HEIRS OF EMILIANO SAN PEDRO,

represented by LUZVIMINDA SAN PEDRO

CUNANAN,
Petitioners,

G.R. No. 166988

Promulgated:

evidenced by a Kasulatan ng Pagkakautang. In the same year,

Calderon sold to Garcia the portions of the land sold by San Pedro to
him in 1980. Thus, Garcia currently controls and cultivates the whole
landholding of San Pedro.[7]

July 3, 2009
- versus PABLITO GARCIA and JOSE CALDERON,
Respondents.
DECISION
PERALTA, J.:
Before this Court is a Petition for Review on Certiorari[1] under
Rule 45 of the Rules of Court, seeking to set aside the November 17,
2004 Decision[2] and February 8, 2005 Resolution[3] of the Court of
Appeals (CA) in CA-G.R. SP. No. 69144.
The facts of the case.

On July 1, 1991, the petitioners, Heirs of Emiliano San Pedro,

represented by Ligaya San Pedro and Leonila San Pedro, filed a
Complaint[4] for Nullification ofKasulatan ng Bilihang
Tuluyan and Kasulatan ng Pagkakautang and Restoration of Tenurial
Rights Covered by Operation Land Transfer against respondents
Pablito Garcia and Jose Calderon before the Provincial Adjudicator
of the Department of Agrarian Reform Adjudication Board (DARAB).
It was alleged that a farm lot measuring 1.8627 hectares,
situated at Dampol 2nd, Pulilan, Bulacan, originally owned by Virginia
King Yap, was acquired by Emiliano San Pedro sometime in 1987 by
virtue of Presidential Decree No. 27 (P.D. No. 27).[5] A portion of said
lot, however, has been assigned and conveyed by San Pedro to
Calderon as early as 1980 through a Kasulatan ng Bilihang Tuluyan.[6]
In 1982, San Pedro mortgaged to Garcia the landholding
for P30,000.00 with the condition that one-half of the landholding
should be delivered to Garcia as collateral, and that Garcia shall till
the land as long as the obligation remains unsettled. The transaction
between San Pedro and Garcia was reduced into writing as

Petitioners, in their Complaint, prayed that the sale and

mortgage entered into by San Pedro be declared null and void for
violation of P.D. No. 27, and that their possession over the
landholding be restored upon payment of the unpaid loan
of P30,000.00 obtained by San Pedro during his lifetime.[8]
In their Position Paper,[9] respondents claim that Calderon was
the real tenant of Virginia King Yap and not San Pedro, who was just
helping Calderon till the land. Respondents further alleged that San
Pedro was only able to obtain a Certificate of Land Transfer because
at that time Calderon left for Manila. Upon his return, Calderon
confronted San Pedro, who then acknowledged through a Sworn
Statement[10] that Calderon was the real tenant of Virginia King
Yap. Later on, both parties entered into a Kasulatan ng Bilihang
Tuluyan ceding the entire property to Calderon. Because of San
Pedro's voluntary acknowledgment of his right, Calderon rewarded
San Pedro P50,000.00.[11]
Furthermore, respondents alleged that Calderon still continued
to avail of the services of San Pedro because he could not find any
helper who could work with him on the land. However, sometime in
October 1982, Calderon discovered that San Pedro, through
a Kasulatan ng Pagkakautang borrowed P30,000.00 from Garcia and
mortgaged one-half of the land he was working on. Calderon tried to
settle the matter with Garcia, who manifested his desire to get his
money back. However, because San Pedro had no money to pay, the
parties brought their problem to the Samahang Nayon where
Calderon and San Pedro suggested that Garcia could buy the land
and cultivate the same. Subsequently, in a conference before
the Samahang Nayon, Calderon and San Pedro decided to surrender
the landholding to the Samahang Nayon to be awarded to any person
who would be willing to pay the value of the land and the P30,000.00
obligation incurred by San Pedro. Garcia decided to purchase the
land and in the presence of the Samahang Nayon officials paid
Calderon P60,000.00 while the P30,000.00 obtained by San Pedro
was already considered part of the purchase price. Thus, respondents
claim that, as of October 1982, the Samahang Nayon already

considered Garcia as the lawful owner and cultivator of the land in

question.[12]
On the other hand, in their Position Paper,[13] petitioners claim in
the main that the conveyances made by San Pedro are void ab
initio for such violated the provisions of P.D. No. 27.
On September 20, 1995, the Provincial Adjudicator rendered a
Decision[14] dismissing the complaint, the dispositive portion of which
reads:

WHEREFORE, premises considered, judgment is

hereby rendered DISMISSING the complaint for lack of merit.
SO ORDERED.

Inasmuch as the plaintiff thru their representative,

Leonila San Pedro, that as of this date, did not file any
Motion for Reconsideration nor notice of appeal within the
prescriptive period of fifteen (15) days, the Board's Decision
dated September 20, 1995, is now FINAL.
SO ORDERED.

[21]

On February 5, 1997, petitioners filed a Notice of Appeal[22] to

which respondents in response filed an Opposition.[23] Respondents
argued that the decision of the Board was already final and executory
by virtue of the November 29, 1996 Order of the Provincial
Adjudicator.

[15]

In said Decision, the Provincial Adjudicator concluded that San

Pedro was not the real tenant of the subject landholding and that the
latter had violated the provisions of P.D. No. 27 that an awardee of
land under the above law shall not at anytime employ tenants in the
cultivation of the land. Moreover, the Provincial Adjudicator ruled that
the acts of San Pedro were tantamount to an abandonment, which
thereby extinguished the tenancy relationship. Furthermore, the
Provincial Adjudicator ruled that San Pedro had no more tenurial right
because he had already abandoned and surrendered his right to
the Samahang Nayon.[16]
On October 16, 1995, petitioners, through their representative
Leonila San Pedro, filed a Motion for Extension of Time to file a
Motion for Reconsideration.[17]
After a year, on October 21, 1996, respondents filed a
Manifestation[18] stating that no motion for reconsideration was filed by
petitioners despite their request for an extension, nor was an appeal
interposed by them. Accordingly, respondents prayed for the issuance
of an entry of judgment. Later, on November 5, 1996, respondents
then filed a Motion to Issue Order of Finality.[19]
On November 29, 1996, the Provincial Adjudicator issued an
Order[20] granting the motion of respondents, the pertinent portion of
which reads:

Notwithstanding the belated appeal, the records of the case

were elevated to the DARAB, as a matter of course, which then
rendered a Decision[24] favorable to petitioners, the dispositive portion
of which reads:
WHEREFORE, premises considered, the decision of
the Adjudicator a quo dated September 20, 1995, is hereby
REVERSED and SET ASIDE. A new one is hereby rendered
to read as follows:
1. Declaring the EP No. A-004783 issued to the late
Emiliano San Pedro, predecessor-in-interest of
plaintiffs-appellants valid and binding;

2. Declaring the Kasulatan ng Bilihang Tuluyan and

Kasulatan ng Pagkakautang as null and void;
3. Ordering the defendants-appellees to turn over the
physical possession of the subject landholding to
herein plaintiffs-appellants;
4. Ordering the plaintiffs-appellants to pay the
defendants-appellees the amount stated in the
Kasulatan ng Bilihang Tuluyan and Kasulatan ng
Pagkakautang.
No pronouncement as to cost.

SO ORDERED.

[25]

In said Decision, the DARAB allowed the belated appeal

notwithstanding that it was filed one year and five months out of time.
The DARAB justified its decision by citing Section 2 of the new
DARAB Rules which provides for a liberal construction of the
rules.[26] Moreover, the DARAB held that the transactions entered into
by San Pedro and respondents violated P.D. No. 27.[27]
Respondents filed a Motion for Reconsideration[28] assailing the
DARAB Decision. On January 25, 2002, the DARAB issued a
Resolution[29] denying respondents Motion for Reconsideration.
On March 6, 2002, respondents filed with the CA a Petition for
Review under Rule 43 of the Rules of Court assailing the Decision
and Resolution of the DARAB.
On November 17, 2004, the CA rendered a Decision[30] ruling in
favor of respondents, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, the petition is
hereby GRANTED. The January 17, 2001 Decision and the
January 25, 2002 Resolution of the DARAB in DARAB Case
No. 6869 are hereby SET ASIDE for lack of jurisdiction.
SO ORDERED.

Hence, herein petition, with the following assignment of errors,

to wit:
I.
WHETHER OR NOT PETITIONERS ARE ENTITLED TO
RECOVER THE LANDHOLDING FROM THE PRIVATE
RESPONDENTS.
II.
WHETHER OR NOT THE HONORABLE PUBLIC
RESPONDENT COURT OF APPEALS COMMITTED
GRAVE ABUSE OF AUTHORITY, GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN GRANTING THE PETITION AND
SETTING ASIDE THE DECISION DATED JANUARY 17,
2001 AND THE RESOLUTION DATED JANUARY 25, 2002
OF THE DEPARTMENT OF AGRARIAN REFORM
ADJUDICATION BOARD IN DARAB CASE NO 6869.

III.
WHETHER OR NOT THE HONORABLE PUBLIC
RESPONDENT COURT OF APPEALS COMMITTED ANY
ERROR IN SETTING ASIDE THE DECISION AND
RESOLUTION OF THE DEPARTMENT OF AGRARIAN
REFORM ADJUDICATION BOARD IN DARAB CASE NO
[36]
6869.

[31]

In said Decision, the CA ruled that the failure to perfect an

appeal within the reglementary period is not a mere technicality, but is
rather, jurisdictional. The CA pointed out that the Revised Rules of the
DARAB itself impose a fifteen-day reglementary period to appeal.
Moreover, notwithstanding that technical rules may be relaxed in the
interest of justice, the CA ruled that the delay of two years[32] in the
filing of the appeal in the case at bar no longer fits the liberality
rule.[33]
On December 8, 2004, petitioners filed a Motion for
Reconsideration[34] which was, however, denied by the CA in a
Resolution[35] dated February 8, 2005.

The petition is not meritorious.

