SECOND DIVISION only to employees who have been with the company for five years; for this

only to employees who have been with the company for five years; for this reason, the balance that
petitioner should pay on his service vehicle stood at P116,380.00 if he opts to purchase the same.
G.R. No. 192105, December 09, 2013
On May 3, 2007, petitioner filed against Mekeni and/or its President, Prudencio S. Garcia, a
Complaint6for the recovery of monetary claims consisting of unpaid salaries, commissions,
ANTONIO LOCSIN II, Petitioners, v. MEKENI FOOD CORPORATION, Respondent.
sick/vacation leave benefits, and recovery of monthly salary deductions which were earmarked for his
cost-sharing in the car plan. The case was docketed in the National Labor Relations Commission
DECISION (NLRC), National Capital Region (NCR), Quezon City as NLRC NCR CASE NO. 00-05-04139-07.

DEL CASTILLO, J.: On October 30, 2007, Labor Arbiter Cresencio G. Ramos rendered a Decision,7 decreeing as follows:
WHEREFORE, in the light of the foregoing premises, judgment is hereby rendered directing
In the absence of specific terms and conditions governing a car plan agreement between the employer respondents to turn-over to complainant x x x the subject vehicle upon the said complainant’s payment
and employee, the former may not retain the installment payments made by the latter on the car plan to them of the sum of P100,435.84.
and treat them as rents for the use of the service vehicle, in the event that the employee ceases his
employment and is unable to complete the installment payments on the vehicle. The underlying reason SO ORDERED.8
is that the service vehicle was precisely used in the former’s business; any personal benefit obtained by Ruling of the National Labor Relations Commission
the employee from its use is merely incidental.
On appeal,9 the Labor Arbiter’s Decision was reversed in a February 27, 2009 Decision 10 of the NLRC,
1 2 thus:
This Petition for Review on Certiorari assails the January 27, 2010 Decision of the Court of Appeals
(CA) in CA-G.R. SP No. 109550, as well as its April 23, 2010 Resolution 3 denying petitioner’s Motion WHEREFORE, premises considered, the appeal is hereby Granted. The assailed Decision dated
for Partial Reconsideration.4ChanRoblesVirtualawlibrary October 30, 2007 is hereby REVERSED and SET ASIDE and a new one entered ordering respondent-
appellee Mekeni Food Corporation to pay complainant-appellee the following:
Factual Antecedents
1. Unpaid Salary in the amount of P12,511.45;
In February 2004, respondent Mekeni Food Corporation (Mekeni) – a Philippine company engaged in
food manufacturing and meat processing – offered petitioner Antonio Locsin II the position of 2. Unpaid sick leave/vacation leave pay in the amount of P14,789.15;
Regional Sales Manager to oversee Mekeni’s National Capital Region Supermarket/Food Service and
South Luzon operations. In addition to a compensation and benefit package, Mekeni offered petitioner 3. Unpaid commission in the amount of P9,780.00; and
a car plan, under which one-half of the cost of the vehicle is to be paid by the company and the other
half to be deducted from petitioner’s salary. Mekeni’s offer was contained in an Offer Sheet 5 which 4. Reimbursement of complainant’s payment under the car plan agreement in the amount of
was presented to petitioner. P112,500.00; and

