J.A.B. Bulao & Associates

CASE 2011-0053: FILIPINAS PALMOIL PROCESSING, INC. AND DENNIS T. VILLAREAL VS. JOEL P. DEJAPA, REPRESENTED BY HIS ATTORNEY-IN-FACT MYRNA MANZANO (G.R. NO. 167332, 7 FEBRUARY 2011, PERALTA, J.) SUBJECTS: FINAL JUDGMENT IS UNALTERABLE; NUNC PRO TUNC ENTRIES. (BRIEF TITLE: FILIPINAS PALM OIL VS. DEJAPA).

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                        DECISION

PERALTA, J.:

Assailed in this petition for review on certiorari are the Resolutions dated December 10, 2004^[1] and February 17, 2005^[2] issued by the Court of Appeals (CA) in CA-G.R. SP No. 60562.

The antecedent facts are as follows:

On May 27, 1997, respondent Joey Dejapa filed a Complaint for illegal dismissal and money claims against petitioner Asian Plantation Phils., Inc. (formerly Veg. Oil Phils. Inc.), now Filipinas Palmoil Processing, Inc., Dennis T. Villareal and Tom Madula.

On July 14, 1999, the Labor Arbiter (LA) dismissed respondent’s complaint for lack of merit.

Respondent filed his appeal with the National Labor Relations Commission (NLRC) which, in a Decision dated December 29, 1999, affirmed the LA decision. Respondent’s motion for reconsideration was denied in a Resolution dated April 28, 2000.

Aggrieved, respondent filed with the CA a petition for certiorari. Petitioners filed their Comment thereto. 

On August 29, 2002, the CA reversed and set aside the NLRC decision and resolution. The decretal portion of the decision states:

            WHEREFORE, premises considered, the assailed Decision dated December 29, 1999, as well as the Resolution dated April 28, 2000 in NLRC NCR CASE No. 0005-03748-97 (NLRC NCR CA No. 016505-98) are hereby REVERSED and SET ASIDE.

            Petitioner (herein respondent) is ordered REINSTATED without loss of seniority rights with payment of backwages, including his salary differentials, overtime pay, 13^th month pay, service incentive leave pay and other benefits from the time his salary was withheld, or from December 1, 1997 until actual reinstatement. However, if reinstatement is no longer feasible, private respondent company is ordered to pay separation pay equivalent to one (1) month for every year of service where a fraction of six (6) months shall be considered as one whole year. Private respondent company is likewise ordered to pay P10,000.00 as moral damages and P10,000.00 as exemplary damages. In addition, private respondent company is ordered to pay attorney’s fees in the amount equivalent to 10% of the total monetary award.

            SO ORDERED.^[3]          

The CA found that petitioner company was respondent’s employer and that Tom Madula was not really an independent contractor, but petitioner company’s Operations Manager. It ruled that respondent was illegally dismissed by petitioner company. We quote the pertinent portions of the Decision, thus:

                        It must be borne in mind that private respondent company’s claim is principally anchored on the assertion that petitioner was not its employee but that of private respondent Madula who is allegedly an independent contractor.^[4]

                        x x x x

                        In this petition, there is no showing that private respondent Madula is an independent contractor. We reiterate that private respondent company failed to show any evidence to support such claim.

                        Hence, it is fair to conclude that private respondent Madula is an employee of private respondent company. He is the operations manager of private respondent company. This fact was not refuted by either private respondent Madula or private respondent company.”^[5]

                        x x x x

            In fine, it is evident that private respondent Madula is indeed an employee of private respondent company. As its operations manager, he is deemed an agent of private respondent company.^[6]

            Petitioners’ motion for reconsideration was denied in a Resolution^[7] dated July 14, 2003.

            Petitioners filed with Us a petition for review on certiorari, docketed as G.R. No. 159142, which We denied in a Resolution^[8] dated October 1, 2003 for petitioners’ failure to take the appeal within the reglementary period. Petitioners’ motion for reconsideration was denied in a Resolution^[9] dated January 21, 2004; thus, the decision became final and executory on February 27, 2004, and an entry of judgment was subsequently made.

          Respondent, through his representative, filed with the LA a Motion for Execution and Computation of the Award. The LA issued a Writ of Execution^[10] dated July 12, 2004 for the implementation of the CA Decision dated August 29, 2002.  Pursuant to the said writ of execution, petitioners’ deposit in the United Coconut Planters Bank (UCPB) in the amount of P736,910.10 was garnished.

          On July 21, 2004, petitioners filed a Motion to Quash Writ of Execution^[11] on the ground that it can be held liable only insofar as the reinstatement aspect and/or the monetary award were concerned, pursuant to the CA Decision dated August 29, 2002, but not to backwages. Respondent filed his Comment/Opposition thereto.

          On August 6, 2004, respondent filed an Ex-Parte Motion for Order of Release praying for the immediate release of the garnished amount in the UCPB.

