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NORBERTO QUISUMBING, LOEFFLER petitioners, vs. COURT OF APPEALS and INC., respondents.

SR.,

and

GUNTHER AIR LINES,

8. Upon landing at the Manila International Airport. 'Zaldy' and his three companions succeeded in escaping. Demands were thereafter made on PAL by Quisumbing and Loeffler "to indemnify ... (them) on their aforesaid loss, but ... (PAL) refused ... (averring that) it is not liable to (them) in law or in fact." 2 Contending that the "aforesaid loss is a result of breach of ... (PAL's) contractual obligation to carry ... (them) and their belongings and effects to their Manila destination without loss or damage, and constitutes a serious dereliction of ... (PAL's) legal duty to exercise extraordinary diligence in the vigilance over the same." , Quisumbing and Loeffler brought suit against PAL in the Court of First Instance of Rizal, as stated in this opinion's opening paragraph, to recover the value of the property lost by them to the robbers as well as moral and exemplary damages, attorney's fees and expenses of litigation. 3 The plaintiffs declared that their suit was instituted "... pursuant to Civil Code articles 1754, 998, 2000 and 2001 and on the ground that in relation to said Civil Code article 2001 the complained-of act of the armed robbers is not a force majeure, as the 'use of arms' or 'irresistible force' was not taken advantage of by said armed robbers in gaining entrance to defendant's ill-fated plane in questions. And, with respect to said Civil Code article 1998, it is not essential that the lost effects and belongings of plaintiffs were actually delivered to defendant's plane personnel or that the latter were notified thereof (De los Santos v. Tamn Khey, [CA] 58 O.G. 7693)." 4 PAL filed answer denying liability, alleging inter alia that the robbery during the flight and after the aircraft was forcibly landed at the Manila Airport did indeed constitute force majeure, and neither of the plaintiffs had notified PAL "or its crew or employees that they were in possession of cash, German marks and valuable jewelries and watches" or surrendered said items to "the crew or personnel on board the aircraft." 5 After trial, the Court of First Instance rendered judgment 'dismissing plaintiffs' complaint with costs against ... (them)." 6 The Court opined that since the plaintiffs "did not notify defendant or its employees that they were in possession of the cash, jewelries, and the wallet they are now claiming," the very provision of law invoked by them, Article 1998 of the Civil Code, denies them any recourse against PAL. The Court also pointed out that... while it is true that the use of gems was not taken advantage of by the robbers in gaining entrance to defendant's ill-fated plane, the armed robbery that took place constitutes force majeure for which defendant is not liable because the robbers were able to gain entrance to the plane with the guns they used already in their possession, which fact could not have been prevented nor avoided by the defendant since it was not authorized to search its passengers for firearms and deadly weapons as shown in Exhibits '6', '7', '8,' and '8-A.' As its robbery constitutes force majeure, defendant is not liable. The plaintiffs appealed to the Court of Appeals. 7 The Court affirmed the trial court's judgment. 8 It rejected the argument that "the use of arms or ... irresistible force" referred to in Article 2001 constitutes force majeure only if resorted to gain entry into the airplane, and not if it attends "the robbery itself." The Court ruled that under the facts, "the highjacking-robbery was force majeure," observing that ... hijackers do not board an airplane through a blatant display of firepower and violent fury. Firearms, hand-grenades, dynamite, and explosives are introduced into the airplane surreptitiously and with the utmost cunning and stealth, although there is an occasional use of innocent hostages who will be coldly murdered unless a plane is given to the hijackers' complete disposal. The objective of modern-day hijackers is to display the irresistible force amounting to force

PHILIPPINE

Having met with no success in the Court of First Instance of Rizal and in the Court of Appeals, the petitioners are now in this Court in a third and final attempt to recover from the Philippine Airlines, Inc. (hereafter, simply PAL) the value of jewelry, other valuables and money taken from them by four (4) armed robbers on board one of the latter's airplanes while on a flight from Mactan City to Manila, as well as moral and exemplary damages, attorney's fees and expenses of litigation. The petitioners accept the correctness of the basic facts adopted by the Court of Appeals from the judgment of the Court of First Instance, to wit: 1 1. . . . Norberto Quisumbing, Sr. and Gunther Leoffler were among the of ... (PAL's) Fokker 'Friendship' PIC-536 plane in its flight of November 6,1968 which left Mactan City at about 7:30 in the evening with Manila for its destination. 2. After the plane had taken off, Florencio O. Villarin, a Senior NBI Agent who was also a passenger of the said plane, noticed a certain 'Zaldy,' a suspect in the killing of Judge Valdez, seated at the front seat near the door leading to the cockpit of the plane. A check by Villarin with the passenger's ticket in the possession of flight Stewardess Annie Bontigao, who was seated at the last seat right row, revealed that 'Zaldy' had used the name 'Cardente,' one of his aliases known to Villarin. Villarin also came to know from the stewardess that 'Zaldy' had three companions on board the plane." 3. Villarin then scribbled a note addressed to the pilot of the plane requesting the latter to contact NBI duty agents in Manila for the said agents to ask the Director of the NBI to send about six NBI agents to meet the plane because the suspect in the killing of Judge Valdez was on board (Exh. 'G'). The said note was handed by Villarin to the stewardess who in tum gave the same to the pilot. 4. After receiving the note, which was about 15 minutes after take off, the pilot of the plane, Capt. Luis Bonnevie, Jr., came out of the cockpit and sat beside Villarin at the rear portion of the plane and explained that he could not send the message because it would be heard by all ground aircraft stations. Villarin, however, told the pilot of the danger of commission of violent acts on board the plane by the notorious 'Zaldy' and his three companions. 5. While the pilot and Villarin were talking, 'Zaldy' and one of his companions walked to the rear and stood behind them. Capt. Bonnevie then stood up and went back to the cockpit. 'Zaldy' and his companions returned to their seats, but after a few minutes they moved back to the rear throwing ugly looks at Villarin who, sensing danger, stood up and went back to his original seat across the aisle on the second to the last seat near the window. 'Zaldy and his companion likewise went back to their respective seats in front. 6. Soon thereafter an exchange of gunshots ensued between Villarin and 'Zaldy' and the latter's companions. 'Zaldy' announced to the passengers and the pilots in the cockpit that it was a hold-up and ordered the pilot not to send any SOS. The hold-uppers divested passengers of their belongings. 7. Specifically, ... Norberto Quisumbing, Sr. was divested of jewelries and cash in the total amount of P18,650.00 out of which recoveries were made amounting to P4,550.00. . . Gunther Leoffler was divested of a wrist watch, cash and a wallet in the total of P1,700.00. As a result of the incident ... Quisumbing, Sr.suffered shock, because a gun had been pointed at him by one of the holduppers.
1

Necessary Deposit

majeure only when it is most effective and that is when the jetliner is winging its way at Himalayan altitudes and ill-advised heroics by either crew or passengers would send the multi-million peso airplane and the priceless lives of all its occupants into certain death and destruction. ... The Appellate Court also ruled that in light of the evidence PAL could not be faulted for want of diligence, particularly for failing "to take positive measures to implement Civil Aeronautics Administration regulations prohibiting civilians from carrying firearms on board aircrafts;" and that "the absence of coded transmissions, the amateurish behaviour of the pilot in dealing with the NBI agent, the allegedly open cockpit door, and the failure to return to Mactan, in the light of the circumstances of the case ..., were not negligent acts sufficient to overcome the force majeure nature of the armed robbery." In fact, the Court went on to says, 9 ... it is illusive to assume that had these precautions been taken, the hijacking or the robbery would not have succeeded. The mandatory use of the most sophisticated electronic detection devices and magnetometers, the imposition of severe penalties, the development of screening procedures, the compilation of hijacker behavioural profiles, the assignment of sky marshals, and the weight of outraged world opinion may have minimized hijackings but all these have proved ineffective against truly determined hijackers. World experience shows that if a group of armed hijackers want to take over a plane in flight, they can elude the latest combined government and airline industry measures. And as our own experience in Zamboanga City illustrates, the use of force to overcome hijackers, results in the death and injury of innocent passengers and crew members. We are not in the least bit suggesting that the Philippine Airlines should not do everything humanly possible to protect passengers from hijackers' acts. We merely state that where the defendant has faithfully complied with the requirements of government agencies and adhered to the established procedures and precautions of the airline industry at any particular time, its failure to take certain steps that a passenger in hindsight believes should have been taken is not the negligence or misconduct which mingles with force majeure as an active and cooperative cause. Under the circumstance of the instant case, the acts of the airline and its crew cannot be faulted as negligence. The hijackers had already shown their willingness to kill. One passenger was in fact killed and another survived gunshot wounds. The lives of the rest of the passengers and crew were more important than their properties. Cooperation with the hijackers until they released their hostages at the runway end near the South Superhighway was dictated by the circumstances. Insisting that the evidence demonstrates negligence on the part of the PAL crew "occurring before and exposing them to hijacking," Quisumbing and Loeffler have come up to this Court praying that the judgments of the trial Court and the Court of Appeals be reversed and another rendered in their favor. Once again, the issue will be resolved against them. A careful analysis of the record in relation to the memoranda and other pleadings of the parties, convinces this Court of the correctness of the essential conclusion of both the trial and appellate courts that the evidence does indeed fail to prove any want of diligence on the part of PAL, or that, more specifically, it had failed to comply with applicable regulations or universally accepted and observed procedures to preclude hijacking; and that the particular acts singled out by the petitioners as supposedly demonstrative of negligence were, in the light of the circumstances of the case, not in truth negligent acts "sufficient to overcome the force majeure nature of the armed robbery." The Court quite agrees, too, with the Appellate Tribunal's wry observation that PAL's "failure to take certain steps that a passenger in hindsight believes should have been taken is not the negligence or misconduct which mingles with force majeure as an active and cooperative cause." No success can therefore attend petitioners' appeal, not only because they wish to have a review and modification of factual conclusions of the Court of Appeals, which established and uniformly observed axiom

proscribes, 10 but also because those factual conclusions have in this Court's view been correctly drawn from the proofs on record. WHEREFORE, the petition is DENIED and the appealed Decision of the Court of Appeals is AFFIRMED, with costs against petitioners. SO ORDERED. G.R. No. 126780 February 17, 2005

