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Prof. Joselito Guianan Chan's The Labor Code of the Philippines, Annotated Labor Standards & Social Legislation Volume I of a 3-Volume Series 2019 Edition (3rd Revised Edition)
 

 
Chan Robles Virtual Law Library
 









 

 
UNITED STATES SUPREME COURT JURISPRUDENCE
 

 
PHILIPPINE SUPREME COURT JURISPRUDENCE
 

   
June-2009 Jurisprudence                 

  • A.C. No. 5688 - Felipe E. Abella v. Atty. Asteria E. Cruzabra

  • A.C. No. 6674 - Robert Bernhard Buehs v. Atty. Inocencio T. Bacatan

  • A.C. No. 7036 - Judge Lily Lydia A. Laquindanum v. Atty. Nestor Q. Quintana

  • A.C. No. 8010 - KeldStemmerik, represented by Attys. Herminio. Liwanag and Winston P.L. Esguerra v. Atty. Leonuel N. Mas

  • A.M. No. MTJ-05-1588 Formerly No. 04-9-511-RTC - Judge Divina Luz P. Aquino-Simbulan v. Presiding Judge Nicasio Bartolome, et al.

  • A.M. No. MTJ-06-1659, A.M. NO. P-06-2254 and A.M. NO. MTJ-09-1730 - Anna Jane D. Lihaylihay, etc. v. Judge Alejandro Canda etc. / Judge Alejandro Canda, etc., v. Anna Jane D. Lihaylihay

  • A.M. No. P-04-1830 Formerly A.M. No. 04-6-151-MCTC - Office of the Court Administrator v. Sylvia Canque etc.

  • A.M. No. P-07-2400 Formerly OCA IPI No. 07-2589-P - Judge Isidra A. Arganosa-Maniego v. Rogelio T. Salinas etc.

  • A.M. No. P-08-2434 - Lyn L. Llamasares, etc. v. Mario M. Pablico, etc.

  • A.M. No. P-08-2450 Formerly OCA IPI No. 00-27-CA-P - Aurora B. Go v. Margarito A. Costela, Jr., etc.

  • A.M. No. P-08-2579 - Odaline B. Narag v. Maritess R. Manio, Court Interpreter III, RTC of Tuguegarao City, Branc 4

  • A.M. No. RTJ-06-1984 Formerly OCA IPI No. 05-2255-RTJ - Valeriano F. Nu es v. Judge Francisco B. Ibay, etc.

  • A.M. No. RTJ-06-1991 - Office of the Court Administrator v. Hon. Tibing A. Asaali

  • A.M. No. RTJ-07-2063 Formerly OCA I.P.I. No. 07-2588-RTJ, A.M. NO. RTJ-07-2064 : June 26, 2009 Formerly OCA I.P.I. No. 07-2608-RTJ and A.M. NO. RTJ-07-2066 : June 26, 2009 Formerly OCA I.P.I. No. 07-2628-RTJ - Republic of the Philippines v. Judge Ramon S

  • G.R. No. 147097 - Carmelo Lazatin, et al. v. Hon. Aniano A. Disierto, et al.

  • G.R. No. 147925-26 - Elpidio S. Uy, etc. v. Public Estates Authority and the Honorable Court of Appeals

  • G.R. No. 149273 - Beinvenido C. Gilles v. Court of Appeals, Schema Konsult and Edgardo Abores

  • G.R. No. 150677 - Renato Reyes So v. Lorna Valera

  • G.R. No. 152889 - Enrique V. Viudez v. Hon Basilio R. Gabo, Jr. etc., et al.

  • G.R. No. 152928 - Metropilitan Bank and Trust Company v. National Labor Relations Commission, Felipe A. Patag and Bienvenido C. Flora

  • G.R. No. 154717 - Bonifacio M. Mejillano v. Enrique Lucillo, et al.

  • G.R. No. 155502 - Sarabia Optical and Vivian Sarabia-Orn v. Jeanet B. Camacho

  • G.R. No. 155504 - Professional Video, Inc. v. Technical Education and Skills Development Authority

  • G.R. No. 156009 - Rommel C. Briones v. People of the Philippines

  • G.R. No. 157384 - Erlinda I. Bildner and Maximo K. Illusorio v. Erlinda K. Illusorio, Ramon K. Illusorio, Marrietta K. Illusorio, Sheree K. Illusorio, Cecilia A. Bisu a, and Atty. Manuel R. Singson

  • G.R. No. 154211-12, G.R. NO. 158252, G.R. NO. 166200, G.R. NO. 168272, G.R. NO. 170683 and G.R. NO. 173392 - Spouses Ernesto F. Curata, et al. v. Philippine Ports Authority, Philippine Ports Authority v. Remedios Rosales-Bondoc, et al., Philippine Ports A

  • G.R. No. 157714 - Municipality of Pateros Vs.The Honorable Court of Appeals, et al.

  • G.R. No. 158093 - Alberto Imperial v. Hon. Court of Appeals and the Republic of the Philippines

  • G.R. No. 158703 - Technological Institute of the Philippines Teachers and Employees Organization and its member Magdalena T. Salon v. the Honorable Court of Appeals, et al.

  • G.R. No. 158820-21 - Stronghold Insurance, Company, Inc. v. Tokyu Construction Company, Ltd.