At the crux of the controversy is the determination of whether or
not the DARAB may entertain an appeal filed beyond the
reglementary period by invoking a liberal application of the DARAB
Rules of Procedure.
This Court rules in the negative.
It is a matter of record that the Provincial Adjudicator rendered
its Decision on September 20, 1995. Notwithstanding that petitioners
filed a motion for extension of time, no motion for reconsideration or
an appeal was filed by them. It is also a matter of record that
petitioners only filed their Notice of Appeal on February 5, 1997. Thus,

said appeal was filed approximately after the lapse of one year and
five months from the date of the Decision of the Provincial
Adjudicator.
The pertinent provisions of the DARAB Revised Rules of
Procedure, which was then in force, state:

xxx
c) The provisions of the Rules of Court shall not apply
even in a suppletory character unless adopted herein or by
resolution of the Board. However, due process of the law shall
[39]
be observed and followed in all instances.

Rule I
SECTION 2. Construction. These Rules shall be liberally
construed to carry out the objectives of agrarian reform and to
promote a just, expeditious, and inexpensive adjudication and
settlement of any agrarian dispute, case, matter or concern.
Rule VIII
SECTION 15. Finality of Judgment. The decision, order, or
ruling disposing of the case on the merits by the Adjudicator
shall be final after the lapse of fifteen (15) days from receipt of
a copy thereof by the counsel or representative on record, or
in their absence, by the party himself.
Rule XIII
SECTION 1. Appeal to the Board. a) An appeal may be
taken from an order or decision of the Regional or Provincial
Adjudicator to the Board by either of the parties or both, by
giving or stating a written or oral appeal within a period of
fifteen (15) days from receipt of the resolution, order or
decision appealed from, and serving a copy thereof on the
[37]
opposite or adverse party, if the appeal is in writing.

Petitioners contend that Section 2 of the DARAB Revised

Rules of Procedure categorically states that its own rules of
procedures must be liberally construed.[38] Moreover, petitioners cite
Section 3, Rule I of the Revised Rules of Procedure of the DARAB to
bolster their case:
SECTION 3. Technical Rules Not Applicable. The Board
and its Regional and Provincial Adjudicators shall not be
bound by technical rules of procedure and evidence as
prescribed in the Rules of Court, but shall proceed to hear and
decide all agrarian cases, disputes or controversies in a most
expeditious manner, employing all reasonable means to
ascertain the facts of every case in accordance with justice
and equity.

Petitioners argue that it was the CA's position that the Rules of
Procedure of the DARAB cannot be liberally construed.[40] Hence,
petitioners contend that the CA committed a grave and serious error
when it reversed the September 17, 2001 Decision of the DARAB.
The arguments of petitioners are misplaced.
A reading of the assailed CA decision shows that the CA did not
categorically state that the DARAB Rules of Procedure cannot be
liberally construed. As a matter of fact, the CA acknowledged that
technical rules may be relaxed in the interest of justice.[41] The CA,
however, chose not to apply the liberality rule primarily because of the
long delay in the filing of the appeal, as well as petitioners failure to
offer an explanation or an excuse for their failure to abide by the
reglementary period.[42]
The case of Sebastian v. Hon. Morales[43] is instructive:
Litigation is not a game of technicalities, but every
case must be prosecuted in accordance with the prescribed
procedure so that issues may be properly presented and
justly resolved. Hence, rules of procedure must be faithfully
followed except only when for persuasive reasons, they may
be relaxed to relieve a litigant of an injustice not
commensurate with his failure to comply with the prescribed
procedure. Concomitant to a liberal application of the
rules of procedure should be an effort on the part of the
party invoking liberality to explain his failure to abide by
[44]
the rules.

Even if the Rules of Court may not apply in the proceedings

before the DARAB, the CA was correct in pointing out that the
Revised Rules of the DARAB itself impose a fifteen-day reglementary

period to appeal. Since the perfection of an appeal within the statutory

or reglementary period is not only mandatory but also jurisdictional,
the failure of petitioners to so perfect their appeal rendered the
questioned decision final and executory.[45] This rule is founded upon
the principle that the right to appeal is not part of due process of law,
but is a mere statutory privilege to be exercised only in the manner
and in accordance with the provisions of the law.[46]
This, of course, does not mean to say that this Court has not in
the past allowed a liberal application of the rules of appeal. However,
the same applies only in exceptionally meritorious cases. The case
of Bank of America, NT & SA v. Gerochi, Jr.[47] is instructive:
True, in few highly exceptional instances, we
have allowed the relaxing of the rules on the application of the
reglementary periods of appeal. We cite a few typical
examples: In Ramos vs. Bagasao, 96 SCRA 395, we excused
the delay of four days in the filing of a notice of appeal
because the questioned decision of the trial court was served
upon appellant Ramos at a time when her counsel of record
was already dead. Her new counsel could only file the appeal
four days after the prescribed reglementary period was over.
In Republic vs. Court of Appeals, 83 SCRA 453, we allowed
the perfection of an appeal by the Republic despite the delay
of six days to prevent a gross miscarriage of justice since the
Republic stood to lose hundreds of hectares of land
already titled in its name and had since then been devoted for
educational purposes. In Olacao vs. National Labor Relations
Commission, 177 SCRA 38, 41, we accepted a tardy appeal
considering that the subject matter in issue had theretofore
been judicially settled, with finality, in another case. The
dismissal of the appeal would have had the effect of the
appellant being ordered twice to make the same reparation to
the appellee.
The case at bench, given its own settings, cannot
come close to those extraordinary circumstances that have
indeed justified a deviation from an otherwise stringent rule.
Let it not be overlooked that the timeliness of an appeal is
a jurisdictional caveat that not even this Court can trifle
[48]
with.

In the case at bar, there is no showing of a factual setting which

warrants a liberal application of the rules on the period of appeal. To

stress, petitioners filed their Notice of Appeal only after one year and
five months from the time the Provincial Adjudicator rendered its
Decision. Such a delay is unacceptable. Moreover, what makes
matters worse is that petitioners offered no explanation or excuse for
this Court to consider as to why it took them so long to file their
appeal.
Lastly, it cannot escape this Courts notice that, on November
29, 1996, the Provincial Adjudicator issued an Order granting
respondents motion for an order of finality for failure of petitioners to
file a motion for reconsideration or an appeal within the reglementary
period. Hence, the September 20, 1995 Decision of the Provincial
Adjudicator is already final.
Nothing is more in settled law than that once a judgment
attains finality it thereby becomes immutable and unalterable. It may
no longer be modified in any respect even if the modification is meant
to correct what is perceived to be an erroneous conclusion of fact or
law, and regardless of whether the modification is attempted to be
made by the court rendering it or by the highest court of the land. Just
as the losing party has the right to file an appeal within the prescribed
period, the winning party also has the correlative right to enjoy the
finality of the resolution of the case.[49]
Litigation must end and terminate sometime and somewhere,
and it is essential to an effective administration of justice that once a
judgment has become final, the issue or cause involved therein
should be laid to rest. The basic rule of finality of judgment is
grounded on the fundamental principle of public policy and sound
practice that at the risk of occasional error, the judgment of courts and
the award of quasi-judicial agencies must become final at some
definite date fixed by law.[50] The orderly administration of justice
requires that the judgment/resolutions of a court or quasi-judicial body
must reach a point of finality set by law, rules and regulations. The
noble purpose is to write finis to disputes once and for all. This is a
fundamental principle in our justice system, without which there could
be no end to litigations. Utmost respect and adherence to this
principle must always be maintained by those who wield the power of
adjudication. Any act which violates such principle must be struck
down.[51]

In sum, based on the foregoing discussion, this Court finds: (1)

that the CA did not commit any error when it ruled that petitioners'
delay of approximately one year and five months in filing an appeal
did not fit the liberality rule; and (2) that the DARAB had no jurisdiction
to entertain petitioners' appeal as the September 20, 1995 Decision of
the Provincial Adjudicator had already attained finality.
WHEREFORE, premises considered, the petition is DENIED for
lack of merit. The November 17, 2004 Decision and February 8,
2005 Resolution of the Court of Appeals in CA-G.R. SP No. 69144
are AFFIRMED.
Costs against petitioners.
SO ORDERED.
DIOSDADO M. PERALTA
Associate Justice

EAGLE STAR SECURITY SERVICES,

INC., Petitioner,
- versus
BONIFACIO L. MIRANDO,
Respondent.

G.R. No. 179512

according to him (respondent), he w[ould] render (sic) voluntary

resignation by December 17, 2001[,] Monday.

Promulgated:
July 30, 2009

DECISION
CARPIO MORALES, J.:
Bonifacio Mirando (respondent), who was hired by Eagle Star
Security Services, Inc. (petitioner) as a security guard on July 29,
1997, was posted at the Heroes Hill Branch (in Quezon City) of
Equitable-PCI Bank (now Banco de Oro-EPCI Bank) with a 9:00 a.m.to-5:00 p.m. shift and a daily wage of P250.00.[1]

On December 14, 2001, respondent was made to sign a duty

schedule for December 15 (a Saturday). When he reported for work
on December 15, 2001, he was told by the detachment commander,
Juanito Endencio (Endencio), not to report for duty per instruction of
the head office. Respondent thus called up the head office and was
told by Wilfredo Dayon that he was removed from duty by Ernesto
Agodilla (Agodilla), petitioners operations manager.[2] As respondent
was thereafter no longer asked to report for duty, he filed
on December 18, 2001 a complaint[3] for illegal dismissal against
petitioner and its president Wilfredo Encarnacion (Encarnacion) at the
National Labor Relations Commission (NLRC). He later amended his
complaint on February 1, 2002 to include a prayer for reinstatement
and payment of full backwages, damages and attorneys fees.[4]
Responding to the complaint, petitioner alleged that
respondent went on absence without official leave (AWOL) on
December 16, 2001 and had not since reported for work, drawing it to
send him a notice on December 26, 2001 to explain his absence, but
he failed to respond thereto. [5]
Petitioner further alleged that in a Memorandum[6] dated
December 26, 2001 sent to Agodilla, Endencio reported that
respondent pulled out his uniform on December 15, 2001 and that

By Decision[7] of October 29, 2003, Labor Arbiter Lilia Savari

found that respondent was illegally dismissed, disposing as
follows:
WHEREFORE, a Decision is hereby
rendered declaring complainant to have been
illegally dismissed. Concomitantly, respondents are
ordered to reinstate complainant to his former
position without loss of seniority rights and with
payment of full backwages from the time of his
illegal dismissal on December 15, 2001. If
reinstatement is no longer feasible, payment of
separation benefits plus refund of cash bond is
hereby ordered.
Further, respondents are ordered to pay
complainant [service incentive leave pay] for 2001,
balance of 13th month pay for the year 2001,
P1,500.00 representing difference in uniform
allowance and 10% of the aggregate amount as
attorneys fees.
Computation of the award prepared by the
NLRC Computation Unit is hereto attached and
made integral part of this Decision.
SO ORDERED.
On appeal, the NLRC, by Decision[8] of October 28,
2005, modified the Labor Arbiters Decision by dismissing the
complaint as against Encarnacion and awarding attorneys fees based
on the 13th month pay and service incentive leave pay.
On petitioners and respondents respective motions for
reconsideration, the NLRC amended its Decision, by Resolution[9] of
April 28, 2006, by reducing the monetary awards to [herein
respondent] representing [the] cash bond [equivalent], 13th month pay
and service incentive leave pay to P1,100.00, P2,403.08
andP107.17, respectively.

