of time to execute an Affidavit of Consolidation and to seek a writ of possession. Calacala insisted
that, by such inaction, the Republic’s right over the land had prescribed, been abandoned or waived.
The Court’s language in rejecting Calacala’s theory is illuminating:

[T]he Republic’s failure to execute the acts referred to by the petitioners within ten (10) years from
the registration of the Certificate of Sale cannot, in any way, operate to restore whatever rights
petitioners’ predecessors-in-interest had over the same. For sure, petitioners have yet to cite any
provision of law or rule of jurisprudence, and we are not aware of any, to the effect that the failure of
a buyer in a foreclosure sale to secure a Certificate of Final Sale, execute an Affidavit of
Consolidation of Ownership and obtain a writ of possession over the property thus acquired, within
ten (10) years from the registration of the Certificate of Sale will operate to bring ownership back to
him whose property has been previously foreclosed and sold. x x x

xxxx

Moreover, with the rule that the expiration of the 1-year redemption period forecloses the obligors’
right to redeem and that the sale thereby becomes absolute, the issuance thereafter of a final deed
of sale is at best a mere formality and mere confirmation of the title that is already vested in the
purchaser. x x x57

Moreover, the provisions cited by petitioners refer to prescription of actions. An action is "defined as
an ordinary suit in a court of justice, by which one party prosecutes another for the enforcement or
protection of a right, or the prevention or redress of a wrong."58 On the other hand "[a] petition for the
issuance of the writ, under Section 7 of Act No. 3135, as amended, is not an ordinary action filed in
court, by which one party ‘sues another for the enforcement or protection of a right, or prevention or
redress of a wrong.’ It is in the nature of an ex parte motion [in] which the court hears only one side.
It is taken or granted at the instance and for the benefit of one party, and without notice to or consent
by any party adversely affected. Accordingly, upon the filing of a proper motion by the purchaser in a
foreclosure sale, and the approval of the corresponding bond, the writ of possession issues as a
matter of course and the trial court has no discretion on this matter."59

WHEREFORE, premises considered, the Petition is DENIED for lack of merit. The CA Decision
dated June 10, 2005 in CA-G.R. SP No. 89248 is AFFIRMED.

SO ORDERED.

G.R. No. L-30511 February 14, 1980

MANUEL M. SERRANO, petitioner,

vs.
CENTRAL BANK OF THE PHILIPPINES; OVERSEAS BANK OF MANILA; EMERITO M. RAMOS,
SUSANA B. RAMOS, EMERITO B. RAMOS, JR., JOSEFA RAMOS DELA RAMA, HORACIO
DELA RAMA, ANTONIO B. RAMOS, FILOMENA RAMOS LEDESMA, RODOLFO LEDESMA,
VICTORIA RAMOS TANJUATCO, and TEOFILO TANJUATCO, respondents.

Rene Diokno for petitioner.

F.E. Evangelista & Glecerio T. Orsolino for respondent Central Bank of the Philippines.

Feliciano C. Tumale, Pacifico T. Torres and Antonio B. Periquet for respondent Overseas Bank of
Manila.

Josefina G. Salonga for all other respondents.

CONCEPCION, JR., J.:

Petition for mandamus and prohibition, with preliminary injunction, that seeks the establishment of
joint and solidary liability to the amount of Three Hundred Fifty Thousand Pesos, with interest,
against respondent Central Bank of the Philippines and Overseas Bank of Manila and its
stockholders, on the alleged failure of the Overseas Bank of Manila to return the time deposits made
by petitioner and assigned to him, on the ground that respondent Central Bank failed in its duty to
exercise strict supervision over respondent Overseas Bank of Manila to protect depositors and the
general public.1 Petitioner also prays that both respondent banks be ordered to execute the proper
and necessary documents to constitute all properties fisted in Annex "7" of the Answer of respondent
Central Bank of the Philippines in G.R. No. L-29352, entitled "Emerita M. Ramos, et al vs. Central
Bank of the Philippines," into a trust fund in favor of petitioner and all other depositors of respondent
Overseas Bank of Manila. It is also prayed that the respondents be prohibited permanently from
honoring, implementing, or doing any act predicated upon the validity or efficacy of the deeds of
mortgage, assignment. and/or conveyance or transfer of whatever nature of the properties listed in
Annex "7" of the Answer of respondent Central Bank in G.R. No. 29352.2

A sought for ex-parte preliminary injunction against both respondent banks was not given by this
Court.

Undisputed pertinent facts are:

On October 13, 1966 and December 12, 1966, petitioner made a time deposit, for one year with 6%
interest, of One Hundred Fifty Thousand Pesos (P150,000.00) with the respondent Overseas Bank
of Manila. 3 Concepcion Maneja also made a time deposit, for one year with 6-½% interest, on March
6, 1967, of Two Hundred Thousand Pesos (P200,000.00) with the same respondent Overseas Bank
of Manila.4

On August 31, 1968, Concepcion Maneja, married to Felixberto M. Serrano, assigned and conveyed
to petitioner Manuel M. Serrano, her time deposit of P200,000.00 with respondent Overseas Bank of
Manila. 5

Notwithstanding series of demands for encashment of the aforementioned time deposits from the
respondent Overseas Bank of Manila, dating from December 6, 1967 up to March 4, 1968, not a
single one of the time deposit certificates was honored by respondent Overseas Bank of Manila. 6

Respondent Central Bank admits that it is charged with the duty of administering the banking system
of the Republic and it exercises supervision over all doing business in the Philippines, but denies the
petitioner's allegation that the Central Bank has the duty to exercise a most rigid and stringent
supervision of banks, implying that respondent Central Bank has to watch every move or activity of
all banks, including respondent Overseas Bank of Manila. Respondent Central Bank claims that as
of March 12, 1965, the Overseas Bank of Manila, while operating, was only on a limited degree of
banking operations since the Monetary Board decided in its Resolution No. 322, dated March 12,
1965, to prohibit the Overseas Bank of Manila from making new loans and investments in view of its
chronic reserve deficiencies against its deposit liabilities. This limited operation of respondent
Overseas Bank of Manila continued up to 1968.7

Respondent Central Bank also denied that it is guarantor of the permanent solvency of any banking
institution as claimed by petitioner. It claims that neither the law nor sound banking supervision
requires respondent Central Bank to advertise or represent to the public any remedial measures it
may impose upon chronic delinquent banks as such action may inevitably result to panic or bank
"runs". In the years 1966-1967, there were no findings to declare the respondent Overseas Bank of
Manila as insolvent. 8
Respondent Central Bank likewise denied that a constructive trust was created in favor of petitioner
and his predecessor in interest Concepcion Maneja when their time deposits were made in 1966 and
1967 with the respondent Overseas Bank of Manila as during that time the latter was not an
insolvent bank and its operation as a banking institution was being salvaged by the respondent
Central Bank. 9

Respondent Central Bank avers no knowledge of petitioner's claim that the properties given by
respondent Overseas Bank of Manila as additional collaterals to respondent Central Bank of the
Philippines for the former's overdrafts and emergency loans were acquired through the use of
depositors' money, including that of the petitioner and Concepcion Maneja. 10

In G.R. No. L-29362, entitled "Emerita M. Ramos, et al. vs. Central Bank of the Philippines," a case
was filed by the petitioner Ramos, wherein respondent Overseas Bank of Manila sought to prevent
respondent Central Bank from closing, declaring the former insolvent, and liquidating its assets.
Petitioner Manuel Serrano in this case, filed on September 6, 1968, a motion to intervene in G.R.
No. L-29352, on the ground that Serrano had a real and legal interest as depositor of the Overseas
Bank of Manila in the matter in litigation in that case. Respondent Central Bank in G.R. No. L-29352
opposed petitioner Manuel Serrano's motion to intervene in that case, on the ground that his claim
as depositor of the Overseas Bank of Manila should properly be ventilated in the Court of First
Instance, and if this Court were to allow Serrano to intervene as depositor in G.R. No. L-29352,
thousands of other depositors would follow and thus cause an avalanche of cases in this Court. In
the resolution dated October 4, 1968, this Court denied Serrano's, motion to intervene. The contents
of said motion to intervene are substantially the same as those of the present petition. 11

This Court rendered decision in G.R. No. L-29352 on October 4, 1971, which became final and
executory on March 3, 1972, favorable to the respondent Overseas Bank of Manila, with the
dispositive portion to wit:

WHEREFORE, the writs prayed for in the petition are hereby granted and
respondent Central Bank's resolution Nos. 1263, 1290 and 1333 (that prohibit the
Overseas Bank of Manila to participate in clearing, direct the suspension of its
operation, and ordering the liquidation of said bank) are hereby annulled and set
aside; and said respondent Central Bank of the Philippines is directed to comply with
its obligations under the Voting Trust Agreement, and to desist from taking action in
violation therefor. Costs against respondent Central Bank of the Philippines. 12

Because of the above decision, petitioner in this case filed a motion for judgment in this case,
praying for a decision on the merits, adjudging respondent Central Bank jointly and severally liable
with respondent Overseas Bank of Manila to the petitioner for the P350,000 time deposit made with
the latter bank, with all interests due therein; and declaring all assets assigned or mortgaged by the
respondents Overseas Bank of Manila and the Ramos groups in favor of the Central Bank as trust
funds for the benefit of petitioner and other depositors. 13

By the very nature of the claims and causes of action against respondents, they in reality are
recovery of time deposits plus interest from respondent Overseas Bank of Manila, and recovery of
damages against respondent Central Bank for its alleged failure to strictly supervise the acts of the
other respondent Bank and protect the interests of its depositors by virtue of the constructive trust
created when respondent Central Bank required the other respondent to increase its collaterals for
its overdrafts said emergency loans, said collaterals allegedly acquired through the use of depositors
money. These claims shoud be ventilated in the Court of First Instance of proper jurisdiction as We
already pointed out when this Court denied petitioner's motion to intervene in G.R. No. L-29352.
Claims of these nature are not proper in actions for mandamus and prohibition as there is no shown
clear abuse of discretion by the Central Bank in its exercise of supervision over the other respondent
Overseas Bank of Manila, and if there was, petitioner here is not the proper party to raise that
question, but rather the Overseas Bank of Manila, as it did in G.R. No. L-29352. Neither is there
anything to prohibit in this case, since the questioned acts of the respondent Central Bank (the acts
of dissolving and liquidating the Overseas Bank of Manila), which petitioner here intends to use as
his basis for claims of damages against respondent Central Bank, had been accomplished a long
time ago.