  • G.R. No. 158877 - Joven De Grano, etc., v. Gregorio Lacaba

  • G.R. No. 159186 - Jesse Y Yap v. Hon. Monico G. Cabales, et al.

  • G.R. No. 159517-18 - Hilario P. Soriano and Rosalinda Ilagan v. People of the Philippines, Bangko Sentral ng Pilipinas, adn Philippine Deposit Insurance Corporation

  • G.R. No. 159755 - Grace Gosiengfiao Guillen, etc. v. The Court of Appeals, et al.

  • G.R. No. 160080 - National Power Corporation v. Carlos Villamor

  • G.R. No. 161027 - Francisco G. Calma v. Arsenio Santos, et al.

  • G.R. No. 161034 - Zenaida Acosta, et al. v. Trinidad Salazar, et al.

  • G.R. No. 161366 - Sycip, Gorres, Velayo, & Company v. Carol De Raedt

  • G.R. No. 161407 - Joaquin Villegas, et al. v. Rural Bank of Tanay, Inc.

  • G.R. No. 161533 - Filomena Soneja v. Honorable Court of Appeals and Ramon Saura, Jr.

  • G.R. No. 161794 - Nestor J. Balladares, etal., v. Peak VenturesCorporation, et al.

  • G.R. No. 162103 - Marylou B. Tolentino, M.D. v. Shenton Realty Corp.

  • G.R. No. 162286 - Glen Pascual Y Malumbay, et al. v. People of the Philippines

  • G.R. No. 162374 - Rodolfo B. Arce o v. Government Serivec Insurance System

  • G.R. No. 162538 - Nissan North Edsa Balintawak, Quezon City v. Angelito Serrano, Jr. and Edwin Tagulao

  • G.R. No. 163244 - Spouses Jose T. Valenzuela & Gloria Valenzuela v. Kalayaan Development and Industrial Corporation

  • G.R. No. 163868 - Romualdo Pagsibigan v. People of the Philippines and Eleazar Cabasal

  • G.R. No. 163924 - ''J'' Marketing Corporation, represented by its Branch Manager Elmundo Dador

  • G.R. No. 164423 - Triumph International (PHILS.), Inc., v. Ramon L. Apostol, et al.

  • G.R. No. 164584 - Philip Mattews v. Benjamin A. Taylor and Joselyn C. Taylor

  • G.R. No. 164631 - Land Bank of the Philippines v. Rene Ralla Belista

  • G.R. No. 164648 - Eric L. Lee v. Hon. Henry J. Trocino, et al.

  • G.R. No. 165407 - Herminigildo Inguillom, et al. v. First Philippine Scales, Inc., et al.

  • G.R. No. 165411 - Wilma Tabaniag v. People of the Philippines

  • G.R. No. 165424 - Lester Benjamin S. Halili v. Chona M. Santos-Halili and the Republic of the Philippines

  • G.R. No. 165742 - Tri-Corp Land & Development, Inc. represented by Solita S. Jimenez-Paulino v. Court of Appeals and Greystone Corporation

  • G.R. No. 165756 - Hotel Enterprises of the Philippines, Inc., etc. v. Samahan ng mga Manggagawa sa Hyatt-National Union of Workers in the Hotel Restaurant, etc.

  • G.R. No. 165781 - Raul S. Tello v. People of the Philippines

  • G.R. No. 165895 - Terlyngrace Rivera v. Florencio L. Vargas

  • G.R. No. 166036 - Nena A. Cari o v. Estrella M. Espinosa, represented by her atty-in-fact Manuel P. Mejia, Jr.

  • G.R. No. 166393 - Cristina F. Reillo, et al. v. Galicano E. San Jose etc., et al.

  • G.R. No. 166498 - Hon. Secretary of Finance, et al. v. La Suerte Cigar and Cigarette Factory, et al.

  • G.R. No. 166518 - National Housing Authority v. Heirs of Isidro Guivelorido, et al.

  • G.R. No. 167017 - Serafin Cheng v. Spouses Vittorio and Ma. Helen Donini

  • G.R. No. 167420 - Allied Banking Corporation v. Ruperto Jose H. Mateo, represented by Warlito Mateo, as Attorney-in-fact

  • G.R. No. 167710 - People of the Philippines v. joven De Grano, et al.

  • G.R. No. 168039 - Office of the Ombudsman v. Fernando J. Beltran

  • G.R. No. 168184 - Republic of the Philippines v. Ruby Lee Tsai

  • G.R. No. 168215 - LBC Express Metro Manila, Inc. and Lorenzo A. Ni o v. James Mateo

  • G.R. No. 168332 and G.R. NO. 169053 - Teodoro O. Arcenas, Jr., et al. v. Hon. Sixto Marella, Jr., Presiding Judge Branch 138, RTC, Makati City and Ana Maria Koruga

  • G.R. No. 168660 - Hilarion, Jr. and Enrico Orendain, represented by Fe Orendain v. Trusteeship of the Estate of Do a Margarita Rodriquez

  • G.R. No. 168693 - The People of the Philippines v. Jessie Mariano y Isla

  • G.R. No. 168848 and G.R. NO. 169019 - Heirs of the late Jose Luzuriaga, etc., v. Republic of the Philippines thru the Office of the Solicitor General/Heirs of the late Jose Luzuriaga, etc., v. Republic of the Philippines thru the Office of the Solicitor G

  • G.R. No. 168859 and G.R. NO. 168897 - United Coconut Planters Bank, et al. v. E. Ganzon, Inc./E. Ganzon, Inc. v. united Coconut Planters Bank, et al.

