Republic of the Philippines


G.R. No. 156051             January 28, 2008

ALLAN F. PUEN, petitioner,



This resolves the Petition for Review on Certiorari filed by Allan F. Puen (petitioner) against Sta. Ana Agro-Aqua Corporation and Sta. Clara Agro-Aqua Corporation (respondents) seeking the reversal of the Decision1 of the Court of Appeals (CA) promulgated on July 22, 2002 and its Resolution dated November 13, 2002.

The problem between petitioner and respondents arose after petitioner, who leased from respondents a 14-hectare prawn farm for a period of four years beginning April 14, 1988, started incurring delay in paying the monthly rentals sometime in March of 1989. Manuel Lacson (Lacson), the President of respondents, made phone calls to petitioner to remind the latter of the delayed payments. In reply, petitioner sent Lacson a letter dated May 3, 1989,2 wherein he explained that his cash flow was tight due to problems with his other business, but he promised to pay the arrears in rentals after they would have harvested the prawns on May 15, 1989. Petitioner also acknowledged in said letter that he had not been able to live up to his promises despite Lacson's very accommodating attitude towards him.

Thereafter, petitioner's General Manager of the prawn farm, Roman Rosagaron (Rosagaron), sent a letter dated May 19, 19893 addressed to Manuel Lacson. It reads as follows:

Dear Mr. Lacson:

This is to formalize our verbal commitment through Mr. Rene Magallanes to pay Sta. Clara Estate, Inc. Forty Nine Percent (49%) of the gross sales from the initial harvest of eight (8) ponds in Phase I.

Please be informed that after settling the other small accounts of King Prawn, the said percentage of the gross sales from the subsequent harvests shall be proportionately increased in order to pay the full due rentals to Sta. Clara.

Thank you for your kind consideration.

Very truly yours,

Sgd. Roman P. Rosagaron
General Manager

c.c. Mr. Puen/file

According to Lacson, he then made arrangements with Rosagaron and the prawn buyers to ensure that payments for the prawns harvested from the leased prawn farm would be made directly to Lacson and applied to petitioner's arrearages.

In a letter dated May 25, 1989, Rosagaron informed petitioner that "through the instruction of Mr. Manuel Lacson, our prawn harvests in Ponds 8 and 9 Phase I has (sic) been withheld due to our pond rental arrears" and that from that time on respondents will be in control of the prawn harvest. Rosagaron also gave petitioner a list of the expected yield from each pond totalling 57,494.67 kilos.

Then, in a letter dated June 20, 19894 addressed to Lacson, petitioner signified his intention to pre-terminate the lease contract, to wit:

Dear Sir,

In reference to your discussion with Mr. Rosagaron and after some consultation and analysis, I have come up with the following replies to your suggestions.

1. I would like to continue with Phase II until such time as the ponds are harvested. Due to several restraints most notably the drop in market prices, I feel it impossible to continue under the present rates and conditions. I would therefore wish to turn over the ponds to you as soon as the ponds are harvested.

2. Moreover, I feel that for the same reason stated above it would not be viable to continue even with Phase I. I would therefore want to turn them over to you at the soonest time.

3. I am amenable to paying you in full for all the rentals due but may I implore you to extend your patience with us a little bit more by possibly foregoing with the interest penalties. Your rentals are already assured under the present conditions. Moreover the poor harvest has already translated into a P3,000,000.00 loss so I would appreciate it if you could give in on this matter.

I know you have been very benevolent with us and I've tried to reciprocate but I guess circumstances from the start made it very difficult for us. I know you've been very understanding and it is for this reason that I ask you to give in to our last request. I see no way for us to continue with this project at the present condition of the industry so I hope you can appreciate our side and deem the contract terminated without imposing further sanctions.

Thank you very much and I hope that our friendship is not affected by the termination of this contract.


Sgd. Allen F. Puen

Respondents, through Lacson, replied in a letter dated July 6, 1989,5 stating the following counter-proposals:

1. Rentals must be paid from time of pond delivery up to June 30, 1989 for Phase I and up to July 15, 1989 for Phase II. Our records show that the outstanding rentals for Phase I and Phase II up to the periods mentioned above are P395,592.11 and P625,000.00 respectively. Please note that there are 4 ponds remaining, proceeds of which are not included. The proceeds are estimated to be only around P100,000.00 as the prawns in these ponds have not been fed properly during the last three weeks. This cut-off date gives us barely 15 days to prepare all that is necessary to take over the grow-out ponds.

2. For the remaining period of the contract that you have expressed unwillingness to continue, we propose a twenty percent (20%) termination fee on the balance of the contract. The whole contract calls for rental payments for four years for 13 hectares at P500,000.00 per hectare or a total of P26,000,000.00. After paying rentals up to the periods stated in the preceding paragraph, a balance of P22,239,466.00 remain and 20% of that will be P4,447,000.00.