Furthermore, both parties overlooked one fundamental principle in the nature of bank deposits when
the petitioner claimed that there should be created a constructive trust in his favor when the
respondent Overseas Bank of Manila increased its collaterals in favor of respondent Central Bank
for the former's overdrafts and emergency loans, since these collaterals were acquired by the use of
depositors' money.

Bank deposits are in the nature of irregular deposits. They are really loans because they earn
interest. All kinds of bank deposits, whether fixed, savings, or current are to be treated as loans and
are to be covered by the law on loans. 14 Current and savings deposit are loans to a bank because it
can use the same. The petitioner here in making time deposits that earn interests with respondent
Overseas Bank of Manila was in reality a creditor of the respondent Bank and not a depositor. The
respondent Bank was in turn a debtor of petitioner. Failure of he respondent Bank to honor the time
deposit is failure to pay s obligation as a debtor and not a breach of trust arising from depositary's
failure to return the subject matter of the deposit

WHEREFORE, the petition is dismissed for lack of merit, with costs against petitioner.

SO ORDERED.

Antonio, Abad Santos, JJ., concur.

Barredo (Chairman) J., concur in the judgment on the of the concurring opinion of Justice Aquino.

Separate Opinions

AQUINO, J., concurring:

The petitioner prayed that the Central Bank be ordered to pay his time deposits of P350,000, plus
interests, which he could not recover from the distressed Overseas Bank of Manila, and to declare
all the assets assigned or mortgaged by that bank and the Ramos group to the Central Bank as trust
properties for the benefit of the petitioner and other depositors.

The petitioner has no causes of action agianst the Central Bank to obtain those reliefs. They cannot
be granted in petitioner's instant original actions in this Court for mandamus and prohibition. It is not
the Central Bank's ministerial duty to pay petitioner's time deposits or to hold the mortgaged
properties in trust for the depositors of the Overseas Bank of Manila. The petitioner has no cause of
action for prohibition, a remedy usually available against any tribunal, board, corporation or person
exercising judicial or ministerial functions.

Since the Overseas Bank of Manila was found to be insolvent and the Superintendent of Banks was
ordered to take over its assets preparatory to its liquidation under section 29 of Republic Act No. 265
(p. 197, Rollo, Manifestation of September 19, 1973), petitioner's remedy is to file his claim in the
liquidating proceeding (Central Bank vs. Morfe, L-38427, March 12, 1975, 63 SCRA 114; Hernandez
vs. Rural Bank of Lucena, Inc., L-29791, January 10, 1978, 81 SCRA 75).

Separate Opinions

AQUINO, J., concurring:

The petitioner prayed that the Central Bank be ordered to pay his time deposits of P350,000, plus
interests, which he could not recover from the distressed Overseas Bank of Manila, and to declare
all the assets assigned or mortgaged by that bank and the Ramos group to the Central Bank as trust
properties for the benefit of the petitioner and other depositors.

The petitioner has no causes of action agianst the Central Bank to obtain those reliefs. They cannot
be granted in petitioner's instant original actions in this Court for mandamus and prohibition. It is not
the Central Bank's ministerial duty to pay petitioner's time deposits or to hold the mortgaged
properties in trust for the depositors of the Overseas Bank of Manila. The petitioner has no cause of
action for prohibition, a remedy usually available against any tribunal, board, corporation or person
exercising judicial or ministerial functions.

Since the Overseas Bank of Manila was found to be insolvent and the Superintendent of Banks was
ordered to take over its assets preparatory to its liquidation under section 29 of Republic Act No. 265
(p. 197, Rollo, Manifestation of September 19, 1973), petitioner's remedy is to file his claim in the
liquidating proceeding (Central Bank vs. Morfe, L-38427, March 12, 1975, 63 SCRA 114; Hernandez
vs. Rural Bank of Lucena, Inc., L-29791, January 10, 1978, 81 SCRA 75).

SECOND DIVISION

[ G.R. No. 213039, November 27, 2017 ]

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES, PETITIONER, VS.

NATIONAL COMPANY DEVELOPMENT RESPONDENT.

DECISION

PERALTA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court seeking the reversal of the Decision[1] dated February 19, 2014 and
Resolution[2] dated June 16, 2014, respectively, of the Court of
Appeals (CA) in CA-G.R. SP No. 124575 which dismissed Polytechnic
University of the Philippines's (PUP) petition for certiorari and prohibition
under Rule 65 of the 1997 Rules of Civil Procedure, as amended, for lack of
merit.[3]

The instant case is an offshoot of the consolidated cases: Polytechnic

University of the Philippines v. Golden Horizon Realty
Corporation; National Development Company vs. Golden Horizon Realty
Corporation,[4]decided on March 15, 2010 where this Court affirmed
Golden Horizon Realty Corporation's (GHRC) right of first refusal under
the latter's lease contract with National Development Company (NDC). In
the same decision, the Court likewise ordered PUP to reconvey the subject
portion of the property in favor of GHRC. The crux of the instant
controversy arose in the implementation of the November 25, 2004
decision of the RTC which this Court affirmed in the same case.

To recapitulate, the antecedent facts of the case are as follows:

In the early sixties, NDC had in its disposal a ten (10)-hectare property
located along Pureza St., Sta. Mesa, Manila. The estate was popularly
known as the NDC Compound and covered by Transfer Certificate of Title
Nos. 92885, 110301 and 145470.

On September 7, 1977, NDC entered into a contract of lease with GHRC

over a portion of the property. Later, a second contract of lease covering
additional portions of the property was executed between NDC and GHRC
where the latter was also given the option to purchase the leased area on
the property.

On August 12, 1988, before the expiration of the ten-year period under the
second contract of lease, GHRC informed NDC of its desire to renew the
contract and thereafter exercise the option to purchase the leased areas.
NDC, however, gave no reply thereon. Later, GHRC discovered that NDC
was trying to dispose of the property in favor of a third party. Thus, on
October 21, 1988, GHRC filed with the trial court, a complaint for specific
performance and damages against NDC, docketed as Civil Case No. 88-
2238.
Meanwhile, on January 6, 1989, then President Corazon C. Aquino issued
Memorandum Order No. 214, ordering the transfer of the whole NDC
Compound to the National Government, which in turn would convey the
said property in favor of PUP at acquisition cost. The order of conveyance
of the 10.31-hectare property would automatically result in the cancellation
of NDCs total obligation in favor of the National Government.

On November 25, 2004, the RTC rendered a Decision sustaining GHRC's

right to purchase the leased areas on the subject lot, disposing as follows:

WHEREFORE, premises considered, judgment is hereby rendered in favor

of the plaintiff and against the defendants ordering the plaintiff to cause
immediate ground survey of the premises subject of the leased contract
under Lease Contract No. C-33-77 and C-12-78 measuring 2,407 and
3,222.8 square meters, respectively, by a duly licensed and registered
surveyor at the expense of the plaintiff within two months from receipt of
this Decision and thereafter, the plaintiff shall have six (6) months from
receipt of the approved survey within which to exercise its right to purchase
the leased property at P554.74 per square meter. And finally, the
defendant PUP, in whose name the property is titled, is hereby
ordered to reconvey the aforesaid property to the plaintiff in the
exercise of its right of its option to buy or first refusal upon payment of the
purchase prices thereof.

The defendant NDC is hereby further ordered to pay the plaintiff attorney's
fees in the amount of P100,000.00.

The case against defendant Executive Secretary is dismissed and this

decision shall bind defendant Metropolitan Trial Court, Branch 20 of
Manila.

With costs against defendant NDC and PUP.

SO ORDERED. (Underscoring ours)[5]

NDC and PUP interposed their respective appeals before the appellate
court. On June 25, 2008, the appellate court in CA-G.R. CV No. 84399,
rendered judgment affirming in toto the decision of the RTC.

The case was then elevated to this Court where it was docketed as G.R. Nos.
183612 and 184260.[6] On March 15, 2010,[7] the Court resolved the issues
raised by the parties in the following manner:

WHEREFORE, the petitions are DENIED. The Decision dated November

25, 2004 of the Regional Trial Court of Makati City, Branch 144 in Civil
Case No. 88-2238, as affirmed by the Court of Appeals in its Decision dated
June 25, 2008 in CA-G.R. CV No. 84399, is
hereby AFFIRMED with MODIFICATION in that the price to be paid by
respondent Golden Horizon Realty Corporation for the leased portion of
the NDC compound under Lease Contract Nos. C-33-77 and C-12-78 is
hereby increased to P1,500.00 per square meter.

No pronouncement as to costs.

SO ORDERED.[8]

On July 23, 2010, the decision of this Court in the above-mentioned G.R.
Nos. 183612 and 184260 became final and executory. Accordingly, GHRC
filed before the RTC a motion for execution which was granted in an
Order[9]dated January 11, 2011. Pursuant to the writ of execution, GHRC
deposited with the Clerk of Court a cashier's check dated March 30, 2011
for the amount of P8,479,875.00 representing the purchase price of the
leased areas of the subject lot. GHRC then sought for the delivery of the
said parcel of land.

On May 23, 2011, PUP filed a Manifestation claiming that instead of NDC,
it was entitled to the purchase price of the leased premises.

Subsequently, the RTC issued its assailed September 5, 2011 Order[10] as

follows:

In view of the foregoing, there is reasonable ground to grant the prayer of

the plaintiff. Wherefore, the defendants are directed to simultaneously
withdraw the purchase price deposited with the Office of the Clerk of Court,
execute a Deed of Conveyance to plaintiff and deliver the Owner's Duplicate
Copies of TCT Nos. 197748 and 197798 covering the litigated property and
its tax declarations.

SO ORDERED.

On September 20, 2011, NDC sought a clarification/reconsideration of the

above Order. PUP also filed its own motion for reconsideration on
September 22, 2011.