  • G.R. No. 168863 - Hi-Yield Realty, Incorporated v. Hon. Court of Appeals, et al.

  • G.R. No. 169173 - M+W Zander Philippines, Inc. and Rolf Wiltschek v. Trinidad M. Enriquez

  • G.R. No. 169276 - Dionosia Monis Lagunilla, et al., v. Andrea Monis Velasco, et al.

  • G.R. No. 169589 - Joaquin Soliman, et al., v. Pampanga Sugar Development Company (PASUDECO), Inc., and Gerry Rodriguez

  • G.R. No. 170126 - Philippines Veterans Bank v. Solid Homes, Inc.

  • G.R. No. 170182 - Leonardo Tarona, et al. v. Court of Appeals, et al.

  • G.R. No. 170222 - Edgar Esqueda v. People of the Philippines

  • G.R. No. 170312 - Philippine Basketball Association v. Honorable Manuel B. Gaite, in his capacity as Deputy Secretary for Legal Affairs of the Office of the President, et al.

  • G.R. No. 170447 - Bienvenido Di o, et al. v. Pablo Olivarez

  • G.R. No. 170782 - Siain Enterprises, Inc. v. Cupertino Realty Corp. and Edwin R. Catacutan

  • G.R. No. 171137 - Philippine Commericial International Bank v. Sps. Wilson Dy Hong Pi and Lolita Dy and Sps Primo Chuyaco, Jr. and Chuyaco

  • G.R. No. 171188 - People of the Philippines v. Jessie B. Castillo and Felicito R. Mejia

  • G.R. No. 171453 - People of the Philippines v. Manuel Delpino

  • G.R. No. 171535 - Mactan-Ceby International Airport Authority v. Sps. Edito and Merian Tirol and Sps. Alejandro and Mirando Ngo

  • G.R. No. 171762 - Lynn Maagad and Director of Lands v. Juanito Maagad

  • G.R. No. 171763 - Maria Luisa Park Association, Inc., v. Samantha Marie T. Almendras and Pia Angela T. Almendras

  • G.R. No. 172045 - Commissioner of Internal Revenue v. First Express Pawnshop Company, Inc.

  • G.R. No. 172198 - Ma. Lourdes C. De Castro v. Crispino De Castro, Jr., Office of the City Prosecutor for Manila, and the Office of the Solicitor General

  • G.R. No. 172367 - Felicidad Dadizon, et al. v. Socorro Bernadas, et al.

  • G.R. No. 172400 - Zosimo Octavio and Jesus Albona (substituted by his wife, Violeta Albona) v. Enrico R. Perovano

  • G.R. No. 172547 - Precy Bunyi and Mila Bunyi v. Fe S. Factor

  • G.R. No. 172785-86 - Cruzvale, Inc. v. Jose Armando L. Eduque, et al.

  • G.R. No. 172925 - Government Service Insurance System v. Jaime K. Ibarra

  • G.R. No. 172931 - Republic of the Philippines v. RTC Br. 18, Roxas City, Capiz, et al.

  • G.R. No. 174141 - Pentagon Steel Corporation v. Court of Appeals, et al.

  • G.R. No. 174286 - Traders Royal Bank v. Cuison Lumber Co., Inc., Josefa Jerodias Vda. Cuison

  • G.R. No. 174316 - Teodoro S. Miranda, Jr. v. Asian Terminals, Inc. and Court of Appeals

  • G.R. No. 174862 - People of the Philippines v. Yvonne Sevilla y Caballero

  • G.R. No. 175375 - Conrado O. Lasquite and Teodora I. Andrade v. Victory Hills, Inc.

  • G.R. No. 175788 - Enriquita Angat and the Legal Heirs of Federico Angat v. Republic of the Philippines

  • G.R. No. 176015 - Mercedita T. Guasch v. Arnaldo Dela Cruz

  • G.R. No. 176135 - Carlos Irwin G. Baldo v. Commission on Elections. et al.

  • G.R. No. 176157 Formerly G.R. No. 155937 - People of the Philippines v. Elpidio Impas y Polbera

  • G.R. No. 176380 - Pilipinas Shell Petroleum Corporation v. Commissioner of Customs

  • G.R. No. 176530 - Sps. Constante Agbulos and Zanaida Padilla Agbulos v. Nicasio Gutierrez, Josefa Gutierrez and Elena G. Garcia

  • G.R. No. 176744 - People of the Philippines v. Adelado Anguac y Ragadao

  • G.R. No. 177011 - Joseph Peter Sison, et al. v. Rogelio Tablang

  • G.R. No. 177148 - PEOPLE OF THE PHILIPPINES v. RAUL NU ES Y REVILLEZA

  • G.R. No. 177164 - People of the Philippines v. Ramon Frodonzo y Dalida

  • G.R. No. 177179 - V C. Cadangen, et al. v. The Commission on Elections

  • G.R. No. 177404 and G.R. NO. 178097 - Land Bank of the Philippines v. Kumassie Plantation Company Incorporated / Kumassie Plantation Company Incorporated v. Land Bank of the Philippines and the Secretary of the Department of Agrarian Reform

  • G.R. No. 177549 - Anthony S. Yu, et al., v. Joseph S. Yukayguan, et al.

