533 Phil. 200
CALLEJO, SR., J.:
WHEREFORE, judgment is hereby rendered in favor of defendants, declaring the Memorandum of Agreement rescinded, ordering both plaintiff and defendants to surrender that which they have respectively received and to place each other as far as practicable in his original situation, and ordering plaintiff to pay the following:
The trial court upheld the spouses Flores' claim that it was Liu who committed a breach of the MOA on the following ratiocinations:
- The amount of P6,582,133.08 as payment to all of defendants' creditors;
- The amount of P2,500,000.00 as compensation for the materials and machines lost; [and]
- The amount of [P225,150.00] as attorney's fees and expenses.
SO ORDERED.[12]
Unrebutted testimony for the defendants belied the allegation of plaintiff. It was stated that all records of the business including the licenses were turned over to plaintiff, together with the factory premises; the same being kept therein. It was, likewise, stated that the licenses, as of the date of the turnover, had all been effective and valid. A certification was obtained from the Bureau of Customs that no order of revocation was ever issued against defendants' business, to corroborate the testimony. The accreditation from the Garments and Textile Export Board was still valid at the time of the agreement's execution and was even used to export a load of garments.On July 1, 1999, the spouses Flores received a copy of the June 25, 1999 decision. The parties did not appeal the decision.
On the other hand, it appears that it was plaintiff who failed to perform his obligations. Despite full compliance on the part of defendants, plaintiff failed to pay the P8,000,000.00 balance of the purchase price less any deductions from payments to defendants' creditors. Indeed, plaintiff contends that no balance remains to be paid defendants their debts to creditors having been found by him to actually be in the amount of P14,631,082.00; P6,631,082.00 more than the purchase price. In other words, plaintiff wants the court to believe that as there is more than P8,000,000.00 in debts to pay, no further amount is due defendants outside of the downpayment. However, the court observes that none of the debts had been paid; not even any such which may be covered by the P8,000,000.00. Plaintiff has not alleged payment of any creditors; neither those covered by paragraph 5 of the agreement and Annex B thereof, nor those included in plaintiff's own inventory of accounts payable.
And although plaintiff alleged failure of payment due to the unsatisfied requirement of special power of attorney, no proof of such requirement was presented.
The foregoing considered, it is clear that plaintiff and not defendants breached the Memorandum of Agreement. Ergo, defendants and not plaintiff are entitled to rescission. For the same reasons and more, no amount for damages nor attorney's fees are due plaintiff. Defendants have faithfully performed their obligations and in good faith. Any unrealized income or damage to reputation asserted by plaintiff remain mere allegations and was caused by no act of defendants but his own.
It is defendants who are entitled to damages and attorney's fees. Materials and machinery of the business have been found missing and unaccounted for since turnover of possession and custody to plaintiff. The redemption period for the property and improvements mortgaged, an essential and intrinsic component of said business, lapsed and were consequently foreclosed upon. Debts which should have been paid in accordance with paragraph 5 of the agreement remain outstanding. Defendants were constrained to engage the services of an attorney in order to protect their rights and interest, and to pay the same P225,150.00. (Exhs. 1, 2, and 9 to 12).[13]
a) With all due respect, said motion has no factual and legal basis as all allegations therein contained did not set forth the facts showing their right to damages, the nature of damages and the amount, if any, corresponding to such damages directly or indirectly caused by either injunction or the attachment;Alexander Flores was presented as witness to prove the damages which the spouses Flores claimed to have suffered on account of the improper issuance of the writ of attachment/injunction. The spouses Flores did not testify. For its part, SICI opted not to present any evidence to support its opposition to the motion, on its claim that there was no factual proof of damages. Besides, the spouses Flores' application for damages was time-barred because it was filed three days after the reglementary period to appeal (July 1, 1999); hence, the period to appeal had lapsed.
