Jovellanos vs CA 210 S 126 G.R. No.

130876 January 31, 2002

FRANCISCO M. ALONSO, substituted by his heirs, petitioners, vs. CEBU COUNTRY CLUB, INC., respondent. PARDO, J.: The Case The case is an appeal via certiorari from a decision of the Court of Appeals1 affirming in toto that of the Regional Trial Court, Branch 8, Cebu City, 2 declaring that the title to the contested Lot No. 727, Banilad Friar Lands Estate, Cebu City, was validly re-constituted in the name of the Cebu Country Club, Inc. and ordering petitioners to pay attorneys fees of P400,000.00, and litigation expenses of P51,000.00, and costs. In an appeal via certiorari, petitioners may raise only questions of law, which shall be distinctly set forth. 3 The jurisdiction of the Supreme Court in cases brought before it from the Court of Appeals is limited to the review of errors of law and not to analyze or weigh the evidence all over again, as its findings of facts are deemed final and conclusive.4 In this appeal, petitioners raise five (5) issues, all of which involve questions of fact that have been resolved by the trial court and the Court of Appeals in favor of the Cebu Country Club, Inc. The Facts The facts, as found by the Court of Appeals, are as follows: (1) Petitioner Francisco M. Alonso, who died pendente lite and substituted by his legal heirs, a lawyer by profession, the only son and sole heir of the late Tomas N. Alonso and Asuncion Medalle, who died on June 16, 1962 and August 18, 1963, respectively (Exhibits "P" and "P-1"). Cebu Country Club, Inc. is a non-stock, non-profit corporation duly organized and existing under Philippine Laws the purpose of which is to cater to the recreation and leisure of its members. (2) Sometime in 1992, petitioner discovered documents and records Friar Lands Sale Certificate Register/Installment Record Certificate No. 734, Sales Certificate No. 734 and Assignment of Sales Certificate (Exhs. "A", "J" and "K") showing that his father acquired Lot No. 727 of the Banilad Friar Lands Estate from the Government of the Philippine Islands in or about the year 1911 in accordance with the Friar Lands Act (Act No. 1120). The documents show that one Leoncio Alburo, the original vendee of Lot No. 727, assigned his sales certificate to petitioners father on December 18, 1911, who completed the required installment payments thereon under Act No. 1120 and was consequently issued Patent No. 14353 on March 24, 1926. On March 27, 1926, the Director of Lands, acting for and in behalf of the government, executed a final deed of sale in favor of petitioners father Tomas N. Alonso (Exh. "C"). It appears, however, that the deed was not registered with the Register of Deeds because of lack of technical requirements, among them the approval of the deed of sale by the Secretary of Agriculture and Natural Resources, as required by law. (3) Upon investigation of the status of the land, petitioner found out from the office of the Registrar of Deeds of Cebu City that title to Lot No. 727 of the Banilad Friar Lands Estate had been "administratively reconstituted from the owners duplicate" on July 26, 1948 under Transfer Certificate of Title (TCT) No. RT-1310 (T-11351) in the name of United Service Country Club, Inc., predecessor of Cebu Country Club, Inc. On March 8, 1960, upon order of the Court of First Instance, the name of the registered owner in TCT No. RT-1310 (T-11531) was changed to Cebu Country Club, Inc. Moreover, the TCT provides that the reconstituted title was a transfer from TCT No. 1021 (Exh. "D" and sub-markings). (4) At present, TCT No. RT-1310 (T-11351) has been partially cancelled when Lot No. 727 was subdivided in accordance with the Memorandum of Agreement entered into by Cebu Country Club, Inc. and Susana Ingles Marquiso and Simeon Ingles, Jr. by virtue of the ruling of the Court of Appeals in the case of Heirs of Ramon Cabrera and Graciano Ingles v. Cebu Country Club, Inc. 5 and affirmed by the Supreme Court in G. R. No. 60392, per resolution dated August 29, 1983. Lot 727-D-2 covered by TCT No. 94905 remains registered in the name of Cebu Country Club, Inc. (Exh. "D-2"). (5) In the firm belief that petitioners father is still the rightful owner of Lot No. 727 of the Banilad Friar Lands Estate since there are no records showing that he ever sold or conveyed the disputed property to anyone, on July 7, 1992, petitioner made a formal demand upon Cebu Country Club, Inc. to restore to him the ownership and possession of said lot within fifteen (15) days from receipt thereof. He indicated that his claim was analogous to that of the heirs of the late Ramon Cabrera and Graciano Ingles which was upheld by the Court of Appeals (Exh. "H"). Cebu Country Club, Inc., however, denied petitioners claim and refused to deliver possession to him. (6) Left with no other recourse, on September 25, 1992, petitioner filed with the Regional Trial Court, Cebu City, 6 a complaint for declaration of nullity and non existence of deed/title, cancellation of certificates of title and recovery of property against defendant Cebu Country Club, Inc.7 He alleged that the Cebu Country Club, Inc. fraudulently and illegally managed to secure in its name the administrative reconstitution of TCT No. RT-13 10 (T-11351) despite the absence of any transaction of specific land dealing that would show how Lot No. 727 had come to pass to Cebu Country Club, Inc.; that TCT No. 11351 which is the source title of TCT No. RT-1310 (T-11351) does not pertain to Lot No. 727; that the reconstituted title which was issued on July 26, 1948, did not contain the technical description of the registered land which was inserted only on March 8, 1960, twenty-eight (28) years after the issuance of TCT No. RT-1310 (T11351), hence, Cebu Country Club, Inc.s title is null and void. Petitioner thus prayed for the cancellation of TCT No. RT-1310 (T-11351) and the issuance of another title in his name as the sole heir of Tomas Alonso, for Cebu Country Club, Inc. to deliver possession of the property to petitioner, and render an accounting of the fruits and income of the land. Petitioner likewise prayed for the sum of P100,000.00 by way of attorneys fees plus P500.00 per hearing as appearance fee, and P10,000.00 as reasonable litigation expenses.

(7) On November 5, 1992, Cebu Country Club, Inc. filed with the trial court its answer with counterclaim. It alleged that petitioner had no cause of action against Cebu Country Club, Inc. since the same had prescribed and was barred by laches, Cebu Country Club, Inc. having been in possession of the land since 1935 until the present in the concept of an owner, openly, publicly, peacefully, exclusively, adversely, continuously, paying regularly the real estate taxes thereon; that Cebu Country Club, Inc. acquired the lot in good faith and for value; that it caused the administrative reconstitution of Lot No. 727 in 1948 from the owners duplicate, the original of TCT No. 11351 having been lost or destroyed during the war, pursuant to Republic Act No. 26, its implementing Circular, GLRO Circular No. 178 and Circular No. 6 of the General Land Registration Office;9 that unlike Cebu Country Club, Inc., petitioners father never had any registered title under the Land Registration Act No. 496 nor did he pay the necessary taxes on Lot No. 727 during his lifetime; that petitioners father knew that the United Service Country Club, Inc., predecessor of Cebu Country Club, Inc. was occupying Lot No. 727 as owner; that petitioners father never reconstituted his alleged title to Lot No. 727 but did so over Lot No. 810 of the Banilad Friar Lands Estate, a lot adjacent to the disputed property, in 1946; that petitioner himself lived in Cebu City, a few kilometers away from the land in litigation; that petitioners father or petitioner himself, both of whom are lawyers and the former a congressman as well, for more than sixty (60) years, never made any demand on Cebu Country Club, Inc. for the recovery of the property knowing fully well that said land was owned and utilized by Cebu Country Club, Inc. as its main golf course. By way of counterclaim, Cebu Country Club, Inc. prayed for the award of attorneys fees in the amount of P900,000.00 and litigation expenses of P100,000.00, moral damages of P500,000.00 and exemplary damages of P2,000,000.00.10 (8) In the course of the trial, Cebu Country Club, Inc. to disprove petitioners allegation that its title, TCT No. RT-1310 (T-11351), was obtained illegally and fraudulently, submitted the deposition of an expert witness, Atty. Benjamin Bustos, Chief of the Reconstitution Division, Land Registration Authority, Central Office, Metro Manila (Exh. "8"). He testified that pursuant to GLRO Circular No. 17 dated February 19, 1947 and Circular No. 6 (RD-3) dated August 5, 1946 (Exhs "2" and "3"), titles issued before the inauguration of the Republic of the Philippines were numbered consecutively, and titles issued after the inauguration of the Republic were likewise numbered consecutively, starting with the number one (1). Eventually, therefore, the title numbers issued before the inauguration would be duplicated by the title numbers issued after the inauguration of the Republic.11 (9) On May 7, 1993, the trial court rendered a decision, the dispositive portion of which reads: "THE FOREGOING CONSIDERED, judgment is hereby rendered in favor of the defendant and against the plaintiff: declaring the contested property or Lot 727 as legally belonging to the defendant; directing the plaintiff to pay attorney' fee of P400,000.00; and litigation expenses of P51,000.00; and finally, with costs against the plaintiff. "SO ORDERED. "Cebu City, May 7, 1993. "(s/t) BERNARDO LL. SALAS "Judge"12 (10) In due time, both parties appealed to the Court of Appeals. 13 After proceedings on appeal, on March 31, 1997, the Court of Appeals promulgated a decision, the dispositive portion of which reads: "WHEREFORE, IN VIEW OF THE FOREGOING, the appeals interposed by both parties are hereby DENIED, and the lower courts Decision dated May 7, 1993 is AFFIRMED in toto. No pronouncement as to costs." "SO ORDERED."14 On April 30, 1997, petitioner filed a motion for reconsideration; however, on October 2, 1997, the Court of Appeals denied the motion.15 Hence, this appeal.16 On October 24, 2000, we required the Solicitor General to file comment on the issue of the validity of the re-constituted title in dispute.17 On November 8, 2000, the Solicitor General submitted a comment stating that on the basis of information received from the Land Registration Authority (LRA) and the Land Management Bureau (LMB), the Cebu Country Club, Inc. had been occupying the disputed property even before the Second World War and developed it into a golf course and must have acquired the property in a proper and valid manner. 18 Nonetheless, the Solicitor General emphasized that the Cebu Country Clubs certificate of title is a reconstituted title. A reconstituted title does not confirm or adjudicate ownership of land covered by lost or destroyed title.19 And the Governments right to file reversion proceedings cannot be barred by prescription that does not run against the State. 20 The Issues Petitioners raise the following issues: 1. Whether the Court of Appeals erred in affirming the validity of TCT No. RT-1310 (T-11351). 2. Whether the Court of Appeals erred in sustaining respondents claim of ownership over Lot No. 727; 3. Whether the Court of Appeals erred in holding that the present action is barred by prescription and/or by laches;