            On September 14, 2004, the LA issued its Order^[12] partially granting petitioners’ Motion to Quash Writ of Execution, the decretal portion of which reads:

            WHEREFORE, the Motion to Quash Writ of Execution filed by Asian Plantation is partially granted in so far as the liability for backwages and reinstatement is concerned such that the same is adjudged against respondent Tom Madula. The respondents are solidarily liable to the rest of the award, except damages, which are for the sole account of respondent company. The garnished account of Filipinas Palm Oil Processing, Inc. with United Coconut Planters Bank is hereby ordered released to the extent of TWO HUNDRED SIXTY-SIX THOUSAND SEVEN HUNDRED FIFTY-SEVEN & 85/100 PESOS (P266,757.85).

            SO ORDERED.^[13]

Dissatisfied, both parties filed their respective appeals with the NLRC. 

On October 19, 2004, respondent then filed before the CA a Very Urgent Motion for Clarification of Judgment, praying that the CA Decision dated August 29, 2002 be clarified to the effect that petitioner be made solely liable to the judgment award and, as a consequence thereof, to order the NLRC and the LA to implement the same and to direct the UCPB to release the garnished amount of P736,910.10 to the NLRC Sheriff and for the latter to deposit the same to the NLRC cashier for further disposition.    

On December 10, 2004, the CA rendered the assailed Resolution granting respondent’s motion for clarificatory judgment, the pertinent portion of which provides:

Obviously, the confusion was brought about by the September 14, 2004 Order of Labor Arbiter Savari. It is immediately apparent that the order is devoid of any legal basis since the ground relied upon by private respondent Filipinas Palmoil (Asian Plantation) is not among those grounds upon which a writ of execution may be quashed. As jurisprudentially settled, quashal of the writ of execution was held to be proper in the following instances: (a) when it was improvidently issued, (b) when it is defective in substance, (c) when it is issued against the wrong party, (d)  where the judgment was already satisfied,  (e) when it was issued without authority, (f) when a change in the situation of the parties renders execution inequitable, and (g) when the controversy was never validly submitted to the court, The ground invoked by private respondent Filipinas Palmoil (Asian Plantation) to quash the writ of execution is patently improper as it actually sought to vary the final judgment of this Court. Despite this, Labor Arbiter Savari “partially granted” the motion to quash. Worst, Labor Arbiter Savari even went to the extent of making her own findings of fact and ruling on the merits, and came out with an entirely new disposition different from that decreed by this Court in the August 29, 2002decision. Such action on the part of Labor Arbiter Savari betrays sheer ignorance of settled precepts, and amounts to a clear encroachment and interference on the final judgment of this Court.

Ordinarily, the recourse against such an order of the Labor Arbiter is to challenge the same on appeal or via the extraordinary remedies ofcertiorari, prohibition or mandamus. However, requiring petitioner to undergo such litigious process once again would not be in keeping with the protection to labor mandate of the Constitution. Thus, in order to write finis to this controversy, which has tarried for some time now, and in order to forestall the offshoot of another prolonged litigation, this Court, in the exercise of equity jurisdiction, hereby grants petitioner’s motion for clarification. It is, of course, stressed that the Court is not amending its August 29, 2002 decision or rectifying a perceived error therein. With this clarification, this Court only states the obvious by explicitly articulating what should have been necessarily implied by the application of basic principles under our labor law. ^[14]  

Thus, the dispositive portion of the assailed CA Resolution reads:

                        WHEREFORE, in view of the foregoing, in accordance with petitioner’s supplications, this Court renders, nunc pro tunc, the following clarification to the decretal portion of this Court’s August 29, 2002 decision.

                         WHEREFORE, premises considered, the assailed Decision dated December 29, 1999 as well as the Resolution dated April 28, 2000 in NLRC NCR CASE NO. 0005-03748-97 (NLRC NCR CA NO. 016505-98) are hereby  REVERSED and SET ASIDE.

                        Private respondent Filipinas Palmoil Processing Inc. (Asian Plantation Phils., Inc.) is hereby ordered to REINSTATE petitioner Joey Dejapa without loss of seniority rights and to pay him his backwages including his salary differentials, overtime pay, 13^th month pay, service incentive leave pay and other benefits from the time his salary was withheld or fromDecember 1, 1997 until actual reinstatement. If reinstatement is no longer feasible, private respondent Filipinas Palmoil Processing, Inc. (Asian Plantation Phils., Inc.) is likewise ordered to pay separation pay in addition to the payment of backwages and other benefits equivalent to one (1) month pay for every year of service, where a fraction of six (6) months shall be considered as one whole year.

                         Private respondent Filipinas Palmoil Processing Inc. (Asian Plantation Phils., Inc.) is likewise ordered to pay petitioner P10,000.00 as moral damages, P10,000.00 as exemplary damages, and attorney’s fees in the amount equivalent to 10% of the total monetary award.

                         Private respondent Tom Madula is hereby relieved from any liability under the judgment.

                        Labor Arbiter Lilia S. Savari is hereby directed to implement the final judgment of this Court strictly in accordance with the foregoing, and to order the UCPB to release the garnished amount of P736,910.10 to the NLRC Sheriff for further disposition.^[15]

                   Petitioners’ motion for reconsideration was denied in a Resolution dated February 17, 2005. 

