1. Ang Yu Suncion v. CA G.R. No. 109125 , Dec. 2, 1994Ang Yu Asuncion vs. CA 238 SCRA 602  | 1994

FACTSOn July 29, 1987, a Second Amended Complaint forSpecific Performance was filed by

Ang Yu Asuncion and Keh Tiong, et al., against Bobby Cu Unjieng and Jose Tan before the Regional Trial Court of Manila. The plaintiffs were tenants or lessees of residential and commercial spaces owned by defendants in Binondo, Manila. On several conditions defendants informed the plaintiffs that they are offering to sell the premises and are giving them priority to acquire the same. During negotiations, Bobby Cu Unjieng offered a price of P6- million while plaintiffs made a counter of offer of P5- million. Plaintiff thereafter asked the defendants to put their offer in writing to which the defendants acceded. In reply to defendants’ letter, plaintiffs wrote, asking that they specify the terms and conditions of the offer to sell. When the plaintiffs did not receive any reply, they sent another letter with the same request.Since defendants failed to specify the terms and conditions of the offer to sell and because of information received that the defendants were about to sell the property, plaintiffs were compelled to file the complaint to compel defendants to sell the property to them. The court dismissed the complaint on the ground that the parties did not agree upon the terms and conditions of the proposed sale, hence, there was no contact of sale at all.  On November 15, 1990, the Cu Unjieng spouses executed a Deed of Sale transferring the property in question to Buen Realty and Development Corporation. Buen Realty, as the new owner of the subject property, wrote to the lessees demanding the latter to vacate the premises. In its reply, it stated that Buen Realty and Development Corporation brought the property subject tothe notice of lis pendens.

ISSUECan Buen Realty be bound by the writ of execution by virtue of the notice of lis

pendens?

RULINGNo. An obligation is a juridical necessity to give, to do or not to do (Art. 1156, Civil

Code). The obligation is upon the concurrence of the essential elements thereof, viz: (a) thevinculum juris or juridical tie which is the efficient cause established by the various sources of obligations; (b) the object which is the prestation or conduct, required to observed; and (c) thesubject-persons who, viewed demandability of the obligation are the active (oblige) and the passive (obligor) subjects.  Among the sources of an obligation is a contract (Art. 1157), which is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. A contract undergoes various stages that include its negotiation or preparation, its perfection and, finally, its consummation. Until the contract is perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation. In sales, particularly, to which the case at bench belongs, the contract is perfected when a person, called the seller, obligates himself, for a price certain, to deliver and to transfer ownership of a thing or right to

another, called the buyer, over which the latter agrees. The registration of lis pendens must be independently addressed in appropriate proceedings. Therefore, Buen Realty cannot be held subject to the writ of execution issued by the respondent Judge, let alone ousted from the ownership and possession of the property, without first being duly afforded its day in court.

2. GASCC v. CA

G.R. No. 105774            April 25, 2002Lessons Applicable: Notice of Dishonor (Negotiable Instruments Law)

FACTS: March 17, 1981: Great Asian BOD approved a resolution authorizing its

Treasurer and General Manager, Arsenio Lim Piat, Jr. (Arsenio) to secure a loan, not exceeding 1M, from Bancasia

February 10, 1982: Great Asian BOD approved a resolution authorizing Great Asian to secure a discounting line with Bancasia in an amount not exceeding P2M

also designated Arsenio as the authorized signatory to sign all instruments, documents and checks necessary to secure the discounting line

Tan Chong Lin signed 2 surety agreements in favor of Bancasia Great Asian, through its Treasurer and General Manager Arsenio, signed 4 Deeds

of Assignment of Receivables (Deeds of Assignment), assigning to Bancasia 15 postdated checks:

9 checks were payable to Great Asian 3 were payable to "New Asian Emp." 3 were payable to cash  various customers of Great Asian issued these postdated checks

in payment for appliances and other merchandise. Deed of Assignments of assignment: January 12, 1982: 4 post-dated checks of P244,225.82 maturing March 17,

1982, 2 were dishonored  January 12, 1982:  4 post-dated checks of P312,819 maturing April 1,

1982, all 4 were dishonored  February 11, 1982: 8 postdated checks of P344,475 maturing April 30,

1982, all 8 checks were dishonored March 5, 1982: 1 postdated checks of P200K maturing March 18, 1982

also dishonored Great Asian assigned the postdated checks to Bancasia at a discount rate of less than 24% of

the face value of the checks

Arsenio endorsed all the 15 dishonored checks by signing his name at the back of the checks

8 dishonored checks bore the endorsement of Arsenio below the stamped name of "Great Asian Sales Center"

