Heirs of Emiliano San Pedro

8/10/2019 Heirs of Emiliano San Pedro

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HEIRS OF EMILIANO SAN PEDRO,represented by LUZVIMINDA SAN PEDROCUNANAN,Petitioners,

- versus -

PABLITO GARCIA and JOSE CALDERON,Respondents.

G.R. No. 166988

Promulgated:

July 3, 2009

DECISION

PERALTA, J .:

Before this Court is a Petition for Review on Certiorari[1]underRule 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 aComplaint[4]for Nullification ofKasulatan ng BilihangTuluyanand Kasulatan ng Pagkakautangand Restoration of TenurialRights Covered by Operation Land Transfer against respondentsPablito Garcia and Jose Calderon before the Provincial Adjudicatorof 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 VirginiaKing Yap, was acquired by Emiliano San Pedro sometime in 1987 byvirtue of Presidential Decree No. 27 (P.D. No. 27).[5]A portion of saidlot, however, has been assigned and conveyed by San Pedro toCalderon as early as 1980 through a Kasulatan ng Bilihang Tuluyan.[6]

In 1982, San Pedro mortgaged to Garcia the landholdingfor P30,000.00 with the condition that one-half of the landholdingshould be delivered to Garcia as collateral, and that Garcia shall tillthe land as long as the obligation remains unsettled. The transactionbetween San Pedro and Garcia was reduced into writing as

evidenced by a Kasulatan ng Pagkakautang. In the same year,Calderon sold to Garcia the portions of the land sold by San Pedro tohim in 1980. Thus, Garcia currently controls and cultivates the wholelandholding of San Pedro.[7]

Petitioners, in their Complaint, prayed that the sale andmortgage entered into by San Pedro be declared null and void forviolation of P.D. No. 27, and that their possession over the

landholding be restored upon payment of the unpaid loanof P30,000.00 obtained by San Pedro during his lifetime.[8]

In their Position Paper,[9]respondents claim that Calderon wasthe real tenant of Virginia King Yap and not San Pedro, who was justhelping Calderon till the land. Respondents further alleged that SanPedro was only able to obtain a Certificate of Land Transfer becauseat that time Calderon left for Manila. Upon his return, Calderonconfronted San Pedro, who then acknowledged through a SwornStatement[10]that Calderon was the real tenant of Virginia KingYap. Later on, both parties entered into a Kasulatan ng BilihangTuluyanceding the entire property to Calderon. Because of SanPedro's voluntary acknowledgment of his right, Calderon rewardedSan Pedro P50,000.00.[11]

Furthermore, respondents alleged that Calderon still continuedto avail of the services of San Pedro because he could not find anyhelper who could work with him on the land. However, sometime inOctober 1982, Calderon discovered that San Pedro, througha Kasulatan ng Pagkakautangborrowed P30,000.00 from Garcia andmortgaged one-half of the land he was working on. Calderon tried tosettle the matter with Garcia, who manifested his desire to get hismoney back. However, because San Pedro had no money to pay, theparties brought their problem to the Samahang NayonwhereCalderon and San Pedro suggested that Garcia could buy the landand cultivate the same. Subsequently, in a conference beforethe Samahang Nayon, Calderon and San Pedro decided to surrenderthe landholding to the Samahang Nayonto be awarded to any personwho would be willing to pay the value of the land and the P30,000.00obligation incurred by San Pedro. Garcia decided to purchase theland and in the presence of the Samahang Nayonofficials paidCalderon P60,000.00 while the P30,000.00 obtained by San Pedrowas already considered part of the purchase price. Thus, respondentsclaim that, as of October 1982, the Samahang Nayonalready
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considered Garcia as the lawful owner and cultivator of the land inquestion.[12]

On the other hand, in their Position Paper,[13]petitioners claim inthe main that the conveyances made by San Pedro are void abinitiofor such violated the provisions of P.D. No. 27.

On September 20, 1995, the Provincial Adjudicator rendered aDecision[14]dismissing the complaint, the dispositive portion of whichreads:

WHEREFORE, premises considered, judgment ishereby rendered DISMISSING the complaint for lack of merit.

SO ORDERED.[15]

In said Decision, the Provincial Adjudicator concluded that San

Pedro was not the real tenant of the subject landholding and that thelatter had violated the provisions of P.D. No. 27 that an awardee ofland under the above law shall not at anytime employ tenants in thecultivation of the land. Moreover, the Provincial Adjudicator ruled thatthe acts of San Pedro were tantamount to an abandonment, whichthereby extinguished the tenancy relationship. Furthermore, theProvincial Adjudicator ruled that San Pedro had no more tenurial rightbecause he had already abandoned and surrendered his right tothe Samahang Nayon.[16]

On October 16, 1995, petitioners, through their representative

Leonila San Pedro, filed a Motion for Extension of Time to file aMotion for Reconsideration.[17]

After a year, on October 21, 1996, respondents filed aManifestation[18]stating that no motion for reconsideration was filed bypetitioners despite their request for an extension, nor was an appealinterposed by them. Accordingly, respondents prayed for the issuanceof an entry of judgment. Later, on November 5, 1996, respondentsthen 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 ofwhich reads:

Inasmuch as the plaintiff thru their representative,Leonila San Pedro, that as of this date, did not f ile anyMotion for Reconsideration nor notice of appeal within theprescriptive period of fifteen (15) days, the Board's Decisiondated September 20, 1995, is now FINAL.

SO ORDERED.[21]

On February 5, 1997, petitioners filed a Notice of Appeal[22]towhich respondents in response filed an Opposition.[23] Respondentsargued that the decision of the Board was already final and executoryby virtue of the November 29, 1996 Order of the Provincial

Adjudicator.