YHT REALTY CORPORATION, ERLINDA LAINEZ and ANICIA PAYAM, petitioners, vs. THE COURT OF APPEALS and MAURICE McLOUGHLIN, respondents. DECISION TINGA, J.: The primary question of interest before this Court is the only legal issue in the case: It is whether a hotel may evade liability for the loss of items left with it for safekeeping by its guests, by having these guests execute written waivers holding the establishment or its employees free from blame for such loss in light of Article 2003 of the Civil Code which voids such waivers. Before this Court is a Rule 45 petition for review of the Decision1 dated 19 October 1995 of the Court of Appeals which affirmed the Decision2 dated 16 December 1991 of the Regional Trial Court (RTC), Branch 13, of Manila, finding YHT Realty Corporation, Brunhilda Mata-Tan (Tan), Erlinda Lainez (Lainez) and Anicia Payam (Payam) jointly and solidarily liable for damages in an action filed by Maurice McLoughlin (McLoughlin) for the loss of his American and Australian dollars deposited in the safety deposit box of Tropicana Copacabana Apartment Hotel, owned and operated by YHT Realty Corporation. The factual backdrop of the case follow. Private respondent McLoughlin, an Australian businessmanphilanthropist, used to stay at Sheraton Hotel during his trips to the Philippines prior to 1984 when he met Tan. Tan befriended McLoughlin by showing him around, introducing him to important people, accompanying him in visiting impoverished street children and assisting him in buying gifts for the children and in distributing the same to charitable institutions for poor children. Tan convinced McLoughlin to transfer from Sheraton Hotel to Tropicana where Lainez, Payam and Danilo Lopez were employed. Lopez served as manager of the hotel while Lainez and Payam had custody of the keys for the safety deposit boxes of Tropicana. Tan took care of McLoughlin's booking at the Tropicana where he started staying during his trips to the Philippines from December 1984 to September 1987.3 On 30 October 1987, McLoughlin arrived from Australia and registered with Tropicana. He rented a safety deposit box as it was his practice to rent a safety deposit box every time he registered at Tropicana in previous trips. As a tourist, McLoughlin was aware of the procedure observed by Tropicana relative to its safety deposit boxes. The safety deposit box could only be opened through the use of two keys, one of which is given to the registered guest, and the other remaining in the possession of the management of the hotel. When a registered guest wished to open his safety deposit box, he alone could personally request the management who then would assign one of its employees to accompany the guest and assist him in opening the safety deposit box with the two keys.4 McLoughlin allegedly placed the following in his safety deposit box: Fifteen Thousand US Dollars (US$15,000.00) which he placed in two envelopes, one envelope containing Ten Thousand US Dollars (US$10,000.00) and the other envelope Five Thousand US Dollars

(US$5,000.00); Ten Thousand Australian Dollars (AUS$10,000.00) which he also placed in another envelope; two (2) other envelopes containing letters and credit cards; two (2) bankbooks; and a checkbook, arranged side by side inside the safety deposit box.5 On 12 December 1987, before leaving for a brief trip to Hongkong, McLoughlin opened his safety deposit box with his key and with the key of the management and took therefrom the envelope containing Five Thousand US Dollars (US$5,000.00), the envelope containing Ten Thousand Australian Dollars (AUS$10,000.00), his passports and his credit cards.6 McLoughlin left the other items in the box as he did not check out of his room at the Tropicana during his short visit to Hongkong. When he arrived in Hongkong, he opened the envelope which contained Five Thousand US Dollars (US$5,000.00) and discovered upon counting that only Three Thousand US Dollars (US$3,000.00) were enclosed therein.7 Since he had no idea whether somebody else had tampered with his safety deposit box, he thought that it was just a result of bad accounting since he did not spend anything from that envelope.8 After returning to Manila, he checked out of Tropicana on 18 December 1987 and left for Australia. When he arrived in Australia, he discovered that the envelope with Ten Thousand US Dollars (US$10,000.00) was short of Five Thousand US Dollars (US$5,000). He also noticed that the jewelry which he bought in Hongkong and stored in the safety deposit box upon his return to Tropicana was likewise missing, except for a diamond bracelet.9 When McLoughlin came back to the Philippines on 4 April 1988, he asked Lainez if some money and/or jewelry which he had lost were found and returned to her or to the management. However, Lainez told him that no one in the hotel found such things and none were turned over to the management. He again registered at Tropicana and rented a safety deposit box. He placed therein one (1) envelope containing Fifteen Thousand US Dollars (US$15,000.00), another envelope containing Ten Thousand Australian Dollars (AUS$10,000.00) and other envelopes containing his traveling papers/documents. On 16 April 1988, McLoughlin requested Lainez and Payam to open his safety deposit box. He noticed that in the envelope containing Fifteen Thousand US Dollars (US$15,000.00), Two Thousand US Dollars (US$2,000.00) were missing and in the envelope previously containing Ten Thousand Australian Dollars (AUS$10,000.00), Four Thousand Five Hundred Australian Dollars (AUS$4,500.00) were missing.10 When McLoughlin discovered the loss, he immediately confronted Lainez and Payam who admitted that Tan opened the safety deposit box with the key assigned to him.11 McLoughlin went up to his room where Tan was staying and confronted her. Tan admitted that she had stolen McLoughlin's key and was able to open the safety deposit box with the assistance of Lopez, Payam and Lainez.12 Lopez also told McLoughlin that Tan stole the key assigned to McLoughlin while the latter was asleep.13 McLoughlin requested the management for an investigation of the incident. Lopez got in touch with Tan and arranged for a meeting with the police and McLoughlin. When the police did not arrive, Lopez and Tan went to the room of McLoughlin at Tropicana and thereat, Lopez wrote on a piece of paper a promissory note dated 21 April 1988. The promissory note reads as follows: I promise to pay Mr. Maurice McLoughlin the amount of AUS$4,000.00 and US$2,000.00 or its equivalent in Philippine currency on or before May 5, 1988.14 Lopez requested Tan to sign the promissory note which the latter did and Lopez also signed as a witness. Despite the execution of promissory note by Tan, McLoughlin insisted that it must be the hotel who must assume responsibility for the loss he suffered. However, Lopez refused to accept the responsibility relying on the conditions for renting the safety deposit box entitled "Undertaking For the Use Of Safety Deposit Box,"15specifically paragraphs (2) and (4) thereof, to wit: 2. To release and hold free and blameless TROPICANA APARTMENT HOTEL from any liability arising from any loss in the contents and/or

use of the said deposit box for any cause whatsoever, including but not limited to the presentation or use thereof by any other person should the key be lost; ... 4. To return the key and execute the RELEASE in favor of TROPICANA APARTMENT HOTEL upon giving up the use of the box.16 On 17 May 1988, McLoughlin went back to Australia and he consulted his lawyers as to the validity of the abovementioned stipulations. They opined that the stipulations are void for being violative of universal hotel practices and customs. His lawyers prepared a letter dated 30 May 1988 which was signed by McLoughlin and sent to President Corazon Aquino.17 The Office of the President referred the letter to the Department of Justice (DOJ) which forwarded the same to the Western Police District (WPD).18 After receiving a copy of the indorsement in Australia, McLoughlin came to the Philippines and registered again as a hotel guest of Tropicana. McLoughlin went to Malacaang to follow up on his letter but he was instructed to go to the DOJ. The DOJ directed him to proceed to the WPD for documentation. But McLoughlin went back to Australia as he had an urgent business matter to attend to. For several times, McLoughlin left for Australia to attend to his business and came back to the Philippines to follow up on his letter to the President but he failed to obtain any concrete assistance.19 McLoughlin left again for Australia and upon his return to the Philippines on 25 August 1989 to pursue his claims against petitioners, the WPD conducted an investigation which resulted in the preparation of an affidavit which was forwarded to the Manila City Fiscal's Office. Said affidavit became the basis of preliminary investigation. However, McLoughlin left again for Australia without receiving the notice of the hearing on 24 November 1989. Thus, the case at the Fiscal's Office was dismissed for failure to prosecute. Mcloughlin requested the reinstatement of the criminal charge for theft. In the meantime, McLoughlin and his lawyers wrote letters of demand to those having responsibility to pay the damage. Then he left again for Australia. Upon his return on 22 October 1990, he registered at the Echelon Towers at Malate, Manila. Meetings were held between McLoughlin and his lawyer which resulted to the filing of a complaint for damages on 3 December 1990 against YHT Realty Corporation, Lopez, Lainez, Payam and Tan (defendants) for the loss of McLoughlin's money which was discovered on 16 April 1988. After filing the complaint, McLoughlin left again for Australia to attend to an urgent business matter. Tan and Lopez, however, were not served with summons, and trial proceeded with only Lainez, Payam and YHT Realty Corporation as defendants. After defendants had filed their Pre-Trial Brief admitting that they had previously allowed and assisted Tan to open the safety deposit box, McLoughlin filed an Amended/Supplemental Complaint20 dated 10 June 1991 which included another incident of loss of money and jewelry in the safety deposit box rented by McLoughlin in the same hotel which took place prior to 16 April 1988.21 The trial court admitted the Amended/Supplemental Complaint. During the trial of the case, McLoughlin had been in and out of the country to attend to urgent business in Australia, and while staying in the Philippines to attend the hearing, he incurred expenses for hotel bills, airfare and other transportation expenses, long distance calls to Australia, Meralco power expenses, and expenses for food and maintenance, among others.22 After trial, the RTC of Manila rendered judgment in favor of McLoughlin, the dispositive portion of which reads:

WHEREFORE, above premises considered, judgment is hereby rendered by this Court in favor of plaintiff and against the defendants, to wit: 1. Ordering defendants, jointly and severally, to pay plaintiff the sum of US$11,400.00 or its equivalent in Philippine Currency of P342,000.00, more or less, and the sum of AUS$4,500.00 or its equivalent in Philippine Currency of P99,000.00, or a total of P441,000.00, more or less, with 12% interest from April 16 1988 until said amount has been paid to plaintiff (Item 1, Exhibit CC); 2. Ordering defendants, jointly and severally to pay plaintiff the sum of P3,674,238.00 as actual and consequential damages arising from the loss of his Australian and American dollars and jewelries complained against and in prosecuting his claim and rights administratively and judicially (Items II, III, IV, V, VI, VII, VIII, and IX, Exh. "CC"); 3. Ordering defendants, jointly and severally, to pay plaintiff the sum of P500,000.00 as moral damages (Item X, Exh. "CC"); 4. Ordering defendants, jointly and severally, to pay plaintiff the sum of P350,000.00 as exemplary damages (Item XI, Exh. "CC"); 5. And ordering defendants, jointly and severally, to pay litigation expenses in the sum of P200,000.00 (Item XII, Exh. "CC"); 6. Ordering defendants, jointly and severally, to pay plaintiff the sum of P200,000.00 as attorney's fees, and a fee of P3,000.00 for every appearance; and 7. Plus costs of suit. SO ORDERED.23 The trial court found that McLoughlin's allegations as to the fact of loss and as to the amount of money he lost were sufficiently shown by his direct and straightforward manner of testifying in court and found him to be credible and worthy of belief as it was established that McLoughlin's money, kept in Tropicana's safety deposit box, was taken by Tan without McLoughlin's consent. The taking was effected through the use of the master key which was in the possession of the management. Payam and Lainez allowed Tan to use the master key without authority from McLoughlin. The trial court added that if McLoughlin had not lost his dollars, he would not have gone through the trouble and personal inconvenience of seeking aid and assistance from the Office of the President, DOJ, police authorities and the City Fiscal's Office in his desire to recover his losses from the hotel management and Tan.24 As regards the loss of Seven Thousand US Dollars (US$7,000.00) and jewelry worth approximately One Thousand Two Hundred US Dollars (US$1,200.00) which allegedly occurred during his stay at Tropicana previous to 4 April 1988, no claim was made by McLoughlin for such losses in his complaint dated 21 November 1990 because he was not sure how they were lost and who the responsible persons were. But considering the admission of the defendants in their pre-trial brief that on three previous occasions they allowed Tan to open the box, the trial court opined that it was logical and reasonable to presume that his personal assets consisting of Seven Thousand US Dollars (US$7,000.00) and jewelry were taken by Tan from the safety deposit box without McLoughlin's consent through the cooperation of Payam and Lainez.25 The trial court also found that defendants acted with gross negligence in the performance and exercise of their duties and obligations as innkeepers and were therefore liable to answer for the losses incurred by McLoughlin.26

Moreover, the trial court ruled that paragraphs (2) and (4) of the "Undertaking For The Use Of Safety Deposit Box" are not valid for being contrary to the express mandate of Article 2003 of the New Civil Code and against public policy.27 Thus, there being fraud or wanton conduct on the part of defendants, they should be responsible for all damages which may be attributed to the non-performance of their contractual obligations.28 The Court of Appeals affirmed the disquisitions made by the lower court except as to the amount of damages awarded. The decretal text of the appellate court's decision reads: THE FOREGOING CONSIDERED, the appealed Decision is hereby AFFIRMED but modified as follows: The appellants are directed jointly and severally to pay the plaintiff/appellee the following amounts: 1) P153,200.00 representing the US$2,000.00 and AUS$4,500.00; peso equivalent of

2) P308,880.80, representing the peso value for the air fares from Sidney [sic] to Manila and back for a total of eleven (11) trips; 3) One-half of P336,207.05 or P168,103.52 representing payment to Tropicana Apartment Hotel; 4) One-half of P152,683.57 or P76,341.785 representing payment to Echelon Tower; 5) One-half of P179,863.20 or P89,931.60 for the taxi xxx transportation from the residence to Sidney [sic] Airport and from MIA to the hotel here in Manila, for the eleven (11) trips; 6) One-half of P7,801.94 or P3,900.97 representing Meralco power expenses; 7) One-half of P356,400.00 or P178,000.00 representing expenses for food and maintenance; 8) P50,000.00 for moral damages; 9) P10,000.00 as exemplary damages; and 10) P200,000 representing attorney's fees. With costs. SO ORDERED.29 Unperturbed, YHT Realty Corporation, Lainez and Payam went to this Court in this appeal by certiorari. Petitioners submit for resolution by this Court the following issues: (a) whether the appellate court's conclusion on the alleged prior existence and subsequent loss of the subject money and jewelry is supported by the evidence on record; (b) whether the finding of gross negligence on the part of petitioners in the performance of their duties as innkeepers is supported by the evidence on record; (c) whether the "Undertaking For The Use of Safety Deposit Box" admittedly executed by private respondent is null and void; and (d) whether the damages awarded to private respondent, as well as the amounts thereof, are proper under the circumstances.30 The petition is devoid of merit.

It is worthy of note that the thrust of Rule 45 is the resolution only of questions of law and any peripheral factual question addressed to this Court is beyond the bounds of this mode of review. Petitioners point out that the evidence on record is insufficient to prove the fact of prior existence of the dollars and the jewelry which had been lost while deposited in the safety deposit boxes of Tropicana, the basis of the trial court and the appellate court being the sole testimony of McLoughlin as to the contents thereof. Likewise, petitioners dispute the finding of gross negligence on their part as not supported by the evidence on record. We are not persuaded.l^vvphi1.net We adhere to the findings of the trial court as affirmed by the appellate court that the fact of loss was established by the credible testimony in open court by McLoughlin. Such findings are factual and therefore beyond the ambit of the present petition.1awphi1.nt The trial court had the occasion to observe the demeanor of McLoughlin while testifying which reflected the veracity of the facts testified to by him. On this score, we give full credence to the appreciation of testimonial evidence by the trial court especially if what is at issue is the credibility of the witness. The oft-repeated principle is that where the credibility of a witness is an issue, the established rule is that great respect is accorded to the evaluation of the credibility of witnesses by the trial court.31 The trial court is in the best position to assess the credibility of witnesses and their testimonies because of its unique opportunity to observe the witnesses firsthand and note their demeanor, conduct and attitude under grilling examination.32 We are also not impressed by petitioners' argument that the finding of gross negligence by the lower court as affirmed by the appellate court is not supported by evidence. The evidence reveals that two keys are required to open the safety deposit boxes of Tropicana. One key is assigned to the guest while the other remains in the possession of the management. If the guest desires to open his safety deposit box, he must request the management for the other key to open the same. In other words, the guest alone cannot open the safety deposit box without the assistance of the management or its employees. With more reason that access to the safety deposit box should be denied if the one requesting for the opening of the safety deposit box is a stranger. Thus, in case of loss of any item deposited in the safety deposit box, it is inevitable to conclude that the management had at least a hand in the consummation of the taking, unless the reason for the loss is force majeure. Noteworthy is the fact that Payam and Lainez, who were employees of Tropicana, had custody of the master key of the management when the loss took place. In fact, they even admitted that they assisted Tan on three separate occasions in opening McLoughlin's safety deposit box.33 This only proves that Tropicana had prior knowledge that a person aside from the registered guest had access to the safety deposit box. Yet the management failed to notify McLoughlin of the incident and waited for him to discover the taking before it disclosed the matter to him. Therefore, Tropicana should be held responsible for the damage suffered by McLoughlin by reason of the negligence of its employees. The management should have guarded against the occurrence of this incident considering that Payam admitted in open court that she assisted Tan three times in opening the safety deposit box of McLoughlin at around 6:30 A.M. to 7:30 A.M. while the latter was still asleep.34 In light of the circumstances surrounding this case, it is undeniable that without the acquiescence of the employees of Tropicana to the opening of the safety deposit box, the loss of McLoughlin's money could and should have been avoided. The management contends, however, that McLoughlin, by his act, made its employees believe that Tan was his spouse for she was always with him most of the time. The evidence on record, however, is bereft of any showing that McLoughlin introduced Tan to the management as his wife. Such an inference from the act of McLoughlin will not exculpate the petitioners from liability in the absence of any showing that he made the management believe that Tan was his wife