On February 2, 2012, the RTC rendered its assailed Resolution[11] modifying

its September 5, 2011 Order.[12] The dispositive portion of which reads as
follows:

WHEREFORE, with our discussions above, the assailed Order is modified

as regards the provision on NDC and PUP simultaneously withdrawing the
amount deposited with the Clerk of Court, execute the deed of conveyance
and delivery of TCT Nos. 197748 and 197798. And, in order to settle the
controversy between the parties and ultimately for the decision of this
Court which was affirmed by the Supreme Court with finality to be fully
implemented, the Court, in resolving the two Motions for Reconsideration,
hereby:

1. GRANTS the Motion for Reconsideration of the National Development

Company only in so far as to its prayer that it be allowed to withdraw the
purchase price deposited by Golden Harvest Realty Corporation.

2. DIRECTS National Development Company to deliver TCT Nos. 197748

and 197798 to Polytechnic University of the Philippines and cause the
annotation of this Resolution on the said titles.

3. Directs the Office of the Register of Deeds of Manila to cancel Transfer

Certificates of Title Nos. 197748 and 197798 in the name of NDC and in
substitution, issue another Certificate/s of Title, covering the subject
property in the name of PUP [representing the National Government for
purposes of transfer to GHRC only].
4. ORDERS Polytechnic University of the Philippines [representing the
National Government] to execute a Deed of Conveyance in favor of Golden
Horizon Realty Corporation.

5. ORDERS the Clerk of Court, Regional Trial Court, City of Makati to

release the purchase price of the subject property, deposited by the Golden
Horizon Realty Corporation, to the National Development Corporation -
after the property is transferred to the name of Golden Horizon Realty
Corporation.

SO ORDERED.

In the said Order, the RTC asserted that its modification was in accordance
to this Court's ruling in G.R. Nos. 183612 and 184260. It explained that
upon verification with the Memorandum of Agreement (MOA) entered by
the NDC and the Republic of the Philippines, it appeared that there are
indeed properties of NDC which were not transferred to the National
Government, among which are the subject properties covered by TCT Nos.
197748 and 197798 because at the time of the execution of the MOA, said
properties were subject of a pending court litigation. The pertinent portion
of the MOA reads as follows:

xxxx

WHEREAS, there are at present pending court actions affecting

certain areas of the NDC estate, more particularly those covered
by TCT No. 145470 (Annex "A"), TCT. No. 197798 (Annex "A-2"),
and TCT No. 197748 (Annex "A-3"), as follows:

xxxx

WHEREAS, the parties hereto have agreed, under the terms and conditions
hereinafter set forth, on the transfer of the NDC Estate to the National
Government excluding those areas subject of pending court
litigations.

NOW, THEREFORE, the parties have agreed as they hereby agree as

follows:

1. NDC hereby transfers to the National Government and the National

Government, thru the BTR, hereby accepts the NDC Estate, together with
the improvements thereon, save and except those areas thereof
presently involved in litigation as aforesaid. For this purpose, the
parties agree that the total area of the NDC Estate hereunder transferred
consists of FIFTY-THREE THOUSAND, TWO HUNDRED SIXTY-ONE
SQUARE METERS AND FIFTY-NINE SQUARE DECIMETERS (53,261.59
sq. m.), hereinafter referred to as the "Net NDC Estate" arrived at by
subtracting the total area under litigation from the total area of
the NDC Estate.

xxxx

4. It is understood and agreed that the transfer to the National

Government of the balance of the NDC Estate now subject of
litigation be made upon final and executory resolution in favor
of NDC of the pending case aforementioned and at the prevailing
price of the remaining estate to be determined by the Commission on Audit
at the date of transfer.

x x x.[13]

Moreover, the RTC also pointed out that while Presidential Memorandum
No. 214 enumerated the properties of NDC which were transferred to the
National Government, it, however, did not mention the subject property
which is covered by TCT Nos. 197748 and 197798. Thus, given the above-
mentioned circumstances, PUP, indeed, cannot reconvey the property to
GHRC because the property in issue is still registered in the name of NDC.

Aggrieved, before the appellate court, PUP filed a petition for certiorari and
prohibition under Rule 65 of the Rules on Civil Procedure invoking grave
abuse of discretion resulting in lack or in excess of jurisdiction on the part
of the RTC for issuing the Order dated September 5, 2011 and the
Resolution dated February 2, 2012.

On February 19, 2014, the appellate court dismissed the petition, the
dispositive portion of which reads:

WHEREFORE, in light of all the foregoing, the petition is

hereby DISMISSED for lack of merit. The assailed issuances of Branch
144, Regional Trial Court of Makati City in Civil Case No. 88-2238 are
hereby AFFIRMED.

SO ORDERED.[14]

PUP moved for reconsideration but was denied in a Resolution[15] dated

June 16, 2014.

Thus, the instant petition for review on certiorari under Rule 45 of the
Rules of Court raising the following issues:

I
WHETHER THE APPELLATE COURT ERRED ON A QUESTION OF LAW
WHEN IT DISMISSED THE PETITION IN CA-G.R. SP NO. 124575 FOR
THE IMPUTED FAILURE OF PUP TO FILE A MOTION FOR
RECONSIDERATION OF THE TRIAL COURT'S RESOLUTION DATED
FEBRUARY 2, 2012 IN CIVIL CASE NO. 88-2238

II
WHETHER THE APPELLATE COURT ERRED ON A QUESTION OF LAW
WHEN IT UPHELD THE TRIAL COURT'S ORDER DATED SEPTEMBER
5, 2011 AND RESOLUTION DATED FEBRUARY 2, 2012 IN CIVIL CASE
NO. 88-2238

At the onset, it must be clarified that what petitioners seek for us to review
is the resolution of the appellate court in the petition for certiorari under
Rule 65 of the Rules of Court which PUP filed before the appellate court.
Thus, We are constrained to touch only those issues relevant in
determining whether the CA correctly ruled on the issue of whether or not
the trial court committed grave abuse of discretion in the process of
deducing its conclusions. Suffice it to say that a petition
for certiorari under Rule 65 is a special civil action confined solely to
questions of jurisdiction because a tribunal, board or officer exercising
judicial or quasi-judicial functions has acted without jurisdiction or in
excess of jurisdiction or with grave abuse of discretion amounting to lack of
jurisdiction. Consequently, the present petition's issue is: Whether the CA
was correct in its finding that the RTC committed no grave abuse of
discretion in issuing the assailed. Order dated September 5, 2011 and the
Resolution dated February 2, 2012:[16]

We rule in the affirmative.

In the instant petition, nowhere does it show that the issuance of the
disputed Decision dated February 19, 2014 of the appellate court was
patently erroneous and gross that would warrant striking it down. Records
reveal that PUP failed to substantiate its imputation of grave abuse of
discretion on the part of the RTC. No argument was advanced to show that
the RTC, in their issuance of the assailed Order dated September 5, 2011
and the Resolution dated February 2, 2012, exercised judgment
capriciously, whimsically, arbitrarily or despotically by reason of passion
and hostility. PUP did not even discuss how or why the conclusions of the
RTC were made with grave abuse of discretion.

In its assailed Decision, the appellate court pointed out that when the RTC
rendered the questioned February 2, 2012 resolution, it laid out the
premises for modifying the September 5, 2011 order. It merely sought to
give resolution on the seemingly impossibility of complying with the Court's
order of reconveyance considering that the subject property was not under
PUP's name. It explained why it was only NDC that should be allowed to
withdraw the amount deposited by GHRC with the Clerk of Court. It merely
reiterated how impossible it was for PUP to convey the subject properties to
GHRC when the same were never part of the lands conveyed by NDC to the
National Government.

The appellate court's decision affirmed the RTC's finding that because the
leased subject properties were under litigation at the time of the
implementation of Memorandum Order No. 214, the ownership thereof was
never transferred to the National Government, thus, it necessarily follows
that the same were never conveyed to PUP.
We, thus, conclude that the appellate court correctly found that no grave
abuse of discretion attended the RTC's issuance of the February 2, 2012
resolution as the same merely clarified what was seemingly confusing in the
November 25, 2004 decision of the RTC.

Even assuming that the appellate court made erroneous judgment on the
issue of whether the trial court committed grave abuse of discretion in its
issuance of the February 2, 2012 Order, We must stress that certiorari is an
extraordinary prerogative writ that is never demandable as a matter of
right.[17] It is meant to correct only errors of jurisdiction and not errors of
judgment committed in the exercise of the discretion of a tribunal or an
officer. To warrant the issuance thereof, the abuse of discretion must have
been so gross or grave, as when there was such capricious and whimsical
exercise of judgment equivalent to lack of jurisdiction; or the exercise of
power was done in an arbitrary or despotic manner by reason of passion,
prejudice, or personal hostility.[18] The abuse must have been committed in
a manner so patent and so gross as to amount to an evasion of a positive
duty or to a virtual refusal to perform the duty enjoined or to act at all in
contemplation of law.[19]

PUP failed in its duty to demonstrate with definiteness the grave abuse of
discretion that would justify the proper availment of a petition for certiorari
under Rule 65 of the Rules of Court. We, thus, find that the appellate court
correctly found that the RTC committed no grave abuse of discretion in
issuing the February 2, 2012 Order as the same lacks the arbitrariness that
characterizes excess of jurisdiction.

WHEREFORE, premises considered, the petition is hereby DENIED for

lack of merit.

SO ORDERED.

G.R. No. L-61898 August 9, 1985

LAO SOK, petitioner

vs.
LYDIA SABAYSABAY, AMPARO MANGULAT, ROSITA SALVIEJO, NENITA RUINATA, VILMA
CAPILLO, VIRGINIA SANORJO and THE NATIONAL LABOR RELATIONS
COMMISSION, respondents.
GUTIERREZ, JR., J.:

This is a petition for review which seeks to set aside for grave abuse of discretion the decision of the
National Labor Relations Commission dated June 21, 1982 affirming the decision of Labor Arbiter
Apolonio L. Reyes ordering the petitioner to pay the private respondents their separation pay.