Hence this Petition for review on certiorari raising the following grounds:

THE HONORABLE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE CONTRARY TO LAW AND SETTLED RULINGS OF THE SUPREME COURT WHEN IT ORDERED THE COMPANY TO REINSTATE THE RESPONDENT AND PAY HIM BACKWAGES, SALARY DIFFERENTIALS, OVERTIME PAY, 13TH MONTH PAY, SERVICE INCENTIVE LEAVE PAY AND OTHER BENEFITS, AND IF REINSTATEMENT IS NOT POSSIBLE, TO PAY RESPONDENT SEPARATION PAY IN ADDITION TO BACKWAGES AND OTHER BENEFITS, PLUS DAMAGES AND ATTORNEY’S FEES CONSIDERING THAT:

A. RESPONDENT WAS NEVER DISMISSED AND WAS NEVER UNDER THE EMPLOY OF THE COMPANY, [AND]

B. QUASHAL OF THE WRIT OF EXECUTION IS PROPER UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE.^[16] 

Petitioners insist that:  (1) it engaged the services of Tom Madula to provide it with manning services and delivery of  liquid cargo;  (2) Madula assigned respondent to work as barge patron in the company’s Butuan depot; (3) the terms of the contract between Madula and petitioner were clear and categorical,  which negate the existence of an employment relationship between respondent and petitioner; and (4) Madula’s obligation to provide the services contracted and which were performed by respondent were among the functions expressly allowed by law to be contractible. Petitioners claim that the CA Decision dated August 29, 2002 did not even provide for the circumstances surrounding the alleged dismissal and how the same was effected; that even respondent’s narration of facts in his position paper filed before the LA negated the existence of the fact of dismissal. Considering that petitioner company was not, at any time, the employer of respondent and that since there was no dismissal to speak of, it is but proper to order the quashal of the writ of execution.

In his Comment, respondent claims that  (1) petitioner seeks to reverse or set aside the CA Decision dated August 29, 2002, which had already attained finality and an entry of judgment had already been made; (2) the issues which petitioners raised have already been passed upon by the CA in its 2002 decision;  and (3) the CA Resolution which is being assailed in this petition was merely a clarification of the final and executory CA Decision dated August 29, 2002, where the CA did not modify its earlier decision but only interpreted the same, which was well  within its authority to do so. Respondent informs Us that the amount ofP736,910.10 in the UCPB had already been released to the NLRC Sheriff and was deposited to the Cashier, who in turn had released the said amount to respondent  through his attorney-in-fact. 

In their Reply, petitioners contend that it is not precluded from assailing the Resolutions issued by the CA via a petition for review under Rule 45 of the Rules of Court and reiterated the arguments raised in the petition.

We find the petition unmeritorious.

In the Decision dated August 29, 2002, the CA found petitioner as the employer of respondent; that Tom Madula was not really an independent contractor, but was only an employee of petitioner company being its operations manager; and that respondent was illegally dismissed by petitioner company. The CA Decision became final and executory on February 27, 2004 after we denied petitioners’ petition for review on certiorari, and an entry of judgment was subsequently made.

The instant petition for review filed with Us by petitioners assails the CA Resolutions dated December 10, 2004 and February 17, 2005, which the CA issued upon respondent’s filing of a Very Urgent Motion for Clarificatory Judgment praying that the CA clarify its Decision dated August 29, 2002 declaring petitioner company solely liable to the judgment award and, as a consequence thereof, to order the NLRC and the LA to implement the same and for the UCPB to release the garnished amount of  P736,910.10 to the Sheriff for further disposition. Notably, the CA Resolutions sought to be annulled in this petition were only issued to clarify the CA Decision dated August 29, 2002, which had already become final and executory in 2004. 

As a general rule, final and executory judgments are immutable and unalterable, except under these recognized exceptions, to wit: (a) clerical errors; (b) nunc pro tunc entries which cause no prejudice to any party; and (c) void judgments.^[17] What the CA rendered on December 10, 2004 was a nunc pro tunc order clarifying the decretal portion of the August 29, 2002 Decision.

In Briones-Vazquez v. Court of Appeals,^[18] nunc pro tunc judgments have been defined and characterized as follows:

The object of a judgment nunc pro tunc is not the rendering of a new judgment and the ascertainment and determination of new rights, but is one placing in proper form on the record, the judgment that had been previously rendered, to make it speak the truth, so as to make it show what the judicial action really was, not to correct judicial errors, such as to render a judgment which the court ought to have rendered, in place of the one it did erroneously render, nor to supply nonaction by the court, however erroneous the judgment may have been.^[19]

By filing the instant petition for review with Us, petitioners would like to appeal anew the merits of the illegal dismissal case filed by respondent against petitioners raising the same arguments which had long been passed upon and decided in the August 29, 2002 CA Decision which had already attained finality. As the CA said in denying petitioners’ motion for reconsideration of the assailed December 10, 2004 Resolution, to wit:

It is basic that once a decision becomes final and executory, it is immutable and unalterable. Private respondents’ (herein petitioners) motion for reconsideration seeks a modification or reversal of this Court’s August 29, 2002 decision, which has long become final and executory, as in fact, it is already in its  execution  stage.  It may no longer be modified by this Court or even by the Highest Court of the land.