7 dishonored checks just bore the signature of Arsenio The drawee banks dishonored the 15 checks on maturity when deposited for

collection by Bancasia, with any of the following as reason for the dishonor:  "account closed" "payment stopped" "account under garnishment" "insufficiency of funds March 18, 1982: Bancasia's lawyer,Atty. Eladia Reyes, sent by registered mail to

Tan Chong Lin a letter notifying him of the dishonor and demanding payment from him 

June 16, 1982: Bancasia sent by personal delivery a letter to Tan Chong Lin May 21, 1982: Great Asian filed a case before the CFI for insolvency listing

Bancasia as one of the creditors of Great Asian in the amount of P1,243,632.00 June 23, 1982: Bancasia filed a complaint for collection of a sum of money

against Great Asian and Tan Chong Lin CFI: favored Bancasia ordering Great Asian and Tan Chong Lin to pay jointly

and severally CA: deleted atty. feesISSUE: W/N Bancasia and Tang Chon Lin should be held liable under the Civil Code because it was a separate and distinct deed of assignment

HELD: YES.  Affirmed with Modification As plain as daylight, the two board resolutions clearly authorize Great Asian to

secure a loan or discounting line from Bancasia Clearly, the discounting arrangements entered into by Arsenio under the Deeds of

Assignment were the very transactions envisioned in the two board resolutions of Great Asian to raise funds for its business.

There is nothing in the Negotiable Instruments Law or in the Financing Company Act (old or new), that prohibits Great Asian and Bancasia parties from adopting the with recourse stipulation uniformly found in the Deeds of Assignment. Instead of being negotiated, a negotiable instrument may be assigned.

the endorsement does not operate to make the finance company a holder in due course. For its own protection, therefore, the finance company usually requires the

assignor, in a separate and distinct contract, to pay the finance company in the event of dishonor of the notes or checks. (only security)

Otherwise, consumers who purchase appliances on installment, giving their promissory notes or checks to the seller, will have no defense against the finance company should the appliances later turn out to be defective

As endorsee of Great Asian, Bancasia had the option to proceed against Great Asian under theNegotiable Instruments Law. Had it so proceeded, the Negotiable Instruments Law would have governed Bancasia’s cause of action. Bancasia, however, did not choose this route. 

Instead, Bancasia decided to sue Great Asian for breach of contract under the Civil Code, a right that Bancasia had under the express with recourse stipulation in the Deeds of Assignment.

Great Asian, after paying Bancasia, is subrogated back as creditor of the receivables. Great Asian can then proceed against the drawers who issued the checks. Even if Bancasia failed to give timely notice of dishonor, still there would be no prejudice whatever to Great Asian.

Under the Negotiable Instruments Law, notice of dishonor is not required if the drawer has no right to expect or require the bank to honor the check, or if the drawer has countermanded payment

In the instant case, all the checks were dishonored for any of the following reasons: 

"account closed"  "account under garnishment"  "insufficiency of funds" drawers had no right to expect or require the bank to honor

the checks "payment stopped" drawers had countermanded payment Moreover, under common law, delay in notice of dishonor, where such notice is

required, discharges the drawer only to the extent of the loss caused by the delay. Again, we reiterate that this obligation of Great Asian is separate

and distinct from its warranties as indorser under the Negotiable Instruments Law.Civil Code are applicable and not the Negotiable Instruments Law.

separate Deeds of Assignment - provisions of the Civil Code are applicable (NOT Negotiable Instruments Law)

Great Asian’s four contracts assigning its fifteen postdated checks to Bancasia expressly stipulate the suspensive condition that in the event the drawers of the checks fail to pay, Great Asian itself will pay Bancasia

The stipulations in the Surety Agreements undeniably mandate the solidary liability of Tan Chong Lin with Great Asian

Moreover, the stipulations in the Surety Agreements are sufficiently broad, expressly encompassing "all the notes, drafts, bills of exchange, overdraft and other obligations of every kind which the PRINCIPAL may now or may hereafter owe the Creditor"

3. The Office of the Solicitor General v. Ayala landCheck Photos IPAD

4. G.R. No. 200895               July 31, 2013

ROLANDO M. MENDIOLA, Petitioner, vs.COMMERZ TRADING INT'L., INC., Respondent.

D E C I S I O N

CARPIO, J.:

The Case

This petition for review1 assails the 30 January 2012 Decision2 of the Court of Appeals in CA-G.R. SP No. 110491. The Court of Appeals reversed the 27 May 2009 Decision3 of the Regional Trial Court, Branch 255, Las Pifias City, which affirmed the 6 October 2008 Decision4 of the Metropolitan Trial Court, Branch 79, Las Pifias City, in a collection suit filed by petitioner Rolando M. I'vfendiola against respondent Commerz Trading Int'l., Inc.

