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First Division: Decision
First Division: Decision
DECISION
LAZARO-JAVIER, J : p
The Case
This petition for review assails the Decision 1 dated May 8, 2019 of the Court
of Appeals in CA-G.R. SP No. 150820 entitled "Blas C. Britania v. Hon. Lilia
Mercedes Encarnacion A. Gepty, et al.," which affirmed the following issuances of
the trial court:
1) Order 2 dated November 18, 2016, denying Blas Britania's written motion to
examine judgment debtor Melba Panganiban and his oral motion to cite
Melba Panganiban for indirect contempt of court; and
2) Order 3 dated March 30, 2017, denying Britania's motion for
reconsideration.
Antecedents
Under Complaint 4 dated November 16, 2012, petitioner Blas Britania
(Britania) initiated an action for judicial foreclosure of mortgage against respondent
Melba Panganiban (Panganiban).
Britania basically alleged:
On July 13, 2011, he and Panganiban executed an agreement
captioned "Magkasanib na Kasunduan" where he agreed to loan Panganiban the sum
of P1,500,000.00 with interest of P100,000.00, payable in monthly installments of
P40,000.00 starting August 2011 until fully paid. The loan was secured by a 120-
square-meter property, which Panganiban was paying on installment to a certain
Florencia Francisco. 5
Panganiban failed to comply with the first agreement so they executed a
second "Magkasanib na Kasunduan" on February 14, 2012 wherein a new payment
scheme was laid out for the unpaid sum of P1,500,000.00. The same property secured
the loan. Panganiban possessed the property situated at No. 1469 Anneth II, Tañada
Subdivision, General T. De Leon, Valenzuela City. Despite repeated demands,
Panganiban continuously refused to pay her obligation. 6
The case was docketed as Civil Case No. 216-V-12 and raffled to the Regional
Trial Court, Branch 75, Valenzuela City, presided by respondent judge Hon. Lilia
Mercedes Encarnacion Gepty.
In her Verified Answer 7 dated December 17, 2012, Panganiban essentially
averred:
She was engaged in the business of buy-and-sell. Because of the nature of her
business, she needed a large amount of capital. She repeatedly borrowed from
Britania at six percent (6%) monthly interest until her loans ballooned to
P1,000,000.00. She regularly paid her loans, including the stipulated interest. In fact,
she already paid a total of P309,000.00. 8
Her son Rommel Panganiban got sick and eventually died on January 18, 2011.
The money intended to pay Britania was used for her son's hospital expenses. She was
constrained to issue a Banco de Oro check for P1,500,000.00 to Britania who
promised he would not encash the check so long as she would continue paying her
loans. 9
But Britania reneged on his promise and encashed the check which
consequently got dishonored. On July 13, 2011, she and Britania went to a notary
public and executed a "Magkasanib na Kasunduan." She then continued to pay her
loans to Britania. On February 14, 2012, they again went to a notary public and
executed yet another "Magkasanib na Kasunduan," which she signed despite her
reservations. 10
The contract to sell which she and Florencia Francisco entered into on the 120-
square meter lot did not prosper because of her financial difficulties. Britania cannot
foreclose on Francisco's property because the latter was not privy to the loan
agreement between her and Britania. 11
After due proceedings, the trial court rendered its Decision 12 dated June 30,
2015 denying the complaint for judicial foreclosure, albeit granting Britania's
monetary claims, thus:
WHEREFORE, premises considered, the instant complaint for judicial
foreclosure is hereby DENIED, for lack of merit. However, the defendant is
hereby ordered to pay the plaintiff the amount of Php1,193,000.00 plus
interest at 6% per annum, reckoned from November 16, 2012 until the finality
of this Decision. Thereafter, the principal amount due as adjusted by interest
shall likewise earn interest at 6% per annum until fully paid, and attorney's
fees in the amount of Php30,000.00 plus costs of suit.
SO ORDERED. 13
Upon finality of the aforesaid decision, a corresponding Writ of
Execution 14 dated January 29, 2016 was issued.
Per Notice of Sheriff's Sale on Execution (Personal Property/ies) 15 dated April
6, 2016, the following personal properties of Panganiban were levied on:
2pcs Marmol Bench, 1pc Wood Sofa, 1pc Center Table, 1pc Corner
table, 1pc Dining Table and 6pcs Chairs, 1pc Wood Cabinet, 1pc Stand Fan,
1pc Corner Cabinet, 2pcs Flower Vase, 2pcs Oven Toaster, 1pc Rice Cooker,
1pc Bread Toaster, 1pc Mirror, 1pc Glass Cabinet, 1pc Refrigerator, 2pcs
Washing Machine, 1pc Turbo Broiler and 2pcs Wall Painting.
The Sheriff's Return 16 dated April 20, 2016 reported that an execution sale
was held on April 14, 2016 and Britania offered the highest bid of P15,000.00 for the
entire bulk of the levied personal properties.
After the sale, Britania filed his Motion to Examine Judgment Debtor Melba C.
Panganiban 17 dated April 15, 2016. According to Britania, the 120-square-meter
property was fraudulently transferred to Panganiban's sister and then to another
person a few days before the trial court's decision was issued.