4. Whether the Court of Appeals erred in not applying the doctrine of stare decisis; 5. Whether the Court of Appeals erred in sustaining the trial courts award for damages in the form of attorneys fees and litigation expenses.21 We resolve the issues in seriatim. First Issue: Validity of Cebu Country Club, Inc.s Title The first issue is whether the Court of Appeals lawfully adjudged the validity of the administrative reconstitution of the title of Cebu Country Club, Inc. over the OCT of the Government of the Philippine Islands and Sales Patent No. 14353 on Lot No. 727 in the name of Tomas N. Alonso. The issue is factual, which, as aforesaid, cannot be reviewed in this appeal. Nevertheless, petitioners assail the validity of the administrative reconstitution of Cebu Country Club, Inc.s title No. RT-1310 (T-11351) on three (3) grounds: 1. Its source title bears the same number as another title which refers to another parcel of land; 2. There is no recorded transaction of the land from Tomas Alonso in favor of Cebu Country Club, Inc.; and 3. The technical description was not transcribed in the title within two (2) years from the date of its reconstitution. None of the grounds has any basis or merit. On the question that TCT No. RT-1310 (T-11351) bears the same number as another title to another land, we agree with the Court of Appeals that there is nothing fraudulent with the fact that Cebu Country Club, Inc.s reconstituted title bears the same number as the title of another parcel of land. This came about because under General Land Registration Office (GLRO) Circular No. 17, dated February 19, 1947, and Republic Act No. 26 and Circular No. 6, RD 3, dated August 5, 1946, which were in force at the time the title was reconstituted on July 26, 1948, the titles issued before the inauguration of the Philippine Republic were numbered consecutively and the titles issued after the inauguration were numbered also consecutively starting with No. 1, so that eventually, the titles issued before the inauguration were duplicated by titles issued after the inauguration of the Philippine Republic. This was testified to by Atty. Benjamin Bustos, Chief of the Reconstitution Division, Land Registration Authority, Central Office, Metro Manila, and by Atty. Dindo Nuez, Deputy Register of Deeds of Cebu City, who declared that several titles in the record of the Register of Deeds which were reconstituted after the inauguration of the Philippine Republic had the same numbers as the titles issued before the Second World War, due to the operation of the circulars referred to. Said the Court of Appeals: "As a third argument, plaintiff avers that the lower court erred in declaring defendant as the owner of Lot 727 when it has a void title because it was fraudulently acquired. Specifically, plaintiff points out that on the face of defendants administratively reconstituted title- TCT No. RT-1310 (T11351), it would appear that its source title is TCT No. 11351. Going over the said title further, it can be gleaned that the parent title of TCT No. 11351 is TCT No. 1021. However, plaintiff claims that defendant failed to present said source titles. It appears likewise that the Register of Deeds of Cebu City does not have a copy thereof. "On the other hand, plaintiff presented TCT No. 11351 issued on June 18, 1954 in the name of Pacita Raffinan covering Lot 925 of the Cadastral Survey of Cebu with an area of 310 square meters, more or less, (Exh. "L") and TCT No. 1021 issued on July 12, 1947 in the name of Rosario Rubio covering Lot No. 51-D of the subdivision plan being a portion of Lot No. 576 of the Banilad Friar lands Estate with an area of 230 sq. m., more or less (Exh. "E"). In his motion for new trial, he likewise presented as one of his newly discovered evidence a copy of TCT No. RT-1325 (T-1021) (Annex "B", Motion for New Trial, p. 60, Rollo) whose source title was presumably TCT No. 1021, which apparently is the parent title of defendants TCT. Said TCT No. RT-1325 (T-1021) was administratively reconstituted on July 27, 1948 and covers Lot No. 1314 of the Cadastral Survey of Cebu with an area of 110 sq. m., more or less, and registered in the name of Spouses Andres Borres and Emiliana Enriquez. As stated in TCT No. RT-1325 (T1021), its parent title, TCT No. 1021, was entered in the record book on May 17, 1939. "Plaintiff concludes then that considering that TCT Nos. 11351 and 1021 as well as RT-1325 (T-1021), which were purportedly the parent titles of TCT No. RT-1310 (T-11351), do not cover Lot. 727, defendants TCT was void having been obtained from a spurious or non-existent source (Citing the case of Ramon Cabrera, et. al., vs. Cebu Country Club, Inc. CA-G.R. No. 65559-R, Exh. "F"). "That there seems to be no record on file of the existence of either TCT No. 11351 or 1021 covering Lot 727 of the Banilad Friar Lands Estate containing an area of 377,622 sq. m., does not invalidate defendants title. As defendant counters, which was corroborated by Atty. Dindo Nuez, Deputy Register of Deeds for Cebu City, copies of these titles were lost and could not be found despite diligent search thereof. "Moreover, the absence of said titles and the existence of TCT Nos. 11351 and 1021, which do not cover Lot 727, do not render TCT No. RT-1310 (T11351) invalid in the light of Circular No. 6 Exh. "3") re: numbering of certificates of title, entries in the day book and registration books, and GLRO Circular No. 17 (Exh. "2") the rules and regulations governing the reconstitution of lost or destroyed certificates of title." 22 Petitioners next argue that the reconstituted title of Cebu Country Club, Inc. had no lawful source to speak of; it was reconstituted through extrinsic and intrinsic fraud in the absence of a deed of conveyance in its favor. In truth, however, reconstitution was based on the owners duplicate of the title, hence, there was no need for the covering deed of sale or other modes of conveyance. Cebu Country Club, Inc. was admittedly in possession of the land since long before the Second World War, or since 1931. In fact, the original title (TCT No. 11351) was issued to the United Service Country Club, Inc. on November 19, 1931 as a transfer from Transfer Certificate of Title No. 1021 (Exh. "D-6"). More importantly, Cebu Country Club, Inc. paid the realty taxes on the land even before the war, and tax declarations covering the property showed the number of the TCT of the land. Cebu Country Club, Inc. produced receipts showing real estate tax payments since 1949 (Exhs. 27 to 100-B). On the other hand, petitioner failed to produce a single receipt of real estate tax payment ever made by his