Petitioner, via certiorari, elevated the case to the Court of

Appeals which, by Decision[10] of August 31, 2007, affirmed the NLRC
Decision of October 28, 2005and Resolution of April 28, 2006.

. . . WHEN IT AFFIRMED THE FINDINGS

OF FACTS OF THE NLRC AND THE LABOR
ARBITER WHICH RELIED ON MANIFESTLY
MISTAKEN SPECULATIONS, SURMISES AND
INFERENCES.
II

In affirming the NLRC ruling, the CA observed:

. . . [I]f indeed it were true that the private
respondent manifested his intention to resign on
December 15, 2001 to Juanito Endencio[,] then the
petitioner agency would have no reason to declare
the former as AWOL as their first reaction would
have been to allow the private respondent to
execute a resignation letter. Moreover, the Court
finds it very peculiar that Juanito Endencio, whom
the private respondent allegedly told of his intention
to resign on December 15, 2001, did not report the
incident immediately to the petitioner agency but
instead waited until December 26, 2001, or 11 days
after, to submit a memorandum reporting the said
incident. This boggles the mind as logic dictates
that such an important incident, if it were true,
should have elicited a much more immediate
reaction from Juanito Endencio, being the
Detachment Commander or Officer in Charge of the
petitioner agency. After all, a security guard
threatening to quit, thereby abandoning his post, is
not an incident that should be taken lightly, much
less ignored by a supervisor,especially considering
that the private respondents post was at a bank. In
addition, it is significant to note that the said
memorandum came several days after the private
respondent filed his case against the petitioner for
illegal dismissal on December 18, 2001. (Emphasis
and underscoring supplied)
Hence, the present petition for review which faults the
appellate court
I

IN FINDING THAT RESPONDENT WAS

ILLEGALLY DISMISSED AND IN FAILING TO
APPRECIATE THE OVERWHELMING EVIDENCE
ESTABLISHED ON RECORD WHICH SHOWS
BEYOND PERADVENTURE OF DOUBT
THAT RESPONDENT WAS NEVER DISMISSED
BUT RATHER WENT ON AWOL.
III
IN FINDING RESPONDENT TO BE
ENTITLED TO FULL BACKWAGES AND
SEPARATION [PAY], INCLUDING ATTORNEYS
FEES DESPITE THE FACT THAT NO IOTA OF
EVIDENCE [WAS PRESENTED] TO SATISFY THE
BURDEN OF PROOF REQUIRED TO SUPPORT
THE MONEY CLAIMS.[11] (Underscoring supplied)
Petitioner reiterates that it did not dismiss respondent who, so
it claims, voluntarily separated himself from the service by refusing to
report for work.[12] And it contends that respondents amendment of
his complaint after forty nine days to include a prayer for
reinstatement, among other things, exposed his scheme that he did
not actually want to be reinstated but merely wanted a windfall in the
form of backwages and separation pay.[13]
Petitioner goes on to argue that even assuming that
respondent was not given any duty assignment, his filing of the
complaint for illegal dismissal was premature as he should be
considered to have been in floating status or off-detail under Article
286[14] of the Labor Code.[15]
Respondent, in his Comment,[16] maintains that the present
petition was filed manifestly for delay as the grounds cited therein are
mere rehash of those already sufficiently passed upon by the
administrative bodies and the appellate court.

Additionally, respondent argues that the present petition must

be treated as a mere scrap of paper since the one who signed it was
not properly authorized by the [p]etitioner to file [it] before this
[Court].
The petition must be denied.
There is no proof that petitioners representative Reynaldo G.
Tauro (Tauro) was authorized to file the petition on its behalf.[17] The
Board Resolution (Annex R to the petition), which was adopted
during petitioners Special Board Meeting of May 20, 2006, states:

the principal party cannot sign the petition, the one

signing on his behalf must have been duly
authorized.
. . . Where the petitioner is a corporation,
the certification against forum shopping should
be signed by its duly authorized director or
representative [I]f the real party-in-interest is a
corporate body, an officer of the corporation can
sign the certification against forum shopping as
long as he is authorized by a resolution of its
board of directors.
xxxx

RESOLVED as it is hereby resolved that the

corporation shall elevate on Certiorari before the
Court of Appeals NLRC NCR Case No. 039872-04
entitled Bonifacio L. Mirando, complainant, versus
Eagle Star Security Services, Inc., respondent.
RESOLVED further as it is hereby resolved
that Mr. REYNALDO G. TAURO, shall be
appointed as authorized representative of the
Corporation, to represent and sign in behalf of
the corporation the Verification and Certification
of the petition for afore-mentioned case. (Italics
in the original; emphasis and underscoring supplied)
Clearly, Annex R was adopted for the purpose of authorizing
Tauro to file petitioners petition for Certiorari before the Court of
Appeals. [18] Despite petitioners awareness in its Reply to
respondents Comment filed before this Court of the defect in Tauro
authority to sign for and in its behalf the Verification and Certification
against Non-Forum Shopping,[19] it failed even to belatedly file the
requisite authority.
Fuentebella and Rolling Hills Memorial Park v. Castro,[20] on
the requirement of a certification against forum shopping, explains:
The reason for this is that the principal party
has actual knowledge whether a petition has
previously been filed involving the same case or
substantially the same issues. If, for any reason,

A certification without the proper

authorization is defective and constitutes a valid
cause for the dismissal of the petition. (Citations
omitted; emphasis, italics and underscoring
supplied)
Petitioners discourse on relaxation of technical rules of
procedure in the interest of substantial justice does not
impress. While there have been instances when the Court dispensed
with technicalities on the basis of special circumstances or compelling
reasons,[21] there is no such circumstance or reason in the present
case which warrants the liberal application of technical rules.
AT ALL EVENTS, on the merits, the appellate court did not
commit any reversible error in affirming the congruent findings of the
Labor Arbiter and the NLRC that respondent was illegally
dismissed.
Both the Labor Arbiter and the NLRC gave weight to
the January 24, 2002 Sworn Affidavit[22] of Gary Villasis (Villasis), a
fellow security guard of respondent, which reads in part:
3. That I am [respondents] co-worker as
[s]ecurity [g]uard at the said bank from the period of
April 30, 2000 up to December 15, 2001 and
[respondent] was terminated on the dated [sic]

stated above without any violation, (Underscoring

supplied),
as well as to Villasis handwritten Pagpapatunay[23] dated February
19, 2002 corroborating respondents claim that he was
unceremoniously relieved of his duties without any explanation.
The persistence of respondent to resume his duties, not to
mention his immediate filing of the illegal dismissal complaint, should
dissipate any doubt that he did not abandon his job.
Clutching at straws, petitioner argues that respondent was on
temporary off-detail, the period of time a security guard is made to
wait until he is transferred or assigned to a new post or client;[24] and
since petitioners business is primarily dependent on contracts
entered into with third parties, the temporary off-detail of respondent
does not amount to dismissal as long as the period does not exceed 6
months, following Art. 286 of the Labor Code.[25]
Petitioners citation of Article 286 of the Labor Code reading:
ART. 286. When employment not deemed
terminated. The bona fide suspension of the
operation of a business or undertaking for a period not
exceeding six (6) months, or the fulfillment by the
employee of a military or civic duty shall not terminate
employment. In all such cases, the employer shall
reinstate the employee to his former position without
loss of seniority rights if he indicates his desire to
resume his work not later than one (1) month from the
resumption of operations of his employer or from his
relief from the military or civic duty. (Emphasis in the
original; underscoring supplied)
is misplaced. Philippine Industrial Security Agency v.
Dapiton teaches:
We stress that Article 286 applies only when there is
a bonafide suspension of the employers operation of a
business or undertaking for a period not exceeding six
(6) months. In such a case, there is no termination of

employment but only a temporary displacement of

employees, albeit the displacement should not exceed
six (6) months. The paramount consideration should
be the dire exigency of the business of the employer
that compels it to put some of its employees
temporarily out of work. In security services, the
temporary off-detail of guards takes place when the
security agencys clients decide not to renew their
contracts with the security agency, resulting in a
situation where the available posts under its existing
contracts are less than the number of guards in its
roster.[26] (Underscoring supplied)
In the present case, there is no showing that there was
lack of available posts at petitioners clients or that there was a
request from the client-bank, where respondent was last
posted and which continued to hire petitioners services, to
replace respondent with another. Petitioner suddenly
prevented him from reporting on his tour of duty at the bank
on December 15, 2001 and had not thereafter asked him to
report for duty.
In fine, the appellate courts affirmance of the NLRC
decision is in order.
WHEREFORE, the petition is DENIED.
Costs against petitioner.
SO ORDERED.

