Navarra v. Planters Development Bank

Navarras obtained a loan of P1,200,000.00 from Planters Bank and, by way of security therefor, executed a deed of mortgage over their aforementioned five (5) parcels of land. Unfortunately, the couple failed to pay their loan obligation. Hence, Planters Bank foreclosed on the mortgage. On the other hand, RRRC, a real estate company owned by the parents of Carmelita Bernardo Navarra, obtained a loan from Planters Bank secured by a mortgage and was able to negotiate with the Bank for the redemption of its foreclosed properties by way of a concession the foreclosed properties of RRRC were sold to third persons whose payments therefore, directly made to the Bank, were in excess by P300,000.00 for the redemption price. In the meantime, Jorge Navarra sent a letter to Planters Bank, proposing to repurchase the five (5) lots earlier auctioned to the Bank, with a request that he be given until August 31, 1985 to pay the down payment of P300,000.00 which will come from the excess payment of P300,000.00 in connection with the redemption made by the RRRC. Because the amount of P300,000.00 was sourced from a different transaction between RRRC and Planters Bank and involved different debtors, the Bank required Navarra to submit a board resolution from RRRC authorizing him to negotiate for and its behalf and empowering him to apply the excess amount of P300,000.00 in RRRC's redemption payment as down payment for the repurchase of the Navarras' foreclosed properties. However, Navarra failed to comply and so the bank informed them that they could not proceed with the documentation of the proposed repurchase of the foreclosed properties on account of his non - compliance with the Bank's request for the submission of the needed board resolution of RRRC.Issue : Was there a perfected contract of sale?

While the letters of Navarras indicate the amount of P300,000.00 as down payment, they are, however, completely silent as to how the succeeding installment payments shall be made. At most, the letters merely acknowledge that the down payment of P300,000.00 was agreed upon by the parties. However, this fact cannot lead to the conclusion that a contract of sale had been perfected. Quite recently, this Court held that before a valid and binding contract of sale can exist, the manner of payment of the purchase price must first be established since the agreement on the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price. Too, the Navarras' letter/offer failed to specify a definite amount of the purchase price for the sale/repurchase of the subject properties. It merely stated that the "purchase price will be based on the redemption value plus accrued interest at the prevailing rate up to the date of the sales contract." The ambiguity of this statement only bolsters the uncertainty of the Navarras' so-called "offer" for it leaves much rooms for such questions, as: what is the redemption value? what prevailing rate of interest shall be followed: is it the rate stipulated in the loan agreement or the legal rate? when will the date of the contract of sale be based, shall it be upon the time of the execution of the deed of sale or upon the time when the last installment payment shall have been made? To our mind, these questions need first to be addressed, discussed and negotiated upon by the parties before a definite purchase price can be arrived at. Again, the offer was not clear insofar as concerned the exact number of years that will comprise the long-term payment scheme. As we see it, the absence of a stipulated period within which the repurchase price shall be paid all the more adds to the indefiniteness of the Navarras' offer. Clearly, then, the lack of a definite offer on the part of the spouses could not possibly serve as the basis of their claim that the sale/repurchase of their foreclosed properties was perfected. The reason is obvious: one essential element of a contract of sale is wanting: the price certain. There can be no contract of sale unless the following elements concur: (a) consent or meeting of the minds; (b) determinate subject matter; and (c) price certain in money or its equivalent. Such contract is born or perfected from the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. Here, what is dramatically clear is that there was no meeting of minds vis-a-vis the price, expressly or impliedly, directly or indirectly.Surtida v. Rural BankSpouses Surtida contends the possession of respondents of their property. It appears from the record that the spouses had executed a real estate mortgage over their property, but owing to their failure to pay, they executed a dation in payment. The preferential right to repurchase having been denied by the spouses, the respondent now asks the spouses to vacate the premises that were turned over to them, but the spouses refuse, contending that they had not accepted a loan from the bank, at all. The RTC favored the petitioners but on appeal the CA reversed the decision. HELD: Petitioners bare denial that they had secured several loans from respondent onJune 16, 1986andNovember 4, 1987cannot prevail over the testimonial and documentary evidence presented in the trial court. The presumption that a contract has sufficient consideration cannot be overthrown by the bare uncorroborated and self-serving assertion ofpetitioners that it has no consideration.To overcome the presumption of consideration, the alleged lack of consideration must be shown by preponderance of evidence.Petitioners failed to discharge this burden.The contracts of Dation in Payment datedAugust 31, 1989andJanuary 5, 1990were duly notarized.

Vagilidad v. Vagilidad

Laura Marnelego v. Banco Filipino

In September 1980, Spouses Patrick and Beatrize Price and petitioner Laura Marnelego executed a Deed of Conditional Sale over a parcel of land and its improvements. The contract showed that the property was mortgaged to respondent Banco Filipino Savings and Mortgage Bank and BF . It appears, however, that when the parties faltered on the amortizations, respondent bank foreclosed the mortgage and acquired the property at public auction. It later consolidated the title to the property in its name after petitioner failed to redeem it. The petitioner made an offer to Banco Filipino to repurchase the property for P310,000.00. ISSUE: Was there a perfected contract of sale? HELD: A 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 law governing the form of contracts. In the case at bar, the subject of the contract is clear, that is, the house and lot where petitioner presently resides. However, it appears from the records that the parties have not reached an agreement on the purchase price. It has been ruled that a definite agreement on the manner of payment of the purchase price is an essential element in the formation of a binding and enforceable contract of sale. The exchange of letters between petitioner and respondent shows that petitioner first offered to buy the property for P310,000.00, considering the numerous repairs that had to be done in the house. Respondent, in its letter dated September 20, 1984, informed petitioner that the bank has approved her request to repurchase the property in the amount of P362,000.00 but subject to the following terms and conditions: (1) cash payment of P310,000.00 upon approval of the request/proposal, and (2) balance of P52,000.00 to be paid within one (1) year at the rate of 35% interest per annum. Petitioner, in her letter to the bank dated October 9, 1984, made a counter-offer to pay a down payment of P100,000.00 and to pay the balance in 5 equal installments to be paid in 5 years with interest. Before the bank could act on petitioners proposal, the Central Bank of the Philippines ordered the closure of Banco Filipino and placed it under liquidation. On April 3, 1986, the Deputy Liquidator replied that they can only consider the sale of the property after the lifting of the Temporary Restraining Order issued by the Supreme Court and said sale shall be subject to the Central Bank rules and regulations. Clearly, there was no agreement yet between the parties as regards the purchase price and the manner and schedule of its payment. Neither of them had expressed acceptance of the other partys offer and counter-offer.

G.R. No. 110115 October 8, 1997

RODOLFO TIGNO AND SPOUSES EDUALINO and EVELYN CASIPIT, petitioners, vs.COURT OF APPEALS AND EDUARDO TIGNO, respondents.

PANGANIBAN, J.:

In denying this petition, the Court takes this occasion to apply the principles of implied trust. As an exception to the general rule barring factual reviews in petitions under Rule 45, the Court wades into the transcript of stenographic notes only to find that the Court of Appeals, indeed, correctly overturned the trial court's findings of facts.

The Case

Petitioners challenge the Decision 1 of Respondent Court of Appeals 2 in CA-G.R. CV No. 29781 promulgated on October 15, 1992 and its Resolution 3 promulgated on May 5, 1993. The dispositive portion of the assailed Decision reads: 4

WHEREFORE, in view of the foregoing, the decision appealed from is hereby REVERSED and another one ENTERED as follows:

1. Declaring plaintiff-appellant Eduardo M. Tigno as the true and lawful owner of the lands described in the complaint;

2. Declaring the Deed of Sale executed by defendant-appellee Rodolfo M. Tigno in favor of defendant-appellee spouses Edualino Casipit and Avelina Estrada as null and void and of no effect; and

3. Ordering defendant-appellee Rodolfo M. Tigno to vacate the parcels of land described in the complaint and surrender possession thereof to plaintiff-appellant Eduardo M. Tigno.

With costs against defendants-appellees.

Petitioners' subsequent motion for reconsideration was "denied for lack of merit" in the assailed Resolution. 5

The Facts

Respondent Court adequately recited the facts of the case as follows: 6

The facts from the standpoint of plaintiff-appellant's (herein private respondent's) evidence are summarized in his brief, to wit:

Sometime in January, 1980, Bienvenido Sison, Remedios Sison and the heirs of Isaac Sison, namely: Manuel Sison, Gerardo Sison and Adelaida Sison appointed Dominador Cruz as agent to sell three (3) parcels of land adjoining each other located at Padilla St., Lingayen, Pangasinan (TSN, Sept. 5, 1989, pp. 6-8). These parcels of land belonging to the abovenamed persons are more particularly described as follows:

Bienvenido Sison:

A parcel of fishpond situated at Padilla Street, Lingayen, Pangasinan, with an area of 3006.67 square meters, more or less, bounded on the North by Padilla Street, on the South by Lots 1105, 1106, 1107, 1108, etc., on the East by alley, and on the West by Alejandro Vinluan and Thomas Caldito: (Exh. B)

Heirs of Isaac Sison (i.e. Manuel, Gerardo and Adelaida Sison)

A parcel of fishpond, situated at Padilla Street, Lingayen, Pangasinan, with an area of 3006.66 square meters, more or less, bounded on the North by Padilla Street; On the South by Bienvenido Sison, on the East by Alley, and on the West by Mariano Sison; (Exh. A)

Remedios Sison

A parcel of unirrigated riceland (now fishpond) situated in Poblacion, Lingayen, Pangasinan, containing an area of 3006.66 square meters, more or less, bounded on the North by Padilla Street; on the East by Path; on the South by Dionisio and Domingo Sison; and on the West by Path; (Exh. C)

Sometime in April 1980, Rodolfo Tigno learned that the abovedescribed properties were for sale. Accordingly, he approached Cruz and told the latter to offer these parcels of land to his brother, Eduardo Tigno, herein appellant (TSN, Sept. 5, 1989, p. 9).