The Facts

Genicon, Inc. (Genicon) is a foreign corporation based in Florida, United States of America, which designs, produces, and distributes "patented surgical instrumentation focused exclusively on laparoscopic surgery."5Petitioner, a physician by profession, entered into a contract with Genicon to be its exclusive distributor of Genicon laparoscopic instruments in the Philippines, as evidenced by a Distribution Agreement dated 18 July 2007.6 Petitioner, in turn, entered into a Memorandum of Agreement (MOA)7 with respondent to facilitate the marketing and sale of Genicon laparoscopic instruments in the Philippines. Under the MOA, respondent would be compensated for P100,000.00 "for the use of respondent’s name, office, secretary, invoices, official receipts and facilities x x x for every sale of a complete set of Genicon laparoscopic instruments x x x."8

Respondent sent a price quotation to Pampanga Medical Specialist Hospital, Inc. (PMSHI), which thereafter agreed to purchase a Genicon laparoscopic instrument for Two Million Six Hundred Thousand Pesos (P2,600,000.00). Then, petitioner ordered the laparoscopic instrument from Genicon, which in turn shipped the medical equipment to the Philippines. Respondent undertook the release of the laparoscopic instrument from the Bureau of Customs and subsequently delivered the same to PMSHI.

PMSHI made the following payments to respondent: (1) P520,000.00 per PMSHI Check Voucher No. 2448 dated 1 February 2007, and to which respondent issued Official Receipt No. 11148; and (2) P2,080,000.00 per PMSHI Check Voucher No. 2419 dated 6 February 2007. From the total amount of P2,600,000.00 paid by PMSHI to respondent, the latter’s president Joaquin Ortega deducted P100,000.00 as respondent’s compensation for its services pursuant to the MOA. Respondent remitted to petitioner P2,430,000.00 only, instead of P2,500,000.00.

Despite petitioner’s repeated demands, respondent failed to remit the remaining balance of P70,000.00 from the proceeds of the sale of the laparoscopic instrument. Consequently, petitioner filed a collection suit against respondent with the Metropolitan Trial Court, Branch 79, Las Piñas City (MeTC).

In its Answer, respondent countered that petitioner had no cause of action because it did not owe petitioner any amount. Respondent alleged that the case was a pre-emptive measure taken by petitioner in anticipation of the collection suit respondent would file for over payment of the purchase price of the laparoscopic instrument. Respondent claimed that the unremitted amount of P70,000.00 represented a portion of the P267,857.14 Expanded Value Added Tax (EVAT) which was erroneously and inadvertently credited or remitted by respondent to petitioner’s account.

The MeTC rendered its Decision of 6 October 2008 in favor of petitioner. The MeTC held that "respondent has no right to retain the P70,000.00 x x x. Respondent had been duly compensated for its work done. It is not its duty to pay any government taxes in whatever form because it is clearly a responsibility of the buyer."9

The dispositive portion of the MeTC decision reads:

WHEREFORE, the Court hereby renders judgment in favor of the plaintiff ordering the defendant to pay plaintiff the sum of P70,000.00 as actual damages plus 12% per annum beginning June, 2007 until the amount is fully paid. The defendant is also ordered to pay plaintiff reasonable attorney’s fees of P20,000.00 and costs of suit.

SO ORDERED.10

Respondent appealed to the Regional Trial Court, Branch 255, Las Piñas City (RTC). In its 27 May 2009 Decision, the RTC sustained the MeTC, holding that the MOA is the law between the parties. Under the MOA, "there was no right or authority given to respondent to retain a portion of the proceeds of any sale coursed through or obtained by it for taxation purposes."11

The dispositive portion of the RTC decision reads:

WHEREFORE, the foregoing considered, the herein appeal of the defendant-appellant Commerz Trading International, Inc. is DENIED for lack of merit. Accordingly, the DECISION dated 06 October 2008 rendered by the Metropolitan Trial Court of Las Piñas City, Branch 79 in Civil Case No. 7645 is affirmed in toto.

SO ORDERED.12

Respondent appealed to the Court of Appeals, which reversed the RTC in its Decision of 30 January 2012.

Hence, this petition.

The Ruling of the Court of Appeals

The Court of Appeals reversed the RTC and ruled in favor of respondent. The Court of Appeals found respondent, a VAT-registered entity, as the seller/importer of the laparoscopic instrument and thus, is the person liable for the payment of the VAT. The Court of Appeals held that respondent "made the sale to PMSHI, x x x and thus is liable for the payment of EVAT albeit respondent is, per the Memorandum of Agreement, only the marketer of the medical product."13 Assuming that the importation of the laparoscopic instrument was the taxable transaction, "it was not disputed x x x that it was respondent which arranged the importation of the medical equipment from Genicon in the U.S.A. and undertook the processing and release of the same before the Bureau of Customs."14

The Court of Appeals likewise reversed the RTC’s award of interest and attorney’s fees.1âwphi1 The dispositive portion of the Court of Appeals’ decision reads:

WHEREFORE, the instant Petition is GRANTED. The Decision dated 27 May 2009 of the Regional Trial Court is REVERSED and SET ASIDE.

