FIRST DIVISION

[G.R. No. 116847. March 16, 2001]

MANUFACTURERS BUILDING, INC., petitioner, vs. COURT OF APPEALS, PHILIPPINE MERCHANT MARINE SCHOOL and JUAN NOLASCO III, respondents.

D E C I S I O N

PARDO, J.:

Petitioner appeals via certiorari from the decision[1] of the Court of Appeals affirming in toto that of the Regional Trial Court, Branch 46, Manila[2] denying the petition for injunction filed by petitioner and ordering the sheriff to proceed with the public auction sale of the property levied upon to satisfy what was due respondent in the sum of P1,520,065.75.

The facts of the case are as follows:

In 1979 and 1980, Philippine Merchant Marine School (PMMS) leased from petitioner Manufacturers Building, Inc. (Manufacturers) three (3) portions of Manufacturers Building, located at Plaza Sta. Cruz, Manila: (1) 5th floor, leased on January 1979, at a monthly rental of P20,000.00; (2) Room No. 406, leased on February 1979, at a monthly rental of P3,800.00; and (3) basement, leased on June 19, 1980, at a monthly rental of P4,000.00.[3]

Respondents later became delinquent in paying their monthly rentals. On April 12, 1984, petitioner filed with the Metropolitan Trial Court, Manila a complaint for ejectment[4] against respondents for non-payment of rentals.

On May 07, 1984, the parties executed a compromise agreement, which the trial court approved on May 21, 1984.[5] The compromise agreement specifically provided:

1. That defendants admit all the allegations of the Complaint dated April 11, 1984, particularly their rental indebtedness and other miscellaneous charges (par. 3, p. 2), as well as their succeeding monthly rentals and other miscellaneous charges in the total sum of P510,200.03 as of June 1984;

2. That defendants state that plaintiff is entitled to an Ejectment Decision and a Writ of Execution for their failure to pay their aforesaid rental indebtedness and other miscellaneous charges, but they have requested plaintiff to give them another chance to remain in the leased commercial premises;

3. That pursuant to the above request, the defendants agree to pay to plaintiff a reasonable monthly rental of P9,575.00, P40,320.00 and P13,630.00, beginning July, 1984 and every month thereafter;

4. That likewise, as a consequence of the above request, the defendants agree and obligate themselves to pay to plaintiff the above mentioned rental indebtedness and other miscellaneous charges in the sum of P510,220.03 in the installment basis, itemized as follows:

(a) To be paid on or before May 18, 1984;

1st installment of arrears P66,957.07

1 interest of remaining balance 6,648.64

TOTAL P73,605.71

(b) To be paid on or before June 15, 1984;

2nd installment of arrears P443,242.46

Electricity 3,129.00

P446,371.46

5. That defendants agree and obligate themselves to pay to plaintiff the succeeding monthly rental and other miscellaneous charges beginning July, 1984 within the first five (5) days of the month and every month thereafter;

6. That notwithstanding the above stipulations, should there be any increase of rental (per square meter) and other miscellaneous charges of the adjacent and similarly situated office premises within the Manufacturers Building, the defendants agree to pay such reasonable charges equal to monthly rental and other charges to be paid by the adjacent and similarly situated office premises within the said building;

7. That defendants further agree that their failure to comply with any of the aforementioned stipulations shall entitle the plaintiff to the immediate Issuance of a Writ of Execution for the ejectment of the defendants and others claiming under them from the premises (Rm. 406, 5th Floor, and part of Basement Manufacturers Building, Plaza Sta. Cruz, Manila) involved in this case.[6]

However, respondents failed to comply with the terms and conditions of the compromise agreement.[7]

Beginning July 1984, petitioner increased the monthly rental to P40,320.00, for the fifth floor; P9,575.00, for Room 406; and P13,630.00, for the basement.[8]

On April 23, 1985, petitioner filed with the trial court a motion for writ of execution[9], which the trial court granted on May 3, 1985. Due to repeated requests of respondents and the promise that they would settle the rental arrearages, petitioner did not enforce the writ of execution.[10] On July 30, 1986, petitioner filed with the trial court an urgent motion for an alias writ of execution,[11] which the court granted on August 4, 1986.[12]

On January 23, 1986, respondents executed a deed of second real estate mortgage in favor of petitioner to guarantee the payment of their rental arrearages, the pertinent portion of which reads:

NOW THEREFORE, for and in consideration of the foregoing premises and of the terms and conditions hereinafter set forth, the parties hereto have agreed and covenanted, as they agree and covenant, as follows:

(1) That to secure payment of the amount of P823,494.50 within the period of time hereinafter stipulated, the MORTGAGOR hereby transfers and conveys, by way of second mortgage, in favor of the SECOND MORTGAGEE, the afore-mentioned parcels of land covered by Transfer Certificate of Titles Nos. S-100612 and S-100613, it being agreed and understood that the prior mortgage liens over the said two (2) parcels of land in favor of the Philippine Commercial International Bank shall be superior to this second lien and that this second mortgage shall be subject to the approval of said PCIB as first lien holder.

