Title 2 Cases

introductory DIVISION G. R. nary(prenominal) 144712. July 4, 2002 SPOUSES SILVESTRE and CELIA PASCUAL, petiti mavenrs, vs. RODRIGO V. RAMOS, reticuloendothelial systempondent. DECISION DAVIDE, JR. , C. J. in the first place us is a quest for review on certiorari assailing the 5 zero(prenominal)ember 1999 finding1 and the 18 August 2000 Resolution2 of the address of Appeals in CA G. R. CV nary(prenominal) 52848. The source substantiate the 5 June 1995 and 7 kinfolk 1995 stations of the regional Trial Court, Malolos, Bula foundation, Branch 21, in polite Case zero(prenominal) 526 -M-93, and the latter denied petiti unrivaledrs exertion for reconsideration.The fountain at bar stemmed from the supplication3 for consolidation of prenomen or self-control filed on 5 July 1993 with the rill judicatory by herein respondent Rodrigo V. Ramos (hereafter RAMOS) against herein petiti nonp atomic number 18ilrs, Spouses Silvestre and Celia Pascual (hereafter the PASCUALs). In h is petition, RAMOS supposed that on 3 June 1987, for and in consideration of P150,000, the PASCUALs executed in his favor a act of infrangible cut- point bargain w ith Right to Repurchase all everyplace two parcels of domain and the improvements at that placeon located in Bambang, Bula mess, Bula rouse, covered by Transfer security measures of Title (TCT) zero(prenominal) 05626 of the Registry of titles of Bulacan. This enrolment was an nonated at the back of the form of address. The PASCUALs did non make their right to repurchase the lieu within the stipulated nonpareil -year consequence hence, RAMOS prayed that the title or acceptership over the sheath parcels of prop up and improvements thereon be consolidated in his favor.In their Answer,4 the PASCUALs admitted having signed the performance of Absolute sales event with Right to Repurchase for a consideration of P150,000 just averred that what the digressies had actu all(prenominal)y hold upon and entered into was a in truth estate mortg eon. They notwithstanding alleged that there was no compact limiting the period within which to exercise the right to repurchase and that they had even overpaid RAMOS.Further much, they interposed the undermentioned defenses (a) the exam philander had no jurisdiction over the base or nature of the petition (b) RAMOS had no legal capacity to sue (c) the bear o f litigate, if both, was barred by the statute of limitations (d) the petiti on verbalise no cause of action (e) the claim or de compositiond set forth in RAMOSs pleading had been paid, waived, abandoned, or parvenue(prenominal)wise extinguished and (f) RAMOS has non complied with the required confrontation and conciliation onward the barangay.By way of counterclaim, the PASCUALs prayed that RAMOS be redacted to execute a head of Cancellation, Release or Discharge of the consummation of Absolute Sale with Right to Repurchase or a Deed of Real Estate Mortgage deliver to them t he owners duplicate of TCT No. T-305626 result the amount they had overpaid and pay each(prenominal) of them moral damages and exemplary damages in the amounts of P200,000 and P50,000, several(prenominal)ly, summation rightfulnessyers fees of P100,000 appearance fee of P1,500 per hearing litigation expenses and costs of suit.After the pre-trial, the trial hook riposted an order5 wherein it identified the by-line issues (1) whether the Deed of Absolute Sale with Right to Repurchase is an absolute sale or a pure mortgage (2) whether the PASCUALs catch paid or overpaid the hint compact (3) whether the ownership over the parcel of land may be consolidated in favor of RAMOS and (4) whether damages may be awarded. Among the chronicles offered in state by RAMOS during the trial on the chastitys was a document denominated as Sinumpaang Salaysay6 signed by RAMOS and Silvestre Pascual, tho non notarized.The contents of the document examine Ako, si SILVESTRE PASCUAL, Filipin o, nasa hustong gulang, may asawa at kasalukuyang naninirahan sa Bambang, Bulacan, Bulacan, ay nagsasabing buong katotohanan at jibeusumpa sa aking mga salaysay sa kasulatang ito 1. Na ngayong June 3, 1987 dahil sa aking matinding pangangailangan ng puhunan ay lumapit ako at nakiusap kay Rodrigo Ramos ng Taal, Pulilan, Bulacan na pautangin ako ng halagang P150,000. 00. 2. Na aming napagkasunduan na ang nasabing utang ay babayaran ko ng tubo ng septenary per centum (7%) o P10,500. 0 isang buwan (7% per calendar month). 3. Na bilang sangla (collateral security) sa aking utang, kami ay nagkasundo na mag-execute ng Deed of Sale with Right to Repurchase check bit sa aking bahay at lupa (TCT No. 305626) sa Bo. Taliptip, Bambang, Bulacan, Bulacan ngayong June 3, 1987 at binigyan ako ni Mr. Ramos ng isang taon hanggang June 3, 1988 upang mabiling muli ang aking isinanla sa kaniya sa kasunduang babayaran kong lahat ang capital na P150,000. 00 pati na ang P10,500. 0 na tubo buwan buwan. 4. Na bilang karagdagang condition, si RODRIGO RAMOS ay pumayag sa aking kahilingan na kung sakali na hindi ko mabayaran ng buo ang aking pagkakautang (Principal plus enkindle) sa loob ng isang taon mula ngayon, ang nakasanglang bahay at lupa ay hindi muna niya iilitin (foreclose) o ipalilipat sa pangalan niya at hindi muna kami paaalisin sa tinitirhan naming bahay hanggat ang tubo ( elicit) na P10,500. 00 ay nababayaran ko buwan buwan. 5.Na ako ay sumasang-ayon sa kundisyon ni Rodrigo Ramos na pagkatapos ng isang taon mula ngayon hanggang June 3, 1988 at puro by- telegraph wire lamang ang aking naibabayad buwan-buwan, kung sakaling hindi ako makabayad ng tubo for six (6) consecutive months (1/2 year after June 3, 1988 (6 na buwang hindi bayad ang ring mail ang utang ko) si Rodrigo Ramos ay binibigyan ko ng karapatan at kapangyarihan na mag-mayari ng aming bahay at lupa at kami ng aking pamilya ay kusang loob na aalis sa nasabing bahay at lupa na lumalabas na ibinenta ko sa kaniya dahil hindi ako nakasunod sa aming mga pinagkasunduang usapan. . At bilang final examinatione ng aming kasunduan, ako ay nangangako na hindi maghahabol ng ano mang sukli sa pagkakailit ng aming bahay at lupa kung sakali mang dumating sa ganuong pagkakataon o sitwasyon o di kayay magsasampa ng reklamo kanino man. Bilang pagsang-ayon sa mga nasabing kasunduan, kami ay lumagda sa ibaba nito kalakip ng aming mga pangalan ngayong ika-3 ng Hunyo, 1987. (Sgd. )Rodrigo Ramos Sgd. ) Silvestre Pascual Nagpautang UmutangFor their part, the PASCUALs presented documentary evidence consisting of acknowledgment receipts 7 to prove the payments they had do. The trial butterflyyard found that the act betwixt the parties was actually a contribute in the amount of P150,000, the payment of which was secured by a mortgage of the airplane propeller covered by TCT No. 305626. It uniformly found that the PASCUALs had made payments in the total sum of P344,000, and that with concern at 7% per an num, the PASCUALs had overpaid the loan by P141,500.Accordingly, in its Decision8 of 15 March 1995 the trial court decreed as fol low-toneds WHEREFORE, archetype is herewith rendered in favor of the defendants and against the plaintiff in the sp ar-time activity someoneal manner 1. Dismissing the plaintiffs petition 2. Directing the Register of Deeds to cancel the tone of the Deed of Sale with Right to Repurchase on the dorsal side of TCT No. 305626 3. Awarding the defendants the sum of P141,500. 00 as overpayment on the loan and bear ons 4. Granting the defendants attorneys fee in the sum of P15,000. 0 and P3,000. 