It should be sufficiently clear to private respondents (herein petitioners) that the December 10, 2004 Resolution  was issued merely to clarify a seeming ambiguity in the decision but as stressed therein, it is neither an amendment nor a rectification of a perceived error therein.  The instant motion for reconsideration has, therefore, no merit at all.^[20]  

We find that petitioners’ action is merely a subterfuge to alter or modify the final and executory Decision of the CA which we cannot countenance without violating procedural rules and jurisprudence. 

In Navarro v. Metropolitan Bank and Trust Company,^[21]  We discussed the rule on immutability of judgment and said:

                        No other procedural law principle is indeed more settled than that once a judgment becomes final, it is no longer subject to change, revision, amendment or reversal, except only for correction of clerical errors, or the making of nunc pro tunc entries which cause no prejudice to any party, or where the judgment itself is void. The underlying reason for the rule is two-fold: (1) to avoid delay in the administration of justice and thus make orderly the discharge of judicial business, and (2) to put judicial controversies to an end, at the risk of occasional errors, inasmuch as controversies cannot be allowed to drag on indefinitely and the rights and obligations of every litigant must not hang in suspense for an indefinite period of time. As the Court declared in Yau v. Silverio,

Litigation must end and terminate sometime and somewhere, and it is essential to an effective and efficient administration of justice that, once a judgment has become final, the winning party be, not through a mere subterfuge, deprived of the fruits of the verdict. Courts must therefore guard against any scheme calculated to bring about that result. Constituted as they are to put an end to controversies, courts should frown upon any attempt to prolong them.

                        Indeed, just as a 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 his case by the execution and satisfaction of the judgment. Any attempt to thwart this rigid rule and deny the prevailing litigant his right to savor the fruit of his victory must immediately be struck down. Thus, in Heirs of Wenceslao Samper v. Reciproco-Noble, we had occasion to emphasize the significance of this rule, to wit:

                        It is an important fundamental principle in our Judicial system that every litigation must come to an end x x x Access to the courts is guaranteed. But there must be a limit thereto. Once a litigant’s rights have been adjudicated in a valid final judgment of a competent court, he should not be granted an unbridled license to come back for another try. The prevailing party should not be harassed by subsequent suits. For, if endless litigations were to be encouraged, then unscrupulous litigants will multiply in number to the detriment of the administration of justice.^[22]

WHEREFORE, the petition is DENIED.  The Resolutions of the Court of Appeals, dated December 10, 2004 and February 17, 2005, in CA-G.R. SP No. 60562, are AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA

                                                                             Associate Justice

WE CONCUR:

ANTONIO T. CARPIO

Associate Justice

Chairperson

ANTONIO EDUARDO B. NACHURA                 ROBERTO A. ABAD                                            Associate Justice                                     Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

ATTESTATION

          I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                      ANTONIO T. CARPIO

                                    Associate Justice

                                    Second Division, Chairperson

CERTIFICATION

          Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                                                   RENATO C. CORONA

                                                                             Chief Justice 

^[1]                      Penned by Associate Justice Remedios A. Salazar-Fernando, with Associate Justices Salvador J. Valdez, Jr. and Danilo B. Pine, concurring; rollo, pp. 205- 216.

^[2]                      Id. at 227-228.

^[3]               Id. at 118-119.

^[4]               Id. at 112.

^[5]               Id. at 114.

^[6]               Id. at 118.

^[7]               Id. at 135.

^[8]               Id. at 186.

^[9]               Id. at 185.

^[10]             Per Labor Arbiter Lilia S. Savari; id. at 187-190.

^[11]              Id. at 191-194.

^[12]             Id. at 195-197.

^[13]              Id. at 196-197.

^[14]                    Id. at 212-214.

^[15]                    Id. at 214-215.

^[16]             Id. at 15.

^[17]             Briones-Vazquez v. Court of Appeals, 491 Phil. 81, 92 (2005).

^[18]             Id.

^[19]             Id.  (Citation omitted).

^[20]             Resolution dated February 17, 2005, p. 2; id. at  228.

^[21]                    G.R. Nos. 165697 and 166481, August 4, 2009, 595 SCRA  149.

^[22]                    Id. at 159-160.

CASE 2011-0052: DEVELOPMENT BANK OF THE PHILIPPINES VS. BEN P. MEDRANO AND PRIVATIZATION MANAGEMENT OFFICE [PMO] (G.R. NO. 167004, 7 FEBRUARY 2011, VILLARAMA, JR., J.) SUBJECTS: CONTRACTS, UNJUST ENRICHMENT, ATTORNEY’S FEES. (BRIEF TITLE: DBP VS. MEDRANO ET AL.)