Notwithstanding the belated appeal, the records of the casewere elevated to the DARAB, as a matter of course, which thenrendered a Decision[24]favorable to petitioners, the dispositive portion

of which reads:

WHEREFORE, premises considered, the decision ofthe Adjudicator a quodated September 20, 1995, is herebyREVERSED and SET ASIDE. A new one is hereby renderedto read as follows:

1. Declaring the EP No. A-004783 issued to the lateEmiliano San Pedro, predecessor-in-interest ofplaintiffs-appellants valid and binding;

2. Declaring the Kasulatan ng Bilihang Tuluyan andKasulatan ng Pagkakautang as null and void;

3. Ordering the defendants-appellees to turn over thephysical possession of the subject landholding toherein plaintiffs-appellants;

4. Ordering the plaintiffs-appellants to pay thedefendants-appellees the amount stated in theKasulatan ng Bilihang Tuluyan and Kasulatan ngPagkakautang.

No pronouncement as to cost.
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SO ORDERED.

[25]

In said Decision, the DARAB allowed the belated appealnotwithstanding that it was filed one year and five months out of time.The DARAB justified its decision by citing Section 2 of the newDARAB Rules which provides for a liberal construction of the

rules.[26]Moreover, the DARAB held that the transactions entered intoby San Pedro and respondents violated P.D. No. 27.[27]

Respondents filed a Motion for Reconsideration[28]assailing theDARAB Decision. On January 25, 2002, the DARAB issued aResolution[29]denying respondents Motion for Reconsideration.

On March 6, 2002, respondents filed with the CA a Petition forReview under Rule 43 of the Rules of Court assailing the Decisionand Resolution of the DARAB.

On November 17, 2004, the CA rendered a Decision[30]ruling infavor of respondents, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing, the petition ishereby GRANTED. The January 17, 2001 Decision and theJanuary 25, 2002 Resolution of the DARAB in DARAB CaseNo. 6869 are hereby SET ASIDE for lack of jurisdiction.

SO ORDERED.[31]

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

appeal within the reglementary period is not a mere technicality, but israther, jurisdictional. The CA pointed out that the Revised Rules of theDARAB itself impose a fifteen-day reglementary period to appeal.Moreover, notwithstanding that technical rules may be relaxed in theinterest of justice, the CA ruled that the delay of two years[32]in thefiling of the appeal in the case at bar no longer fits the liberalityrule.[33]

On December 8, 2004, petitioners filed a Motion forReconsideration[34]which was, however, denied by the CA in aResolution[35]dated February 8, 2005.

Hence, herein petition, with the following assignment of errors,to wit:

I.WHETHER OR NOT PETITIONERS ARE ENTITLED TORECOVER THE LANDHOLDING FROM THE PRIVATERESPONDENTS.

II.WHETHER OR NOT THE HONORABLE PUBLICRESPONDENT COURT OF APPEALS COMMITTEDGRAVE ABUSE OF AUTHORITY, GRAVE ABUSE OFDISCRETION AMOUNTING TO LACK OR EXCESS OFJURISDICTION IN GRANTING THE PETITION ANDSETTING ASIDE THE DECISION DATED JANUARY 17,2001 AND THE RESOLUTION DATED JANUARY 25, 2002OF THE DEPARTMENT OF AGRARIAN REFORMADJUDICATION BOARD IN DARAB CASE NO 6869.

III.WHETHER OR NOT THE HONORABLE PUBLICRESPONDENT COURT OF APPEALS COMMITTED ANYERROR IN SETTING ASIDE THE DECISION ANDRESOLUTION OF THE DEPARTMENT OF AGRARIANREFORM ADJUDICATION BOARD IN DARAB CASE NO6869.

[36]

The petition is not meritorious.

At the crux of the controversy is the determination of whether ornot the DARAB may entertain an appeal filed beyond thereglementary period by invoking a liberal application of the DARABRules of Procedure.

This Court rules in the negative.

It is a matter of record that the Provincial Adjudicator renderedits Decision on September 20, 1995. Notwithstanding that petitionersfiled a motion for extension of time, no motion for reconsideration oran 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,
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said appeal was filed approximately after the lapse of one year andfive months from the date of the Decision of the Provincial

Adjudicator.

The pertinent provisions of the DARAB Revised Rules ofProcedure, which was then in force, state:

Rule I

SECTION 2. Cons t ruc t ion. These Rules shall be liberallyconstrued to carry out the objectives of agrarian reform and topromote a just, expeditious, and inexpensive adjudication andsettlement of any agrarian dispute, case, matter or concern.

Rule VIIISECTION 15. Final i ty of Judgment. The decision, order, orruling disposing of the case on the merits by the Adjudicatorshall be final after the lapse of fifteen (15) days from receipt ofa copy thereof by the counsel or representative on record, orin their absence, by the party himself.

Rule XIIISECTION 1. App eal to the Board. a) An appeal may betaken from an order or decision of the Regional or Provincial

Adjudicator to the Board by either of the parties or both, bygiving or stating a written or oral appeal within a period offifteen (15) days from receipt of the resolution, order ordecision appealed from, and serving a copy thereof on theopposite or adverse party, if the appeal is in writing.

[37]

Petitioners contend that Section 2 of the DARAB RevisedRules of Procedure categorically states that its own rules ofprocedures must be liberally construed.[38]Moreover, petitioners citeSection 3, Rule I of the Revised Rules of Procedure of the DARAB tobolster their case:

SECTION 3. Technical Rules Not Applicable. The Boardand its Regional and Provincial Adjudicators shall not bebound by technical rules of procedure and evidence asprescribed in the Rules of Court, but shall proceed to hear anddecide all agrarian cases, disputes or controversies in a mostexpeditious manner, employing all reasonable means toascertain the facts of every case in accordance with justice

and equity.

x x x

c) The provisions of the Rules of Court shall not applyeven in a suppletory character unless adopted herein or byresolution of the Board. However, due process of the law shallbe observed and followed in all instances.