00 for litigation expenses. With costs against the plaintiff. RAMOS travel for the reconsideration of the finality, alleging that the trial court erred in using an pursual rate of 7% per annum in the figuring of the total amount of obligation because what was acquitly stipulated in the Sinumpaang Salaysay was 7% per month. The total interest due from 3 June 198 7 to 3 April 1995 was P987,000. Deducting therefrom the interest payments made in the sum of P344,000, the amount of P643,000 was still due as interest.Adding the latter to the psyche sum of P150,000, the total amount due from the PASCUALs as of 3 April 1995 was P793,000. Finding merit in the action for reconsideration, which was not opposed by the PASCUALs, the trial court issued on 5 June 1995 an consecrate9 modifying its decision by deleting the award of P141,500 to the PASCUALs as overpayment of the loan and interest and ordering them to pay RAMOS P511,000 representing the principal loan plus interest. The trial court ac noesisd that it had inadvertently decl atomic number 18d the interest rate to be 7% per annum when, in fact, the Sinumpaang Salaysay stipulated 7% per month.It noted that during trial, the PASCUALs never disputed the stipulated interest rate. However, the court decl atomic number 18d that the 7% per month interest is too burdensome and onerous. Invoking the p rotective mantle of Article 24 of the well-behaved Code, which mandates the courts to be vigilant for the guard of a party at a dis receipts due to his moral dependence, ignorance, indigence, mental weaknes s, tender age or other(a)(a) handicap, the trial court unilaterally reduced the interest rate from 7% per month to 5% per month. Thus, the interest due from 3 June 1987 to April 1995 was P705,000. Deducting therefrom the payments made by the PASCUALs in the amount of P344,000, the concreteise interest due was P361,000. Adding thereto the loan principal of P150,000, the total amount due from the PASCUALs was P511,000. Aggrieved by the fitting of the decision, the PASCUALs filed a motion to reconsider the Order of 5 June 1995. They alleged that the motion for reconsideration filed by RAMOS was a mere scrap of paper because they received a copy of give tongue to motion alone a day before the hearing, in violation of the 3 -day-notice rule.Moreover, they had already paid th e interests and had in fact overpaid the principal sum of P150,000. Besides, RAMOS, being an individual, could not charge more than 1% interest per month or 12% per annum and, the interest of either 5% or 7% a month is exorbitant, unconscionable, un sensible, usurious and inequitable. RAMOS opposed the motion of the PASCUALs. He contended that the non-compliance with the 3-day-notice rule was cured when the trial court gave them an opportunity to file their opposition, but despite the retrogression of the perio d given them, no opposition was filed.It is not correct to say that he was not allowed to plunder more than 1% per month interest considering that with the moratorium on the Usury Law, the allowable interest is that agreed upon by the parties. In the absence of whatever evidence that there was travesty, withdraw or undue influence exerted upon the PASCUALs when they entered into the accomplishment in fountainhead, their agreement embodied in the Sinumpaang Salaysay sh ould be respected. Furthermore, the trial court had already reduced the interest rate to 5% per month, a rate which is not exorbitant, unconscionable, unreasonable and inequitable.Their motion for reconsideration having been denied in the Order10 of 7 September 1995, the PASCUALs seasonably appealed to the Court of Appeals. They pointed out that since the single prayer of RAMOS in his petition was to sop up the title or ownership over the subject land and the improvements thereon consolidated in his favor and he did not have any prayer for general relief, the trial court had no basis in ordering them to pay him the sum of P511,000. In its Decision11 of 5 November 1999, the Court of Appeals affirmed in toto the trial courts Orders of 5 June 1995 and 7 September 1995.It ruled that while RAMOSs petition for consolidation of title or ownership did not include a prayer for the payment of the balance of the suppliants obligation and a prayer for general relief, the issue of whether the re was still a balance from the amount loaned was deemed to have been brocaded in the pleadings by virtue of Section 5, Rule 10 of the Rules of Court, which provides that when issues not raised by the pleadings be tried with the stock or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. In the course of the trial, receipts were presented by the PASCUALs evidencing the payments they had made. Taken in conjunction with the Sinumpaang Salaysay which train the interest rate at 7% per month, a mathematical computation promptly leads to the conclusion that there is still a balance due from the PASCUALs, even at a reduced interest rate of 5% interest per month. With the denial of their motion for reconsideration of the decision by the Court of Appeals, t he PASCUALs filed before us the instant petition raising the sole issue of whether they are nonimmune for 5% interest per month from 3 June 1987 to 3 April 1995.Invoki ng this Courts impression in Medel v. Court of Appeals,12 they suggest that the 5% per month interest is excessive, iniquitous, unconscionable and exorbitant. Moreover, respondent should not be allowed to collect interest of more than 1% per month because he tried to hide the real effect amongst the parties by high-minded upon them to sign a Deed of Absolute Sale with Right to Repurchase. For his part, RAMOS contends that the issue raised by petitioners cannot be entertained anymore because it wa s neither raised in the guardianship nor ventilated during the trial.In any type, there was nothing illegal on the rate of interest agreed upon by the parties, since the ceilings on interest rates prescribed under the Usury Law had expressly been re locomote, a nd hence parties are left dislodgely at their discretion to agree on any rate of interest. Moreover, there was no scheme to hide a usurious transaction. RAMOS wherefore prays that the challenged decision and resolution be af firmed and that petitioners be further ordered to pay legal interest on the interest due from the time it was demanded. We ascertain at once the proclivity of the PASCUALs to change theory almost every step of the case.By invoking the decision in Medel v. Court of Appeals, the PASCUALs are actually raising as issue the validity of the stipulated interest rate. It must be stressed that they never raised as a defense or as basis for their counterclaim the nullity of the stipulated interest. While overpayment was alleged in the Answer, no ultimate fac ts which constituted the basis of the overpayment was alleged. In their pre-trial brief, the PASCUALs made a long list of issues, but not one of them touched on the validity of the stipulated interest rate.Their own evidence clearly shows that they have agreed on, and have in fact paid interest at, the rate of 7% per month. Exhibits 1 to 8 specifically mentioned that the payments made were for the interest due on the P150,000 loan of the PASCUALs. In the course of the trial, the PASCUALs never put in issue the validity of the stipulated interest rate. After the trial court sustained petitioners claim that their agreement with RAMOS was actually a loan with real estate mortgage, the PASCUALs should not be allowed to turn their back on the stipulati on in that agreement to pay interest at the rate of 7% per month.The PASCUALs should accept not barely the favorable aspect of the courts resolving power that the document is actually an equitable mortgage but in any case the necessary consequence of much(prenominal) declaratio n, that is, that interest on the loan as stipulated by the parties in that same document should be paid. Besides, when RAMOS moved for a reconsideration of the 15 March 1995 Decision of the trial court pointing out that the