Respondent Rolando M. Mendiola is hereby ORDERED to reimburse the Petitioner the sum of P197,857.14 within five (5) days from receipt of finality of this decision. Petitioner is thereafter ORDERED to reflect the reimbursement in its EVAT Return for the current quarter to be submitted to the Bureau of Internal Revenue and pay the same to the latter’s authorized collecting agency immediately within the next monthly pay period as provided under the NIRC.

Petitioner and Respondent are ORDERED to submit their compliance thereto within fifteen (15) days from receipt of finality of this decision.

SO ORDERED.15

The Issues

Petitioner raises the following issues:

1. Whether respondent has the right to retain the balance of the proceeds of the sale in the amount ofP70,000.00; and

2. Whether petitioner is entitled to the award of interest and attorney’s fees.

The Ruling of the Court

We deny the petition.

There is no dispute that the P70,000.00 respondent withheld from petitioner formed part of the proceeds of the sale of the Genicon laparoscopic instrument.

Respondent, however, claims that the P70,000.00 represents a portion of the total VAT due16 from the Genicon transaction which is allegedly petitioner’s obligation under paragraph V of the MOA which states: "All taxes/expenses and expenses related to Genicon transactions shall be the responsibility of petitioner."17

Basic is the principle that a contract is the law between the parties,18 and its stipulations are binding on them, unless the contract is contrary to law, morals, good customs, public order or public policy.19 Indeed, paragraph V of the MOA obligates petitioner to pay the taxes due from the sale of the Genicon laparoscopic instrument. Petitioner admits that he is the one "responsible in the payment of the EVAT and not the respondent, who merely acted as the marketer"20 of the Genicon laparoscopic instrument. Hence, as between petitioner and respondent, petitioner bears the burden for the payment of VAT.

The question now is whether respondent is authorized under the MOA to withhold a specific amount from the proceeds of the sale of the Genicon laparoscopic instrument as tax due from petitioner.

The MOA is silent on this matter. The MOA does not expressly allow respondent to collect or withhold from petitioner any amount from the sale of the Genicon laparoscopic instrument for taxation purposes.

However, the same agreement (1) allows respondent to issue official receipts on which VAT should have been computed and included in the purchase price, and (2) obligates petitioner to pay any tax due on the sale.

Under the MOA, petitioner requested respondent "to use the latter’s name, office, secretary, invoice, official receipts and its facilities for the distribution and sale of Genicon products in the Philippines."21 Petitioner, who is a physician, made such request "solely for ethical and personal reasons."22 Accommodating and agreeing to petitioner’s request, respondent, a VAT-registered entity, issued Official Receipt No. 11148 to evidence the sale of the Genicon laparoscopic instrument to PMSHI, and the payment by the latter of the purchase price. PMSHI, in turn, issued two checks in favor of respondent totaling P2,600,000.00.23

Clearly, based on respondent's records, it would appear that (1) it received P2,600,000.00 from PMSHI, which amount is subject to VAT as found by its external auditor and (2) it is the seller of the Genicon laparoscopic instrument. Therefore, petitioner should pay the VAT due on the sale, which would be computed based on the official receipt issued by respondent. To hold otherwise clearly operates to defraud the. government of the correct amount of taxes due on the sale, and contravenes the Civil Code provision mandating "every person x x x to act with justice, give everyone his due, and observe honesty and good faith."24 While by agreement of the parties petitioner bears the economic burden for paying the VAT, the legal liability to pay the same to the BIR falls on respondent.

Thus, since respondent, as the seller on record, will be liable for the payment of the VAT based on the official receipt it issued, we shall allow respondent to retain the P70,000.00 only for the purpose of paying forthwith, if it has not done so yet, this amount to the BIR as the estimated tax due on the subject sale. There remains a dispute on the computation of the correct amount of VAT because respondent allegedly issued an official receipt25 only in the amount of P520,000.00, instead of the P2,600,000.00 purchase price. Considering this, and the foregoing findings, the BIR must be informed of this Decision for its appropriate action.

We find the resolution of the other issue unnecessary.

WHEREFORE, we DENY the petition.

Let a copy of this Decision be forwarded to the Bureau of Internal Revenue for its appropriate action.

SO ORDERED.

5. NGEI MPC, inc. v. FPP

G.R. No. 184950               October 11, 2012

NGEI MULTI-PURPOSE COOPERATIVE INC. AND HERNANCITO RONQUILLO, Petitioners, vs.FILIPINAS PALMOIL PLANTATION INC. AND DENNIS VILLAREAL, Respondents.