Petitioner began his stint as Mekeni Regional Sales Manager on March 17, 2004. To be able to 5. The equivalent share of the company as part of the complainant’s benefit under the car plan 50/50
effectively cover his appointed sales territory, Mekeni furnished petitioner with a used Honda Civic car sharing amounting to P112,500.00.
valued at P280,000.00, which used to be the service vehicle of petitioner’s immediate supervisor.
Petitioner paid for his 50% share through salary deductions of P5,000.00 each month. Respondent-Appellee Mekeni Food Corporation is hereby authorized to deduct the sum of P4,736.50
representing complainant-appellant’s cash advance from his total monetary award.
Subsequently, Locsin resigned effective February 25, 2006. By then, a total of P112,500.00 had been
deducted from his monthly salary and applied as part of the employee’s share in the car plan. Mekeni All other claims are dismissed for lack of merit.
supposedly put in an equivalent amount as its share under the car plan. In his resignation letter,
petitioner made an offer to purchase his service vehicle by paying the outstanding balance thereon. The SO ORDERED.11
parties negotiated, but could not agree on the terms of the proposed purchase. Petitioner thus returned The NLRC held that petitioner’s amortization payments on his service vehicle amounting to
the vehicle to Mekeni on May 2, 2006. P112,500.00 should be reimbursed; if not, unjust enrichment would result, as the vehicle remained in
the possession and ownership of Mekeni. In addition, the employer’s share in the monthly car plan
Petitioner made personal and written follow-ups regarding his unpaid salaries, commissions, benefits, payments should likewise be awarded to petitioner because it forms part of the latter’s benefits under
and offer to purchase his service vehicle. Mekeni replied that the company car plan benefit applied the car plan. It held further that Mekeni’s claim that the company car plan benefit applied only to
employees who have been with the company for five years has not been substantiated by its evidence,
in which case the car plan agreement should be construed in petitioner’s favor.
Mekeni moved to reconsider, but in an April 30, 2009 Resolution,12 the NLRC sustained its original
findings.
Ruling of the Court of Appeals
Mekeni filed a Petition for Certiorari13 with the CA assailing the NLRC’s February 27, 2009 Decision,
saying that the NLRC committed grave abuse of discretion in holding it liable to petitioner as it had no
jurisdiction to resolve petitioner’s claims, which are civil in nature.
On January 27, 2010, the CA issued the assailed Decision, decreeing as follows:
WHEREFORE, the petition for certiorari is GRANTED. The Decision of the National Labor Relations
Commission dated 27 February 2009, in NLRC NCR Case No. 00-05-04139-07, and
its Resolution dated 30 April 2009 denying reconsideration thereof, are MODIFIED in that the
reimbursement of Locsin’s payment under the car plan in the amount of P112,500.00, and the payment
to him of Mekeni’s 50% share in the amount of P112,500.00 are DELETED. The rest of the decision
is AFFIRMED.
SO ORDERED.14
In arriving at the above conclusion, the CA held that the NLRC possessed jurisdiction over petitioner’s
claims, including the amounts he paid under the car plan, since his Complaint against Mekeni is one
for the payment of salaries and employee benefits. With regard to the car plan arrangement, the CA
applied the ruling in Elisco Tool Manufacturing Corporation v. Court of Appeals,15 where it was held
that –
First. Petitioner does not deny that private respondent Rolando Lantan acquired the vehicle in question
under a car plan for executives of the Elizalde group of companies. Under a typical car plan, the
company advances the purchase price of a car to be paid back by the employee through monthly
deductions from his salary. The company retains ownership of the motor vehicle until it shall have
been fully paid for. However, retention of registration of the car in the company’s name is only a form
of a lien on the vehicle in the event that the employee would abscond before he has fully paid for it.
There are also stipulations in car plan agreements to the effect that should the employment of the
employee concerned be terminated before all installments are fully paid, the vehicle will be taken by
the employer and all installments paid shall be considered rentals per agreement. 16
In the absence of evidence as to the stipulations of the car plan arrangement between Mekeni and
petitioner, the CA treated petitioner’s monthly contributions in the total amount of P112,500.00 as
rentals for the use of his service vehicle for the duration of his employment with Mekeni. The appellate
court applied Articles 1484-1486 of the Civil Code,17 and added that the installments paid by petitioner
should not be returned to him inasmuch as the amounts are not unconscionable. It made the following
pronouncement:
Having used the car in question for the duration of his employment, it is but fair that all of Locsin’s
payments be considered as rentals therefor which may be forfeited by Mekeni. Therefore, Mekeni has
no obligation to return these payments to Locsin. Conversely, Mekeni has no right to demand the
payment of the balance of the purchase price from Locsin since the latter has already surrendered
possession of the vehicle.18
Moreover, the CA held that petitioner cannot recover Mekeni’s corresponding share in the purchase
price of the service vehicle, as this would constitute unjust enrichment on the part of petitioner at
Mekeni’s expense.
The CA affirmed the NLRC judgment in all other respects. Petitioner filed his Motion for Partial
Reconsideration,19 but the CA denied the same in its April 23, 2010 Resolution.
Thus, petitioner filed the instant Petition; Mekeni, on the other hand, took no further action.
Issue
Petitioner raises the following solitary issue:
WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS ERRED IN NOT
CONSIDERING THE CAR PLAN PRIVILEGE AS PART OF THE COMPENSATION
PACKAGE OFFERED TO PETITIONER AT THE INCEPTION OF HIS EMPLOYMENT
AND INSTEAD LIKENED IT TO A CAR LOAN ON INSTALLMENT, IN SPITE OF THE
ABSENCE OF EVIDENCE ON RECORD.20
Petitioner’s Arguments
In his Petition and Reply,21 petitioner mainly argues that the CA erred in treating his monthly
contributions to the car plan, totaling P112,500.00, as rentals for the use of his service vehicle during
his employment; the car plan which he availed of was a benefit and it formed part of the package of
economic benefits granted to him when he was hired as Regional Sales Manager. Petitioner submits
that this is shown by the Offer Sheet which was shown to him and which became the basis for his
decision to accept the offer and work for Mekeni.
Petitioner adds that the absence of documentary or other evidence showing the terms and conditions of
the Mekeni company car plan cannot justify a reliance on Mekeni’s self-serving claims that the full
terms thereof applied only to employees who have been with the company for at least five years; in the
absence of evidence, doubts should be resolved in his favor pursuant to the policy of the law that
affords protection to labor, as well as the principle that all doubts should be construed to its benefit.
Finally, petitioner submits that the ruling in the Elisco Tool case cannot apply to his case because the
car plan subject of the said case involved a car loan, which his car plan benefit was not; it was part of
his compensation package, and the vehicle was an important component of his work which required
constant and uninterrupted mobility. Petitioner claims that the car plan was in fact more beneficial to
Mekeni than to him; besides, he did not choose to avail of it, as it was simply imposed upon him. He
concludes that it is only just that his payments should be refunded and returned to him.
Petitioner thus prays for the reversal of the assailed CA Decision and Resolution, and that the Court
reinstate the NLRC’s February 27, 2009 Decision.
Respondent’s Arguments
In its Comment,22 Mekeni argues that the Petition does not raise questions of law, but merely of fact,
which thus requires the Court to review anew issues already passed upon by the CA – an unauthorized
exercise given that the Supreme Court is not a trier of facts, nor is it its function to analyze or weigh
the evidence of the parties all over again.23 It adds that the issue regarding the car plan and the
conclusions of the CA drawn from the evidence on record are questions of fact.
Mekeni asserts further that the service vehicle was merely a loan which had to be paid through the
monthly salary deductions. If it is not allowed to recover on the loan, this would constitute unjust
enrichment on the part of petitioner.
Our Ruling
The Petition is partially granted.
To begin with, the Court notes that Mekeni did not file a similar petition questioning the CA Decision;
thus, it is deemed to have accepted what was decreed. The only issue that must be resolved in this
Petition, then, is whether petitioner is entitled to a refund of all the amounts applied to the cost of the
service vehicle under the car plan.
When the conclusions of the CA are grounded entirely on speculation, surmises and conjectures, or
when the inferences made by it are manifestly mistaken or absurd, its findings are subject to review by
this Court.24
From the evidence on record, it is seen that the Mekeni car plan offered to petitioner was subject to no
other term or condition than that Mekeni shall cover one-half of its value, and petitioner shall in turn
pay the other half through deductions from his monthly salary. Mekeni has not shown, by documentary
evidence or otherwise, that there are other terms and conditions governing its car plan agreement with
petitioner. There is no evidence to suggest that if petitioner failed to completely cover one-half of the
cost of the vehicle, then all the deductions from his salary going to the cost of the vehicle will be
treated as rentals for his use thereof while working with Mekeni, and shall not be refunded. Indeed,
there is no such stipulation or arrangement between them. Thus, the CA’s reliance on Elisco Tool is
without basis, and its conclusions arrived at in the questioned decision are manifestly mistaken. To
repeat what was said in Elisco Tool –
First. Petitioner does not deny that private respondent Rolando Lantan acquired the vehicle in question
under a car plan for executives of the Elizalde group of companies. Under a typical car plan, the
company advances the purchase price of a car to be paid back by the employee through monthly
deductions from his salary. The company retains ownership of the motor vehicle until it shall have
been fully paid for. However, retention of registration of the car in the company’s name is only a form
of a lien on the vehicle in the event that the employee would abscond before he has fully paid for
it. There are also stipulations in car plan agreements to the effect that should the employment of
the employee concerned be terminated before all installments are fully paid, the vehicle will be
taken by the employer and all installments paid shall be considered rentals per
agreement.25 (Emphasis supplied)
It was made clear in the above pronouncement that installments made on the car plan may be treated as
rentals only when there is an express stipulation in the car plan agreement to such effect. It was
therefore patent error for the appellate court to assume that, even in the absence of express stipulation,
petitioner’s payments on the car plan may be considered as rentals which need not be returned.
Indeed, the Court cannot allow that payments made on the car plan should be forfeited by Mekeni and
treated simply as rentals for petitioner’s use of the company service vehicle. Nor may they be retained
by it as purported loan payments, as it would have this Court believe. In the first place, there is
precisely no stipulation to such effect in their agreement. Secondly, it may not be said that the car plan
arrangement between the parties was a benefit that the petitioner enjoyed; on the contrary, it was an
absolute necessity in Mekeni’s business operations, which benefited it to the fullest extent: without the
service vehicle, petitioner would have been unable to rapidly cover the vast sales territory assigned to
him, and sales or marketing of Mekeni’s products could not have been booked or made fast enough to
move Mekeni’s inventory. Poor sales, inability to market Mekeni’s products, a high rate of product
spoilage resulting from stagnant inventory, and poor monitoring of the sales territory are the necessary
consequences of lack of mobility. Without a service vehicle, petitioner would have been placed at the
mercy of inefficient and unreliable public transportation; his official schedule would have been
dependent on the arrival and departure times of buses or jeeps, not to mention the availability of seats
in them. Clearly, without a service vehicle, Mekeni’s business could only prosper at a snail’s pace, if
not completely paralyzed. Its cost of doing business would be higher as well. The Court expressed just
such a view in the past. Thus –
In the case at bar, the disallowance of the subject car plan benefits would hamper the officials in
the performance of their functions to promote and develop trade which requires mobility in the
performance of official business. Indeed, the car plan benefits are supportive of the
implementation of the objectives and mission of the agency relative to the nature of its
operation and responsive to the exigencies of the service.26 (Emphasis supplied)
Any benefit or privilege enjoyed by petitioner from using the service vehicle was merely incidental and
insignificant, because for the most part the vehicle was under Mekeni’s control and supervision. Free
and complete disposal is given to the petitioner only after the vehicle’s cost is covered or paid in full.
Until then, the vehicle remains at the beck and call of Mekeni. Given the vast territory petitioner had to
cover to be able to perform his work effectively and generate business for his employer, the service
vehicle was an absolute necessity, or else Mekeni’s business would suffer adversely. Thus, it is clear
that while petitioner was paying for half of the vehicle’s value, Mekeni was reaping the full benefits
from the use thereof.
In light of the foregoing, it is unfair to deny petitioner a refund of all his contributions to the car plan.
Under Article 22 of the Civil Code, “[e]very person who through an act of performance by another, or
any other means, acquires or comes into possession of something at the expense of the latter without
just or legal ground, shall return the same to him.” Article 2142 27 of the same Code likewise clarifies
that there are certain lawful, voluntary and unilateral acts which give rise to the juridical relation of
quasi-contract, to the end that no one shall be unjustly enriched or benefited at the expense of another.
In the absence of specific terms and conditions governing the car plan arrangement between the
petitioner and Mekeni, a quasi-contractual relation was created between them. Consequently, Mekeni
may not enrich itself by charging petitioner for the use of its vehicle which is otherwise absolutely
necessary to the full and effective promotion of its business. It may not, under the claim that
petitioner’s payments constitute rents for the use of the company vehicle, refuse to refund what
petitioner had paid, for the reasons that the car plan did not carry such a condition; the subject vehicle
is an old car that is substantially, if not fully, depreciated; the car plan arrangement benefited Mekeni
for the most part; and any personal benefit obtained by petitioner from using the vehicle was merely
incidental.
Conversely, petitioner cannot recover the monetary value of Mekeni’s counterpart contribution to the
cost of the vehicle; that is not property or money that belongs to him, nor was it intended to be given to
him in lieu of the car plan. In other words, Mekeni’s share of the vehicle’s cost was not part of
petitioner’s compensation package. To start with, the vehicle is an asset that belonged to Mekeni. Just
as Mekeni is unjustly enriched by failing to refund petitioner’s payments, so should petitioner not be
awarded the value of Mekeni’s counterpart contribution to the car plan, as this would unjustly enrich
him at Mekeni’s expense.