or was duly authorized to have access to the safety deposit box. Mere close companionship and intimacy are not enough to warrant such conclusion considering that what is involved in the instant case is the very safety of McLoughlin's deposit. If only petitioners exercised due diligence in taking care of McLoughlin's safety deposit box, they should have confronted him as to his relationship with Tan considering that the latter had been observed opening McLoughlin's safety deposit box a number of times at the early hours of the morning. Tan's acts should have prompted the management to investigate her relationship with McLoughlin. Then, petitioners would have exercised due diligence required of them. Failure to do so warrants the conclusion that the management had been remiss in complying with the obligations imposed upon hotel-keepers under the law. Under Article 1170 of the New Civil Code, those who, in the performance of their obligations, are guilty of negligence, are liable for damages. As to who shall bear the burden of paying damages, Article 2180, paragraph (4) of the same Code provides that the owners and managers of an establishment or enterprise are likewise responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions. Also, this Court has ruled that if an employee is found negligent, it is presumed that the employer was negligent in selecting and/or supervising him for it is hard for the victim to prove the negligence of such employer.35 Thus, given the fact that the loss of McLoughlin's money was consummated through the negligence of Tropicana's employees in allowing Tan to open the safety deposit box without the guest's consent, both the assisting employees and YHT Realty Corporation itself, as owner and operator of Tropicana, should be held solidarily liable pursuant to Article 2193.36 The issue of whether the "Undertaking For The Use of Safety Deposit Box" executed by McLoughlin is tainted with nullity presents a legal question appropriate for resolution in this petition. Notably, both the trial court and the appellate court found the same to be null and void. We find no reason to reverse their common conclusion. Article 2003 is controlling, thus: Art. 2003. The hotel-keeper cannot free himself from responsibility by posting notices to the effect that he is not liable for the articles brought by the guest. Any stipulation between the hotel-keeper and the guest whereby the responsibility of the former as set forth in Articles 1998 to 200137 is suppressed or diminished shall be void. Article 2003 was incorporated in the New Civil Code as an expression of public policy precisely to apply to situations such as that presented in this case. The hotel business like the common carrier's business is imbued with public interest. Catering to the public, hotelkeepers are bound to provide not only lodging for hotel guests and security to their persons and belongings. The twin duty constitutes the essence of the business. The law in turn does not allow such duty to the public to be negated or diluted by any contrary stipulation in so-called "undertakings" that ordinarily appear in prepared forms imposed by hotel keepers on guests for their signature. In an early case,38 the Court of Appeals through its then Presiding Justice (later Associate Justice of the Court) Jose P. Bengzon, ruled that to hold hotelkeepers or innkeeper liable for the effects of their guests, it is not necessary that they be actually delivered to the innkeepers or their employees. It is enough that such effects are within the hotel or inn.39 With greater reason should the liability of the hotelkeeper be enforced when the missing items are taken without the guest's knowledge and consent from a safety deposit box provided by the hotel itself, as in this case. Paragraphs (2) and (4) of the "undertaking" manifestly contravene Article 2003 of the New Civil Code for they allow Tropicana to be released from liability arising from any loss in the contents and/or use of the safety deposit box for any cause whatsoever.40 Evidently, the undertaking was intended to bar any claim against Tropicana for any loss of the contents of the safety deposit box whether or not negligence was incurred by Tropicana or its employees. The New Civil Code is explicit that the responsibility of the hotel-keeper shall extend to loss of, or injury to, the personal property of the guests even if caused by servants or employees of the keepers of hotels or inns as

well as by strangers, except as it may proceed from any force majeure.41 It is the loss through force majeurethat may spare the hotelkeeper from liability. In the case at bar, there is no showing that the act of the thief or robber was done with the use of arms or through an irresistible force to qualify the same as force majeure.42 Petitioners likewise anchor their defense on Article 200243 which exempts the hotel-keeper from liability if the loss is due to the acts of his guest, his family, or visitors. Even a cursory reading of the provision would lead us to reject petitioners' contention. The justification they raise would render nugatory the public interest sought to be protected by the provision. What if the negligence of the employer or its employees facilitated the consummation of a crime committed by the registered guest's relatives or visitor? Should the law exculpate the hotel from liability since the loss was due to the act of the visitor of the registered guest of the hotel? Hence, this provision presupposes that the hotel-keeper is not guilty of concurrent negligence or has not contributed in any degree to the occurrence of the loss. A depositary is not responsible for the loss of goods by theft, unless his actionable negligence contributes to the loss.44 In the case at bar, the responsibility of securing the safety deposit box was shared not only by the guest himself but also by the management since two keys are necessary to open the safety deposit box. Without the assistance of hotel employees, the loss would not have occurred. Thus, Tropicana was guilty of concurrent negligence in allowing Tan, who was not the registered guest, to open the safety deposit box of McLoughlin, even assuming that the latter was also guilty of negligence in allowing another person to use his key. To rule otherwise would result in undermining the safety of the safety deposit boxes in hotels for the management will be given imprimatur to allow any person, under the pretense of being a family member or a visitor of the guest, to have access to the safety deposit box without fear of any liability that will attach thereafter in case such person turns out to be a complete stranger. This will allow the hotel to evade responsibility for any liability incurred by its employees in conspiracy with the guest's relatives and visitors. Petitioners contend that McLoughlin's case was mounted on the theory of contract, but the trial court and the appellate court upheld the grant of the claims of the latter on the basis of tort.45 There is nothing anomalous in how the lower courts decided the controversy for this Court has pronounced a jurisprudential rule that tort liability can exist even if there are already contractual relations. The act that breaks the contract may also be tort.46 As to damages awarded to McLoughlin, we see no reason to modify the amounts awarded by the appellate court for the same were based on facts and law. It is within the province of lower courts to settle factual issues such as the proper amount of damages awarded and such finding is binding upon this Court especially if sufficiently proven by evidence and not unconscionable or excessive. Thus, the appellate court correctly awarded McLoughlin Two Thousand US Dollars (US$2,000.00) and Four Thousand Five Hundred Australian dollars (AUS$4,500.00) or their peso equivalent at the time of payment,47 being the amounts duly proven by evidence.48 The alleged loss that took place prior to 16 April 1988 was not considered since the amounts alleged to have been taken were not sufficiently established by evidence. The appellate court also correctly awarded the sum of P308,880.80, representing the peso value for the air fares from Sydney to Manila and back for a total of eleven (11) trips;49one-half of P336,207.05 or P168,103.52 representing payment to Tropicana;50 one-half of P152,683.57 orP76,341.785 representing payment to Echelon Tower;51 one-half of P179,863.20 or P89,931.60 for the taxi or transportation expenses from McLoughlin's residence to Sydney Airport and from MIA to the hotel here in Manila, for the eleven (11) trips;52 one-half of P7,801.94 or P3,900.97 representing Meralco power expenses;53 one-half of P356,400.00 or P178,000.00 representing expenses for food and maintenance.54 The amount of P50,000.00 for moral damages is reasonable. Although trial courts are given discretion to determine the amount of moral damages, the appellate court may modify or change the amount awarded when it is palpably and scandalously excessive.l^vvphi1.net Moral damages are not intended to enrich a

complainant at the expense of a defendant.l^vvphi1.net They are awarded only to enable the injured party to obtain means, diversion or amusements that will serve to alleviate the moral suffering he has undergone, by reason of defendants' culpable action.55 The awards of P10,000.00 as exemplary damages and P200,000.00 representing attorney's fees are likewise sustained. WHEREFORE, foregoing premises considered, the Decision of the Court of Appeals dated 19 October 1995 is hereby AFFIRMED. Petitioners are directed, jointly and severally, to pay private respondent the following amounts: (1) US$2,000.00 and AUS$4,500.00 or their peso equivalent at the time of payment; (2) P308,880.80, representing the peso value for the air fares from Sydney to Manila and back for a total of eleven (11) trips; (3) One-half of P336,207.05 or P168,103.52 representing payment to Tropicana Copacabana Apartment Hotel; (4) One-half of P152,683.57 or P76,341.785 representing payment to Echelon Tower; (5) One-half of P179,863.20 or P89,931.60 for the taxi or transportation expense from McLoughlin's residence to Sydney Airport and from MIA to the hotel here in Manila, for the eleven (11) trips; (6) One-half of P7,801.94 or P3,900.97 representing Meralco power expenses; (7) One-half of P356,400.00 or P178,200.00 representing expenses for food and maintenance; (8) P50,000.00 for moral damages; (9) P10,000.00 as exemplary damages; and (10) P200,000 representing attorney's fees. With costs. SO ORDERED. G.R. No. 120528 January 29, 2001

ATTY. DIONISIO CALIBO, JR., petitioner, vs. COURT OF APPEALS and DR. PABLO U. ABELLA, respondents. QUISUMBING, J.: Before us is the petition for review on certiorari by petitioner Dionisio Calibo, Jr., assailing the decision of the Court of Appeals in CA-G.R. CV No. 39705, which affirmed the decision of the Regional Trial Court of Cebu, Branch 11, declaring private respondent as the lawful possessor of a tractor subject of a replevin suit and ordering petitioner to pay private respondent actual damages and attorney's fees. The facts of the case, as summarized by respondent court, are undisputed. "on January 25, 1979, plaintiff-appellee [herein petitioner] Pablo U. Abella purchased an MF 210 agricultural tractor