interest rate to be utilise should be 7% per month, the PASCUALs never lifted a finger to oppose the claim. Admittedly, in their work for Reconsideration of theOrder of 5 June 1995, the PASCUALs argued that the interest rate, whether it be 5% or 7%, is exorbitant, unconscionable, unreasonable, usurious and inequitable. However, in their Appellants Brief, the only argument raised by the PASCUALs was that RAMOSs petition did not contain a prayer for general relief and, hence, the trial court had no basis for ordering them to pay RAMOS P511,000 representing the principal and unpaid interest. It was only in their motion for the reconsideration of the decision of the Court of Appeals that the PASCUALs made an issue of the interest rate and prayed for its decrement to 12% per annum.In Manila Bay Club Corp. v. Court of Appeals,13 this Court ruled that if an issue is raised only in the motion for reconsideration of the decision of the Court of Appeals, the effect is that it is as if it was never duly raised in that court at all. Our ruling in Medel v. Court of Appeals14 is not applicable to the present case. In that case, the excessiveness of the stipulate d interest at the rate of 5. 5 % per month was put in issue by the defendants in the Answer.Moreover, in addition to the interest, the debtors were also required, as per stipulation in the pr omissory note, to pay operate charge of 2% per annum and a penalty charge of 1% per month plus attorneys fee of equivalent to 25% of the amount due. In the case at bar, there is no other stipulation for the payment of an extra amount except interest on t he principal loan. Thus, taken in conjunction with the stipulated service charge and penalty, the interest rate of 5. 5% in the Medel case was found to be excessive, iniquitous, unconscionable, exorbitant and hence, contrary to morals, t hereby making such s tipulation null and void.Considering the section in the real percentage of the Medel case and the instant case, we are not prepared to apply the occasion lest it be construed that we can strike down anytime interest rates agreed upon by parties in a loan transaction. It is a basic prin ciple in civil law that parties are bound by the stipulations in the withers voluntarily entered into by them. Parties are free to stipulate terms and conditions which they deem convenient provided they are not contra ry to law, morals, good customs, public order, or public policy. 15The interest rate of 7% per month was voluntarily agreed upon by RAMOS and the PASCUALs. in that respect is nothing from the records and, in fact, there is no allegement showing that petitioners were victims of fraud when they entered into the agreement with RAMOS. Neither is there a showing that in their contractual relations with RAMOS, the PASCUAL s were at a disadvantage on account of their moral dependence, ignorance, mental weakness, tender age or other handicap, which would entitle them to the vigilant protection of the courts as mandated by Article 24 of the Civil Code.Apropos in our ruling in Vales vs. Villa All men are presumed to be sane and normal and subject to be moved by substantially the same motives. W hen of age and sane, they must take care of themselves. In their relations with others in the business of life, wits, sense, intelligence, training, ability and psyche meet and clash and contest, one-time(prenominal)s with gain and advantage to all, sometimes to a few only, with qualifying and injury to others. In these contests men must depend upon themselves upon their own abilities, talents, training, sense, acumen, perceptiveness.The fact that one may be worsted by some other, of itself, furnishes no cause of complaint. One man cannot complain because another is more able, or better trained, or has better sense or judgment than he has and when the two meet on a fair field the inferior cannot murmur if the action goes against him. The law furnishes no protection to the inferior simply because he is inferior, any more than it protects the strong because he is strong. The law furnishes protection to both a corresponding to one no more or less than to the other.It makes no distinction between the wise and the foolish, the great and the small, the strong and the weak. The foolish may lose all they have to the wise but that does not mean that the law will give it back to them again. Courts cannot follow one every step of his life and extricate him from bad bargains, protect him from unwise investments, relieve him from one-sided contracts, or annul the effects of foolish acts. Courts cannot constitute themselves guardians of persons who are not legally incompetent.Courts operate not because one person has been defeated or subdue by another, but because he has been defeated or overcome illegally. Men may do foolish things, make ridiculous contracts, use miserable judgment, and lose g aged(prenominal) by then in human action, all they have in the world but not for that alone can the law intervene and restore. there must be, in addition, aviolation of law, the commission of what the law knows as an actionable wrong, before the courts are authorized to lay hold of the situation and remedy it. 16 With the suspension of the Usury Law and the removal of interest ceiling, the partie s are free to stipulate the interest to be imposed on loans. hit any evidence of fraud, undue influence, or any vice of consent exercised by RAMOS on the PASCUALs, the interest agreed upon is binding upon them. This Court is not in a position to impose upon parties contractual stipulations diverse from what they have agreed upon. As tell in the decision of Cuizon v. Court of Appeals,17It is not the province of the court to alter a contract by construction or to make a new contract for the parties its duty is confined to the interpretation of the one which they have made for themselves without regard to its wisdom or unwiseness as the court cannot supply material stipulations or read into the contract words which it does not contain. Thus, we cannot succeed the interest rate, which was reduced to 5% per month without opposition on t he part of RAMOS.We are not persuaded by the argument of the PASCUALs that since RAMOS tried to hide the real transaction by imposing upon them the consummation of a Deed of Absolute Sale with Right to Repurchase, he should not be allowed to collect more than 1% per month interest. It is undisputed that simultaneous with the execution of the verbalize deed was the execution of the Sinumpaang Salaysay, which set forth the true agreement of the parties. The PASCUALs cannot then claim that they did not know the real transaction.RAMOSs claim that the interest due should produce legal i nterest cannot be acted upon favorably because he did not appeal from the Order of the trial court of 5 June 1995, which simply ordered the payment by the PASCUALs of the amount of P511,000 without interest thereon. No relief can be granted a party who does not appeal. 18 Therefore, the order of the trial court should stand. Incidentally, we noticed that in the Memorandum filed by RAMOS, the ruling in Vales v. Valle was reproduced by his counsel without the proper citation. Such act constitutes plagiarism. Atty. Felimon B.Mangahas is hereby warned that a repetition of such act shall be dealt with accordingly. WHEREFORE, in view of all the antecedent, the petition is DENIED. The assailed decision of the Court of Appeals in CA G. R. CV No. 52848 is AFFIRMED in toto. Costs against petitioners. SO ORDERED. Vitug, Kapunan, Ynares-Santiago, and Austria-Martinez, JJ. , concur. FIRST DIVISION SPS. EDGAR AND DINAH OMENGAN, Petitioners, G. R. No. 161319 Present PUNO, C. J. , SANDOVAL-GUTIERREZ, Working Chairperson, CORONA, AZCUNA and GARCIA, JJ. versus PHILIPPPINE NATIONAL BANK, HENRY M. MONTALVO AND MANUEL S. ACIERTO,*answerers. Promulgated January 23, 2007 x -x DECISION CORONA, J. This petition for review on certiorari1 seeks a review and blast of the Court of Appeals (CA) decision 2 and resolution3 in CA-G. R. CV No. 71302. In Octobe r 1996, the Philippine National Bank (PNB) Tabuk (Kalinga) Branch pass petitioners-spouses application for a revolving identification verge of P3 zillion. The loan was secured by two residential piles in Tabuk, Kalinga-Apayao covered by Transfer Certificate of Title (TCT) Nos. 2954 and 12112. The certificates of title, issued by the Registry of Deeds of the Province of KalingaApayao, were in the name of Edgar4 Omengan married to Dinah Omengan. The first P2. 