D E C I S I O N

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the May 9, 2008 Decision1of the Court of Appeals (CA) in CA-G.R. SP No. 99552 and its October 3, 2008 Resolution2 denying the motion for reconsideration thereof.

The Facts

On December 2, 1988, the petitioner NGEI Multi-Purpose Cooperative Inc. (NGEI Coop), a duly-registered agrarian reform workers’ cooperative, was awarded by the Department of Agrarian Reform (DAR) 3,996.6940 hectares of agricultural land for palm oil plantations located in Rosario and San Francisco, Agusan del Sur.

On March 7, 1990, NGEI Coop entered into a lease agreement with respondent Filipinas Palmoil Plantation, Inc. (FPPI), formerly known as NDC Gutrie Plantation, Inc., over the subject property commencing on September 27, 1988 and ending on December 31, 2007. Under the lease agreement, FPPI (as lessee) shall pay NGEI Coop (as lessor) a yearly fixed rental of ₱635.00 per hectare plus a variable component equivalent to 1% of net sales from 1988 to 1996, and ½% from 1997 to 2007.3

On January 29, 1998, the parties executed an Addendum to the Lease Agreement (Addendum) which provided for the extension of the lease contract for another 25 years from January 1, 2008 to December 2032. The Addendum was signed by Antonio Dayday, Chairman of the NGEI Coop, and respondent Dennis Villareal (Villareal), the President of FPPI, and witnessed by DAR Undersecretary Artemio Adasa. The annual lease rental remained at 635.00 per hectare, but the package of ₱economic benefits for the bona fide members of NGEI Coop was amended and increased, as follows:

Years Covered Amount (Per Hectare)

1998 – 2002 P1,865.00

2003 – 2006 P2,365.00

2007 – 2011 P2,865.00

2012 – 2016 P3,365.00

2017 – 2021 P3,865.00

2022 – 2026 P4,365.00

2027 – 2031 P4,865.00

2032 P5,365.00 4

On June 20, 2002, NGEI Coop and petitioner Hernancito Ronquillo (Ronquillo) filed a complaint for the Nullification of the Lease Agreement and the Addendum to the Lease Agreement before the Department of Agrarian Reform Adjudication Board (DARAB) Regional Adjudicator of San Francisco, Agusan del Sur (Regional Adjudicator). The case was docketed as DARAB Case No. XIII (03)–176. The petitioners alleged, among others, that the Addendum was null and void because Antonio Dayday had no authority to enter into the agreement; that said Addendum was approved neither by the farm worker-beneficiaries nor by the Presidential Agrarian Reform Council (PARC) Executive Committee, as required by DAR Administrative Order (A.O.) No. 5, Series of 1997; that the annual rental and the package of economic benefits were onerous and unjust to them; and that the lease agreement and the Addendum unjustly deprived them of their right to till their own land for an exceedingly long period of time, contrary to the intent of Republic Act (R.A.) No. 6657, as amended by R.A. No. 7905.

In its Decision,5 dated February 3, 2004, the Regional Adjudicator declared the Addendum as null and void for having been entered into by Antonio Dayday without the express authority of NGEI Coop, and for having been executed in violation of the Rules under A.O. No. 5, Series of 1997.

FPPI filed a motion for reconsideration. The Regional Adjudicator, finding merit in the said motion, reversed his earlier decision in an Order, dated March 22, 2004. He dismissed the complaint for the nullification of the Addendum on the grounds of prescription and lack of cause of action. The Regional Adjudicator further opined that the Addendum was valid and binding on both the NGEI Coop and FPPI and, the petitioners having enjoyed the benefits under the Addendum for more than four (4) years before filing the complaint, were considered to have waived their rights to assail the agreement.

The petitioners moved for a reconsideration of the said order but the Regional Adjudicator denied it in the Order dated April 28, 2004.

On appeal, the DARAB Central Office rendered the October 9, 2006 Decision.6 It found no reversible error on the findings of fact and law by the Regional Adjudicator and disposed the case as follows:

WHEREFORE, premises considered, the instant Appeal is DENIED for lack of merit and the assailed Order dated March 22, 2004 is hereby affirmed.

SO ORDERED.7

After their motion for reconsideration was denied, the petitioners appealed to the CA via a petition for review under Rule 43 of the Rules of Court.

On May 9, 2008, the CA rendered the assailed decision upholding the validity and binding effect of the Addendum as it was freely and voluntarily executed between the parties, devoid of any vices of consent. The CA sustained its validity on the basis of the civil law principle of mutuality of contracts that the parties were bound by the terms and conditions unequivocally expressed in the addendum which was the law between them.

In dismissing the petition, the CA ratiocinated that the findings of fact of the Regional Adjudicator and the DARAB were supported by substantial evidence. Citing the case of Sps. Joson v. Mendoza,8 the CA held that such findings of the agrarian court being supported by substantial evidence were conclusive and binding on it.