father since the sales patent was issued to his father on March 24, 1926. Worse, admittedly petitioner could not show any torrens title ever issued to Tomas N. Alonso, because, as said, the deed of sale executed on March 27, 1926 by the Director of Lands was not approved by the Secretary of Agriculture and Natural Resources and could not be registered. "Under the law, it is the act of registration of the deed of conveyance that serves as the operative act to convey the land registered under the Torrens system. The act of registration creates constructive notice to the whole world of the fact of such conveyance."23 On this point, petitioner alleges that Cebu Country Club, Inc. obtained its title by fraud in connivance with personnel of the Register of Deeds in 1941 or in 1948, when the title was administratively reconstituted. Imputations of fraud must be proved by clear and convincing evidence.24 Petitioner failed to adduce evidence of fraud. In an action for re-conveyance based on fraud, he who charges fraud must prove such fraud in obtaining a title. "In this jurisdiction, fraud is never presumed."25 The strongest suspicion cannot sway judgment or overcome the presumption of regularity. "The sea of suspicion has no shore, and the court that embarks upon it is without rudder or compass."26 Worse, the imputation of fraud was so tardily brought, some forty-four (44) years or sixty-one (61) years after its supposed occurrence, that is, from the administrative reconstitution of title on July 26, 1948, or from the issuance of the original title on November 19, 1931, that verification is rendered extremely difficult, if not impossible, especially due to the supervening event of the second world war during which practically all public records were lost or destroyed, or no longer available. Petitioners next question the lack of technical description inscribed in the reconstituted title in Cebu Country Club, Inc.s name. This is not a bar to reconstitution of the title nor will it affect the validity of the reconstituted title. A registered owner is given two (2) years to file a plan of such land with the Chief of the General Land Registration Office.27 The two-year period is directory, not jurisdictional. In other words, the failure to submit the technical description within two (2) years would not invalidate the title. At most, the failure to file such technical description within the two-year period would bar a transfer of the title to a third party in a voluntary transaction. Second Issue: Whether Francisco Alonso is owner of the land The second issue is whether the Court of Appeals erred in ruling that the Cebu Country Club, Inc. is owner of Lot No. 727. Admittedly, neither petitioners nor their predecessor had any title to the land in question. The most that petitioners could claim was that the Director of Lands issued a sales patent in the name of Tomas N. Alonso. The sales patent, however, and even the corresponding deed of sale were not registered with the Register of Deeds and no title was ever issued in the name of the latter. This is because there were basic requirements not complied with, the most important of which was that the deed of sale executed by the Director of Lands was not approved by the Secretary of Agriculture and Natural Resources. Hence, the deed of sale was void.28 "Approval by the Secretary of Agriculture and Commerce is indispensable for the validity of the sale." 29 Moreover, Cebu Country Club, Inc. was in possession of the land since 1931, and had been paying the real estate taxes thereon based on tax declarations in its name with the title number indicated thereon. Tax receipts and declarations of ownership for taxation purposes are strong evidence of ownership. 30 This Court has ruled that although tax declarations or realty tax payments are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in the concept of owner for no one in his right mind will be paying taxes for a property that is not in his actual or constructive possession. 31 Notwithstanding this fatal defect, the Court of Appeals ruled that "there was substantial compliance with the requirement of Act No. 1120 to validly convey title to said lot to Tomas N. Alonso."32 On this point, the Court of Appeals erred. Under Act No. 1120, which governs the administration and disposition of friar lands, the purchase by an actual and bona fide settler or occupant of any portion of friar land shall be "agreed upon between the purchaser and the Director of Lands, subject to the approval of the Secretary of Agriculture and Natural Resources (mutatis mutandis)."33 In his Memorandum filed on May 25, 2001, the Solicitor General submitted to this Court certified copies of Sale Certificate No. 734, in favor of Leoncio Alburo, and Assignment of Sale Certificate No. 734, in favor of Tomas N. Alonso. Conspicuously, both instruments do not bear the signature of the Director of Lands and the Secretary of the Interior. They also do not bear the approval of the Secretary of Agriculture and Natural Resources. Only recently, in Jesus P. Liao v. Court of Appeals,34 the Court has ruled categorically that approval by the Secretary of Agriculture and Commerce of the sale of friar lands is indispensable for its validity, hence, the absence of such approval made the sale null and void ab-initio.35 Necessarily, there can be no valid titles issued on the basis of such sale or assignment. 36 Consequently, petitioner Franciscos father did not have any registerable title to the land in question. Having none, he could not transmit anything to his sole heir, petitioner Francisco Alonso or the latters heirs. In a vain attempt at showing that he had succeeded to the estate of his father, on May 4, 1991, petitioner Francisco Alonso executed an affidavit adjudicating the entire estate to himself (Exh. "Q"), duly published in a newspaper of general circulation in the province and city of Cebu (Exh. "Q-1"). Such affidavit of selfadjudication is inoperative, if not void, not only because there was nothing to adjudicate, but equally important because petitioner Francisco did not show proof of payment of the estate tax and submit a certificate of clearance from the Commissioner of Internal Revenue.37 Obviously, petitioner Francisco has not paid the estate taxes. Consequently, we rule that neither Tomas N. Alonso nor his son Francisco M. Alonso or the latters heirs are the lawful owners of Lot No. 727 in dispute. Neither has the respondent Cebu Country Club, Inc. been able to establish a clear title over the contested estate. The reconstitution of a title is simply the reissuance of a lost duplicate certificate of title in its original form and condition. It does not determine or resolve the ownership of the land covered by the lost or destroyed title. A reconstituted title, like the original certificate of title, by itself does not vest ownership of the land or estate covered thereby. 38 Third Issue: Action has prescribed or is barred by laches The third issue is whether petitioners action for re-conveyance has prescribed or is barred by laches. "An action based on implied or constructed trust prescribes in ten (10) years... from the time of its creation or upon the alleged fraudulent registration of the property."39 Petitioner Franciscos action in the court below was basically one of re-conveyance. It was filed on September 25, 1992, sixty-one (61) years after the title was issued on November 19, 1931, and forty-four (44) years after its reconstitution on July 26, 1948. Thus, the failure of petitioner Francisco and his

father to assert ownership of the land for over sixty (60) years during which the Cebu Country Club, Inc. was in possession is simply contrary to their claim of ownership.40 Petitioner Franciscos and his fathers "long inaction or passivity in asserting their rights over disputed property will preclude them from recovering the same."41 Aside from the fact that, as herein-above stated, neither petitioner Francisco nor his father held a valid title over the land, and that there was no showing that his father owned the land at the time of his demise so as to bequeath the same to petitioner Francisco as his sole heir, by now, the rule is firmly settled that an action for re-conveyance based on fraud must be filed within ten (10) years from discovery of the fraud which as to titled lands referred to the registration of the title with the register of deeds.42 "An action for re-conveyance is a legal remedy granted to a landowner whose property has been wrongfully or erroneously registered in anothers name, but then the action must be filed within ten years from the issuance of the title since such issuance operates as a constructive notice."43 In addition, the action is barred by laches because of the long delay before the filing of the case.44 Fourth Issue: No stare decisis The next issue is whether the Court of Appeals erred in not ruling that the decision in Ramon Cabrera-Graciano Ingles vs. Cebu Country Club, Inc., CA-G. R. No. 65559-R, October 31, 1981, was binding on respondent Cebu Country Club, Inc. as to the land in question. Petitioners assert that as the Court of Appeals annulled Cebu Country Club, Inc.s title in the Cabrera-Ingles case, so too must the title in this case be declared void. In the first place, there is no identity of parties; secondly, neither the titles to nor the parcels of land involved are the same. Consequently, the doctrine of res-judicata does not apply.45 Momentarily casting aside the doctrine of res-judicata, there is an important moiety in the Cabrera-Ingles case. There, the Director of Lands, after the administrative reconstitution of the title, issued a directive to the Register of Deeds to register the lot in question in favor of Graciano Ingles.46 This superseded the administrative reconstitution, rendering allegations of fraud irrelevant. Here, the Director of Lands did not issue a directive to register the land in favor of Tomas N. Alonso. And worse, the sales patent and corresponding deed of sale executed in 1926 are now stale.47 Petitioners further contend that the Supreme Courts minute resolution refusing to review that decision is equivalent to a judgment on the merits. The minute resolution may amount to a final action on the case but it is not a precedent. 48 It can not bind non-parties to the action. To restate, the rule is that: (1) a judgment in rem is binding upon the whole world, such as a judgment in a land registration case or probate of a will; (2) a judgment in personam is binding upon the parties and their successors in interest but not upon strangers. 49 A judgment directing a party to deliver possession of a property to another is in personam; it is binding only against the parties and their successors in interest by title subsequent to the commencement of the action.50 "Suits to quiet title are not technically suits in rem, nor are they, strictly speaking, in personam, but being against the person in respect of the res, these proceedings are characterized as quasi in rem. The judgment in such proceedings is conclusive only between the parties."51 In this case, the action below is basically one for declaration of nullity of title and recovery of ownership of real property, or re-conveyance. "An action to recover a parcel of land is a real action but it is an action in personam, for it binds a particular individual only although it concerns the right to a tangible thing." 52 "Any judgment therein is binding only upon the parties properly impleaded."53 What is more, the doctrine of stare decisis notwithstanding, the Court has abandoned or overruled precedents whenever it realized that the Court erred in the prior decisions. "After all, more important than anything else is that this Court should be right." 54 Fifth Issue: Award of attorneys fees The final issue raised is whether or not the Court of Appeals erred in awarding in favor of the Cebu Country Club, Inc. attorneys fees of P400,000.00 as damages and P51,000.00 as litigation expenses.55 An award of attorneys fees and expenses of litigation is proper under the circumstances provided for in Article 2208 of the Civil Code, one of which is when the court deems it just and equitable that attorneys fees and expenses of litigation should be recovered 56 and when the civil action or proceeding is clearly unfounded and where defendant acted in gross and evident bad faith.57 "The award of attorneys fees as damages is the exception rather than the rule; it is not to be given to the defendant every time the latter prevails. The right to litigate is so precious that a penalty should not be charged on those who may exercise it erroneously, unless, of course such party acted in bad faith."58 In this case, however, we would rather not award attorneys fees and expenses of litigation in the absence of showing of gross and evident bad faith in filing the action. 59 The Judgment WHEREFORE, we DENY the petition for review. However, we SET ASIDE the decision of the Court of Appeals60 and that of the Regional Trial Court, Cebu City, Branch 08.61 IN LIEU THEREOF, we DISMISS the complaint and counterclaim of the parties in Civil Case No. CEB 12926 of the trial court. We declare that Lot No. 727 D-2 of the Banilad Friar Lands Estate covered by Original Certificate of Title Nos. 251, 232, and 253 legally belongs to the Government of the Philippines. No costs. SO ORDERED. Leano vs CA 369 S 36 CARMELITA LEAO, assisted by her husband GREGORIO CUACHON, petitioner, vs. COURT OF APPEALS and HERMOGENES FERNANDO, respondents. PARDO, J.:

The Case The case is a petition for review on certiorari of the decision1 of the Court of Appeals affirming that of the Regional Trial Court, Malolos, Branch 7 2 ordering petitioner Leao to pay respondent Hermogenes Fernando the sum of P183,687.70 corresponding to her outstanding obligations under the contract to sell, with interest and surcharges due thereon, attorney's fees and costs.1wphi1.nt The Facts On November 13, 1985, Hermogenes Fernando, as vendor and Carmelita Leao, as vendee executed a contract to sell involving a piece of land, Lot No. 876-B, with an area of 431 square meters, located at Sto. Cristo, Baliuag, Bulacan. 3 In the contract, Carmelita Leao bound herself to pay Hermogenes Fernando the sum of one hundred seven thousand and seven hundred and fifty pesos (P107,750.00) as the total purchase price of the lot. The manner of paying the total purchase price was as follows: "The sum of TEN THOUSAND SEVEN HUNDRED SEVENTY FIVE (P10,775.00) PESOS, shall be paid at the signing of this contract as DOWN PAYMENT, the balance of NINETY SIX THOUSAND NINE HUNDRED SEVENTY FIVE PESOS (P96,975.00) shall be paid within a period of TEN (10) years at a monthly amortization of P1,747.30 to begin from December 7, 1985 with interest at eighteen per cent (18%) per annum based on balances."4 The contract also provided for a grace period of one month within which to make payments, together with the one corresponding to the month of grace. Should the month of grace expire without the installments for both months having been satisfied, an interest of 18% per annum will be charged on the unpaid installments.5 Should a period of ninety (90) days elapse from the expiration of the grace period without the overdue and unpaid installments having been paid with the corresponding interests up to that date, respondent Fernando, as vendor, was authorized to declare the contract cancelled and to dispose of the parcel of land, as if the contract had not been entered into. The payments made, together with all the improvements made on the premises, shall be considered as rents paid for the use and occupation of the premises and as liquidated damages. 6 After the execution of the contract, Carmelita Leao made several payments in lump sum. 7 Thereafter, she constructed a house on the lot valued at P800,000.00.8 The last payment that she made was on April 1, 1989. On September 16, 1991, the trial court rendered a decision in an ejectment case 9 earlier filed by respondent Fernando ordering petitioner Leao to vacate the premises and to pay P250.00 per month by way of compensation for the use and occupation of the property from May 27, 1991 until she vacated the premises, attorney's fees and costs of the suit.10 On August 24, 1993, the trial court issued a writ of execution which was duly served on petitioner Leao. On September 27, 1993, petitioner Leao filed with the Regional Trial Court of Malolos, Bulacan a complaint for specific performance with preliminary injunction.11 Petitioner Leao assailed the validity of the judgment of the municipal trial court 12 for being violative of her right to due process and for being contrary to the avowed intentions of Republic Act No. 6552 regarding protection to buyers of lots on installments. Petitioner Leao deposited P18,000.00 with the clerk of court, Regional Trial Court, Bulacan, to cover the balance of the total cost of Lot 876-B.13 On November 4, 1993, after petitioner Leao posted a cash bond of P50,000.00, 14 the trial court issued a writ of preliminary injunction15 to stay the enforcement of the decision of the municipal trial court. 16 On February 6, 1995, the trial court rendered a decision, the dispositive portion of which reads: "WHEREFORE, judgment is hereby rendered as follows: "1. The preliminary injunction issued by this court per its order dated November 4, 1993 is hereby made permanent; "2. Ordering the plaintiff to pay to the defendant the sum of P103,090.70 corresponding to her outstanding obligations under the contract to sell (Exhibit "A" Exhibit "B") consisting of the principal of said obligation together with the interest and surcharges due thereon as of February 28, 1994, plus interest thereon at the rate of 18% per annum in accordance with the provision of said contract to be computed from March 1, 1994, until the same becomes fully paid; "3. Ordering the defendant to pay to plaintiff the amount of P10,000 as and by way of attorney's fees; "4. Ordering the defendant to pay to plaintiff the costs of the suit in Civil Case No. 1680 aforementioned. "SO ORDERED. "Malolos, Bulacan, February 6, 1995.

"(sgd.) DANILO A. MANALASTAS Judge"17

On February 21, 1995, respondent Fernando filed a motion for reconsideration 18 and the supplement19 thereto. The trial court increased the amount of P103,090.70 to P183,687.00 and ordered petitioner Leao ordered to pay attorney's fees. 20 According to the trial court, the transaction between the parties was an absolute sale, making petitioner Leao the owner of the lot upon actual and constructive delivery thereof. Respondent Fernando, the seller, was divested of ownership and cannot recover the same unless the contract is rescinded pursuant to Article 1592 of the Civil Code which requires a judicial or notarial demand. Since there had been no rescission, petitioner Leao, as the owner in possession of the property, cannot be evicted. On the issue of delay, the trial court held: "While the said contract provides that the whole purchase price is payable within a ten-year period, yet the same contract clearly specifies that the purchase price shall be payable in monthly installments for which the corresponding penalty shall be imposed in case of default. The plaintiff certainly cannot ignore the binding effect of such stipulation by merely asserting that the ten-year period for payment of the whole purchase price has not yet lapsed. In other words, the plaintiff has clearly defaulted in the payment of the amortizations due under the contract as recited in the statement of account (Exhibit "2") and she should be liable for the payment of interest and penalties in accordance with the stipulations in the contract pertaining thereto."21 The trial court disregarded petitioner Leaos claim that she made a downpayment of P10,000.00, at the time of the execution of the contract. The trial court relied on the statement of account 22 and the summary23 prepared by respondent Fernando to determine petitioner Leao's liability for the payment of interests and penalties. The trial court held that the consignation made by petitioner Leao in the amount of P18,000.00 did not produce any legal effect as the same was not done in accordance with Articles 1176, 1177 and 1178 of the Civil Code. In time, petitioner Leao appealed the decision to the Court of Appeals.24 On January 22, 1997, Court of Appeals promulgated a decision affirming that of the Regional Trial Court in toto.25 On February 11, 1997, petitioner Leao filed a motion for reconsideration. 26 On April 18, 1997, the Court of Appeals denied the motion.27 Hence, this petition.28 The Issues The issues to be resolved in this petition for review are (1) whether the transaction between the parties in an absolute sale or a conditional sale; (2) whether there was a proper cancellation of the contract to sell; and (3) whether petitioner was in delay in the payment of the monthly amortizations. The Court's Ruling Contrary to the findings of the trial court, the transaction between the parties was a conditional sale not an absolute sale. The intention of the parties was to reserve the ownership of the land in the seller until the buyer has paid the total purchase price. Consider the following: First, the contract to sell makes the sale, cession and conveyance "subject to conditions" set forth in the contract to sell. 29 Second, what was transferred was the possession of the property, not ownership. The possession is even limited by the following: (1) that the vendee may continue therewith "as long as the VENDEE complies with all the terms and conditions mentioned, and (2) that the buyer may not sell, cede, assign, transfer or mortgage or in any way encumber any right, interest or equity that she may have or acquire in and to the said parcel of land nor to lease or to sublease it or give possession to another person without the written consent of the seller. 30 Finally, the ownership of the lot was not transferred to Carmelita Leao. As the land is covered by a torrens title, the act of registration of the deed of sale was the operative act that could transfer ownership over the lot. 31 There is not even a deed that could be registered since the contract provides that the seller will execute such a deed "upon complete payment by the VENDEE of the total purchase price of the property" with the stipulated interest. 32 In a contract to sell real property on installments, the full payment of the purchase price is a positive suspensive condition, the failure of which is not considered a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring any obligatory force. 33 The transfer of ownership and title would occur after full payment of the price. 34 In the case at bar, petitioner Leao's non-payment of the installments after April 1, 1989, prevented the obligation of respondent Fernando to convey the property from arising. In fact, it brought into effect the provision of the contract on cancellation. Contrary to the findings of the trial court, Article 1592 of the Civil Code is inapplicable to the case at bar.35 However, any attempt to cancel the contract to sell would have to comply with the provisions of Republic Act No. 6552, the "Realty Installment Buyer Protection Act."

R.A. No. 6552 recognizes in conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer, which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding force.36 The law also provides for the rights of the buyer in case of cancellation. Thus, Sec. 3 (b) of the law provides that: "If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty percent of the total payments made and, after five years of installments, an additional five percent every year but not to exceed ninety percent of the total payment made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer." [Emphasis supplied] The decision in the ejectment case37 operated as the notice of cancellation required by Sec. 3(b). As petitioner Leao was not given then cash surrender value of the payments that she made, there was still no actual cancellation of the contract. Consequently, petitioner Leao may still reinstate the contract by updating the account during the grace period and before actual cancellation. 38 Should petitioner Leao wish to reinstate the contract, she would have to update her accounts with respondent Fernando in accordance with the statement of account39 which amount was P183,687.00.40 On the issue of whether petitioner Leao was in delay in paying the amortizations, we rule that while the contract provided that the total purchase price was payable within a ten-year period, the same contract specified that the purchase price shall be paid in monthly installments for which the corresponding penalty shall be imposed in case of default. Petitioner Leao cannot ignore the provision on the payment of monthly installments by claiming that the ten-year period within which to pay has not elapsed. Article 1169 of the Civil Code provides that in reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins.1wphi1.nt In the case at bar, respondent Fernando performed his part of the obligation by allowing petitioner Leao to continue in possession and use of the property. Clearly, when petitioner Leao did not pay the monthly amortizations in accordance with the terms of the contract, she was in delay and liable for damages.41 However, we agree with the trial court that the default committed by petitioner Leao in respect of the obligation could be compensated by the interest and surcharges imposed upon her under the contract in question. 42 It is a cardinal rule in the interpretation of contracts that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall control.43 Thus, as there is no ambiguity in the language of the contract, there is no room for construction, only compliance. The Fallo IN VIEW WHEREOF, we DENY the petition and AFFIRM the decision of the Court of Appeals44 in toto. No costs. SO ORDERED. Bacus vs CA 371 S 295 G.R. No. 127695 December 3, 2001