CONCHITA CARPIO MORALES

Associate Justice

DEVELOPMENT BANK OF
THEPHILIPPINES, Petitioner,
- versus FAMILY FOODS MANUFACTURING CO.
LTD., and SPOUSES JULIANCO and
CATALINA CENTENO, Respondent.

G.R. No. 180458

Promulgated:
July 30, 2009

DECISION
NACHURA, J.:
At bar is a petition for review on certiorari under Rule 45 of the
Rules of Court filed by petitioner Development Bank of the Philippines
(DBP), challenging the May 11, 2007 Decision[1] and the October 24,
2007 Resolution[2] of the Court of Appeals (CA) in CA-G.R. CV No.
81360.
On September 15, 1982, respondent Family Foods
Manufacturing Co. Ltd. (FAMILY FOODS), a partnership owned and
operated by Spouses Julianco and Catalina Centeno (spouses
Centeno) obtained an industrial loan of P500,000.00 from DBP. The
loan was evidenced by a promissory note dated September 15, 1982
and payable in seven (7) years, with quarterly amortizations
of P31,760.40. The loan carried an interest rate of 18% per annum,
and penalty charge of 8% per annum. As security, spouses Centeno
executed a real estate mortgage on the parcels of land in Los Baos,
Laguna, covered by Transfer Certificate of Title (TCT) Nos. T-651217,
T-96878 and T-96689; and a chattel mortgage over the buildings,
equipment and machineries therein, in favor of DBP.
On October 14, 1984, FAMILY FOODS was granted an
additional loan of P440,000.00, payable on or before November 8,
1989, with interest at 22% per annum and penalty charge of 8%. The
loan was, likewise, secured by the same real estate and chattel
mortgages.
FAMILY FOODS failed to pay the loans when they became
due. Demand to pay was made, but it was not heeded. Accordingly,
DBP filed a petition for extrajudicial foreclosure of mortgage with the
Office of the Clerk of Court of the Regional Trial Court (RTC) of
Laguna. A notice of sale, setting the auction sale on August 20, 1990,
was issued and was published in The Barangay on July 19, August 5

and August 12, 1990. As scheduled, the sale proceeded, and the
properties were awarded to DBP as the highest bidder. A certificate
of sale was issued and was registered with the Register of Deeds.
On January 10, 1991, before the redemption period expired,
FAMILY FOODS entered into a contract of lease over the foreclosed
properties with DBP for agreed monthly rentals P12,000.00. Spouses
Centeno paid P24,000.00 as advanced rentals, but refused to pay the
succeeding rentals. They, likewise, failed to redeem the foreclosed
properties; hence, DBP consolidated its title over the same.
On March 3, 1994, spouses Centeno filed a suit for Annulment
of Sale with Prayer for Issuance of a Writ of Injunction and/or
Restraining Order.[3] They admitted obtaining loans in the amount
of P940,000.00 from DBP, but claimed that they made substantial
payments amounting to P773,466.59. DBP, however, imposed
interest and other charges in excess of those provided in the
promissory note and in the real estate and chattel mortgages, thus,
unnecessarily increasing their outstanding obligation. Spouses
Centeno further claimed that the foreclosure was void, because the
notice of public action was not published in a newspaper of general
circulation, as required by law. The Barangay, the newspaper where
the notice of auction sale was published, they asserted, was not a
newspaper of general circulation in Laguna. The certificate of posting
issued by the Sheriff was, likewise, defective, as it was not in affidavit
form or under oath, as required by Act No. 3135. Finally, spouses
Centeno prayed for the issuance of a restraining order to enjoin DBP
from taking possession of the property pending adjudication of the
case.
DBP filed its answer[4] asserting lack of cause of action, as a
defense. It averred that the foreclosure proceeding was valid and in
accordance with law, arguing that it was not flawed by lack of notice
or publication. FAMILY FOODS and spouses Centeno were duly
notified of the scheduled auction sale. The notices of foreclosure sale
were posted and published, as required by law. DBP further averred
that respondents were estopped from questioning the foreclosure
proceeding, because respondents already entered into a contract of
lease with DBP. In so doing, respondents acknowledged DBPs
ownership of the subject properties, thereby admitting the validity of
the foreclosure proceeding. It added that respondents, as tenants,

could not deny the DPBs title over the property, citing Sec. 4 (b), Rule
31 of the Rules of Court.
In due course and after hearing, the RTC rendered a
decision[5] on January 30, 2003, dismissing the complaint. It rejected
respondents assertion that the notice of auction sale was not
published and posted, as required by law. It also sustained DBPs
argument that respondents are estopped from assailing the auction
sale after the execution of the contract of lease. Respondents claim
of payment was, likewise, rejected for lack of factual and legal
basis. Respondents filed a motion for reconsideration, but the RTC
denied the same.[6]
Forthwith, respondents appealed to the Court of Appeals
(CA). In its May 11, 2007 Decision, the appellate court modified the
RTC decision. While upholding the validity of the auction sale, the CA
reduced the interest rates and penalty charges stipulated in the two
(2) promissory notes for being iniquitous and unconscionable. The
dispositive portion of the CA decision reads:
WHEREFORE, premises considered, the
assailed January 30, 2003 Decision of the Regional
Trial Court of Calamba, Laguna, Branch 92, in Civil
Case No. 2082-94-C, is hereby MODIFIED with
respect to the penalty which is hereby REDUCED to
three percent (3%) per annum and with respect to the
interest rates charged in the two promissory notes,
these iniquitous interest rates are hereby REDUCED to
twelve percent (12%) per annum each of the two
promissory notes. All other aspects of the decision are
hereby AFFIRMED.
SO ORDERED.[7]

On February 2, 2008, this Court dismissed G.R. No. 180318 and

affirmed the CA ruling. Thus, what remains to be resolved is DBPs
petition, raising the following issues:
I. WHETHER THE REASONABLENESS OF THE
STIPULATED PENALTY CHARGE AND INTEREST
RATES ARE WITHIN THE ISSUES OF THE INSTANT
CASE;
II. WHETHER THE JUSTIFICATION PROVIDED FOR
THE REDUCTION OF THE STIPULATED PENALTY
CHARGE AND INTEREST RATES IS SUPPORTED
BY THE EVIDENCE ON RECORD;
III. WHETHER THE STIPULATED PENALTY
CHARGE OF 8% PER ANNUM AND INTEREST
RATES OF 18% AND 22% PER ANNUM ARE
UNREASONABLE, INIQUITOUS AND
UNCONSCIONABLE UNDER THE APPLICABLE
DECISIONS OF THE SUPREME COURT.[8]
We will first address the procedural issue raised by the
respondents in their comment.
Respondents moved for the outright dismissal of the petition
on the ground that DBP did not attach material portions of the
record, i.e. promissory notes, real estate and chattel mortgages, and
other documents, which are necessary for a complete determination
of the merits of the petition. They assert that DBP violated Sec. 4,
Rule 45[9] of the Rules of Civil Procedure, thus, justifying the outright
dismissal of the petition.
We disagree.

Respondents filed a motion for reconsideration, while DBP

moved for partial reconsideration of the decision, but these were both
denied by the CA on October 24, 2007.
Respondents and DBP then came to us with their respective
petitions for review assailing the CA ruling. Respondents petition was
docketed as G.R No. 180318, while that of DBP was docketed as G.
R. No. 180458. The petitions, however, were not consolidated.

As a general rule, a petition lacking copies of essential

pleadings and portions of the case record may be dismissed.[10] This
rule, however, is not petrified. As the exact nature of the pleadings
and parts of the case record that must accompany a petition is not
specified, much discretion is left to the court to determine the
necessity for copies of pleadings and other documents. [11]

A careful perusal of the records of the case shows that the

petitioners substantially complied with the procedural requirements of
Section 4, Rule 45 of the Rules of Court. Attached to the petition for
review as annexes are legible certified duplicate originals of the
assailed CA decision and resolution. DBP also attached the
pleadings filed before the RTC and the latters decision. The
attachment of the pleadings and of the decisions of the RTC and CA
provides sufficient basis to resolve the instant controversy.
As held by this Court in Air Philippines Corporation v.
Zamora:[12]
[E]ven if a document is relevant and pertinent to
the petition, it need not be appended if it is shown that
the contents thereof can also found in another
document already attached to the petition. Thus, if the
material allegations in a position paper are summarized
in a questioned judgment, it will suffice that only a
certified true copy of the judgment is attached.
Third, a petition lacking an essential pleading or
part of the case record may still be given due course or
reinstated (if earlier dismissed) upon showing that
petitioner later submitted the documents required, or
that it will serve the higher interest of justice that the
case be decided on the merits.
Nevertheless, even if the pleadings and other supporting documents
were not attached to the petition, the dismissal is unwarranted
because the CA records containing the promissory notes and the real
estate and chattel mortgages were elevated to this Court. Without a
doubt, we have sufficient basis to actually and completely dispose of
the case.
We must stress that cases should be determined on the
merits, after all parties have been given full opportunity to ventilate
their causes and defenses, rather than on technicalities or procedural
imperfections. In that way, the ends of justice would be served
better. Rules of procedure are mere tools designed to expedite the
decision or resolution of cases and other matters pending in court. A
strict and rigid application of rules, resulting in technicalities that tend
to frustrate rather than promote substantial justice, must be
avoided. In fact, Section 6 of Rule 1 states that the Rules shall be