The petitioners filed a motion for reconsideration of the said decision on the grounds, among others, that the findings of fact of the Regional Adjudicator were in conflict with those of the DARAB and were not supported by the evidence on record; and that the conclusions of law were not in accordance with applicable law and existing jurisprudence. The motion, however, was denied for lack of merit by the CA in its Resolution, dated October 3, 2008.

Hence, NGEI Coop and Ronquillo interpose the present petition before this Court anchored on the following GROUNDS

(I)

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE ASSAILED ADDENDUM IS VOID AB-INITIO, THE SAME HAVING BEEN EXECUTED WITHOUT THE CONSENT OF ONE OF THE PARTIES THERETO (Petitioner NGEI-MPC), BY REASON OF THE ABSENCE OF AUTHORITY TO EXECUTE THE SAME GIVEN BY SAID PARTY TO THE SUBSCRIBING INDIVIDUAL (Dayday) AND THE FACT THAT THE ADDENDUM WAS NEVER RATIFIED BY THE GENERAL MEMBERSHIP OF NGEI-MPC.

(II)

THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE ADDENDUM TO LEASE AGREEMENT IS NULL AND VOID FOR BEING CONTRARY TO LAW, MORALS, GOOD CUSTOMS, AND PUBLIC POLICY.

(III)

THE HONORABLE COURT OF APPEALS, WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION, SERIOUSLY ERRED IN HOLDING THAT THE DECISION OF THE DARAB IS SUPPORTED BY SUBSTANTIAL EVIDENCE.

(IV)

WHETHER OR NOT PETITIONERS’ CAUSE OF ACTION HAS PRESCRIBED.9

The sole issue for the Court’s resolution is whether the CA committed reversible error of law when it affirmed the decision of the DARAB which upheld the order of the Regional Adjudicator dismissing the petitioners’ complaint for the nullification of the Addendum.

The Court finds the petition bereft of merit.

The petitioners contend that the CA gravely erred in upholding the validity of the Addendum. They allege that the yearly lease rental of P635.00 per hectare stipulated in the Addendum was unconscionable because it violated the prescribed minimum rental rates under DAR A.O. No. 5, Series of 1997 and R.A. No. 3844 which mandate that the lease rental should not be less than the yearly amortization and taxes. They also argue that it constitutes an infringement on the policy of the State to promote social justice for the welfare and dignity of farmers and farm workers.

Relying on the same A.O. No. 5, the petitioners further argue that the Addendum with another 25 years of extension period was invalid for lack of approval by the PARC Executive Committee; that Antonio Dayday had no authority to enter into the Addendum on behalf of NGEI Coop; that the authority given, if any, was merely for a review of the lease agreement and to negotiate with FPPI on the specific issue of land lease rental through a negotiating panel or committee, to which Dayday was a member; that Dayday’s act of signing for, and in behalf of, NGEI Coop being ultra vires was null and void; that it was Vicente Flora who was authorized to sign the Addendum as shown in Resolution No. 1, Series of 1998; that the Addendum was not ratified through the use of attendance sheets for meal and transportation allowance; that neither did NGEI Coop and its members ratify the Addendum by their receipt of its so-called economic benefits; and that their acceptance of the benefits under the agreement was not an indication of waiver of their right to pursue their claims against FPPI considering their consistent actions to contest the subject Addendum.

The respondents, on the other hand, posit in their Comment10 and reiterated in their Memorandum11 that by raising factual issues, the petitioners were seeking a review of the factual findings of the Regional Adjudicator and the DARAB which is proscribed in a petition for review under Rule 45 of the Rules of Court. They add that the findings of the said administrative agencies, having been sustained by the CA in the assailed decision and supported by substantial evidence, should be respected.

The respondents further state that the CA correctly ruled that the Addendum was a valid and binding contract. They claim that the package of economic benefits under the Addendum was not unconscionable or contrary to public policy.

Indeed, the issues raised in this petition are mainly factual in nature. Factual issues are not proper subjects of the Court’s power of judicial review. Well-settled is the rule that only questions of law can be raised in a petition for review under Rule 45 of the Rules of Civil Procedure.12 It is, thus, beyond the Court’s jurisdiction to review the factual findings of the Regional Adjudicator, the DARAB and the CA as regards the validity and the binding effect of the Addendum. Whether or not the person who signed the Addendum on behalf of the NGEI Coop was authorized to do so; whether or not the NGEI Coop members ratified the Addendum; whether or not the rental rates prescribed in the Addendum were unconscionably low so as to be illegal, and whether or not the NGEI Coop had consistently assailed the validity of the Addendum even prior to the filing of the complaint with the Regional Adjudicator, are issues of fact which cannot be passed upon by the Court for the simple reason that the Court is not a trier of facts.