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DECISION

VILLARAMA, JR., J.:

            This petition for review on certiorari assails the Decision^[1] dated December 14, 2004 and Resolution^[2] dated February 8, 2005 of the Court of Appeals (CA) in CA-G.R. CV No. 65436.  The CA affirmed in toto the Decision^[3] dated January 26, 1999 of the Regional Trial Court (RTC) of Pasig City, Branch 158, ordering petitioner Development Bank of the Philippines (DBP) to pay respondent Ben Medrano the following: (1) the amount of P2,449,265.00 representing the value of the purchase price of Medrano’s 37,681 shares in Paragon Paper Industries, Inc. plus legal interest from date of first demand; (2) attorney’s fees in the amount ofP100,000.00; and (3) the cost of suit.

            The facts, as culled from the records, are as follows.

            Respondent Ben Medrano was the President and General Manager of Paragon Paper Industries, Inc. (Paragon) wherein he owned 37,681 shares. Sometime in 1980, petitioner DBP sought to consolidate its ownership in Paragon.  In one of the meetings of the Paragon Executive Committee, the Chairman Jose B. de Ocampo, instructed Medrano, as President and General Manager of Paragon, to contact or sound off the minority stockholders and to convince them to sell their shares to DBP at P65.00 per share, or 65% of the stock’s par value of P100.00.  Medrano followed the instructions and began to contact each member of the minority stockholders. He was able to contact all except one who was in Singapore.  Medrano testified that all, including himself, agreed to sell, and all took steps to have their shares surrendered to DBP for payment.^[4]  They made proposals to DBP and the Board of Directors of DBP approved the sale under DBP Resolution No. 4270 subject to the following terms and conditions: (1) that prior to the implementation of the approval, 57,596 shares of Paragon’s stock issued to the stockholders concerned shall first be surrendered to the DBP; (2) that all the parties concerned shall give their written conformity to the arrangement; and (3) that the transaction shall be implemented within forty-five (45) days from the date of approval (December 24, 1980); otherwise, the same shall be deemed canceled. Medrano then indorsed and delivered to DBP all his 37,681 shares which had a value of P2,449,265.00. DBP accepted said shares and took over Paragon.

            DBP, through Jose de Ocampo, who was also a member of its Board of Governors, also offered Medrano a commission ofP185,010.00 if the latter could persuade all the other Paragon minority stockholders to sell their shares. Medrano was able to convince only two stockholders, Alberto Wong and Gerardo Ledonio III, to sell their respective shares. Thus, his commission was reduced to P155,455.00.

            Thereafter, Medrano demanded that DBP pay the value of his shares, which he had already turned over, and his P155,455.00 commission. When DBP did not heed his demand, Medrano filed a complaint for specific performance and damages against DBP on September 2, 1981.

         DBP filed an Answer arguing that there was no perfected contract of sale as the three conditions in DBP Resolution No. 4270 were not fulfilled. Likewise, certain minority stockholders owning 17,635 shares refused to sell their shares.  Hence, DBP exercised its right to cancel the sale under Resolution No. 4270.

            Later, during the pendency of the case, DBP conveyed the shares to the Asset Privatization Trust (APT) in a Deed of Transfer when the APT took over certain assets, and assumed the liabilities, of government financial institutions including DBP.  As the transferee of the shares, the APT was impleaded as party-defendant. DBP thereafter filed a cross-claim against the APT which was later on substituted by the Privatization Management Office (PMO).  Medrano adopted his evidence against DBP as his evidence against the APT while the APT adopted DBP’s evidence and defenses against Medrano. On the cross-claim, the APT raised the defense that the liabilities assumed by the National Government and referred to in the Deed of Transfer are liabilities to local and foreign intermediaries and guarantees and not to individual persons like Medrano.

            On January 26, 1999, the RTC ruled in Medrano’s favor and dismissed DBP’s cross-claim against the APT, to wit:

            WHEREFORE, in view of the foregoing, judgment is rendered in favor of the plaintiff and against defendant Development Bank of the Philippines ordering the latter to pay the former the following: (1) the amount of P2,449,265.00 representing the value of the purchase price of plaintiff’s 37,681 shares in Paragon plus legal rate of interest from date of first demand; (2) attorney’s fees in the amount of P100,000.00; and (3) the cost of suit.

            The cross-claim of defendant DBP against the other defendant Asset Privatization Trust is dismissed because defendant Development Bank of the Philippines’ accountability to the plaintiff [is] based on act[s] solely imputable to it.

            SO ORDERED.^[5]

            Dissatisfied, DBP elevated the case to the CA.  DBP prayed that the trial court’s decision be reversed and that DBP be absolved from any and all liabilities to Medrano.

            Medrano, for his part, prayed in his appellee’s brief that DBP be ordered to pay his commission of P155,445.00.^[6]

            On December 14, 2004, the CA issued the challenged Decision^[7] and affirmed the decision of the trial court. The CA, however, refused to grant Medrano’s prayer for the payment of commission because Medrano did not appeal the trial court’s decision but instead prayed for the payment of his commission only in his appellee’s brief.