[39]

Petitioners argue that it was the CA's position that the Rules ofProcedure of the DARAB cannot be liberally construed.[40] Hence,petitioners contend that the CA committed a grave and serious errorwhen 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 notcategorically state that the DARAB Rules of Procedure cannot beliberally 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 thelong delay in the filing of the appeal, as well as petitioners failure tooffer an explanation or an excuse for their failure to abide by thereglementary period.[42]

The case of Sebastian v. Hon. Morales[43]is instructive:

Litigation is not a game of technicalities, but everycase must be prosecuted in accordance with the prescribedprocedure so that issues may be properly presented and

justly resolved. Hence, rules of procedure must be faithfullyfollowed except only when for persuasive reasons, they maybe relaxed to relieve a litigant of an injustice notcommensurate with his failure to comply with the prescribedprocedure. Concomitant to a liberal application of therules of procedure should be an effort on the part of theparty invoking liberality to explain his failure to abide bythe rules.

[44]

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

before the DARAB, the CA was correct in pointing out that theRevised Rules of the DARAB itself impose a fifteen-day reglementary
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period to appeal. Since the perfection of an appeal within the statutoryor reglementary period is not only mandatory but also jurisdictional,the failure of petitioners to so perfect their appeal rendered thequestioned decision final and executory.[45] This rule is founded uponthe 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 mannerand in accordance with the provisions of the law.[46]

This, of course, does not mean to say that this Court has not inthe past allowed a liberal application of the rules of appeal. However,the same applies only in exceptionally meritorious cases. The caseof Bank of America, NT & SA v. Gerochi, Jr.[47]is instructive:

True, in few highly exceptional instances, wehave allowed the relaxing of the rules on the application of thereglementary periods of appeal. We cite a few typicalexamples: In Ramos vs. Bagasao, 96 SCRA 395, we excusedthe delay of four days in the filing of a notice of appealbecause the questioned decision of the trial court was served

upon appellant Ramos at a time when her counsel of recordwas already dead. Her new counsel could only file the appealfour days after the prescribed reglementary period was over.In Republic vs. Court of Appeals, 83 SCRA 453, we allowedthe perfection of an appeal by the Republic despite the delayof six days to prevent a gross miscarriage of justice since theRepublic stood to lose hundreds of hectares of landalready titled in its nameand had since then been devoted foreducational purposes. In Olacao vs. National Labor RelationsCommission, 177 SCRA 38, 41, we accepted a tardy appealconsidering that the subject matter in issue had theretoforebeenjudicially settled, with finality, in another case. The

dismissal of the appeal would have had the effect of theappellant being ordered twice to make the same reparation tothe appellee.

The case at bench, given its own settings, cannotcome close to those extraordinary circumstances that haveindeed justified a deviation from an otherwise stringent rule.Let it not be overlooked that the timeliness of an appeal isajurisdictional caveatthat not even this Court can triflewith.

[48]

In the case at bar, there is no showing of a factual setting whichwarrants a liberal application of the rules on the period of appeal. To

stress, petitioners filed their Notice of Appeal only after one year andfive months from the time the Provincial Adjudicator rendered itsDecision. Such a delay is unacceptable. Moreover, what makesmatters worse is that petitioners offered no explanation or excuse forthis Court to consider as to why it took them so long to file theirappeal.

Lastly, it cannot escape this Courts notice that, onNovember29, 1996, the Provincial Adjudicator issued an Order grantingrespondents motion for an order of finality for failure of petitioners tofile a motion for reconsideration or an appeal within the reglementaryperiod. Hence, the September 20, 1995 Decision of the Provincial

Adjudicator is already final.

Nothing is more in settled law than that once a judgmentattains finality it thereby becomes immutable and unalterable. It mayno longer be modified in any respect even if the modification is meantto correct what is perceived to be an erroneous conclusion of fact orlaw, and regardless of whether the modification is attempted to bemade by the court rendering it or by the highest court of the land. Justas the losing party has the right to file an appeal within the prescribedperiod, the winning party also has the correlative right to enjoy thefinality 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 thereinshould be laid to rest. The basic rule of finality of judgment isgrounded on the fundamental principle of public policy and soundpractice that at the risk of occasional error, the judgment of courts andthe award of quasi-judicial agencies must become final at somedefinite date fixed by law.[50]The orderly administration of justicerequires that the judgment/resolutions of a court or quasi-judicial bodymust reach a point of finality set by law, rules and regulations. Thenoble purpose is to write finis to disputes once and for all. This is afundamental principle in our justice system, without which there couldbe no end to litigations. Utmost respect and adherence to thisprinciple must always be maintained by those who wield the power ofadjudication. Any act which violates such principle must be struckdown.[51]
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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 appealdid not fit the liberality rule; and (2) that the DARAB had no jurisdictionto entertain petitioners' appeal as the September 20, 1995 Decision ofthe Provincial Adjudicator had already attained finality.

WHEREFORE, premises considered, the petition is DENIED forlack of merit. The November 17, 2004 Decision and February 8,2005 Resolution of the Court of Appeals in CA-G.R. SP No. 69144are AFFIRMED.

Costs against petitioners.

SO ORDERED.

DIOSDADO M. PERALTAAssociate Justice


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EAGLE STAR SECURITY SERVICES,INC.,Petitioner,

- versus

BONIFACIO L. MIRANDO,Respondent.

G.R. No. 179512

Promulgated:

July 30, 2009

D E C I S I O N

CARPIO MORALES, J .:

Bonifacio Mirando (respondent), who was hired by Eagle StarSecurity Services, Inc. (petitioner) as a security guard on July 29,1997, was posted at the Heroes Hill Branch (in Quezon City) ofEquitable-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 workon December 15, 2001, he was told by the detachment commander,Juanito Endencio (Endencio), not to report for duty per instruction ofthe head office. Respondent thus called up the head office and wastold by Wilfredo Dayon that he was removed from duty by Ernesto

Agodilla (Agodilla), petitioners operations manager.[2]As respondentwas thereafter no longer asked to report for duty, he filedon December 18, 2001 a complaint[3]for illegal dismissal againstpetitioner and its president Wilfredo Encarnacion (Encarnacion) at theNational Labor Relations Commission (NLRC). He later amended hiscomplaint 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 thatrespondent went on absence without official leave (AWOL) onDecember 16, 2001 and had not since reported for work, drawing it tosend him a notice on December 26, 2001 to explain his absence, buthe failed to respond thereto. [5]

Petitioner further alleged that in a Memorandum[6]datedDecember 26, 2001 sent to Agodilla, Endencio reported thatrespondent pulled out his uniform on December 15, 2001 and that

according to him (respondent), he w[ould] render (sic) voluntaryresignation by December 17, 2001[,] Monday.