As held in the recent case of Carpio v. Sebastian,13 thus:

x x x It bears stressing that in a petition for review on certiorari, the scope of this Court’s judicial review of decisions of the Court of Appeals is generally confined only to errors of law, and questions of fact are not entertained. We elucidated on our fidelity to this rule, and we said:

Thus, only questions of law may be brought by the parties and passed upon by this Court in the exercise of its power to review. Also, judicial review by this Court does not extend to a reevaluation of the sufficiency of the evidence upon which the proper x x x tribunal has based its determination.

It is aphoristic that a re-examination of factual findings cannot be done through a petition for review on certiorari under Rule 45 of the Rules of Court because as earlier stated, this Court is not a trier of facts; it reviews only questions of law. The Supreme Court is not duty-bound to analyze and weigh again the evidence considered in the proceedings below.14

In the present case, the Court finds no cogent reason to depart from the aforementioned settled rule. The DARAB made the following findings, viz:

This Board finds that the said "Addendum to the Lease Agreement" is valid and binding to both parties. While the complainant impugns the validity of the "Addendum" based on the ground that Chairman Dayday was not authorized by the Cooperative to enter into the Agreement, based on the records, a series of Resolution was made authorizing the Chairman to enter into the said "Addendum." Granting en arguendo that Chairman Dayday was not authorized to enter into the said Agreement, the fact remains that the terms and stipulations in the Addendum had been observed and enforced by the parties for several years. Both parties have benefited from the said contract. If indeed Chairman Dayday was not authorized to enter into said Agreement, why does the Cooperative have to wait for four (4) years to impugn the validity of the Contract. Thus, the Adjudicator a quo is correct in his findings that:

As already discussed in the assailed Order, whatever procedural defects that may have attended the final execution of the addendum, these are considered waived and/or impliedly accepted or consented to by Complainants when its General assembly ratified its execution and lived with for the next four (4) years.

Further the Adjudicator a quo is correct in his findings that:

It has to be impressed once more, that the Complaint is really one for the cancellation of the Addendum to the original lease agreement. The negotiations that led to its execution is in fact a re-negotiation of the old lease contract, and not a negotiated original lease requiring the approval of the PARC Executive Committee. The re-negotiation that culminated in the execution of the addendum requires only the recommendation of the PARCCOM and the DAR, (AO No. 5, S-1997). It cannot be gainsaid, therefore, that both PARCCOM and the DAR after a long and tedious re-negotiation had no knowledge of such re-negotiation, but for reasons unknown, both have kept their peace, thus, allowing the addendum to be ratified, enforced and implemented. On the other hand, the arguments, that said addendum being void ab initio may be assailed at anytime cannot be conceded. First, because said addendum has not been officially or legally declared as a nullity. It is not nullified just because a subsequent resolution of the

Coop Board abrogated the Addendum. To annul a Contract cannot be done unilaterally, in fact the reason why this case was filed. On the contrary, having been forged in 1998, complainants waited until 2002 to assail its validity, and in the meantime, their action to do so had prescribed pursuant to Section 28 of RA 3844, the law governing leasehold. The other assigned alleged errors having been fully discussed in the assailed Order of March 22, 2004, the same need no longer be traversed.

Finding no reversible error on the finding of facts and law made by the Adjudicator a quo this Board hereby affirms the Order dated March 22, 2004.15

It is well to emphasize that the above-quoted factual findings and conclusions of the DARAB affirming those of the Regional Adjudicator were sustained by the CA in the assailed decision. The Court is in accord with the CA when it wrote:

In appeals in agrarian cases, the only function of this Court is to determine whether the findings of fact of the Department of Agrarian Reform Adjudication Board (DARAB) are supported by substantial evidence – it cannot make its own findings of fact and substitute the same for the findings of the DARAB. And substantial evidence has been defined to be such relevant evidence as a reasonable mind might accept as adequate to support a conclusion and its absence is not shown by stressing that there is contrary evidence on record, direct or circumstantial; and where the findings of the agrarian court are supported by substantial evidence, such findings are conclusive and binding on the appellate court.16

Considering that the findings of the Regional Adjudicator and the DARAB are uniform in all material respects, these findings should not be disturbed. More so in this case where such findings were sustained by the CA for being supported by substantial evidence and in accord with law and jurisprudence.