Pursuant thereto, Cruz and Rodolfo Tigno went to appellant's Makati office to convince the latter to buy the properties earlier described. At first, appellant was reluctant, but upon Rodolfo Tigno's prodding, appellant was finally convinced to buy them (TSN, Sept. 5, 1989, pp. 9-11). In that meeting between Cruz and appellant at the latter's office, it was agreed that each parcel of land would cost Ten Thousand Pesos (P10,000.00) [TSN, Oct. 16, 1989, p. 9].

Having reached an agreement of sale, appellant then instructed Cruz to bring the owners of these parcels of land to his ancestral house at Guilig Street, Lingayen, Pangasinan on May 2, 1980, as he will be there to attend the town fiesta (TSN, Sept. 5, 1989, p. 13).

After leaving appellant's office, Cruz and Rodolfo Tigno went to Manila City Hall to visit the latter's uncle, Epifanio Tigno, who works there. At the Manila City Hall, Cruz and Rodolfo Tigno intimated to Epifanio Tigno that appellant has agreed to buy the 3 parcels of land abovedescribed (TSN, Sept. 5, 1989, p. 19; TSN, Sept. 29, 1989, pp. 8-10).

After leaving Manila City Hall, Cruz and Rodolfo Tigno left for Lingayen, Pangasinan (TSN, Sept. 5, 1989, p. 15).

On May 2, 1980, Cruz, together with Bienvenido Sison, Manuel Sison, Adelaida Sison and Remedios Sison went to appellant's house at Guilig Street, Lingayen, Pangasinan. At around 5:00 o'clock in the afternoon, the abovenamed persons and appellant went to Atty. Modesto Manuel's house at Defensores West Street, Lingayen, Pangasinan for the preparation of the appropriate deeds of sale (TSN, Sept. 5, 1989, pp. 15-17).

At Atty. Manuel's house, it was learned that Bienvenido Sison failed to bring the tax declarations relating to his property. Also, Remedios Sison had mortgaged her property to a certain Mr. Tuliao, which mortgage was then existent. Further, Manuel Sison did not have a Special Power of Attorney from his sister in the United States of America to evidence her consent to the sale. In view thereof, no deed of sale was prepared on that day (TSN, Sept. 5, 1989, pp. 17-19).

However, despite the fact that no deed of sale was prepared by Atty. Manuel, Remedios Sison, Bienvenido Sison and Manuel Sison asked appellant to pay a fifty percent (50%) downpayment for the properties. The latter acceded to the request and gave Five Thousand Pesos (P5,000.00) each to the 3 abovenamed persons for a total of Fifteen Thousand Pesos (P15,000.00) (TSN, Sept. 5, 1989, pp. 19-20). This was witnessed by Cruz and Atty. Manuel. After giving the downpayment, appellant instructed Cruz and Atty. Manuel to place the name of Rodolfo Tigno as "vendee" in the deeds of sale to be subsequently prepared. This instruction was given to enable Rodolfo Tigno to mortgage these properties at the Philippine National Bank (PNB), Lingayen Branch, for appropriate funds needed for the development of these parcels of land as "fishponds" (TSN, Sept. 27, 1989, pp. 16-23).

On May 6, 1980, May 12, 1980 and June 12, 1980, the appropriate deeds of sale (Exhs. A, B, C) were finally prepared by Atty. Manuel and signed by Bienvenido Sison, the heirs of Isaac Sison (Manuel, Gerardo and Adelaida Sison), and Remedios Sison, respectively. In all these deeds of sale, Rodolfo Tigno was named as "vendee" pursuant to the verbal instruction of herein appellant. Cruz, the agent in the sale, signed in these three (3) deeds of sale as a witness (Exhs. A-2, B-l and C-l).

Sometime in the second week of July 1980, Cruz brought and showed these deeds of sale to appellant in his Makati office. After seeing these documents, appellant gave Cruz a Pacific Bank check in the amount of Twenty Six Thousand Pesos (P26,000.00) representing the following:

a) P15,000.00 as the balance for the three (3) parcels of land;

b) P6,000.00 representing Cruz's commission as agent; and

c) P5,000.00 for capital gains tax, registration and other incidental expense. (TSN, Sept. 5, 1989, pp. 39-41).

Upon encashment of this check at PNB, Lingayen Branch, Cruz paid Remedios Sison, Manuel Sison and Bienvenido Sison, through Adelaida Sison, the balance due them from appellant (TSN, Sept. 5, 1989, pp. 42-43).

On April 29, 1989, Rodolfo Tigno, without the knowledge and consent of appellant, sold to Spouses Edualino Casipit and Avelina Casipit 508.56 square meters of the land previously owned by Bienvenido Sison (Exh. E). At the time of sale, the Casipits were aware that the portion of the land they bought was owned by appellant, not Rodolfo Tigno (TSN, Oct. 16, 1989, pp. 30-31; TSN, Nov. 6, 1989, p. 10).

On May 16, 1989, appellant learned that Rodolfo Tigno is "negotiating" a portion of his land to the Casipits. Accordingly, appellant sent a letter (Exh. D) to the Casipits advising them to desist from the intended sale, not knowing that the sale was already consummated as early as April 29, 1989.

A few days thereafter, upon learning that the sale was already consummated, appellant confronted the Casipits and Rodolfo Tigno and asked them to annul the sale, but his request was not heeded (TSN, Oct. 16, 1989, pp. 29-32). (pp. 12-B to 12-j, rollo)

On May 24, 1989, the plaintiff filed Civil Case No. 16673 for "Reconveyance, Annulment of Document, Recovery of Possession and Damages" against Rodolfo M. Tigno and defendant spouses Edualino Casipit and Avelina Estrada. The complaint alleged, among others, that plaintiff purchased the three (3) parcels of land in question so that his brother Rodolfo Tigno, who was then jobless, could have a source of income as a caretaker of the fishponds; that plaintiff and Rodolfo agreed that the latter would secure a loan from the Philippine National Bank at Lingayen using said lands as collateral; that considering the busy schedule of plaintiff, then as executive vice-president of an American firm based in Makati, Metro Manila, it was made to appear in the deeds of sale that Rodolfo M. Tigno was the vendee so that the latter could, as he actually did, secure a loan from the PNB without need of plaintiff's signature and personal presence, the loan proceeds to be used as seed capital for the fishponds; that there being trust and confidence as brothers between plaintiff and defendant, the former instructed the Notary Public, who prepared the Deeds of Sale, to put in said Deeds the name of Rodolfo M. Tigno as vendee.

The plaintiff further averred in said Complaint that some time on May 16, 1989, when he was in Lingayen, Pangasinan, he came to know from friends that Rodolfo was negotiating the sale to defendant spouses of a portion of one of the parcels of land; that after requesting in writing the defendant-spouses to desist from buying the land, and after confronting Rodolfo himself, plaintiff found out upon verification with the Register of Deeds of Lingayen, that Rodolfo had already sold on April 29, 1989 said portion of 508.56 square meters to his co-defendant spouses who had previous knowledge that plaintiff, and not Rodolfo Tigno, is the real owner of said lands; that there being a violation of trust and confidence by defendant Rodolfo, plaintiff demanded from said defendants the reconveyance of said lands, the surrender of the possession thereof to him and the cancellation of the Deed of Sale of said portion of 508.56 square meters, but all the demands were unjustifiably refused.

In their Answer (pp. 8-11, records), defendants denied the material allegations of the complaint and alleged, by way of special and affirmative defense, that Rodolfo M. Tigno became the absolute and exclusive owner of the parcels of land having purchased the same after complying with all legal requirements for a valid transfer and that in selling a portion thereof to his co-defendants, he was merely exercising his right to dispose as owner; and that defendant spouses Casipit acquired the portion of 508.56 square meters in good faith and for value, relying upon the validity of the vendor's ownership.

After trial on the merits, the trial court 7 dismissed the complaint and disposed as follows: 8

Wherefore, in the light of the facts and circumstances discussed above, the court hereby renders judgment against the plaintiff and in favor of the defendants.

1. Ordering the dismissal of the plaintiffs complaint for lack of basis in fact and in law;

2. Ordering the plaintiff to pay the defendants the sum of three thousand (P3,000.00) pesos as atty's fees and further to pay the costs of the proceedings.

As earlier stated, Respondent Court reversed the trial court. Hence, this petition for review.

The Issues

Petitioners raise the following issues: 9

I Evidence of record definitely show that the receipts of payments of Petitioner Rodolfo Tigno for the fishponds in question are authenticated, contrary to the decision of the Court of Appeals

II Documents and circumstances substantiate ownership of petitioner Rodolfo Tigno

III No fiduciary relationship existed between Petitioner Rodolfo Tigno and Private Respondent Eduardo Tigno

The main issue is whether the evidence on record proves the existence of an implied trust between Petitioner Rodolfo Tigno and Private Respondent Eduardo Tigno. In petitions for review under Rule 45, this Court ordinarily passes upon questions of law only. However, in the present case, there is a conflict between the factual findings of the trial court and those of the Respondent Court. Hence, this Court decided to take up and rule on such factual issue, as an exception to the general rule. A corollary question is whether Petitioners Edualino and Evelyn Casipit are purchasers in good faith and for value of a portion of the lots allegedly held in trust and whether they may thus acquire ownership over the said property.