The motion was set for hearing on June 7, 2016, during which, Panganiban did
not appear. For this reason, Britania moved to cite Panganiban in indirect contempt of
court. By Order 18 dated June 7, 2016, the trial court ordered Panganiban to comment
thereon within ten (10) days from notice.
In her Comment 19 dated June 28, 2016, Panganiban stated in the main: the
120-square-meter parcel of land was not included in the trial court's decision denying
the complaint for judicial foreclosure. She had always observed the rules and never
meddled in or interrupted its enforcement. She opted not to oppose or comment on
Britania's motion to examine her. The trial court may make a ruling purely on the
basis of Britania's motion. Because of the tragedy that struck her and her family, they
could not get themselves to confront the case head on.
By Reply 20 dated August 23, 2016, Britania reiterated the statements in his
motion to examine Panganiban.
Under Order 21 dated November 18, 2016, the trial court denied Britania's oral
motion for indirect contempt and motion to examine Panganiban, thus:
Finding the arguments raised by the plaintiff to be without merit, the
Motion to Examine Judgment Debtor Melba C. Panganiban is hereby
DENIED.
Herein plaintiff anchored its motion on the ground that defendant,
fraudulently transferred her house and lot to her sister and thereafter, the latter
to another person after the Court's Decision was rendered on June 30, 2015.
Granting arguendo that the same is true, said allegation is subject of another
cause of action, cancellation of title in the name of the new owner and/or
cancellation of sale, which this Court cannot take cognizance thereof for lack
of jurisdiction.
While it is true that a judgment debtor may be questioned pursuant to
the cited provisions of the Rules of Court by the plaintiff, the circumstances
attendant in the instant case does not fall within said provisions as a cause of
action allegedly arose after the Court's rendition of judgment in this case.
In view of the foregoing, the subject motion to cite defendant Melba C.
Panganiban in indirect contempt of court as well as the motion to examine
said judgment debtor are both DENIED for lack of merit.
SO ORDERED. 22
Britania moved for reconsideration, 23 which the trial court denied per second
Order 24 dated March 30, 2017.
Proceedings before the Court of Appeals
Aggrieved, Britania moved up to the Court of Appeals via an action
for certiorari and mandamus. 25 He faulted the trial court with grave abuse of
discretion amounting to lack or excess of jurisdiction for denying his motion to
examine and motion to cite Panganiban in indirect contempt. In so doing, the trial
court's action allegedly violated his right to examine Panganiban as judgment debtor
and ignored the latter's disobedience to the lawful order of the trial court to appear
during the hearing.
By its assailed Decision 26 dated May 8, 2019, the Court of Appeals affirmed.
According to the Court of Appeals, Panganiban's non-appearance during the
scheduled hearing on June 7, 2016 did not amount to a contumacious act which may
be punished by contempt of court. The trial court properly deemed Panganiban to
have waived her right to be heard on Britania's motion to examine her. Further, in
denying Britania's motion to examine Panganiban under Section 36, Rule 39 of
the Rules of Court, the trial court correctly held that it had no jurisdiction to compel
Panganiban to answer for a 120-square-meter property that did not even belong to her
and was registered in the name of a third person.
The Present Petition
Britania now invokes this Court's discretionary appellate jurisdiction for
affirmative relief via Rule 45 of the Revised Rules of Court. He asserts that
Panganiban's non-appearance during the June 7, 2016 hearing was an utter disregard
of the trial court's authority, thus, a ground to cite Panganiban for indirect contempt.
Further, under Section 36, Rule 39 of the Rules of Court, he had the right to examine
Panganiban because the judgment in his favor was not fully satisfied. 27
Panganiban did not file her comment despite the directive under
Resolution 28 dated July 15, 2019. By Resolution dated January 8, 2020, the Court
dispensed with the filing of the comment.
Ruling
Britania mainly argues that Panganiban should be held in indirect contempt for
violating Section 36, Rule 39 of the Rules of Court, which reads:
Sec. 36. Examination of judgment obligor when judgment unsatisfied. —
When the return of a writ of execution issued against property of a
judgment obligor, or any one of several obligors in the same judgment, shows
that the judgment remains unsatisfied, in whole or in part, the judgment
obligee, at any time after such return is made, shall be entitled to an order
from the court which rendered the said judgment, requiring such judgment
obligor to appear and be examined concerning his property and income before
such court or before a commissioner appointed by it, at a specified time and
place; and proceedings may thereupon be had for the application of the
property and income of the judgment obligor towards the satisfaction of the
judgment. But no judgment obligor shall be so required to appear before a
court or commissioner outside the province or city in which such obligor
resides or is found.