Verily, the factual findings of administrative officials and agencies that have acquired expertise in the performance of their official duties and the exercise of their primary jurisdiction are generally accorded not only respect but, at times, even finality if such findings are supported by substantial evidence.17 The factual findings of these quasi-judicial agencies, especially when affirmed by the CA, are binding on the Court. The recognized exceptions to this rule are: (1) when there is grave abuse of discretion; (2) when the findings are grounded on speculation; (3) when the inference made is manifestly mistaken; (4) when the judgment of the Court of Appeals is based on a misapprehension of facts; (5) when the factual findings are conflicting; (6) when the Court of Appeals went beyond the issues of the case and its findings are contrary to the admissions of the parties; (7) when the Court of Appeals overlooked undisputed facts which, if properly considered, would justify a different conclusion; (8) when the facts set forth by the petitioner are not disputed by the respondent; and (9) when the findings of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on record.18 None of these circumstances is obtaining in this case.

The Court understands the predicament of these farmer-beneficiaries of NGEI Coop. Under the prevailing circumstances, however, it cannot save them from the consequences of the binding lease agreement, the Addendum. The petitioners, having freely and willingly entered into the Addendum with FPPI, cannot and should not now be permitted to renege on their compliance under it, based on the supposition that its terms are unconscionable. The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them.19

It is basic that a contract is the law between the parties. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. Unless the stipulations in a contract are contrary to law, morals, good customs, public order or public policy, the same are binding as between the parties.20 The Court quotes with approval the ruling of the CA on this matter, to wit:

Indeed, the terms and conditions between the parties unequivocally expressed in the Addendum must govern their contractual relations for these serve as the terms of the agreement, which are binding and conclusive on them.

Consequently, petitioners cannot unilaterally change the tenor of the terms and conditions of the Addendum or cancel it altogether after having gone through the solemnities and formalities for its perfection. In fact, the Addendum had been consummated upon performance by the parties of the prestations and after they had already reaped the mutual benefits arising from the contract. Mutuality is one of the characteristics of a contract, and its validity or performance or compliance cannot be left to the will of only one of the parties. It is a long established doctrine that the law does not relieve a party from the effects of an unwise, foolish, or disastrous contract, entered into with all the required formalities and with full awareness of what he was doing.21(Underscoring supplied)

It must be stressed that the Addendum was found to be a valid and binding contract. The petitioners failed to show that the Addendum’s stipulated rental rates and economic benefits violated any law or public policy. The Addendum should, therefore, be given full force and effect, without prejudice to a renegotiation of the terms of the leasehold agreement in accordance with the provisions of Administrative Order No. 5, Series of 1997, governing their Addendum, as regards the contracting procedures and fixing of lease rental in lands planted to palm oil trees, specifically:

IV. POLICIES AND GOVERNING PRINCIPLES

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D. Renegotiation of the amount of lease rental shall be undertaken by the parties every five (5) years, subject to the recommendation of the PARCCOM and review by the DAR.

Lease rental on the leased lands may be renegotiated by the contracting parties even prior to the termination of the contract on the following grounds: (a) domestic inflation rate of seven percent (7%) or more; (b) drop in the world prices of the commodity by at least twenty percent (20%); and (c) other valid reasons.

E. Any conflict that may arise from the implementation of the lease contract shall be referred to the PARCCOM by any of the contracting parties for mediation and resolution. In the event of failure to resolve the issue, any of the parties may file an action with the Department of Agrarian Reform Adjudication Board (DARAB) for adjudication pursuant to Section 50 of R.A. No. 6657.

Anent the issue of prescription, Section 38 of R.A. No. 3844 (The Agricultural Land Reform Code), the applicable law to agricultural leasehold relations, provides:

Section 38. Statute of Limitations - An action to enforce any cause of action under this Code shall be barred if not commenced within three years after such cause of action accrued. (Underscoring supplied)

On the basis of the aforequoted provision, the petitioners' cause of action to have the Addendum, an agricultural leasehold arrangement between NGEI Coop and FPPI, declared null and void has already prescribed. To recall, the Addendum was executed on January 29, 1998 and the petitioners tiled their complaint with the Regional Adjudicator on June 20, 2002, or more than four years after the cause of action accrued. Evidently, prescription has already set in. Inasmuch as the validity of the Addendum was sustained by the CA as devoid of any vice or defect, Article 1410 of the Civil Code on imprescriptibility of actions for declaration of inexistence of contracts, relied upon by the petitioners, is not applicable. 1âwphi1

On a final note, the petitioners faulted the CA for failure to re-assess the facts of the case despite the conflicting findings of the Regional Adjudicator and the DARAB. Such imputation of error deserves no merit because, in truth and in fact, no such conflict exists. Contrary to the petitioners' claim, both tribunals declared the validity of the Addendum being in existence for several years and on the basis that the petitioners had enjoyed the benefits accorded under it, and both raised the ground of prescription of the petitioners' cause of action pursuant to Section 38, R.A. No. 3844.

All told, the Court, after a careful review of the records, finds no reversible error in the assailed decision of the CA .

WHEREFORE, the petition is DENIED.

SO ORDERED.

6.