We feel that our proposal is a decision arrived at with compassion as a primary factor. x x x x Although legally we are entitled to the full amount of the contract, it is because of compassion on our part that we have agreed to only demand 20% of the amount due us as condition for terminating the contract of lease.

x x x x

Very truly yours,

Sgd. Manuel V. Lacson

P.S. We are attaching a statement of rentals and payments made as of July 06, 1989.6

In said statement of rentals and payments, respondents recorded the amount of P1,121,458.34 as proceeds from the sale of prawns harvested from the leased prawn farm. Petitioner never questioned the correctness of said amount or the application of said proceeds as payment for his delayed rentals.

Thereafter, Rosagaron again sent Lacson another letter dated July 10, 1989. It reads thus:

Dear Mr. Lacson:

Pursuant to the letter of Mr. Allen F. Puen and as per our verbal agreement on June 24, 1989, together with Mr. Nestor Mendoza, we would like to officially turn-over phase I & II to your office effective immediately.

In connection with this, Messrs. Arsenio M. Olila, Head Pond Technician, and Michael Malata, Jr., Pond Technician are hereby authorized to coordinate with your representatives to spot check and account the facilities to be turned over.

Kindly let us know as to when the actual turn-over of facilities shall be and with whom shall we coordinate with so we can act immediately.

Thank you and best wishes.

Very truly yours,

Sgd. Roman P. Rosagaron
General Manager7

Thereafter, counsel for respondents sent petitioner a letter demanding payment of unpaid rentals for the months of May, June and July of 1989 amounting to P905,371.30 and unpaid electricity bills in the amount of P227,896.40, or a total of P1,133,267.70.

Petitioner never replied and failed to comply with said demands; hence, respondents filed a complaint for specific performance with damages. In contravention, petitioner alleged in his Answer that: (1) respondents forcibly dispossessed him of the leased premises, then harvested and sold the prawns and appropriated for their own benefit the proceeds from said sale; and (2) due to said forcible take-over, the other prawns not ready for harvest were left unattended and unfed, rendering them non-marketable, thus, petitioner suffered grave losses. Petitioner prayed that respondents be ordered to account to the former the proceeds of the sale of the prawns and pay damages for losses he incurred due to the wrongful take-over of the leased premises.

After trial, the Regional Trial Court of Bacolod City, Branch 43, (RTC) rendered a Decision dated June 10, 1995 in favor of herein respondents, the dispositive portion of which reads as follows:

WHEREFORE, judgment is hereby rendered in favor of plaintiff [herein respondents], defendant [herein petitioner] being ordered to pay the former -

1. P3,163,868.34 representing unpaid and delayed rentals and CENECO bills.

The counterclaim filed by defendant against the plaintiff is dismissed for lack of merit.

No costs.


Petitioner appealed to the CA which issued herein assailed Decision dated July 22, 2002, ruling thus:

x x x x It has been held that where the lessor resumes possession of his leased property for its protection after the lessee has abandoned the same, the lessor has still the right, if he elects, to hold the lessee responsible under the contract until the termination of the lease. Moreover, even with such express option granted to the appellees-lessors to pre-terminate the lease after default by the lessee-appellant in the payment of rentals, the resolution or termination of the contract is not mandatory on the lessor (creditor) who may still choose to require specific performance, unless the contrary is expressly stipulated. Such resolution or termination takes effect when the lessor (creditor) notifies the lessee (debtor) of his decision to resolve. Since the herein lessor (appellees) had not exercised their option under the Contract of Lease to pre-terminate the lease by reason of such default in the payment of monthly rentals by the lessee, resort to specific performance is not legally barred. At any rate, the claim for damages in the form of unpaid rentals past due, stipulated penalty for such late payment as well as unpaid electric consumption by the appellant lessee gives the appellees lessors sufficient cause of action notwithstanding that possession of the leased premises had already been turned over to them; the right to such damages is recognized in both remedies of specific performance and rescission.

x x x x

x x x However, we cannot sustain the additional amount of P1,318,000.00 being claimed for alleged lost income on account of delay. There is no clear proof presented showing how and when such lost income was incurred, such as documentary evidence of actual production subsequently achieved. x x x

x x x x9

The dispositive portion of the CA Decision reads as follows:

WHEREFORE, premises considered, the present appeal is DISMISSED and the decision appealed from in Civil Case No. 5654 is hereby AFFIRMED with MODIFICATION in that the award of P1,318,000.00 for alleged lost income is hereby DELETED and the total amount of liability of the appellant under said judgment is hereby REDUCED to P1,845,868.34 representing the rents in arrears inclusive of 3% penalty per month and unpaid electric bills with CENECO.

No pronouncement as to costs.


Petitioner's Motion for Reconsideration of the afore-quoted Decision was denied by the CA in its Resolution dated November 13, 2002.

Hence, the present petition where the main issue raised is whether respondents' alleged appropriation and sale of petitioner's stocked prawns are unlawful.11

Petitioner prays that the complaint against him be dismissed and that respondents be ordered (1) to restitute the market value of the stocked prawns at P5,117,025.63 to be compensated against unpaid rentals and light bills in the aggregate of P1,845,868.34; (2) to pay petitioner the difference between the aforementioned amounts; (3) to pay petitioner actual and compensatory damages, moral and exemplary damages and attorney's fees.