The provision applies to cases where the judgment remains unsatisfied and
there is a need for the judgment obligor to appear and be examined concerning his or
her property and income to determine whether the same may be properly held to
satisfy the full judgment amount. 29
The provision speaks of the judgment obligor's property and income only; not
those belonging to third persons. For a judgment creditor or purchaser at an execution
sale acquires only whatever rights the judgment obligor may have over the property at
the time of levy. Thus, if the judgment obligor has no right, title or interest over the
levied property, there is nothing for him or her to transfer. 30
Here, in the trial court's final and executory Decision dated June 30, 2015, it
categorically held that Panganiban did not validly mortgage the 120-square-meter
property to Britania because she did not own in the first place, thus:
Be that as it may, the prayer for the Foreclosure of Mortgage is hereby
denied for lack of merit as the property subject matter thereof was not owned
by the mortgagor-debtor at the time of the execution of the agreements in this
case, whether the first or the second agreement.
xxx xxx xxx
At the time of the execution thereof, the owner of the aforesaid
property was one Florencia Francisco. Moreover, even at the time of default
and at the time of the filing of this case, the mortgagor-debtor did not own the
subject property as evidence was presented (Exhibit "32" Kasunduan dated
April 3, 2012) showing that Agreement to Sell has been cancelled on account
of the failure of the mortgagor-debtor to pay the monthly amortizations
thereon since 2010. Thus, not being the absolute owner of the mortgaged
property, the same cannot be subject of a valid mortgage. 31
It is a fundamental principle that a judgment that lapses into finality becomes
immutable and unalterable. The primary consequence of this principle is that the
judgment may no longer be modified or amended by any court in any manner even if
the purpose of the modification or amendment is to correct perceived errors of law or
fact. This principle known as the doctrine of immutability of judgment is a matter of
sound public policy, which rests upon the practical consideration that every litigation
must come to an end. 32 Here, Britania cannot revive his claim on the 120-square-
meter property by subjecting Panganiban to examination under Section 36, Rule 39 of
the Rules of Court which, as stated, is not even applicable here.
As for Britania's motion to cite Panganiban for indirect contempt of court, we
reckon with the rule that the power to declare a person in contempt of court and in
dealing with him or her accordingly is an inherent power lodged in courts of justice,
to be used as a means to protect and preserve the dignity of the court, the solemnity of
the proceedings therein, and the administration of justice from callous misbehavior,
offensive personalities, and contumacious refusal to comply with court orders. This
contempt power, however plenary it may seem, must be exercised judiciously and
sparingly with utmost self-restraint with the end in view of utilizing the same for
correction and preservation of the dignity of the court, not for retaliation or
vindication. It should not be availed of unless necessary in the interest of justice. 33
There are two (2) types of contempt of court: (i) direct contempt and (ii)
indirect contempt. Direct contempt consists of misbehavior in the presence of or so
near a court as to obstruct or interrupt the proceedings before it. It includes: (i)
disrespect to the court, (ii) offensive behavior against others, (iii) refusal, despite
being lawfully required, to be sworn in or to answer as a witness, or to subscribe an
affidavit or deposition. It can be punished summarily without a hearing. 34
Indirect contempt is committed through any of the acts enumerated under
Section 3, Rule 71 of the Rules of Court, thus:
Section 3. Indirect contempt to be punished after charge and hearing. — After
a charge in writing has been filed, and an opportunity given to the respondent
to comment thereon within such period as may be fixed by the court and to be
heard by himself or counsel, a person guilty of any of the following acts may
be punished for indirect contempt:
(a) Misbehavior of an officer of a court in the performance of his official duties
or in his official transactions;
(b) Disobedience of or resistance to a lawful writ, process, order, or judgment of
a court, including the act of a person who, after being dispossessed or
ejected from any real property by the judgment or process of any court
of competent jurisdiction, enters or attempts or induces another to enter
into or upon such real property, for the purpose of executing acts of
ownership or possession, or in any manner disturbs the possession given
to the person adjudged to be entitled thereto;
(c) Any abuse of or any unlawful interference with the processes or proceedings
of a court not constituting direct contempt under section 1 of this Rule;
(d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or
degrade the administration of justice;
(e) Assuming to be an attorney or an officer of a court, and acting as such
without authority;
(f) Failure to obey a subpoena duly served; and
(g) The rescue, or attempted rescue, of a person or property in the custody of an
officer by virtue of an order or process of a court held by him.
But nothing in this section shall be so construed as to prevent the court
from issuing process to bring the respondent into court, or from holding him
in custody pending such proceedings. (3a)
As stated, indirect contempt is only punished after a written petition is filed
and an opportunity to be heard is given to the party charged. 35 Verily, the trial court
here should have outrightly dismissed petitioner's oral charge of indirect contempt for
not being compliant with Section 3, Rule 71 of the Rules of Court. Contempt
proceedings are penal in nature, thus, their procedure and rules of evidence adopted
are similar to those used in criminal prosecutions. Consequently, in case of doubt, the
contempt proceedings should be liberally construed in favor of the accused. 36
Here, the trial court itself whose authority and dignity the contempt rules seek
to protect, did not consider as contemptuous Panganiban's non-appearance during the
hearing on Britania's motion to examine her. So how can Britania now fault the trial
court for not feeling the way he wanted it to feel? Most of all, how can Britania
compel the trial court not to be compassionate or liberal in the exercise of its power of
contempt? The trial court aptly held that "whether said defendant and her counsel
appears or not on said hearing, the same is their look out. Their failure to appear on
said hearing will only waive their right to be present on said date and/or to oppose
the motion. The same is not a ground to cite the defendant in indirect contempt of
court." 37 Since the trial court did not find any ill intent on Panganiban's part, it cannot
be compelled to hold Panganiban in indirect contempt of court.