(2) The MORTGAGOR hereby agrees and undertakes to pay the amount of P823,494.50 to the herein SECOND MORTGAGEE within a period of six (6) months counted from date of execution hereof, with legal interest of 12% on outstanding balances.

(3) It shall be special condition of this instrument, that should the MORTGAGOR truly and faithfully comply with its herein undertaking and settle its account in full with the SECOND MORTAGAGEE within the period of time herein stipulated, then this second mortgage shall be rendered automatically cancelled and be null and void; otherwise, the same shall remain in full force and effect and the SECOND MORTGAGEE shall have the right to foreclose the same either judicially or extra-judicially in accordance with the provisions of law.

(4) All expenses for registration of this second mortgage and the annotation thereof on TCTs Nos. S-100612 and S-100613 including documentary stamps, and other incidental expenses shall be for the account of the MORTGAGOR.[13]

Respondents offered to pay their obligation within six (6) months from execution of the second mortgage, with legal interest of 12%, per annum, on the outstanding balance.[14]

On July 30, 1986, petitioner filed with the trial court an urgent motion for an alias writ of execution,[15] which the court granted on August 4, 1986.

On August 22, 1986, the sheriff of Manila levied upon the property of respondents consisting of two (2) parcels of land with TCT Nos. 100612 and 100613 registered under the name of Philippine Merchant Marine School.[16]

On October 30, 1986, respondents vacated the leased premises. However, two (2) of these, the 5th floor and Room 406, suffered considerable damage requiring repair and rehabilitation in the amounts of P112,020.00 and P39,500.00, respectively. Petitioner included the cost of repairs in the summary of rental account of respondents.

On February 19, 1987, the trial court issued another alias writ of execution pursuant to the compromise judgment, which reads:

Finding merit in the Urgent Motion For Issuance Of Alias Writ Of Execution filed by plaintiff through counsel, this Court hereby resolves to GRANT the same.

WHEREFORE, let an alias writ of execution be now issued in the above-entitled case.

SO ORDERED.

Manila, Philippines, February 19, 1987.

(ORIGINAL SIGNED)

EMELITA HABACON-GARAYBLAS

Presiding Judge[17]

On September 19, 1987, petitioner sent a letter to respondents demanding payment of the aggregate amount of P1,710,266.88.[18] On November 23, 1989, petitioner instructed the sheriff to proceed with the levy on execution.[19]

On December 5, 1989, the sheriff of Manila issued a notice of sale on execution of real property, setting the sale at public auction of the two (2) parcels of land on December 29, 1989.

On December 19, 1989, respondents filed with the Regional Trial Court, Branch 46, Manila a petition for injunction[20] to enjoin the auction sale.

Petitioner opposed the petition on the ground that the amount of P446,371.46 had been partially settled by the sale of the personal property of PMMS. Further, assuming that it still owed petitioner, the property levied upon could not be sold at public auction since the judgment by compromise did not stipulate for levy and sale of any property. It merely provided for the ejectment of respondents, and they vacated the premises on October 31, 1986.

On November 2, 1990, the Regional Trial Court rendered a decision dismissing the petition for injunction.[21] The trial court ruled that the deed of second mortgage provided for the imposition of 12% interest per annum on the outstanding balance. Hence, 1% interest is chargeable per month, contrary to petitioners allegation of 2 % interest per month. In determining the monthly rentals commencing February 1, 1986, the rental rates stipulated in the judgment by compromise were used. The dispositive portion reads:

WHEREFORE, the Petition is ordered DISMISSED and the Sheriff may proceed with the public auction of the property levied upon in order to satisfy what is due the defendant in the sum of P1,520,065.75 computed until December 31, 1990.

SO ORDERED.

Manila, November 2, 1990.

(Sgd.)

TERESITA DY-LIACCO FLORES

Judge[22]

On December 21, 1991, petitioner moved the trial court for partial reconsideration of its decision, particularly the computation of respondents rental arrearages.[23] Petitioner claimed that the amount in arrears was more than P1,520,065.75.