By Decision[7]of October 29, 2003, Labor Arbiter Lilia Savarifound that respondent was illegally dismissed, disposing asfollows:

WHEREFORE, a Decision is herebyrendered declaring complainant to have beenillegally dismissed. Concomitantly, respondents areordered to reinstate complainant to his formerposition without loss of seniority rights and withpayment of full backwages from the time of hisillegal dismissal on December 15, 2001. Ifreinstatement is no longer feasible, payment ofseparation benefits plus refund of cash bond ishereby ordered.

Further, respondents are ordered to paycomplainant [service incentive leave pay] for 2001,balance of 13thmonth pay for the year 2001,P1,500.00 representing difference in uniformallowance and 10% of the aggregate amount asattorneys fees.

Computation of the award prepared by theNLRC Computation Unit is hereto attached andmade 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 thecomplaint as against Encarnacion and awarding attorneys fees basedon the 13thmonth pay and service incentive leave pay.

On petitioners and respondents respective motions forreconsideration, the NLRC amended its Decision, by Resolution[9]of

April 28, 2006, by reducing the monetary awards to [hereinrespondent] representing [the] cash bond [equivalent], 13thmonth payand service incentive leave pay toP1,100.00, P2,403.08andP107.17, respectively.
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Petitioner, via certiorari, elevated the case to the Court of

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

In affirming the NLRC ruling, the CA observed:

. . . [I]f indeed it were true that the privaterespondent manifested his intention to resign onDecember 15, 2001 to Juanito Endencio[,] then thepetitioner agency would have no reason to declarethe former as AWOL as their first reaction wouldhave been to allow the private respondent toexecute a resignation letter. Moreover, the Courtfinds it very peculiar that Juanito Endencio, whomthe private respondent allegedly told of his intentionto resign on December 15, 2001, did not report the

incident immediately to the petitioner agency butinstead waited until December 26, 2001, or 11 daysafter, to submit a memorandum reporting the saidincident. This boggles the mind as logic dictatesthat such an important incident, if it were true,should have elicited a much more immediatereaction from Juanito Endencio, being theDetachment Commander or Officer in Charge of thepetitioner agency. After all, a security guardthreatening to quit, thereby abandoning his post, isnot an incident that should be taken lightly, muchless ignored by a supervisor,especially consideringthat the private respondents post was at a bank. Inaddition, it is significant to note that the saidmemorandum came several days after the privaterespondent filed his case against the petitioner forillegal dismissal on December 18, 2001. (Emphasisand underscoring supplied)

Hence, the present petition for review which faults theappellate court

I

. . . WHEN IT AFFIRMED THE FINDINGSOF FACTS OF THE NLRC AND THE LABOR

ARBITER WHICH RELIED ON MANIFESTLYMISTAKEN SPECULATIONS, SURMISES ANDINFERENCES.

II IN FINDING THAT RESPONDENT WAS

ILLEGALLY DISMISSED AND IN FAILING TOAPPRECIATE THE OVERWHELMING EVIDENCEESTABLISHED ON RECORD WHICH SHOWSBEYOND PERADVENTURE OF DOUBTTHAT RESPONDENT WAS NEVER DISMISSEDBUT RATHER WENT ON AWOL.

III IN FINDING RESPONDENT TO BE

ENTITLED TO FULL BACKWAGES ANDSEPARATION [PAY], INCLUDING ATTORNEYS

FEES DESPITE THE FACT THAT NO IOTA OFEVIDENCE [WAS PRESENTED] TO SATISFY THEBURDEN OF PROOF REQUIRED TO SUPPORTTHE MONEY CLAIMS.[11](Underscoring supplied)

Petitioner reiterates that it did not dismiss respondent who, soit claims, voluntarily separated himself from the service by refusing toreport for work.[12]And it contends that respondents amendment ofhis complaint after forty nine days to include a prayer forreinstatement, among other things, exposed his scheme that he didnot actually want to be reinstated but merely wanted a windfall in theform of backwages and separation pay.[13]

Petitioner goes on to argue that even assuming thatrespondent was not given any duty assignment, his filing of thecomplaint for illegal dismissal was premature as he should beconsidered to have been in floating status or off-detail under Article286[14]of the Labor Code.[15]

Respondent, in his Comment,[16]maintains that the presentpetition was filed manifestly for delay as the grounds cited therein aremere rehash of those already sufficiently passed upon by theadministrative bodies and the appellate court.
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Additionally, respondent argues that the present petition must

be treated as a mere scrap of paper since the one who signed it wasnot 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] TheBoard Resolution (Annex R to the petition), which was adoptedduring petitioners Special Board Meeting of May 20, 2006, states:

RESOLVED as it is hereby resolved that thecorporation shall elevate on Certiorari before theCourt of AppealsNLRC NCR Case No. 039872-04entitled Bonifacio L. Mirando,complainant, versusEagle Star Security Services, Inc., respondent.

RESOLVED further as it is hereby resolvedthat Mr. REYNALDO G. TAURO, shall beappointed as authorized representative of theCorporation, to represent and sign in behalf ofthe corporation the Verification and Certificationof the petition for afore-mentioned case.(Italicsin the original; emphasis and underscoring supplied)

Clearly, Annex Rwas adopted for the purpose of authorizingTauro to file petitioners petition for Certioraribefore the Court of

Appeals.[18] Despite petitioners awareness in its Reply torespondents Comment filed before this Court of the defect in Tauroauthority to sign for and in its behalf the Verification and Certificationagainst Non-Forum Shopping,[19]it failed even to belatedly file therequisite authority.