We also quote with concurrence the Court of Appeals' relevant disposition:
To be considered contemptuous, an act must be clearly contrary to or
prohibited by the order of the [C]ourt. A person cannot be punished for
contempt for disobedience of an order of the Court, unless the act which is
forbidden or required to be done is clearly and exactly defined, so that there
can be no reasonable doubt or uncertainty as to what specific act or thing is
forbidden or required. Only in cases of clear or contumacious refusal to obey
should the power to punish for contempt be exercised. In this case, no order or
judgment was issued by the RTC which strictly directed private respondent to
attend the hearing on petitioner's motion to examine. Her absence was not
contrary to any order of public respondent as would be considered
contemptuous. This was treated by the trial court as a mere waiver of her
"right to be present on said date and/or oppose the motion" and not a ground
to cite her in indirect contempt of court. As a matter of fact, in the Order dated
June 7, 2016, the court a quo merely reset the hearing date and directed
private respondent to file a comment on petitioner's motions, which she had
actually complied with. Without the finding of any contemptuous act, the
lower court cannot then be faulted for not citing private respondent in indirect
contempt. 38
So must it be.
ACCORDINGLY, the petition is DENIED, and the assailed Decision dated
May 8, 2019 of the Court of Appeals in CA-G.R. SP No. 150820, AFFIRMED.
SO ORDERED.
Peralta, C.J., Caguioa, J.C. Reyes, Jr. and Lopez, JJ., concur.
||| (Britania v. Gepty, G.R. No. 246995, [January 22, 2020])
SECOND DIVISION
DECISION
INTING, J :p
SO ORDERED. 29
Aggrieved, petitioners filed a motion for reconsideration which the NLRC
denied for lack of merit in a Resolution 30 dated February 23, 2011. Petitioners then
elevated the case to the CA raising grave abuse of discretion tantamount to lack of
jurisdiction in the NLRC's reversal of the LA's Decision despite evidence on record 31
The Ruling of the CA
The CA dismissed the petition filed by petitioners in the absence of any
justifiable reason to reverse the factual findings and conclusions of law of the NLRC
as supported by substantial evidence. 32 It affirmed the findings of the NLRC, but
modified the refund of Beltran's placement fee to P25,056.00 with interest of 12% per
annum. 33
The Issues
The issues brought to the Court for resolution are as follows:
(a) hether Beltran was illegally dismissed from employment;
(b) hether there was underpayment of salaries of respondents;
(c) hether the transportation expenses of respondents to Taiwan should be
reimbursed;
(d) hether respondents should be awarded moral and exemplary damages and
attorney's fees; and
(e) hether petitioner Peralta should be solidarily liable with Prime Stars.
Simply put, the issues boil down to whether the CA erred in holding petitioners
liable for respondents' money claims pursuant to their contracts of employment.
The Ruling of the Court
The Court finds no merit in the petition.
The issues raised herein by petitioners are essentially factual. It is an
elementary principle that the Court is not a trier of facts. 34 Judicial review of labor
cases must not go beyond the evaluation of the sufficiency of the evidence upon and
as such, the findings of fact and conclusions of law of the NLRC are generally
accorded not only great weight and respect but even clothed with finality and deemed
binding on the Court as long as they are supported by substantial
evidence. 35 However, where there are variance and conflicting factual findings
between the LA and the NLRC, as in the case at bench, the Court deems it necessary
to reassess these factual findings for the just resolution of the case.
Beltran was illegally dismissed.
Petitioners maintain that Beltran voluntarily preterminated her contract of
employment for personal reasons; thus, it precluded her from recovering the
unexpired portion of her employment contract. They also contest Beltran's bare
testimonies and allegations of undue pressure and duress for being unsubstantiated
and in contrast to petitioners' documentary evidence which are Beltran's duly signed
Mutual Contract Annulment Agreement and Worker Discontinue Employment
Affidavit.
The Court is not convinced.
As similarly declared by the NLRC and the CA, petitioners' complete reliance
on Beltran's alleged voluntary execution of the Mutual Contract Annulment
Agreement and the Worker Discontinue Employment Affidavit to support their claim
that Beltran voluntarily preterminated her contract is unavailing considering that the
filing of the complaint for illegal dismissal is inconsistent with resignation. 36 The
Court finds it highly unlikely that Beltran would just quit even before the end of her
contract after all the expenses she incurred and still needed to settle and the sacrifices
she went through in seeking financial upliftment. It is incongruous for Beltran to
simply give up her work, return home, and be unemployed once again given that so
much time, effort, and money have already been invested to secure her employment
abroad and enduring the tribulations of being in a foreign country and away from her
family.
Apropos to the foregoing, the Court further adheres to the observation of both
the NLRC and the CA that the wordings of Beltran's relinquishment of her contract of
employment were ambiguous and doubtful. Contrary to the petitioners' assertion, the
burden of proving that Beltran voluntary preterminated her contract falls upon
petitioners as the employer. The employer still has the burden of proving that the
resignation is voluntary despite the employer's claim that the employee
resigned, 37 which petitioners failed to discharge.