The undisputed facts are:

Petitioner Lao Sok owned and operated the Shelton Department Store located at Carriedo Street,
Quiapo, Manila.

Private respondents, Lydia Sabaysabay, Amparo Mangulat, Rosita Salviejo, Nenita Ruinata, Vilma
Capillo and Virginia Sanorjo were all salesladies of the department store with a daily wage of P14.00
each.

On October 12, 1980, petitioner's store was razed by fire. He did not report the loss of jobs of the
salesladies which resulted from the burning of his department store to the Regional Office of the
Ministry of Labor.

Petitioner promised the private respondents that he would transfer them to his other department
stores. Several weeks passed but petitioner still did not fulfill his promise.

The petitioner, however, told the respondents that he would give them their separation pay and other
benefits due them as soon as he collected the insurance proceeds arising from his burned store.
The private respondents accepted this offer of the petitioner.

Petitioner later collected the proceeds of his insurance but he did not give the private respondents
their separation pay and other benefits. Neither did he employ them in his other stores as earlier
promised.

On May 14, 1981, the private respondents filed a complaint with the Ministry of Labor and
Employment charging the petitioner with illegal dismissal and non-payment of their separation pay,
allowance and incentive leave pay.

Labor Arbiter Apolonio L. Reyes required the parties to submit their position papers and on the basis
of these position papers, he rendered a decision on July 23, 1981, the dispositive portion of which
reads:

WHEREFORE, judgment is rendered in favor of the complainants and against the

respondent, ordering the latter to pay the former their separation pay equivalent to
one month salary for every year of service proportionate to their individual length of
service with the respondents at legal rate of interest in the event that respondent
failed or refused to pay the same within ten days from receipt thereof. Other issues
are dismissed for being judicata.

On October 2, 1981, the petitioner appealed said decision to the National Labor Relations
Commission (NLRC).

The NLRC affirmed the decision of the Labor Arbiter and dismissed the appeal.

Petitioner moved for a reconsideration of the decision but the motion was likewise denied.
Hence, this petition for review.

The issue in this case is whether or not petitioner Lao Sok is obligated to pay the private
respondents' separation pay.

The petitioner contends that he may not be compelled to pay separation pay on the basis of his
mere failure to make a report about the fire and the consequent dismissal of his employees which
may be effected without prior clearance. Sections 10 and 11 (c), Rule XIV, Book V of the Labor
Code provide:

Sec. 10. Exception. — No clearance is required if the shutdown of establishment is

due to serious accidents, fire, flood, typhoon, earthquakes, or other disaster, calamity
or public emergencies, provided that the employer makes a report thereon to the
Regional Office in accordance with the form prescribed by the Department.

Sec. 11. When reports required. -Every employer shall submit a report to the
Regional Office in accordance with the form prescribed by the Department on the
following instances of termination of employment, suspension, layoff or shutdown
which may be effected by the employer without prior clearance, within five (5) days
thereafter:

(a) ...

(b) ...

(c) All shutdowns or cessations of work or operations falling under the exceptional
circumstances specified in Section 10 hereof;

xxx xxx xxx

Compliance with the above rules is only an administrative matter and the failure to make a report
does not make the dismissal illegal per se. But the employer who fails to file such report may be
subjected to such administrative penalties or sanctions as may be duly provided. (Oceanic Bic
Division (FFW) vs. Romero, 130 SCRA 392,405).

However, the petitioner's obligation to pay severance compensation is not based on his failure to
make a report or to ask for a prior clearance. Article 284 of the Labor Code provides for separation
pay whenever there is a reduction of personnel caused by the closure of an establishment which is
not intended to circumvent the provisions of the law. We also note that Book VI, Rule 1, Section 4 (b)
of the Rules and Regulations Implementing the Labor Code provides:

xxx xxx xxx

(b) In case the establishment where the employee is to be reinstated has closed or
ceased operations or where his former position no longer exists at the time of
reinstatement for reasons not attributable to the fault of the employer, the employee
shall be entitled to separation pay equivalent at least to one month salary or to one
month salary for every year of service, whichever is higher, a fraction of at least six
months being considered as one whole year. (emphasis supplied).
The department store or the establishment where the six salesladies are employed has ceased
operations and admittedly, it was due to reasons not attributable to the fault of the employer. But
while we can not fault petitioner Lao Sok for the loss of his store due to a fortuitous event, his acts
subsequent to the fire are equally deplorable as a termination without just cause. There is certainly a
need to alleviate the plight of the employees who have lost their jobs or sources of livelihood as a
result of the closure or cessation of operations of the establishment. Their being given the run
around after the loss of their jobs and their being given promises which could be fulfilled but which
were not fulfilled aggravated the situation.

That petitioner Lao Sok promised to give his employees their separation pay, as soon as he receives
the insurance proceeds for his burned building was not rebutted. ln fact, it appears to have been
undisputed until the petitioner filed his memorandum on December 6,1984.

We quote with favor the Solicitor General's explanation:

xxx xxx xxx

... It was in reality not a mere 'promise' as petitioner terms it but a contract, because
all the essential requisites of a valid contract are present, to wit: (1) consent was
freely given by the parties, (2) there was a subject matter, which is the payment of
the separation pay of private respondents, and (3) a cause, which is the loss of job of
private respondents who had been petitioner's salesladies for several years. ... .

xxx xxx xxx

Respondent NLRC, therefore, acted properly in ordering petitioner to give private

respondents their separation pay as he was bound to comply with his contractual
obligation which is the law between the parties (Phoenix Assurance Co. LTD. v.
United States Lines, 22 SCRA 674). ... .

Lao Sok made an offer which was duly accepted by the private respondents. There was, therefore, a
meeting of the minds between two parties whereby one bound himself with respect to the other, to
give something or to render some service (Article 1305, Civil Code). By the unconditional
acceptance of the offer that they would be paid separation pay, a contract was therefore perfected.
As held in the case of Herrera v. Auditor General, (102 Phil. 875):

xxx xxx xxx

... the Government, through the Quezon City Engineer had as late as 1955
acknowledged the financial obligation of the Government, and even offered to pay it,
and what is more, the offer was duly accepted by Herrera, thereby constituting a
contract, and a renewal of the obligation. (emphasis supplied).

Petitioner contends that the contract though orally made is unenforceable since it does not comply
with the Statute of Frauds.

This contention has no merit.

Contracts in whatever form they may have been entered into are binding on the parties unless form
is essential for the validity and enforceability of that particular contract. (See Lopez v. Auditor
General, 20 SCRA 655). We held in Shaffer v. Palma (22 SCRA 934):
 xxx xxx xxx

... Whether the agreement is in writing or not is a question of evidence. Nevertheless,

even granting that the agreement is not in writing, this circumstance does not militate
against the validity or enforceability of said agreement, because contracts are
binding upon the parties in whatever form they may have been entered into unless
the law requires otherwise. (Article 1356, Civil Code; Lopez v. The Auditor General,
et al., L-25859, July 13, 1967; Pilar Gil Vdan de Murciano v. The Auditor General, et
al., 103 Phil. 907). It is true that Article 1358 of the Civil Code provides that contracts
involving more than P500.00 must appear in writing, but nothing is said therein that
such requirement is necessary for their validity or enforceability. It has been held that
the writing required under Article 1358 is merely for convenience, (Thunga Chui v.
Que Bentac, 2 Phil. 561; Ng Hoc v. Tong Ho, 52 0,G., 4396) and so the agreement
alleged in the amended complaint in the present case can be enforced even if it may
not be in writing.

The requirement of writing for the offer made by Lao Sok is only for convenience and not
enforceability. In fact, the petitioner could be compelled to put the offer in writing, a step no longer
necessary now because of this petition.

Furthermore, it was also established that petitioner Lao Sok has other department stores where he
promised to absorb the salesladies. He was likewise remiss in this obligation. There is Merit in the
Solicitor General's submission that, in effect, the fire closed only a division or unit of Lao Sok's
business. His entire enterprise consisting of the operation of various department stores did not really
close down or cease.

We agree with the respondents that:

xxx xxx xxx

... the record shows that petitioner voluntarily agreed to compensate private
respondents for the loss of their jobs because they have been his salesladies for a
long time; that he did this freely and spontaneously (Motion for Reconsideration, p.
88, record). He should not now, therefore, be allowed to renege on an obligation of
his own making. To do so, would be unjust and unfair to the private respondents who
took his word for it in good faith. The validity of that agreement must, consequently,
be sustained (Jimeno v. Gacilago, 14 Phil. 16; Legarda v. Ongsiaco, 36 Phil. 185).

Both the law and equity dictate that private respondents must be compensated for the loss of their
jobs considering that they were kept waiting and hoping that they would be re-employed by the
petitioner, if not paid their severance pay.

WHEREFORE, the decision is hereby AFFIRMED and judgment is rendered in favor of private
respondents, ordering the petitioner to pay the former their separation pay equivalent to one month
salary for every year of service proportionate to their individual lengths of service with the petitioner.

SO ORDERED.

G.R. No. L-42283 March 18, 1985

BUENAVENTURA ANGELES, ET AL., plaintiffs-appellees,
vs.
URSULA TORRES CALASANZ, ET AL., defendants-appellants.

GUTIERREZ, JR., J.:

This is an appeal from the decision of the Court of First Instance of Rizal, Seventh Judicial District,
Branch X, declaring the contract to sell as not having been validly cancelled and ordering the
defendants-appellants to execute a final deed of sale in favor of the plaintiffs-appellees, to pay
P500.00 attorney's fees and costs.

The facts being undisputed, the Court of Appeals certified the case to us since only pure questions
of law have been raised for appellate review.

On December 19, 1957, defendants-appellants Ursula Torres Calasanz and Tomas Calasanz and
plaintiffs-appellees Buenaventura Angeles and Teofila Juani entered into a contract to sell a piece of
land located in Cainta, Rizal for the amount of P3,920.00 plus 7% interest per annum.

The plaintiffs-appellees made a downpayment of P392.00 upon the execution of the contract. They
promised to pay the balance in monthly installments of P 41.20 until fully paid, the installments being
due and payable on the 19th day of each month. The plaintiffs-appellees paid the monthly
installments until July 1966, when their aggregate payment already amounted to P4,533.38. On
numerous occasions, the defendants-appellants accepted and received delayed installment
payments from the plaintiffs-appellees.