The CA held that there existed between DBP and Medrano a contract of sale and the conditions imposed by Resolution No. 4270 were merely conditions imposed on the performance of an obligation.  Hence, while under Article 1545^[8] of the Civil Code, DBP had the right not to proceed with the agreement upon Medrano’s failure to comply with the conditions, DBP was deemed to have waived the performance of the conditions when it chose to retain Medrano’s shares and later transfer them to the APT.  The CA noted that the retention of the shares was contrary to DBP’s claim of rescission because if indeed DBP rescinded the sale, then it should have returned to Medrano his shares together with their fruits and the price with interests, as provided by Article 1385^[9] of the Civil Code.

DBP filed a motion for reconsideration, but the same was denied by the CA in a Resolution^[10] dated February 8, 2005. Hence, this appeal.

            DBP alleges that the CA erred

I

… WHEN IT REACHED A CONCLUSION WHICH IS NOT A LOGICAL CONSEQUENCE OF ITS FINDING THAT THERE WAS NO PERFECTED CONTRACT OF SALE BETWEEN DBP AND MEDRANO AND PROCEEDED TO MAKE A CONTRACT FOR THE PARTIES IN THE INSTANT CASE.

II

… WHEN IT APPLIED ARTICLE 1545 OF THE CIVIL CODE OF THE PHILIPPINES NOTWITHSTANDING ITS FINDING THAT THERE WAS NO PERFECTED CONTRACT OF SALE BETWEEN MEDRANO AND DBP.

III

… WHEN IT FAILED TO EXERCISE ITS AUTHORITY TO RULE ON MATTERS WHICH ARE THE NATURAL AND LOGICAL CONSEQUENCE OF ITS FINDINGS OF FACTS OR THAT ARE INDISPENSABLE AND NECESSARY TO THE JUST RESOLUTION OF THE PLEADED ISSUES, EVEN IF NOT RAISED AS ISSUES IN THE APPEAL.

IV

… WHEN IT FAILED TO CONSIDER THE ESTABLISHED FACT THAT THE ASSETS OF PARAGON PAPER INDUSTRIES, INC., INCLUDING THE SUBJECT CERTIFICATE OF STOCKS, WERE TRANSFERRED TO THE ASSET PRIVATIZATION TRUST, NOW THE PRIVATIZATION MANAGEMENT OFFICE, HEREIN CO-DEFENDANT.  HENCE, THE PMO SHOULD BE THE PARTY THAT SHOULD BE MADE TO RETURN THE SUBJECT CERTIFICATES OF STOCKS OR PAY THE SAID SHARES OF STOCKS.

V

… WHEN IT AFFIRMED THE AWARD OF ATTORNEY’S FEES, DAMAGES AND COST OF SUIT IN FAVOR OF RESPONDENT MEDRANO CONTRARY TO LAW AND THE PERTINENT DECISIONS OF THIS HONORABLE SUPREME COURT.^[11]

Essentially, the issue in this case is whether the CA erred in applying Article 1545 of the Civil Code and holding that DBP exercised the second option under the said article to justify the order against DBP to pay the value of Medrano’s shares of stock. As a side issue, DBP also questions the award of attorney’s fees in Medrano’s favor.

            In fine, DBP contends that the trial court and the CA both ruled that there was no perfected contract of sale in this case and that accordingly, it was erroneous for them to order DBP to pay Medrano the value or price of the object of the sale.  DBP insists that the proper order was to direct DBP or the PMO, which now has possession of the shares, to return the shares of stock.  By ordering DBP to pay the purchase price of the stocks, DBP argues that the CA in effect created a new contract of sale between the parties.^[12]

            DBP adds that the CA erred in applying Article 1545 of the Civil Code. According to DBP, Article 1545 of the Civil Codeonly applies to a perfected contract of sale and since there is no such perfected contract in this case because of Medrano’s failure to meet all the conditions agreed upon, the application of this article by the CA is misplaced.

         Lastly, DBP questions the award of attorney’s fees to Medrano.  DBP maintains that there was no unjustified refusal to pay for the shares of stock transferred to DBP as there was no perfected contract of sale.

         Medrano, for his part, argues that by retaining the shares of stock transferred to it and later even appropriating and transferring them to the APT, DBP is deemed to have exercised the second option under Article 1545 of the Civil Code, that is, it waived performance of the conditions imposed by Resolution No. 4270.  The original conditional sale was thus converted into, and correctly treated by the courts a quo, as an absolute, unconditional sale where compliance with the obligation of the buyer to pay the purchase price may be demanded.

            As regards the award of attorney’s fees, Medrano maintains that he was constrained to acquire the services of a lawyer and use legal means to enforce his rights over the shares in question.  He argues that since DBP refused to pay for or return the shares that he transferred to it, he was left with no other option but to go to court. Hence, the award of attorney’s fees is legally justified.

            We sustain the CA.