  • G.R. No. 177795 - Leah M. Nazareno, et al. v. City of Dumaguete, represented by City Mayor Agustin Percides, et al.

  • G.R. No. 178337 - Carment R. Ritualo v. People of the Philippines

  • G.R. No. 178461 - California Manufacturing Company, Inc. v. The City of Las Pi as, et al.

  • G.R. No. 178520 - AMA Computer College-East Rizal, et al. v. Allan Raymond R. Ignacio

  • G.R. No. 178624 - Jose Concepcion, Jr. v. Commission on Elections

  • G.R. No. 179090 - Leonilo Sanchez Alias Nilo v. People of the Philippines and Court of Appeals

  • G.R. No. 179452 - Civil Service Commission, Anicia De Lima, in her capacity as Regional Director of CSC-NCR v. Larry M. Alfonso

  • G.R. No. 179700 - People of the Philippines v. Gwyn Quinicot y Curativo

  • G.R. No. 179943 - People of the Philippines v. Marlon Albert De Leon y Homo

  • G.R. No. 180048 - Roseller De Guzman v. Commission on Elections, et al.

  • G.R. No. 180067 - Republic of the Philippines v. Iglesia ni Cristo, Trustee and Applicant, with its Executive Minister Era o Manalo as Corporate Sole

  • G.R. No. 180197 - Francisco N. Villanueva v. Virgilio P. Balaquer, et al.

  • G.R. No. 180755 - Pedriatica, Inc. v. Joselito T. Rafaeles

  • G.R. No. 180817 - Multi-Trans Agency Phils., Inc. v. Oriental Assurance Corporation

  • G.R. No. 180941 - Chairman Percival C. Chavez, Chair and Chief Executive Officer, Presidential Commission for the Urban Poor v. Lourdes R. Ronidel and Honorable Court of Appeals 9th Division

  • G.R. No. 181084 - People of the Philippines v. Bartolome Tampus and Ida Monresclaros

  • G.R. No. 181132 - Heirs of Loreto C. Maramag, etc. v. Eva Verna De Guzman Maramag, et al.

  • G.R. No. 181675 - Spouses Eduardo Tnakiang and Mayda Tankiang v. Metropolitan and Trust Company, Inc.

  • G.R. No. 181688 - Daikoku Electronics Phils., Inc. v. Alberto J. Raza

  • G.R. No. 183211 - Philippine National Bank v. Gotesco Tyan Ming Development, Inc.

  • G.R. No. 183753 - Archinet International, Inc., et al. v. Becco Philippines, Inc., et al.

  • G.R. No. 184081 - Global Holiday Ownership Corporation v. Metropolitan Bank & Trust Company

  • G.R. No. 184704 - People of the Philippines v. Leodegario Bascuguin y Agquiz

  • G.R. No. 184756 - People of the Philippines v. Joven Jumawid

  • G.R. No. 184804 - People of the Philippines v. Rashamia Hernandez y Santos and Grace Katipunan y Cruz

  • G.R. No. 184861 - Dreamwork Construction, Inc. v. Cleofe S. Janiola and Hon. Arthur A. Famini

  • G.R. No. 184915 - Nilo T. Pates v. Commission on Elections and Emelita B. Almirante

  • G.R. No. 185140 - Jerry B. Aguilar v. The Commission on Elections and Romulo R. Insoy

  • G.R. No. 185164 - People of the Philippines v. Frederick Richie Teodoro y Dela Cruz

  • G.R. No. 185284 - People of the Philippines v. Jason Sy

  • G.R. No. 185380 - People of the Philippines v. Rogelio Marcos

  • G.R. No. 185724 - People of the Philippines v. Jessie Malate y Canete

  • G.R. No. 185860 - Antonio and Rodolfo Duran v. People of the Philippines

  • G.R. No. 187883 and G.R. NO. 187910 - Atty. Oliver O. Lozano and Atty. Evangeline J. Lozano-Endriano v. Speaker Prospero C. Nograles, Representative, Majority, House of Representatives - Louis "Barok" C. Biraogo v. Speaker Prospero C. Nograles, Representa

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    G.R. No. 167017 - Serafin Cheng v. Spouses Vittorio and Ma. Helen Donini

      G.R. No. 167017 - Serafin Cheng v. Spouses Vittorio and Ma. Helen Donini

    PHILIPPINE SUPREME COURT DECISIONS

    FIRST DIVISION

    [G.R. NO. 167017 : June 22, 2009]

    SERAFIN CHENG, Petitioner, v. SPOUSES VITTORIO and MA. HELEN DONINI, Respondents.

    D E C I S I O N

    CORONA, J.:

    The subject of this petition is an oral lease agreement that went sour. Petitioner Serafin Cheng agreed to lease his property located at 479 Shaw Blvd., Mandaluyong City to respondents, Spouses Vittorio and Ma. Helen Donini, who intended to put up a restaurant thereon. They agreed to a monthly rental of P17,000, to commence in December 1990.