5 million was hammockd by Branch Manager Henry Montalvo on three separate dates. The release of the final half million was, withal, withheld by Montalvobecause of a letter allegedly sent by Edgars sisters. It read A ppas, Tabuk Kalinga 7 November 1996 The Manager Philippine National Bank Tabuk Branch Poblacion, Tabuk Kalinga SirThis refers to the land at Appas, Tabuk in the name of our brother, Edgar Omengan, which was mortgaged to the Bank in the amount of Three Million Pesos (P3,000,000. 00), the sum of P2. 5 Million ha d already been released and received by our brother, Edgar. In this connection, it is requested that the remaining unreleased balance of half a million pesos be held in abeyance unfinished an intellect by the rest of the brothers and sisters of Edgar. Please be informed that the property mortgaged, while in the name of Edgar Omengan, is owned in co-ownership by all the children of the late Roberto and Elnora Omengan.The lawyer who drafted the document registering the subject property under Edgars name can attest to this fact. We had a prior intelligence with Edgar in allowing him to make use of the property as collateral, but he refuses to comply with such arrangement. Hence, this letter. (emphasis ours) precise truly yours, (Sgd. ) Shirley O. Gamon (Sgd. ) Imogene O. Bangao (Sgd. ) Caroline O. Salicob (Sgd. ) Alice O. Claver5 Montalvo was eventually replaced as branch manager by Manuel Acierto who released the remaining half million pesos to petitioners on May 2, 1997.Acierto a lso recommended the approval of a P2 million growing in their credit line to the Cagayan Valley Business Center Credit Committee in Santiago metropolis. The credit committee approved the increase of petitioners credit line (from P3 million to P5 million), provided Edgars sisters gave their conformity. Acierto informed petitioners of the conditional approval of their credit line. and petitioners failed to secure the consent of Edgars sisters hence, PNB put on hold the release of the extra P2 million. On October 7, 1998, Edgar Omengan demanded the release of the P2 million.He claimed that the condition for its release was not part of his credit line agreement with PNB because it was added without his consent. PNB denied his request. On March 3, 1999, petitioners filed a complaint for reveal of con tract and damages against PNB with the regional Trial Court (RTC), Branch 25 in Tabuk, Kalinga. After trial, the court make upd in favor of petitioners. Accordingly, judgment is hereby rendered finding in favor of petitioners. PNB is ordered 1) To release without delay in favor of petitioners the amount of P2,000,000. 00 to complete the P5,000,000. 00 credit line agreement ) To pay petitioners the amount of P2,760,000. 00 representing the losses and/or expected income of the petitioners for three years 3) To pay lawful interest, until the amount aforementioned on paragraphs 1 and 2 above are fully paid and 4) To pay the costs. SO ORDERED. 6 The CA, however, on June 18, 2003, change and set aside the RTC decision dated April 21, 2001. 7 Petitioners now contend that the CA erred when it did not sustain the finding of breach of contract by the RTC. 8 The existence of breach of contract is a factual matter not usually reviewed in a petition filed under Rule 45.But since the RTC and the CA had impertinent findings, we are constrained to rule on this issue. Was there a breach of contract? There was none. split up of contract is defined as follows It is the failure without legal reason to comply with the terms of a contract. It is also defined as the failure, with out legal excuse, to perform any promise which forms the whole or part of the contract. 9 In this case, the parties agreed on a P3 million credit line. This sum was completely released to petitioners who subsequently applied10 for an increase in their credit line.This was conditionally approved by PNBs credit committee. For all objectives and economic consumptions, petitioners sought an additive loan. The condition attached to the increase in credit line requiring petitioners to acquire the conformity of Edgars sisters was never acknowledged and accepted by petitioners. Thus, as to the additional loan, no meeting of the minds actually occurred and no breach of contract could be attributed to PNB. There was no perfected contract over the increase in credit line. The business of a bank is one affected with public interest, for which reason the bank should guard against loss due to negligence or bad faith.In approving the loan of an applicant, the bank concerns itself with proper education regarding its debtors. 11 Any probe previously conducted on the property offered by petitioners as collateral did not preclude PNB from considering new information on the same property as security for a sub sequent loan. The credit and property investigation for the original loan of P3 million did not oblige PNB to grant and release any additional loan. At the time the original P3 million credit line was approved, the title to the property appeared to perta in merely to petitioners.By the time the application for an increase was considered, however, PNB already had reason to suspect petitioners claim of exclusive ownership. A mortgage holder can rely on what appears on the certificate of title p resented by the mortgagor and an indigent mortgagee is not expected to conduct an exhaustive investigation on the history of the mortgagors title. This rule is strictly applied to ban king institutions. xxx Banks, indeed, should exercise more care and circumspection in dealing even with registered lands, than private individuals, as their business is one affected with public interest. xx Thus, this Court clarified that the rule that persons dealing wit h registered lands can rely solely on the certificate of title does not apply to banks. 12 (emphasis supplied) Here, PNB had acquired information sufficient to induce a reasonably discreet person to inquire into the status of the title over the subject property. Instead of defending their position, petitioners merely insisted that conviction on the face of the certificate of title (in their name) was sufficient. This principle, as already mentioned, was not applicable to financial institutions like PNB.In truth, petitioners had every chance to turn the situation in their favor if, as they give tongue to, they really owned the subject p roperty alone, to the exclusion of any other owner(s). Unfortunately, all they offered were bare denials of the co -ownership claimed by Edgars sisters. PNB exercised reasonable prudence in requiring the above-mentioned condition for the release of the additional loan. If the condition proved unacceptable to petitioners, the parties could have discussed other terms instead of making an obstinate and outright demand for the release of the additional amount.If the alleged co-ownership in fact had no leg to stand on, petitioners could have introduced evidence other than a unproblematic denial of its existence. Since PNB did not breach