Baybayan and Beltran are
entitled to salary differentials
and refund of transportation
expenses.
Petitioners admit that the employment contracts of respondents were indeed
amended, but posit that the Addendum, while apparently do not appear to contain any
indication of POEA approval, actually contained provisions which have been
approved by the POEA as evidenced by the respondents' Foreign Worker's Affidavits.
The petitioners' argument deserves scant consideration.
Paragraph (i) of Article 34 of the Labor Code of the Philippines prohibits the
substitution or alteration of employment contracts approved and verified by the
Department of Labor and Employment (DOLE) from the time of the actual signing
thereof by the parties up to and including the period of expiration of the same without
the approval of the DOLE.
Furthermore, Republic Act No. (RA) 8042, otherwise known as the Migrant
Workers and Overseas Filipinos Act of 1995, explicitly prohibits the substitution or
alteration to the prejudice of the worker of employment contracts already approved
and verified by the DOLE from the time of actual signing thereof by the parties up to
and including the period of the expiration of the same without the approval of the
DOLE. 38
Thus, the Court agrees with the findings of the CA in this wise:
We stress, at the outset, that the numerous documentary evidence
presented by petitioners which private respondents entered into with the
foreign principals are not valid and binding upon private respondents.
Specifically, the Addendum to the employment contract whereby private
respondents were made to shoulder their food and accommodation in the
amount of NT$4,000 per month, as well as transportation fare, to and from
Taiwan, is in contravention of the Employment Contract executed by the
parties and duly approved by the Philippine Overseas Employment
Administration (POEA). Article IV of the Contract states that private
respondents are entitled to free food and accommodation for the duration of
the contract. It further states that the employer shall provide the employee
with an economy class air ticket from the country of origin to Taiwan and
upon completion of the contract, the employer shall provide the ticket back to
the country of origin. In fact, these provisions constitute the minimum
requirements for contracts of employment of land-based overseas Filipino
workers, pursuant to Section 2, Rule 1, Part V of the POEA Rules and
Regulations Governing the Recruitment and Employment of Land-based
Overseas Workers, thus —
"Section 2. Minimum Provisions of Employment
Contract. — Consistent with its welfare and employment
facilitation objectives, the following shall be considered
minimum requirements for contracts of employment of land-
based workers:
xxx xxx xxx
b. Free transportation to and from the worksite, or
offsetting benefit;
c. Free food and accommodation, or offsetting benefit;
xxx xxx xxx"
Following therefor, the explicit provisions of the employment
contracts of private respondents. the same cannot be altered or modified by
the Addendum without the prior approval of the POEA. Indeed, while the
parties may stipulate on other terms and conditions of employment as well as
other benefits, the stipulations should not violate the minimum requirements
required by law as these would be disadvantageous to the employee. Section
3, Rule 1, Part V of the POEA Rules and Regulations Governing the
Recruitment and Employment of Land-based Overseas Workers is pertinent,
to wit:
"Section 3. Freedom to Stipulate. — Parties to overseas
employment contracts are allowed to stipulate other terms and
conditions and other benefits not provided under these
minimum requirements; provided the whole employment
package should be more beneficial to the worker than the
minimum; provided that the same shall not be contrary to law,
public policy and morals, and provided further, that Philippine
agencies shall make foreign employers aware of the standards
of employment adopted by the Administration."
Moreover, Section 15 of R.A. No. 8042, otherwise known as
the Migrant Workers and Overseas Filipinos Act of 1995 categorically
provides that the repatriation of the worker is the primary responsibility of the
agency that recruited and deployed him, unless the repatriation is due to the
fault of the worker. We find that both Beltran and Baybayan's repatriation
were due to illegal dismissal and expiration of employment contract,
respectively, as will be discussed hereunder. 39 (Citations and emphasis
omitted.)
A careful and assiduous review of the record of the case would yield to no
other conclusion than that the Addendum is contrary to law and public policy
considering that the minimum provisions for employment of respondents were not
met, and that there was diminution of their benefits which were already guaranteed by
law and granted in their favor under their POEA-approved contracts of employment.
The Addendum, absent the approval of the POEA, is not valid and executory
as against respondents. The clear and categorical language of the law likewise
imposes upon foreign principals minimum terms and conditions of employment for
land-based overseas Filipino workers, which include basic provisions for food,
accommodation and transportation. The licensed recruitment agency shall also, prior
to the signing of the employment contract, inform the overseas Filipino workers of
their rights and obligations, and disclose the full terms and conditions of employment,
and provide them with a copy of the POEA-approved contract, to give them ample
opportunity to examine the same. 40
Award of moral and exemplary
damages, and attorney's fees.
The Court finds no cogent reason to disturb the award of damages and
attorney's fees in favor of respondents considering that the acts of petitioners were
evidently tainted with bad faith. Petitioners' failure to comply with the stipulations on
the POEA-approved employment contracts of respondents with regard to salaries and
transportation expenses, guaranteed under our labor laws, constituted an act
oppressive to labor and more importantly, contrary to law and public policy.