Fuentebella and Rolling Hills Memorial Park v. Castro,[20] onthe requirement of a certification against forum shopping, explains:

The reason for this is that the principal partyhas actual knowledge whether a petition haspreviously been filed involving the same case or

substantially the same issues. If, for any reason,

the principal party cannot sign the petition, the onesigning on his behalf must have been dulyauthorized.

. . . Where the petitioner is a corporation,the certification against forum shopping shouldbe signed by its duly authorized director orrepresentative [I]f the real party-in-interest is a

corporate body, an officer of the corporation cansign the certification against forum shopping aslong as he is authorized by a resolution of itsboard of directors.

x x x x

A certification wi thout the properauthor izat ion is defective and constitutes a validcause for the dismissal of the petition. (Citationsomitted; emphasis, italics and underscoring

supplied)

Petitioners discourse on relaxation of technical rules ofprocedure in the interest of substantial justice does notimpress. While there have been instances when the Court dispensedwith technicalities on the basis of special circumstances or compellingreasons,[21]there is no such circumstance or reason in the presentcase which warrants the liberal application of technical rules.

AT ALL EVENTS, on the merits, the appellate court did notcommit any reversible error in affirming the congruent findings of the

Labor Arbiter and the NLRC that respondent was illegallydismissed.

Both the Labor Arbiter and the NLRC gave weight tothe January 24, 2002 Sworn Affidavit[22]of Gary Villasis (Villasis), afellow 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]
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stated above without any violation, (Underscoringsupplied),

as well as to Villasis handwritten Pagpapatunay[23]dated February19, 2002 corroborating respondents claim that he wasunceremoniously relieved of his duties without any explanation.

The persistence of respondent to resume his duties, not tomention his immediate filing of the illegal dismissal complaint, shoulddissipate any doubt that he did not abandon his job.

Clutching at straws, petitioner argues that respondent was ontemporary off-detail, the period of time a security guard is made towait until he is transferred or assigned to a new post or client;[24]andsince petitioners business is primarily dependent on contractsentered into with third parties, the temporary off-detail of respondentdoes not amount to dismissal as long as the period does not exceed 6months, following Art. 286 of the Labor Code.[25]

Petitioners citation of Article 286 of the Labor Code reading:

ART. 286. When employment not deemedterminated. Thebona fide suspension of theoperation of a business or undertaking for a period notexceeding six (6) months, or the fulfillment by theemployee of a military or civic duty shall not terminateemployment. In all such cases, the employer shallreinstate the employee to his former position withoutloss of seniority rights if he indicates his desire to

resume his work not later than one (1) month from theresumption of operations of his employer or from hisrelief from the military or civic duty. (Emphasis in theoriginal; underscoring supplied)

is misplaced. Philippine Industrial Security Agency v.Dapiton teaches:

We stress that Article 286 applies only when there isa bonafide suspension of the employers operation of abusiness 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 ofemployees, albeit the displacement should not exceedsix (6) months. The paramount consideration shouldbe the dire exigency of the business of the employerthat compels it to put some of its employeestemporarily out of work. In security services, thetemporary off-detail of guards takes place when thesecurity agencys clients decide not to renew their

contracts with the security agency, resulting in asituation where the available posts under its existingcontracts are less than the number of guards in itsroster.[26] (Underscoring supplied)

In the present case, there is no showing that there waslack of available posts at petitioners clients or that there was arequest from the client-bank, where respondent was lastposted and which continued to hire petitioners services, toreplace respondent with another. Petitioner suddenlyprevented him from reporting on his tour of duty at the bank

on December 15, 2001 and had not thereafter asked him toreport for duty.

In fine, the appellate courts affirmance of the NLRCdecision is in order.

WHEREFORE, the petition is DENIED.

Costs against petitioner.

SO ORDERED.

CONCHITA CARPIO MORALESAssociate Justice
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DEVELOPMENT BANK OFTHEPHILIPPINES, Petitioner,

- versus -FAMILY FOODS MANUFACTURING CO.LTD., and SPOUSES JULIANCO andCATALINA CENTENO, Respondent.

G.R. No. 180458

Promulgated:

July 30, 2009

DECISION

NACHURA, J.:

At bar is a petition for review on certiorariunder Rule 45 of theRules 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 FoodsManufacturing Co. Ltd. (FAMILY FOODS), a partnership owned and

operated by Spouses Julianco and Catalina Centeno (spousesCenteno) obtained an industrial loan of P500,000.00 from DBP. Theloan was evidenced by a promissory note dated September 15, 1982and payable in seven (7) years, with quarterly amortizationsof P31,760.40. The loan carried an interest rate of 18% per annum,and penalty charge of 8% per annum. As security, spouses Centenoexecuted 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 anadditional loan of P440,000.00, payable on or before November 8,1989, with interest at 22% per annum and penalty charge of 8%. Theloan was, likewise, secured by the same real estate and chattelmortgages.

FAMILY FOODS failed to pay the loans when they becamedue. Demand to pay was made, but it was not heeded. Accordingly,DBP filed a petition for extrajudicial foreclosure of mortgage with theOffice of the Clerk of Court of the Regional Trial Court (RTC) ofLaguna. A notice of sale, setting the auction sale on August 20, 1990,

was issued and was published in The Barangayon July 19, August 5

and August 12, 1990. As scheduled, the sale proceeded, and theproperties were awarded to DBP as the highest bidder. A certificateof 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 foreclosedproperties with DBP for agreed monthly rentals P12,000.00. SpousesCenteno paid P24,000.00 as advanced rentals, but refused to pay the

succeeding rentals. They, likewise, failed to redeem the foreclosedproperties; hence, DBP consolidated its title over the same.