HEIRS OF LUIS BACUS, namely: CLARA RESMA BACUS, ROQUE R. BACUS, SR., SATURNINO R. BACUS, PRISCILA VDA. DE CABANERO, CARMELITA B. SUQUIB, BERNARDITA B. CARDENAS, RAUL R. BACUS, MEDARDO R. BACUS, ANSELMA B. ALBAN, RICARDO R. BACUS, FELICISIMA B. JUDICO, and DOMINICIANA B. TANGAL, petitioners, vs. HON. COURT OF APPEALS and SPOUSES FAUSTINO DURAY and VICTORIANA DURAY, respondents. QUISUMBING, J.: This petition assails the decision dated November 29, 1996, of the Court of Appeals in CA-G.R. CV No. 37566, affirming the decision dated August 3, 1991, of the Regional Trial Court of Cebu City, Branch 6, in Civil Case No. CEB-8935. The facts, as culled from the records, are as follows: On June 1, 1984, Luis Bacus leased to private respondent Faustino Duray a parcel of agricultural land in Bulacao, Talisay, Cebu. Designated as Lot No. 3661-A3-B-2, it had an area of 3,002 square meters, covered by Transfer Certificate of Title No. 48866. The lease was for six years, ending May 31, 1990. The contract contained an option to buy clause. Under said option, the lessee had the exclusive and irrevocable right to buy 2,000 square meters of the property within five years from a year after the effectivity of the contract, at P200 per square meter. That rate shall be proportionately adjusted depending on the peso rate against the US dollar, which at the time of the execution of the contract was fourteen pesos. 1

Close to the expiration of the contract, Luis Bacus died on October 10, 1989. Thereafter, on March 15, 1990, the Duray spouses informed Roque Bacus, one of the heirs of Luis Bacus, that they were willing and ready to purchase the property under the option to buy clause. They requested Roque Bacus to prepare the necessary documents, such as a Special Power of Attorney authorizing him to enter into a contract of sale, 2 on behalf of his sisters who were then abroad. On March 30, 1990, due to the refusal of petitioners to sell the property, Faustino Duray's adverse claim was annotated by the Register of Deeds of Cebu, at the back of TCT No. 63269, covering the segregated 2,000 square meter portion of Lot No. 3661-A-3-B-2-A.3 Subsequently, on April 5, 1990, Duray filed a complaint for specific performance against the heirs of Luis Bacus with the Lupon Tagapamayapa of Barangay Bulacao, asking that he be allowed to purchase the lot specifically referred to in the lease contract with option to buy. At the hearing, Duray presented a certification4 from the manager of Standard Chartered Bank, Cebu City, addressed to Luis Bacus, stating that at the request of Mr. Lawrence Glauber, a bank client, arrangements were being made to allow Faustino Duray to borrow funds of approximately P700,000 to enable him to meet his obligations under the contract with Luis Bacus.5 Having failed to reach an agreement before the Lupon, on April 27, 1990, private respondents filed a complaint for specific performance with damages against petitioners before the Regional Trial Court, praying that the latter, (a) execute a deed of sale over the subject property in favor of private respondents; (b) receive the payment of the purchase price; and (c) pay the damages. On the other hand, petitioners alleged that before Luis Bacus' death, private respondents conveyed to them the former's lack of interest to exercise their option because of insufficiency of funds, but they were surprised to learn of private respondents' demand. In turn, they requested private respondents to pay the purchase price in full but the latter refused. They further alleged that private respondents did not deposit the money as required by the Lupon and instead presented a bank certification which cannot be deemed legal tender. On October 30, 1990, private respondents manifested in court that they caused the issuance of a cashier's check in the amount of P650,0006 payable to petitioners at anytime upon demand. On August 3, 1991, the Regional Trial Court ruled in favor of private respondents, the dispositive portion of which reads: Premises considered, the court finds for the plaintiffs and orders the defendants to specifically perform their obligation in the option to buy and to execute a document of sale over the property covered by Transfer Certificate of Title # T-63269 upon payment by the plaintiffs to them in the amount of Six Hundred Seventy-Five Thousand Six Hundred Seventy-Five (P675,675.00) Pesos within a period of thirty (30) days from the date this decision becomes final. SO ORDERED.7 Unsatisfied, petitioners appealed to the respondent Court of Appeals which denied the appeal on November 29, 1996, on the ground that the private respondents exercised their option to buy the leased property before the expiration of the contract of lease. It held: . . . After a careful review of the entire records of this case, we are convinced that the plaintiffs-appellees validly and effectively exercised their option to buy the subject property. As opined by the lower court, "the readiness and preparedness of the plaintiff on his part, is manifested by his cautionary letters, the prepared bank certification long before the date of May 31, 1990, the final day of the option, and his filing of this suit before said date. If the plaintiff-appellee Francisco Duray had no intention to purchase the property, he would not have bothered to write those letters to the defendant-appellants (which were all received by them) and neither would he be interested in having his adverse claim annotated at the back of the T.C.T. of the subject property, two (2) months before the expiration of the lease. Moreover, he even went to the extent of seeking the help of the Lupon Tagapamayapa to compel the defendants-appellants to recognize his right to purchase the property and for them to perform their corresponding obligation.8 xxx xxx xxx

We therefore find no merit in this appeal. WHEREFORE, the decision appealed from is hereby AFFIRMED.9 Hence, this petition where petitioners aver that the Court of Appeals gravely erred and abused its discretion in: I. . . . UPHOLDING THE TRIAL COURT'S RULING IN THE SPECIFIC PERFORMANCE CASE BY ORDERING PETITIONERS (DEFENDANTS THEREIN) TO EXECUTE A DOCUMENT OF SALE OVER THE PROPERTY IN QUESTION (WITH TCT NO. T-63269) TO THEM IN THE AMOUNT OF P675,675.00 WITHIN THIRTY (30) DAYS FROM THE DATE THE DECISION BECOMES FINAL; II. . . . DISREGARDING LEGAL PRINCIPLES, SPECIFIC PROVISIONS OF LAW AND JURISPRUDENCE IN UPHOLDING THE DECISION OF THE TRIAL COURT TO THE EFFECT THAT PRIVATE RESPONDENTS HAD EXERCISED THEIR RIGHT OF OPTION TO BUY ON TIME; THUS THE PRESENTATION OF THE CERTIFICATION OF THE BANK MANAGER OF A BANK DEPOSIT IN THE NAME OF ANOTHER PERSON FOR LOAN TO RESPONDENTS WAS EQUIVALENT TO A VALID TENDER OF PAYMENT AND A SUFFICIENT COMPLAINCE (SIC) OF A CONDITION FOR THE EXERCISE OF THE OPTION TO BUY; AND III. . . . UPHOLDING THE TRIAL COURT'S RULING THAT THE PRESENTATION OF A CASHER'S (SIC) CHECK BY THE RESPONDENTS IN THE AMOUNT OF P625,000.00 EVEN AFTER THE TERMINATION OF THE TRIAL ON THE MERITS WITH BOTH PARTIES ALREADY HAVING RESTED THEIR CASE, WAS STILL VALID COMPLIANCE OF THE CONDITION FOR THE PRIVATE RESPONDENTS' (PLAINTIFFS THEREIN) EXERCISE OF RIGHT OF OPTION TO BUY AND HAD A FORCE OF VALID AND FULL TENDER OF PAYMENT WITHIN THE AGREED PERIOD. 10