any contract and since it exercised the degree of diligence expected of it, it cannot be held liable for damages. WHEREFORE, the decision and resolution of the Court of Appeals in CA-G. R. CV No. 71302 are hereby AFFIRMED. Costs against petitioners. SO ORDERED. RENATO C. CORONA consociate Justice WE CONCUR REYNATO S. PUNO Chief Justice ANGELINA SANDOVAL-GUTIERREZ Associate Justice Working ChairpersonADOLFO S. AZCUNA Asso ciate Justice CANCIO C. GARCIA Associate Justice CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, I establish that the conclusions in the above decision had been reach ed in consultation before the case was assign to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice FIRST DIVISION G. R. No. 126713. July 27, 1998 ADORACION E. CRUZ, THELMA DEBBIE E. CRUZ and GERRY E. CRUZ, petitioners, vs. motor lodge OF APPEALS and SPOUSES ELISEO and VIRGINIA MALOLOS, respondents. DECISION PANGANIBAN, J. Contracts constitute the law between the parties. They must be read together and interpreted in an manner that reconciles and gives life to all of them. The intent of the parties, as shown by the clear language utilise, prevails over post facto explanations that find no support from the words employed by the parties of from their contemporary and subsequent acts showing their understanding of such contracts, Furthermore, a subsequent agreement cannot novate or change by implication a previous one, unless old and new contracts are, on every point, incompatible with each other.Finally, collateral facts may be admitted in evidence when a reasoning(prenominal) similarity exists between the conditions giving rise to the fact offered and the circumstances surrounding the issue or fact to be proved. The Case Before us is a petition for review on certiorari seeking to nullify the Court of Appeals (CA) Decision1 in CA- GR CV 33566, promulgated July 15, 1996, which reverse the Regional Trial Court (RTC) of Antipolo, Rizal and CA Resolution 2 of October 1, 1996, which denied petitioners Motion for Reconsideration.Petitioners Adoracion, Thelma Debbie, Gerry and Arnel (all surnamed Cruz) filed an action for division against the private respondents, Spouses Eliseo and Virginia Malolos. On January 28, 1991, the trial court rendered a Decision which disposed as follows3 WHEREFORE, judgment is hereby rendered for the plaintiffs and agai nst the defendants -spouses 1. rescript the section of the seven parcels of land totalling 1,912 sq. m. among the four (4) plaintiffs and the defendants-spouses as follows a. b. c. d. e. Adoracion E. Cruz (1/5) Thelma Debbie Cruz (1/5) Gerry E. Cruz (1/5) Arnel E. Cruz (1/5)Spouses Eliseo and Virginia Malolos (1/5) 382 sq. m. 382 sq. m. 382 sq. m. 382 sq. m. 382 sq. m. to whom Lot No. 1-C-2-B-2-B-4-L-1-A with an field of operation of 276 sq. m. covered by TCT No. 502603 and a portion of Lot No. 1-C2-B-2-B-4-L-1-B covered by TCT No. 502604 to the extent of 106 sq. m. adjoining TCT No. 502603. 2. Ordering the parties herein to execute a labor of part in accordance with this decision indicating the partition of the seven (7) parcels of land within fifteen (15) days upon receipt of this judgment. 3. Ordering defendants-spouses to pay plaintiffs herein P5,000. 00 as and for attorneys fees 4. Cost of suit. On appeal, respondent Court reversed the trial court thus4 WHEREFORE, findi ng the appeal to be meritorious, we REVERSE the appealed decision and render judgment DISMISSING the complaint without prejudice however to the claim of plaintiff -appellees for their percents in the retort of the auction sale of the seven (7) parcels of land in irresolution against Nerissa Cruz Tamayo pursuant to the Memorandum contract. Cost against the plaintiff-appellees. As earlier stated, reconsideration was denied through and through the appellate courts challenged Resolution 5 WHEREFORE, for insufficiency of merit, the Motion for Reconsideration in DENIED. . The Antecedent Facts The facts of this case are undisputed. The assailed Decision relates them as follows6 Delfin I. Cruz and Adoracion Cruz were spouses and their children were Thelma, Nerissa, Arnel and Gerry Cruz. Upon the death of Delfin I. Cruz, his surviving spouse and children executed on August 22, 1977 a notarized Deed of Partial cleavage (Exhibit 2) by virtue of which each one of them was given a contr ibution of several parcels of registered lands all situat ed in Taytay, Rizal.The following day, August 23, 1977, the same mother and children executed a Memorandum system (Exhibit H) which provided That the parties hereto are common co-owners pro-indiviso in represent shares of the following registered real properties, all situated at Taytay, Rizal, Philippines, x x x. xxx That sometime on August 22, 1977, a Deed of Partial Partition was executed among us before Atty. Virgilio J. Tamayo, notary public Public on and for the Province of Rizal, per Doc. No. 1776 Page No. 14 of his Notarial Register No. XLIX, series of 1977 xxxThat as a result of tell partial(p) partition, the properties affected were actually partitioned and the respective shares of ea ch party, adjudicated to him/her That despite the execution of this Deed of Partial Partition and the eventu al giving medication or sale of their respective shares, the spying parties herein covenanted and agreed among themselves and by these presents do hereby bind themselves to one another that they shall share alike and received equal shares from the product of the sale of any lot or lots allotted to and adjudicated in their individual names by virtue of this deed of partial partition. That this Agreement shall continue to be valid and enforceable among the contracting parties herein up to and until the get lot covered by the Deed of Partial Partition above adverted to shall have been disposed of or interchange and the proceeds thereof equally divided and their respective shares received by each of them. This Memorandum Agreement was registered and annotated in the titles of the lands covered by the Deed of Partial Partition. Subsequently, the same parties caused the consolidation and subdivisions of the lands they respectively inherited from the late Delfin I.Cruz per Deed of Partial Partition. After that, they registered the Deed of Partial Partition and subdivision plans and titles were issued in their names. In the case of Nerissa Cruz Tamayo, the following titles were issued to her in her name TCT No. 502603 (Exhibit A), TCT No. 502604, (Exhibit B), TCT No. 502605 (Exhibit C), TCT No. 502606 (Exhibit D), TCT No. 502608 (Exhibit E), TCT No. 502609 (Exhibit F), TCT No. 502610 (Exhibit G), hereafter called the lands in interrogate. Naturally, the annotation pertaining to the Memorandum Agreement was carried in each of said seven (7) titles and annotated in each of them.Meanwhile, the spouses Eliseo and Virginia Malolos filed Civil Case No. 31231 against the spouses Nerissa Cruz -Tamayo and Nelson Tamayo for a sum of money. The Court of First Instance of Rizal, Branch xvi (Quezon City) rendered a decision of June 1, 1981 in favor of Eliseo and Virginia condemning the spouses Nerissa and Nelson Tamayo to pay them P126,529. 00 with 12% interest per annum from the filing of the complaint plus P5,000. 