    Bearing an Interim Grant of Authority executed by petitioner, respondents proceeded to introduce improvements in the premises. The authority read:

    I, Serafin Cheng, of legal age and with office address at Room 310 Federation Center Building Muelle de Binondo, Manila, owner of the building/structure located at 479 Shaw Boulevard, Mandaluyong, Metro Manila, pursuant to a lease agreement now being finalized and to take effect December 1, 1990, hereby grants VITTORIO DONINI (Prospective Lessee) and all those acting under his orders to make all the necessary improvements on the prospective leased premises located at 479 Shaw Blvd., Mandaluyong, Metro Manila, and for this purpose, to enter said premises and perform, all such works and activities to make the leased premises operational as a restaurant or similar purpose.

    Manila, 31 October 1990.1

    However, before respondents' business could take off and before any final lease agreement could be drafted and signed, the parties began to have serious disagreements regarding its terms and conditions. Petitioner thus wrote respondents on January 28, 1991, demanding payment of the deposit and rentals, and signifying that he had no intention to continue with the agreement should respondents fail to pay. Respondents, however, ignoring petitioner's demand, continued to occupy the premises until April 17, 1991 when their caretaker voluntarily surrendered the property to petitioner.

    Respondents then filed an action for specific performance and damages with a prayer for the issuance of a writ of preliminary injunction in the Regional Trial Court (RTC) of Pasig City, Branch 67, docketed as Civil Case No. 60769. Respondents prayed that petitioner be ordered to execute a written lease contract for five years, deducting from the deposit and rent the cost of repairs in the amount of P445,000, or to order petitioner to return their investment in the amount of P964,000 and compensate for their unearned net income of P200,000 with interest, plus attorney's fees.2

    Petitioner, in his answer, denied respondents' claims and sought the award of moral and exemplary damages, and attorney's fees.3

    After trial, the RTC rendered its decision in favor of petitioner, the dispositive portion of which provided:

    WHEREFORE, in view of all the foregoing, this Court finds the preponderance of evidence in favor of the [petitioner] and hereby renders judgment as follows:

    1. The Complaint is dismissed.

    2. On the counterclaim, [respondents] are ordered, jointly and severally, to pay the [petitioner] P500,000.00 as moral damages; P100,000.00 as exemplary damages; and P50,000.00 as attorney's fees.

    3. [Respondents] are likewise ordered to pay the costs.

    SO ORDERED.4

    Respondents appealed to the Court of Appeals (CA) which, in its decision5 dated March 31, 2004, recalled and set aside the RTC decision, and entered a new one ordering petitioner to pay respondents the amount of P964,000 representing the latter's expenses incurred for the repairs and improvements of the premises.6

    Petitioner filed a motion for reconsideration on the ground that the award of reimbursement had no factual and legal bases,7 but this was denied by the CA in its resolution dated February 21, 2005.8

    Hence, this petition for certiorari under Rule 45 of the Rules of Court, with petitioner arguing that:

    THE COURT OF APPEALS DECIDED THIS CASE NOT IN ACCORD WITH LAW AND WITH APPLICABLE DECISIONS OF THIS HONORABLE COURT. PUT OTHERWISE:

    A. BY ORDERING PETITIONER TO REIMBURSE RESPONDENTS THE FULL VALUE OF EXPENSES FOR THEIR ALLEGED REPAIRS AND IMPROVEMENTS OF THE LEASED PREMISES, THE COURT OF APPEALS ERRONEOUSLY CONSIDERED RESPONDENTS NOT AS MERE LESSEES BUT POSSESSORS IN GOOD FAITH UNDER ARTICLES 448 AND 546 OF THE CIVIL CODE.

    B. THE COURT OF APPEALS DECIDED THIS CASE NOT IN ACCORD WITH ARTICLE 1678 OF THE CIVIL CODE WHICH GIVES THE LESSOR THE OPTION TO REIMBURSE THE LESSEE ONE-HALF OF THE VALUE OF USEFUL IMPROVEMENTS OR, IF HE DOES NOT WANT TO, ALLOW THE LESSEE TO REMOVE THE IMPROVEMENTS.

    C. LIKEWISE, BY ORDERING PETITIONER TO REIMBURSE THE VALUE OF ORNAMENTAL EXPENSES, THE COURT OF APPEALS CONTRAVENED THE SECOND PARAGRAPH OF ARTICLE 1678.

    D. THE COURT OF APPEALS ERRED IN APPLYING THE PRINCIPLE OF EQUITY IN FAVOR OF THE RESPONDENTS.

    E. THE COURT OF APPEALS ERRED IN NOT AFFIRMING THE DECISION OF THE TRIAL COURT AWARDING DAMAGES TO PETITIONER.

    F. THE COURT OF APPEALS SERIOUSLY ERRED AND/OR GRAVELY ABUSED ITS DISCRETION IN FIXING THE AMOUNT OF P961,000.009 CONTRARY TO RESPONDENTS' OWN REPRESENTATION AND EVIDENCE.10

    Respondents were required to file their comment on the petition but their counsel manifested that he could not file one since his clients' whereabouts were unknown to him.11 Counsel also urged the Court to render a decision on the basis of the available records and documents.12 Per resolution dated August 30, 2006, copies of the resolutions requiring respondents to file their comment were sent to their last known address and were deemed served. The order requiring respondents' counsel to file a comment in their behalf was reiterated.13