Petitioners insist that they cannot be compelled to sell the disputed property by virtue of the nonfulfillment of the obligation under the option contract of the private respondents. Private respondents first aver that petitioners are unclear if Rule 65 or Rule 45 of the Rules of Court govern their petition, and that petitioners only raised questions of facts which this Court cannot properly entertain in a petition for review. They claim that even assuming that the instant petition is one under Rule 45, the same must be denied for the Court of Appeals has correctly determined that they had validly exercised their option to buy the leased property before the contract expired. In response, petitioners state that private respondents erred in initially classifying the instant petition as one under Rule 65 of the Rules of Court. They argue that the petition is one under Rule 45 where errors of the Court of Appeals, whether evidentiary or legal in nature, may be reviewed. We agree with private respondents that in a petition for review under Rule 45, only questions of law may be raised. 11 However, a close reading of petitioners' arguments reveal the following legal issues which may properly be entertained in the instant petition: a) When private respondents opted to buy the property covered by the lease contract with option to buy, were they already required to deliver the money or consign it in court before petitioner executes a deed of transfer? b) Did private respondents incur in delay when they did not deliver the purchase price or consign it in court on or before the expiration of the contract? On the first issue, petitioners contend that private respondents failed to comply with their obligation because there was neither actual delivery to them nor consignation in court or with the Municipal, City or Provincial Treasurer of the purchase price before the contract expired. Private respondents' bank certificate stating that arrangements were being made by the bank to release P700,000 as a loan to private respondents cannot be considered as legal tender that may substitute for delivery of payment to petitioners nor was it a consignation. Obligations under an option to buy are reciprocal obligations.12 The performance of one obligation is conditioned on the simultaneous fulfillment of the other obligation.13 In other words, in an option to buy, the payment of the purchase price by the creditor is contingent upon the execution and delivery of a deed of sale by the debtor. In this case, when private respondents opted to buy the property, their obligation was to advise petitioners of their decision and their readiness to pay the price. They were not yet obliged to make actual payment. Only upon petitioners' actual execution and delivery of the deed of sale were they required to pay. As earlier stated, the latter was contingent upon the former. In Nietes vs. Court of Appeals, 46 SCRA 654 (1972), we held that notice of the creditor's decision to exercise his option to buy need not be coupled with actual payment of the price, so long as this is delivered to the owner of the property upon performance of his part of the agreement. Consequently, since the obligation was not yet due, consignation in court of the purchase price was not yet required. Consignation is the act of depositing the thing due with the court or judicial authorities whenever the creditor cannot accept or refuses to accept payment and it generally requires a prior tender of payment. In instances, where no debt is due and owing, consignation is not proper. 14 Therefore, petitioners' contention that private respondents failed to comply with their obligation under the option to buy because they failed to actually deliver the purchase price or consign it in court before the contract expired and before they execute a deed, has no leg to stand on. Corollary, private respondents did not incur in delay when they did not yet deliver payment nor make a consignation before the expiration of the contract. In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. Only from the moment one of the parties fulfills his obligation, does delay by the other begin. 15 In this case, private respondents, as early as March 15, 1990, communicated to petitioners their intention to buy the property and they were at that time undertaking to meet their obligation before the expiration of the contract on May 31, 1990. However, petitioners refused to execute the deed of sale and it was their demand to private respondents to first deliver the money before they would execute the same which prompted private respondents to institute a case for specific performance in the Lupong Tagapamayapa and then in the RTC. On October 30, 1990, after the case had been submitted for decision but before the trial court rendered its decision, private respondents issued a cashier's check in petitioners' favor purportedly to bolster their claim that they were ready to pay the purchase price. The trial court considered this in private respondents' favor and we believe that it rightly did so, because at the time the check was issued, petitioners had not yet executed a deed of sale nor expressed readiness to do so. Accordingly, as there was no compliance yet with what was incumbent upon petitioners under the option to buy, private respondents had not incurred in delay when the cashier's check was issued even after the contract expired. WHEREFORE, the instant petition is DENIED. The decision dated November 29, 1996 of the Court of Appeals is hereby AFFIRMED. Costs against petitioners. SO ORDERED. Cortes vs. CA 494 S 570 G.R. No. 158086 February 14, 2008

ASJ CORPORATION and ANTONIO SAN JUAN, petitioners, vs. SPS. EFREN & MAURA EVANGELISTA, respondents. DECISION

QUISUMBING, J.: For review on certiorari is the Decision1 dated April 30, 2003 of the Court of Appeals in CA-G.R. CV No. 56082, which had affirmed the Decision2 dated July 8, 1996 of the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 9 in Civil Case No. 745-M-93. The Court of Appeals, after applying the doctrine of piercing the veil of corporate fiction, held petitioners ASJ Corporation (ASJ Corp.) and Antonio San Juan solidarily liable to respondents Efren and Maura Evangelista for the unjustified retention of the chicks and egg by-products covered by Setting Report Nos. 108 to 113.3 The pertinent facts, as found by the RTC and the Court of Appeals, are as follows: Respondents, under the name and style of R.M. Sy Chicks, are engaged in the large-scale business of buying broiler eggs, hatching them, and selling their hatchlings (chicks) and egg by-products4 in Bulacan and Nueva Ecija. For the incubation and hatching of these eggs, respondents availed of the hatchery services of ASJ Corp., a corporation duly registered in the name of San Juan and his family. Sometime in 1991, respondents delivered to petitioners various quantities of eggs at an agreed service fee of 80 centavos per egg, whether successfully hatched or not. Each delivery was reflected in a "Setting Report" indicating the following: the number of eggs delivered; the date of setting or the date the eggs were delivered and laid out in the incubators; the date of candling or the date the eggs, through a lighting system, were inspected and determined if viable or capable of being hatched into chicks; and the date of hatching, which is also the date respondents would pick-up the chicks and by-products. Initially, the service fees were paid upon release of the eggs and by-products to respondents. But as their business went along, respondents delays on their payments were tolerated by San Juan, who just carried over the balance, as there may be, into the next delivery, out of keeping goodwill with respondents. From January 13 to February 3, 1993, respondents had delivered to San Juan a total of 101,3[50]5 eggs, detailed as follows:6 Date Set 1/13/1993 1/20/1993 1/22/1993 1/28/1993 1/30/1993 2/3/1993 SR Number SR 108 SR 109 SR 110 SR 111 SR 112 SR 113 TOTAL No. of eggs delivered 32,566 eggs 21,485 eggs 7,213 eggs 14,495 eggs 15,346 eggs 10,24[5]7 eggs 101,350 eggs Date hatched/ Pick-up date February 3, 1993 February 10, 1993 February 12, 1993 February 18, 1993 February 20, 1993 February 24, 1993

On February 3, 1993, respondent Efren went to the hatchery to pick up the chicks and by-products covered by Setting Report No. 108, but San Juan refused to release the same due to respondents failure to settle accrued service fees on several setting reports starting from Setting Report No. 90. Nevertheless, San Juan accepted from Efren 10,245 eggs covered by Setting Report No. 113 and P15,000.008 in cash as partial payment for the accrued service fees. On February 10, 1993, Efren returned to the hatchery to pick up the chicks and by-products covered by Setting Report No. 109, but San Juan again refused to release the same unless respondents fully settle their accounts. In the afternoon of the same day, respondent Maura, with her son Anselmo, tendered P15,000.009 to San Juan, and tried to claim the chicks and by-products. She explained that she was unable to pay their balance because she was hospitalized for an undisclosed ailment. San Juan accepted the P15,000.00, but insisted on the full settlement of respondents accounts before releasing the chicks and byproducts. Believing firmly that the total value of the eggs delivered was more than sufficient to cover the outstanding balance, Maura promised to settle their accounts only upon proper accounting by San Juan. San Juan disliked the idea and threatened to impound their vehicle and detain them at the hatchery compound if they should come back unprepared to fully settle their accounts with him. On February 11, 1993, respondents directed their errand boy, Allan Blanco, to pick up the chicks and by-products covered by Setting Report No. 110 and also to ascertain if San Juan was still willing to settle amicably their differences. Unfortunately, San Juan was firm in his refusal and reiterated his threats on respondents. Fearing San Juans threats, respondents never went back to the hatchery. The parties tried to settle amicably their differences before police authorities, but to no avail. Thus, respondents filed with the RTC an action for damages based on petitioners retention of the chicks and by-products covered by Setting Report Nos. 108 to 113. On July 8, 1996, the RTC ruled in favor of respondents and made the following findings: (1) as of Setting Report No. 107, respondents owed petitioners P102,336.80;10 (2) petitioners withheld the release of the chicks and by-products covered by Setting Report Nos. 108-113;11 and (3) the retention of the chicks and by-products was unjustified and accompanied by threats and intimidations on respondents. 12 The RTC disregarded the corporate fiction of ASJ Corp.,13 and held it and San Juan solidarily liable to respondents for P529,644.80 as actual damages, P100,000.00 as moral damages, P50,000.00 as attorneys fees, plus interests and costs of suit. The decretal portion of the decision reads: WHEREFORE, based on the evidence on record and the laws/jurisprudence applicable thereon, judgment is hereby rendered ordering the defendants to pay, jointly and severally, unto the plaintiffs the amounts of P529,644.80, representing the value of the hatched chicks and byproducts which the plaintiffs on the average expected to derive under Setting Reports Nos. 108 to 113, inclusive, with legal interest thereon from the date of this judgment until the same shall have been fully paid, P100,000.00 as moral damages and P50,000.00 as attorneys fees, plus the costs of suit. SO ORDERED.14