The Court's Ruling

The petition has no merit.

First Issue: Was an Implied Trust Created?

Implied trusts are those which are deducible by operation of law from the nature of the transaction as matters of equity, independently of the particular intention of the parties. 10 An implied trust arises where a person purchases land with his own money and takes conveyance thereof in the name of another. In such a case, the property is held on resulting trust in favor of the one furnishing the consideration for the transfer, unless a different intention or understanding appears. The trust which results under such circumstances does not arise from a contract or an agreement of the parties, but from the facts and circumstances; that is to say, the trust results because of equity and it arises by implication or operation of law. 11 The species of implied trust raised by private respondent was extensively discussed by the Court, through the learned Mr. Justice Hilario G. Davide, Jr., in Morales, et al. vs. Court of Appeals, et al.: 12

A trust is the legal relationship between one person having an equitable ownership in property and another person owning the legal title to such property, the equitable ownership of the former entitling him to the performance of certain duties and the exercise of certain powers by the latter. 13 The characteristics of a trust are:

1. It is a relationship;

2. it is a relationship of fiduciary character;

3. it is a relationship with respect to property, not one involving merely personal duties;

4. it involves the existence of equitable duties imposed upon the holder of the title to the property to deal with it for the benefit of another; and

5. it arises as a result of a manifestation of intention to create the relationship. 14

Trusts are either express or implied. Express trusts are created by the intention of the trustor or of the parties, while implied trusts come into being by operation of law, 15 In turn, implied trusts are either resulting or constructive trusts. Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines the equitable title or interest and are presumed always to have been contemplated by the parties. They arise from the nature or circumstances of the consideration involved in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another. On the other hand, constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold. 16

A resulting trust is exemplified by Article 1448 of the Civil Code, which reads:

Art. 1448. There is an implied trust when property is sold, and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property. The former is the trustee, while the latter is the beneficiary. However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of the child.

The trust created under the first sentence of Article 1448 is sometimes referred to as a purchase money resulting trust. 17 The trust is created in order to effectuate what the law presumes to have been the intention of the parties in the circumstances that the person to whom the land was conveyed holds it as trustee for the person who supplied the purchase money. 18

To give rise to a purchase money resulting trust, it is essential that there be:

1. an actual payment of money, property or services, or an equivalent, constituting valuable consideration;

2. and such consideration must be furnished by the alleged beneficiary of a resulting trust. 19

There are recognized exceptions to the establishment of an implied resulting trust. The first is stated in the last part of Article 1448 itself. Thus, where A pays the purchase money and title is conveyed by absolute deed to A's child or to a person to whom A stands in loco parentis and who makes no express promise, a trust does not result, the presumption being that a gift was intended. Another exception is, of course, that in which an actual contrary intention is proved. Also where the purchase is made in violation of an existing statute and in evasion of its express provision, no trust can result in favor of the party who is guilty of the fraud. 20

As a rule, the burden of proving the existence of a trust is on the party asserting its existence, and such proof must be clear and satisfactorily show the existence of the trust and its elements. 21 While implied trusts may be proved by oral evidence, 22 the evidence must be trustworthy and received by the courts with extreme caution, and should not be made to rest on loose, equivocal or indefinite declarations. Trustworthy evidence is required because oral evidence can easily be fabricated. 23

In Chiao Liong Tan vs. Court of Appeals, we ruled: 24

A certificate of registration of a motor vehicle in one's name indeed creates a strong presumption of ownership. For all practical purposes, the person in whose favor it has been issued is virtually the owner thereof unless proved otherwise. In other words, such presumption is rebuttable by competent proof.

The New Civil Code recognizes cases of implied trust other than those enumerated therein. (fn: Art. 1447, New Civil Code) Thus, although no specific provision could be cited to apply to the parties herein, it is undeniable that an implied trust was created when the certificate of registration of the motor vehicle was placed in the name of petitioner although the price thereof was not paid by him but by private respondent. The principle that a trustee who puts a certificate of registration in his name cannot repudiate the trust by relying on the registration is one of the well-known limitations upon a title. A trust, which derives its strength from the confidence one reposes on another especially between brothers, does not lose that character simply because of what appears in a legal document.

Even under the Torrens System of land registration, this Court in some instances did away with the irrevocability or indefeasibility of a certificate of title to prevent injustice against the rightful owner of the property. (fn: Bornales v. IAC, G.R. No. 75336, 166 SCRA 524 [1988]; Amerol v. Bagumbayan, G.R. No. L-33261, 154 SCRA 403 [1987]; Cardiente v. IAC, G.R. No. 73651, 155 SCRA 689 [1987].)

In this petition, petitioners deny that an implied trust was constituted between the brothers Rodolfo and Eduardo. They contend that, contrary to the findings of Respondent Court, their Exhibit 16 25 and Exhibit 17 26 were fully authenticated by Dominador Cruz, an "instrumental witness." Hence, he should not be allowed to vary the plain content of the two documents indicating that Rodolfo Tigno was the vendee.

We not persuaded. Witness Dominador Cruz did not authenticate the genuineness of Exhibit 16: 27

ATTY. BERMUDEZ:

As Exhibit "16" dated June 12, 1980 signed by Remedios Sison, is that the document executed Remedios Sison?

ATTY. VIRAY:

That is only a xerox copy, we object, Your Honor.

ATTY. BERMUDEZ:

At any rate there was a receipt, is this the receipt?

A Maybe this or maybe not, sir.

ATTY. BERMUDEZ:

Q I am showing to you another document, which we respectfully request that the same be marked as Exhibit "17".

In any event, these two exhibits are proof merely of the receipt of money by the seller; they do not show that Rodolfo paid the balance of the purchase price. 28 On the other hand, Witness Dominador Cruz was unshakable in testifying that Private Respondent Eduardo, though not named in the receipts or in the deeds of sale, was definitely the real buyer: 29

COURT: (The Court will ask few questions.)

Q Do you know if there [is] a document executed between the brothers to show the real vendee in these three deeds of absolute sale is Eduardo Tigno?

A I don't know of any document because according to Eduardo Tigno it will be placed in the name of his brother, Rodolfo Tigno so that it can be used as collateral.

COURT:

Q Being the agent of this transaction did you not try to advice Eduardo Tigno to be safe for him a document will have to be executed showing that he is really the vendee?

A I also explained that matter to him I know that matter to happen in the long run they will have dispute but Eduardo Tigno said he is his brother, he have [sic] trust and confidence in his brother, sir.

COURT:

Q When did you give that advice?

A Before the preparation of the documents, sir.

Q Do you know already that it will be in the name of Rofolfo [sic] Tigno before the execution?

A Yes, sir. During the time we have conversation on May 2, 1980, he instructed me to place the name of Rodolfo Tigno in the document, Atty. Manuel was present when he gave that advice, sir.

COURT:

Q What did Atty. Manuel advised [sic]?

A The reason for [sic] Eduardo Tigno have trust and confidence on his elder brother, Rodolfo Tigno.

COURT: (Propounding questions)

Q So there is nothing written that will show that the money or purchase price came from Eduardo Tigno, is that correct?

A None, sir. It's by trust and confidence,

Q Considering that you know that the money came from Eduardo Tigno, why did you consent that the deed of absolute sale in the name of Rodolfo Tigno and not Eduardo Tigno?

A Because Atty. Manuel called for Rodolfo Tigno because the document was in the name of Rodolfo Tigno, sir.

Q The document is already defective, why did you not ask the preparation of the document to be executed by Rodolfo Tigno accordingly that the real owner who sold to you is the brother, Eduardo Tigno?

A I did not think of it, what I know is that the real owner is Eduardo Tigno, sir, and has the power to disposed.

COURT:

Q Eduardo Tigno is the real owner, why did you agree that Rodolfo Tigno to execute the document?

A Yes, sir. Atty. Manuel called for Rodolfo Tigno so I consented.

Aside from the "trust and confidence" reposed in him by his brother, Petitioner Rodolfo was named as vendee in the deeds of sale to facilitate the loan and mortgage the brothers were applying for to rehabilitate the fishponds. Be it remembered that private respondent was a Makati-based business executive who had no time to follow up the loan application at the PNB branch in Lingayen, Pangasinan and, at the same time, to tend the fish farm on a daily basis. Atty. Modesto Manuel, who prepared and notarized the deeds of sale, unhesitatingly affirmed the unwritten agreement between the two brothers: 30

ATTY. VIRAY:

Will you please tell the Court what is the reason, if ever there was, why the plaintiff, Eduardo Tigno, instructed you to put the name of Rodolfo Tigno as vendee in the papers?

ATTY. BERMUDEZ:

We object, Your Honor. The best witness to that is the plaintiff, Your Honor.

COURT:

Q Do you know the reason why Eduardo Tigno requested you to place the name of his brother as vendee?

WITNESS:

A Eduardo Tigno requested me to place the name of his brother as vendee so that the brother can use the lands as collateral for possible loan at the PNB (Philippine National Bank), sir.

COURT:

Go ahead.

ATTY. VIRAY:

Q When was that when the plaintiff instructed you to place the name of his brother, the defendant, Rodolfo Tigno as vendee in the documents so that the defendant, Rodolfo Tigno, could use the properties as collateral for possible loan to the PNB?

WITNESS:

A It was sometimes during a fiesta in Guilig when Eduardo Tigno and Dominador Cruz, I think that was May 2, 1980, when Eduardo Tigno and Dominador Cruz and some of the vendors went to my house and they requested me to prepare the deeds of sale, sir.