On March 5, 1991, the trial court denied the motion for reconsideration.[24] Hence, both parties filed their respective appeals with the Court of Appeals.[25]

Petitioner alleged that the trial court erred in: (1) applying the 1% interest per month, instead of 2.5 %; (2) fixing the monthly rentals of respondent in the total sum of P63,525.00; and (3) denying its claim for damages for the repair and rehabilitation of the leased premises.

Respondents, on the other hand, questioned the validity of the public auction sale because the amount of P446,371.46 representing unpaid rents ending June 1984, had been paid.

On June 15, 1994, the Court of Appeals promulgated a decision ruling that the parties were bound by the terms of the compromise. Since they reduced their agreements to writing, they were presumed to have intended the writing as the only evidence of their agreement. Hence, the documents submitted by petitioner as proof of the alleged change in the monthly rental and stipulated interest on the rental arrearages may not be admitted to vary the terms of the written agreement.

With regard to the claim for damages, the Court of Appeals denied the claim in the absence of proof of damage. The properties could be sold at public auction because it was clearly authorized under paragraphs 2 and 7 of the compromise agreement. The dispositive portion reads:

WHEREFORE, the separate appeals are hereby DISMISSED and the decision dated November 2, 1990 is hereby AFFIRMED in toto. No pronouncement is made as to costs.

SO ORDERED.[26]

On July 11, 1994, petitioner moved for reconsideration of the decision of the Court of Appeals,[27] but the court denied the motion on August 19, 1994.[28]

Hence, this petition.[29]

Petitioner alleged that the Court of Appeals erred in: (1) applying the parol evidence rule in computing the monthly rental; (2) upholding the trial courts ruling that the legal interest of 12% interest per annum, instead of the subsequent agreement of 2.5% per month or a total of 30% per annum, is chargeable on the outstanding balance of the rental arrearages; and (3) ruling that petitioner is not entitled to damages for the repair and rehabilitation of the leased premises.[30]

We find the petition without merit.

It is a well-settled rule that factual findings of the trial court, adopted and confirmed by the Court of Appeals, are final and conclusive and may not be reviewed on appeal.[31] The exceptions to this rule are as follows: (1) when the inference made is manifestly mistaken, absurd or impossible; (2) when there is a grave abuse of discretion; (3) when the findings are grounded entirely on speculations, surmises or conjectures; (4) when the judgment of the Court of Appeals is based on misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (7) when the findings of the Court of Appeals are contrary to those of the trial court; (8) when the findings of fact are conclusions without citation of specific evidence on which they are based; (9) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion and (10) when the findings of fact of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on record.[32]

Only a clear showing that any of the aforecited exceptions exist would justify a review of the findings of fact of the lower court and upheld by the Court of Appeals.[33]

After a careful scrutiny of the decision of the trial court, as well as that of the Court of Appeals, we find that the instant case does not fall under any of the aforecited exceptions.

As elucidated by the Court of Appeals, the parties were bound by the terms of their written agreements. They cannot vary or alter the terms as contained in this agreement as they were bound by the parol evidence rule. The so-called parole evidence rule forbids any addition to or contradiction of the terms of a written instrument by testimony or other evidence purporting to show that, at or before the execution of the parties written agreement, other or different terms were agreed upon by the parties, varying the purport of the written contract. When an agreement has been reduced to writing, the parties cannot be permitted to adduce evidence to prove alleged practices, which to all purposes would alter the terms of the written agreement. Whatever is not found in the writing is understood to have been waived and abandoned.[34]

The rule is not without exceptions, however, as it is likewise provided that a party to an action may present evidence to modify, explain, or add to the terms of the written agreement if he puts in issue in his pleadings: (a) An intrinsic ambiguity, mistake or imperfection in the written agreement; (b) The failure of the written agreement to express the true intent and agreement of the parties thereto; (c) The validity of the written agreement; or (d) The existence of other terms agreed to by the parties or their successors in interest after the execution of the written agreement.[35] None of these exceptions finds application in the instant case.

With regard to the claim for an increased rate of interest, we affirm the ruling of the trial court. Based on the deed of second mortgage, the parties agreed on a rate of 12% interest per annum. The provisions of this deed expressly stipulated that there would be 12% interest per annum on the outstanding balance. The rate of interest which they might have agreed upon earlier has been obliterated or superseded by the new agreement.