On December 7, 1966, the defendants-appellants wrote the plaintiffs-appellees a letter requesting

the remittance of past due accounts.

On January 28, 1967, the defendants-appellants cancelled the said contract because the plaintiffs-
appellees failed to meet subsequent payments. The plaintiffs' letter with their plea for reconsideration
of the said cancellation was denied by the defendants-appellants.

The plaintiffs-appellees filed Civil Case No. 8943 with the Court of First Instance of Rizal, Seventh
Judicial District, Branch X to compel the defendants-appellants to execute in their favor the final
deed of sale alleging inter alia that after computing all subsequent payments for the land in question,
they found out that they have already paid the total amount of P4,533.38 including interests, realty
taxes and incidental expenses for the registration and transfer of the land.

The defendants-appellants alleged in their answer that the complaint states no cause of action and
that the plaintiffs-appellees violated paragraph six (6) of the contract to sell when they failed and
refused to pay and/or offer to pay the monthly installments corresponding to the month of August,
1966 for more than five (5) months, thereby constraining the defendants-appellants to cancel the
said contract.

The lower court rendered judgment in favor of the plaintiffs-appellees. The dispositive portion of the
decision reads:

WHEREFORE, based on the foregoing considerations, the Court hereby renders

judgment in favor of the plaintiffs and against the defendants declaring that the
 contract subject matter of the instant case was NOT VALIDLY cancelled by the
defendants. Consequently, the defendants are ordered to execute a final Deed of
Sale in favor of the plaintiffs and to pay the sum of P500.00 by way of attorney's fees.
Costs against the defendants.

A motion for reconsideration filed by the defendants-appellants was denied.

As earlier stated, the then Court of Appeals certified the case to us considering that the appeal
involves pure questions of law.

The defendants-appellants assigned the following alleged errors of the lower court:

First Assignment of Error

THE LOWER COURT ERRED IN NOT HOLDING THE CONTRACT TO SELL

(ANNEX "A" OF COMPLIANCE) AS HAVING BEEN LEGALLY AND VALIDLY
CANCELLED.

Second Assignment of Error

EVEN ASSUMING ARGUENDO THAT THE SAID CONTRACT TO SELL HAS NOT
BEEN LEGALLY AND VALIDLY CANCELLED, THE LOWER COURT ERRED IN
ORDERING DEFENDANTS TO EXECUTE A FINAL DEED OF SALE IN FAVOR OF
THE PLAINTIFF.

Third Assignment of Error

THE LOWER COURT ERRED IN ORDERING DEFENDANTS TO PAY PLAINTIFFS

THE SUM OF P500.00 AS ATTORNEY'S FEES.

The main issue to be resolved is whether or not the contract to sell has been automatically and
validly cancelled by the defendants-appellants.

The defendants-appellants submit that the contract was validly cancelled pursuant to paragraph six
of the contract which provides:

xxx xxx xxx

SIXTH.—In case the party of the SECOND PART fails to satisfy any monthly
installments, or any other payments herein agreed upon, he is granted a month of
grace within which to make the retarded payment, together with the one
corresponding to the said month of grace; it is understood, however, that should the
month of grace herein granted to the party of the SECOND PART expired; without
the payments corresponding to both months having been satisfied, an interest of
10% per annum will be charged on the amounts he should have paid; it is
understood further, that should a period of 90 days elapse, to begin from the
expiration of the month of grace herein mentioned, and the party of SECOND PART
has not paid all the amounts he should have paid with the corresponding interest up
to that date, the party of the FIRST PART has the right to declare this contract
cancelled and of no effect, and as consequence thereof, the party of the FIRST
PART may dispose of the parcel of land covered by this contract in favor of other
 persons, as if this contract had never been entered into. In case of such cancellation
of the contract, all the amounts paid in accordance with this agreement together with
all the improvements made on the premises, shall be considered as rents paid for the
use and occupation of the above mentioned premises, and as payment for the
damages suffered by failure of the party of the SECOND PART to fulfill his part of the
agreement; and the party of the SECOND PART hereby renounces all his right to
demand or reclaim the return of the same and obliges himself to peacefully vacate
the premises and deliver the same to the party of the FIRST PART. (Emphasis
supplied by appellant)

xxx xxx xxx

The defendants-appellants argue that the plaintiffs-appellees failed to pay the August, 1966
installment despite demands for more than four (4) months. The defendants-appellants point
to Jocson v. Capitol Subdivision (G.R. No. L-6573, February 28, 1955) where this Court upheld the
right of the subdivision owner to automatically cancel a contract to sell on the strength of a provision
or stipulation similar to paragraph 6 of the contract in this case. The defendants-appellants also
argue that even in the absence of the aforequoted provision, they had the right to cancel the contract
to sell under Article 1191 of the Civil Code of the Philippines.

The plaintiffs-appellees on the other hand contend that the Jocson ruling does not apply. They state
that paragraph 6 of the contract to sell is contrary to law insofar as it provides that in case of
specified breaches of its terms, the sellers have the right to declare the contract cancelled and of no
effect, because it granted the sellers an absolute and automatic right of rescission.

Article 1191 of the Civil Code on the rescission of reciprocal obligations provides:

The power to rescind obligations is implied in reciprocal ones, in case one of the
obligors should not comply with what is incumbent upon him.

The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should become impossible.

xxx xxx xxx

Article 1191 is explicit. In reciprocal obligations, either party the right to rescind the contract upon the
failure of the other to perform the obligation assumed thereunder. Moreover, there is nothing in the
law that prohibits the parties from entering into an agreement that violation of the terms of the
contract would cause its cancellation even without court intervention (Froilan v. Pan Oriental
Shipping, Co., et al., 12 SCRA 276)—

Well settled is, however, the rule that a judicial action for the rescission of a contract
is not necessary where the contract provides that it may be revoked and cancelled
for violation of any of its terms and conditions' (Lopez v. Commissioner of Customs,
37 SCRA 327, and cases cited therein)

Resort to judicial action for rescission is obviously not contemplated . . . The validity
of the stipulation can not be seriously disputed. It is in the nature of a facultative
resolutory condition which in many cases has been upheld by this Court. (Ponce
Enrile v. Court of Appeals, 29 SCRA 504).
The rule that it is not always necessary for the injured party to resort to court for rescission of the
contract when the contract itself provides that it may be rescinded for violation of its terms and
conditions, was qualified by this Court in University of the Philippines v. De los Angeles, (35 SCRA
102) where we explained that:

Of course, it must be understood that the act of a party in treating a contract as

cancelled or resolved on account of infractions by the other contracting party must be
made known to the other and is always provisional, being ever subject to scrutiny
and review by the proper court. If the other party denies that rescission is justified, it
is free to resort to judicial action in its own behalf, and bring the matter to court.
Then, should the court, after due hearing, decide that the resolution of the contract
was not warranted, the responsible party will be sentenced to damages; in the
contrary case, the resolution will be affirmed, and the consequent indemnity awarded
to the party prejudiced.

In other words, the party who deems the contract violated many consider it resolved
or rescinded, and act accordingly, without previous court action, but it proceeds at its
own risk. For it is only the final judgment of the corresponding court that will
conclusively and finally settle whether the action taken was or was not correct in law.
... .

We see no conflict between this ruling and the previous jurisprudence of this Court
invoked by respondent declaring that judicial action is necessary for the resolution of
a reciprocal obligation; (Ocejo, Perez & Co. v. International Banking Corp., 37 Phil.
631; Republic v. Hospital de San Juan de Dios, et al., 84 Phil. 820) since in every
case where the extrajudicial resolution is contested only the final award of the court
of competent jurisdiction can conclusively settle whether the resolution was proper or
not. It is in this sense that judicial action will be necessary, as without it, the
extrajudicial resolution will remain contestable and subject to judicial invalidation,
unless attack thereon should become barred by acquiescence, estoppel or
prescription.

The right to rescind the contract for non-performance of one of its stipulations, therefore, is not
absolute. In Universal Food Corp. v. Court of Appeals (33 SCRA 1) the Court stated that—

The general rule is that rescission of a contract will not be permitted for a slight or
casual breach, but only for such substantial and fundamental breach as would defeat
the very object of the parties in making the agreement. (Song Fo & Co. v. Hawaiian-
Philippine Co., 47 Phil. 821, 827) The question of whether a breach of a contract is
substantial depends upon the attendant circumstances. (Corpus v. Hon. Alikpala, et
al., L-23707 & L-23720, Jan. 17, 1968). ... .

The defendants-appellants state that the plaintiffs-appellees violated Section two of the contract to
sell which provides:

SECOND.—That in consideration of the agreement of sale of the above described

property, the party of the SECOND PART obligates himself to pay to the party of the
FIRST PART the Sum of THREE THOUSAND NINE HUNDRED TWENTY ONLY
(P3,920.00), Philippine Currency, plus interest at the rate of 7% per annum, as
follows:
 (a) The amount of THREE HUNDRED NINETY TWO only (P392.00) when this
contract is signed; and

(b) The sum of FORTY ONE AND 20/100 ONLY (P4l.20) on or before the 19th day of
each month, from this date until the total payment of the price above stipulated,
including interest.

because they failed to pay the August installment, despite demand, for more than four (4) months.

The breach of the contract adverted to by the defendants-appellants is so slight and casual when we
consider that apart from the initial downpayment of P392.00 the plaintiffs-appellees had already paid
the monthly installments for a period of almost nine (9) years. In other words, in only a short time,
the entire obligation would have been paid. Furthermore, although the principal obligation was only P
3,920.00 excluding the 7 percent interests, the plaintiffs- appellees had already paid an aggregate
amount of P 4,533.38. To sanction the rescission made by the defendants-appellants will work
injustice to the plaintiffs- appellees. (See J.M. Tuazon and Co., Inc. v. Javier, 31 SCRA 829) It would
unjustly enrich the defendants-appellants.