with Serial No. 00105 and Engine No. P126M00199 (Exhibit A; Record, p.5) which he used in his farm in Dagohoy, Bohol. Sometimes in October or November 1985, Pablo Abella's son, Mike abella rented for residential purpose the house of defendant-appellant Dionosio R. Calibo, Jr., in Tagbilaran City. In October 1986, Pablo Abella pulled out his aforementioned tractor from his farm in Dagohoy, Bohol, and left it in the safekeeping of his son, Mike Abella, in Tagbilaran City. Mike kept the tractor in the garage of the house he was leasing from Calibo. Since he started renting Calibo's house, Mike had been religiously paying the monthly rentals therefor, but beginning November of 1986, he stopped doing so. The following month, Calibo learned that Mike had never paid the charges for electric and water consumption in the leased premises which the latter was duty-bound to shoulder. Thus, Calibo confronted Mike about his rental arrears and the unpaid electric and water bills. During this confrontation, Mike informed Calibo that he (Mike) would be staying in the leased property only until the end of December 1986. Mike also assured Calibo that he would be settling his account with the latter, offering the tractor as security. Mike even asked Calibo to help him find a buyer for the tractor so he could sooner pay his outstanding obligation.1wphi1.nt In January 1987 when a new tenant moved into the house formerly leased to Mike, Calibo had the tractor moved to the garage of his father's house, also in Tagbilaran City. Apprehensive over Mike's unsettled account, Calibo visited him in his Cebu City address in January, February and March, 1987 and tried to collect payment. On all three occasions, Calibo was unable to talk to Mike as the latter was reportedly out of town. On his third trip to Cebu City, Calibo left word with the occupants of the Abella residence thereat that there was a prospective buyer for the tractor. The following week, Mike saw Calibo in Tagbilaran City to inquire about the possible tractor buyer. The sale, however, did not push through as the buyer did not come back anymore. When again confronted with his outstanding obligation, Mike reassured Calibo that the tractor would stand as a guarantee for its payment. That was the last time Calibo saw or heard from Mike. After a long while, or on November 22, 1988, Mike's father, Pablo Abella, came to Tagbilaran City to claim and take possession of the tractor. Calibo, however, informed Pablo that Mike left the tractor with him as security for the payment of Mike's obligation to him. Pablo offered to write Mike a check for P2,000.00 in payment of Mike's unpaid lease rentals, in addition to issuing postdated checks to cover the unpaid electric and water bills the correctness of which Pablo said he still had to verify with Mike. Calibo told Pablo that he would accept the P2,000.00-check only if the latter would execute a promissory note in his favor to cover the amount of the unpaid electric and water bills. Pablo was not amenable to this proposal. The two of them having failed to come to an agreement, Pablo left and went back to Cebu City, unsuccessful in his attempt to take possession of the tractor."1 On November 25, 1988, private respondent instituted an action for replevin, claiming ownership of the tractor and seeking to recover possession thereof from petitioner. As adverted to above, the trial court ruled in favor of private respondent; so did the Court of Appeals when petitioner appealed. The Court of Appeals sustained the ruling of the trial court that Mike Abella could not have validly pledged the subject tractor to petitioner

since he was not the owner thereof, nor was he authorized by its owner to pledge the tractor. Respondent court also rejected petitioner's contention that, if not a pledge, then a deposit was created. The Court of Appeals said that under the Civil Code, the primary purpose of a deposit is only safekeeping and not, as in this case, securing payment of a debt. The Court of Appeals reduced the amount of actual damages payable to private respondent, deducting therefrom the cost of transporting the tractor from Tagbilaran, Bohol, to Cebu City. Hence, this petition. Essentially, petitioner claims that the tractor in question was validly pledged to him by private respondent's son Mike Abella to answer for the latter's monetary obligations to petitioner. In the alternative, petitioner asserts that the tractor was left with him, in the concept of an innkeeper, on deposit and that he may validly hold on thereto until Mike Abella pays his obligations. Petitioner maintains that even if Mike Abella were not the owner of the tractor, a principal-agent relationship may be implied between Mike Abella and private respondent. He contends that the latter failed to repudiate the alleged agency, knowing that his son is acting on his behalf without authority when he pledged the tractor to petitioner. Petitioner argues that, under Article 1911 of the Civil Code, private respondent is bound by the pledge, even if it were beyond the authority of his son to pledge the tractor, since he allowed his son to act as though he had full powers. On the other hand, private respondent asserts that respondent court had correctly ruled on the matter. In a contract of pledge, the creditor is given the right to retain his debtor's movable property in his possession, or in that of a third person to whom it has been delivered, until the debt is paid. For the contract to be valid, it is necessary that: (1) the pledge is constituted to secure the fulfillment of a principal obligation; (2) the pledgor be the absolute owner of the thing pledged; and (3) the person constituting the pledge has the free disposal of his property, and in the absence thereof, that he be legally authorized for the purpose.2 As found by the trial court and affirmed by respondent court, the pledgor in this case, Mike Abella, was not the absolute owner of the tractor that was allegedly pledged to petitioner. The tractor was owned by his father, private respondent, who left the equipment with him for safekeeping. Clearly, the second requisite for a valid pledge, that the pledgor be the absolute owner of the property, is absent in this case. Hence, there is no valid pledge. "He who is not the owner or proprietor of the property pledged or mortgaged to guarantee the fulfillment of a principal obligation, cannot legally constitute such a guaranty as may validly bind the property in favor of his creditor, and the pledgee or mortgagee in such a case acquires no right whatsoever in the property pledged or mortgaged."3 There also does not appear to be any agency in this case. We agree with the Court of Appeals that: "As indicated in Article 1869, for an agency relationship to be deemed as implied, the principal must know that another person is acting on his behalf without authority. Here, appellee categorically stated that the only purpose for his leaving the subject tractor in the care and custody of Mike Abella was for safekeeping, and definitely not for him to pledge or alienate the same. If it were true that Mike pledged appeellee's tractor to appellant, then Mike was acting not only without appellee's authority but without the latter's knowledge as well.

Article 1911, on the other hand, mandates that the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers. Again, in view of appellee's lack of knowledge of Mike's pledging the tractor without any authority from him, it stands to reason that the former could not have allowed the latter to pledge the tractor as if he had full powers to do so."4 There is likewise no valid deposit in this case. In a contract of deposit, a person receives an object belonging to another with the obligation of safely keeping it and of returning the same.5 Petitioner himself states that he received the tractor not to safely keep it but as a form of security for the payment of Mike Abella's obligations. There is no deposit where the principal purpose for receiving the object is not safekeeping.6 Consequently, petitioner had no right to refuse delivery of the tractor to its lawful owner. On the other hand, private respondent, as owner, had every right to seek to repossess the tractor, including the institution of the instant action for replevin.1wphi1.nt We do not here pass upon the other assignment of errors made by petitioner concerning alleged irregularities in the raffle and disposition of the case at the trial court. A petition for review on certiorari is not the proper vehicle for such allegations. WHEREFORE, the instant petition is DENIED for lack of merit, and the decision of the Court of Appeals in CA-G.R. CV No. 39705 is AFFIRMED. Costs against petitioner. SO ORDERED. DURBAN APARTMENTS CORPORATION, doing business under the name and style of City Garden Hotel,Petitioner, vs. PIONEER INSURANCE AND SURETY CORPORATION, Respondent.2 For review is the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 86869, which affirmed the decision2 of the Regional Trial Court (RTC), Branch 66, Makati City, in Civil Case No. 03-857, holding petitioner Durban Apartments Corporation solely liable to respondent Pioneer Insurance and Surety Corporation for the loss of Jeffrey Sees (Sees) vehicle. The facts, as found by the CA, are simple. On July 22, 2003, [respondent] Pioneer Insurance and Surety Corporation x x x, by right of subrogation, filed [with the RTC of Makati City] a Complaint for Recovery of Damages against [petitioner] Durban Apartments Corporation, doing business under the name and style of City Garden Hotel, and [defendant before the RTC] Vicente Justimbaste x x x. [Respondent averred] that: it is the insurer for loss and damage of Jeffrey S. Sees [the insureds] 2001 Suzuki Grand Vitara x x x with Plate No. XBH-510 under Policy No. MC-CV-HO-010003846-00-D in the amount of P1,175,000.00; on April 30, 2002, See arrived and checked in at the City Garden Hotel in Makati corner Kalayaan Avenues, Makati City before midnight, and its parking attendant, defendant x x x Justimbaste got the key to said Vitara from See to park it[. O]n May 1, 2002, at about 1:00 oclock in the morning, See was awakened in his room by [a] telephone call from the Hotel Chief Security Officer who informed him that his Vitara was carnapped while it was parked unattended at the parking area of Equitable PCI Bank along Makati Avenue between the hours of 12:00 [a.m.] and 1:00 [a.m.]; See went to see the Hotel Chief Security Officer, thereafter reported the incident to the Operations Division of the Makati City Police Anti-Carnapping Unit, and a flash alarm was issued; the Makati City Police Anti-Carnapping Unit investigated Hotel Security Officer, Ernesto T. Horlador, Jr. x x x and defendant x x x Justimbaste; See gave his Sinumpaang Salaysay to the police investigator, and filed a Complaint Sheet with the PNP Traffic Management Group in Camp
2