There is unjust enrichment “when a person unjustly retains a benefit to the loss of another, or when a
person retains money or property of another against the fundamental principles of justice, equity and
good conscience.” The principle of unjust enrichment requires two conditions: (1) that a person is
benefited without a valid basis or justification, and (2) that such benefit is derived at the expense of
another.
The main objective of the principle against unjust enrichment is to prevent one from enriching himself
at the expense of another without just cause or consideration. x x x28
WHEREFORE, the Petition is GRANTED IN PART. The assailed January 27, 2010 Decision and
April 23, 2010 Resolution of the Court of Appeals in CA-G.R. SP No. 109550 are MODIFIED, in that
respondent Mekeni Food Corporation is hereby ordered to REFUND petitioner Antonio Locsin II’s
payments under the car plan agreement in the total amount of P112,500.00.
Thus, except for the counterpart or equivalent share of Mekeni Food Corporation in the car plan
agreement amounting to P112,500.00, which is DELETED, the February 27, 2009 Decision of the
National Labor Relations Commission is affirmed in all respects.chanRoblesvirtualLawlibrary
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 183984 April 13, 2011
ARTURO SARTE FLORES, Petitioner,
vs.
SPOUSES ENRICO L. LINDO, JR. and EDNA C. LINDO, Respondents.
DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review1 assailing the 30 May 2008 Decision2 and the 4 August 2008
Resolution3 of the Court of Appeals in CA-G.R. SP No. 94003.
The Antecedent Facts
The facts, as gleaned from the Court of Appeals’ Decision, are as follows:
On 31 October 1995, Edna Lindo (Edna) obtained a loan from Arturo Flores (petitioner) amounting to
₱400,000 payable on 1 December 1995 with 3% compounded monthly interest and 3% surcharge in
case of late payment. To secure the loan, Edna executed a Deed of Real Estate Mortgage 4 (the Deed)
covering a property in the name of Edna and her husband Enrico (Enrico) Lindo, Jr. (collectively,
respondents). Edna also signed a Promissory Note5and the Deed for herself and for Enrico as his
attorney-in-fact.
Edna issued three checks as partial payments for the loan. All checks were dishonored for insufficiency
of funds, prompting petitioner to file a Complaint for Foreclosure of Mortgage with Damages against
respondents. The case was raffled to the Regional Trial Court of Manila, Branch 33 (RTC, Branch 33)
and docketed as Civil Case No. 00-97942.
In its 30 September 2003 Decision,6 the RTC, Branch 33 ruled that petitioner was not entitled to
judicial foreclosure of the mortgage. The RTC, Branch 33 found that the Deed was executed by Edna
without the consent and authority of Enrico. The RTC, Branch 33 noted that the Deed was executed on
31 October 1995 while the Special Power of Attorney (SPA) executed by Enrico was only dated 4
November 1995.
The RTC, Branch 33 further ruled that petitioner was not precluded from recovering the loan from
Edna as he could file a personal action against her. However, the RTC, Branch 33 ruled that it had no
jurisdiction over the personal action which should be filed in the place where the plaintiff or the
defendant resides in accordance with Section 2, Rule 4 of the Revised Rules on Civil Procedure.
Petitioner filed a motion for reconsideration. In its Order7 dated 8 January 2004, the RTC, Branch 33
denied the motion for lack of merit.
On 8 September 2004, petitioner filed a Complaint for Sum of Money with Damages against
respondents. It was raffled to Branch 42 (RTC, Branch 42) of the Regional Trial Court of Manila, and
docketed as Civil Case No. 04-110858.
Respondents filed their Answer with Affirmative Defenses and Counterclaims where they admitted the
loan but stated that it only amounted to ₱340,000. Respondents further alleged that Enrico was not a
party to the loan because it was contracted by Edna without Enrico’s signature. Respondents prayed for
the dismissal of the case on the grounds of improper venue, res judicata and forum-shopping, invoking
the Decision of the RTC, Branch 33. On 7 March 2005, respondents also filed a Motion to Dismiss on
the grounds of res judicata and lack of cause of action.
The Decision of the Trial Court
On 22 July 2005, the RTC, Branch 42 issued an Order8 denying the motion to dismiss. The RTC,
Branch 42 ruled that res judicata will not apply to rights, claims or demands which, although growing
out of the same subject matter, constitute separate or distinct causes of action and were not put in issue
in the former action. Respondents filed a motion for reconsideration. In its Order 9 dated 8 February
2006, the RTC, Branch 42 denied respondents’ motion. The RTC, Branch 42 ruled that the RTC,
Branch 33 expressly stated that its decision did not mean that petitioner could no longer recover the
loan petitioner extended to Edna.
Respondents filed a Petition for Certiorari and Mandamus with Prayer for a Writ of Preliminary
Injunction and/or Temporary Restraining Order before the Court of Appeals.
The Decision of the Court of Appeals
In its 30 May 2008 Decision, the Court of Appeals set aside the 22 July 2005 and 8 February 2006
Orders of the RTC, Branch 42 for having been issued with grave abuse of discretion.
The Court of Appeals ruled that while the general rule is that a motion to dismiss is interlocutory and
not appealable, the rule admits of exceptions. The Court of Appeals ruled that the RTC, Branch 42
acted with grave abuse of discretion in denying respondents’ motion to dismiss.
The Court of Appeals ruled that under Section 3, Rule 2 of the 1997 Rules of Civil Procedure, a party
may not institute more than one suit for a single cause of action. If two or more suits are instituted on
the basis of the same cause of action, the filing of one on a judgment upon the merits in any one is
available ground for the dismissal of the others. The Court of Appeals ruled that on a nonpayment of a
note secured by a mortgage, the creditor has a single cause of action against the debtor, that is recovery
of the credit with execution of the suit. Thus, the creditor may institute two alternative remedies: either
a personal action for the collection of debt or a real action to foreclose the mortgage, but not both. The
Court of Appeals ruled that petitioner had only one cause of action against Edna for her failure to pay
her obligation and he could not split the single cause of action by filing separately a foreclosure
proceeding and a collection case. By filing a petition for foreclosure of the real estate mortgage, the
Court of Appeals held that petitioner had already waived his personal action to recover the amount
covered by the promissory note.
Petitioner filed a motion for reconsideration. In its 4 August 2008 Resolution, the Court of Appeals
denied the motion.
Hence, the petition before this Court.
The Issue
The sole issue in this case is whether the Court of Appeals committed a reversible error in dismissing
the complaint for collection of sum of money on the ground of multiplicity of suits.
The Ruling of this Court
The petition has merit.
The rule is that a mortgage-creditor has a single cause of action against a mortgagor-debtor, that is, to
recover the debt.10 The mortgage-creditor has the option of either filing a personal action for collection
of sum of money or instituting a real action to foreclose on the mortgage security. 11 An election of the
first bars recourse to the second, otherwise there would be multiplicity of suits in which the debtor
would be tossed from one venue to another depending on the location of the mortgaged properties and
the residence of the parties.12
The two remedies are alternative and each remedy is complete by itself. 13 If the mortgagee opts to
foreclose the real estate mortgage, he waives the action for the collection of the debt, and vice
versa.14 The Court explained:
x x x in the absence of express statutory provisions, a mortgage creditor may institute against the
mortgage debtor either a personal action for debt or a real action to foreclose the mortgage. In other
words, he may pursue either of the two remedies, but not both. By such election, his cause of action
can by no means be impaired, for each of the two remedies is complete in itself. Thus, an election to
bring a personal action will leave open to him all the properties of the debtor for attachment and
execution, even including the mortgaged property itself. And, if he waives such personal action and
pursues his remedy against the mortgaged property, an unsatisfied judgment thereon would still give
him the right to sue for deficiency judgment, in which case, all the properties of the defendant, other
than the mortgaged property, are again open to him for the satisfaction of the deficiency. In either case,
his remedy is complete, his cause of action undiminished, and any advantages attendant to the pursuit
of one or the other remedy are purely accidental and are all under his right of election. On the other
hand, a rule that would authorize the plaintiff to bring a personal action against the debtor and
simultaneously or successively another action against the mortgaged property, would result not only in
multiplicity of suits so offensive to justice (Soriano v. Enriques, 24 Phil. 584) and obnoxious to law
and equity (Osorio v. San Agustin, 25 Phil. 404), but also in subjecting the defendant to the vexation of
being sued in the place of his residence or of the residence of the plaintiff, and then again in the place
where the property lies.15
The Court has ruled that if a creditor is allowed to file his separate complaints simultaneously or
successively, one to recover his credit and another to foreclose his mortgage, he will, in effect, be
authorized plural redress for a single breach of contract at so much costs to the court and with so much
vexation and oppressiveness to the debtor.16
In this case, however, there are circumstances that the Court takes into consideration.
Petitioner filed an action for foreclosure of mortgage. The RTC, Branch 33 ruled that petitioner was
not entitled to judicial foreclosure because the Deed of Real Estate Mortgage was executed without
Enrico’s consent. The RTC, Branch 33 stated:
All these circumstances certainly conspired against the plaintiff who has the burden of proving his
cause of action. On the other hand, said circumstances tend to support the claim of defendant Edna
Lindo that her husband did not consent to the mortgage of their conjugal property and that the loan
application was her personal decision.
Accordingly, since the Deed of Real Estate Mortgage was executed by defendant Edna Lindo lacks the
consent or authority of her husband Enrico Lindo, the Deed of Real Estate Mortgage is void pursuant
to Article 96 of the Family Code.
This does not mean, however, that the plaintiff cannot recover the ₱400,000 loan plus interest which he
extended to defendant Edna Lindo. He can institute a personal action against the defendant for the
amount due which should be filed in the place where the plaintiff resides, or where the defendant or
any of the principal defendants resides at the election of the plaintiff in accordance with Section 2,
Rule 4 of the Revised Rules on Civil Procedure. This Court has no jurisdiction to try such personal
action.17
Edna did not deny before the RTC, Branch 33 that she obtained the loan. She claimed, however, that
her husband did not give his consent and that he was not aware of the transaction.18 Hence, the RTC,
Branch 33 held that petitioner could still recover the amount due from Edna through a personal action
over which it had no jurisdiction.
Edna also filed an action for declaratory relief before the RTC, Branch 93 of San Pedro Laguna (RTC,
Branch 93), which ruled:
At issue in this case is the validity of the promissory note and the Real Estate Mortgage executed by
Edna Lindo without the consent of her husband.
The real estate mortgage executed by petition Edna Lindo over their conjugal property is undoubtedly
an act of strict dominion and must be consented to by her husband to be effective. In the instant case,
the real estate mortgage, absent the authority or consent of the husband, is necessarily void. Indeed, the
real estate mortgage is this case was executed on October 31, 1995 and the subsequent special power
of attorney dated November 4, 1995 cannot be made to retroact to October 31, 1995 to validate the
mortgage previously made by petitioner.
The liability of Edna Lindo on the principal contract of the loan however subsists notwithstanding the
illegality of the mortgage. Indeed, where a mortgage is not valid, the principal obligation which it
guarantees is not thereby rendered null and void. That obligation matures and becomes demandable in
accordance with the stipulation pertaining to it. Under the foregoing circumstances, what is lost is
merely the right to foreclose the mortgage as a special remedy for satisfying or settling the
indebtedness which is the principal obligation. In case of nullity, the mortgage deed remains as
evidence or proof of a personal obligation of the debtor and the amount due to the creditor may be
enforced in an ordinary action.
In view of the foregoing, judgment is hereby rendered declaring the deed of real estate mortgage as
void in the absence of the authority or consent of petitioner’s spouse therein. The liability of petitioner
on the principal contract of loan however subsists notwithstanding the illegality of the real estate
mortgage.19
The RTC, Branch 93 also ruled that Edna’s liability is not affected by the illegality of the real estate
mortgage.
Both the RTC, Branch 33 and the RTC, Branch 93 misapplied the rules.
Article 124 of the Family Code provides:
Art. 124. The administration and enjoyment of the conjugal partnership property shall belong to both
spouses jointly. In case of disagreement, the husband’s decision shall prevail, subject to recourse to the
court by the wife for proper remedy, which must be availed of within five years from the date of
contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to participate in the administration of
the conjugal properties, the other spouse may assume sole powers of administration. These powers do
not include disposition or encumbrance without authority of the court or the written consent of the
other spouse. In the absence of such authority or consent the disposition or encumbrance shall be
void. However, the transaction shall be construed as a continuing offer on the part of the
consenting spouse and the third person, and may be perfected as a binding contract upon the
acceptance by the other spouse or authorization by the court before the offer is withdrawn by
either or both offerors. (Emphasis supplied)
Article 124 of the Family Code of which applies to conjugal partnership property, is a reproduction of
Article 96 of the Family Code which applies to community property.
Both Article 96 and Article 127 of the Family Code provide that the powers do not include disposition
or encumbrance without the written consent of the other spouse. Any disposition or encumbrance
without the written consent shall be void. However, both provisions also state that "the transaction
shall be construed as a continuing offer on the part of the consenting spouse and the third person, and
may be perfected as a binding contract upon the acceptance by the other spouse x x x before the
offer is withdrawn by either or both offerors."
In this case, the Promissory Note and the Deed of Real Estate Mortgage were executed on 31 October
1995. The Special Power of Attorney was executed on 4 November 1995. The execution of the SPA
is the acceptance by the other spouse that perfected the continuing offer as a binding contract
between the parties, making the Deed of Real Estate Mortgage a valid contract.
However, as the Court of Appeals noted, petitioner allowed the decisions of the RTC, Branch 33 and
the RTC, Branch 93 to become final and executory without asking the courts for an alternative relief.
The Court of Appeals stated that petitioner merely relied on the declarations of these courts that he
could file a separate personal action and thus failed to observe the rules and settled jurisprudence on
multiplicity of suits, closing petitioner’s avenue for recovery of the loan.
WHEREFORE, the 30 May 2008 Decision and the 4 August 2008 Resolution of the Court of Appeals
in CA-G.R. SP No. 94003 are SET ASIDE. The Regional Trial Court of Manila, Branch 42 is directed
to proceed with the trial of Civil Case No. 04-110858.
SO ORDERED.