Petitioners even tried to justify the execution and validity of the Addendum and cloak
the latter as legal and binding through respondents' execution of Foreign Worker's
affidavits. However, the affidavits of respondents explicitly indicated that their
monthly wage/salary shall be NT$17,280.00 for Beltran and NT$15,840.00 for
Baybayan. 41 There was nothing in the mentioned affidavits which would indicate that
there would be deductions to respondents' salaries. Indeed, the Court finds appalling
petitioners' circumvention of our labor laws and the intentional diminution of
employee's benefits guaranteed by our laws to land-based overseas workers —
indicative of petitioners' exercise of bad faith and fraud in their dealings with Filipino
workers.
As regards Beltran's summary dismissal from employment, there was nothing
"voluntary" in putting words into Beltran's own mouth in the guise of her handwritten
statement of resignation. Petitioners' attempt to demonstrate voluntariness fails since
"cooperate" is more of an imposition coming from the employer rather than from a
disadvantaged overseas employee. The execution of the documents was indeed
plainly oppressive and violative of Beltran's security of tenure. Veritably, the award of
moral and exemplary damages is sufficient to allay the sufferings experienced by
respondents and by way of example or correction for public good, respectively.
Peralta is solidarily liable with
Prime Stars.
Peralta is jointly and severally liable with Prime Stars. Section 10 of RA
8042 mandates solidary liability among the corporate officers, directors, partners and
the corporation or partnership for any claims and damages that may be due to the
overseas workers, viz.:
Section 10. Monetary Claims. — x x x
The liability of the principal/employer and the recruitment/placement
agency for any and all claims under this section shall be joint and several.
This provision shall be incorporated in the contract for overseas employment
and shall be a condition precedent for its approval. The performance bond to
be filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or partnership
for the aforesaid claims and damages.
xxx xxx xxx
Legal interest should be
imposed on the monetary
awards.
When there is a finding of illegal dismissal and an award of backwages and
separation pay, the decision also becomes a judgment for money from which another
consequence flows — the payment of legal interest in case of delay imposable upon
the total unpaid judgment amount, from the time the decision became
final. 42 Applying the principles laid down in the case of Nacar v. Gallery Frames, et
al., 43 respondents shall receive legal interest of 6% per annum to be imposed on their
total monetary awards computed from finality of judgment until full satisfaction
thereof.
On a final note, it is a time-honored rule that in controversies between a worker
and his employer, doubts reasonably arising from the evidence, or in the interpretation
of agreements and writing should be resolved in the worker's favor. 44 The policy of
the State is to extend the applicability of the decree to a greater number of employees
who can avail of the benefits under the law, which is in consonance to giving
maximum aid and protection to labor. 45 Accordingly, the Court upholds the solidary
liability of petitioners against respondents' money claims as discussed above.
WHEREFORE, the petition is DENIED. The Decision dated January 14,
2014 and the Resolution dated August 14, 2014 of the Court of Appeals in CA-G.R.
SP No. 119224 are AFFIRMED with MODIFICATION in that legal interest of
6% per annum shall be additionally imposed on the total monetary awards to be
computed from the finality of this Decision until its full satisfaction.
SO ORDERED.
(Prime Stars International Promotion Corp. v. Baybayan, G.R. No. 213961, [January
|||
22, 2020])
THIRD DIVISION
DECISION
CARANDANG, J : p
Antecedents
On July 17, 2002, Philippine-Japan Active Carbon Corporation (petitioner)
leased two apartment units from Habib Borgaily (respondent) for P15,000.00 each
unit. The two lease contracts 3 have a lease period from August 1, 2002 to August 1,
2003. To secure faithful compliance of the obligations of petitioner under the lease
contracts, a security deposit was required, to wit:
19. Upon signing hereof, the LESSEE shall pay a deposit of FORTY FIVE
THOUSAND PESOS (P45,000.00) as a security for the faithful performance
by the LESSEE of his obligations herein provide[d], as well as to answer for
any liability or obligation that the LESSEE may incur to third parties arising
from or regarding the use of the subject premises. Accordingly, said deposit
may not be applied to any rental due under this contract and shall be refunded
to the LESSEE only upon termination hereof after ascertaining that the latter
has no further obligations under this contract or to any person or entity from
or regarding the use of the premises. 4
Petitioner deposited the amount of P90,000.00 as security deposit for the two
apartment units.
The lease contract was not renewed after the expiration of the lease on August
1, 2003. However, petitioner still occupied the premises until October 31, 2003.
After vacating the premises, petitioner asked respondent to return the amount
of P90,000.00. Petitioner alleged that it has no outstanding obligation to any person or
entity relative to the use of the apartment units to which the security deposit may be
held accountable.