liberally construed in order to promote their objective of ensuring the

just, speedy and inexpensive disposition of every action and
proceeding.[13]
Now we resolve the merit of the petition.
DBP faults the CA for ruling on the reasonableness of the
stipulated interest and, accordingly, modifying the RTC decision. It
points out that respondents never questioned the interest and charges
stipulated in the promissory notes and in the real estate and chattel
mortgages throughout the proceedings in the court a quo. What
respondents questioned were the interest and charges allegedly
imposed or collected in excess of those provided in the real estate
and chattel mortgages. Thus, it contends that the CA committed
reversible error in ruling on the issue, which was neither raised in the
complaint nor ventilated during the trial. In any case, there was
nothing illegal in the stipulated rate of interest. DBP, therefore, prays
for the reversal of the assailed decision and resolution.
We grant the petition.
The records show that respondents in their complaint never
raised as a ground or basis for the annulment of the auction sale the
nullity of the stipulated interest;[14] that during the pre-trial
conference,[15] and in the course of trial, the validity of the stipulated
interest was never put as an issue. What respondents questioned
were the interest and charges that were allegedly imposed or
collected in excess of those provided in the real estate and chattel
mortgages. It was only in theappellants brief that respondents raised
the validity of the stipulated interest rate and invoked this Courts
ruling in Medel v. Court of Appeals.[16] Clearly, respondents raised
the issue for the first time on appeal.
It is well settled that issues raised for the first time on appeal
are barred by estoppel. Arguments not raised in the original
proceedings cannot be considered on review; otherwise, it would
violate basic principles of fair play.[17] The CA, therefore, had no basis
for, and erred in, reducing the stipulated interest rates.
Moreover, respondents own evidence shows that they agreed
on the stipulated interest rates of 18% and 22%, and on the penalty
charge of 8%, in each promissory note. It is a basic principle in civil

law that parties are bound by the stipulations in the contracts

voluntarily entered into by them. Parties are free to stipulate terms
and conditions that they deem convenient, provided these are not
contrary to law, morals, good customs, public order, or public
policy.[18]
There is nothing in the records, and in fact, there is no
allegation, showing that respondents were victims of fraud when they
signed the promissory notes. Neither is there a showing that in their
contractual relations with DBP, respondents were at a disadvantage
on account of their moral dependence, mental weakness, tender age
or other handicap, which would entitle them to the vigilant protection
of the courts as mandated by Article 24[19] of the Civil Code.
As held by this Court in Vales v. Villa,[20] and Spouses Pascual
v. Ramos: [21]
All men are presumed to be sane and normal
and subject to be moved by substantially the same
motives. When of age and sane, they must take care
of themselves. In their relations with others in the
business of life, wits, sense, intelligence, training,
ability and judgment meet and clash and contest,
sometimes with gain and advantage to all, sometimes
to a few only, with loss and injury to others. In these
contests men must depend upon themselves upon
their own abilities, talents, training, sense, acumen,
judgment. The fact that one may be worsted by
another, of itself, furnishes no cause of complaint. One
man cannot complain because another is more able, or
better trained, or has better sense or judgment than he
has; and when the two meet on a fair field the inferior
cannot murmur if the battle goes against him. The law
furnishes no protection to the inferior simply because
he is inferior, any more than it protects the strong
because he is strong. The law furnishes protection to
both alike to one no more or less than to the other. It
makes no distinction between the wise and the foolish,
the great and the small, the strong and the weak. The
foolish may lose all they have to the wise; but that does
not mean that the law will give it back to them again.
Courts cannot follow one every step of his life and

extricate him from bad bargains, protect him from

unwise investments, relieve him from one-sided
contracts, or annul the effects of foolish acts. Courts
cannot constitute themselves guardians of persons
who are not legally incompetent. Courts operate not
because one person has been defeated or overcome
by another, but because he has been defeated or
overcome illegally. Men may do foolish things, make
ridiculous contracts, use miserable judgment, and lose
money by then indeed, all they have in the world; but
not for that alone can the law intervene and
restore. There must be, in addition, a violation of law,
the commission of what the law knows as anactionable
wrong, before the courts are authorized to lay hold of
the situation and remedy it.
Likewise, the 18% and 22% stipulated rates of interest in the two (2)
promissory notes are not unconscionable or excessive, contrary to the
CA ruling.
In Garcia v. Court of Appeals,[22] this Court sustained the
interest rates of 18% and 24% per annum on the loans obtained by
Chemark from Security Bank. Also, in Bautista v. Pilar Development
Corporation,[23] the validity of the 21% interest rate was upheld. Thus,
the stipulated rates on respondents promissory notes cannot be
stricken down for being contrary to public policy.
Similarly, we uphold the validity of the 8% penalty
charge. In Development Bank of the Philippines v. Go,[24] this Court
had the occasion to state that the 8% penalty charge is valid, viz.:
This Court has recognized a penalty clause as
an accessory obligation which the parties attach to a
principal obligation for the purpose of insuring the
performance thereof by imposing on the debtor a
special prestation (generally consisting in the payment
of a sum of money) in case the obligation is not fulfilled
or is irregularly or inadequately fulfilled. The
enforcement of the penalty can be demanded by the
creditor only when the non-performance is due to the
fault or fraud of the debtor. The non-performance gives
rise to the presumption of fault; in order to avoid the

payment of the penalty, the debtor has the burden of

proving an excuse the failure of the performance
was due to either force majeure or the acts of the
creditor himself.[25]
In this case, respondents failed to discharge the
burden. Thus, they cannot avoid the payment of the agreed penalty
charge.
WHEREFORE, the petition is GRANTED. The assailed
Decision and Resolution of the Court of Appeals in CA-G.R. CV No.
81360 are REVERSED and SET ASIDE. The January 30, 2003
Decision of the Regional Trial Court of Calamba, Branch 92,
dismissing Civil Case 2082-94-C, is REINSTATED.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice

F.A.T.
KEE
COMPUTER
SYSTEMS, INC., Petitioner,

G.R. No. 171238

Promulgated:

- versus ONLINE NETWORKS

INTERNATIONAL, INC.,
Respondent.

February 2, 2011

DECISION
LEONARDO DE CASTRO, J.:
For consideration of the Court is a Petition for Review
on Certiorari[1] under Rule 45 of the Rules of Court, which seeks to
challenge the Decision[2] dated September 26, 2005 of the Court of
Appeals in CA-G.R. CV No. 71910. The appellate court reversed and
set aside the Decision[3] dated November 7, 2000 of the Regional Trial
Court (RTC) of Makati City, Branch 148, in Civil Case No. 99-167,
which dismissed the complaint filed by herein respondent Online
Networks International, Inc. (ONLINE).
Petitioner F.A.T. Kee Computer Systems, Inc. (FAT KEE) is a
domestic corporation engaged in the business of selling computer
equipment and conducting maintenance services for the units it sold.
ONLINE is also a domestic corporation principally engaged in
the business of selling computer units, parts and software.
On January 25, 1999, ONLINE filed a Complaint[4] for Sum of
Money against FAT KEE docketed as Civil Case No. 99167. ONLINE alleged that sometime in November 1997, it sold
computer printers to FAT KEE for which the latter agreed to pay the
purchase price of US$136,149.43. The agreement was evidenced by
Invoice Nos. 4680, 4838, 5090 and 5096[5] issued by ONLINE to FAT
KEE. The invoice receipts contained a stipulation that interest at
28% per annum is to be charged on all accounts overdue and an
additional sum equal to 25% of the amount will be charged by vendor
for attorneys fees plus cost of collection in case of suit.[6] It was
further asserted in the Complaint that thereafter, FAT KEE, through its
President Frederick Huang, Jr., offered to pay its US dollar obligations
in Philippine pesos using the exchange rate of P40:US$1. ONLINE

claimed to have duly accepted the offer. The amount payable was
then computed at P5,445,977.20. FAT KEE then made several
payments amounting to P2,502,033.06 between the periods of March
and May 1998.[7] As of May 12, 1998, the balance of FAT KEE
purportedly amounted to P2,943,944.14. As the obligations of FAT
KEE matured in December 1997, ONLINE applied the 28% interest on
the unpaid amount. However, in view of the good business
relationship of the parties, ONLINE allegedly applied the interest on
the balance for a period of three months only. Thus, the total amount
due, plus interest, was P3,012,636.17.[8] FAT KEE subsequently
made additional payments in the amount of P2,256,541.12. A
balance of P756,095.05, thus, remained according to ONLINEs
computations. Despite repeated demands, FAT KEE failed to pay its
obligations to ONLINE without any valid reason. ONLINE was
allegedly constrained to send a final demand letter for the payment of
the aforementioned balance. As FAT KEE still ignored the demand,
ONLINE instituted the instant case, praying that FAT KEE be ordered
to pay the principal amount of P756,095.05, plus 28% interest per
annum computed from July 28, 1998 until full payment. ONLINE
likewise sought the payment of 25% of the total amount due as
attorneys fees, as well as litigation expenses and costs of suit.
FAT KEE duly answered[9] the complaint alleging, inter alia, that
it did not reach an agreement with ONLINE for the payment of its
obligations in US dollars. FAT KEE claimed that the invoice receipts of
the computer printers, which quoted the purchase price in US dollars,
were unilaterally prepared by ONLINE. While FAT KEE admitted that
it offered to pay its obligations in Philippine pesos, it averred that the
amount owing to ONLINE was only P5,067,925.34, as reflected in the
Statement of Account (SOA) sent by ONLINE dated December 9,
1997.[10] FAT KEE stated that payments in Philippine pesos were
tendered to ONLINE, in accordance with the SOA, and the latter
accepted the same. FAT KEE denied that it agreed to the conversion
rate of P40:US$1 and claimed that it had already fully paid its total
obligations to ONLINE. FAT KEE, thus, prayed for the dismissal of
the complaint and, by way of counterclaim, sought the payment
of P250,000.00 as attorneys fees.
The trial of the case ensued thereafter.
ONLINE first called Peter Jeoffrey Goco to the witness
stand. Goco testified that he was the Legal Officer of ONLINE, whose