Article 1234 of the Civil Code which provides that:

If the obligation has been substantially performed in good faith, the obligor may
recover as though there had been a strict and complete fulfillment, less damages
suffered by the obligee.

also militates against the unilateral act of the defendants-appellants in cancelling the contract.

We agree with the observation of the lower court to the effect that:

Although the primary object of selling subdivided lots is business, yet, it cannot be
denied that this subdivision is likewise purposely done to afford those landless, low
income group people of realizing their dream of a little parcel of land which they can
really call their own.

The defendants-appellants cannot rely on paragraph 9 of the contract which provides:

NINTH.-That whatever consideration of the party of the FIRST PART may concede
to the party of the SECOND PART, as not exacting a strict compliance with the
conditions of paragraph 6 of this contract, as well as any other condonation that the
party of the FIRST PART may give to the party of the SECOND PART with regards
to the obligations of the latter, should not be interpreted as a renunciation on the part
of the party of the FIRST PART of any right granted it by this contract, in case of
default or non-compliance by the party of the SECOND PART.

The defendants-appellants argue that paragraph nine clearly allows the seller to waive the
observance of paragraph 6 not merely once, but for as many times as he wishes.

The defendants-appellants' contention is without merit. We agree with the plaintiffs-appellees that
when the defendants-appellants, instead of availing of their alleged right to rescind, have accepted
and received delayed payments of installments, though the plaintiffs-appellees have been in arrears
beyond the grace period mentioned in paragraph 6 of the contract, the defendants-appellants have
waived and are now estopped from exercising their alleged right of rescission. In De Guzman v.
Guieb (48 SCRA 68), we held that:

xxx xxx xxx

But defendants do not deny that in spite of the long arrearages, neither they nor their
predecessor, Teodoro de Guzman, even took steps to cancel the option or to eject
the appellees from the home-lot in question. On the contrary, it is admitted that the
delayed payments were received without protest or qualification. ... Under these
circumstances, We cannot but agree with the lower court that at the time appellees
exercised their option, appellants had already forfeited their right to invoke the
above-quoted provision regarding the nullifying effect of the non-payment of six
months rentals by appellees by their having accepted without qualification on July 21,
1964 the full payment by appellees of all their arrearages.

The defendants-appellants contend in the second assignment of error that the ledger of payments
show a balance of P671,67 due from the plaintiffs-appellees. They submit that while it is true that the
total monthly installments paid by the plaintiffs-appellees may have exceeded P3,920.00, a
substantial portion of the said payments were applied to the interests since the contract specifically
provides for a 7% interest per annum on the remaining balance. The defendants-appellants rely on
paragraph 2 of the contract which provides:

SECOND.—That in consideration of the agreement of sale of the above described

property, the party of the SECOND PART obligates himself to pay to the party of the
FIRST PART the Sum of THREE THOUSAND NINE HUNDRED TWENTY ONLY (P
3,920.00), Philippine Currency, plus interest at the rate of 7% per annum ... .
(Emphasis supplied)

The plaintiffs-appellees on the other hand are firm in their submission that since they have already
paid the defendants-appellants a total sum of P4,533.38, the defendants-appellants must now be
compelled to execute the final deed of sale pursuant to paragraph 12 of the contract which provides:

TWELFTH.—That once the payment of the sum of P3,920.00, the total price of the
sale is completed, the party to the FIRST PART will execute in favor of the party of
the SECOND PART, the necessary deed or deeds to transfer to the latter the title of
the parcel of land sold, free from all hens and encumbrances other than those
expressly provided in this contract; it is understood, however, that au the expenses
which may be incurred in the said transfer of title shall be paid by the party of the
SECOND PART, as above stated.

Closely related to the second assignment of error is the submission of the plaintiffs-appellees that
the contract herein is a contract of adhesion.

We agree with the plaintiffs-appellees. The contract to sell entered into by the parties has some
characteristics of a contract of adhesion. The defendants-appellants drafted and prepared the
contract. The plaintiffs-appellees, eager to acquire a lot upon which they could build a home, affixed
their signatures and assented to the terms and conditions of the contract. They had no opportunity to
question nor change any of the terms of the agreement. It was offered to them on a "take it or leave
it" basis. In Sweet Lines, Inc. v. Teves (83 SCRA 36 1), we held that:

xxx xxx xxx

 ... (W)hile generally, stipulations in a contract come about after deliberate drafting by
the parties thereto. . . . there are certain contracts almost all the provisions of which
have been drafted only by one party, usually a corporation. Such contracts are called
contracts of adhesion, because the only participation of the party is the signing of his
signature or his "adhesion" thereto. Insurance contracts, bills of lading, contracts of
sale of lots on the installment plan fall into this category. (Paras, Civil Code of the
Philippines, Seventh ed., Vol. 1, p. 80.) (Emphasis supplied)

While it is true that paragraph 2 of the contract obligated the plaintiffs-appellees to pay the
defendants-appellants the sum of P3,920.00 plus 7% interest per annum, it is likewise true that
under paragraph 12 the seller is obligated to transfer the title to the buyer upon payment of the
P3,920.00 price sale.

The contract to sell, being a contract of adhesion, must be construed against the party causing it.
We agree with the observation of the plaintiffs-appellees to the effect that "the terms of a contract
must be interpreted against the party who drafted the same, especially where such interpretation will
help effect justice to buyers who, after having invested a big amount of money, are now sought to be
deprived of the same thru the prayed application of a contract clever in its phraseology,
condemnable in its lopsidedness and injurious in its effect which, in essence, and in its entirety is
most unfair to the buyers."

Thus, since the principal obligation under the contract is only P3,920.00 and the plaintiffs-appellees
have already paid an aggregate amount of P4,533.38, the courts should only order the payment of
the few remaining installments but not uphold the cancellation of the contract. Upon payment of the
balance of P671.67 without any interest thereon, the defendants-appellants must immediately
execute the final deed of sale in favor of the plaintiffs-appellees and execute the necessary transfer
documents as provided in paragraph 12 of the contract. The attorney's fees are justified.

WHEREFORE, the instant petition is DENIED for lack of merit. The decision appealed from is
AFFIRMED with the modification that the plaintiffs-appellees should pay the balance of SIX
HUNDRED SEVENTY ONE PESOS AND SIXTY-SEVEN CENTAVOS (P671.67) without any
interests. Costs against the defendants-appellants.

SO ORDERED.

G.R. No. 176841 June 29, 2010

ANTHONY ORDUÑA, DENNIS ORDUÑA, and ANTONITA ORDUÑA, Petitioners,

vs.
EDUARDO J. FUENTEBELLA, MARCOS S. CID, BENJAMIN F. CID, BERNARD G. BANTA, and
ARMANDO GABRIEL, JR., Respondents.

DECISION

VELASCO, JR., J.:

In this Petition for Review1 under Rule 45 of the Rules of Court, Anthony Orduña, Dennis Orduña
and Antonita Orduña assail and seek to set aside the Decision2 of the Court of Appeals (CA) dated
December 4, 2006 in CA-G.R. CV No. 79680, as reiterated in its Resolution of March 6, 2007, which
affirmed the May 26, 2003 Decision3 of the Regional Trial Court (RTC), Branch 3 in Baguio City, in
Civil Case No. 4984-R, a suit for annulment of title and reconveyance commenced by herein
petitioners against herein respondents.
Central to the case is a residential lot with an area of 74 square meters located at Fairview
Subdivision, Baguio City, originally registered in the name of Armando Gabriel, Sr. (Gabriel Sr.)
under Transfer Certificate of Title (TCT) No. 67181 of the Registry of Deeds of Baguio City.4

As gathered from the petition, with its enclosures, and the comments thereon of four of the five
respondents,5 the Court gathers the following relevant facts:

Sometime in 1996 or thereabouts, Gabriel Sr. sold the subject lot to petitioner Antonita Orduña
(Antonita), but no formal deed was executed to document the sale. The contract price was
apparently payable in installments as Antonita remitted from time to time and Gabriel Sr. accepted
partial payments. One of the Orduñas would later testify that Gabriel Sr. agreed to execute a final
deed of sale upon full payment of the purchase price.6

As early as 1979, however, Antonita and her sons, Dennis and Anthony Orduña, were already
occupying the subject lot on the basis of some arrangement undisclosed in the records and even
constructed their house thereon. They also paid real property taxes for the house and declared it for
tax purposes, as evidenced by Tax Declaration No. (TD) 96-04012-1110877 in which they place the
assessed value of the structure at PhP 20,090.

After the death of Gabriel Sr., his son and namesake, respondent Gabriel Jr., secured TCT No. T-
714998 over the subject lot and continued accepting payments from the petitioners. On December
12, 1996, Gabriel Jr. wrote Antonita authorizing her to fence off the said lot and to construct a road in
the adjacent lot.9 On December 13, 1996, Gabriel Jr. acknowledged receipt of a PhP 40,000
payment from petitioners.10 Through a letter11 dated May 1, 1997, Gabriel Jr. acknowledged that
petitioner had so far made an aggregate payment of PhP 65,000, leaving an outstanding balance of
PhP 60,000. A receipt Gabriel Jr. issued dated November 24, 1997 reflected a PhP 10,000 payment.

Despite all those payments made for the subject lot, Gabriel Jr. would later sell it to Bernard Banta
(Bernard) obviously without the knowledge of petitioners, as later developments would show.

As narrated by the RTC, the lot conveyance from Gabriel Jr. to Bernard was effected against the
following backdrop: Badly in need of money, Gabriel Jr. borrowed from Bernard the amount of PhP
50,000, payable in two weeks at a fixed interest rate, with the further condition that the subject lot
would answer for the loan in case of default. Gabriel Jr. failed to pay the loan and this led to the
execution of a Deed of Sale12 dated June 30, 1999 and the issuance later of TCT No. T-7278213 for
subject lot in the name of Bernard upon cancellation of TCT No. 71499 in the name of Gabriel, Jr. As
the RTC decision indicated, the reluctant Bernard agreed to acquire the lot, since he had by then
ready buyers in respondents Marcos Cid and Benjamin F. Cid (Marcos and Benjamin or the Cids).