Nevertheless, petitioner still has a remedy under the law.

In Chieng v. Santos,20 this Court ruled that a mortgage-creditor may institute against the mortgage-
debtor either a personal action for debt or a real action to foreclose the mortgage. The Court ruled that
the remedies are alternative and not cumulative and held that the filing of a criminal action for SECOND DIVISION
violation of Batas Pambansa Blg. 22 was in effect a collection suit or a suit for the recovery of the
mortgage-debt.21 In that case, however, this Court pro hac vice, ruled that respondents could still be
held liable for the balance of the loan, applying the principle that no person may unjustly enrich
himself at the expense of another.22 SHINRYO (PHILIPPINES) COMPANY, INC., G.R. No. 172525
Petitioner, Present:
The principle of unjust enrichment is provided under Article 22 of the Civil Code which provides: CARPIO, J., Chairperson,
VELASCO, JR.,**
Art. 22. Every person who through an act of performance by another, or any other means, acquires or - versus - LEONARDO-DE CASTRO,***
comes into possession of something at the expense of the latter without just or legal ground, shall PERALTA, and
return the same to him. MENDOZA, JJ.

There is unjust enrichment "when a person unjustly retains a benefit to the loss of another, or when a RRN INCORPORATED,* Promulgated:
person retains money or property of another against the fundamental principles of justice, equity and Respondent.
good conscience."23 The principle of unjust enrichment requires two conditions: (1) that a person is October 20, 2010
benefited without a valid basis or justification, and (2) that such benefit is derived at the expense of
another.241avvphi1

The main objective of the principle against unjust enrichment is to prevent one from enriching himself
at the expense of another without just cause or consideration. 25 The principle is applicable in this case
considering that Edna admitted obtaining a loan from petitioners, and the same has not been fully paid
without just cause. The Deed was declared void erroneously at the instance of Edna, first when she x-----------------------------------------------------------------------------------------x
raised it as a defense before the RTC, Branch 33 and second, when she filed an action for declaratory
relief before the RTC, Branch 93. Petitioner could not be expected to ask the RTC, Branch 33 for an
alternative remedy, as what the Court of Appeals ruled that he should have done, because the RTC, DECISION
Branch 33 already stated that it had no jurisdiction over any personal action that petitioner might have
against Edna.
PERALTA, J.:

Considering the circumstances of this case, the principle against unjust enrichment, being a substantive
law, should prevail over the procedural rule on multiplicity of suits. The Court of Appeals, in the This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that
assailed decision, found that Edna admitted the loan, except that she claimed it only amounted to
₱340,000. Edna should not be allowed to unjustly enrich herself because of the erroneous decisions of the Decision[1] of the Court of Appeals (CA) dated February 22, 2006, affirming the Decision of the
the two trial courts when she questioned the validity of the Deed. Moreover, Edna still has an
Construction Industry Arbitration Commission (CIAC), and the CA Resolution[2] dated April 26, 2006,
opportunity to submit her defenses before the RTC, Branch 42 on her claim as to the amount of her
indebtedness. denying herein petitioner's motion for reconsideration, be reversed and set aside.
 submitted to arbitration. During the preliminary conference, the parties agreed in
The facts, as accurately narrated in the CA Decision, are as follows. their Terms of Reference to resolve eight issues, to wit:
Petitioner Shinryo (Philippines) Company, Inc. (hereinafter petitioner) is a domestic
corporation organized under Philippine laws. Private respondent RRN Incorporated
(hereinafter respondent) is likewise a domestic corporation organized under
1. What should be the basis in evaluating the variation
Philippine laws.
cost?
Respondent filed a claim for arbitration against petitioner before CIAC for recovery
1.1 How much is the variation cost?
of unpaid account which consists of unpaid portions of the sub-contract, variations
and unused materials in the total sum of P5,275,184.17 and legal interest in the 2. Is the Respondent (petitioner in the instant case)
amount of P442,014.73. Petitioner filed a counterclaim for overpayment in the
justified in charging claimant (herein respondent) the equipment
amount of P2,512,997.96.
rental fee and for the use of the scaffoldings? If so, how much
should be charged to Claimant?
The parties admitted several facts before the CIAC. It was shown that petitioner and
respondent executed an Agreement and Conditions of Sub-contract (hereafter 3. What should be the basis in evaluating the total cost of
Agreement signed on June 11, 1996 and June 14, 1996, respectively. Respondent materials supplied by Respondent to the Project which is
signified its willingness to accept and perform for petitioner in any of its projects, a
chargeable to Claimant?
part or the whole of the works more particularly described in Conditions of Sub-
Contract and other Sub-contract documents.
3.1 How much is the total cost of materials supply chargeable to
Claimant?
On June 11, 2002, the parties executed a Supply of Manpower, Tools/Equipment,
Consumables for the Electrical Works-Power and Equipment Supply, Bus Duct 4. How much is the value of the remaining works left
Installation for the Phillip Morris Greenfield Project (hereafter Project) covered by
undone by the Claimant in the project?
Purchase Order Nos. 4501200300-000274 and 4501200300-000275 amounting
to P15,724,000.00 and P9,276,000.00 respectively, or a total amount
5. Is the Claimant's claim for inventory of excess
of P25,000,000.00. The parties also agreed that respondent will perform variation materials valid? If so, how much is the value thereof?
orders in the Project. In connection with the Project, petitioner supplied manpower
chargeable against respondent.
6. Is the Respondent entitled to its claim for an
overpayment in the amount of P2,512,997.96?
Respondent was not able to finish the entire works with petitioner due to financial
difficulties. Petitioner paid respondent a total amount of P26,547,624.76. On June
7. Is Claimant entitled to its claim for interest? If so, how
25, 2005 [should read 2003], respondent, through its former counsel sent a letter to much?
petitioner demanding for the payment of its unpaid balance amounting
to P5,275,184.17. Petitioner claimed material back charges in the amount
8. Who between the parties shall bear the cost of
of P4,063,633.43. On September 26, 2003, respondent only
Arbitration?
acknowledged P2,371,895.33 as material back charges. Thereafter, on October 16,
2003, respondent sent another letter to petitioner for them to meet and settle their
The CIAC rendered the assailed decision after the presentation of the parties'
dispute. evidence. [The dispositive portion of said decision reads as follows:
On January 8, 2004, respondent sent another letter to petitioner regarding the cost of
WHEREFORE, judgment is hereby rendered in favor of the
equipment rental and the use of scaffolding. Thereafter, on August 12, 2004,
claimant and respondent is ordered to pay claimant its unpaid
petitioner sent a letter to respondent denying any unpaid account and the failure in
account in the sum of P3,728,960.54 plus legal interest of 6%
their negotiations for amicable settlement. reckoned from June 25, 2003 up to the filing of the case on
October 11, 2004 and 12% of P3,728,960.54 from the finality of
On September 3, 2004, respondent, through its new counsel, advised petitioner of
the judgment until fully paid and arbitration cost of P104,333.82
their intention to submit the matter to arbitration. Thereafter, their dispute was
 representing claimant's share of the arbitration cost which INSTALLED THE SAID MATERIALS AS PART OF
respondent should reimburse. REMAINING WORKS THAT PETITIONER TOOK OVER
FROM RESPONDENT RRN.
SO ORDERED.]
C. THE CLAIM FOR THE VALUE OF INVENTORIED
Petitioner accepts the ruling of the CIAC only in Issue No. 1 and Sub-Issue MATERIALS IS A DOUBLE CLAIM OR DOUBLE ENTRY
No. 1.1 and in Issue No. 2 in so far as the amount of P440,000.00 awarded as back BECAUSE IN THE COMPUTATION OF THE FINAL
charges for the use of scaffoldings. x x x[3] ACCOUNT, RESPONDENT RRN WAS CREDITED THE FULL
CONTRACT PRICE AND THE COST OF VARIATIONS,
WHICH INCLUDED THE INVENTORIED MATERIALS.
On February 22, 2006, the CA promulgated the assailed Decision affirming the decision of the
CIAC. The CA upheld the CIAC ruling that petitioner failed to adduce sufficient proof that the parties IV. IN RENDERING THE QUESTIONED DECISION AND
QUESTIONED RESOLUTION, THE COURT OF APPEALS COMMITTED A
had an agreement regarding charges for respondent's use of the manlift. As to the other charges for GRAVE REVERSIBLE ERROR IN THAT IT COMPLETELY DISREGARDED
materials, the CA held that the evidence on record amply supports the CIAC findings. Petitioner moved THE PROVISION OF THE SUBCONTRACT, WHICH ALLOWED PAYMENT
OF ACTUAL COST INCURRED BY PETITIONER IN COMPLETING THE
for reconsideration of said ruling, but the same was denied per Resolution dated April 26, 2006. REMAINING WORKS THAT PRIVATE RESPONDENT ADMITTEDLY
FAILED TO COMPLETE.