00 attorneys fee. After the finality of that decision, a writ of execution (Ex hibit J) was issued on November 20, 1981. Enforcing said writ, the sheriff of the court levied upon the lands in question.On June 29, 1983, these properties were sold in an execution sale to the highest bidders, the spouses Eliseo and Virginia Malolos. Accordingly, the sheriff executed a Certificate of Sale (Exhibit K) over all the rights, claims, interests, titles, shares, and participations of defendant spouses Nerissa Tamayo and Ne lson Tamayo.. Nerissa Cruz Tamayo failed to exercise her right of redemption within the statutory period and so the final deed of sale was executed by the sheriff conveying the lands in question to spouses Eliseo and Virginia Malolos.The Malolos gallus asked Nerissa Cruz Tamayo to give them the owners duplicate copy of the seven (7) titles of the lands in question but she refused. The jibe moved the court to compel her to surrender said titles to the Register of Deeds of Rizal for cancellation. This was granted on September 7, 1984. But Nerissa wa s adamant. She did not comply with the Order of the court and so the Malolos couple asked the court to declare said titles as null and void.At this point, Adoracion Cruz, Thelma Cruz, Gerry Cruz and Arnel Cruz entered the picture by filing is said lower court a motion for leave to intervene and oppose the Maloloses motion. The Cruzes alleged that they were co-owners of Nerissa Cruz Tamayo over the lands in question. On January 18, 1985, said court issued an Order modifying the Order of September 7, 1984 by directing the surrender of the owners duplicate copies of the titles of the lands in question to the Register of Deeds not for cancellation but for the annotation of the rights, interest acquired by the Maloloses over said lands.On February 17, 1987, Adoracion, Thelma, Gerry and Arnel Cruz filed Civil Case No. 961-A for Partition of Real Estate against spouses Eliseo and Virginia Malolos over the lands in question. As already stated in the first paragraph of this Decision, the cou rt a quo rendered a decision in favor of the plaintiffs from which the defendants appealed to this court, x x x x . Ruling of the Court of Appeals For respondent Court, the central issue was Did the Memorandum of Agreement MOA (Exhibit H)7 revoke, cancel or supersede the Deed of Partial Partition DPP (Exhibit 2)? 8 If so, then petitioners and Spouses Tamayo were co-owners of the land in issue, and partition should ensue upon motion of the former if not, then the latter are its absolute owners and to partition should be made. Respondent Court resolved the above question in the negative for the following reasons First, the DPP was not materially and substantially incompatible with the MOA. The DPP conferred absolute ownership of the parcels of land in issue on Nerissa Cruz Tamayo, while the MOA merely created an obligation on her part to share with the petitioners the proceeds of the sale of said properties.Second, the fact that private respondent registered the DPP was self-contra dictory with the allegation that they intended to abandon it. Indeed, had they meant to abandon it, they would have simply gathered the copies of said document and then torn of burned them. Third, petitioners were estopped from claiming co-ownership over the disputed properties because, as absolute owners, they either mortgaged or sold the other properties adjudicated to them by virtue of the DPP. Hence, this petition. 9 Assignment of ErrorsIn their Memorandum,10 petitioners submit the following assignment of errors A. Respondent Court erred in ruling that the Memorandum of Agreement (Exhibit H) does not prevail over the Deed of Partial Partition (Exhibit 2). B. sale. C. Respondent Court erred in ruling that petitioners can only claim their right to the proceeds of the auction Respondent Court erred in ruling that petitioners are in estoppel by deed. D. Respondent Court erred in ruling that the registration of the deed of partial partition precluded the petitioners from abrogating i t. E.Respondent Court erred when it completely ignored the finality of the order of the Regional Trial Court of Quezon City, Branch LXXXVI as embodied in the decision of the Regional Trial Court of Antipolo, Rizal, Branch 71. In fine, the resolution of this petition hinges of the following issues (1) whether DPP was cancelled or novated by the MOA (2) whether the MOA established, between petitioners and the judgment debtor, a co -ownership of the lots in question (3) whether petitioners are barred by estoppel from claiming co-ownership of the seven parcels of land and (4) whether res judicata has set in.The Courts Ruling The petition is unbeloved of merit. It fails to butt against any reversible error on the part of the Court of Appeals. First passing No Novation or Cancellation In their Memorandum, petitioners insist that the MOA categorically and unmistakably named and covenanted them as co owners of the parcels in issue and novated their earlier agreement, the Deed of Partial Part ition. Petitioners claim that the MOA clearly manifested their intention to create a co -ownership. This is particularly plain in Exhibit 1-B, which provides That despite the execution of this Deed of Partial Partition and eventual disposal or sale of their respective shares, the contracting parties herein covenanted and agreed among themselves and by these presents do hereby bind themselves to one another that they shall share and receive equal shares from the proceeds of the sale of any lot or lots allotted to and adjudicated in their individual names by virtue of this deed of partial partition. The Court disagrees. The foregoing readying in the MOA does not novate, much less cancel, the earlier DPP.Novation, one of the modes of extinguishing an obligation, requires the concurrence of the following (1) there is a previous valid obligation (2) the parties concerned agree to a new contract (3) the old contract is extinguished and (4) there is a valid new contract. 11Novati on may be express or implied. Article 1292 of the Code provides In order that an obligation may be extinguished by another which substitutes the same, it is imperative that it be so declared in unequivocal terms express novation,12 or that the old and new obligations be on every point incompatible with each other implied novation. Tested against the foregoing standards, petitioners stance is shattered to pieces. The stipulation that the petitioners and Spouses Tamayo were co-owners was merely the introductory part of the MOA, and it reads13 That the parties are common co-owners pro-indiviso in equal shares of the following registered real properties, all situated at Taytay, Rizal, Philippines. xxx xxx xxx xxx That sometime in August 22, 1977, a Deed of Partial Partition was executed among us before Atty. Virgilio J.Tamayo, Notary Public in and for the Province of Rizal, per Doc. No. 1796 Page No. 14 of his Notarial Register No. XLIX, Series of 1977 Following the above-quoted stipula tion is a statement that the subject parcels of land had in fact been partitioned, but that the former co-owner intended to share with petitioners the proceeds of any sale of said land,14 viz That as a result of said partial partition, the properties affected were actually partitioned and the respe ctive shares of each party, adjudicated to him/herThat despite the execution of this Deed of Partial Partition and the eventual disposal or sale of their respective shares, th e contracting parties herein covenanted and agreed among themselves and to one another that they shall do sic hereby bind themselves to one another that they shall share alike and receive equal shares from the proceeds of the sale of any lot or lots allotted to and adjudicated in their individual names by virtue of this deed of p artial partition That this Agreement shall continue to be valid and enforceable among the contracting parties herein up to and until the last lot covered by the deed or partial partition ab ove adverted to shall have been disposed of or sold and the procee ds thereof equally divided and their respective shares received by each of them. xxx xxx xxxThe MOA waterfall short of producing a novation, because it does not express a clear int ent to dissolve the old obligation as