In his direct examination, Atty. Manuel convincingly explained why Petitioner Rodolfo was named as vendee: 31

ATTY. VIRAY:

Q When the plaintiff Eduardo Tigno instructed you to place the name of his brother as the vendee in the deeds of sale you were to prepare, what did you tell him or did you give any advice?

A Yes, sir. I certainly did, sir.

Q What advice?

A Why will I put the name of your brother as vendee when you were here as real buyer who will give the money to the vendors? Why not you, I told him, sir.

Q What else did you tell him?

A I remember he is to make Special Power of Attorney in order his brother (sic) will execute the loan to the PNB, sir.

Q What did the plaintiff, Eduardo Tigno, tell you when you said it would be best to execute the Special Power of Attorney instead of placing the name directly in the deeds of sale, what is his answer?

A He acceded to my advised [sic], sir. All right, make the deeds of sale, he said, agreeable to the deed of sale to my advised but when I told him that It would take the document probably by the middle of June, he back [sic] out, sir, because he told me he is going abroad and he may not be around and then he instructed me to place the name of his brother as the vendee not the plaintiff anymore, sir.

Q In other words, Mr. Witness, at first he was agreeable and that he would execute Special Power of Attorney?

A Yes, sir.

Q Since he was going to the United States and he could not wait the preparation of the documents he just instructed you to go ahead with the first instruction, is that what you mean, Mr. Witness?

A Yes, sir. (Emphasis supplied.)

This testimony of Atty. Manuel was corroborated by Dominador Cruz who was the real estate agent cum witness in all three deeds of sale. As a witness, he pointed out that Petitioner Rodolfo was named as the vendee in the deeds of sale upon the order of private respondent: 32

ATTY. VIRAY:

Q When you said Atty. Manuel was not able to prepare the deed of sale on May 2, 1980, what then happened in the house of Atty. Manuel?

A When Atty. Manuel was not able to prepare the document, my cousins wanted to get advance payment, one half of ten thousand pesos, sir, each.

ATTY. VIRAY:

Q Did Eduardo Tigno agreed [sic] to the request of your cousins to get one half of the price of their land?

A He agreed to give five thousand pesos each but he prepared temporary receipt fpr [sic] five thousand pesos, sir.

Q Who prepared the receipt?

A Atty. Manuel, sir.

Q By the way, how much all in all did Eduardo Tigno give on May 2, 1980 as advanced consideration?

A P15,000.00, sir.

Q You mean to say five thousand pesos for each parcel of land?

A Yes, sir.

Q After the plaintiff, Eduardo Tigno paid the advanced payment for five thousand pesos for each parcel of land, what else happened?

A When the three of us, I, Atty. Manuel and Eduardo Tigno were talking, I heard Eduardo Tigno said to Attyl. [sic] Manuel that the deed of sale will be placed in the name of my brother, Rodolfo because we will mortgage the land with the P.N.B., the proceeds will be used in the development of the fishpond. He requested that the buyer of the fishpond will be placed in the name of the brother of Eduardo Tigno.

Q Who is that brother of Eduardo Tigno?

A Rodolfo Tigno.

xxx xxx xxx

Q How about the balance of the purchase price of the property, is there any instruction made by Eduardo Tigno with respect to the payment thereof?

A With respect to the balance after the preparation of the document they will bring it to Eduardo Tigno for him to pay the balance, sir.

Q By the way, was the deed of sale to these parcels of land finally executed?

A Yes, sir.

From the foregoing, it is clear that the name of Rodolfo Tigno appeared in the deeds of sale not for the purpose of transferring ownership to him but only to enable him to hold the property in trust for his brother, herein private respondent.

In the face of the credible and straightforward testimony of the two witnesses, Cruz and Manuel, the probative value, if any, of the tax declarations being in the name of Petitioner Rodolfo is utterly minimal to show ownership. Suffice it to say that these documents, by themselves, are not conclusive evidence of ownership. 33

Contrary to petitioners' insistence, no delay may be imputed to private respondent. When private respondent went to Pangasinan to pay the taxes on his property in Bugallon, he learned from his relatives that his brother was negotiating the sale of a portion of the fishponds to Spouses Casipit. Failing to find his brother, he immediately wrote a letter dated May 16, 1989 addressed to the Casipits advising them to desist from buying the property because he was the real owner. On May 18, 1989, he confronted Petitioner Edualino Casipit about the impending sale, only to learn that the sale had already been consummated as early as April 29, 1989. 34 Failing to convince petitioners to annul the sale, private respondent instituted this case on May 24, 1989 35 or five (5) days after learning from Edualino of the consummation of the sale. 36 Before the institution of this case, private respondent had no reason to sue. Indeed, he filed this case after only five days from learning of the infidelity of his brother. Clearly, no delay may be attributed to private respondent.

We agree with the detailed disquisitions of the Court of Appeals on this point: 37

The trial court's conclusion that defendant-appellee is the true buyer and owner of the lands in question, mainly relying on the Deeds of Sale where defendant Rodolfo's name appears as vendee, and on the Tax Declarations and Tax payment receipts in his name, must inevitably yield to the clear and positive evidence of plaintiff. Firstly, as has thus been fully established, the only reason why defendant Rodolfo was made to appear as the buyer in the Deeds of Sale was to facilitate their mortgage with the PNB Branch at Lingayen to generate seed capital for the fishponds, out of which Rodolfo could derive income. With Rodolfo's name as vendee, there would be no need anymore for the personal presence of plaintiff-appellant who was very busy with his work in Manila. Moreover, aside from the fact that plaintiff was to travel abroad for thirty (30) days sometime in June, 1980, he could not have executed a Special Power of Attorney in favor of Rodolfo, as the Deeds of Sale were not yet prepared on May 2, 1980. Thus, to enable Rodolfo to mortgage the lands, his name was put as vendee in view of the mutural [sic] trust and confidence existing between said parties who are brothers. Secondly, it is well-settled that the tax declarations or the payments of real estate taxes on the land are not conclusive evidence of ownership of the declarant or payor (De Guzman v. CA, et al., L-47378, Feb. 27, 1987, and cases cited therein; Cited in II Regalado REMEDIAL LAW COMPENDIUM, p. 563 [1988]). Since defendant Rodolfo is named as vendee in the Deeds of Sale, it is only natural that Tax Declarations and the corresponding tax payment receipts be in his name so as to effect payment thereof.

Petitioners contend that there was no "fiduciary relationship" created between the brothers Tigno. Petitioners argue that Rodolfo Tigno "had exercised all the acts of dominion and ownership over the fishponds in question," as nobody "shared in the produce of the fishponds for the past nine (9) years." Therefore, Petitioner Rodolfo, "being the real purchaser" of the parcels of land, "could validly transfer the ownership of a portion" to Spouses Casipit. 38

We firmly reject these contentions and need only to cite Respondent Court's incisive findings:

After a careful examination of the evidence on record, we hold that an implied trust was created in favor of the plaintiff [private respondent herein] within the meaning of Article 1448 of the Civil Code, which provides:

Art. 1448. There is an implied trust when property is sold, and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property. The former is the trustee, while the latter is the beneficiary. . . . .

An implied trust arises where a person purchases land with his own money and takes conveyance thereof in the name of another. In such case, the property is held on a resulting trust in favor of the one furnishing the consideration for the transfer, unless a different intention or understanding appears. (Lim vs. Court of Appeals, 65 SCRA 160)

In the earlier case of Heirs of Candelaria, et al. v. Romero, at al., 109 Phil. 500, the Supreme Court elucidated on implied trust:

The trust alleged to have been created in our opinion, is an implied trust. As held, in effect, by this Court in the case of Martinez v. Grio (42 Phil. 35), where property is taken by a person under an agreement to hold it for or convey it to another or the grantor, a resulting or implied trust arises in favor of the person for whose benefit the property was intended.

xxx xxx xxx

It is also the rule that an implied trust arises where a person purchases land with his own money and takes a conveyance thereof in the name of another. In such a case, the property is held on a resulting trust in favor of the one furnishing the consideration for the transfer, unless a different intention or understanding appears. The trust which results under such circumstances does not arise from contract or agreement on the parties, but from the facts and circumstances, that is to say, it results because of equity and arises by implication or operation of law.

We disagree with the trial court's ruling that if, indeed, a trust has been established, it is an express trust which cannot be proved by parol evidence. It must be noted that Article 1441 of the Civil Code defines both express trust and implied trust in general terms, thus:

Art. 1441. Trusts are either express or implied. Express trust are created by the intention of the trustor or of the parties. Implied trust come into being by operation of law.

Specific instances or examples of implied trusts are given in the Civil Code, one of which is described under Article 1448 quoted heretofore. Since Article 1448 is a specific provision, it prevails over and qualifies Article 1441, which is a general provision, under the rule generalia specialibus non derogant (Alcantara, Statutes, 1990 Ed., p. 101).

Therefore, since this case involves an implied trust falling under Article 1448, parol evidence is allowed to prove its existence pursuant to Article 1457, Civil Code, which states:

Art. 1457. An implied trust may be proved by oral evidence.

xxx xxx xxx

On the other hand, the record is replete with clear and convincing evidence to show that (1) plaintiff Eduardo Tigno is the real buyer and true owner of the lands in question and (2) defendant Rodolfo M. Tigno is merely a trustee constituted over said lands on behalf of plaintiff.

It was established thru plaintiff's testimony that plaintiff paid P5,000.00 each, as first installment, to the three vendors for a total of P15,000.00 (TSN, Sept. 5, 1989, pp. 19-20), which was witnessed by Dominador Cruz and Atty. Manuel. Later, he gave a check to Dominador Cruz, the agent, in the amount of P26,000.00, representing the following:

a) P15,000.00 as the balance for the three (3) parcels of land;

b) P6,000.00 representing Cruz's commission as agent;

c) P5,000.00 for capital gains tax, registration and other incidental expenses. (TSN, Sept. 5, 1989, pp. 39-41).