Hence, this petition where it is alleged that: V. THE COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE
ERROR WHEN IT COMPLETELY DISREGARDED THE EVIDENCE ON
ACTUAL COST INCURRED BY PETITIONER IN COMPLETING THE
I. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE
REMAINING WORKS.
REVERSIBLE ERROR WHEN IT DENIED PETITIONER'S CLAIM FOR
MANLIFT EQUIPMENT RENTAL IN THE AMOUNT OF P511,000.00 DESPITE
VI. THE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE
EVIDENCE ON RECORD THAT RESPONDENT RRN ACTUALLY USED AND
ERROR WHEN IT AFFIRMED THE CIAC AWARD FOR INTERESTS AND
BENEFITED FROM THE MANLIFT EQUIPMENT.
ARBITRATION COSTS IN FAVOR OF RESPONDENT RRN.[4]
II. IN RENDERING THE QUESTIONED DECISION AND
QUESTIONED RESOLUTION, THE HONORABLE COURT OF APPEALS HAS
DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW The petition is bereft of merit.
AND/OR WITH THE APPLICABLE DECISIONS OF THE HONORABLE
SUPREME COURT.
Despite petitioner's attempts to make it appear that it is advancing questions of law, it is quite
III. THE COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE
ERROR IN AFFIRMING THE CIAC AWARD FOR THE VALUE OF clear that what petitioner seeks is for this Court to recalibrate the evidence it has presented before the
INVENTORIED MATERIALS CONSIDERING THAT: CIAC.It insists that its evidence sufficiently proves that it is entitled to payment for respondent's use of
A. RESPONDENT RRN ADMITTED THE VALIDITY OF THE its manlift equipment, and even absent proof of the supposed agreement on the charges petitioner may
DEDUCTIONS ON ACCOUNT OF MATERIAL SUPPLY,
impose on respondent for the use of said equipment, respondent should be made to pay based on the
WHICH INCLUDED THE INVENTORIED MATERIALS.
principle of unjust enrichment. Petitioner also questions the amounts awarded by the CIAC for
B. RESPONDENT RRN HAS NO BASIS TO CLAIM BECAUSE
ENGR. BONIFACIO ADMITTED THAT RESPONDENT RRN inventoried materials, and costs incurred by petitioner for completing the work left unfinished by
FAILED TO ESTABLISH WHETHER THE MATERIALS respondent.
CAME FROM RESPONDENT RRN OR FROM PETITIONER
AND THAT IT WAS PETITIONER THAT ACTUALLY
 As reiterated by the Court in IBEX International, Inc. v. Government Service Insurance
System,[5] to wit:
It is settled that findings of fact of quasi-judicial bodies, which have
acquired expertise because their jurisdiction is confined to specific matters, are
generally accorded not only respect, but also finality, especially when affirmed
by the Court of Appeals. In particular, factual findings of construction
arbitrators are final and conclusive and not reviewable by this Court on appeal.
This rule, however, admits of certain exceptions. In Uniwide Sales Realty and
Resources Corporation v. Titan-Ikeda Construction and Development Corporation,
we said:
In David v. Construction Industry and Arbitration Commission, we
ruled that, as exceptions, factual findings of construction
arbitrators may be reviewed by this Court when the petitioner
proves affirmatively that: (1) the award was procured by
corruption, fraud or other undue means; (2) there was evident
partiality or corruption of the arbitrators or any of them; (3) the
arbitrators were guilty of misconduct in refusing to hear evidence
pertinent and material to the controversy; (4) one or more of the
arbitrators were disqualified to act as such under Section nine of
Republic Act No. 876 and willfully refrained from disclosing such
disqualifications or of any other misbehavior by which the rights of
any party have been materially prejudiced; or (5) the arbitrators
exceeded their powers, or so imperfectly executed them, that a
mutual, final and definite award upon the subject matter submitted
to them was not made.
Other recognized exceptions are as follows: (1) when there is a
very clear showing of grave abuse of discretion resulting in lack or
loss of jurisdiction as when a party was deprived of a fair
opportunity to present its position before the Arbitral Tribunal or
when an award is obtained through fraud or the corruption of
arbitrators, (2) when the findings of the Court of Appeals are
contrary to those of the CIAC, and (3) when a party is deprived of
administrative due process.[6]
A perusal of the records would reveal that none of the aforementioned circumstances, which
would justify exemption of this case from the general rule, are present here. Such being the case, the
Court, not being a trier of facts, is not duty-bound to examine, appraise and analyze anew the evidence
presented before the arbitration body.[7]
Petitioner's reliance on the principle of unjust enrichment is likewise misplaced. The ruling of
the Court in University of the Philippines v. Philab Industries, Inc.[8] is highly instructive, thus:
Unjust enrichment claims do not lie simply because one party benefits from
the efforts or obligations of others, but instead it must be shown that a party was
unjustly enriched in the sense that the term unjustly could mean illegally or
unlawfully.
Moreover, to substantiate a claim for unjust enrichment, the claimant must
unequivocally prove that another party knowingly received something of value to
which he was not entitled and that the state of affairs are such that it would be unjust
for the person to keep the benefit. Unjust enrichment is a term used to depict result or
effect of failure to make remuneration of or for property or benefits received under
circumstances that give rise to legal or equitable obligation to account for them; to be
entitled to remuneration, one must confer benefit by mistake, fraud, coercion, or
request. Unjust enrichment is not itself a theory of reconvey. Rather, it is a
prerequisite for the enforcement of the doctrine of restitution.
Article 22 of the New Civil Code reads:
Every person who, through an act of performance by another, or
any other means, acquires or comes into possession of something
at the expense of the latter without just or legal ground, shall
return the same to him.
In order that accion in rem verso may prosper, the essential elements must be
present: (1) that the defendant has been enriched, (2) that the plaintiff has suffered a
loss, (3) that the enrichment of the defendant is without just or legal ground, and
(4) that the plaintiff has no other action based on contract, quasi-contract,
crime or quasi-delict.
An accion in rem verso is considered merely an auxiliary action, available only when
there is no other remedy on contract, quasi-contract, crime, and quasi-delict. If there
is an obtainable action under any other institution of positive law, that action must be
resorted to, and the principle of accion in rem verso will not lie.[9]
As found by both the CIAC and affirmed by the CA, petitioner failed to prove that
respondent's free use of the manlift was without legal ground based on the provisions of their
contract. Thus, the third requisite, i.e., that the enrichment of respondent is without just or legal
ground, is missing. In addition, petitioner's claim is based on contract, hence, the fourth requisite − that
the plaintiff has no other action based on contract, quasi-contract, crime or quasi-delict − is also
absent. Clearly, the principle of unjust enrichment is not applicable in this case.
The other issues raised by petitioner all boil down to whether the CIAC or the CA erred in
rejecting its claims for costs of some materials.
The awards for interests and arbitration costs are, likewise, correct as they are in keeping with
prevailing jurisprudence.[13]
IN VIEW OF THE FOREGOING, the Petition is DENIED. The Decision of the Court of Appeals
dated February 22, 2006 and its Resolution dated April 26, 2006 are AFFIRMED.

Again, these issues are purely factual and cannot be properly addressed in this petition for review SO ORDERED.
on certiorari. In Hanjin Heavy Industries and Construction Co., Ltd. v. Dynamic Planners and
Construction Corp.,[10] it was emphasized that mathematical computations, the propriety of arbitral
awards, claims for other costs and abandonment are factual questions. Since the discussions of the FIRST DIVISION
CIAC and the CA in their respective Decisions show that its factual findings are supported by
TITAN-IKEDA CONSTRUCTION G.R. No. 158768
substantial evidence, there is no reason why this Court should not accord finality to said & DEVELOPMENT
findings. Verily, to accede to petitioner's request for a recalibration of its evidence, which had been CORPORATION,
Petitioner, Present:
thoroughly studied by both the CIAC and the CA would result in negating the objective of Executive
PUNO, C.J., Chairperson,
Order No. 1008, which created an arbitration body to ensure the prompt and efficient settlement of
SANDOVAL-GUTIERREZ,
disputes in the construction industry. Thus, the Court held in Uniwide Sales Realty and Resources -v e r s u s- CORONA,
AZCUNA and
Corporation v. Titan-Ikeda Construction and Development Corporation,[11] that: LEONARDO-DE CASTRO, JJ.
PRIMETOWN PROPERTY
x x x The Court will not review the factual findings of an arbitral tribunal GROUP, INC.,
upon the artful allegation that such body had "misapprehended facts" and will not Respondent. Promulgated:
pass upon issues which are, at bottom, issues of fact, no matter how cleverly
disguised they might be as "legal questions." The parties here had recourse to February 12, 2008
arbitration and chose the arbitrators themselves; they must have had confidence in
such arbitrators. The Court will not, therefore, permit the parties to relitigate before it
the issues of facts previously presented and argued before the Arbitral Tribunal, save x--------------------------------------------------x
only where a clear showing is made that, in reaching its factual conclusions, the
Arbitral Tribunal committed an error so egregious and hurtful to one party as to DECISION
constitute a grave abuse of discretion resulting in lack or loss of jurisdiction.[12]
CORONA, J.:

As discussed above, there is nothing in the records that point to any grave abuse of discretion
This petition for review on certiorari[1] seeks to set aside the decision of the Court of Appeals (CA) in
committed by the CIAC.
CA-G.R. CV No. 61353[2] and its resolution[3] denying reconsideration.
In 1992, respondent Primetown Property Group, Inc. awarded the contract for the structural works [4] of Petitioner started working on the project in February 1994.

its 32-storey Makati Prime Tower (MPT) to petitioner Titan-Ikeda Construction and Development
On June 30, 1994, respondent executed a deed of sale [12] (covering 114 condominium units and 20
[5] [6]
Corporation. The parties formalized their agreement in a construction contract dated February 4,
parking slots of the MPT collectively valued by the parties at P112,416,716.88)[13] in favor of
[7]
1993.
petitioner pursuant to the full-swapping payment provision of the supplemental agreement.

Upon the completion of MPT's structural works, respondent awarded the P130,000,000 contract for the
Shortly thereafter, petitioner sold some of its units to third persons.[14]
[8]
tower's architectural works (project) to petitioner. Thus, on January 31, 1994, the parties executed a

supplemental agreement.[9] The salient portions thereof were: In September 1995, respondent engaged the services of Integratech, Inc. (ITI), an engineering

1. the [project] shall cover the scope of work of the detailed construction consultancy firm, to evaluate the progress of the project.[15] In its September 7, 1995 report,[16] ITI
bid plans and specifications and bid documents dated 28 September 1993,
attached and forming an integral part hereof as Annex A. informed respondent that petitioner, at that point, had only accomplished 31.89% of the project (or was

2. the contract price for the said works shall be P130 million. 11 months and six days behind schedule).[17]

3. the payment terms shall be full swapping or full payment in

condominium units. The condominium units earmarked for the [petitioner] Meanwhile, petitioner and respondent were discussing the possibility of the latters take over of the
are shown in the attached Annex B.
projects supervision. Despite ongoing negotiations, respondent did not obtain petitioners consent in
4. the [respondent] shall transfer and surrender to [petitioner] the
condominium units abovestated in accordance with the following schedule:
hiring ITI as the projects construction manager. Neither did it inform petitioner of ITIs September 7,
(a) 80% of units upon posting and acceptance by [respondent] of
1995 report.
the performance bond [and]

(b) 20% or remaining balance upon completion of the project as

provided in the construction contract and simultaneous with the
posting by [petitioner] of the reglementary guarantee bond.
5. the contract period shall be fifteen (15) months reckoned from the
release of the condominium certificates of title (CCTs) covering eighty
percent (80%) of the units transferable to [petitioner] as aforesaid[.]
Significantly, the supplemental agreement adopted those provisions of the construction contract which
it did not specifically discuss or provide for.[10] Among those carried over was the designation of
GEMM Construction Corporation (GEMM) as the project's construction manager. [11]
On October 12, 1995, petitioner sought to confirm respondent's plan to take over the project. [18] Its
letter stated:
The mutual agreement arrived at sometime in the last week of August 1995 for
[respondent] to take over the construction supervision of the balance of the [project]
from [petitioner's] [e]ngineering staff and complete [the] same by December 31,
1995 as promised by [petitioner's] engineer.
The [petitioner's] accomplished works as of this date of [t]ake over is of acceptable
quality in materials and workmanship.
 This mutual agreement on the take over should not be misconstrued in any
other way except that the take over is part of the long range plan While the complaint for specific performance was pending in the HLURB, respondent sent a demand
of [respondent] that [petitioner], in the spirit of cooperation, agreed to hand over
the construction supervision to [respondent] as requested. (emphasis supplied)[19] letter to petitioner asking it to reimburse the actual costs incurred in finishing the project

(or P69,785,923.47).[30] In view of the pendency of the HLURB case, petitioner did not heed
Engineers Antonio Co, general construction manager of respondent, and Luzon Y. Tablante, project
respondent's demands.
manager of petitioner, signed the letter.