Crame, Quezon City; the Vitara has not yet been recovered since July 23, 2002 as evidenced by a Certification of Non- Recovery issued by the PNP TMG; it paid the P1,163,250.00 money claim of See and mortgagee ABN AMRO Savings Bank, Inc. as indemnity for the loss of the Vitara; the Vitara was lost due to the negligence of [petitioner] Durban Apartments and [defendant] Justimbaste because it was discovered during the investigation that this was the second time that a similar incident of carnapping happened in the valet parking service of [petitioner] Durban Apartments and no necessary precautions were taken to prevent its repetition; [petitioner] Durban Apartments was wanting in due diligence in the selection and supervision of its employees particularly defendant x x x Justimbaste; and defendant x x x Justimbaste and [petitioner] Durban Apartments failed and refused to pay its valid, just, and lawful claim despite written demands. Upon service of Summons, [petitioner] Durban Apartments and [defendant] Justimbaste filed their Answer with Compulsory Counterclaim alleging that: See did not check in at its hotel, on the contrary, he was a guest of a certain Ching Montero x x x; defendant x x x Justimbaste did not get the ignition key of Sees Vitara, on the contrary, it was See who requested a parking attendant to park the Vitara at any available parking space, and it was parked at the Equitable Bank parking area, which was within Sees view, while he and Montero were waiting in front of the hotel; they made a written denial of the demand of [respondent] Pioneer Insurance for want of legal basis; valet parking services are provided by the hotel for the convenience of its customers looking for a parking space near the hotel premises; it is a special privilege that it gave to Montero and See; it does not include responsibility for any losses or damages to motor vehicles and its accessories in the parking area; and the same holds true even if it was See himself who parked his Vitara within the premises of the hotel as evidenced by the valet parking customers claim stub issued to him; the carnapper was able to open the Vitara without using the key given earlier to the parking attendant and subsequently turned over to See after the Vitara was stolen; defendant x x x Justimbaste saw the Vitara speeding away from the place where it was parked; he tried to run after it, and blocked its possible path but to no avail; and See was duly and immediately informed of the carnapping of his Vitara; the matter was reported to the nearest police precinct; and defendant x x x Justimbaste, and Horlador submitted themselves to police investigation. During the pre-trial conference on November 28, 2003, counsel for [respondent] Pioneer Insurance was present. Atty. Monina Lee x x x, counsel of record of [petitioner] Durban Apartments and Justimbaste was absent, instead, a certain Atty. Nestor Mejia appeared for [petitioner] Durban Apartments and Justimbaste, but did not file their pre-trial brief. On November 5, 2004, the lower court granted the motion of [respondent] Pioneer Insurance, despite the opposition of [petitioner] Durban Apartments and Justimbaste, and allowed [respondent] Pioneer Insurance to present its evidence ex parte before the Branch Clerk of Court. See testified that: on April 30, 2002, at about 11:30 in the evening, he drove his Vitara and stopped in front of City Garden Hotel in Makati Avenue, Makati City; a parking attendant, whom he had later known to be defendant x x x Justimbaste, approached and asked for his ignition key, told him that the latter would park the Vitara for him in front of the hotel, and issued him a valet parking customers claim stub; he and Montero, thereafter, checked in at the said hotel; on May 1, 2002, at around 1:00 in the morning, the Hotel Security Officer whom he later knew to be Horlador called his attention to the fact that his Vitara was carnapped while it was parked at the parking lot of Equitable PCI Bank which is in front of the hotel; his Vitara was insured with [respondent] Pioneer Insurance; he together with Horlador and defendant x x x Justimbaste went to Precinct 19 of the Makati City Police to report the carnapping incident, and a police officer came accompanied them to the Anti-Carnapping Unit of the said station for investigation, taking of their sworn statements, and flashing of a voice alarm; he likewise reported the said incident in PNP TMG in Camp Crame where another alarm was issued; he filed his claim with [respondent] Pioneer Insurance, and a representative of the latter, who is also an adjuster of Vesper Insurance Adjusters-Appraisers [Vesper], investigated the incident; and [respondent] Pioneer Insurance required him to sign a

Sequestration or Judicial Deposit

Release of Claim and Subrogation Receipt, and finally paid him the sum of P1,163,250.00 for his claim. Ricardo F. Red testified that: he is a claims evaluator of [petitioner] Pioneer Insurance tasked, among others, with the receipt of claims and documents from the insured, investigation of the said claim, inspection of damages, taking of pictures of insured unit, and monitoring of the processing of the claim until its payment; he monitored the processing of Sees claim when the latter reported the incident to [respondent] Pioneer Insurance; [respondent] Pioneer Insurance assigned the case to Vesper who verified Sees report, conducted an investigation, obtained the necessary documents for the processing of the claim, and tendered a settlement check to See; they evaluated the case upon receipt of the subrogation documents and the adjusters report, and eventually recommended for its settlement for the sum of P1,163,250.00 which was accepted by See; the matter was referred and forwarded to their counsel, R.B. Sarajan & Associates, who prepared and sent demand letters to [petitioner] Durban Apartments and [defendant] Justimbaste, who did not pay [respondent] Pioneer Insurance notwithstanding their receipt of the demand letters; and the services of R.B. Sarajan & Associates were engaged, for P100,000.00 as attorneys fees plus P3,000.00 per court appearance, to prosecute the claims of [respondent] Pioneer Insurance against [petitioner] Durban Apartments and Justimbaste before the lower court. Ferdinand Cacnio testified that: he is an adjuster of Vesper; [respondent] Pioneer Insurance assigned to Vesper the investigation of Sees case, and he was the one actually assigned to investigate it; he conducted his investigation of the matter by interviewing See, going to the City Garden Hotel, required subrogation documents from See, and verified the authenticity of the same; he learned that it is the standard procedure of the said hotel as regards its valet parking service to assist their guests as soon as they get to the lobby entrance, park the cars for their guests, and place the ignition keys in their safety key box; considering that the hotel has only twelve (12) available parking slots, it has an agreement with Equitable PCI Bank permitting the hotel to use the parking space of the bank at night; he also learned that a Hyundai Starex van was carnapped at the said place barely a month before the occurrence of this incident because Liberty Insurance assigned the said incident to Vespers, and Horlador and defendant x x x Justimbaste admitted the occurrence of the same in their sworn statements before the Anti-Carnapping Unit of the Makati City Police; upon verification with the PNP TMG [Unit] in Camp Crame, he learned that Sees Vitara has not yet been recovered; upon evaluation, Vesper recommended to [respondent] Pioneer Insurance to settle Sees claim for P1,045,750.00; See contested the recommendation of Vesper by reasoning out that the 10% depreciation should not be applied in this case considering the fact that the Vitara was used for barely eight (8) months prior to its loss; and [respondent] Pioneer Insurance acceded to Sees contention, tendered the sum of P1,163,250.00 as settlement, the former accepted it, and signed a release of claim and subrogation receipt. The lower court denied the Motion to Admit Pre-Trial Brief and Motion for Reconsideration field by [petitioner] Durban Apartments and Justimbaste in its Orders dated May 4, 2005 and October 20, 2005, respectively, for being devoid of merit.3 Thereafter, on January 27, 2006, the RTC rendered a decision, disposing, as follows: WHEREFORE, judgment is hereby rendered ordering [petitioner Durban Apartments Corporation] to pay [respondent Pioneer Insurance and Surety Corporation] the sum of P1,163,250.00 with legal interest thereon from July 22, 2003 until the obligation is fully paid and attorneys fees and litigation expenses amounting toP120,000.00. SO ORDERED.4 On appeal, the appellate court affirmed the decision of the trial court, viz.: WHEREFORE, premises considered, the Decision dated January 27, 2006 of the RTC, Branch 66, Makati City in Civil Case No. 03-857 is

hereby AFFIRMED insofar as it holds [petitioner] Durban Apartments Corporation solely liable to [respondent] Pioneer Insurance and Surety Corporation for the loss of Jeffrey Sees Suzuki Grand Vitara. SO ORDERED.5 Hence, this recourse by petitioner. The issues for our resolution are: 1. Whether the lower courts erred in declaring petitioner as in default for failure to appear at the pre-trial conference and to file a pre-trial brief; 2. Corollary thereto, whether the trial court correctly allowed respondent to present evidence ex-parte; 3. Whether petitioner is liable to respondent for attorneys fees in the amount of P120,000.00; and 4. Ultimately, whether petitioner is liable to respondent for the loss of Sees vehicle. The petition must fail. We are in complete accord with the common ruling of the lower courts that petitioner was in default for failure to appear at the pre-trial conference and to file a pre-trial brief, and thus, correctly allowed respondent to present evidence ex-parte. Likewise, the lower courts did not err in holding petitioner liable for the loss of Sees vehicle. Well-entrenched in jurisprudence is the rule that factual findings of the trial court, especially when affirmed by the appellate court, are accorded the highest degree of respect and are considered conclusive between the parties.6A review of such findings by this Court is not warranted except upon a showing of highly meritorious circumstances, such as: (1) when the findings of a trial court are grounded entirely on speculation, surmises, or conjectures; (2) when a lower courts inference from its factual findings is manifestly mistaken, absurd, or impossible; (3) when there is grave abuse of discretion in the appreciation of facts; (4) when the findings of the appellate court go beyond the issues of the case, or fail to notice certain relevant facts which, if properly considered, will justify a different conclusion; (5) when there is a misappreciation of facts; (6) when the findings of fact are conclusions without mention of the specific evidence on which they are based, are premised on the absence of evidence, or are contradicted by evidence on record.7 None of the foregoing exceptions permitting a reversal of the assailed decision exists in this instance. Petitioner urges us, however, that "strong [and] compelling reason[s]" such as the prevention of miscarriage of justice warrant a suspension of the rules and excuse its and its counsels non-appearance during the pre-trial conference and their failure to file a pre-trial brief. We are not persuaded. Rule 18 of the Rules of Court leaves no room for equivocation; appearance of parties and their counsel at the pre-trial conference, along with the filing of a corresponding pre-trial brief, is mandatory, nay, their duty. Thus, Section 4 and Section 6 thereof provide: SEC. 4. Appearance of parties.It shall be the duty of the parties and their counsel to appear at the pre-trial. The non-appearance of a party may be excused only if a valid cause is shown therefor or if a representative shall appear in his behalf fully authorized in writing to enter into an amicable settlement, to submit to alternative modes of dispute resolution, and to enter into stipulations or admissions of facts and documents.