When this check was encashed, Cruz paid the three vendors the balance due them (TSN, Sept. 5, 1989, pp. 42-43). That plaintiff was able to pay these amounts is believable, because plaintiff had the financial means to pay said amounts. At the time of the sale in 1980, plaintiff was an executive of Meryll Lynch, Pierce, Fennon S. Smith Phil., Inc., where he received P311,700.79 in 1980 alone, as shown by his Certificate of Income Tax Withheld on Wages for said year (Exhibit G for plaintiff).

Indeed, by express provision of the Civil Code, 39 oral evidence is admissible to establish a trust relation between the Tigno brothers. Private respondent explained how this trust was created: 40

ATTY. VIRAY

Q When you said Dominador Cruz was able to bring the vendors at Guilig street, Lingayen, what happened there?

A They came to our family home at Guilig street and we went to the house of Atty. Modesto Manuel, sir.

Q Why did you go to the house of Atty. Manuel?

A For the executionof [sic] the deed of sale of the property I am going to buy, sir.

Q Was the deed of sale finished on that day?

A No, sir.

Q What was the reason?

A The vendors did not bring the tax declarations, secondly, the other heirs failed to get the power of attorney from their sister in United States.

Q When the deed of sale were not executed on that day, what transpired?

A The vendors requested for advance payment of P5,000.00 each for the three parcels of land.

Q Did you agree to the request of the vendors for the advance payment of P5,000.00 each for the three parcels of land?

A Yes, sir.

Q Did you comply?

A Yes, sir.

Q How much all in all?

A P15,000.00 in cash, sir.

Q Was there any receipt signed evidencing receipt for that?

A There was receipt for the P15,000.00

Q Where is that receipt now?

A I gave all the papers to him in my brown envelope, I trust [sic] him.

Q Do you remember in whose name the vendors allegedly to have received the P15,000.00?

A In my name, received from Eduardo Tigno.

Q After giving the P15,000.00 advance payment which you said the deed of sale were not executed because of some requirement were not available, what happened next?

A I talked to Atty. Manuel separately from the vendors, and I told him to prepare the deed of sale at that time and I told him to place my older brother, Rodolfo Tigno as vendee because I have plan to mortgage the property in PNB, Lingayen, sir.

xxx xxx xxx

Q Aside from instructing Atty. Manuel to place the name of your brother, Rodolfo Tigno, did you also instruct Dominador Cruz for the payment of the balance?

A Yes, sir.

Q What was your instruction to Dominador Cruz?

A I told Dominador Cruz, I am leaving for United States, I will be back first week of July, after the completion of the papers, see me on the second week of July and I will give the whole payment of the property.

Q And was the deed of sale covering the three parcels of land completed?

A Yes, sir.

Q Did Dominador Cruz bring the documents to you in your office in Makati?

A Yes, sir.

Q When was that?

A First week of July 1980, sir.

Q Did you give the payment of the balance?

A Yes, sir. After going over the documents, I issued to him a check payable in the sum of P26,000.00.

The previously quoted testimonies of Modesto Manuel and Dominador Cruz substantially corroborate private respondent's testimony.

On the other hand, Petitioner Rodolfo, although in possession of the deeds of sale in his name, failed to present a single witness to corroborate his claim that he bought the property partly with his own money and partly with the money he allegedly borrowed from a certain Jose Manaoat. His failure to present Manaoat gives rise to a presumption that the latter's testimony, if given, would have been unfavorable to the former. 41 Respondent Court did not give credence to the financial capacity of Petitioner Rodolfo Tigno: 42

Defendant Rodolfo's denial of plaintiff's evidence, and his bare testimony that he was the real buyer, without corroboration by other witnesses, cannot be given credence and do not deserve belief. It was unlikely that he had the financial means to pay for the lands in the total amount of P53,000.00. As testified to by Arnulfo Peralta (TSN, Sept. 29, 1988, pp. 36-37), Rodolfo was jobless then, and at one time or another was even supported financially by plaintiff, as testified to by plaintiff (TSN, Oct. 16, 1989, pp. 11-12), which in fact was confirmed by Rodolfo during his cross-examination (TSN, Oct. 18, 1989, pp. 6-7). If indeed he was engaged in some piggery, as he claimed, his financial capability is rendered doubtful by the fact that no evidence, other than his bare testimony, was presented to show his income, like an income tax return. His bare testimony that he borrowed P20,000.00 from Jose Manaoat to raise partly the amount of P53,000.00 lacks credibility. Manaoat, who was in the best position to testify that Rodolfo borrowed money from him, was never presented, which would gives rise to the presumption that his testimony would be adverse to defendant, if presented. (Sec. 3[e], Rule 131, Rules of Court).

From the foregoing, it is ineludible that Article 1448 of the Civil Code finds application in this case. Although the deeds of sale were in the name of Petitioner Rodolfo, the purchase price was paid by private respondent who was the real owner of the property. Petitioner Rodolfo is the trustee, and private respondent is the beneficiary.

Second Issue: Are Petitioners Casipit Purchasers in Good Faith?

Spouses Edualino and Evelyn Casipit contend that they "are purchasers in good faith" and for valuable consideration; thus, they cannot be deprived of the land they bought from Rodolfo Tigno. 43

This posturing is unacceptable. First, unrebutted is the emphatic testimony of private respondent that Edualino was invited on May 2, 1980 to a picnic in the fishpond. At the picnic, private respondent informed Petitioner Edualino Casipit that he was the owner of the property. On this point, private respondent testified: 44

ATTY. VIRAY:

Q You said Edualino Casipit very well knew that the property is owned by you, what made you say that the defendant Edualino Casipit very well knew that you are the owner of the property he bought?

A Way back in 1980 when I gave the advance payment to the vendors, I invited my friends and right there in the fishpond, we had small picnic and that my father, and Boy Casipit were there.

ATTY. VIRAY:

Q What if you invited them, sign that from that time you were the one who bought the parcels of land?

A Yes, sir.

Second, also uncontested is the testimony of Dominador Cruz that he met Edualino on April 24, 1989, or five (5) days before the consummation of the sale between Rodolfo and Spouses Casipit. During that meeting, Cruz told Edualino that he bought from private respondent a portion of the subject property for the purpose of building a dike. Thereafter, Edualino asked Cruz to buy a portion of the property from private respondent. 45

Third, and in any event, Spouses Casipit did not acquire absolute ownership over the property since the apparent vendor, Petitioner Rodolfo, did not have the right to transfer ownership thereof. Be it remembered that the fishponds were not registered under the Torrens system. Again, we cite public respondent's ruling, which we find totally persuasive: 46

It is our well-considered opinion, however, that whether or not defendant-appellee spouses are in good faith is entirely immaterial, because no valid sale in the first place was made between defendant-appellees covering the portion of land in question. The fact is, as established by the evidence on record, that defendant Rodolfo M. Tigno is not the owner of the lands in question, but a mere trustee thereof, and could not have transferred ownership of said lands, by way of sale, to his co-defendant-appellee spouses. As a matter of basic principle in the law on sales, a person cannot transfer ownership, by way of sale, of something over which he has no right to transfer. Thus, Article 1459 of the Civil Code provides:

Art. 1459. The thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is delivered. (Emphasis supplied)

Since defendant-appellee is not the owner of the lands in question, which are not registered under the Torrens system, he could not by way of sale have transferred, as he has no right to transfer, ownership of a portion thereof, at the time of delivery.

WHEREFORE, premises considered, the petition is hereby DENIED and the assailed Decision and Resolution are AFFIRMED in toto. Costs against petitioners.

SO ORDERED.

Narvasa, C.J., Romero, Melo and Francisco, JJ., concur.

Footnotes

1 Rollo, pp. 42-60.

2 Second Division composed of Acting Presiding Justice Santiago M. Kapunan (now Associate Justice of this Court), ponente, and JJ. Oscar M. Herrera and Serafin V.C. Guingona, concurring.

3 Rollo, p. 71.

4 Ibid., p. 59.

5 Ibid., pp. 71.

6 Ibid., pp. 43-48.

7 Regional Trial Court, Branch 38 of Lingayen, Pangasinan, presided by Judge Antonio M. Belen.

8 Rollo, p. 29.

9 Ibid., pp. 8, 10 & 12-13; petition pp. 7, 9 & 11-12; original text in upper case.

10 Meynardo Policarpio vs. Court of Appeals, et al. G.R. 116211, p. 12, March 7, 1997, per Panganiban, J. citing Cuaycong vs. Cuaycong, 21 SCRA 1192, 1196-1197, December 11, 1967 in turn citing 89 C.J.S. 722, 724.

11 Lim vs. Court of Appeals, 65 SCRA 161, 165-166, July 18, 1975.

12 G.R. No. 117228, pp. 10-12, June 19, 1997.

13 4 Arturo Tolentino, Commentaries And Jurisprudence On The Civil Code Of the Philippines 669 [1991] (hereafter "4 Tolentino").

14 Ibid.

15 Article 1441, Civil Code of the Philippines.

16 Huang vs. Court of Appeals, 236 420, 428 [1994]; Vda. de Esconde vs. Court of Appeals, 253 SCRA 66, 73-74 [1996].

17 76 Am. Jur. 2d Trusts 179 [1992].

18 Ibid.

19 76 Am. Jur. 2d Trusts 180.

20 4 Tolentino, 679-680.

21 76 A.m. Jur. 2d Trusts 688 [1992].