Subsequently, Bernard sold to the Cids the subject lot for PhP 80,000. Armed with a Deed of
Absolute Sale of a Registered Land14 dated January 19, 2000, the Cids were able to cancel TCT No.
T-72782 and secure TCT No. 7278315 covering the subject lot. Just like in the immediately preceding
transaction, the deed of sale between Bernard and the Cids had respondent Eduardo J. Fuentebella
(Eduardo) as one of the instrumental witnesses.

Marcos and Benjamin, in turn, ceded the subject lot to Eduardo through a Deed of Absolute
Sale16 dated May 11, 2000. Thus, the consequent cancellation of TCT No. T-72782 and issuance on
May 16, 2000 of TCT No. T-327617over subject lot in the name of Eduardo.

As successive buyers of the subject lot, Bernard, then Marcos and Benjamin, and finally Eduardo,
checked, so each claimed, the title of their respective predecessors-in-interest with the Baguio
Registry and discovered said title to be free and unencumbered at the time each purchased the
property. Furthermore, respondent Eduardo, before buying the property, was said to have inspected
the same and found it unoccupied by the Orduñas.18

Sometime in May 2000, or shortly after his purchase of the subject lot, Eduardo, through his lawyer,
sent a letter addressed to the residence of Gabriel Jr. demanding that all persons residing on or
physically occupying the subject lot vacate the premises or face the prospect of being ejected.19

Learning of Eduardo’s threat, petitioners went to the residence of Gabriel Jr. at No. 34 Dominican
Hill, Baguio City. There, they met Gabriel Jr.’s estranged wife, Teresita, who informed them about
her having filed an affidavit-complaint against her husband and the Cids for falsification of public
documents on March 30, 2000. According to Teresita, her signature on the June 30, 1999 Gabriel
Jr.–Bernard deed of sale was a forgery. Teresita further informed the petitioners of her intent to
honor the aforementioned 1996 verbal agreement between Gabriel Sr. and Antonita and the partial
payments they gave her father-in-law and her husband for the subject lot.

On July 3, 2001, petitioners, joined by Teresita, filed a Complaint20 for Annulment of Title,
Reconveyance with Damages against the respondents before the RTC, docketed as Civil Case No.
4984-R, specifically praying that TCT No. T-3276 dated May 16, 2000 in the name of Eduardo be
annulled. Corollary to this prayer, petitioners pleaded that Gabriel Jr.’s title to the lot be reinstated
and that petitioners be declared as entitled to acquire ownership of the same upon payment of the
remaining balance of the purchase price therefor agreed upon by Gabriel Sr. and Antonita.

While impleaded and served with summons, Gabriel Jr. opted not to submit an answer.

Ruling of the RTC

By Decision dated May 26, 2003, the RTC ruled for the respondents, as defendants a quo, and
against the petitioners, as plaintiffs therein, the dispositive portion of which reads:

WHEREFORE, the instant complaint is hereby DISMISSED for lack of merit. The four (4) plaintiffs
are hereby ordered by this Court to pay each defendant (except Armando Gabriel, Jr., Benjamin F.
Cid, and Eduardo J. Fuentebella who did not testify on these damages), Moral Damages of Twenty
Thousand (P20,000.00) Pesos, so that each defendant shall receive Moral Damages of Eighty
Thousand (P80,000.00) Pesos each. Plaintiffs shall also pay all defendants (except Armando
Gabriel, Jr., Benjamin F. Cid, and Eduardo J. Fuentebella who did not testify on these damages),
Exemplary Damages of Ten Thousand (P10,000.00) Pesos each so that each defendant shall
receive Forty Thousand (P40,000.00) Pesos as Exemplary Damages. Also, plaintiffs are ordered to
pay eachdefendant (except Armando Gabriel, Jr., Benjamin F. Cid, and Eduardo J. Fuentebella who
did not testify on these damages), Fifty Thousand (P50,000.00) Pesos as Attorney’s Fees, jointly
and solidarily.

Cost of suit against the plaintiffs.21

On the main, the RTC predicated its dismissal action on the basis of the following grounds and/or
premises:

1. Eduardo was a purchaser in good faith and, hence, may avail himself of the provision of
Article 154422 of the Civil Code, which provides that in case of double sale, the party in good
faith who is able to register the property has better right over the property;
 2. Under Arts. 135623 and 135824 of the Code, conveyance of real property must be in the
proper form, else it is unenforceable;

3. The verbal sale had no adequate consideration; and

4. Petitioners’ right of action to assail Eduardo’s title prescribes in one year from date of the
issuance of such title and the one-year period has already lapsed.

From the above decision, only petitioners appealed to the CA, their appeal docketed as CA-G.R. CV
No. 79680.

The CA Ruling

On December 4, 2006, the appellate court rendered the assailed Decision affirming the RTC
decision. The falloreads:

WHEREFORE, premises considered, the instant appeal is hereby DISMISSED and the 26 May 2003
Decision of the Regional Trial Court, Branch 3 of Baguio City in Civil Case No. 4989-R is hereby
AFFIRMED.

SO ORDERED.25

Hence, the instant petition on the submission that the appellate court committed reversible error of
law:

1. xxx WHEN IT HELD THAT THE SALE OF THE SUBJECT LOT BY ARMANDO GABRIEL,
SR. AND RESPONDENT ARMANDO GABRIEL, JR. TO THE PETITIONERS IS
UNENFORCEABLE.

2. xxx IN NOT FINDING THAT THE SALE OF THE SUBJECT LOT BY RESPONDENT
ARMANDO GABRIEL, JR. TO RESPONDENT BERNARD BANTA AND ITS SUBSEQUENT
SALE BY THE LATTER TO HIS CO-RESPONDENTS ARE NULL AND VOID.

3. xxx IN NOT FINDING THAT THE RESPONDENTS ARE BUYERS IN BAD FAITH

4. xxx IN FINDING THAT THE SALE OF THE SUBJECT LOT BETWEEN GABRIEL, SR.
AND RESPONDENT GABRIEL, JR. AND THE PETITIONERS HAS NO ADEQUATE
CONSIDERATION.

5. xxx IN RULING THAT THE INSTANT ACTION HAD ALREADY PRESCRIBED.

6. xxx IN FINDING THAT THE PLAINTIFFS-APPELLANTS ARE LIABLE FOR MORAL AND
EXEMPLARY DAMAGES AND ATTORNEY’S FEES.26

The Court’s Ruling

The core issues tendered in this appeal may be reduced to four and formulated as follows, to
wit: first, whether or not the sale of the subject lot by Gabriel Sr. to Antonita is unenforceable under
the Statute of Frauds; second, whether or not such sale has adequate consideration; third, whether
the instant action has already prescribed; and, fourth, whether or not respondents are purchasers in
good faith.
The petition is meritorious.

Statute of Frauds Inapplicable to Partially Executed Contracts

It is undisputed that Gabriel Sr., during his lifetime, sold the subject property to Antonita, the
purchase price payable on installment basis. Gabriel Sr. appeared to have been a recipient of some
partial payments. After his death, his son duly recognized the sale by accepting payments and
issuing what may be considered as receipts therefor. Gabriel Jr., in a gesture virtually
acknowledging the petitioners’ dominion of the property, authorized them to construct a fence
around it. And no less than his wife, Teresita, testified as to the fact of sale and of payments
received.

Pursuant to such sale, Antonita and her two sons established their residence on the lot, occupying
the house they earlier constructed thereon. They later declared the property for tax purposes, as
evidenced by the issuance of TD 96-04012-111087 in their or Antonita’s name, and paid the real
estates due thereon, obviously as sign that they are occupying the lot in the concept of owners.

Given the foregoing perspective, Eduardo’s assertion in his Answer that "persons appeared in the
property"27 only after "he initiated ejectment proceedings"28 is clearly baseless. If indeed petitioners
entered and took possession of the property after he (Eduardo) instituted the ejectment suit, how
could they explain the fact that he sent a demand letter to vacate sometime in May 2000?

With the foregoing factual antecedents, the question to be resolved is whether or not the Statute of
Frauds bars the enforcement of the verbal sale contract between Gabriel Sr. and Antonita.

The CA, just as the RTC, ruled that the contract is unenforceable for non-compliance with the
Statute of Frauds.

We disagree for several reasons. Foremost of these is that the Statute of Frauds expressed in
Article 1403, par. (2),29 of the Civil Code applies only to executory contracts, i.e., those where no
performance has yet been made. Stated a bit differently, the legal consequence of non-compliance
with the Statute does not come into play where the contract in question is completed, executed,
or partially consummated.30

The Statute of Frauds, in context, provides that a contract for the sale of real property or of an
interest therein shall be unenforceable unless the sale or some note or memorandum thereof is in
writing and subscribed by the party or his agent. However, where the verbal contract of sale has
been partially executed through the partial paymentsmade by one party duly received by the
vendor, as in the present case, the contract is taken out of the scope of the Statute.

The purpose of the Statute is to prevent fraud and perjury in the enforcement of obligations
depending for their evidence on the unassisted memory of witnesses, by requiring certain
enumerated contracts and transactions to be evidenced by a writing signed by the party to be
charged.31 The Statute requires certain contracts to be evidenced by some note or memorandum in
order to be enforceable. The term "Statute of Frauds" is descriptive of statutes that require certain
classes of contracts to be in writing. The Statute does not deprive the parties of the right to contract
with respect to the matters therein involved, but merely regulates the formalities of the contract
necessary to render it enforceable.32

Since contracts are generally obligatory in whatever form they may have been entered into, provided
all the essential requisites for their validity are present,33 the Statute simply provides the method by
which the contracts enumerated in Art. 1403 (2) may be proved but does not declare them
invalid because they are not reduced to writing. In fine, the form required under the Statute is for
convenience or evidentiary purposes only.

There can be no serious argument about the partial execution of the sale in question. The records
show that petitioners had, on separate occasions, given Gabriel Sr. and Gabriel Jr. sums of money
as partial payments of the purchase price. These payments were duly receipted by Gabriel Jr. To
recall, in his letter of May 1, 1997, Gabriel, Jr. acknowledged having received the aggregate
payment of PhP 65,000 from petitioners with the balance of PhP 60,000 still remaining unpaid. But
on top of the partial payments thus made, possession of the subject of the sale had been transferred
to Antonita as buyer. Owing thus to its partial execution, the subject sale is no longer within the
purview of the Statute of Frauds.