a consideration for the emergence of the new one. 15 Likewise, petitioners fail to show that the DPP and the MOA are materially and substantially incompatible with each other. Petitioners admit that, under the MOA, they and the Tamayo spouses agreed to equally share in the proceeds of the sale of the lots. 16 Indeed, the DPP granted title to the lots in question to the co-owner to whom they were assigned, and the MOA created an obligation on the part of such co -owner to share with the others the proceeds of the sale of such parcels. There is no incompatibility between these two contracts. Verily, the MOA cannot be construed as a repudiation of the earlier DPP.Both documents can exist together and must be so interpreted as to give life to both. Respondent Court aptly explained17 The Deed of Partition conferred upon Nerissa Cruz Tamayo absolute ownership over the lands in question. The Memorandum of Agreement merely created an obligation on the part of absolute owner Nerissa Cruz Tamayo to share with the appellees with sic the proceeds of the sale of said properties. The obligation of the owner of a piece of land to share with somebody with sic its fruits or the proceeds of its sale does not necessarily impair his dominion over the property much less make the benefactive role his co -owner thereof. All in all, the basic principle underlying this ruling is simple when t he text of a contract is explicit and leaves no doubt as to its intention, the court may not read into it any intention that would contradict its plain import. 18 The hornbook rule on interpretation of contracts gives primacy to the intention of the parties, which is the law among them. Ultimately, their intention is to be deciphered not from the unilateral post facto assertions of one of the parties, but from the language used in the contract. And when the terms of the agreement, as expressed in such language, are clear, they are to be tacit literally, just as they appear on the face of the contract. Indeed, the legal effects of a contract are determined by extracting the intention of the parties from the language they used and from their contemporaneous and subsequent acts. 19 This principle gains more force when third parties are concerned. To require such persons to go beyond what is clearly written in the document is unfair and unjust. They cannot possibly delve into the contracting parties minds and suspect that something is amiss, when the language of th e instrument appears clear and unequivocal. Second Issue No Co-ownership in the MOA Petitioners contend that they converted their separate and individual ownership over the lands in dispute into a co ownership by their execution of the MOA and the annotation thereof on the separate titles. The Court is not convinced. The very provisions of the MOA belie the existence of a co -ownership.First, it retains the partition of the properties, which petitioners supposedly placed in co -ownership and, second, it vests in the registered owner the power to dispose of the land adjudicated to him or her under the DPP. These are antithetical to the petitioners contention. In a co-ownership, an undivided thing or right belongs to two or more persons. 20 Put differently, several persons hold common dominion over a spiritual (or ideal) part of a thing, which is not physically divided. 21 In the present case, however, the parcels of land in the MOA have all been partitioned and titled under separate and individual names. More important, the MOA stipulated that the registered owner could sell the land without the consent of the other parties to the MOA.Jus disponendi is an attribute of ownership, and only the owner can dispose of a property. 22 Contrary to petitioners claim, the annotation of the MOA in the certificate of title did not engender any co -ownership. W ell settled is the doctrine that registration merely confirms, but does not confer, title. 23 It does not give the holder any better title than what he actually has. As earlier observed, the MOA did not make petitioners co-owners of the disputed parcels of land. Hence, the annotation of this document in the separate certificates of title did not grant them a greater right over the same property. Third Issue Estoppel by DeedRespondent Court found that several deeds of sale and real estate mortgage, which petitioners executed when they sold or mortgaged some parcels adjudicated to them under the DPP, contained the statement that the vendor/mortgagor was the absolute owner of the parcel of residential land and that he or she represented it as free from liens and encumbrances. On the basis of these pieces of evidence, respondent Court held that petitio ners were estopped from claiming that there was a co-ownership over the disputed parcels of land which were also covered by the DPP. Petitioners contend that Respondent Court , in so ruling violated the res inter alios acta rule. Petitioners contentions is untenable.Res inter alios acta, as a general rule, prohibits the admission of evidence that tends to show that what a person has done at one time is probative of the contention that he has done a similar as act at another time. 24 Evidence of similar acts or occurrences compels the dependant to meet allegation s that are not mentioned in the complaint, confuses him in his defense, raises a variety of ir germane(predicate) issues, and diverts the attention of the court from th e issues immediately before it. Hence, this evidentiary rule guards against the practical inconven ience of trying collateral issues and protracting the trial and prevents surprise or other mischief prejudicial to litigants. 25 The rule, however, is not witho ut exception.W hile inadmissible in general, collateral facts may be received as evidence under exceptional circumstances, as when there is a rational similarity or resemblance between the conditions giving rise to the fact offered and the circumstances surrounding the issue or fact to be proved. 26 Evidence of similar acts may frequently become relevant, especially in actions based on fraud and deceit , because it sheds light on the state of mind or knowledge of a persons it provides insight into such persons motive or intent it uncovers a scheme, design or plan or it reveals a mistake. 27 In this case, petitioners argue that transactions relating to the other parcels of land they entered into, in the notion of absolute owners, are inadmissible as evidence to show that the parcels in issue are not co -owned.The court is not persuaded. Evidence of such transactions falls under the exception to the rule on the res inter alios acta. Such evidence is admissible because it is relevant to an issue in the case and corroborative of evidence already received. 28 The relevancy of such transactions is readily apparent. The nature of ownership of said property should be the same as that of the lots on question since they are all subject to the MOA. If the parcels of land were held and disposed by petitioners in fee simple, in the concept of absolute owners, then the lots in question should similarly be treated as abruptly owned in fee simple by the Tamayo spouses.Unmistakably, the evidence in dispute manifests petitioners common purpose and design to treat all the parcels of land covered by the DPP as absolutely owned and not subject to co -ownership. 29 Under the principle of estoppel, petitioners are barred from claiming co-ownership of the lands in issue. In estoppel, a person, who by his deed or conduct has introduced another to act in a particular m anner, is barred from adopting an inconsistent position, attitude or course of conduct that thereby causes loss or i njury to another. 