duty was to monitor the outstanding or unpaid accounts of ONLINEs

clients, as well as to send demand letters and recommend the filing of
cases should the clients fail to pay.[11] FAT KEE was one of the
clients of ONLINE, which had an outstanding balance of a little
over P756,000.00.[12] Goco stated that the invoice receipts sent to
FAT KEE were denominated in US dollars as the business of ONLINE
was to sell imported computer products, in wholesale and retail. In
view of the currency fluctuations during those times, ONLINE deemed
that the better business policy was to bill their clients in US
dollars.[13] FAT KEE allegedly had an outstanding balance of roughly
around US$136,000.00.[14] When ONLINE demanded payment, FAT
KEE negotiated that it be allowed to pay in Philippine pesos. Goco
attested that the parties subsequently agreed to a conversion rate
of P40:US$1. FAT KEE was able to remit partial payments to
ONLINE, but as of May 1998, the amount of P756,095.05 remained
unpaid.[15] As FAT KEE failed to settle its obligations, ONLINE
included the payment of interests on the latters claim.[16] FAT KEE
then sent a letter to ONLINE, insisting that there was no agreement as
to the exchange rate to be used in converting the unpaid obligations
of FAT KEE and that the latter could not pay because of the
extraordinary currency fluctuations.[17] The lawyers of ONLINE
eventually sent a demand letter[18] to FAT KEE for the payment of the
outstanding balance, but this too went unheeded. ONLINE, thus, filed
the instant case.[19]
The next witness to be presented by ONLINE was James
Payoyo, an Account Manager for the said company. Payoyo testified,
among others, that sometime in November 1997, FAT KEE submitted
their Purchase Order[20] for Hewlett Packard computers and printers,
which was quoted in US dollars.[21] Prior to this, FAT KEE likewise
sent ONLINE a Purchase Order[22] dated October 23, 1997 and the
same was denominated in US dollars.[23] Payoyo related that, on
January 15, 1998, the officials of ONLINE met with Frederick Huang,
Jr., the President of FAT KEE, and the latters lawyer. The parties
discussed the payment scheme for the outstanding balance of FAT
KEE. ONLINE proposed that the total unpaid amount of more than
US$136,000.00 shall be divided in two, such that 50% of the amount
was to be paid in US dollars and the other half was to be settled in
Philippine pesos. The exchange rate to be applied to the Philippine
peso component was P41:US$1.[24] FAT KEE then offered to
renegotiate the exchange rate, offering to pay P35:US$1, but ONLINE

rejected the same. According to Payoyo, the parties subsequently

agreed to a P40:US$1 conversion rate.[25]
Lastly, ONLINE called on Sonia Magpili to likewise testify to the
fact that FAT KEE renegotiated with ONLINE for the conversion rate
of P40:US$1. Magpili stated that she was then the Executive Vice
President of ONLINE[26] and was among the company officials who
met with FAT KEE President Huang on January 15,
1998.[27] Discussed in the meeting was the proposal to split the
payment to be made by FAT KEE.[28] Frederick Huang, Jr.
subsequently called the office of ONLINE to request for the lowering
of the exchange rate to P40:US$1, to which ONLINE agreed.[29] FAT
KEE made partial payments from March 1998, but later tried to
negotiate again for a lower exchange rate. Magpili testified that
ONLINE no longer agreed to this proposal as the account of FAT KEE
had already fallen due as of December 1997.[30] On crossexamination, however, Magpili admitted that FAT KEE did not execute
any written confirmation to signify its agreement to the proposal to
split its outstanding balance and the conversion rate
of P40:US$1.[31]
FAT KEE, afterwards, presented its testimonial evidence,
calling forth Frederick Huang, Jr. to the witness stand. Pertinently,
Huang testified that the exchange rate they used in order to compute
their total unpaid obligation to ONLINE was P34:US$1. Huang
explained that this figure was arrived at by taking into account the
SOA dated December 9, 1997. Therein, the unpaid dollar amounts in
the assailed Invoice Nos. 4680 and 4838[32] were denominated in
Philippine
pesos
asP2,343,414.33
and P1,502,033.06,
respectively. A simple computation[33] then revealed that the rate of
exchange rate thereon was P34:US$1.[34] FAT KEE also applied the
said rate on Invoice Nos. 5090 and 5096,[35] such that the dollar
amounts stated thereon were respectively converted to P384,107.52
andP466,480.00.
Huang also stated that FAT KEE quoted in US dollars the
Purchase Order dated November 26, 1997, since the same was upon
the instructions of Payoyo. During that time, the fluctuations of the
Philippine peso were rapid and the Accounting Department of
ONLINE informed Huang that the computer equipment ordered by
FAT KEE would not be delivered unless FAT KEE issued a Purchase
Order in US dollars. Huang also said that there was no agreement

between FAT KEE and ONLINE for the payment in US dollars, nor did
the parties agree to a specific exchange rate.[36] On January 15,
1998, the parties met, but they failed to reach any agreement
regarding the exchange rate and the payment in US dollars. The next
day, ONLINE, through Payoyo, wrote a letter to FAT KEE, confirming
their supposed agreement on an exchange rate of P41:US$1.[37] On
February 23, 1998, Payoyo again wrote to Huang, informing him that
the new exchange rate to be applied wasP40:US$1. On March 2,
1998, Huang communicated to Payoyo, stating that the Board of
Directors of FAT KEE agreed to settle the outstanding balance of the
company at the rate of P37:US$1.[38] Huang then testified that FAT
KEE continued to pay its obligation in Philippine pesos until its
obligation was fully paid.[39] Later, FAT KEE received demand letters
from ONLINE, directing the former to pay the amount
of P756,095.05.[40]
Mayumi Huang also testified for FAT KEE. Being the
Operations Manager[41] of FAT KEE, she admitted that she was the
one who issued the Purchase Order dated November 26, 1997 to
ONLINE for $13,720.00.[42]
As rebuttal evidence, ONLINE offered the testimony of Melissa
Tan to prove that the SOA dated December 9, 1997 that was
purportedly issued by ONLINE was in fact unauthorized and FAT KEE
was duly informed of the same. Tan stated that she was the Credit
and Collection Supervisor for ONLINE.[43] Sometime in December
1997, Magpili showed her a copy of the SOA dated December 9,
1997, asking Tan if she approved the said document. Tan declared
that she did not issue the SOA, nor was she even aware of its
issuance.[44] Tan explained that the absence of her signature on the
SOA meant that the same was not authorized by ONLINE. The
standard procedure was for Tan to review and approve such
documents first before the same were issued.[45] Tan noted that the
SOA was prepared by Edwin Morales, an Accountant of
ONLINE. When confronted about the SOA, Morales reasoned that he
merely wanted to give FAT KEE an initial computation of the latters
outstanding balance, but he mistakenly included the billings that were
denominated in US dollars.[46] At the meeting between ONLINE and
FAT KEE on January 15, 1998, the latter was informed that the SOA
was not official and the parties negotiated the applicable conversion
rate.[47] Upon cross-examination, Tan revealed that ONLINE did not
rectify or correct the entries contained in the SOA. No disciplinary

action was likewise taken against Morales for the unauthorized

issuance of the said document.[48]
Finally, FAT KEE presented the testimony of Frederick Huang,
Jr. as surrebuttal evidence. Huang again maintained that the parties
failed to reach an agreement as regards the payment of FAT KEEs
obligations to ONLINE, as well as the proposal to apply the exchange
rate of P37:US$1.[49]
In a Decision dated November 7, 2000, the RTC dismissed the
complaint of ONLINE, ratiocinating thus:
After assessing the evidence presented by both parties,
the court is of the belief that [ONLINE] failed to establish its claim
against [FAT KEE]. While indeed [FAT KEE] purchased computer
printers from [ONLINE], [the latter] has not established the fact that
at the time when the obligation became due and demandable, there
was an agreement as to the conversion rate between [ONLINE]
and [FAT KEE] as to the rate of exchange from US dollars into
Philippine Peso in the payment of purchase price of printers. When
there is no agreement between [ONLINE] and [FAT KEE] as to the
rate of exchange from US dollars to Philippine peso, while it is
correct to say that it is the prevailing rate of exchange at the time
when the obligation became due and demandable, the prevailing
rate should be used that prevailing rate, is the rate pegged by
[ONLINE], which was contained in the Statement of Account dated
9 December 1997.
x x x Edwin Morales in the Statement of Account he sent
to [FAT KEE] dated 9 December 1997 computed the obligation of
[FAT KEE] in Philippine currency and after computing the total
obligation, by simple mathematical computation, it appears indeed
that the exchange rate used by [ONLINE] is PHP34.00 for every
US$1.00. [ONLINE], therefore, is estopped from claiming that the
rate of exchange rate should be at the rate of either PHP41.50 or
PHP40.00 per US$1.00, as the rate which [ONLINE] itself used is
PHP34.00
for
every
US$1.00
by
[ONLINEs]
own
computation. [FAT KEE] even paid an excess of PHP62,539.24.
Considering that [FAT KEE] have fully paid the amount
and there being really no dispute as to the exchange rate by
[ONLINEs] own admission in its Statement of Account dated 9
December 1997, it is but proper to consider that [FAT KEE] has
fully paid its obligation with [ONLINE] as evidenced by various
receipts presented during the trial.
xxxx

With all these, considering that [ONLINE] failed to prove

through preponderance of evidence its claim against [FAT KEE]
and therefore [ONLINEs] complaint must be dismissed.

ONLINE thereafter filed a Notice of Appeal,[53] elevating the

case to the Court of Appeals.

However, [FAT KEE] in its counterclaim claimed among

others that [FAT KEE] is entitled to attorneys fees in the amount
of P250,000.00. It having been satisfactorily proven by [FAT KEE]
that [it] is entitled to attorneys fees, the court, in its discretion,
awards to [FAT KEE] the amount of PHP100,000.00 for and as
attorneys fees, which [ONLINE] must pay to [FAT KEE]
considering that the claim of [ONLINE] is incorrect and its complaint
baseless.

On September 26, 2005, the Court of Appeals rendered a

Decision, reversing the judgment of the RTC in this wise:

WHEREFORE, premises considered, [judgment] is hereby

rendered in favor of [FAT KEE] and as against [ONLINE]. As a
consequence, [ONLINEs] Complaint is dismissed, and [ONLINE] is
therefore adjudged to pay [FAT KEE] the amount of P100,000.00
for and as attorneys fees.
Costs against [ONLINE].

We find the appeal meritorious.

In the proceedings below, both parties harped on the propriety of using the exchange rate
of P40:$1 as against the stated rate contained in the December SOA which the court a quo fixed
at P34.00. However, after scrutinizing the pieces of evidence submitted by the contending parties,
We found the pronouncement of the court a quo wanting of bases and support. Thus, in light of this
conclusion, this Court is constrained to take exception from the findings of the trial court considering
that there were pieces [of] evidence which had been misappreciated that will compel a contrary
conclusion if properly taken into account.