On April 29, 1997, the HLURB rendered a decision in favor of petitioner. [31] It ruled that the

instrument executed on June 30, 1994 was a deed of absolute sale because the conveyance of the
INTEGRATECHS (ITIS) REPORT
condominium units and parking slots was not subject to any condition. [32] Thus, it ordered respondent

In its September 7, 1995 report, ITI estimated that petitioner should have accomplished to issue MPTs management certificate and to deliver the keys to the condominium units to

48.71% of the project as of the October 12, 1995 takeover date. [20] Petitioner repudiated this petitioner.[33] Respondent did not appeal this decision. Consequently, a writ of execution was issued

figure[21] but qualifiedly admitted that it did not finish the project. [22] Records showed that respondent upon its finality.[34]

did not merely take over the supervision of the project but took full control thereof. [23]
Undaunted by the finality of the HLURB decision, respondent filed a complaint for collection

Petitioner consequently conducted an inventory.[24] On the basis thereof, petitioner demanded from of sum of money[35] against petitioner in the Regional Trial Court (RTC) of Makati City, Branch 58 on

respondent the payment of its balance amounting to P1,779,744.85.[25] July 2, 1997. It prayed for the reimbursement of the value of the projects unfinished portion amounting

to P66,677,000.[36]
On February 19, 1996, petitioner sent a second letter to respondent demanding P2,023,876.25. This

new figure included the cost of materials (P244,331.40) petitioner advanced from December 5, 1995 to During trial, the RTC found that because respondent modified the MPT's architectural design,

January 26, 1996.[26] petitioner had to adjust the scope of work.[37] Moreover, respondent belatedly informed petitioner of

On November 22, 1996, petitioner demanded from respondent the delivery of MPT's management those modifications. It also failed to deliver the concrete mix and rebars according to schedule. For this

certificate[27] and the keys to the condominium units and the payment of its (respondent's) balance. [28] reason, petitioner was not responsible for the project's delay. [38] The trial court thus allowed petitioner

to set-off respondent's other outstanding liabilities with respondents excess payment in the project. [39] It
Because respondent ignored petitioner's demand, petitioner, on December 9, 1996, filed a complaint
concluded that respondent owed petitioner P2,023,876.25.[40] In addition, because respondent refused
[29]
for specific performance in the Housing and Land Use Regulatory Board (HLURB).
to deliver the keys to the condominium units and the management certificate to petitioner, the RTC
 plus legal interest thereon until fully paid. Upon payment by [petitioner] of the
found that petitioner lost rental income amounting to US$1,665,260. [41] The dispositive portion of the aforementioned amount, [respondent] is hereby ordered to deliver the keys and
[m]anagement [c]ertificate of the [Makati Prime Tower] paid to [petitioner] as
RTC decision stated: consideration for the [project].[46]

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered

dismissing [respondent's] [c]omplaint for lack of merit. On the other hand, finding Petitioner moved for reconsideration but it was denied. Hence, this petition.
preponderance of evidence to sustain [petitioner's] counterclaim, judgment is hereby
rendered in favor of [petitioner] ordering [respondent] to pay the former:
Petitioner contends that the CA erred in giving weight to ITI's report because the project evaluation
1. The unpaid balance of the consideration for [petitioner's] services in
[the project] in the amount of P2,023,867.25 with legal interest from the was commissioned only by respondent,[47] in disregard of industry practice. Project evaluations are
date of demand until fully paid;
agreed upon by the parties and conducted by a disinterested third party. [48]
2. Compensatory damages in the amount of US$1,665,260 or its peso
equivalent at the current foreign exchange rate representing lost rental
income due only as of July 1997 and the accrued lost earnings from then on We grant the petition.
until the date of actual payment, with legal interest from the date of demand
until fully paid; and

3. Attorney's fees in the amount of P100,000 as acceptance fee, P1,000 REVIEW OF CONFLICTING
appearance fee per hearing and 25% of the total amount awarded to FACTUAL FINDINGS
[petitioner].

With costs against the [respondent].

SO ORDERED.[42] As a general rule, only questions of law may be raised in a petition for review on certiorari. Factual

issues are entertained only in exceptional cases such as where the findings of fact of the CA and the
Respondent appealed the RTC decision to the CA.[43] The appellate court found that respondent fully
trial court are conflicting.[49]
performed its obligation when it executed the June 30, 1994 deed of absolute sale in favor of

petitioner.[44] Moreover, ITI's report clearly established that petitioner had completed only 48.71% of Here, a glaring contradiction exists between the factual findings of the RTC and the CA. The trial court

the project as of October 12, 1995, the takeover date. Not only did it incur delay in the performance of found that respondent contributed to the project's delay because it belatedly communicated the

its obligation but petitioner also failed to finish the project. The CA ruled that respondent was entitled modifications and failed to deliver the necessary materials on time. The CA, however, found that

to recover the value of the unfinished portion of the project under the principle of unjust petitioner incurred delay in the performance of its obligation. It relied on ITI's report which stated that

enrichment.[45] Thus: petitioner had accomplished only 48.71% of the project as of October 12, 1995.
WHEREFORE, the appealed decision is REVERSED and a new one entered
dismissing [petitioner's] counterclaims of P2,023,867.25 representing unpaid
balance for [its] services in [the project]; US$1,665,260 as accrued lost earnings,
and attorney's fees. [Petitioner] is hereby ordered to return to [respondent] the
amount of P66,677,000 representing the value of unfinished [portion of the project],
JANUARY 31, 1994
SUPPLEMENTAL
AGREEMENT WAS Because the parties agreed to extinguish the supplemental agreement, they were no longer required to
EXTINGUISHED
fully perform their respective obligations. Petitioner was relieved of its obligation to complete the

project while respondent was freed of its obligation to pay the entire contract price. However,
A contract is a meeting of the minds between two persons whereby one binds himself, with respect to
respondent, by executing the June 30, 1994 deed of absolute sale, was deemed to have
the other, to give something or to render some service.[50] This case involved two contracts entered into
paid P112,416,716.88. Nevertheless, because petitioner applied part of what it received to respondents
by the parties with regard to the project.
outstanding liabilities,[56] it admitted overpayment.

The parties first entered into a contract for a piece of work[51] when they executed the supplemental Because petitioner acknowledged that it had been overpaid, it was obliged to return the excess to

agreement. Petitioner as contractor bound itself to execute the project for respondent, the respondent. Embodying the principle of solutio indebiti, Article 2154 of the Civil Code provides:

owner/developer, in consideration of a price certain (P130,000,000). The supplemental agreement was Article 2154. If something is received when there is no right to demand it and it
was unduly delivered through mistake, the obligation to return it arises.
reciprocal in nature because the obligation of respondent to pay the entire contract price depended on

the obligation of petitioner to complete the project (and vice versa).

For the extra-contractual obligation of solutio indebiti to arise, the following requisites must
Thereafter, the parties entered into a second contract. They agreed to extinguish the supplemental
be proven:
agreement as evidenced by the October 12, 1995 letter-agreement which was duly acknowledged by
1. the absence of a right to collect the excess sums and
their respective representatives.[52]
2. the payment was made by mistake.[57]

While the October 12, 1995 letter-agreement stated that respondent was to take over merely the
With regard to the first requisite, because the supplemental agreement had been extinguished by the
supervision of the project, it actually took over the whole project itself. In fact, respondent
mutual agreement of the parties, petitioner became entitled only to the cost of services it actually
[53]
subsequently hired two contractors in petitioner's stead. Moreover, petitioner's project engineer at
rendered (i.e., that fraction of the project cost in proportion to the percentage of its actual
site only monitored the progress of architectural works undertaken in its condominium
accomplishment in the project). It was not entitled to the excess (or extent of overpayment).
[54]
units. Petitioner never objected to this arrangement; hence, it voluntarily surrendered its

participation in the project. Moreover, it judicially admitted in its answer that respondent took over the On the second requisite, Article 2163 of the Civil Code provides:

entire project, not merely its supervision, pursuant to its (respondents) long-range plans.[55]
 Article 2163. It is presumed that there was a mistake in the payment if
something which had never been due or had already been paid was delivered; b) the percentage of petitioner's actual accomplishment in the project has not been
but, he from whom the return is claimed may prove that the delivery was made out
of liberality or for any other just cause. (emphasis supplied) determined and

In this instance, respondent paid part of the contract price under the assumption that petitioner
c) the records of this case do not show the actual number of condominium units and parking
would complete the project within the stipulated period. However, after the supplemental agreement
slots sold by petitioners.
was extinguished, petitioner ceased working on the project. Therefore, the compensation petitioner
Because this Court is not a trier of facts, the determination of these matters should be
received in excess of the cost of its actual accomplishment as of October 12, 1995 was never due. The
remanded to the RTC for reception of further evidence.
condominium units and parking slots corresponding to the said excess were mistakenly delivered by

respondent and were therefore not due to petitioner. The RTC must first determine the percentage of the project petitioner actually completed and its

proportionate cost.[62] This will be the amount due to petitioner. Thereafter, based on the stipulated
Stated simply, respondent erroneously delivered excess units to petitioner and the latter, pursuant to
valuation inthe June 30, 1994 deed of sale, the RTC shall determine how many condominium units and
Article 2154, was obliged to the return them to respondent. [58] Article 2160 of the Civil Code provides:
Article 2160. He who in good faith accepts an undue payment of a thing parking slots correspond to the amount due to petitioner. It will only be the management certificate and
certain and determinate shall only be responsible for the impairment or loss of the
same or its accessories and accessions insofar as he has thereby been benefited. If the keys to these units that petitioner will be entitled to. The remaining units, having been mistakenly
he has alienated it, he shall return the price or assign the action to collect the sum.
delivered by respondent, will therefore be the subject of solutio indebiti.