SEC. 6. Pre-trial brief.The parties shall file with the court and serve on the adverse party, in such manner as shall ensure their receipt thereof at least three (3) days before the date of the pre-trial, their respective pre-trial briefs which shall contain, among others: xxxx Failure to file the pre-trial brief shall have the same effect as failure to appear at the pre-trial. Contrary to the foregoing rules, petitioner and its counsel of record were not present at the scheduled pre-trial conference. Worse, they did not file a pre-trial brief. Their non-appearance cannot be excused as Section 4, in relation to Section 6, allows only two exceptions: (1) a valid excuse; and (2) appearance of a representative on behalf of a party who is fully authorized in writing to enter into an amicable settlement, to submit to alternative modes of dispute resolution, and to enter into stipulations or admissions of facts and documents. Petitioner is adamant and harps on the fact that November 28, 2003 was merely the first scheduled date for the pre-trial conference, and a certain Atty. Mejia appeared on its behalf. However, its assertion is belied by its own admission that, on said date, this Atty. Mejia "did not have in his possession the Special Power of Attorney issued by petitioners Board of Directors." As pointed out by the CA, petitioner, through Atty. Lee, received the notice of pre-trial on October 27, 2003, thirty-two (32) days prior to the scheduled conference. In that span of time, Atty. Lee, who was charged with the duty of notifying petitioner of the scheduled pre-trial conference,8 petitioner, and Atty. Mejia should have discussed which lawyer would appear at the pre-trial conference with petitioner, armed with the appropriate authority therefor. Sadly, petitioner failed to comply with not just one rule; it also did not proffer a reason why it likewise failed to file a pre-trial brief. In all, petitioner has not shown any persuasive reason why it should be exempt from abiding by the rules. The appearance of Atty. Mejia at the pre-trial conference, without a pre-trial brief and with only his bare allegation that he is counsel for petitioner, was correctly rejected by the trial court. Accordingly, the trial court, as affirmed by the appellate court, did not err in allowing respondent to present evidence ex-parte. Former Chief Justice Andres R. Narvasas words continue to resonate, thus: Everyone knows that a pre-trial in civil actions is mandatory, and has been so since January 1, 1964. Yet to this day its place in the scheme of things is not fully appreciated, and it receives but perfunctory treatment in many courts. Some courts consider it a mere technicality, serving no useful purpose save perhaps, occasionally to furnish ground for non-suiting the plaintiff, or declaring a defendant in default, or, wistfully, to bring about a compromise. The pre-trial device is not thus put to full use. Hence, it has failed in the main to accomplish the chief objective for it: the simplification, abbreviation and expedition of the trial, if not indeed its dispensation. This is a great pity, because the objective is attainable, and with not much difficulty, if the device were more intelligently and extensively handled. xxxx Consistently with the mandatory character of the pre-trial, the Rules oblige not only the lawyers but the parties as well to appear for this purpose before the Court, and when a party "fails to appear at a pretrial conference (he) may be non-suited or considered as in default." The obligation "to appear" denotes not simply the personal appearance, or the mere physical presentation by a party of ones self, but connotes as importantly, preparedness to go into the different subject assigned by law to a pre-trial. And in those instances where a party may not himself be present at the pre-trial, and another person substitutes for him, or his lawyer undertakes to appear not only as an attorney but in substitution of the clients person, it is imperative for that

representative of the lawyer to have "special authority" to make such substantive agreements as only the client otherwise has capacity to make. That "special authority" should ordinarily be in writing or at the very least be "duly established by evidence other than the self-serving assertion of counsel (or the proclaimed representative) himself." Without that special authority, the lawyer or representative cannot be deemed capacitated to appear in place of the party; hence, it will be considered that the latter has failed to put in an appearance at all, and he [must] therefore "be non-suited or considered as in default," notwithstanding his lawyers or delegates presence.9 We are not unmindful that defendants (petitioners) preclusion from presenting evidence during trial does not automatically result in a judgment in favor of plaintiff (respondent). The plaintiff must still substantiate the allegations in its complaint.10 Otherwise, it would be inutile to continue with the plaintiffs presentation of evidence each time the defendant is declared in default. In this case, respondent substantiated the allegations in its complaint, i.e., a contract of necessary deposit existed between the insured See and petitioner. On this score, we find no error in the following disquisition of the appellate court: [The] records also reveal that upon arrival at the City Garden Hotel, See gave notice to the doorman and parking attendant of the said hotel, x x x Justimbaste, about his Vitara when he entrusted its ignition key to the latter. x x x Justimbaste issued a valet parking customer claim stub to See, parked the Vitara at the Equitable PCI Bank parking area, and placed the ignition key inside a safety key box while See proceeded to the hotel lobby to check in. The Equitable PCI Bank parking area became an annex of City Garden Hotel when the management of the said bank allowed the parking of the vehicles of hotel guests thereat in the evening after banking hours.11 Article 1962, in relation to Article 1998, of the Civil Code defines a contract of deposit and a necessary deposit made by persons in hotels or inns: Art. 1962. A deposit is constituted from the moment a person receives a thing belonging to another, with the obligation of safely keeping it and returning the same. If the safekeeping of the thing delivered is not the principal purpose of the contract, there is no deposit but some other contract. Art. 1998. The deposit of effects made by travelers in hotels or inns shall also be regarded as necessary.1avvphi1 The keepers of hotels or inns shall be responsible for them as depositaries, provided that notice was given to them, or to their employees, of the effects brought by the guests and that, on the part of the latter, they take the precautions which said hotel-keepers or their substitutes advised relative to the care and vigilance of their effects. Plainly, from the facts found by the lower courts, the insured See deposited his vehicle for safekeeping with petitioner, through the latters employee, Justimbaste. In turn, Justimbaste issued a claim stub to See. Thus, the contract of deposit was perfected from Sees delivery, when he handed over to Justimbaste the keys to his vehicle, which Justimbaste received with the obligation of safely keeping and returning it. Ultimately, petitioner is liable for the loss of Sees vehicle. Lastly, petitioner assails the lower courts award of attorneys fees to respondent in the amount of P120,000.00. Petitioner claims that the award is not substantiated by the evidence on record. We disagree. While it is a sound policy not to set a premium on the right to litigate,12 we find that respondent is entitled to reasonable attorneys fees. Attorneys fees may be awarded when a party is compelled to litigate or incur expenses to protect its interest,13 or when the court deems it just and equitable.14 In this case, petitioner refused to answer for the loss of Sees vehicle, which was deposited with it for safekeeping. This refusal constrained respondent, the insurer of See,

and subrogated to the latters right, to litigate and incur expenses. However, we reduce the award of P120,000.00 to P60,000.00 in view of the simplicity of the issues involved in this case. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 86869 is AFFIRMED with the MODIFICATION that the award of attorneys fees is reduced to P60,000.00. Costs against petitioner. SO ORDERED. G.R. No. 143994 July 11, 2002

Certificate of Title (TCT) No. 203492 covering a parcel of land situated in Diliman, Quezon City, and registered in the name of petitioner Pacita. The aforesaid property was part of the conjugal property of petitioner Pacita and her late husband Alberto Africa. "On request of Pacita, private respondent Macy Africa, the common-law wife of petitioner Antonio Africa, worked for the reconstitution of the aforesaid TCT No. 203492. The same was done and a new Transfer Certificate of Title (TCT) No. RT-76140 (203492) PR-36463 was issued in the name of Pacita Africa. While the reconstituted title was in her possession, Macy allegedly forged, or caused the forgery of, Pacitas signature on a Deed of Absolute Sale dated December 29, 1992, purporting to transfer ownership of the subject property to Macy. On the strength of the forged Deed of Absolute Sale, Macy was able to cause the issuance of TCT No. 81519 in her name, without the knowledge of any of herein petitioners. "Still as part of the scheme to defraud petitioners, Macy caused the preparation of a fake TCT No. 81519 in the name of Pacita, which the former showed to the latter to make Pacita believe that the said title was issued in her (Pacitas) name. "Sometime in March 1994, petitioners discovered private respondents fraudulent act. They (petitioners) likewise came to know that the subject property was mortgaged by Macy to the respondent bank. To protect their interests over the subject property, petitioners lodged an action in court against Macy and the respondent bank for Annulment of Title, Deed of Absolute Sale and Deed of Mortgage. The case was originally assigned to Branch 99 of the RTC of Quezon City and docketed as Civil Case No. Q-94-20898. "After the filing of the aforesaid case, the respondent bank in utter bad faith, foreclosed the subject property on June 11, 1996 without due notice to the petitioners, prompting the petitioners to amend [their] complaint, this time incorporating therein a prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction, to stop the respondent bank from, among others, consolidating title to the subject property. "On July 2, 1997, RTC Branch 99 issued an Order granting petitioners application for a temporary restraining order. Meanwhile, the respondent bank filed its Manifestation, Opposition and Motion to Postpone dated July 11, 1997, praying, inter alia, for the denial of petitioners application for a writ of preliminary injunction, or in the alternative, for the cancellation of the hearing thereon. On July 18, 1997, the aforesaid court denied the respondent banks motion to postpone and proceeded with the hearing of petitioners application. Thereafter, petitioners application was considered submitted for resolution. "On July 22, 1997, the Court issued an Order granting petitioners application for a writ of preliminary injunction to which respondent bank filed a Motion for Reconsideration dated July 11, 1997 followed by a Motion for Inhibition on January 1, 1998 praying that Hon. Felix M. de Guzman, presiding judge of RTC, Branch 99, inhibit himself from further trying the case. This latter motion was granted, and the case was re-raffled and assigned to Branch 220. "On April 19, 1999, RTC Branch 220, public respondent herein, issued the questioned Order."5 Ruling of the Court of Appeals The CA overturned the RTC Order dated April 19, 1999, and granted the issuance of a preliminary injunction to restrain petitioner from