    In their comment, respondents argued that they were possessors in good faith, hence, Articles 448 and 546 of the Civil Code applied and they should be indemnified for the improvements introduced on the leased premises. Respondents bewailed the fact that petitioner was going to benefit from these improvements, the cost of which amounted to P1.409 million, in contrast to respondents' rental/deposit obligation amounting to only P34,000. Respondents also contended that petitioner's rescission of the agreement was in bad faith and they were thus entitled to a refund.14

    In settling the appeal before it, the CA made the following findings and conclusions:

    1. there was no agreement that the deposit and rentals accruing to petitioner would be deducted from the costs of repairs and renovation incurred by respondents;

    2. respondents committed a breach in the terms and conditions of the agreement when they failed to pay the rentals;

    3. there was no valid rescission on the part of petitioner;

    4. respondents were entitled to reimbursement for the cost of improvements under the principle of equity and unjust enrichment; andcralawlibrary

    5. the award of damages in favor of petitioner had no basis in fact and law.15

    As the correctness of the CA's ruling regarding (1) the lack of agreement on the deposit and rentals; (2) respondents' breach of the terms of the verbal agreement and (3) the lack of valid rescission by petitioner was never put in issue, this decision will be confined only to the issues raised by petitioner, that is, the award of reimbursement and the deletion of the award of damages. It need not be stressed that an appellate court will not review errors that are not assigned before it, save in certain exceptional circumstances and those affecting jurisdiction over the subject matter as well as plain and clerical errors, none of which is present in this case.16

    Remarkably, in ruling that respondents were entitled to reimbursement, the CA did not provide any statutory basis therefor and instead applied the principles of equity and unjust enrichment, stating:

    It would be inequitable to allow the defendant-appellee, as owner of the property to enjoy perpetually the improvements introduced by the plaintiffs-appellants without reimbursing them for the value of the said improvements. Well-settled is the rule that no one shall be unjustly enriched or benefitted at the expense of another.17

    Petitioner, however, correctly argued that the principle of equity did not apply in this case. Equity, which has been aptly described as "justice outside legality," is applied only in the absence of, and never against, statutory law or judicial rules of procedure.18 Positive rules prevail over all abstract arguments based on equity contra legem.19 Neither is the principle of unjust enrichment applicable since petitioner (who was to benefit from it) had a valid claim.20

    The relationship between petitioner and respondents was explicitly governed by the Civil Code provisions on lease, which clearly provide for the rule on reimbursement of useful improvements and ornamental expenses after termination of a lease agreement. Article 1678 states:

    If the lessee makes, in good faith, useful improvements which are suitable to the use for which the lease is intended, without altering the form or substance of the property leased, the lessor upon the termination of the lease shall pay the lessee one-half of the value of the improvements at that time. Should the lessor refuse to reimburse said amount, the lessee may remove the improvements, even though the principal thing may suffer damage thereby. He shall not, however, cause any more impairment upon the property leased than is necessary.

    With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may remove the ornamental objects, provided no damage is caused to the principal thing, and the lessor does not choose to retain them by paying their value at the time the lease is extinguished.

    Article 1678 modified the (old) Civil Code provision on reimbursement where the lessee had no right at all to be reimbursed for the improvements introduced on the leased property, he being entitled merely to the rights of a usufructuary - the right of removal and set-off but not to reimbursement.21

    Contrary to respondents' position, Articles 448 and 546 of the Civil Code did not apply. Under these provisions, to be entitled to reimbursement for useful improvements introduced on the property, respondents must be considered builders in good faith. Articles 448 and 546, which allow full reimbursement of useful improvements and retention of the premises until reimbursement is made, apply only to a possessor in good faith or one who builds on land in the belief that he is the owner thereof. A builder in good faith is one who is unaware of any flaw in his title to the land at the time he builds on it.22

    But respondents cannot be considered possessors or builders in good faith. As early as 1956, in Lopez v. Philippine & Eastern Trading Co., Inc.,23 the Court clarified that a lessee is neither a builder nor a possessor in good faith'

    x x x This principle of possessor in good faith naturally cannot apply to a lessee because as such lessee he knows that he is not the owner of the leased property. Neither can he deny the ownership or title of his lessor. Knowing that his occupation of the premises continues only during the life of the lease contract and that he must vacate the property upon termination of the lease or upon the violation by him of any of its terms, he introduces improvements on said property at his own risk in the sense that he cannot recover their value from the lessor, much less retain the premises until such reimbursement. (Emphasis supplied)cralawlibrary

    Being mere lessees, respondents knew that their right to occupy the premises existed only for the duration of the lease.24 Cortez v. Manimbo25 went further to state that:

    If the rule were otherwise, 'it would always be in the power of the tenant to improve his landlord out of his property.

    These principles have been consistently adhered to and applied by the Court in many cases.26

    Under Article 1678 of the Civil Code, the lessor has the primary right (or the first move) to reimburse the lessee for 50% of the value of the improvements at the end of the lease. If the lessor refuses to make the reimbursement, the subsidiary right of the lessee to remove the improvements, even though the principal thing suffers damage, arises. Consequently, on petitioner rests the primary option to pay for one-half of the value of the useful improvements. It is only when petitioner as lessor refuses to make the reimbursement that respondents, as lessees, may remove the improvements. Should petitioner refuse to exercise the option of paying for one-half of the value of the improvements, he cannot be compelled to do so. It then lies on respondents to insist on their subsidiary right to remove the improvements even though the principal thing suffers damage but without causing any more impairment on the property leased than is necessary.