On March 3, 1994, spouses Centeno filed a suit forAnnulmentof Sale with Prayer for Issuance of a Writ of Injunction and/orRestraining Order.[3] They admitted obtaining loans in the amountof P940,000.00 from DBP, but claimed that they made substantialpayments amounting to P773,466.59. DBP, however, imposedinterest and other charges in excess of those provided in thepromissory 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 thenotice of public action was not published in a newspaper of generalcirculation, as required by law. The Barangay, the newspaper wherethe notice of auction sale was published, they asserted, was not anewspaper of general circulation in Laguna. The certificate of postingissued by the Sheriff was, likewise, defective, as it was not in affidavitform or under oath, as required by Act No. 3135. Finally, spousesCenteno prayed for the issuance of a restraining order to enjoin DBPfrom taking possession of the property pending adjudication of thecase.

DBP filed its answer[4]asserting lack of cause of action, as adefense. It averred that the foreclosure proceeding was valid and inaccordance with law, arguing that it was not flawed by lack of noticeor publication. FAMILY FOODS and spouses Centeno were dulynotified of the scheduled auction sale. The notices of foreclosure salewere posted and published, as required by law. DBP further averredthat respondents were estopped from questioning the foreclosureproceeding, because respondents already entered into a contract oflease with DBP. In so doing, respondents acknowledged DBPsownership of the subject properties, thereby admitting the validity ofthe foreclosure proceeding. It added that respondents, as tenants,
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could not deny the DPBs title over the property, citing Sec. 4 (b), Rule31 of the Rules of Court.

In due course and after hearing, the RTC rendered adecision[5]on January 30, 2003, dismissing the complaint. It rejectedrespondents assertion that the notice of auction sale was notpublished and posted, as required by law. It also sustained DBPsargument that respondents are estopped from assailing the auction

sale after the execution of the contract of lease. Respondents claimof payment was, likewise, rejected for lack of factual and legalbasis. Respondents filed a motion for reconsideration, but the RTCdenied the same.[6]

Forthwith, respondents appealed to the Court of Appeals(CA). In its May 11, 2007 Decision, the appellate court modified theRTC decision. While upholding the validity of the auction sale, the CAreduced the interest rates and penalty charges stipulated in the two(2) promissory notes for being iniquitous and unconscionable. Thedispositive portion of the CA decision reads:

WHEREFORE, premises considered, theassailed January 30, 2003 Decision of the RegionalTrial Court of Calamba, Laguna, Branch 92, in CivilCase No. 2082-94-C, is hereby MODIFIED withrespect to the penalty which is hereby REDUCED tothree percent (3%) per annum and with respect to theinterest rates charged in the two promissory notes,these iniquitous interest rates are hereby REDUCED totwelve percent (12%) per annum each of the twopromissory notes. All other aspects of the decision are

hereby AFFIRMED.SO ORDERED.[7]

Respondents filed a motion for reconsideration, while DBPmoved for partial reconsideration of the decision, but these were bothdenied by the CA on October 24, 2007.

Respondents and DBP then came to us with their respectivepetitions for review assailing the CA ruling. Respondents petition wasdocketed as G.R No. 180318, while that of DBP was docketed as G.R. No. 180458. The petitions, however, were not consolidated.

On February 2, 2008, this Court dismissed G.R. No. 180318 andaffirmed the CA ruling. Thus, what remains to be resolved is DBPspetition, raising the following issues:

I. WHETHER THE REASONABLENESS OF THESTIPULATED PENALTY CHARGE AND INTERESTRATES ARE WITHIN THE ISSUES OF THE INSTANTCASE;

II. WHETHER THE JUSTIFICATION PROVIDED FORTHE REDUCTION OF THE STIPULATED PENALTYCHARGE AND INTEREST RATES IS SUPPORTEDBY THE EVIDENCE ON RECORD;

III. WHETHER THE STIPULATED PENALTYCHARGE OF 8% PER ANNUM AND INTERESTRATES OF 18% AND 22% PER ANNUM AREUNREASONABLE, INIQUITOUS ANDUNCONSCIONABLE UNDER THE APPLICABLE

DECISIONS OF THE SUPREME COURT.[8]

We will first address the procedural issue raised by therespondents in their comment.

Respondents moved for the outright dismissal of the petitionon the ground that DBP did not attach material portions of therecord, i.e.promissory notes, real estate and chattel mortgages, andother documents, which are necessary for a complete determinationof 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.

As a general rule, a petition lacking copies of essentialpleadings and portions of the case record may be dismissed.[10]Thisrule, however, is not petrified. As the exact nature of the pleadingsand parts of the case record that must accompany a petition is notspecified, much discretion is left to the court to determine thenecessity for copies of pleadings and other documents.[11]
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A careful perusal of the records of the case shows that thepetitioners substantially complied with the procedural requirements ofSection 4, Rule 45 of the Rules of Court. Attached to the petition forreview as annexes are legible certified duplicate originals of theassailed CA decision and resolution. DBP also attached thepleadings filed before the RTC and the latters decision. Theattachment of the pleadings and of the decisions of the RTC and CAprovides sufficient basis to resolve the instant controversy.

As held by this Court inAir Philippines Corporation v.Zamora:[12]

[E]ven if a document is relevant and pertinent tothe petition, it need not be appended if it is shown thatthe contents thereof can also found in anotherdocument already attached to the petition. Thus, if thematerial allegations in a position paper are summarizedin a questioned judgment, it will suffice that only acertified true copy of the judgment is attached.

Third, a petition lacking an essential pleading orpart of the case record may still be given due course orreinstated (if earlier dismissed) upon showing thatpetitioner later submitted the documents required, orthat it will serve the higher interest of justice that thecase be decided on the merits.

Nevertheless, even if the pleadings and other supporting documentswere not attached to the petition, the dismissal is unwarrantedbecause the CA records containing the promissory notes and the realestate and chattel mortgages were elevated to this Court. Without a

doubt, we have sufficient basis to actually and completely dispose ofthe case.

We must stress that cases should be determined on themerits, after all parties have been given full opportunity to ventilatetheir causes and defenses, rather than on technicalities or proceduralimperfections. In that way, the ends of justice would be servedbetter. Rules of procedure are mere tools designed to expedite thedecision or resolution of cases and other matters pending in court. Astrict and rigid application of rules, resulting in technicalities that tendto 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 thejust, speedy and inexpensive disposition of every action andproceeding.[13]

Now we resolve the merit of the petition.