            As a rule, a contract is perfected upon the meeting of the minds of the two parties.  Under Article 1475^[13] of the Civil Code,a contract of sale is perfected the moment there is a meeting of the minds on the thing which is the object of the contract and on the price. 

            In the case of Traders Royal Bank v. Cuison Lumber Co., Inc.,^[14] the Court ruled:

Under the law, a contract is perfected by mere consent, that is, from the moment that there is a meeting of the offer and the acceptance upon the thing and the cause that constitute the contract. The law requires that the offer must be certain and the acceptance absolute and unqualified. An acceptance of an offer may be express and implied; a qualified offer constitutes a counter-offer. Case law holds that an offer, to be considered certain, must be definite, while an acceptance is considered absolute and unqualified when it is identical in all respects with that of the offer so as to produce consent or a meeting of the minds. We have also previously held that the ascertainment of whether there is a meeting of minds on the offer and acceptance depends on the circumstances surrounding the case.

… the offer must be certain and definite with respect to the cause or consideration and object of the proposed contract, while theacceptance of this offer – express or implied – must be unmistakable,  unqualified, and identical in all respects to the offer.  The required concurrence, however, may not always be immediately clear and may have to be read from the attendant circumstances; in fact, a binding contract may exist between the parties whose minds have met, although they did not affix their signatures to any written document.  (Italics supplied.)

         Also, in Manila Metal Container Corporation v. Philippine National Bank,^[15] the Court ruled,

            A qualified acceptance or one that involves a new proposal constitutes a counter-offer and a rejection of the original offer. A counter-offer is considered in law, a rejection of the original offer and an attempt to end the negotiation between the parties on a different basis. Consequently,when something is desired which is not exactly what is proposed in the offer, such acceptance is not sufficient to guarantee consent because any modification or variation from the terms of the offer annuls the offer.  The acceptance must be identical in all respects with that of the offer so as to produce consent or meeting of the minds.  (Italics supplied.)

            In the present case, Medrano’s offer to sell the shares of the minority stockholders at the price of 65% of the par value wasnot absolutely and unconditionally accepted by DBP.  DBP imposed several conditions to its acceptance and it is clear that Medrano indeed tried in good faith to comply with the conditions given by DBP but unfortunately failed to do so. Hence, there was no birth of a perfected contract of sale between the parties. 

            The petitioner is also correct that Paragraph 1, Article 1545 of the Civil Code speaks of a perfected contract of sale. Paragraph 1, Article 1545 of the Civil Code provides:

            ART. 1545. Where the obligation of either party to a contract of sale is subject to any condition which is not performed, such party may refuse to proceed with the contract or he may waive performance of the condition. If the other party has promised that the condition should happen or be performed, such first mentioned party may also treat the nonperformance of the condition as a breach of warranty.

            x x x x (Italics supplied.)

            It is clear from a plain reading of this article that it speaks of a party to a contract of sale who fails in the performance of his/her obligation.  The application of this article presupposes that there is a perfected contract between the parties and that one of them fails in the performance of an obligation under the contract.

            The present case does not fall under this article because there is no perfected contract of sale to speak of. Medrano’s failure to comply with the conditions set forth by DBP prevented the perfection of the contract of sale. Hence, Medrano and DBP remained as prospective-seller and prospective-buyer and not parties to a contract of sale.

         This notwithstanding, however, we cannot simply agree with DBP’s argument that since there is no perfected contract of sale, DBP should not be ordered to pay Medrano any amount. 

            The factual scenario of this case took place in 1980 or over thirty (30) years ago.  Medrano had turned over and delivered his own shares of stock to DBP in his attempt to comply with the conditions given by DBP.  DBP then accepted the shares of stock as partial fulfillment of the conditions that it imposed on Medrano.  However, after the lapse of some time and after it became clear that Medrano would not be able to comply with the conditions, DBP decided to retain Medrano’s shares of stock without paying Medrano.  After the realization that DBP would in fact not pay him for his shares of stock, Medrano was constrained to file a suit to enforce his rights.^[16]

            In civil law, DBP’s act of keeping the shares delivered by Medrano without paying for them constitutes unjust enrichment. As we held in Car Cool Philippines, Inc. v. Ushio Realty and Development Corporation^[17],

         … “[t]here is unjust enrichment when a person unjustly retains a benefit to the loss of another, or when a person retains money or property of another against the fundamental principles of justice, equity and good conscience.” Article 22 of the Civil Code provides that “[e]very person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.” The principle of unjust enrichment under Article 22 requires two conditions: (1) that a person is benefited without a valid basis or justification, and (2) that such benefit is derived at another’s expense or damage.

            It was not proper for DBP to hold on to Medrano’s shares of stock after it became obvious that he will not be able to comply with the conditions for the contract of sale.  From that point onwards, the prudent and fair thing to do for DBP was to return Medrano’s shares because DBP had no just or legal ground to retain them.