30 It further bars him from denying the truth of a fact which has, in the contemplation of law, become settled by the acts and transactions of judicial or legislative officers or by the act of the party himself, either by conventional writing or by representations, express or im plied or in pairs. 31In their transaction with others, petitioners have declared that the other lands covered by the same MOA are absolutely owned, without indicating the existence of a co-ownership over such properties. Thus, they are estopped from claiming otherwise because, by their very own acts and representations as evidenced by the deeds of mortgage and of sale, they have denied such co-ownership. 32 FOURTH ISSUES No Res Judicata On Co-ownership Petitioners argue that the Order (Exhibit J)33 dated January 18, 1985, issued by the RTC of Quezon City, Branch 86, which had long become final and executory, confirmed their co-ownership. Thus, they claim that Respondent Courts reversal of the ruling of the RTC of Antipolo, Rizal, is a violation of the rule on res judicata. This contention is equally untenable.The elements of res judicata are (1) the former judgment was final (2) the court which rendered it had jurisdiction over the subject matter and the parties(3) the judgment was on the merits and (4) the parties, subject matters and causes of action in the first and second actions are identical. 34 The RTC of Quezon City had no jurisdiction to decide on the merits of the present case or to entertain questions regarding the existence of co-ownership over the parcels in dispute, because the suit pending before it was only for the collection of a sum of money. Its disquisition on co-ownership was merely for the levy and the execution of the properties of the Tamayo spouses, in satisfaction of their judgment debt to the private respondents. Perhaps more glaring is the overleap of identity between the two actions.The first action before the RTC of Quezon City was for the collection of money, while the second before the RTC of Antipolo, Rizal, was for partition. There being no concurrence of the elements of res judicata in this case, the Court finds no error in Respondent Courts ruling. No further discussion is needed to show the glaring difference between the two controversies. WHEREFORE, the petition is hereby DENIED and the assailed Decision is Affirmed. Cost against petitioners. SO ORDERED. Davide, Jr. , (Chairman), Bellosillo, Vitug, and Quisumbing, JJ. , concur. THIRD DIVISION G. R. No. 134559. December 9, 1999 ANTONIA TORRES, assisted by her husband, ANGELO TORRES and EMETERIA BARING, petitioners, vs.COURT OF APPEALS and MANUEL TORRES,respondents. DECISION PANGANIBAN, J. Courts may not extricate parties from the necessary consequences of their acts. That the terms of a contract turn out to be financially disadvantageous to them will not relieve them of their obligations therein. The lack of an inventory of real property will not ipso fac to release the contracting partners from their respective obligations to each other arising from acts executed in accordance with their agreement. The Case The Petition for Review on Certiorari before us assails the March 5, 1998 Decision 1 Second Division of the Court of Appeals2 (CA) in CA-GR CV No. 2378 and its June 25, 1998 Resolution denying reconsideration. The assailed Decision affirmed the ruling of the Regional Trial Court (RTC) of Cebu City in Civil Case No. R -21208, which disposed as follows WHEREFORE, for all the foregoing considerations, the Court, finding for the defendant and against the plaintiffs, orders the dismissal of the plaintiffs complaint. The counterclaims of the defendant are likewise ordered dismissed. No pronouncement as to costs. 3 The Facts Sisters Antonia Torres and Emeteria Baring, herein petitioners, entered into a enunciate venture agreement with Respondent Manuel Torres for the discipline of a parcel of land into a subdivision.Pursuant to the co ntract, they executed a Deed of Sale covering the said parcel of land in favor of respondent, who then had it registered in his name. By mortgaging the property, respondent obtained from Equitable Bank a loan ofP40,000 which, under the Joint Venture Agreement, was to be used for the development of the subdivision. 4 All three of them also agreed to share the proceeds from the sale of the subdivided lots. The project did not push through, and the land was subsequently foreclosed by the bank. According to petitioners, the project failed because of respondents lack of funds or means and skills. They add that respondent used the loan not for the development of the subdivision, but in furtherance of his own company, Universal Umbrell a Company.On the other hand, respondent alleged that he used the loan to implement the Agreement. With the said amount, he was able to effect the survey and the subdivision of the lots. He secured the Lapu Lapu City Councils approval of the subdivision proj ect which he advertised in a local newspaper. He also caused the construction of roads, curbs and gutters. Likewise, he entered into a contract with an engineering firm for the building of sixty low -cost housing units and actually even set up a model house on one of the subdivision lots. He did all of these for a total expense of P85,000. Respondent claimed that the subdivision project failed, however, because petitioners and their relatives had independently cause d the annotations of dverse claims on the title to the land, which eventually scared away prospective buyers. Despite his requests, petitioners refused to cause the clearing of the claims, thereby forcing him to give up on the project. 5 Subsequently, petitioners filed a criminal case for estafa against respondent and his wife, who were however acquitted. Thereafter, they filed the present civil case which, upon respondents motion, was later dismissed by the trial court in an Order dated September 6, 1982. On appeal, how ever, the appellate court remanded the case for further proceedings. Thereafter, the RTC issued its assailed Decision, which, as earlier stated, was affirmed by the CA. Hence, this Petition. 6 Ruling of the Court of AppealsIn affirming the trial court, the Court of Appeals held that petitioners and respondent had formed a partnership for the development of the subdivision. Thus, they must bear the loss suffered by the partnership in the same proportion as their share in the profits stipulated in the contract. Disagreeing with the trial courts pronouncement that losses as substantially as profits in a joint venture should be distributed equally,7 the CA invoked Article 1797 of the Civil Code which provides Article 1797 The losses and profits shall be distributed in conformity with the agreement. If only the share of each partner in the profits has been agreed upon, the share of each in the losses shall be in the same proportion. The CA elucidated further In the absence of stipulat ion, the share of each partner in th e profits and losses shall be in proportion to what he may have contributed, but the industrial partner shall not be liable for the losses. As for the profits, the industrial partner shall receive such share as may be just and equitable under the circumstances. If besides his services he has contributed capital, he shall also receive a share in the profits in proportion to his capital. The Issue Petitioners impute to the Court of Appeals the following error x x x The Court of Appeals erred in conclud ing that the transaction x x x between the petitioners and respondent was that of a joint venture/partnership, ignoring outright the provision of Article 1769, and other related provisions of the Civil Code of the Philippines. 8 The Courts RulingThe Petition is bereft of merit. Main Issue Existence of a Partnership Petitioners deny having formed a partnership with respondent.