FACTS:

In 2010, IP E-Game Ventures, Inc. (petitioner) and George H. Tan (respondent) entered into an incentive agreement in connection with the sale of shares of Digital Paradise, Inc. The agreement stated that if the respondent successfully negotiated for the acceptance of the offered price by ePLDT, the petitioner would provide a certain amount of cash and shares to the respondent. An agreement for the sale of the shares was executed on April 1, 2011. However, the petitioner failed to settle the complete monetary incentive and provide the remaining balance and shares to the respondent. The respondent sent demand letters and notifications to the petitioner to settle the obligations, but the petitioner claimed that it had already settled the obligations or reduced the incentive amount. Due to the petitioner's refusal, the respondent filed a complaint for specific performance and damages. The trial court ruled in favor of the respondent, and the decision was affirmed by the Court of Appeals. The petitioner appealed to the Supreme Court, questioning the due and demandability of the transfer of shares and the sufficiency of the respondent's cause of action.

ISSUES:

1. Whether the petitioner raised errors of law in the present petition.

2. Whether the jurisdiction of the Court under Rule 45, Section 1 is limited only to errors of law.

3. Whether the case falls under any of the recognized exceptions to the jurisdiction of the Court under Rule 45.

4. Whether the contract between the parties should be respected and enforced.

5. Whether petitioner's argument that there was a subsequent agreement to reduce the monetary incentive is valid.

6. Whether or not the respondent has a cause of action for breach of contract.

7. Whether or not the petitioner is liable to pay the respondent the promised monetary incentive.

8. Whether or not the petitioner is liable to convey stocks worth P5,000,000.00 to the respondent.

RULING:

1. The petitioner did not raise errors of law in the present petition.

2. The jurisdiction of the Court under Rule 45, Section 1 is limited only to errors of law.

3. The case does not fall under any of the recognized exceptions to the jurisdiction of the Court under Rule 45.

4. The contract between the parties should be respected and enforced.

5. Petitioner's argument fails to convince. The Court cannot rely on unsubstantiated allegations without any evidence of a subsequent agreement. The literal meaning of the stipulations in the Agreement should control when the terms are clear and unambiguous. Petitioner is liable to pay the remaining balance of the monetary incentive.

6. The Court finds that the respondent has a cause of action for breach of contract. A cause of action on a written contract accrues when an actual breach or violation thereof occurs.

7. The petitioner is liable to pay the respondent the promised monetary incentive. The Court affirms the findings of the Regional Trial Court (RTC) and the Court of Appeals (CA) that the complaint sufficiently avers the existence of the elements of a cause of action. Therefore, the petitioner is ordered to pay the respondent FOUR MILLION PESOS (P4,000,000.00) as and by way of Actual Damages.

8. The petitioner is also liable to convey stocks worth P5,000,000.00 to the respondent as stipulated in the Agreement.

PRINCIPLES:

• A contract is the law between the parties, and obligations arising from contracts have the force of law between the contracting parties (principle of pacta sunt servanda).

• Stipulations in a contract are binding and enforceable as long as they are not contrary to law, morals, good customs, public order, or public policy.

• Courts cannot alter or amend the agreement between the parties and should give force and effect to their intentions.

• Contracts should be fulfilled according to their literal sense and the clear and unambiguous terms of the agreement should be observed.

• The literal meaning of the stipulations in a contract should control when the terms are clear and unambiguous.

• Allegations in a complaint establish a cause of action if they sufficiently aver the legal right of the plaintiff, the correlative obligation of the defendant, and the act or omission of the defendant in violation of the legal right.

• A cause of action is determined by the sufficiency, not the veracity, of the material allegations in a complaint.

• A cause of action on a written contract accrues only when an actual breach or violation thereof occurs.

• A complaint sufficiently avers the existence of a cause of action if it includes the elements necessary for the specific cause of action alleged.