[54]

On the issue of estoppel on the part of ONLINE, the Court of

Appeals adjudged that:

[50]

On February 20, 2001, ONLINE filed a Motion for

Reconsideration[51] of the above decision. ONLINE argued that
estoppel may not be invoked against it as FAT KEE did not act or rely
on the representations in the SOA dated December 9, 1997. ONLINE
maintained that FAT KEE was informed that the SOA was erroneous
and unauthorized and the parties subsequently met and negotiated on
the exchange rate to be applied. Likewise, ONLINE challenged the
award of attorneys fees in favor of FAT KEE.
In an Order dated July 25, 2001, the RTC denied ONLINEs
motion for lack of merit. Said the RTC:
The principle of Estoppel properly applies to [ONLINE] brought about by the Statement of Account
dated December 9, 1997 which was sent to [FAT KEE] through [ONLINEs] own collection clerk
employee, Mr. Edwin Morales. While, indeed, there is no exchange rate agreed upon between
[ONLINE] and [FAT KEE], [the latter] actually made payments using the exchange rate of P34 for
every US dollar after the Statement of Account dated December 9, 1997 was received by [FAT
KEE]. Neither was there any formal action to correct the alleged unauthorized Statement of Account
received by [FAT KEE] nor was the employee, Mr. Edwin Morales meted appropriate disciplinary
action for the acts. On the contrary, it was only during the rebuttal stage of the case when [ONLINE]
tried to rectify the alleged mistake committed and not at the time when the same was
discovered. Moreover, [ONLINEs] claim that [FAT KEE] did not reply on the Statement of Account
aforestated is not entirely correct as the payments made by [FAT KEE] which [ONLINE] accepted
were actually based on the Statement of Account using the rate of exchange of P34 for every US
Dollar.
In the matter of the award for Attorneys fees, the same is justified and reasonable under the
circumstances. The complaint being unfounded and baseless, [FAT KEE] was forced to litigate and
to engage the services of counsel for the protection of its interest. The Court therefore finds
justifiable and equitable reason for attorneys fees to be awarded.
WHEREFORE, premises considered, for lack of substantial merit and for reasons stated
above, the Motion for Reconsideration is hereby DENIED.

[52]

As borne by the records, ONLINE and FAT KEE had

previous dealings with each other. Out of all their transactions in
the month of November 1997, six of these were transacted using
the US Currency in their price quotations; two of these were
actually paid in said notes. While We agree that Invoice Nos. 4680
and 4838 were included in the December SOA, it should not
however, be assumed that the same was the applicable conversion
rate upon which FAT KEE relied on.
xxxx

Even granting that FAT KEE was of the impression

that P34:$1 was the applicable rate for its obligation, this was
however, immediately rectified by ONLINE when the parties
met on January 1998, barely two months from FAT KEEs
receipt of the subject statement of account and before any
payment for the same was advanced by FAT KEE, in order to
negotiate the conversion rate of its obligation. x x x The fact
that FAT KEE started paying its obligation under the dollar
denominated invoices only on March 1998 fortifies the fact that
both parties did not intend to be bound by the December SOA
with respect to the subject invoices.
Clearly, no estoppel as regards the December SOA may
be ascribed to ONLINE because FAT KEE was not misled by
ONLINEs actuations, and even assumingarguendo that it was
in fact misled, it still cannot invoke the principle as it was
clearly negligent in not fully scrutinizing the receipts issued to
it, which on their face made specific reference as to where
payment was to be applied. x x x In pegging the amount
at P34:$1, a peculiar situation will result where FAT KEE will be
allowed to gain from defaulting payment despite absolute
knowledge of its transactions with ONLINE. x x x.

x x x Other than its bare assertion, there were no indications

to show that [FAT KEE] sought to correct the alleged irregular
transactions. Neither is there any evidence on record
demonstrating that sometime after making the purchase order, it
made known its intention to take exception from the currency to be
used. By and large, FAT KEE cannot now be permitted to escape
liability by simply alleging that the subject transactions were made
solely upon the insistence of ONLINE.
xxxx
In this present recourse, it is undeniable that FAT KEE had given its assent to the foreign
currency-based transaction with full knowledge of its probable effects and consequences that may
spring therefrom. This is evident from its acquiescence to the varying rates of exchange that ONLINE
was charging the dollar transactions and its willingness to negotiate on the conversion rate. x x
x And while this single proof of payment may not be regarded as a customary business practice, this
however, may be taken as an indicium of FAT KEEs concurrence to enter into a transaction that
involves a foreign currency.

[55]

(Emphases ours.)

As regards the applicable conversion rate, the appellate court

held that:
Nevertheless, despite the above findings, this Court does
not agree that the rate of conversion has been pegged by the
parties at P40:$1. It is evident that when the parties met on 15
January 1999, ONLINEs proposal to FAT KEE to use the
exchange rate of P41:$1 was declined by the latter and instead,
FAT KEE made a counter offer of P35:$1. Further renegotiations
then ensued with ONLINE proposing a rate of P40:$1. On the
other hand, FAT KEE, in a correspondence dated 2 March 1998,
offered to use the exchange rate ofP37:$1 for the satisfaction of its
remaining obligation. Thereafter, no further negotiations took
place. Significantly, on 17 March 1998, FAT KEE started to make
payments for its remaining obligations, which ONLINE accepted
without any protest.
In fine, if ONLINE is to be held in estoppel, it is not from the
issuance of the December SOA but rather from the last offer which
pegged the exchange rate at the ratio of 37:1. To Our mind, the
silence of ONLINE and its receipt of the FAT KEEs payment fifteen
(15) days after the last correspondence may be taken as an implied
acquiescence to the latters offer to pay in Philippine currency
pegging the exchange rate at P37.00 to a US dollar.
Thereby, from its actions subsequent to FAT KEEs last
offer, ONLINE is now barred from adopting an inconsistent position
that would eventually cause loss or injury to another. x x x
On the other hand, ONLINEs bare denial that this last offer was refused by the company
simply contradicts the course of its action and at best, self serving. Accordingly, utilizing the ratio of
37:1, FAT KEEs obligation under Invoice Nos. 4680, 4838, 5090 and 5096 stands in the total amount
of P5,148,528.91. Admittedly, FAT KEE had already made payments for these invoices in the total

amount of P4,758,574.18 from 17 March to 19 May 1998 and thus, only the amount of P389,954.73
remains unpaid.[56]

Thus, the Court of Appeals resolved the case as follows:

The only issue now left for resolution is where ONLINEs
claim should be computed at the fixed rate of exchange or the rate
prevailing at the time of payment of the obligation.
Under Republic Act No. 8183, repealing Republic Act No.
529, parties to a contract may now agree that the obligation or
transaction shall be settled in any currency other than the Philippine
Currency at the time of payment. The repeal of R.A. No. 529 by
R.A. No. 8183 has the effect of removing the prohibition on the
stipulation of currency other than Philippine currency, such that
obligations or transactions may now be paid in the currency agreed
upon by the parties. Just like R.A. No. 529, however, the new law
does not provide for the applicable rate of exchange for the
conversion of foreign currency-incurred obligations in their peso
equivalent. It follows, therefore, that the jurisprudence established
in R.A. No. 529 regarding the rate of conversion remains
applicable.
Thus, in Asia World Recruitment, Inc. v. National Labor
Relations Commission, the High Court, applying R.A. No. 8183,
sustained the ruling of the NLRC that obligations in foreign currency
may be discharged in Philippine currency based on the prevailing
rate at the time of payment. The wisdom on which the
jurisprudence interpreting R.A. No. 529 is based, equally holds true
with R.A. No. 8183. Verily, it is just and fair to preserve the real
value of the foreign exchange-incurred obligation to the date of its
payment.
In this present recourse, We observed that ONLINE failed
to sufficiently establish that the obligation was payable in US
currency. On the other hand, its actuations of negotiating for the
mode of payment and allowing FAT KEE to settle its obligation in
pesos are indicia of the want of any unequivocal agreement
between the parties. With no definite agreement that the
transaction shall be settled in US Currency at the time of payment
and considering the agreement of the parties to peg the rate
at P37:$1, it now becomes an ineluctable conclusion that FAT
KEEs unpaid obligation shall be based at the rate of P37:$1 for the
reasons discussed above. Further validating this is ONLINEs
insistence that FAT KEE was liable to pay the amount
of P756,095.05 and its allegations that the remaining unsettled
controversy was confined to the amount of the applicable exchange
rate. Thus, it now becomes indubitable that the obligation was
payable in a fixed rate.
Prescinding from the foregoing, We find that the exchange
rate to be applied on FAT KEEs obligation is the ratio of 37:1, and

after deducting the amounts already paid, FAT KEE still owes
ONLINE the amount of P389,954.73 excluding interest at the rate
of 28% per annum, as stated on the face of the pertinent invoices,
commencing from July 1998. In the same manner and for having
been compelled to institute this suit to vindicate its rights, attorneys
fees are also awarded to the [ONLINE] but the same is reduced to
10% of the total award.
WHEREFORE, the foregoing considered, the appeal is
hereby GRANTED and
the
decision
of
the
court a
quo REVERSED and SET ASIDE. Accordingly, the [FAT KEE] is
ordered to pay the amount of P389,954.73 to [ONLINE] with
interest at the rate [of] 28% per annum from July 1998 until paid,
[57]
plus 10% of the total award representing attorneys fees.

FAT KEE filed a Motion for Reconsideration[58] of the above

decision, but the Court of Appeals denied the same in a Resolution
dated January 26, 2006.
Hence, this petition.
FAT KEE invokes for resolution the following legal issues, to
wit:
I
THE PETITION IS COMPLETE IN FORM AND SUBSTANCE
II
F.A.T. KEE DID NOT AGREE TO ENTER INTO A FOREIGN
CURRENCY TRANSACTION
III
THERE WAS NO AGREEMENT TO USE A 1:37 PESO TO
DOLLAR EXCHANGE RATE
IV
ONLINE WAS ESTOPPED BY THE 9 DECEMBER 1997
STATEMENT OF ACCOUNT.