b) The motion is prematurely filed as there is no showing that either the injunction or the attachment was illegally and improperly issued;
c) There is no evidence whatsoever on record to show that either the injunction or the attachment was illegal or improper;
d) The damages, if any, incurred by defendants are not by reason of either the injunction or the attachment for which the bonds put up by Stronghold can be held liable;
e) In fact, the issue of the injunction or the attachment was not even touched in the Decision rendered by this Honorable Court dated June 25, 1999. There was not even any inference to either injunction or the attachment. That is because defendants never challenged the injunction or the attachment for having been issued illegally or improperly. It is only now that it is raised, for the first time, when it is already too late-in-a-day after the decision was rendered;
f) What is significant to note is the finding of the Honorable Court that because of the "breach of the Memorandum of Agreement" by plaintiff "no amount of damages nor attorney's fees are due plaintiff." The decision did not say that because of the bonds, the defendants are entitled to damages;
g) The motion did not comply with Section 20, Rule 57 of the Rules of Court because it did not specify the amount for each item of damages. More importantly, defendants have not shown in the motion the facts showing their rights to damages;
h) Both injunction and attachment bonds were issued by Stronghold upon application by plaintiff and pursuant to the legal orders of this Honorable Court and which orders were never questioned by defendants.[17]
WHEREFORE, Stronghold Insurance Corporation is directed to pay the defendants the following:
SICI filed a motion for reconsideration, which the RTC denied in an Order[20] dated July 30, 2002.1.) The amount of P2.5 million as actual damages for the materials and machines lost;
2.) The amount of P2.0 million as moral damages;
3.) The amount of P225,150.00 as attorney's fees; and
4.) The costs of the suit.
SO ORDERED.[19]
On November 10, 2004, the CA rendered a Decision[22] nullifying the Order of the RTC, holding that the spouses Flores' motion for damages against the bonds were filed on July 16, 1999; the decision of the trial court had already become final and executory as to them since they did not appeal the decision. Thus, the CA declared, the RTC no longer had jurisdiction to hear the motion nor amend its own decision which had become final and executory.I
THE LOWER COURT PALPABLY COMMITTED GRAVE ERROR IN ORDERING APPELLANT TO PAY THE DEFENDANTS THE AMOUNT OF P2.5 MILLION AS ACTUAL DAMAGES FOR MATERIALS AND MACHINES LOST; THE AMOUNT OF P2.0 MILLION AS MORAL DAMAGES; AND THE AMOUNT OF P225,150.00 AS ATTORNEY'S FEES.
II
THE LOWER COURT PALPABLY COMMITTED GRAVE ERROR WHEN IT ISSUED THE QUESTIONED ORDERS DESPITE JUDGMENT HAVING BECOME FINAL AND EXECUTORY.[21]
THE COURT OF APPEALS DECIDED A QUESTION OF LAW NOT IN ACCORD WITH THE LAW OR APPLICABLE DECISIONS OF THE HONORABLE COURT IN HOLDING THAT THE RTC HAD LOST JURISDICTION TO HEAR AND ACT UPON THE MOTION FOR DAMAGES FILED BY THE PETITIONERS.[24]The sole issue in this case is whether the petition for application of damages against the bonds posted by respondent SICI was already time-barred when petitioners filed the same on July 16, 1999.
SEC. 20. Claim for damages on account of improper, irregular or excessive attachment. - An application for damages on account of improper, irregular or excessive attachment must be filed before the trial or before appeal is perfected or before the judgment becomes executory, with due notice to the attaching party and his surety or sureties, setting forth the facts showing his right to damages and the amount thereof. Such damages may be awarded only after proper hearing and shall be included in the judgment on the main case.An application for damages against the bonds must be filed in the same case where the bond was issued, either (a) before the trial or (b) before the appeal is perfected or (c) before the judgment becomes executory.[25] The principal party and his surety or sureties must be notified of said application. This rule is mandatory.[26] In the absence of due notice to the surety, no judgment for damages may be entered and executed against it.[27]
SEC. 3. Manner of filing. - The filing of pleadings, appearances, motions, notices, orders, judgments and all other papers shall be made by presenting the original copies thereof, plainly indicated as such, personally to the clerk of court or by sending them by registered mail. In the first case, the clerk of court shall endorse on the pleading the date and hour of filing. In the second case, the date of the mailing of motions, pleadings, or any other papers or payments or deposits, as shown by the post office stamp on the envelope or the registry receipt, shall be considered as the date of their filing, payment, or deposit in court. The envelope shall be attached to the record of the case.Under Section 7, Rule 13 of the Rules of Court, pleadings may be served by registered mail or by ordinary mail:
SEC. 7. Service by mail. - Service by registered mail shall be made by depositing the copy in the office, in a sealed envelope, plainly addressed to the party or his counsel at his office, if known, otherwise at his residence, if known, with postage fully pre-paid, and with instructions to the postmaster to return the mail to the sender after ten (10) days if undelivered. If no registry service is available in the locality of either the sender or the addressee, service may be done by ordinary mailThe Court notes that petitioners filed their application and served a copy thereof on respondent by registered mail on July 16, 1999. As of said date, the decision of the RTC had not yet become final and executory, and the fifteen-day period to appeal the decision had not yet lapsed. Thus, the application of the petitioners with the RTC was not yet time-barred.