As counterclaim in his Answer, 5 respondent claimed that petitioner failed to
comply with its obligations in the lease contracts, such as keeping the apartment units
"neat[-]looking" and keeping the lawns and hedges watered and trimmed. 6 Petitioner
was also obliged to keep the leased premises in good and tenantable
condition. 7 Further, upon termination of the lease, the lessee should surrender the
leased premises to the lessor in a good and tenantable condition with the exception of
ordinary fair wear and tear. 8
Respondent alleged that when petitioner vacated the leased premises, the same
was destroyed and rendered inhabitable. As such, respondent had to make the
necessary repairs amounting to P79,534.00 to the units. Respondent furnished
petitioner with the receipts of the expenses incurred from the labor and materials for
the repair of the units. Hence, respondent had the right to withhold the release of the
deposits due to the violation of the terms and conditions of the lease agreements.
Respondent claimed that when petitioner leased the two apartment units, the
latter made respondent believe that the apartment units were going to be occupied by
petitioner's executives and their families while assigned in Davao City. Instead,
petitioner used the apartment units as staff houses. The use and occupancy of the
apartment units became hazardous because petitioner's occupants, recklessly and with
impunity, disregarded all norms of decent living in apartments and destroyed the
units. Thus, as counterclaim, respondent claimed that he had the right to withhold the
refund of the security deposit amounting to P90,000.00 and apply the same to the cost
of the repairs amounting to P79,534.00. 9
Since respondent refused to return the security deposit, petitioner filed an
action for collection of sum of money equivalent to the amount of the security deposit
against the respondent.
MTCC ruling
In a Decision 10 dated May 20, 2005, the Municipal Trial Court Cities (MTCC)
of Davao City, 11th Judicial Region, Branch 1, found that respondent had the
obligation to return the security deposit. Under the lease agreement, it is provided that
the security deposit shall be returned after the expiration of the lease. The lease
agreement does not authorize the outright withholding of the security deposit by the
lessor if it appears to him that the terms and conditions of the lease are violated. The
lessor should first bring it to the proper forum to determine whether the lease
contracts were violated, thus:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff
and against the defendant:
a.) Ordering the defendant to refund plaintiff its security deposit in the amount
of Ninety Thousand Pesos (P90,000.00) with interest at twelve percent (12%)
per annum, until refunded in full;
b.) Ordering the defendant to pay plaintiff the amount of Ten Thousand Pesos
(P10,000.00) as attorney's fees plus cost of suit.
SO ORDERED. 11
RTC ruling
In a Decision 12 dated August 16, 2006, the Regional Trial Court (RTC) of
Davao City, 11th Judicial Region, Branch 13, reversed the ruling of the MTCC. The
RTC held that, according to Paragraph 19 of the lease agreements, the security deposit
is for the faithful performance by the lessee of its obligations under the lease
agreement. 13 Respondent had the right to withhold the deposit until his claim for
damages to the units which were not caused by ordinary wear and tear have been
reimbursed. 14 The pictures showing the damage to the leased premises presented by
the respondent during the hearing showed that when petitioner vacated the premises,
the same were in need of major repairs. 15 Furthermore, the RTC found that the major
repairs were all covered by receipts, which convinced the court that respondent spent
P79,534.00 for the repairs for the two apartment units, thus:
WHEREFORE, the decision of the court a quo is hereby reversed and
set aside.
The court finds that the claim of plaintiff for refund of the amount of
P90,000.00 which it paid defendant as security deposit for the two apartment
units which plaintiff leased, had already been offset by amount of P79,534.00
which defendant spent for the repairs of the leased premises and the nominal
damage in the amount of P11,464.00 which the court hereby awards to
defendant. Plaintiff and defendant have therefore no more claims against each
other.
SO ORDERED. 16
CA ruling
Upon Petition for Review under Rule 42 to the CA, petitioner ascribed to the
RTC grave abuse of discretion when it ruled that the claim for the refund of the
security deposit has already been offset by the amount respondent spent for the
repairs, and when the RTC ruled that defendant is entitled to nominal damages.
However, the CA in its Decision 17 dated February 25, 2011, resolved the case
completely different from the raised errors by petitioner. The CA held that the pivotal
issue was whether the MTCC has jurisdiction over the complaint. 18 The CA ruled
that the allegations in petitioner's complaint make out a case for breach of contract
and, therefore, an action for specific performance is an available remedy. 19 As such,
the same is an action incapable of pecuniary estimation. Therefore, the MTCC has no
jurisdiction over the case. The action for sum of money representing the security
deposit is merely incidental to the main action for specific performance. 20 Thus, the
CA dismissed the case for lack of jurisdiction, to wit:
WHEREFORE, the instant petition is DENIED. The Decision dated
August 16, 2006 and the Order dated September 19, 2006 of the RTC are SET
ASIDE. The Decision dated May 20, 2005 of the MTCC is also SET ASIDE.
The Complaint is DISMISSED for lack of jurisdiction.
SO ORDERED. 21
Aggrieved by the CA Decision, petitioner filed a Petition for Review
on Certiorari 22 before this Court, alleging that the nature of its complaint is one for
collection of sum of money and attorney's fees, and not one for breach of
contract. 23 Petitioner claimed that the lease contracts were already terminated at the
time of respondent's refusal to return the security deposit. 24 Since an action
of breach of contract presupposes the existence of a contract, and that breach must be
committed during the effectivity of the same, petitioner's action for the return of the
security deposit cannot be considered as an action for breach of contract. 25
Respondent, in his Comment, 26 claimed that the ruling of the CA that the
action is one for breach of contract is correct. However, respondent has a legal and
justifiable reason to withhold the refund of the security deposits, because petitioner
vandalized the leased units and destroyed the same when the latter left the
premises. 27
aScITE
Issues
The issues for Our resolution are: (1) whether the MTCC has jurisdiction over
the case; and (2) whether the RTC was correct when it offset the amount of the
security deposit with the amount of the repairs made by the respondent, plus the
amount of nominal damages awarded to respondent.