22 Article 1457, Civil Code.

23 Salao vs. Salao, 70 SCRA 65, 84 [1976]; O'laco vs. Co Cho Chit, 220 SCRA 656, 664-665 [1993]; Ong Ching Po vs. Court of Appeals, 239 SCRA 341, 347 [1994].

24 228 SCRA 75, 80-81, November 19, 1993, per Nocon, J.

25 The receipt for P15,000.00 as partial payment issued by Vendor Remedios Sison for her lot.

26 This is the receipt for P13,333.35 as full payment issued by Vendor Manuel Sison as one of the heirs of Isaac Sison for their lot. See also Exhibits for the Defendants in Civil Case No. 16673.

27 TSN, September 5, 1989, p. 57.

28 TSN, September 5, 1989, p. 59.

29 TSN, September 5, 1989, pp. 64-67.

30 TSN, September 27, 1989, pp. 16-17.

31 TSN, September 27, 1989, pp. 23-26.

32 TSN, September 5, 1989, pp. 19-22.

33 Rivera vs. Court of Appeals, 244 SCRA 218, 222, May 22, 1995, citing Republic vs. Intermediate Appellate Court, G.R. No. 74830, July 5, 1993, 224 SCRA 285; Director of Lands vs. Intermediate Appellate Court, G.R. No. 73246, March 2, 1993, 219 SCRA 339; De Jesus vs. Court of Appeals, G.R. No. 57092, January 21, 1993, 217 SCRA 307; Director of Lands vs. Buyo, G.R. No. 91189, November 27, 1992, 216 SCRA 78.

34 Exhibit E for the Plaintiff.

35 Original records of Civil Case No. 16673, p. 1.

36 TSN, October 16, 1989, pp. 25-30.

37 Ibid., pp. 56-57.

38 Rollo, pp. 14-15.

39 "Art. 1457. An implied trust may be proved by oral evidence."