The Court finds the petition bereft of merit.

It is quite clear that petitioner has admitted his indebtedness to respondent in the amount of P1,845,868.34.

The only issue remaining is whether respondents unlawfully harvested and appropriated for themselves petitioner's stocked prawns. The resolution thereof is inextricably dependent on whether respondents forcibly took control of subject prawn farms before the stocked prawns were harvested.

Although both the RTC and the CA failed to categorically state that respondents did not harvest or appropriate for themselves the stocked prawns, the RTC and CA nevertheless found that petitioner's claim of being forcibly dispossessed of the leased premises cannot be given credence. Well-settled is the rule that factual findings of the trial court, affirmed by the CA, are final and conclusive and may not be reviewed on appeal.12 Although such general rule admits of exceptions,13 this case does not fall under any of them.

Moreover, the letter dated July 10, 1989 sent by petitioner's General Manager Rosagaron to Lacson, respondent's President, is quite revealing. It stated petitioner's intent to physically turn over the prawn farm back to respondents, asking Lacson to "[k]indly let us know as to when the actual turn-over of facilities shall be and with whom shall we coordinate with so we can act immediately." This statement belies petitioner's claim that as early as May of 1989, or before they were able to harvest all of their stocked prawns, respondents had already taken back possession of the leased premises.14 Evidently, as of July 10, 1989, respondents have not yet been in possession of the prawn farm and petitioner's claim that it was respondents who harvested and sold the stocked prawns cannot be given credence. Verily, it is impossible to believe that respondents could have harvested for themselves the stocked prawns if they had not yet been in possession and full control of the prawn farm at the time of the harvest. This jibes with the testimony of Lacson that respondents only took possession of the leased premises after petitioner, through his employees, had already harvested and sold all the prawns, and as agreed upon, half of the proceeds of the sale were given directly to respondent and applied as payment for petitioner's arrearages.15 The Court finds respondents' version to be more plausible or convincing and therefore agrees with the CA in affirming the finding of the RTC in favor of respondents.

The Court likewise finds it hard to believe petitioner's claim that the proceeds from the sale of the prawns should amount to P5,117,025.63. In the statement of rentals and payments attached to respondents' letter dated July 6, 1989 sent to petitioner, the proceeds from the sale of prawns harvested from the leased prawn farm were recorded as P1,121,458.34. Petitioner never questioned the correctness of said amount or the application of said proceeds as payment for his delayed rentals. If, indeed, there was such a great discrepancy between the amount reported by respondents as proceeds from the sale of the prawns and petitioner's expected yield, the natural reaction of anybody would have been to question respondents about such discrepancy. But petitioner never raised any objection. Petitioner's reaction is unnatural and goes against ordinary human experience. As held in Manzano v. Perez, Sr.,16 "[i]n the assessment of the facts, reason and logic are used. In civil cases, the party that presents a preponderance of convincing evidence wins." In this case, reason and logic dictate that petitioner's claim cannot be believed and the Court must rule in favor of respondents.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals promulgated on July 22, 2002 and its Resolution dated November 13, 2002 are .AFFIRMED in toto.


Associate Justice


Associate Justice

Associate Justice

Associate Justice

Associate Justice


I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

Associate Justice
Chairperson, Third Division


Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

Chief Justice


* In lieu of Justice Minita V. Chico-Nazario, per Special Order No. 484 dated January 11, 2008.

1 Penned by Associate Justice Martin S. Villarama, Jr., with Associate Justice Conchita Carpio Morales (now a Member of this Court) and Associate Justice Mariano C. del Castillo, concurring.

2 Exh. "B" for respondents and Exh. "5" for petitioner, records, pp. 95-96.

3 Exh. "I" for respondents and Exh. "6" for petitioner, id. at 205.

4 Exh. "C" for respondents and Exh. "7" for petitioner, records, pp. 97-98.

5 Exh. "2," records, pp. 190-192.

6 Exhs. "2" and "2-A-1," id.

7 Exh. "E," records, p. 103.

8 Rollo, p. 58.

9 Rollo, pp. 69-71.

10 Id. at 72.

11 Id. at 6.

12 Child Learning Center, Inc. v. Tagario, G.R. No. 150920, November 25, 2005, 476 SCRA 236, 241-242.

13 Said exceptions [as enumerated in Child Learning Center, Inc. v. Tagario, supra] are as follows:

(1) when the inference made is manifestly mistaken, absurd or impossible; (2) when there is grave abuse of discretion; (3) when the findings are grounded entirely on speculations, surmises or conjectures; (4) when the judgment of the Court of Appeals is based on misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same are contrary to the admissions of both appellant and appellee; (7) when the findings of fact are conclusions without citation of specific evidence on which they are based; (8) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion; and (9) when the findings of fact of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on record.

14 See TSN of January 9, 1992, pp. 16-17.

15 See TSN of June 13, 1991, pp. 12-14.

16 414 Phil. 728, 731 (2001).

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