One who receives payment by mistake in good faith is, as a general rule, only liable to return What exactly must petitioner give back to respondent? Under Article 2160 in relation to Article

the thing delivered.[59] If he benefited therefrom, he is also liable for the impairment or loss of the thing 2154, it should return to respondent the condominium units and parking slots in excess of the value of

delivered and its accessories and accessions.[60] If he sold the thing delivered, he should either deliver its actual accomplishment (i.e., the amount due to it) as of October 12, 1995. If these properties include

the proceeds of the sale or assign the action to collect to the other party. [61] units and/or slots already sold to third persons, petitioner shall deliver the proceeds of the

sale thereof or assign the actions for collection to respondent as required by Article 2160.
The situation is, however, complicated by the following facts: DELAY IN THE
COMPLETION OF THE
a) the basis of the valuation (P112,416,716.99) of the condominium units and parking slots PROJECT

covered by the June 30, 1994 deed of sale is unknown;

Mora or delay is the failure to perform the obligation in due time because of dolo (malice)
In view of the foregoing, we hold that petitioner did not incur delay in the performance of its
or culpa (negligence).[63] A debtor is deemed to have violated his obligation to the creditor from the
obligation.
time the latter makes a demand. Once the creditor makes a demand, the debtor incurs mora or delay.[64] RECOVERY OF ADDITIONAL
COSTS RESULTING FROM
CHANGES
The construction contract[65] provided a procedure for protesting delay:
Article XIV
DELAYS AND ABANDONMENT
The supplemental agreement was a contract for a stipulated price.[68] In such contracts, the recovery of
15.1. If at any time during the effectivity of this contract,
[PETITIONER] shall incur unreasonable delay or slippages of more than additional costs (incurred due to changes in plans or specifications) is governed by Article 1724 of the
fifteen percent (15%) of the scheduled work program,
[RESPONDENT] should notify [PETITIONER] in writing to accelerate the Civil Code.
work and reduce, if not erase, slippage. If after the lapse of sixty (60) days from
receipt of such notice, [PETITIONER] fails to rectify the delay or slippage, Article 1724. The contractor who undertakes to build a structure or any other work
[RESPONDENT] shall have the right to terminate this contract except in cases for a stipulated price, in conformity with plans and specifications agreed upon with
where the same was caused by force majeure. FORCE MAJEURE as contemplated the landowner, can neither withdraw from the contract nor demand an increase in
herein, and in determination of delay includes, but is not limited to, typhoon, flood, the price on account of higher cost of labor or materials, save when there has been a
earthquake, coup d'etat, rebellion, sedition, transport strike, stoppage of work, mass change in plans and specifications, provided:
public action that prevents workers from reporting for work, and such other causes
beyond [PETITIONER'S] control.[66](emphasis supplied) 1. such change has been authorized by the proprietor in writing; and

2. the additional price to be paid to the contractor has been determined in

xxx xxx xxx writing by both parties.

Respondent never sent petitioner a written demand asking it to accelerate work on the project and
In Powton Conglomerate, Inc. v. Agcolicol,[69] we reiterated that a claim for the cost of additional work
reduce, if not eliminate, slippage. If delay had truly been the reason why respondent took over the
arising from changes in the scope of work can only be allowed upon the:
project, it would have sent a written demand as required by the construction contract. Moreover,
1. written authority from the developer/owner ordering/allowing the changes in
according to the October 12, 1995 letter-agreement, respondent took over the project for the sole work; and

reason that such move was part of its (respondent's) long-term plan. 2. written agreement of parties with regard to the increase in cost (or price) due
to the change in work or design modification. [70]

Respondent, on the other hand, relied on ITI's September 7, 1995 report. The construction contract

named GEMM, not ITI, as construction manager.[67] Because petitioner did not consent to the change Furthermore:

of the designated construction manager, ITI's September 7, 1995 report could not bind it. Compliance with the two requisites of Article 1724, a specific provision
governing additional works, is a condition precedent of the recovery. The
 absence of one or the other bars the recovery of additional costs. Neither the
authority for the changes made nor the additional price to be paid therefor may be Since respondent did not repudiate petitioner's other claims stated in the inventory [77] in the RTC and
proved by any other evidence for purposes of recovery. [71] (emphasis supplied)
CA, it is estopped from questioning the validity thereof.[78] However, because some of petitioner's

claims have been disallowed, we remand the records of this case to the RTC for the computation of
Petitioner submitted neither one. In addition, petitioners project coordinator Estellita Garcia testified
respondent's liability.[79]
[72]
that respondent never approved any change order. Thus, under Article 1724 and pursuant to our

ruling in Powton Conglomerate, Inc., petitioner cannot recover the cost it incurred in effecting the WHEREFORE, the petition is hereby GRANTED.

design modifications. A contractor who fails to secure the owner or developer's written authority to
The March 15, 2002 decision and May 29, 2003 resolution of the Court of Appeals in CA-G.R. CV
changes in the work or written assent to the additional cost to be incurred cannot invoke the principle
No. 61353 and the August 5, 1998 decision of the Regional Trial Court, Branch 58, Makati City in
of unjust enrichment.[73]
RECOVERY OF Civil Case No. 97-1501 are hereby SET ASIDE. New judgment is entered:
COMPENSATORY DAMAGES

1. ordering petitioner Titan-Ikeda Construction and Development Corporation to return to

Indemnification for damages comprehends not only the loss suffered (actual damages or damnum respondent Primetown Property Group, Inc. the condominium units and parking slots

emergens) but also the claimant's lost profits (compensatory damages or lucrum cessans). For corresponding to the payment made in excess of the proportionate (project) cost of its actual

compensatory damages to be awarded, it is necessary to prove the actual amount of the alleged loss by accomplishment as of October 12, 1995, subject to its (petitioners) allowable claims as stated

preponderance of evidence.[74] in the inventory and

2. dismissing petitioner Titan-Ikeda Construction and Development Corporations claims for the
The RTC awarded compensatory damages based on the rental pool rates submitted by petitioner [75] and
cost of additional work (or change order) and damages.
on the premise that all those units would have been leased had respondent only finished the project by

December 31, 1995.[76] However, other than bare assertions, petitioner submitted no proof that the The records of this case are remanded to the Regional Trial Court of Makati City, Branch 58 for:

rental pool was in fact able to lease out the units. We thus hold that the losses sustained by petitioner
1. the reception of additional evidence to determine
were merely speculative and there was no basis for the award.
(a) the percentage of the architectural work actually completed by petitioner Titan-

REMAND OF OTHER CLAIMS Ikeda Construction and Development Corporation as of October 12, 1995