Lest it be overlooked, a contract that infringes the Statute of Frauds is ratified by the acceptance of
benefits under the contract.34 Evidently, Gabriel, Jr., as his father earlier, had benefited from the
partial payments made by the petitioners. Thus, neither Gabriel Jr. nor the other respondents—
successive purchasers of subject lots—could plausibly set up the Statute of Frauds to thwart
petitioners’ efforts towards establishing their lawful right over the subject lot and removing any cloud
in their title. As it were, petitioners need only to pay the outstanding balance of the purchase price
and that would complete the execution of the oral sale.

There was Adequate Consideration

Without directly saying so, the trial court held that the petitioners cannot sue upon the oral sale since
in its own words: "x x x for more than a decade, [petitioners] have not paid in full Armando Gabriel,
Sr. or his estate, so that the sale transaction between Armando Gabriel Sr. and [petitioners] [has] no
adequate consideration."

The trial court’s posture, with which the CA effectively concurred, is patently flawed. For starters,
they equated incomplete payment of the purchase price with inadequacy of price or what passes as
lesion, when both are different civil law concepts with differing legal consequences, the first being a
ground to rescind an otherwise valid and enforceable contract. Perceived inadequacy of price, on
the other hand, is not a sufficient ground for setting aside a sale freely entered into, save perhaps
when the inadequacy is shocking to the conscience.35

The Court to be sure takes stock of the fact that the contracting parties to the 1995 or 1996 sale
agreed to a purchase price of PhP 125,000 payable on installments. But the original lot owner,
Gabriel Sr., died before full payment can be effected. Nevertheless, petitioners continued remitting
payments to Gabriel, Jr., who sold the subject lot to Bernard on June 30, 1999. Gabriel, Jr., as may
be noted, parted with the property only for PhP 50,000. On the other hand, Bernard sold it for PhP
80,000 to Marcos and Benjamin. From the foregoing price figures, what is abundantly clear is that
what Antonita agreed to pay Gabriel, Sr., albeit in installment, was very much more than what his
son, for the same lot, received from his buyer and the latter’s buyer later. The Court, therefore,
cannot see its way clear as to how the RTC arrived at its simplistic conclusion about the transaction
between Gabriel Sr. and Antonita being without "adequate consideration."

The Issues of Prescription and the Bona

Fides of the Respondents as Purchasers

Considering the interrelation of these two issues, we will discuss them jointly.

There can be no quibbling about the fraudulent nature of the conveyance of the subject lot effected
by Gabriel Jr. in favor of Bernard. It is understandable that after his father’s death, Gabriel Jr.
inherited subject lot and for which he was issued TCT No. No. T-71499. Since the Gabriel Sr. –
Antonita sales transaction called for payment of the contract price in installments, it is also
understandable why the title to the property remained with the Gabriels. And after the demise of his
father, Gabriel Jr. received payments from the Orduñas and even authorized them to enclose the
subject lot with a fence. In sum, Gabriel Jr. knew fully well about the sale and is bound by the
contract as predecessor-in-interest of Gabriel Sr. over the property thus sold.

Yet, the other respondents (purchasers of subject lot) still maintain that they are innocent purchasers
for value whose rights are protected by law and besides which prescription has set in against
petitioners’ action for annulment of title and reconveyance.

The RTC and necessarily the CA found the purchaser-respondents’ thesis on prescription correct
stating in this regard that Eduardo’s TCT No. T-3276 was issued on May 16, 2000 while petitioners
filed their complaint for annulment only on July 3, 2001. To the courts below, the one-year
prescriptive period to assail the issuance of a certificate of title had already elapsed.

We are not persuaded.

The basic complaint, as couched, ultimately seeks the reconveyance of a fraudulently registered
piece of residential land. Having possession of the subject lot, petitioners’ right to the reconveyance
thereof, and the annulment of the covering title, has not prescribed or is not time-barred. This is so
for an action for annulment of title or reconveyance based on fraud is imprescriptible where the
suitor is in possession of the property subject of the acts,36 the action partaking as it does of a suit for
quieting of title which is imprescriptible.37 Such is the case in this instance. Petitioners have
possession of subject lots as owners having purchased the same from Gabriel, Sr. subject only to
the full payment of the agreed price.

The prescriptive period for the reconveyance of fraudulently registered real property is 10 years,
reckoned from the date of the issuance of the certificate of title, if the plaintiff is not in possession,
but imprescriptible if he is in possession of the property.38 Thus, one who is in actual possession of a
piece of land claiming to be the owner thereof may wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his right.39As it is, petitioners’ action for reconveyance is
imprescriptible.

This brings us to the question of whether or not the respondent-purchasers, i.e., Bernard, Marcos
and Benjamin, and Eduardo, have the status of innocent purchasers for value, as was the thrust of
the trial court’s disquisition and disposition.

We are unable to agree with the RTC.

It is the common defense of the respondent-purchasers that they each checked the title of the
subject lot when it was his turn to acquire the same and found it clean, meaning without annotation
of any encumbrance or adverse third party interest. And it is upon this postulate that each claims to
be an innocent purchaser for value, or one who buys the property of another without notice that
some other person has a right to or interest in it, and who pays therefor a full and fair price at the
time of the purchase or before receiving such notice.40

The general rule is that one dealing with a parcel of land registered under the Torrens System may
safely rely on the correctness of the certificate of title issued therefor and is not obliged to go beyond
the certificate.41 Where, in other words, the certificate of title is in the name of the seller, the innocent
purchaser for value has the right to rely on what appears on the certificate, as he is charged with
notice only of burdens or claims on the res as noted in the certificate. Another formulation of the rule
is that (a) in the absence of anything to arouse suspicion or (b) except where the party has actual
knowledge of facts and circumstances that would impel a reasonably cautious man to make such
inquiry or (c) when the purchaser has knowledge of a defect of title in his vendor or of sufficient facts
to induce a reasonably prudent man to inquire into the status of the title of the property,42 said
purchaser is without obligation to look beyond the certificate and investigate the title of the seller.

Eduardo and, for that matter, Bernard and Marcos and Benjamin, can hardly claim to be innocent
purchasers for value or purchasers in good faith. For each knew or was at least expected to know
that somebody else other than Gabriel, Jr. has a right or interest over the lot. This is borne by the
fact that the initial seller, Gabriel Jr., was not in possession of subject property. With respect to
Marcos and Benjamin, they knew as buyers that Bernard, the seller, was not also in possession of
the same property. The same goes with Eduardo, as buyer, with respect to Marcos and Benjamin. ten.lihpw a1

Basic is the rule that a buyer of a piece of land which is in the actual possession of persons other
than the seller must be wary and should investigate the rights of those in possession. Otherwise,
without such inquiry, the buyer can hardly be regarded as a buyer in good faith. When a man
proposes to buy or deal with realty, his duty is to read the public manuscript, i.e., to look and see
who is there upon it and what his rights are. A want of caution and diligence which an honest man of
ordinary prudence is accustomed to exercise in making purchases is, in contemplation of law, a want
of good faith. The buyer who has failed to know or discover that the land sold to him is in adverse
possession of another is a buyer in bad faith.43

Where the land sold is in the possession of a person other than the vendor, the purchaser must go
beyond the certificates of title and make inquiries concerning the rights of the actual
possessor.44 And where, as in the instant case, Gabriel Jr. and the subsequent vendors were not in
possession of the property, the prospective vendees are obliged to investigate the rights of the one
in possession. Evidently, Bernard, Marcos and Benjamin, and Eduardo did not investigate the rights
over the subject lot of the petitioners who, during the period material to this case, were in actual
possession thereof. Bernard, et al. are, thus, not purchasers in good faith and, as such, cannot be
accorded the protection extended by the law to such purchasers.45 Moreover, not being purchasers
in good faith, their having registered the sale, will not, as against the petitioners, carry the day for
any of them under Art. 1544 of the Civil Code prescribing rules on preference in case of double sales
of immovable property. Occeña v. Esponilla46laid down the following rules in the application of Art.
1544: (1) knowledge by the first buyer of the second sale cannot defeat the first buyer’s rights except
when the second buyer first register in good faith the second sale; and (2) knowledge gained by the
second buyer of the first sale defeats his rights even if he is first to register, since such knowledge
taints his registration with bad faith.

Upon the facts obtaining in this case, the act of registration by any of the three respondent-
purchasers was not coupled with good faith. At the minimum, each was aware or is at least
presumed to be aware of facts which should put him upon such inquiry and investigation as might be
necessary to acquaint him with the defects in the title of his vendor.

The award by the lower courts of damages and attorney’s fees to some of the herein respondents
was predicated on the filing by the original plaintiffs of what the RTC characterized as an
unwarranted suit. The basis of the award, needless to stress, no longer obtains and, hence, the
same is set aside.

WHEREFORE, the petition is hereby GRANTED. The appealed December 4, 2006 Decision and the
March 6, 2007 Resolution of the Court of Appeals in CA-G.R. CV No. 79680 affirming the May 26,
2003 Decision of the Regional Trial Court, Branch 3 in Baguio City are hereby REVERSED and SET
ASIDE. Accordingly, petitioner Antonita Orduña is hereby recognized to have the right of ownership
over subject lot covered by TCT No. T-3276 of the Baguio Registry registered in the name of
Eduardo J. Fuentebella. The Register of Deeds of Baguio City is hereby ORDERED to cancel said
TCT No. T-3276 and to issue a new one in the name of Armando Gabriel, Jr. with the proper
annotation of the conditional sale of the lot covered by said title in favor of Antonita Orduña subject
to the payment of the PhP 50,000 outstanding balance. Upon full payment of the purchase price by
Antonita Orduña, Armando Gabriel, Jr. is ORDERED to execute a Deed of Absolute Sale for the
transfer of title of subject lot to the name of Antonita Orduña, within three (3) days from receipt of
said payment.

No pronouncement as to costs.

SO ORDERED.