         We find that equitable considerations militate against DBP’s claimed right over the subject shares.  First, it is clear that DBP did not buy the shares from Medrano as it even asserts there was no perfected contract of sale because of the failure of the latter to comply with DBP’s conditions. Second, it cannot be said that Medrano voluntarily donated his shares of stock as he is in fact still trying to recover them 30 years later.  Third, it cannot be said that DBP was merely holding the shares of stock for safekeeping as DBP even claims that the shares were transferred to the APT (now PMO).  In fine, there is no reason whatsoever for DBP to continue in the possession of the shares of stock against Medrano. For nearly 30 years, Medrano was deprived of his shares without any compensation at all from DBP.  To this Court, such situation is tantamount to the loss of respondent’s shares of stock, by reason of DBP’s unjustified retention. 

            As to the issue of attorney’s fees, it is well settled that the law allows the courts discretion as to the determination of whether or not attorney’s fees are appropriate.  The surrounding circumstances of each case are to be considered in order to determine if such fees are to be awarded.  In the case of Servicewide Specialists, Incorporated v. Court of Appeals,^[18] the Court ruled:

Article 2208 of the Civil Code allows attorney’s fees to be awarded by a court when its claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act or omission on the part of the party from whom it is sought….

            In the present case, it is clear that Medrano was constrained to use legal means to recover his shares of stock. Records showed that indeed respondent Medrano followed up^[19] the payment of his shares of stock that were transferred to DBP.  After some time, he became convinced that DBP will not pay for the shares of stock for reasons unknown to him. That was when he decided to bring the matter to court. 

            DBP’s unjustified refusal to pay for the shares or even offer an explanation to Medrano why payment was being withheld indicates bad faith on its part.  Besides having no legal or just reason to hold on to Medrano’s shares of stock, DBP also refused to enlighten Medrano of the reason why he was being denied payment.  Further, Medrano’s failure to comply with the conditions of the acceptance should have prompted DBP either to return the shares of Medrano or accept the shares of Medrano as a sale and pay a fair price or at least communicate to Medrano why his shares were being withheld. Instead, DBP did nothing but to hold on to the shares.  Because of this, Medrano was left with no other option but to seek redress from the courts.

            WHEREFORE, the Decision dated December 14, 2004 and Resolution dated February 8, 2005 of the Court of Appeals in CA-G.R. CV No. 65436 are hereby AFFIRMED. 

         No pronouncement as to costs.

SO ORDERED.

A T T E S T A T I O N

         I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

C E R T I F I C A T I O N

         Pursuant to Section 13, Article VIII of the 1987 Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

^[1]       Rollo, pp. 51-56. Penned by Associate Justice Jose Catral Mendoza (now a member of this Court) with Associate Justices Godardo A. Jacinto and Edgardo P. Cruz concurring.

^[2]          Id. at 58-59.

^[3]       Id. at 101-106.

^[4]       TSN, June 16, 1983, pp. 10-13, 30.

^[5]       Rollo, pp. 105-106.

^[6]       CA rollo, p. 100.

^[7]       Supra note 1.

^[8]       ART. 1545. Where the obligation of either party to a contract of sale is subject to any condition which is not performed, such party may refuse to proceed with the contract or he may waive performance of the condition.  If the other party has promised that the condition should happen or be performed, such first mentioned party may also treat the nonperformance of the condition as a breach of warranty.

                Where the ownership in the things has not passed, the buyer may treat the fulfillment by the seller of his obligation to deliver the same as described and as warranted expressly or by implication in the contract of sale as a condition of the obligation of the buyer to perform his promise to accept and pay for the thing.

^[9]       ART. 1385. Rescission creates the obligation to return the things which were the object of the contract, together with their fruits, and the price with its interest; consequently, it can be carried out only when he who demands rescission can return whatever he may be obliged to restore.

                Neither shall rescission take place when the things which are the object of the contract are legally in the possession of third persons who did not act in bad faith.

                In this case, indemnity for damages may be demanded from the person causing the loss.

^[10]     Supra note 2.

^[11]     Id. at 34.

^[12]     Id. at 36-37.

^[13]     Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.

             From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.

^[14]     G.R. No. 174286, June 5, 2009, 588 SCRA 690, 701, 703.

^[15]     G.R. No. 166862, December 20, 2006, 511 SCRA 444, 465-466, citing Logan v. Philippine Acetylene Co., 33 Phil. 177, 183-184 (1916) and ABS-CBN Broadcasting Corporation v. Court of Appeals, G.R. No. 128690, January 21, 1999, 301 SCRA 572, 592-593.

^[16]     TSN, June 16, 1983, pp. 22-25.

^[17]     G.R. No. 138088, January 23, 2006, 479 SCRA 404, 412, citing Reyes v. Lim, G.R. No. 134241, August 11, 2003, 408 SCRA 560 and 1 J. Vitug, CIVIL LAW 30 (2003).

^[18]     G.R. No. 110597, May 8, 1996, 256 SCRA 649, 655, citing Gonzales v. National Housing Corporation, No. L-50092, December 18, 1979, 94 SCRA 786.

^[19]     TSN, June 16, 1983, p. 24.