Both parties appealed to the Court of Appeals. Respondents prayed for an additional award of P76,139.00 as actual damages for the cost of other unreturned by-products and P1,727,687.52 as unrealized profits, while petitioners prayed for the reversal of the trial courts entire decision. On April 30, 2003, the Court of Appeals denied both appeals for lack of merit and affirmed the trial courts decision, with the slight modification of including an award of exemplary damages of P10,000.00 in favor of respondents. The Court of Appeals, applying the doctrine of piercing the veil of corporate fiction, considered ASJ Corp. and San Juan as one entity, after finding that there was no bona fide intention to treat the corporation as separate and distinct from San Juan and his wife Iluminada. The fallo of the Court of Appeals decision reads: WHEREFORE, in view of the foregoing, the Decision appealed from is hereby AFFIRMED, with the slight modification that exemplary damages in the amount of P10,000.00 are awarded to plaintiffs. Costs against defendants. SO ORDERED.15 Hence, the instant petition, assigning the following errors: I. THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN HOLDING, AS DID THE COURT A QUO, THAT PETITIONERS WITHHELD/OR FAILED TO RELEASE THE CHICKS AND BY-PRODUCTS COVERED BY SETTING REPORT NOS. 108 AND 109. II. THE HONORABLE COURT OF APPEALS ERRED IN ADMITTING THE HEARSAY TESTIMONY OF MAURA EVANGELISTA SUPPORTIVE OF ITS FINDINGS THAT PETITIONERS WITHHELD/OR FAILED TO RELEASE THE CHICKS AND BY-PRODUCTS COVERED BY SETTING REPORT NOS. 108 AND 109. III. THE HONORABLE COURT OF APPEALS, AS DID THE COURT A QUO, ERRED IN NOT FINDING THAT RESPONDENTS FAILED TO RETURN TO THE PLANT TO GET THE CHICKS AND BY-PRODUCTS COVERED BY SETTING REPORT NOS. 110, 111, 112 AND 113. IV. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING, AS DID THE COURT A QUO, THAT THE PIERCING OF THE VEIL OF CORPORATE ENTITY IS JUSTIFIED, AND CONSEQUENTLY HOLDING PETITIONERS JOINTLY AND SEVERALLY LIABLE TO PAY RESPONDENTS THE SUM OF P529,644.[80]. V. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONERS HAVE VIOLATED THE PRINCIPLES ENUNCIATED IN ART. 19 OF THE NEW CIVIL CODE AND CONSEQUENTLY IN AWARDING MORAL DAMAGES, EXEMPLARY DAMAGES AND ATTORNEYS FEES. VI. THE HONORABLE COURT OF APPEALS ERRED IN NOT AWARDING PETITIONERS COUNTERCLAIM. 16 Plainly, the issues submitted for resolution are: First, did the Court of Appeals err when (a) it ruled that petitioners withheld or failed to release the chicks and by-products covered by Setting Report Nos. 108 and 109; (b) it admitted the testimony of Maura; (c) it did not find that it was respondents who failed to return to the hatchery to pick up the chicks and by-products covered by Setting Report Nos. 110 to 113; and (d) it pierced the veil of corporate fiction and held ASJ Corp. and Antonio San Juan as one entity? Second, was it proper to hold petitioners solidarily liable to respondents for the payment of P529,644.80 and other damages? In our view, there are two sets of issues that the petitioners have raised. The first set is factual. Petitioners seek to establish a set of facts contrary to the factual findings of the trial and appellate courts. However, as well established in our jurisprudence, only errors of law are reviewable by this Court in a petition for review under Rule 45. 17 The trial court, having had the opportunity to personally observe and analyze the demeanor of the witnesses while testifying, is in a better position to pass judgment on their credibility.18 More importantly, factual findings of the trial court, when amply supported by evidence on record and affirmed by the appellate court, are binding upon this Court and will not be disturbed on appeal.19 While there are exceptional circumstances20 when these findings may be set aside, none of them is present in this case. Based on the records, as well as the parties own admissions, the following facts were uncontroverted: (1) As of Setting Report No. 107, respondents were indebted to petitioners for P102,336.80 as accrued service fees for Setting Report Nos. 90 to 107;21 (2) Petitioners, based on San Juans own admission, 22 did not release the chicks and by-products covered by Setting Report Nos. 108 and 109 for failure of respondents to fully settle their previous accounts; and (3) Due to San Juans threats, respondents never returned to the hatchery to pick up those covered by Setting Report Nos. 110 to 113.23

Furthermore, although no hard and fast rule can be accurately laid down under which the juridical personality of a corporate entity may be disregarded, the following probative factors of identity justify the application of the doctrine of piercing the veil of corporate fiction 24 in this case: (1) San Juan and his wife own the bulk of shares of ASJ Corp.; (2) The lot where the hatchery plant is located is owned by the San Juan spouses; (3) ASJ Corp. had no other properties or assets, except for the hatchery plant and the lot where it is located; (4) San Juan is in complete control of the corporation; (5) There is no bona fide intention to treat ASJ Corp. as a different entity from San Juan; and (6) The corporate fiction of ASJ Corp. was used by San Juan to insulate himself from the legitimate claims of respondents, defeat public convenience, justify wrong, defend crime, and evade a corporations subsidiary liability for damages.25 These findings, being purely one of fact,26 should be respected. We need not assess and evaluate the evidence all over again where the findings of both courts on these matters coincide. On the second set of issues, petitioners contend that the retention was justified and did not constitute an abuse of rights since it was respondents who failed to comply with their obligation. Respondents, for their part, aver that all the elements on abuse of rights were present. They further state that despite their offer to partially satisfy the accrued service fees, and the fact that the value of the chicks and by-products was more than sufficient to cover their unpaid obligations, petitioners still chose to withhold the delivery. The crux of the controversy, in our considered view, is simple enough. Was petitioners retention of the chicks and by-products on account of respondents failure to pay the corresponding service fees unjustified? While the trial and appellate courts had the same decisions on the matter, suffice it to say that a modification is proper. Worth stressing, petitioners act of withholding the chicks and by-products is entirely different from petitioners unjustifiable acts of threatening respondents. The retention had legal basis; the threats had none. To begin with, petitioners obligation to deliver the chicks and by-products corresponds to three dates: the date of hatching, the delivery/pick-up date and the date of respondents payment. On several setting reports, respondents made delays on their payments, but petitioners tolerated such delay. When respondents accounts accumulated because of their successive failure to pay on several setting reports, petitioners opted to demand the full settlement of respondents accounts as a condition precedent to the delivery. However, respondents were unable to fully settle their accounts. Respondents offer to partially satisfy their accounts is not enough to extinguish their obligation. Under Article 124827 of the Civil Code, the creditor cannot be compelled to accept partial payments from the debtor, unless there is an express stipulation to that effect. More so, respondents cannot substitute or apply as their payment the value of the chicks and by-products they expect to derive because it is necessary that all the debts be for the same kind, generally of a monetary character. Needless to say, there was no valid application of payment in this case. Furthermore, it was respondents who violated the very essence of reciprocity in contracts, consequently giving rise to petitioners right of retention. This case is clearly one among the species of non-performance of a reciprocal obligation. Reciprocal obligations are those which arise from the same cause, wherein each party is a debtor and a creditor of the other, such that the performance of one is conditioned upon the simultaneous fulfillment of the other.28 From the moment one of the parties fulfills his obligation, delay by the other party begins. 29 Since respondents are guilty of delay in the performance of their obligations, they are liable to pay petitioners actual damages of P183,416.80, computed as follows: From respondents outstanding balance of P102,336.80, as of Setting Report No. 107, we add the corresponding services fees of P81,080.0030 for Setting Report Nos. 108 to 113 which had remain unpaid. Nonetheless, San Juans subsequent acts of threatening respondents should not remain among those treated with impunity. Under Article 1931 of the Civil Code, an act constitutes an abuse of right if the following elements are present: (a) the existence of a legal right or duty; (b) which is exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another. 32 Here, while petitioners had the right to withhold delivery, the high-handed and oppressive acts of petitioners, as aptly found by the two courts below, had no legal leg to stand on. We need not weigh the corresponding pieces of evidence all over again because factual findings of the trial court, when adopted and confirmed by the appellate court, are binding and conclusive and will not be disturbed on appeal.33 Since it was established that respondents suffered some pecuniary loss anchored on petitioners abuse of rights, although the exact amount of actual damages cannot be ascertained, temperate damages are recoverable. In arriving at a reasonable level of temperate damages of P408,852.10, which is equivalent to the value of the chicks and by-products, which respondents, on the average, are expected to derive, this Court was guided by the following factors: (a) award of temperate damages will cover only Setting Report Nos. 109 to 113 since the threats started only on February 10 and 11, 1993, which are the pick-up dates for Setting Report Nos. 109 and 110; the rates of (b) 41% and (c) 17%, representing the average rates of conversion of broiler eggs into hatched chicks and egg by-products as tabulated by the trial court based on available statistical data which was unrebutted by petitioners; (d) 68,784 eggs,34 or the total number of broiler eggs under Setting Report Nos. 109 to 113; and (e) P14.00 and (f) P1.20, or the then unit market price of the chicks and by-products, respectively. Thus, the temperate damages of P408,852.10 is computed as follows: [b X (d X e) + c X (d X f)] 41% X (68,784 eggs X P14) 17% X (68,784 eggs X P1.20) [P394,820.16 + P14,031.94] = = = = Temperate Damages P394,820.16 P 14,031.94 P408,852.10

At bottom, we agree that petitioners conduct flouts the norms of civil society and justifies the award of moral and exemplary damages. As enshrined in civil law jurisprudence: Honeste vivere, non alterum laedere et jus suum cuique tribuere. To live virtuously, not to injure others and to give everyone his due. 35 Since exemplary damages are awarded, attorneys fees are also proper. Article 2208 of the Civil Code provides that: In the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs, cannot be recovered, except: (1) When exemplary damages are awarded;

xxxx WHEREFORE, the petition is PARTLY GRANTED. The Decision dated April 30, 2003 of the Court of Appeals in CA-G.R. CV No. 56082 is hereby MODIFIED as follows: a. Respondents are ORDERED to pay petitioners P183,416.80 as actual damages, with interest of 6% from the date of filing of the complaint until fully paid, plus legal interest of 12% from the finality of this decision until fully paid. b. The award of actual damages of P529,644.80 in favor of respondents is hereby REDUCED to P408,852.10, with legal interest of 12% from the date of finality of this judgment until fully paid. c. The award of moral damages, exemplary damages and attorneys fees of P100,000.00, P10,000.00, P50,000.00, respectively, in favor of respondents is hereby AFFIRMED. d. All other claims are hereby DENIED. No pronouncement as to costs. SO ORDERED. Titan Ikeda Construction vs Primetown 544 S 466 G.R. No. 160972 March 9, 2010