    As regards the ornamental expenses, respondents are not entitled to reimbursement. Article 1678 gives respondents the right to remove the ornaments without damage to the principal thing. But if petitioner appropriates and retains said ornaments, he shall pay for their value upon the termination of the lease.

    The fact that petitioner will benefit from the improvements introduced by respondents is beside the point. In the first place, respondents introduced these improvements at their own risk as lessees. Respondents were not forced or obliged to splurge on the leased premises as it was a matter of necessity as well as a business strategy.27 In fact, had respondents only complied with their obligation to pay the deposit/rent, there would have been no dispute to begin with. If they were able to shell out more than a million pesos to improve the property, the measly P34,000 deposit demanded by petitioner was a mere "drop in the bucket," so to speak. More importantly, the unequivocal terms of Article 1678 of the Civil Code should be the foremost consideration.

    The Court notes that the CA pegged the total value of the improvements made on the leased premises at P964,000, which was apparently based on the allegation in respondents' complaint that it was their total investment cost.28 The CA lumped together all of respondents' expenses, which was a blatant error. A qualification should have been made as to how much was spent for useful improvements (or those which were suitable to the use for which the lease was intended) and how much was for ornamental expenses. Respondent Vittorio Donini testified that he spent P450,000 for necessary repairs, while P500,000 was spent for adornments.29 The evidence on record, however, showed respondents' expenses for useful improvements to be as follows:

    Expense Amount
    Electrical P31,893.65

    Exh. "F", et seq.30

    Roofing P14,856.00

    Exhibit "O"31

    Labor P19,909.75

    Exh. "P", et seq.32

    Ceiling P65,712.00

    Exh. "Q", et seq.33

    Labor P38,689.20

    Exh. "R", et seq.34

    Electrical (phase 2) P76,539.10

    Exh. "S", et seq.35

    Door P41,371.75

    Exh. "T", et seq.36

    Labor P25,126.00

    Exh. "U", et seq.37

    Water P 8,031.00

    Exhs. "W" & "W-1"38

    Gutters P 35,550.05

    Exhs. "X" & "X-1"39

    Outside Wall P 24,744.00

    Exh. "X-2"40

    Inside Wall P 22,186.10

    Exh. "X-3"41

    Electrical (phase 3) P 88,698.30

    Exhs. "X-8" to "X-11"42

    Labor P 19,995.00

    Exhibit "Y"43

    Total P513,301.90

    Accordingly, the 50% value of the useful improvements to be reimbursed by petitioner, if he chose to do so, should be based on P513,301.90. Since petitioner did not exercise his option to retain these useful improvements, then respondents could have removed the same. This was the legal consequence of the application of Article 1678 under ordinary circumstances.

    The reality on the ground ought to be recognized. For one, as disclosed by respondents' counsel, he no longer knows the exact whereabouts of his clients, only that they are now in Europe and he has no communication with them at all.44 For another, it appears that as soon as respondents vacated the premises, petitioner immediately reclaimed the property and barred respondents from entering it. Respondents also alleged, and petitioner did not deny, that the property subject of this case had already been leased to another entity since 1991.45 This is where considerations of equity should come into play. It is obviously no longer feasible for respondents to remove the improvements from the property, if they still exist. The only equitable alternative then, given the circumstances, is to order petitioner to pay respondents one-half of the value of the useful improvements (50% of P513,301.90) introduced on the property, or P256,650.95. To be off-set against this amount are respondents' unpaid P17,000 monthly rentals for the period of December 1990 to April 1991,46 or P85,000. Petitioner should, therefore, indemnify respondents the amount of P171,650.95. This is in accord with the law's intent of preventing unjust enrichment of a lessor who now has to pay one-half of the value of the useful improvements at the end of the lease because the lessee has already enjoyed the same, whereas the lessor can enjoy them indefinitely thereafter.47

    Respondents are not entitled to reimbursement for the ornamental expenses under the express provision of Article 1678. Moreover, since they failed to remove these ornaments despite the opportunity to do so when they vacated the property, then they were deemed to have waived or abandoned their right of removal.

    The CA also erred when it deleted the awards of moral and exemplary damages and attorney's fees.

    Petitioner is entitled to moral damages but not in the amount of P500,000 awarded by the RTC, which the Court finds to be excessive. While trial courts are given discretion to determine` the amount of moral damages, it "should not be palpably and scandalously excessive."48 Moral damages are not meant to enrich a person at the expense of the other but are awarded only to allow the former to obtain means, diversion or amusements that will serve to alleviate the moral suffering he has undergone due to the other person's culpable action.49 It must always reasonably approximate the extent of injury and be proportional to the wrong committed.50 The award of P100,000 as moral damages is sufficient and reasonable under the circumstances.