DBP faults the CA for ruling on the reasonableness of thestipulated interest and, accordingly, modifying the RTC decision. It

points out that respondents never questioned the interest and chargesstipulated in the promissory notes and in the real estate and chattelmortgages throughout the proceedings in the court a quo. Whatrespondents questioned were the interest and charges allegedlyimposed or collected in excess of those provided in the real estateand chattel mortgages. Thus, it contends that the CA committedreversible error in ruling on the issue, which was neither raised in thecomplaint nor ventilated during the trial. In any case, there wasnothing illegal in the stipulated rate of interest. DBP, therefore, praysfor the reversal of the assailed decision and resolution.

We grant the petition.

The records show that respondents in their complaint neverraised as a ground or basis for the annulment of the auction sale thenullity of the stipulated interest;[14] that during the pre-trialconference,[15]and in the course of trial, the validity of the stipulatedinterest was never put as an issue. What respondents questionedwere the interest and charges that were allegedly imposed orcollected in excess of those provided in the real estate and chattelmortgages. It was only in theappellants brief that respondents raisedthe validity of the stipulated interest rate and invoked this Courts

ruling in Medel v. Court of Appeals.[16] Clearly, respondents raisedthe issue for the first time on appeal.

It is well settled that issues raised for the first time on appealare barred by estoppel. Arguments not raised in the originalproceedings cannot be considered on review; otherwise, it wouldviolate basic principles of fair play.[17] The CA, therefore, had no basisfor, and erred in, reducing the stipulated interest rates.

Moreover, respondents own evidence shows that they agreedon 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
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law that parties are bound by the stipulations in the contractsvoluntarily entered into by them. Parties are free to stipulate termsand conditions that they deem convenient, provided these are notcontrary to law, morals, good customs, public order, or publicpolicy.[18]

There is nothing in the records, and in fact, there is noallegation, showing that respondents were victims of fraud when they

signed the promissory notes. Neither is there a showing that in theircontractual relations with DBP, respondents were at a disadvantageon account of their moral dependence, mental weakness, tender ageor other handicap, which would entitle them to the vigilant protectionof the courts as mandated by Article 24[19]of the Civil Code.

As held by this Court in Vales v. Villa,[20]and Spouses Pascualv. Ramos:[21]

All men are presumed to be sane and normaland subject to be moved by substantially the same

motives. When of age and sane, they must take careof themselves. In their relations with others in thebusiness of life, wits, sense, intelligence, training,ability and judgment meet and clash and contest,sometimes with gain and advantage to all, sometimesto a few only, with loss and injury to others. In thesecontests men must depend upon themselvesupontheir own abilities, talents, training, sense, acumen,

judgment. The fact that one may be worsted byanother, of itself, furnishes no cause of complaint. Oneman cannot complain because another is more able, or

better trained, or has better sense or judgment than hehas; and when the two meet on a fair field the inferiorcannot murmur if the battle goes against him. The lawfurnishes no protection to the inferior simply becausehe is inferior, any more than it protects the strongbecause he is strong. The law furnishes protection toboth aliketo one no more or less than to the other. Itmakes no distinction between the wise and the foolish,the great and the small, the strong and the weak. Thefoolish may lose all they have to the wise; but that doesnot 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 fromunwise investments, relieve him from one-sidedcontracts, or annul the effects of foolish acts. Courtscannot constitute themselves guardians of personswho are not legally incompetent. Courts operate notbecause one person has been defeated or overcomeby another, but because he has been defeated orovercome illegally.Men may do foolish things, make

ridiculous contracts, use miserable judgment, and losemoney by thenindeed, all they have in the world; butnot for that alone can the law intervene andrestore. There must be, in addition, a violation of law,the commission of what the law knows as anactionablewrong, before the courts are authorized to lay hold ofthe 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 theCA ruling.

In Garcia v. Court of Appeals,[22]this Court sustained theinterest rates of 18% and 24% per annum on the loans obtained byChemark from Security Bank. Also, in Bautista v. Pilar DevelopmentCorporation,[23]the validity of the 21% interest rate was upheld. Thus,the stipulated rates on respondents promissory notes cannot bestricken down for being contrary to public policy.

Similarly, we uphold the validity of the 8% penaltycharge. In Development Bank of the Philippines v. Go,[24]this Courthad the occasion to state that the 8% penalty charge is valid, viz.:

This Court has recognized a penalty clause asan accessory obligation which the parties attach to aprincipal obligation for the purpose of insuring theperformance thereof by imposing on the debtor aspecial prestation (generally consisting in the paymentof a sum of money) in case the obligation is not fulfilledor is irregularly or inadequately fulfilled. Theenforcement of the penalty can be demanded by thecreditor only when the non-performance is due to thefault or fraud of the debtor. The non-performance gives

rise to the presumption of fault; in order to avoid the
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payment of the penalty, the debtor has the burden ofproving an excuse the failure of the performancewas due to either force majeureor the acts of thecreditor himself.[25]

In this case, respondents failed to discharge theburden. Thus, they cannot avoid the payment of the agreed penaltycharge.

WHEREFORE, the petition is GRANTED. The assailedDecision and Resolution of the Court of Appeals in CA-G.R. CV No.81360 are REVERSEDand SET ASIDE. The January 30, 2003Decision of the Regional Trial Court of Calamba, Branch 92,dismissing Civil Case 2082-94-C, is REINSTATED.

SO ORDERED.

ANTONIO EDUARDO B. NACHURAAssociate Justice
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F.A.T. KEE COMPUTERSYSTEMS, INC., Petitioner,

- versus -ONLINE NETWORKSINTERNATIONAL, INC.,Respondent.

G.R. No. 171238

Promulgated:

February 2, 2011

D E C I S I O N

LEONARDODE CASTRO, J .:

For consideration of the Court is a Petition for Reviewon Certiorari[1]under Rule 45 of the Rules of Court, which seeks tochallenge the Decision[2]dated September 26, 2005 of the Court of

Appeals in CA-G.R. CV No. 71910. The appellate court reversed andset aside the Decision[3]dated November 7, 2000 of the Regional TrialCourt (RTC) of Makati City, Branch 148, in Civil Case No. 99-167,

which dismissed the complaint filed by herein respondent OnlineNetworks International, Inc. (ONLINE).