40 TSN, October 16, 1989, pp. 12-17.

41 Rule 131 of the Rules of Court, Section 3, paragraph (e).

42 Rollo, p. 56, Decision, p. 15.

43 Rollo, p. 15.

44 TSN, October 16, 1989, pp. 30-31.

45 TSN, November 6, 1989, p. 10.

46 Ibid, p. 59; Decision, p. 18.

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Republic of the PhilippinesSUPREME COURTManilaSECOND DIVISIONG.R. No. 118357 May 6, 1997PHILIPPINE NATIONAL BANK, petitioner, vs.COURT OF APPEALS and INDUSTRIAL ENTERPRISES, INC., respondents.ROMERO, J.:This is a petition for review on certiorari of the Decision 1 of the Court of Appeals affirming in toto the November 27, 1992 decision 2 of the Regional Trial Court of Makati, Branch 150 which disposed of Civil Case No. 8109, "Industrial Enterprises, Inc. v. Marinduque Mining and Industrial Corporation, Geronimo Velasco (in his capasity as the then Minister of Energy) and Philippine National Bank," an action for rescission of contract and damages, as follows:WHEREFORE, in the light of the foregoing, and as plaintiff Industrial Enterprises, Inc. was able to establish by preponderant evidence the allegations in its Complaint and causes of action against defendants Marinduque Mining and Industrial Corporation and Philippine National Bank, the Court finds both defendants civilly liable to plaintiff and, therefore, orders them to jointly and severally:1. pay plaintiff the sum of P31.66 Million as of July 31, 1983, for the expenses invested by plaintiff in the property subject of this case, as computed by Sycip, Gorres, Velayo and Company and brought to current value per SGV formula, as agreed in the Memorandum of Agreement;2 pay plaintiff the sum of P37,569,733.00, for the indemnification and rehabilitation cost, plus interest at the legal rate from March 31, 1991, until fully paid;3. pay plaintiff the sum of P120 Million for unrealized profit for five (5) years from August, 1983, the date of defendant MMIC's takeover of the property, to October, 1988, when plaintiff was re-awarded the contract, plus interest at the legal rate, from the date of this decision, until fully paid;4. pay plaintiff an amount not less than ten (10) percent of the losses it incurred and its unrealized profits as indicated in Numbers 1 to 3, for the injury done to plaintiff's business standing and commercial credit;5. pay plaintiff an amount not less than five (5) percent of the above obligation as reimbursement to plaintiff for litigation expenses and attorney's fees;6. COST OF SUIT.And finally, the extrajudicial foreclosure sale held on August 31, 1984, in Catbalogan, Samar, over the property of plaintiff, part of the Giporlos Coal Project, is hereby declared NULL and VOID.SO ORDERED.Marinduque Mining and Industrial Corporation (MMIC) was founded by Jesus S. Cabarrus in 1949. 3 Four years later or in 1953, Cabarrus established J. Cabarrus, Inc. which subsequently was renamed Industrial Enterprises, Inc. (IEI). During the period when most of the facts relevant to this case transpired, Cabarrus and his family owned about 12% to 14% of the shares of stock in the MMIC 4 where he was the President. He was also the President of IEI.On July 27, 1979, IEI entered into a coal operating contract with the Bureau of Energy Development (BED), with Cabarrus and then Minister of Energy Geronimo Velasco as signatories. 5 The contract was pursuant to the Coal Development Act of 1976 (P.D. No. 972, as amended) and covered 2,000 hectares of two (2) coal blocks in Barrio Carbon, Magsaysay, Eastern Samar.While exploring this area, IEI found the adjacent areas, comprising of three (3) coal blocks, to be likewise coal potentials. Hence, upon confirmation by the BED that these three (3) adjacent coal blocks were in the free area, IEI filed an application for another coal operating contract on August 12, 1981. Simultaneously, IEI applied for the conversion of its July 27, 1979 coal operating contract from exploration to development/production. IEI also followed up its application on the three (3) newly-discovered coal blocks. All of these coal blocks were collectively known as the Giporlos Coal Project.Sometime in April, 1982, Minister Velasco informed Cabarrus that IEI's application for exploration of the three (3) coal blocks had been disapproved and that, instead, the contract would be awarded to MMIC. Following Cabarrus' letter of May 4, 1982 6 requesting that the rejection of IEI's application be made in writing, Minister Velasco wrote him a letter dated June 2, 1982, 7 where Minister Velasco said:We appreciate your desire to increase Industrial Enterprises, Inc.'s (IEI) involvement in coal development. In line, however, with the objective of rationalizing the country's overall coal supply-demand balance, we believe that coal users who have the capability to go into coal production themselves should, as much as possible, be encouraged and given the preference to do so. This ensures maximum utilization of local coal and will be beneficial to coal producer/user in the long run. In your area of interest, therefore, we believe that the logical coal operator should be Marinduque Mining and Industrial Corporation (MMIC) which is now developing the Bagacay coal deposit in order to support MMIC's coal conversion program at the Nonoc Nickel Refinery. As a member of the board of MMIC, I am fully aware that this coal conversion program is critical to the profitability and the survival of the Nonoc Nickel Refinery. It is, therefore, imperative that MMIC secure its own coal supply.Consistent with the above rationale, you are aware that MMIC Board has in fact taken concrete steps to consolidate the Giporlos and Bagacay coal areas under MMIC and, for this purpose, has authorized Chairman Cesar C. Zalamea to create a committee (of which I was asked to be Chairman) to evaluate the Giporlos coal blocks of IEI to serve as basis for their acquisition by MMIC. As President of MMIC, you are likewise aware that the Board has recently hired the services of SGV to make an evaluation of the proper pricing for the IEI coal interest to be paid for by MMIC. With these developments indicating the imminent formal acquisition of Giporlos coal areas by MMIC, it would indeed be inconsistent now for us to award additional coal blocks in the same area to IEI. We believe that these additional coal areas, if at all, should be applied for and awarded direct to MMIC.In view of the foregoing, please be advised that we are denying IEI's application, and we suggest instead that MMIC apply for the same blocks.On March 28, 1983, Minister Velasco informed Cesar Zalamea, Chairman of the Board of the Development Bank of the Philippines (DBP) and of the MMIC, that IEI's application for the conversion of its coal operating contract for the Giporlos area from exploration to development/production had been put "under advisement in the light of the ongoing discussion for the transfer of IEI's rights and obligations" to MMIC. 8Thereafter, MMIC and IEI, through Chairman Zalamea and President Cabarrus, 9 respectively, entered into a Memorandum of Agreement (MOA) whereby IEI assigned to MMIC all its rights and interests under the July 27, 1979 coal operating contract. The MOA provided as follows:NOW, THEREFORE, the parties have agreed, as hereby they agree, one with the other, as follows:1. That IEI, subject and conformably with the whereas clauses hereinabove stated, hereby assigns and transfers all its rights and interests on the Coal Operating Contract described in the first whereas clause; and MMIC shall in consideration of the above assignment and transfer (a) Undertake all the obligations required of IEI under said Coal Operating Contract;(b) Reimburse all costs and expenses actually incurred as of 31 July 1983 by IEI on the coal property and brought up to current values, as shall be audited and confirmed by Sycip, Gorres and Velayo as of said date of 31 July 1983; and(c) Pay to IEI the total sum equivalent to P4.17 per ton of proven and positive reserves of coal to be confirmed by an independent geologist who shall be designated and appointed by mutual agreement of the parties.2. That the total sum due from MMIC to IEI under this agreement shall be paid upon the effectivity of this agreement in the following manner (a) An assumption by MMIC of the outstanding loan obligation (evidenced by Promissory Note No. 1516 for P3.3 Million and Promissory Note No. 11098 for P5.0 Million) of IEI to Manila Banking Corporation which as of 31 July 1983 stands at P8.3 Million.(b) Payment in cash to IEI of the difference between the above amount of P8.3 Million and the sum total of subparagraphs (b) and (c) par. 1, above.3. That this agreement shall only become binding and effective upon its approval by the BED, which approval shall be secured jointly by MMIC and IEI.MMIC and IEI, again through Zalamea and Cabarrus, respectively, jointly informed the BED on August 10, 1983, that they had entered into the MOA "at the instance and suggestion of the Hon. Minister of Energy in one of the earlier meetings of the Board of Directors of MMIC." 10 MMIC and IEI were informed of the approval of the MOA on August 29, 1983 by the then Acting BED Director Wenceslao R. de la Paz. 11MMIC took over possession and control of the two (2) coal blocks even before the MOA was finalized. However, instead of continuing the exploration and development work actively pursued by IEI, MMIC completely stopped all works and dismissed the work force thereon, leaving only a caretaker crew.Consequently, IEI made written demands to MMIC, pursuant to the MOA, for the reimbursement of all costs and expenses it had incurred on the project which, as of July 31, 1983, had amounted to P31.66 million as audited by the Sycip, Gorres and Velayo Company.In view of MMIC's failure to comply with its obligations under the MOA, IEI filed a complaint against MMIC and Minister Velasco on August 7, 1984, for rescission of the MOA and damages, before the Regional Trial Court of Makati, Branch 137. Docketed as Civil Case No. 8109, the complaint alleged that MMIC acted in gross and evident bad faith in entering into the MOA when it had no intention at all to operate the two (2) coal blocks and of complying with any of its obligations under the said agreement. It likewise alleged that Minister Velasco was instrumental in causing the assignment of the coal operating contracts to MMIC when he did not act on complainant IEI's application for conversion of its coal operating contract from exploration to development/production and in rejecting its application for another coal operating contract for the exploration of additional three (3) coal blocks which he had reserved for MMIC.Meanwhile, on July 13, 1981, for various credit accommodations secured from the Philippine National Bank (PNB), aggregating to four billion pesos (P4,000,000,000.00) excluding interest and charges as of November 30, 1980, as well as from the DBP, amounting to two billion pesos (P2,000,000,000.00), MMIC entered into a Mortgage Trust Agreement (MTA) 12 whereby it constituted a mortgage pari passu of its assets in favor of PNB and DBP. These assets are described in the third "whereas clause" of the MTA as follows:(1) all the MORTGAGOR'S assets described and covered under the Deed of Real Estate and Chattel Mortgage executed by the MORTGAGOR in favor of PNB dated October 9, 1978, acknowledged before Notary Public of Manila, Lucas R. Vidad, as Dec. No. 1004, Page No. 94, Book No. VII, Series of 1978, as amended, which are made integral parts of this Agreement by way of reference; and(2) additional assets of the MORTGAGOR described and identified in the list hereto attached as Annex "A", including assets of whatever kind, nature or description, which the MORTGAGOR may hereafter acquire whether in substitution of, in replenishment, or in addition thereto, (the "Mortgaged Properties"). 13Under the MTA, the PNB was constituted and appointed as the trustee tasked with holding in trust the mortgaged properties "for the equal and ratable benefit of the Beneficiaries in proportion to the amount of the obligation of the MORTGAGOR to each of them" as provided therein. 14 One of the conditions of the mortgage was that:. . . Should the MORTGAGORS fail to deliver said properties, as aforestated, the TRUSTEE, through its duly authorized representative, is authorized to take possession of said properties and bring the same to the location of any of their respective offices or to any, other place and the expenses of locating and bringing said properties to such place shall be for the account of the MORTGAGOR and shall form part of the sums secured by this mortgage; Provided, however, that the TRUSTEE shall have the option of selling said properties at any place where their respective offices shall be located or at any place where said properties may be found. 15 (Emphasis supplied.)The MTA also provided that:For the purpose of extra-judicial foreclosure, the MORTGAGOR hereby appoints the TRUSTEE, through its duly authorized representatives, its attorney-in-fact to sell the mortgaged properties in accordance with the provision of Act No. 3135, as amended, and/or Act No. 1508, as amended, and subject to the stipulations herein set forth, to sign all documents and perform any act requisite or necessary to accomplish said purpose and to appoint their representatives or substitutes as such attorneys-in-fact with all the powers herein conferred. In extra-judicial foreclosure under Act No. 3135, as amended, the auction sale shall take place in the City or Capital of the Province where the mortgaged properties are situated. In extra-judicial foreclosure under Act No. 1508, as amended, the auction sale shall take place in such City or Municipality as the TRUSTEE at its option,may elect by virtue of the provisions of the first paragraph of this Condition. 16 (Emphasis supplied.)The MTA was amended on April 27, 1984 with PNB Senior Vice President Gerardo Agulto, Jr. and MMIC Senior Vice President Jose Luis Javier as signatories. 17 Premised on the fact that the mortgagor (MMIC) had "acquired additional personal and real properties, including, but not limited to, leasehold rights on mining claims, which pursuant to the terms of the Mortgage Trust Agreement are deemed covered by the mortgage as after-acquired assets," the MTA amended Sec. 2.01 thereof to read as follows:As security for the prompt and full payment by the MORTGAGOR of the Secured Obligations, the MORTGAGOR hereby establishes and constitutes in favor of the MORTGAGEES a first lien and mortgage of the first rank in and to each and every item of the Mortgaged Properties, together with any and all substitutes or replacements for or renewals of or additions to any thereof, all of which belong to and are in the possession of (or will belong to and will be in the possession of) the MORTGAGOR, free end clear of any liens or encumbrances of any nature whatsoever. (Emphasis supplied.) 