The Court shall determine the procedural questions first.

FAT KEE contests the argument of ONLINE that the instant
petition is fatally defective for the failure of the former to attach the

transcript of stenographic notes (TSN) of the RTC proceedings. FAT

KEE counters that there is no need to annex the said TSN given that
ONLINE does not dispute the accuracy of the quoted portions of the
transcripts and the petition does not request for a reevaluation of the
evidence of the parties. Assuming arguendo that the TSN should
have been attached to the petition, FAT KEE begs for the relaxation of
the rules so as not to frustrate the ends of substantive justice. FAT
KEE also rejects the contention of ONLINE that the petition raises
only factual issues, which are not proper in a petition for review
on certiorari. FAT KEE argues that the Court of Appeals likewise
erred in re-evaluating the evidence and substituted its own
interpretation of the testimonies of the witnesses.
On this preliminary procedural issue, we rule that the nonattachment of the relevant portions of the TSN does not render the
petition of FAT KEE fatally defective.
Rule 45, Section 4 of the Rules of Court indeed requires the
attachment to the petition for review on certiorari such material
portions of the record as would support the petition.[59] However,
such a requirement was not meant to be an ironclad rule such that the
failure to follow the same would merit the outright dismissal of the
petition. In accordance with Section 7 of Rule 45, the Supreme Court
may require or allow the filing of such pleadings, briefs, memoranda
or documents as it may deem necessary within such periods and
under such conditions as it may consider appropriate.[60] More
importantly, Section 8 of Rule 45 declares that [i]f the petition is given
due course, the Supreme Court may require the elevation of the
complete record of the case or specified parts thereof within fifteen
(15) days from notice.[61] Given that the TSN of the proceedings
before the RTC forms part of the records of the instant case, the
failure of FAT KEE to attach the relevant portions of the TSN was
already cured by the subsequent elevation of the case records to this
Court. This pronouncement is likewise in keeping with the doctrine
that procedural rules should be liberally construed in order to promote
their objective and assist the parties in obtaining just, speedy and
inexpensive determination of every action or proceeding.[62]
As to the substantive issues raised in the instant petition, the
Court finds that, indeed, questions of fact are being invoked by FAT
KEE. A question of law arises when there is doubt as to what the law
is on a certain state of facts, while there is a question of fact when the

doubt arises as to the truth or falsity of the alleged facts. For a

question to be one of law, the same must not involve an examination
of the probative value of the evidence presented by the litigants or any
of them.[63]
Rule 45, Section 1 of the Rules of Court dictates that a petition
for review on certiorari shall raise only questions of law, which must
be distinctly set forth.[64] This rule is, however, subject to
exceptions,[65] one of which is when the findings of fact of the Court of
Appeals and the RTC are conflicting. Said exception applies to the
instant case.
Substantially, FAT KEE primarily argues there was neither any
agreement to enter into a foreign currency-based transaction, nor to
use a dollar exchange rate ofP37:US$1. The invoice receipts
denominated in US dollars were unilaterally prepared by
ONLINE. Similarly, the Accounting Department of ONLINE required
that the Purchase Order to be submitted by FAT KEE be denominated
in US dollars and Frederick Huang, Jr. merely complied with the same
upon the instructions of Payoyo. Contrary to ONLINEs claim, it issued
the SOA dated December 9, 1997 with the alleged unpaid obligation
of FAT KEE quoted in Philippine pesos. FAT KEE also takes issue
with the ruling of the Court of Appeals that it assented to the payment
in US dollars of the transactions covered under Invoice Nos. 4680,
4838, 5090 and 5096. Lastly, FAT KEE reiterates the ruling of the
RTC that ONLINE was estopped from seeking payment in US dollars
since the outstanding obligation of FAT KEE was denominated in
Philippine pesos in the SOA dated December 9, 1997. Claiming that
the SOA was its only basis for payment, FAT KEE allegedly paid its
obligations in accordance therewith and ONLINE duly accepted the
payments.
After a meticulous review of the records, we resolve to deny
the petition.
FAT KEE subscribes to the rulings of the RTC in the Decision
dated November 7, 2000 and the Order dated July 25, 2001. The trial
court found that there was no agreement as to the exchange rate for
the conversion of the outstanding balance of FAT KEE to Philippine
pesos. A reading of the RTC rulings reveals that the trial court
principally relied on the SOA dated December 9, 1997 and the
testimony of Frederick Huang, Jr. in setting the exchange rate

at P34:US$1. The RTC ruled that ONLINE was estopped from

claiming otherwise since FAT KEE actually paid its outstanding
balance in accordance with the SOA. Furthermore, the RTC
determined that ONLINE failed to undertake any action to correct the
SOA, which the latter claimed was unauthorized. No disciplinary
action was likewise taken against Edwin Morales, the employee who
allegedly issued the SOA without authority.
In British American Tobacco v. Camacho,[66] the
emphasized the doctrine of estoppel as follows:
Estoppel, an equitable principle rooted in natural justice,
prevents persons from going back on their own acts and
representations, to the prejudice of others who have relied on
them. The principle is codified in Article 1431 of the Civil Code,
which provides:
Through estoppel, an admission or
representation is rendered conclusive upon the
person making it and cannot be denied or
disproved as against the person relying thereon.
Estoppel can also be found in Rule 131, Section 2 (a) of
the Rules of Court, viz:
Sec. 2. Conclusive presumptions.
The following are instances of conclusive
presumptions:
(a)
Whenever a party has by his
own declaration, act or omission, intentionally
and deliberately led another to believe a
particular thing true, and to act upon such belief,
he cannot, in any litigation arising out of such
declaration, act or omission be permitted to falsify
it.
The elements of estoppel are: first, the actor who usually
must have knowledge, notice or suspicion of the true facts,
communicates something to another in a misleading way, either by
words, conduct or silence; second, the other in fact relies, and
relies reasonably or justifiably, upon that communication; third, the
other would be harmed materially if the actor is later permitted to
assert any claim inconsistent with his earlier conduct; and fourth,
the actor knows, expects or foresees that the other would act upon
the information given or that a reasonable person in the actor's
[67]
position would expect or foresee such action.

Court

In the instant case, we find that FAT KEE cannot invoke

estoppel against ONLINE for the latters issuance of the SOA on
December 9, 1997. The Court agrees with the Court of Appeals
ruling that any misconception on the part of FAT KEE engendered by
the issuance of the SOA should have already been rectified when the
parties subsequently met on January 15, 1998. The testimonial
evidence of both ONLINE and FAT KEE establish that, during the
meeting, the parties tried but failed to reach an agreement as regards
the payment of FAT KEEs outstanding obligation and the exchange
rate to be applied thereto. Whether or not FAT KEE was duly
informed of the fact that the SOA was unauthorized is no longer of
much importance. By their act of submitting their respective
proposals and counter-proposals on the mode of payment and the
exchange rate, FAT KEE and ONLINE demonstrated that it was not
their intention to be further bound by the SOA, especially with respect
to the exchange rate to be used. Moreover, FAT KEE only started
making payments vis--vis the subject invoice receipts on March 17,
1998, or two months after the aforementioned meeting.
At this point, Mijares v. Court of Appeals[68] is instructive in
declaring that:
One who claims the benefit of an estoppel on the ground
that he has been misled by the representations of another must not
have been misled through his own want of reasonable care and
circumspection. A lack of diligence by a party claiming an estoppel
is generally fatal. If the party conducts himself with careless
indifference to means of information reasonably at hand, or ignores
highly suspicious circumstances, he may not invoke the doctrine
of estoppel. Good faith is generally regarded as requiring the
exercise of reasonable diligence to learn the truth, and
accordingly estoppel is denied where the party claiming it was put
on inquiry as to the truth and had available means for ascertaining
it, at least where actual fraud has not been practised on the party
[69]
claiming the estoppel.

Thus, after participating in the meeting on January 15, 1998,

submitting its own proposals and further renegotiating for the lowering
of the exchange rate, FAT KEE cannot anymore insist that it was
completely under the impression that the applicable exchange rate
was P34:US$1 as purportedly indicated in the December 9, 1997
SOA.

Anent the proper exchange rate to be applied in this case, we

likewise uphold the ruling of the Court of Appeals that estoppel finds
application in this case as regards the implied acquiescence of
ONLINE to the use of the P37:US$1 exchange rate. On March 2,
1998, after a series of proposals on the conversion rate to be applied,
FAT KEE finally offered to settle its outstanding balance at the rate
of P37:US$1. To this offer, ONLINE did not respond. Thereafter, on
March 17, 1998, FAT KEE began remitting payments continuously,
which ONLINE duly accepted. Following the dictum stated in British
American Tobacco, ONLINE communicated, through its silence and
acceptance of payments, that it was agreeable to the P37:US$1
rate. Indeed, ONLINE should not be allowed to adopt a contrary
position to the detriment of FAT KEE.
Premises considered, we find therefore that the applicable
exchange rate to determine the outstanding balance of FAT KEE
is P37:US$1. We note, however, that the Court of Appeals
inadvertently erred in computing the remaining balance to be paid by
FAT KEE. According to Invoice Nos. 4680, 4838, 5090 and 5096, the
total unpaid amount is US$136,149.43. By applying P37:US$1 rate
on the unpaid amount, the resulting balance is P5,037,528.91,
not P5,148,528.91 as determined by the Court of Appeals. As FAT
KEE has already paid a total amount of P4,758,574.18,[70] the total
unpaid amount owed to ONLINE is P278,954.73.
WHEREFORE,
the
Petition
for
Review
on Certiorari is DENIED. The Decision dated September 26, 2005 of
the Court of Appeals in CA-G.R. CV No. 71910 is
hereby AFFIRMED with MODIFICATION that F.A.T. Kee Computer
Systems, Inc. is ordered to pay the amount of P278,954.73 to Online
Networks International, Inc., with interest at the rate of 28% per
annum from July 1998 until fully paid, plus 10% of the total award as
attorneys fees. No costs.
SO ORDERED.

TERESITA J. LEONARDO-DE
CASTRO
Associate Justice