Neither is petitioner entitled to compounded or accumulated interest. There was no agreement regarding this either in the compromise agreement or in the deed of second mortgage. The law clearly provides that interest due and unpaid shall not earn interest, unless the contracting parties stipulate to capitalize the interest due and unpaid, which as added to the principal, shall earn new interest.[36]

Lastly, petitioner is not entitled to claim for damages for the cost of repair and rehabilitation of the two (2) units vacated by respondent. As found by the trial court and affirmed by the appellate court, petitioner failed to adduce sufficient evidence to support its claim. Hence, the denial of the claim for actual damages. Absent proof of the amount of actual damage sustained, the Court cannot rely on speculations, conjectures, or guesswork as to the fact and amount of damages, but must depend upon competent proof that they have been suffered by the injured party and on the best obtainable evidence of the actual amount thereof.[37] To seek recovery of actual damages, it is necessary to prove the actual amount of loss with a reasonable degree of certainty, premised on competent proof and on the best evidence obtainable by the injured party.[38]

Hence, we can not grant the petition. The Court of Appeals did not err or gravely abuse its discretion in affirming in toto the decision of the trial court.

WHEREFORE, the Court DENIES the petition for lack of merit. The Court AFFIRMS the decision of the Court of Appeals in CA-G. R. CV No. 32312.

No costs.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Ynares-Santiago, JJ., concur.



[1] In CA-G. R. CV No. 32312, promulgated on June 15, 1994, Labitoria, J., ponente, Cui and Martin, Jr., JJ., concurring. Petition, Annex A, Rollo, pp. 33-47.

[2] In Civil Case No. 89-51395, Decision dated November 22, 1990, Judge Teresita Dy-Liacco Flores, presiding. Petition, Annex M, Rollo, pp. 129-139.

[3] Petition, Annex P, Brief for Manufacturers Building, Inc., Rollo, pp. 153-169, 155.

[4] Docketed as MTC Civil Case No. 098646; Petition for Review, Annex B, Rollo, pp. 50-53.

[5] Rollo, p. 10.

[6] Petition for Review, Annex C, Rollo, pp. 54-56.

[7] Rollo, p. 10.

[8] Petition, Annex P, supra, Note 3, on p. 155.

[9] Petition for Review, Rollo, pp. 57-59.

[10] Rollo, p. 10.

[11] Petition for Review, Rollo, pp. 60-62.

[12] Rollo, p. 10.

[13] Petition for Review, Annex I-5, Rollo, pp. 87-88.

[14] Ibid., p. 88.

[15] Petition, Annex E, Rollo, pp. 60-62.

[16] Petition, Annex F, Rollo, pp. 63.

[17] Petition for Review, Annex I-8, Rollo, p. 97.

[18] Petition, Annex A, CA Decision, Rollo, pp. 33-47, 37.

[19] Ibid., Rollo, p. 38.

[20] Docketed as RTC Case No. 89-51395; Petition for Review, Annex G, Rollo, pp. 66-69.

[21] Petition, Annex M, Rollo, pp. 129-139.

[22] Regional Trial Court Decision, Rollo, pp. 129-139, on p. 139.

[23] Rollo, pp. 140-148.

[24] Petition, Annex O", Rollo, p. 152.

[25] RTC Record, pp. 128, 131. Docketed as CA-G. R. CV No. 32312.

[26] Rollo, pp. 46-47.

[27] Rollo, pp. 187-204.

[28] Rollo, p. 49.

[29] Petition filed on October 3, 1994, Rollo, pp. 8-30. On March 25, 1996, we gave due course to the petition (Rollo, p. 259).

[30] Petition for Review, Rollo, pp. 16-17.

[31] Gonzales v. Court of Appeals, 298 SCRA 322 [1998]; Lagandaon v. Court of Appeals, 290 SCRA 330 [1998]; Halili v. Court of Appeals, 350 Phil.906 [1998]; Salao v. Court of Appeals, 348 Phil. 529 [1998].

[32] Polotan, Sr. v. Court of Appeals, 296 SCRA 247, 254 [1998], citing Reyes v. Court of Appeals, 328 Phil. 171 [1996].

[33] Polotan, Sr. v. Court of Appeals, supra, Note 28, on p. 255.

[34] CKH Industrial and Development Corporation v. Court of Appeals, 338 Phil. 837, 851 [1997].

[35] CKH Industrial and Development Corporation v. Court of Appeals, supra, Note 34, on p. 851.

[36] Article 1959, Civil Code.

[37] Development Bank of the Philippines v. Court of Appeals, 348 Phil. 15 [1998].

[38] People v. Oliano, 350 Phil. 604 [1998].