Petitioner F.A.T. Kee Computer Systems, Inc. (FAT KEE) is adomestic corporation engaged in the business of selling computerequipment and conducting maintenance services for the units it sold.

ONLINE is also a domestic corporation principally engaged inthe 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. 99-167. ONLINE alleged that sometime in November 1997, it soldcomputer printers to FAT KEE for which the latter agreed to pay thepurchase price of US$136,149.43. The agreement was evidenced byInvoice Nos. 4680, 4838, 5090 and 5096[5]issued by ONLINE to FATKEE. The invoice receipts contained a stipulation that interest at28%per annumis to be charged on all accounts overdue and anadditional sum equal to 25% of the amount will be charged by vendorfor attorneys fees plus cost of collection in case of suit. [6] It wasfurther asserted in the Complaint that thereafter, FAT KEE, through itsPresident 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 wasthen computed at P5,445,977.20. FAT KEE then made severalpayments amounting to P2,502,033.06 between the periods of Marchand May 1998.[7]As of May 12, 1998, the balance of FAT KEEpurportedly amounted to P2,943,944.14. As the obligations of FATKEE matured in December 1997, ONLINE applied the 28% interest onthe unpaid amount. However, in view of the good businessrelationship of the parties, ONLINE allegedly applied the interest on

the balance for a period of three months only. Thus, the total amountdue, plus interest, was P3,012,636.17.[8] FAT KEE subsequentlymade additional payments in the amount of P2,256,541.12. Abalance of P756,095.05, thus, remained according to ONLINEscomputations. Despite repeated demands, FAT KEE failed to pay itsobligations to ONLINE without any valid reason. ONLINE wasallegedly constrained to send a final demand letter for the payment ofthe aforementioned balance. As FAT KEE still ignored the demand,ONLINE instituted the instant case, praying that FAT KEE be orderedto pay the principal amount of P756,095.05, plus 28% interestperannumcomputed from July 28, 1998 until full payment. ONLINE

likewise sought the payment of 25% of the total amount due asattorneys fees, as well as litigation expenses and costs of suit.

FAT KEE duly answered[9]the complaint alleging, inter alia, thatit did not reach an agreement with ONLINE for the payment of itsobligations in US dollars. FAT KEE claimed that the invoice receipts ofthe computer printers, which quoted the purchase price in US dollars,were unilaterally prepared by ONLINE. While FAT KEE admitted thatit offered to pay its obligations in Philippine pesos, it averred that theamount owing to ONLINE was only P5,067,925.34, as reflected in theStatement of Account (SOA) sent by ONLINE dated December 9,

1997.[10] FAT KEE stated that payments in Philippine pesos weretendered to ONLINE, in accordance with the SOA, and the latteraccepted the same. FAT KEE denied that it agreed to the conversionrate of P40:US$1 and claimed that it had already fully paid its totalobligations to ONLINE. FAT KEE, thus, prayed for the dismissal ofthe complaint and, by way of counterclaim, sought the paymentof 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
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duty was to monitor the outstanding or unpaid accounts of ONLINEsclients, as well as to send demand letters and recommend the filing ofcases should the clients fail to pay.[11] FAT KEE was one of theclients of ONLINE, which had an outstanding balance of a littleover P756,000.00.[12] Goco stated that the invoice receipts sent toFAT KEE were denominated in US dollars as the business of ONLINEwas to sell imported computer products, in wholesale and retail. Inview of the currency fluctuations during those times, ONLINE deemed

that the better business policy was to bill their clients in USdollars.[13] FAT KEE allegedly had an outstanding balance of roughlyaround US$136,000.00.[14] When ONLINE demanded payment, FATKEE negotiated that it be allowed to pay in Philippine pesos. Gocoattested that the parties subsequently agreed to a conversion rateof P40:US$1. FAT KEE was able to remit partial payments toONLINE, but as of May 1998, the amount of P756,095.05 remainedunpaid.[15]As FAT KEE failed to settle its obligations, ONLINEincluded the payment of interests on the latters claim.[16] FAT KEEthen sent a letter to ONLINE, insisting that there was no agreement asto the exchange rate to be used in converting the unpaid obligations

of FAT KEE and that the latter could not pay because of theextraordinary currency fluctuations.[17] The lawyers of ONLINEeventually sent a demand letter[18]to FAT KEE for the payment of theoutstanding balance, but this too went unheeded. ONLINE, thus, filedthe instant case.[19]

The next witness to be presented by ONLINE was JamesPayoyo, an Account Manager for the said company. Payoyo testified,among others, that sometime in November 1997, FAT KEE submittedtheir 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 thesame was denominated in US dollars.[23] Payoyo related that, onJanuary 15, 1998, the officials of ONLINE met with Frederick Huang,Jr., the President of FAT KEE, and the latters lawyer. The partiesdiscussed the payment scheme for the outstanding balance of FATKEE. ONLINE proposed that the total unpaid amount of more thanUS$136,000.00 shall be divided in two, such that 50% of the amountwas to be paid in US dollars and the other half was to be settled inPhilippine pesos. The exchange rate to be applied to the Philippinepeso component was P41:US$1.[24] FAT KEE then offered torenegotiate the exchange rate, offering to pay P35:US$1, but ONLINE

rejected the same. According to Payoyo, the parties subsequentlyagreed to a P40:US$1 conversion rate.[25]

Lastly, ONLINE called on Sonia Magpili to likewise testify to thefact that FAT KEE renegotiated with ONLINE for the conversion rateof P40:US$1. Magpili stated that she was then the Executive VicePresident of ONLINE[26]and was among the company officials whomet with FAT KEE President Huang on January 15,

1998.[27] Discussed

Documents

Heirs of Emiliano San Pedro