on the Makati Prime Tower and


(b) the number of condominium units and parking slots sold by petitioner Titan-
Ikeda Construction and Development Corporation to third persons;
2. the computation of petitioner Titan-Ikeda Construction and Development
Corporation's actual liability to respondent Primetown Property Group, Inc. or vice-
versa, and the determination of imposable interests and/or penalties, if any.
SO ORDERED.
[G.R. No. 146807. May 9, 2002]
PADCOM CONDOMINIUM CORPORATION, petitioner, vs. ORTIGAS CENTER
ASSOCIATION, INC., respondent.
DECISION
DAVIDE, JR., C.J.:
Challenged in this case is the 30 June 2000 decision[1] of the Court of Appeals in CA-G.R. CV
No. 60099, reversing and setting aside the 1 September 1997 decision [2] of the Regional Trial Court of
Pasig City, Branch 264, in Civil Case No. 63801. [3]
Petitioner Padcom Condominium Corporation (hereafter PADCOM) owns and manages the
Padilla Office Condominium Building (PADCOM Building) located at Emerald Avenue, Ortigas
Center, Pasig City. The land on which the building stands was originally acquired from the Ortigas &
Company, Limited Partnership (OCLP), by Tierra Development Corporation (TDC) under a Deed of
Sale dated 4 September 1974. Among the terms and conditions in the deed of sale was the requirement
that the transferee and its successor-in-interest must become members of an association for realty
owners and long-term lessees in the area later known as the Ortigas Center. Subsequently, the said lot,
together with improvements thereon, was conveyed by TDC in favor of PADCOM in a Deed of
Transfer dated 25 February 1975.[4]
In 1982, respondent Ortigas Center Association, Inc. (hereafter the Association) was organized to
advance the interests and promote the general welfare of the real estate owners and long-term lessees
of lots in the Ortigas Center. It sought the collection of membership dues in the amount of two
thousand seven hundred twenty-four pesos and forty centavos (P2,724.40) per month from
PADCOM. The corporate books showed that PADCOM owed the Association P639,961.47,
representing membership dues, interests and penalty charges from April 1983 to June 1993. [5] The
letters exchanged between the parties through the years showed repeated demands for payment,
requests for extensions of payment, and even a settlement scheme proposed by PADCOM in
September 1990.
In view of PADCOMs failure and refusal to pay its arrears in monthly dues, including interests
and penalties thereon, the Association filed a complaint for collection of sum of money before the trial
court below, which was docketed as Civil Case No. 63801. The Association averred that purchasers of
lands within the Ortigas Center complex from OCLP are obligated under their contracts of sale to
become members of the Association. This obligation was allegedly passed on to PADCOM when it
bought the lot from TDC, its predecessor-in-interest.[6]
In its answer, PADCOM contended that it is a non-stock, non-profit association, and for it to
become a special member of the Association, it should first apply for and be accepted for membership
by the latters Board of Directors. No automatic membership was apparently contemplated in the
Associations By-laws. PADCOM added that it could not be compelled to become a member without
violating its right to freedom of association. And since it was not a member of the Association, it was
not liable for membership dues, interests and penalties.[7]
During the trial, the Association presented its accountant as lone witness to prove that PADCOM
was, indeed, one of its members and, as such, did not pay its membership dues.
PADCOM, on the other hand, did not present its evidence; instead it filed a motion to dismiss by
way of demurrer to evidence. It alleged that the facts established by the Association showed no right to
the relief prayed for. It claimed that the provisions of the Associations By-laws and the Deed of
Transfer did not contemplate automatic membership. Rather, the owner or long-term lessee becomes a
member of the Association only after applying with and being accepted by its Board of
Directors. Assuming further that PADCOM was a member of the Association, the latter failed to show
that the collection of monthly dues was a valid corporate act duly authorized by a proper resolution of
the Associations Board of Directors.[8]
After due consideration of the issues raised in the motion to dismiss, the trial court rendered a
decision dismissing the complaint.[9]
The Association appealed the case to the Court of Appeals, which docketed the appeal as CA-
G.R. CV No. 60099. In its decision[10] of 30 June 2000, the Court of Appeals reversed and set aside the
trial courts dismissal of Civil Case No. 63801, and decreed as follows:
WHEREFORE, the appealed decision dated September 1, 1997
is REVERSED and SET ASIDE and, in lieu thereof, a new one is entered ordering the appellee
(PADCOM) to pay the appellant (the Association) the following:
1) P639,961.47 as and for membership dues in arrears inclusive of earned interests and penalties; and
2) P25,000.00 as and for attorneys fees.
Costs against the appellees.
SO ORDERED.
The Court of Appeals justified its ruling by declaring that PADCOM automatically became a
member of the Association when the land was sold to TDC. The intent to pass the obligation to
prospective transferees was evident from the annotation of the same clause at the back of the Transfer
Certificate of Title covering the lot. Despite disavowal of membership, PADCOMs membership in the
Association was evident from these facts: (1) PADCOM was included in the Associations list of bona
fide members as of 30 March 1995; (2) Narciso Padilla, PADCOMs President, was one of the
Associations incorporators; and (3) having received the demands for payment, PADCOM not only
acknowledged them, but asked for and was granted repeated extensions, and even proposed a scheme
for the settlement of its obligation. The Court of Appeals also ruled that PADCOM cannot evade
payment of its obligation to the Association without violating equitable principles underlying quasi-
contracts. Being covered by the Associations avowed purpose to promote the interests and welfare of
its members, PADCOM cannot be allowed to expediently deny and avoid the obligation arising from
such membership.
Dissatisfied with the adverse judgment of the Court of Appeals, PADCOM filed the petition for
review in this case. It raises the sole issue of whether it can be compelled to join the association
pursuant to the provision on automatic membership appearing as a condition in the Deed of Sale of 04
September 1974 and the annotation thereof on Transfer Certificate of Title No. 457308.
PADCOM contends that it cannot be compelled to be a member of the Association solely by
virtue of the automatic membership clause that appears on the title of the property and the Deed of
Transfer. In 1975, when it bought the land, the Association was still inexistent. Therefore, the
provision on automatic membership was anticipatory in nature, subject to the actual formation of the
Association and the subsequent formulation of its implementing rules.
PADCOM likewise maintains that the Associations By-laws requires an application for
membership. Since it never sought membership, the Court of Appeals erred in concluding that it was a
member of the Association by implication. Aside from the lack of evidence proving such membership,
the Association has no basis to collect monthly dues since there is no board resolution defining and
prescribing how much should be paid.
For its part, the Association claims that the Deed of Sale between OCLP and TDC clearly
stipulates automatic membership for the owners of lots in the Ortigas Center, including their
successors-in-interest. The filing of applications and acceptance thereof by the Board of Directors of
the Association are, therefore, mere formalities that can be dispensed with or waived. The provisions
of the Associations By-laws cannot in any manner alter or modify the automatic membership clause
imposed on a property owner by virtue of an annotation of encumbrance on his title.
The Association likewise asserts that membership therein requires the payment of certain
amounts for its operations and activities, as may be authorized by its Board of Directors. The
membership dues are for the common expenses of the homeowners for necessary services.
After a careful examination of the records of this case, the Court sees no reason to disturb the
assailed decision. The petition should be denied.
Section 44 of Presidential Decree No. 1529[11] mandates that:
SEC. 44. Statutory liens affecting title. Every registered owner receiving a certificate of title in
pursuance of a decree of registration, and every subsequent purchaser of registered land taking a
certificate of title for value and in good faith, shall hold the same free from all encumbrances except
those noted on said certificate and any of the following encumbrances which may be subsisting,
namely: xxx
Under the Torrens system of registration, claims and liens of whatever character, except those
mentioned by law, existing against the land binds the holder of the title and the whole world.[12]
It is undisputed that when the land in question was bought by PADCOMs predecessor-in-interest,
TDC, from OCLP, the sale bound TDC to comply with paragraph (G) of the covenants, conditions and
restrictions of the Deed of Sale, which reads as follows:[13]
G. AUTOMATIC MEMBERSHIP WITH THE ASSOCIATION:
The owner of this lot, its successor-in-interest hereby binds himself to become a member of the
ASSOCIATION which will be formed by and among purchasers, fully paid up Lot BUYERS, Building
Owners and the COMPANY in respect to COMPANY OWNED LOTS.
The OWNER of this lot shall abide by such rules and regulations that shall be laid down by the
ASSOCIATION in the interest of security, maintenance, beautification and general welfare of the
OFFICE BUILDING zone. The ASSOCIATION when organized shall also, among others, provide for
and collect assessments which shall constitute a lien on the property, junior only to liens of the
Government for taxes.
Evidently, it was agreed by the parties that dues shall be collected from an automatic member and
such fees or assessments shall be a lien on the property.
This stipulation was likewise annotated at the back of Transfer Certificate of Title No. 457308
issued to TDC.[14] And when the latter sold the lot to PADCOM on 25 February 1975, the Deed of
Transfer expressly stated:[15]
NOW, THEREFORE, for and in consideration of the foregoing premises, the DEVELOPER, by these
presents, cedes, transfers and conveys unto the CORPORATION the above-described parcel of land
evidenced by Transfer Certificate of Title No. 457308, as well as the Common and Limited Common
Areas of the Condominium project mentioned and described in the Master Deed with Declaration of
Restrictions (Annex A hereof), free from all liens and encumbrances, except those already annotated at
the back of said Transfer Certificate of Title No. 457308, xxx
This is so because any lien annotated on previous certificates of title should be incorporated in or
carried over to the new transfer certificates of title. Such lien is inseparable from the property as it is a
right in rem, a burden on the property whoever its owner may be. It subsists notwithstanding a change
in ownership; in short, the personality of the owner is disregarded. [16] As emphasized earlier, the
provision on automatic membership was annotated in the Certificate of Title and made a condition in
the Deed of Transfer in favor of PADCOM. Consequently, it is bound by and must comply with the
covenant.
Moreover, Article 1311 of the Civil Code provides that contracts take effect between the parties,
their assigns and heirs. Since PADCOM is the successor-in-interest of TDC, it follows that the
stipulation on automatic membership with the Association is also binding on the former.
We are not persuaded by PADCOMs contention that the By-laws of the Association requires
application for membership and acceptance thereof by the Board of Directors. Section 2 of the By-
laws[17] reads:
Section 2. Regular Members. Upon acceptance by the Board of Directors of Ortigas Center
Association, Inc., all real estate owners, or long-term lessees of lots within the boundaries of the
Association as defined in the Articles of Incorporation become regular members, provided, however
that the long-term lessees of a lot or lots in said area shall be considered as the regular members in lieu
of the owners of the same. Likewise, regular membership in the Association automatically ceases upon
the cessation of a member to be an owner or long-term lessee of real estate in the area.
A lessee shall be considered a long-term lessee if his lease is in writing and for a period of two (2)
years or more. Membership of a long-term lessee in the Association shall be co-terminus with his legal
possession (or his lease) of the lot/s in the area. Upon the lessees cessation of membership in the
Association, the owner shall automatically succeed the lessee as member thereat.
As lot owner, PADCOM is a regular member of the Association. No application for membership
is necessary. If at all, acceptance by the Board of Directors is a ministerial function considering that
PADCOM is deemed to be a regular member upon the acquisition of the lot pursuant to the automatic
membership clause annotated in the Certificate of Title of the property and the Deed of Transfer.
Neither are we convinced by PADCOMs contention that the automatic membership clause is a
violation of its freedom of association. PADCOM was never forced to join the association. It could
have avoided such membership by not buying the land from TDC. Nobody forced it to buy the land
when it bought the building with the annotation of the condition or lien on the Certificate of Title
thereof and accepted the Deed. PADCOM voluntarily agreed to be bound by and respect the condition,
and thus to join the Association.
In addition, under the principle of estoppel, PADCOM is barred from disclaiming membership in
the Association. In estoppel, a person, who by his act or conduct has induced another to act in a
particular manner, is barred from adopting an inconsistent position, attitude or course of conduct that
thereby causes loss or injury to another.[18]
We agree with the Court of Appeals conclusion from the facts or circumstances it enumerated in
its decision and enumerated above that PADCOM is, indeed, a regular member of the
Association. These facts and circumstances are sufficient grounds to apply the doctrine of estoppel
against PADCOM.
Having ruled that PADCOM is a member of the Association, it is obligated to pay its dues
incidental thereto. Article 1159 of the Civil Code mandates:
Art. 1159. Obligations arising from contracts have the force of law between the contracting parties and
should be complied with in good faith.
Assuming in gratis argumenti that PADCOM is not a member of the Association, it cannot evade
payment without violating the equitable principles underlying quasi-contracts. Article 2142 of the Civil
Code provides:
Art. 2142. Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-
contract to the end that no one shall be unjustly enriched or benefited at the expense of another.
Generally, it may be said that a quasi-contract is based on the presumed will or intent of the
obligor dictated by equity and by the principles of absolute justice. Examples of these principles are:
(1) it is presumed that a person agrees to that which will benefit him; (2) nobody wants to enrich
himself unjustly at the expense of another; or (3) one must do unto others what he would want others
to do unto him under the same circumstances.[19]
As resident and lot owner in the Ortigas area, PADCOM was definitely benefited by the
Associations acts and activities to promote the interests and welfare of those who acquire property
therein or benefit from the acts or activities of the Association.
Finally, PADCOMs argument that the collection of monthly dues has no basis since there was no
board resolution defining how much fees are to be imposed deserves scant consideration. Suffice it is
to say that PADCOM never protested upon receipt of the earlier demands for payment of membership
dues. In fact, by proposing a scheme to pay its obligation, PADCOM cannot belatedly question the
Associations authority to assess and collect the fees in accordance with the total land area owned or
occupied by the members, which finds support in a resolution dated 6 November 1982 of the
Associations incorporating directors[20] and Section 2 of its By-laws.[21]
WHEREFORE, the petition is hereby DENIED for lack of merit.
Costs against petitioner.
SO ORDERED.