    The award of P100,000 as exemplary damages is likewise excessive. Exemplary damages are imposed not to enrich one party or impoverish another but to serve as a deterrent against or as a negative incentive to curb socially deleterious actions.51 We think P50,000 is reasonable in this case.ςηαñrοblεš νιr υαl lαω lιbrαrÿ

    Finally, Article 2208 of the Civil Code allows recovery of attorney's fees when exemplary damages are awarded or when the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest.52 Petitioner is entitled to it since exemplary damages were awarded in this case and respondents' act in filing Civil Case No. 60769 compelled him to litigate. The amount of P25,000 is in accord with prevailing jurisprudence.53

    WHEREFORE, the petition is PARTIALLY GRANTED. The decision dated March 31, 2004 rendered by the Court of Appeals in CA-G.R. CV No. 54430 is hereby MODIFIED in that '

    (1) petitioner Serafin Cheng is ORDERED to pay respondents, spouses Vittorio and Ma. Helen Donini, the amount of P171,650.95 as indemnity for the useful improvements; andcralawlibrary

    (2) respondents, spouses Vittorio and Ma. Helen Donini, are ORDERED to pay petitioner Serafin Cheng the following sums:

    a) P100,000.00 moral damages;

    b) P50,000.00 exemplary damages and

    c) P25,000.00 attorney's fees.

    Let copies of this decision be furnished respondents, spouses Vittorio and Ma. Helen Donini, at their last known address, and their counsel of record.

    SO ORDERED.


    Endnotes:


    1 Record, p. 127; Exhibit "E."

    2 Id., pp. 9-10.

    3 Id., p. 48.

    4 Id., p. 522.

    5 Penned by Associate Justice Amelita G. Tolentino and concurred in by Associate Justice Eloy R. Bello, Jr. (retired) and Associate Justice Magdangal M. de Leon of the Sixteenth Division of the Court of Appeals.

    6 CA rollo, p. 76.

    7 Id., p. 95.

    8 Id., p. 106.

    9 The CA decision awarded the amount of P964,000.00, not P961,000.00 as alleged in the petition.

    10 Rollo, pp. 14-15.

    11 Id., pp. 62, 71.

    12 Ibid.

    13 Id., p. 93.

    14 Id., pp. 105-108.

    15 Id., pp. 34-40.

    16 Enriquez v. Court of Appeals, G.R. No. 140473, 28 January 2003, 396 SCRA 377, 384.

    17 Rollo, p. 39.

    18 Conte v. Commission on Audit, G.R. No. 116422, 4 November 1996, 264 SCRA 19, 33.

    19 Republic of the Philippines v. Court of Appeals, G.R. No. 100709, 14 November 1997, 281 SCRA 639, 649.

    20 Car Cool Philippines, Inc. v. Ushio Realty and Development Corporation, G.R. No. 138088, 23 January 2006, 479 SCRA 404, 413.

    21 Parilla v. Pilar, G.R. No. 167680, 30 November 2006, 509 SCRA 420, 425-426.

    22 Florentino v. Supervalue, Inc., G.R. No. 172384, 12 September 2007, 533 SCRA 156, 170-171.

    23 98 Phil. 348, 354 (1956).

    24 Lopez v. Sarabia, G.R. No. 140357, 24 September 2004, 439 SCRA 35, 51.

    25 113 Phil. 363, 366 (1961).

    26 See Florentino case, supra, note 22; Lopez case, supra, note 24; Geminiano v. Court of Appeals, G.R. No. 120303, 24 July 1996, 259 SCRA 344; Salonga v. Farrales, G.R. No. L-47088, 10 July 1981, 105 SCRA 359; Philippine National Bank v. Pineda, G.R. No. L-29748, 29 August 1969, 29 SCRA 262.

    27 Supra, Florentino case, note 22.

    28 Record, pp. 4-5.

    29 TSN, June 5, 1991, p. 18.

    30 Record, pp. 128-129.

    31 Id., p. 144.

    32 Id., pp. 146-154.

    33 Id., pp. 155-164.

    34 Id., pp. 165-173.

    35 Id., pp. 174-223.

    36 Id., pp. 224-233.

    37 Id., pp. 234-247.

    38 Id., pp. 254-255.

    39 Id., pp. 265-266.

    40 Id., p. 267.

    41 Id., p. 268.

    42 Id., pp. 273-276.

    43 Id., pp. 311-312.

    44 Id., pp. 62, 67, 75.

    45 Id., pp. 106-107.

    46 Article 1687 of the Civil Code creates the presumption that when the rent agreed upon is from month to month, the period for the lease is understood to be such.

    47 Supra, Parilla case, note 21.

    48 Bank of the Philippine Islands v. Leobrera, G.R. No. 137147, 18 November 2003, 416 SCRA 15, 22.

    49 Philippine Airlines, Inc. v. Court of Appeals, G.R. No. 127473, 8 December 2003, 417 SCRA 196, 211-212.

    50 Solidbank Corporation v. Arrieta, G.R. No. 152720, 17 February 2005, 451 SCRA 711, 721-722.

    51 Bataan Seedling Association, Inc. v. Republic of the Philippines, G.R. No. 141009, 2 July 2002, 383 SCRA 590, 600-601.

    52 Sandejas v. Ignacio, G.R. No. 155033, 19 December 2007, 541 SCRA 61, 83-84.

    53 Cagungun v. Planters Development Bank, G.R. No. 158674, 17 October 2005, 473 SCRA 259; Padillo v. Court of Appeals, G.R. No. 119707, 29 November 2001, 371 SCRA 27; Lucas v. Royo, G.R. No. 136185, 30 October 2000, 344 SCRA 481.

    G.R. No. 167017 - Serafin Cheng v. Spouses Vittorio and Ma. Helen Donini


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