Ruling of the Court
In order to determine whether the subject matter of an action is one which is
capable of pecuniary estimation, the nature of the principal action or remedy sought
must be considered. If it is primarily for recovery of a sum of money, then the claim is
considered as capable of pecuniary estimation, and the jurisdiction lies with the
municipal trial courts if the amount of the claim does not exceed P300,000.00 outside
Metro Manila, and does not exceed P400,000.00 within Metro Manila. However,
where the basic issue of the case is something other than the right to recover a sum of
money, where the money claim is merely incidental to the principal relief sought, then
the subject matter of the action is not capable of pecuniary estimation, and is within
the jurisdiction of the RTC. 28
The CA held that the allegations of the complaint filed by petitioner make out a
case for breach of contract where an action for specific performance is an available
remedy. Since the same is incapable of pecuniary estimation, the same is cognizable
by the RTC. The refund of the P90,000.00 security deposit was merely incidental to
the main action for specific performance. 29
The CA was mistaken in appreciating the facts of the case. Contrary to its
ruling, a perusal of the complaint filed by petitioner makes out a case for collection of
sum of money and not for breach of contract. It is to be noted that the lease agreement
had already expired when petitioner filed an action for the return of the security
deposit. Since the lease had already expired, there is no more contract
to breach. 30 The demand for the return of the security deposit was merely a collection
suit. What the petitioner prayed for before the MTCC was the return of the amount of
P90,000.00, and not to compel respondent to comply with his obligation under the
lease agreement. As such, the CA erred when it held that the MTCC has no
jurisdiction over the case and dismissed the same for lack of jurisdiction.
Respondent pleaded as counterclaim in his answer the cost of the repairs
amounting to P79,534.00, which he incurred in fixing the two units leased by the
petitioner. Petitioner rendered the two apartment units hazardous because petitioner
recklessly and with impunity disregarded all norms of decent living. Petitioner
destroyed the two apartment units and rendered it inhabitable and in need of major
repairs. Thus, while respondent must return the security deposit to petitioner,
respondent had the right to withhold the same and to apply it to the damages incurred
by the apartment units occupied by petitioner. The RTC found that respondent spent a
total of P79,534.00 for the repairs on the leased premises. Petitioner, when it occupied
the apartment units, acknowledged that the leased premises were in good and
tenantable condition. Petitioner shouldered all expenses for repairs of the apartment
units, regardless of its nature, and that upon termination of the lease, petitioner must
surrender the premises, also in the same good and tenantable condition when taken,
with the exception of ordinary wear and tear. However, photographs of the extent of
the damage on the leased premises presented during trial showed that when petitioner
vacated the apartment units, they were in need of major repairs. The repairs
undertaken by respondent were all covered by receipts, which the latter furnished to
petitioner. The failure of petitioner to inspect the repairs undertaken by respondent,
despite notice of the same, bars petitioner to question the propriety of the repairs on
the apartment units. Therefore, the RTC was correct when it ordered the offsetting of
the P90,000.00 security deposit to the expenses of the repairs amounting to
P79,534.00.
However, the award of nominal damages has no basis. It has been settled that
nominal damages cannot co-exist with actual damages. 31 Nominal damages are
adjudicated in order that a right of the plaintiff, which has been violated or invaded by
the defendant, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him. Since respondent has already
been indemnified for the damages made on the leased premises, there is no more
reason to further grant nominal damages.
Since respondent must return the security deposit of P90,000.00 less than the
cost of repairs amounting to P79,534.00, the remaining amount of P10,466.00, should
still be returned by respondent to petitioner.
WHEREFORE, the Decision dated February 25, 2011 of the Court of
Appeals in CA-G.R. SP No. 01315 dismissing the complaint and holding that the case
is one for specific performance incapable of pecuniary estimation and, therefore,
within the original jurisdiction of the Regional Trial Court is
hereby REVERSED and SET ASIDE. Accordingly, the Decision dated August 16,
2006 of the Regional Trial Court of Davao City, Branch 13 in Civil Case No. 31, 103-
2005 is AFFIRMED with MODIFICATION. The security deposit in the amount of
P90,000.00 has already been offset by the amount of P79,534.00 as expenses for the
repairs of the apartment units. Nevertheless, respondent Habib Borgaily
is ORDERED to return the amount of P10,466.00, the remaining amount of the
security deposit, to petitioner Philippine-Japan Active Carbon Corporation.
SO ORDERED. HEITAD
2020])
FIRST DIVISION
DECISION
PERALTA, C.J : p
PAPERTECH, INC., petitioner, vs. JOSEPHINE P.
KATANDO, respondent.
DECISION
CARANDANG, J : p