18MMIC defaulted in the payment of its loan obligation with PNB and DBP which, as of July 15, 1984 stood at P23.55 billion. As a consequence thereof, PNB and DBP simultaneously filed in the provinces of Rizal, Samar, Negros and Surigao, joint petitions for sale on foreclosure under Act Nos. 1508 and 3135, 19 of the MMIC assets located at: (a) Island Cement in Antipolo, Rizal; (b) Sipalay Copper Mine in Negros; (c) Bagacay and Giporlos Coal Projects in Samar, and (d) Nonoc Nickel Project in Surigao. The petitions were premised on: (1) the MOA of July 13, 1984 which delineated MMIC's mortgaged properties; (2) the April 27, 1984 amendment to the MTA in favor of DBP and PNB which included in the mortgage MMIC's additional after-acquired assets; (3) the liabilities of MMIC secured by the mortgage being past due, and (4) Presidential Decree No. 385 mandating PNB and DBP to institute foreclosure proceedings when the arrearages of the borrower have exceeded twenty percent (20%) of the principal obligation.Deputy Sheriff Esteban G. Malindog of the Regional Trial Court in Catbalogan, Samar, Branch XXVII, complied with the requirements of the law as to the posting and publication of the notice of sale. Said notice, dated August 15, 1984, set for August 31, 1984 the auction sale of the various mining equipment and other assets of MMIC, including the equipment at the Giporlos Project.On August 15, 1984, IEI advised PNB and DBP at their respective Manila and Makati offices that the purchase price of the Giporlos Coal Project that it had assigned to MMIC per the MOA, was still unpaid. 20 However, despite said notice, the foreclosure sale proceeded as scheduled and the various machineries and equipment of MMIC were sold to PNB as the sole bidder for P33,940,940.00.In its letter of September 20, 1984 to PNB and DBP, 21 IEI requested that the movable properties in the Giporlos Coal Project which were detailed in a list attached to its August 15, 1984 letter to said banks, be excluded from the foreclosed assets of MMIC as the purchase price thereof under the MOA had remained unpaid. IEI further informed PNB and DBP that a suit for rescission of the assignment of the Giporlos Coal Project to MMIC (and damages) had been filed before the Regional Trial Court of Makati.On June 24, 1985, in view of the inclusion of the mining equipment and other movable properties at the Giporlos Coal Project in the foreclosure sale of the assets of MMIC, IEI filed an amended complaint impleading the PNB as an additional defendant. 22 The amended complaint was admitted by the trial court on September 23, 1985. 23On April 23, 1986, the lower court 24 rendered a decision finding that:With respect to the plaintiff's claim against the Philippine National Bank, the evidence on record is clear that said defendant bank is equally guilty of bad faith because it was advised beforehand that the heavy equipment and movable property which are part of the Giporlos Coal Project were still unpaid; however, despite that actual knowledge or information, the said defendant bank proceeded to extrajudicially foreclose the mortgage on the said properties; moreover, the foreclosure proceedings were held in Catbalogan, Province of Samar, although the said movable properties are actually found or located at Giporlos, Eastern Samar (Exhibit "ooo"), a province, distinct and separate from, and outside the jurisdiction of, the Province of Samar; these foreclosure proceedings in Catbalogan, Samar, are clearly contrary to the provisions of Act 1508, as amended; likewise, the inclusion of the movable properties which are part of the Giporlos Coal Project is contrary to the provisions of the last paragraph of Sec. 7 of said Act No. 1508, as amended, which provides that a chattel mortgage shall be determined to cover only the properties described therein and not like or substituted property thereafter acquired by the mortgagor and placed in the same depository as the property originally mortgaged, anything in the mortgage to the contrary notwithstanding. 25Noting the futility of proceeding with the trial of the case because there was "no genuine issue of any material facts," the lower court rendered a summary judgment disposing of Civil Case No. 8109 as follows:WHEREFORE, judgment is hereby rendered:a declaring the memorandum agreement, Exhibit "C" as rescinded or annulled and without further force and effect between the parties thereto;b declaring and sustaining the continued efficacy and validity of the coal operating contract, Exhibit "A" between plaintiff and defendant BED;c ordering the reversion or return of the two coal blocks covered by the coal operating contract dated July 27, 1979, Exhibit "A", from the defendant MMIC to and in favor of the plaintiff together with or including all the pieces of equipment MMIC received by said defendant in virtue of the rescinded memorandum of agreement, Exhibit "C";d ordering the defendant Bureau of Energy Development to issue its corresponding formal written affirmation and confirmation of the coal operating contract, Exhibit "A", and to expeditiously cause the conversion thereof from exploration to development/production or exploitation contract in favor of the plaintiff;e directing the Bureau of Energy Development and the Ministry of Energy to give due course to plaintiff's application for a coal operating contract for the exploration of the three additional coal blocks in the plaintiff's Giporlos Coal Project;f condemning the defendant MMIC to pay the plaintiff the amount of P3,431,645.00 representing expenditures on the two coal blocks covered by Exhibit "A" from July 31, 1983 up to May 1984 and such further amounts from said date up to the finality of this decision to be computed in accordance with the formula adopted in the report of Sycip, Gorres and Velayo referred to in paragraph 14 of the Amended Complaint;g ordering the defendant MMIC to pay the plaintiff the sum of P6,500,000.00 representing rehabilitation expenses to be incurred by plaintiff in putting back the two coal blocks and the pieces of equipment thereon in the same workable and operating condition as they were at the time they were taken possession of by said defendant MMIC and the defendant PNB shall be subsidiarily liable therefor;h condemning the defendants MMIC and PNB jointly and solidarily liable to pay the plaintiff moral damages in the amount of P300,000.00, as exemplary damages of P200,000.00 and the amount of P200,000.00 as and for attorney's fees;i declaring the extra-judicial foreclosure sale executed for and in behalf of the defendant Philippine National Bank of the mining equipment and other movable property which are enumerated in Exh. "ooo" and which are part of the Giporlos Coal Project, as null and void and of no force and effect as against the plaintiff; in the event of the loss or deterioration of the said mining equipment and other movable property, the said defendants PNB and MMIC shall be held jointly and solidarily liable to the plaintiff for the current market value thereof; andj ordering the defendants MMIC and PNB to pay the cost of this suit.SO ORDERED. 26PNB and IEI filed separately motions for the reconsideration of said summary judgment. 27 PNB alleged that the lower court did not have jurisdiction over the subject matter and nature of the action as the MOA between MMIC and IEI was an incident arising out of a mining claim which was within the jurisdiction of the BED. Moreover, the validity of the extrajudicial foreclosure proceedings which PNB effected on said properties was a genuine material issue which was not determinable through summary judgment. Inasmuch as the merit of the case was resolved through summary judgment, PNB was denied its constitutional right to due process. Furthermore, the award of damages to IEI was improper as PNB was not a party to the MOA.For its part, IEI contended that the decision failed to award consequential damages in its favor considering the finding that MMIC and PNB acted in bad faith and that it failed to realize profits of about P14.5 million on the confirmed coal reserves of 3,485,915 metric tons computed at P4.17 per metric ton.On the other hand, the public defendant and MMIC filed their respective notices of appeal to the then Intermediate Appellate Court. 28On July 14, 1986, IEI filed a motion for execution pending appeal 29 alleging that MMIC had failed and refused to fulfill its obligations under the MOA and that it even allowed the PNB to unlawfully foreclose the mortgage on the heavy equipment and other movable properties in the Giporlos Coal Project. According to IEI, to allow this situation to persist would only aggravate the damages suffered by all concerned parties. It added that the grant of the motion for execution pending appeal would not only stop the continuing injury to the common weal but it would also hasten the day when the coal blocks could be placed in useful production to provide gainful employment to the people in the community. By the same token, IEI averred, granting of the motion would accelerate realization of scarce foreign exchange savings occasioned by the local production of a substitute energy source that would thereby contribute to the relief of an ailing economy.This motion was opposed by the public defendant, the MMIC and the PNB. 30 The public defendant averred that the execution of the decision "would cause great irreparable damage and injury to public interest" and that there were no "good reasons" of superior circumstance that demand urgency of the execution pending appeal. MMIC opposed the motion on the ground that the court had lost jurisdiction after the perfection of its appeal while PNB's objection was on the ground that there were no good reasons to justify the issuance of a writ of execution and that the issuance thereof was premature.In its order of September 15, 1986, the lower court denied the motions for reconsideration of IEI and PNB for lack of merit. It ordered the elevation of the records of the case to the Court of Appeals considering that the MMIC and the public defendant had filed their notices of appeal on time. It likewise directed the issuance of a writ of execution pending appeal to enforce the April 23, 1986 decision upon the filing of a bond in the amount of five million pesos (P5,000,000.00) conditioned on the payment of damages the defendants might suffer should the court finally rule that the plaintiff was not entitled to the writ.In granting the writ of execution, the court held that "the immediate resumption of operation of the two coal blocks in question became imperative and is of urgent necessity at this time when our government is in dire need of capitalization to encourage the establishment of business to generate employment and dollar-producing energy sources." In the court's perception, this was enough reason to entitle IEI to execution pending appeal pursuant to Sec. 2, Rule 39 of the Rules of Court.The corresponding writ having been issued on September 22, 1986, 31 on September 26, 1986, Pioquinto P. Villapana was appointed Special Sheriff to assist and cooperate with Deputy Sheriff Arturo Flores in its enforcement. However, execution of the writ was curtailed.The appeal to the Court of Appeals was docketed as CA-G.R. CV No. 12660. On October 14, 1988, IEI filed a motion to dismiss the case against Minister Velasco on the grounds of IEI's reapplication for the two coal blocks with the Office of Energy Affairs (OEA) and its loss of interest in pursuing the case against Minister Velasco. 32 The motion was favorably acted upon by the Court of Appeals thereby effectively dropping Minister Velasco as a defendant in Civil Case No. 8109 through the decision of May 29, 1989, 33 where the Court of Appeals disposed of the appeal as follows:WHEREFORE, the judgment appealed from is hereby reversed and set aside and the appeal of plaintiff Industrial Enterprises, Inc., is DISMISSED. The complaint against the defendants Marinduque Iron Mines Corporation and Minister of Energy is dismissed for lack of jurisdiction. The case against defendant PNB is remanded to the lower court for further proceedings.Cost against appellant Industrial Enterprises, Inc.SO ORDERED. 34IEI elevated the decision to this Court through a petition for review on certiorari under G.R. No. 88550 while the PNB filed in the Court of Appeals a motion for the reconsideration of the same decision. On September 21, 1989, the Court of Appeals resolved the motion for reconsideration with the following findings:Considering, therefore, that PNB was impleaded as party defendant only in connection with its foreclosure of the mortgages on the properties of the principal defendant MMIC, and considering that the main action against MMIC has been dismissed for lack of jurisdiction, there appears to be no cogent reason to continue the case against PNB which is merely a secondary defendant. There is thus merit in PNB's contention that since the case against MMIC has been dismissed, the case against PNB should likewise be dismissed, considering that PNB merely stepped into the shoes of MMIC.Moreover, there is no privity of contract between PNB and IEI. Hence, there is no direct cause of action by IEI against PNB independently of MMIC, it being merely a foreclosing mortgage creditor of the latter. At any rate, the record shows that there is an on-going litigation between MMIC stockholders and PNB before the Regional Trial Court of Makati (Civil Case No. 9900) for the annulment of the PNB's extra-judicial foreclosure of MMIC's mortgaged properties. 35 Accordingly, the Court of Appeals modified its decision of May 29, 1989 by dismissing the case against the PNB.Meanwhile, G.R. No. 88550 was eventually decided by this Court on April 18, 1990. 36 In denying the petition of IEI, the Court held:Clearly, the doctrine of primary jurisdiction finds application in this case since the question of what coal areas should be exploited and developed and which entity should be granted coal operating contracts over said areas involves a technical determination by the BED as the administrative agency in possession of the specialized expertise to act on the matter. The Trial Court does not have the competence to decide matters concerning activities relative to the exploration, exploitation, development and extraction of mineral resources like coal. These issues preclude an initial judicial determination. It behooves the courts to stand aside even when apparently they have statutory power to proceed in recognition of the primary jurisdiction of an administrative agency.One thrust of the multiplication of administrative agencies is that the interpretation of contracts and the determination of private rights thereunder is no longer a uniquely judicial function, exercisable only by our regular courts (Antipolo Realty Corp. v. National Housing Authority, 153 SCRA 399, at 407).The application of the doctrine of primary jurisdiction, however, does not call for the dismissal of the case below. It need only be suspended until after the matters within the competence of the BED are threshed out and determined. Thereby, the principal purpose behind the doctrine of primary jurisdiction is salutarily served.Pursuant to this Decision, IEI lodged a complaint against MMIC and PNB before the OEA. After due hearing, a decision was issued by Executive Director W. R. de la Paz on January 25, 1991, with a decretal portion which reads:Wherefore, in the light of the foregoing, insofar as the Memorandum of Agreement is concerned, such agreement may already be deemed rescinded and of no force and effect in view of the re-award made in IEI's favor of the same coal areas subject of this dispute. However, on the issue of the effects and consequences of the right to claim damages for unpaid financial obligations and such other damages incidental thereto, by one party as against the other, this matter may be referred to the regular courts for appropriate adjudication.Similarly, this likewise holds true insofar as the foreclosed properties involved in this case are concerned where respondent Philippine National Bank was impleaded. 37In accordance with this ruling of the OEA, on March 1, 1991, IEI filed in the lower court a motion to set Civil Case No. 8109 for hearing. 38 On June 17, 1991, PNB filed a motion to dismis