LOS BAOS RURAL BANK, INC., petitioner, vs. PACITA O. AFRICA, GLORIA AFRICA, ANTONIO AFRICA, ARISTEO AFRICA, SOCORRO AFRICA, CONSUELO AFRICA, AND LOURDES AFRICA, respondents. PANGANIBAN, J.: A writ of preliminary injunction is issued to preserve the status quo ante, upon an applicants showing of two important requisite conditions; namely, (1) the right to be protected exists prima facie, and (2) the acts sought to be enjoined are violative of that right. It must be proven that the violation sought to be prevented would cause an irreparable injustice. Statement of the Case Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the June 30, 2000 Decision1 of the Court of Appeals2 (CA) in CA-GR SP No. 53355. The decretal portion of the Decision reads as follows: "WHEREFORE, the petition is GRANTED. The Order dated April 19, 1999 insofar as it denied the petitioners application for the issuance of a writ of preliminary injunction, is hereby RECALLED and SET ASIDE. "Let a writ of preliminary injunction issue in this case to restrain the respondent bank from proceeding with the foreclosure and consolidation of the title over the subject property upon posting by petitioners of a bond in the amount of Php20,000.00."3 The Order of the Regional Trial Court (RTC) of Quezon City (Branch 220), which was reversed by the CA, reads as follows: "WHEREFORE, premises considered, the Order of the Court dated July 22, 1997 is hereby recalled and set aside. The application for issuance of writ of preliminary injunction is hereby DENIED. "Issues in this case having been joined, let this case be set for pre-trial on May 28, 1999 at 8:30 o clock in the morning. Send notice of pre-trial to the parties and counsels."4 The Facts The factual antecedents of the case are summarized by the Court of Appeals in this wise: "Petitioner Pacita Africa (Pacita for brevity) is the widow of Alberto Africa and the rest of her co-petitioners are their children. "Records disclose that sometime in June 1989, the Quezon City Hall building where the Register of Deeds was then holding office was razed by fire, destroying some of its records/documents among which was the original Transfer

proceeding with the foreclosure and the consolidation of title over the subject property. The CA ruled that respondents had title to and possession of the property and were deprived thereof by petitioner. Thus, respondents had a clear and unmistakable right to protect their title and possession.6 Hence, this Petition.7 Issues In its Memorandum, petitioner raises the following issues for the Courts consideration: I "Whether the Court of Appeals acted with patent grave abuse of discretion in applying the ruling in Verzosa vs. Court of Appeals, (299 SCRA 100), to the instant case to justify its reversal of the 19 April 1999 Order of Branch 220 of the Regional Trial Court of Quezon City in Civil Case No. Q-94-20898[;] II "Whether the Court of Appeals acted with patent grave abuse of discretion when it rationalized its decision by citing factual premises therein that are not borne out by the records nor based on evidence and in fact contrary to reality[;] III "Whether the Court of Appeals acted with patent grave abuse of discretion when it ignored, disregarded and/or deviated from established jurisprudence governing the issuance of preliminary injunction demanded by private respondents against the petitioner bank[;] IV "Whether the Court [of] Appeals acted with patent grave abuse of discretion when it disregarded the pertinent provisions of Section 3, Rule 58, of the Revised Rules of Court providing for the grounds for issuance of preliminary injunction."8 In sum, the issues boil down to whether the appellate court erred in issuing a writ of preliminary injunction to stop petitioners consolidation of its title to the subject property. This Courts Ruling The Petition is not meritorious; it has not shown any reversible error in the CAs Decision. Main Propriety of Preliminary Injunction Issue:

We agree with respondents. The grounds for the issuance of a writ of preliminary injunction are enumerated in Rule 58, Section 3 of the Revised Rules of Court, which reads as follows: "Sec. 3. Grounds for issuance of preliminary injunction. A preliminary injunction may be granted when it is established; (a)That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission or continuance of the act or acts complained of, or in requiring the performance of an act or acts, either for a limited period or perpetually; (b)That the commission, continuance or non-performance of the act or acts complained of during the litigation would probably work injustice to the applicant; or (c)That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual." Injunction is a preservative remedy aimed at no other purpose than to protect the complainants substantive rights and interests13 during the pendency of the principal action.14 A preliminary injunction, as the term itself suggests, is merely temporary.15 It is to be resorted to only when there is a pressing necessity to avoid injurious consequences that cannot be remedied under any standard of compensation.16 Moreover, injunction, like other equitable remedies, should be issued only at the instance of a suitor who has sufficient interest in or title to the right or the property sought to be protected.17 It is proper only when the plaintiff appears to be entitled to the relief demanded in the complaint.18 In particular, the existence of the right and the violation thereof must appear in the allegations of the complaint19 and must constitute at least a prima facie showing of a right to the final relief.20 Thus, there are two requisite conditions for the issuance of a preliminary injunction, namely, (1) the right to be protected exists prima facie, and (2) the acts sought to be enjoined are violative of that right.21 It must be proven that the violation sought to be prevented would cause an irreparable injustice. Further, while a clear showing of the right is necessary, its existence need not be conclusively established.22 In fact, the evidence required to justify the issuance of a writ of preliminary injunction in the hearing thereon need not be conclusive or complete. The evidence need only be a "sampling" intended merely to give the court an idea of the justification for the preliminary injunction, pending the decision of the case on the merits.23 Thus, to be entitled to the writ, respondents are only required to show that they have the ostensible right to the final relief prayed for in their Complaint.24 First Existence of the Right Requisite:

Petitioner argues that respondents do not have a right to the relief demanded, because they merely have possession of the property, as the legal title is in the name of Macy Africa.9 Furthermore, it claims that the consolidation of title in its name does not constitute an "invasion of a right that is material and substantial."10 On the other hand, respondents maintain that they would suffer great irreparable damage if the writ of preliminary injunction is not granted.11 They likewise contend that if petitioner is allowed to consolidate its title to the subject property, they would lose their ancestral home, a loss that would result in unnecessary and protracted proceedings involving third parties.12

In the case at bar, we find ample justification for the issuance of a writ of preliminary injunction.25 Evidently, the question on whether or not respondents possess the requisite right hinges on the prima facie existence of their legal title to the subject property.26 They have shown that they have that right, and that it is directly threatened by the act sought to be enjoined.27 First, as alleged in the Complaint,28 Respondent Pacita Africa is the registered owner of the subject property. Her ownership is evidenced by the reconstituted Transfer Certificate of Title (TCT) No. RT-76140 (203492) PR-36463,29 issued by the Registry of Deeds of Quezon City. Second, the validity of the Deed of Sale30 dated December 29, 1992, is still in dispute because Respondent Pacita Africa claims that

her signature was forged by the vendee, Macy Africa.31 Third, there is doubt as to the validity of the mortgage in favor of petitioner, because there exists on record two TCTs covering the mortgaged property: (1) TCT No. 8151932 registered in the name of Pacita Africa and (2) TCT No. 8151933 registered in the name of Macy Africa. If indeed the Deed of Sale is a forgery, no parcel of land was ever transferred to the purported buyer34 who, not being the owner, could not have validly mortgaged the property.35 Consequently, neither has petitioner -- the buyer and mortgagee of the same lot -- ever acquired any title thereto.36 Significantly, no evidence was presented by petitioner to controvert these allegations put forward by respondents. Clearly then, on the basis of the evidence presented, respondents possess the right to prevent petitioner from consolidating the title in its name. The first requisite -- the existence of a right to be protected -- is thus present.37 Second Violation of Applicants Right Requisite:

longer be enjoined, because it has long been effected since 1996.54 We agree with petitioner. It is a well-entrenched rule that consummated acts can no longer be restrained by injunction55 whose sole objective is to preserve the status quo until the merits of the case are fully heard.56 Status quo is defined as the last actual peaceful uncontested situation that precedes a controversy, and its preservation is the office of an injunctive writ.57 In the instant case, the status quo was the situation of the parties at the time of the filing of the Amended Complaint58 with a prayer for a writ of preliminary injunction. It was that point at which petitioner had already foreclosed the subject property and, hence, could no longer be enjoined from going on with the foreclosure. However, the last actual uncontested status that preceded the controversy was when the property in dispute was still registered in the name of Macy Africa, petitioner not having consolidated in its name the title thereto. 59 Thus, the issuance of the writ would no doubt preserve the status quo.60 We cannot rule on the allegation of petitioner that this case is a "scam perpetrated by private respondents" to defraud it.61 The truth or the falsity of that assertion cannot be ascertained by this Court at this time. Verily, we refrain from expressing any opinion on the merits of the case, pending a full consideration of the evidence that would be presented by the parties.62 WHEREFORE, the Petition is DENIED and the assailed Decision of the Court of Appeals AFFIRMED. Costs against petitioner. SO ORDERED.

As to the second requisite, what is sought to be enjoined by respondents is the consolidation of the title to the subject property in petitioners name. After having discovered that the property had been mortgaged to petitioner, respondents filed on June 12, 1994 an action for Annulment of Title, Deed of Sale, and Mortgage to protect their rights over the property.38 This notwithstanding, petitioner foreclosed it on June 11, 1996.39 To enjoin petitioner from consolidating the title in its name, respondents then filed an Amended Complaint,40 praying for a writ of preliminary injunction. Unless legally stopped, petitioner may consolidate title to the property in its name and enjoy the unbridled freedom to dispose of it to third persons, to the damage and prejudice of respondents.41 What respondents stand to lose is material and substantial.42 They would lose their ancestral home even without the benefit of a trial.43 Clearly, the act sought to be enjoined is violative of their proprietary right over the property.44 A writ of preliminary injunction is issued precisely to preserve threatened or continuous irremediable injury to some of the parties before their claims can be thoroughly studied and adjudicated.45 Denial of the application for the writ may make the Complaint of respondents moot and academic. Furthermore, it would render ineffectual a final judgment in their favor or, at the very least, compel them to litigate needlessly with third persons who may have acquired an interest in the property.46 Such a situation cannot be countenanced.47 Lis Pendens Petitioner further contends that respondents are not entitled to the relief prayed for, because they caused a notice of lis pendens to be annotated at the back of TCT No. 81519, registered in the name of Macy P. Africa; thus, that notice provided ample protection of their rights and interests.48 We are not persuaded. A notice of lis pendens serves as an announcement to the whole world that a particular real property is in litigation and as a warning that those who acquire an interest in the property do so at their own risk -- they gamble on the result of the litigation over it.49 However, the cancellation of such notice may be ordered by the court that has jurisdiction over it at any given time.50 Its continuance or removal -- like the continuance or the removal of a preliminary attachment or injunction -- is not contingent on the existence of a final judgment on the action and ordinarily has no effect on the merits thereof.51 Thus, the notice of lis pendens does not suffice to protect herein respondents rights over the property.52 It does not provide complete and ample protection. Status Quo Ante Petitioner further claims that the RTC erred in enjoining the foreclosure sale of the subject property.53 It argues that the foreclosure may no