LEIGHTON CONTRACTORS PHILIPPINES, INC., Petitioner, vs. CNP INDUSTRIES, INC., Respondent. DECISION CORONA, J.: This petition for review on certiorari1 assails the May 31, 2000 decision2 and November 20, 2003 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 52090. In 1997, Hardie Jardin, Inc. (HJI) awarded the contract for site preparation, building foundation and structural steel works of its fibre cement plant project in Barangay Tatalon in San Isidro, Cabuyao, Laguna to petitioner Leighton Contractors Philippines, Inc. 4 On July 5, 1997, respondent CNP Industries, Inc. submitted to petitioner a proposal to undertake, as subcontractor, the construction of the structural steelworks5 of HJIs fibre cement plant project. It estimated the project to require 885,009 kgs. of steel costing P44,223,909.6 On July 15, 1997, petitioner accepted respondents proposal specifying that the project cost was for the fixed lump sum price of P44,223,909.7 Respondent agreed and petitioner instructed it to commence work. Meanwhile, petitioner revised the fabrication drawings of several of the structures columns necessitating adjustments in the designs of roof ridge ventilation8 and crane beams.9 Petitioner communicated the said revisions to respondent on July 16, 1997. Respondent estimated that the said revisions required an additional 8,132 kgs. of steel costing P13,442,882. However, it did not re-negotiate the fixed lump-sum price with petitioner. On July 28, 1997, petitioner and respondent signed a sub-contract10 providing: (B) Subcontract works. To carry out complete structural steelworks11 outlined in the Sub-contract Lump Sum Price [of P44,223,909]12 in accordance with the Main Drawing13 and Technical Specifications14 and in accordance with the Main Contract, all of which are available on Site. (c) Special Conditions of the Sub-Contract. xxx xxx xxx

2. Notwithstanding the provisions of Clause 11(4) 15 of the General Conditions of the Sub-contract, this Sub-contract is on a Fixed Lump Sum basis and is not subject to re-measurement. It is the responsibility of [respondent] to derive his own quantities for the purpose of the Lump Sum Sub-contract price. No additional payments will be made to [respondent] for any errors in quantities that may be revealed during the Sub-contract period. (emphasis supplied) 16 xxx xxx xxx

Moreover, the contract required respondent to finish the project within 20 weeks from the time petitioner was allowed access to the site on June 20, 1997,17 that is, on or before November 6, 1997. On July 29, 1997, petitioner paid respondent 10% of the project cost amounting to P4,422,390.90.18 Thereafter, in a letter dated July 31, 1997, respondent informed petitioner that, due to the revisions in the designs of the roof ridge ventilation and crane beams, it incurred "additional costs" amounting to P13,442,882. Respondent submitted its weekly progress report including the progress billing. Petitioner, on the other hand, paid the billings. In its August 12, 1997 progress report,19 respondent reiterated that the roof ridge ventilation and crane beams were not included in the scope of work and consequently were not part of the sub-contract price. It likewise presented the cost estimates in the progress report. Because respondent was unable to meet the project schedule, petitioner took over the project on April 27, 1998. At the time of the takeover, respondent had already accomplished 86% of the project20 for which petitioner paid P42,008,343.69.21 Thereafter, respondent again asked petitioner to settle the "outstanding balance" of P12,364,993.94, asserting that the roof ridge ventilation and crane beams were excluded from the project cost. Petitioner refused to pay as the July 28, 1997 subcontract clearly stated that the sub-contract price was a fixed lump sum. The parties submitted the matter to the Construction Industry Arbitration Commission (CIAC) for arbitration.22 The principal issue submitted thereto was whether the cost of the additional steel used for the roof ridge ventilation and crane beams was included in the fixed lump-sum price. Respondent argued that the proposal it submitted (accepted by petitioner on July 15, 1997) excluded the roof ridge ventilation and crane beams as the fabrications drawings were "clouded" or had not been finalized when the subcontract was executed on July 28, 1997. Furthermore, respondent claimed that petitioner approved the cost estimates when Simon Bennett, petitioners quantity surveyor, signed the August 12, 1997 progress report. This proved that the said portions were "additional works" excluded from the fixed lump-sum price. Petitioner, on the other hand, asserted that the subcontract explicitly included the aforementioned works in the scope of work. Furthermore, it was not liable for the "additional costs" incurred by respondent as the subcontract clearly provided that the project was for the fixed lump-sum price of P44,223,909. It likewise denied approving respondents additional cost estimates as Bennett signed the August 12, 1997 progress report only to acknowledge its receipt. The CIAC found that the subcontract was perfected when petitioner accepted respondents proposal on July 15, 2009. Thus, because the fabrication drawings for the roof ridge ventilation and crane beams had not yet been finalized then, the same were deemed "additional works" not included in the lump-sum price. In a decision dated March 19, 1999,23 the CIAC rendered judgment in favor of respondent and ordered petitioner to pay the balance of the contract price plus additional works, the cost of arbitration and attorneys fees. Aggrieved, petitioner assailed the CIAC decision via a petition for review in the CA. 24 Aside from disputing the CIACs interpretation of the sub-contract, petitioner likewise argued that the arbitral body disregarded Article 1724 of the Civil Code. 25 In a decision dated May 31, 2000, the CA dismissed the petition and affirmed the CIAC decision in toto.26 Petitioner moved for reconsideration but it was denied in resolution dated November 20, 2003.27 Hence, this recourse. Petitioner insists that it was not liable to pay for the increase in cost due to the adjustments in the design of the roof ridge ventilation and crane beams. The subcontract clearly defined the scope of work as the construction of the structural steel works and stated that it was for a fixed lump-sum price. Furthermore, assuming arguendo that the said adjustments were indeed additional works, petitioner was not liable to pay for incremental cost since respondent did not observe the procedure mandated by Article 1724 of the Civil Code. The petition is meritorious. The parties entered into a contract for a piece of work28 whereby petitioner engaged respondent as contractor to build and provide the necessary materials for the construction of the structural steel works of HJIs fiber cement plant for a fixed lump-sum price of P44,223,909. The parol evidence rule, embodied in Section 9, Rule 130 of the Rules of Court 29 holds that when the terms of an agreement have been reduced into writing, it is considered as containing all the terms agreed upon and there can be, between the parties and their successors in interest, no evidence of such terms other than the contents of the written agreement.30 It, however, admits of exceptions such as when the parties subsequently modify the terms of their original agreement. The scope of work was defined in the subcontract as the completion of the structural steel works according to the main drawing, technical specifications and the main contract.31 Thus, to determine whether the roof ridge ventilation and crane beams were included in the scope of work, reference to the main drawing, technical specifications and main contract is necessary. The main contract32 stated that the structural steel works included Drawing Nos. P302-6200S-405 and P302-6200-S-402.33 This, according to petitioner and respondent,34 referred to the roof ridge ventilation and crane beams. Hence, the said works were clearly included in the sub-contract works. Nevertheless, respondent contends that when Bennett signed the August 12, 1997 progress report, petitioner approved the additional cost estimates, in effect modifying the original agreement in the subcontract. Respondent therefore claims an exception to the parole evidence rule.

In contracts for a stipulated price like fixed lump-sum contracts, the recovery of additional costs is governed by Article 1724 of the Civil Code.35 Settled is the rule that a claim for the cost of additional work arising from changes in the scope of work can only be allowed upon the: (1) written authority from the developer or project owner ordering or allowing the written changes in work and (2) written agreement of parties with regard to the increase in price or cost due to the change in work or design modification. Furthermore, compliance with the two requisites of Article 1724, a specific provision governing additional works, is a condition precedent for the recovery. The absence of one or the other condition bars the recovery of additional costs. Neither the authority for the changes made nor the additional price to be paid therefor may be proved by any other evidence. 36 Respondent, in this instance, presented the August 12, 1997 progress report signed by Bennett. However, respondent knew that Bennett was not authorized to order any changes in the scope of works or to approve the cost thereof. It addressed all correspondences relating to the project to (petitioners) project manager Michael Dent, not Bennett.37 Moreover, Bennett did not sign the subcontract for and in behalf of respondent but only as a witness. 38 Respondent was therefore aware of Bennetts lack of authority. In this respect, aside from respondents failure to present the documents required by Article 1724 of the Civil Code, we find that the sub-contract was never modified. Petitioner therefore cannot be liable for the additional costs incurred by respondent.1avvphi1 In a fixed lump-sum contract, the project owner agrees to pay the contractor a specified amount for completing a scope of work involving a variety of unspecified items of work without requiring a cost breakdown.39 The contractor estimates the project cost based on the scope of work and schedule and considers probable errors in measurement and changes in the price of materials. 40 By entering into a fixed lump-sum contract, respondent undertook the risk of incurring a loss due to errors in measurement. The sub-contract explicitly stated that the stipulated price was not subject to remeasurement. Since the roof ridge ventilation and crane beams were included in the scope of work, respondent was presumed to have estimated the quantity of steel (the minimum and maximum amount) needed on the said portions when it made its formal offer on July 5, 1997. Concomitantly, by the very nature of a fixed lump-sum contract, petitioner was only liable to pay the stipulated subcontract price. 41 WHEREFORE, the May 31, 2000 decision and November 20, 2003 resolution of the Court of Appeals in CA-G.R. SP No. 52090 affirming the March 19, 1999 decision of the Construction and Industry Arbitration Commission are hereby REVERSED and SET ASIDE. New judgment is hereby entered declaring that petitioner Leighton Contractors Philippines, Inc. is not liable for the additional costs incurred by respondent CNP Industries, Inc. SO ORDERED.