In a nutshell, where a lease agreement, whether express or implied, is subsequently entered into by the mortgagor and the mortgagee after the expiration of the redemption period and the consolidation of title in the name of the latter, a case for ejectment or unlawful detainer, not a motion for a writ of possession, is the proper remedy in order to evict from the questioned premises a mortgagor-turned-lessee. The rationale for this rule is that a new relationship between the parties has been created. What applies is no longer the law on extrajudicial foreclosure, but the law on lease. And when an issue arises, as in the case at bar, regarding the right of the lessee to continue occupying the leased premises, the rights of the parties must be heard and resolved in a case for ejectment or unlawful detainer under Rule 70 of the Rules of Court.
Thursday, September 19, 2019
Sunday, October 23, 2016
From this act of receiving delayed payment, it is clear that the respondent bank had waived its right under the acceleration clause so that instead of claiming penalty charges on the entire amount of P4,500.00, it only computed the penalty based on the defaulted amortization payment which is P1,018.14. If it computed the penalty charge at 19% of the entire amount of P4,500.00 which would have been due and demandable by virtue of the acceleration clause, the penalty charges would be much more than P25.20.
This is similarly observed in payments which the respondent bank received on June 6, 1978 and August 26, 1978. We also noticed that in Exhibit “D-3”, the receipt which the respondent bank issued to petitioner for the August 26, 1978 partial payment, it waived its right under Article 1253[7] of the Civil Code on Application of Payments when it applied the payment to the principal instead of the interest. Thus, on that date the outstanding obligation of petitioner was already reduced to P3,558.21 after she had paid a total of P2,200,00 over a period of nine months from the time the loan was obtained.
From this conduct of the respondent bank it is clear that it neither enforced its right under the acceleration clause nor its right to foreclose under the mortgage contract. For more than four years, the respondent bank made petitioner believe that it was applying her payment on the loan and interest just like before when the respondent bank accepted such payment and issued a receipt therefor. It is bound by estoppel to apply the same as payment for petitioner’s obligation as it did when it received previous payments on three occasions. Its act of applying said payments to accounts payable is clearly prejudicial to petitioner. We cannot countenance this act of the bank.
about a contract of loan
"An accepted promise to
deliver something by way of commodatum or simple loan is binding upon the
parties, but the commodatum or simple loan itself shall not be perfected until
the delivery of the object of the contract."
A loan contract is a real
contract, not consensual, and, as such, is perfected only upon the delivery of
the object of the contract.21
In
this case, the objects of the contract are the loan proceeds which Queaño would
enjoy only upon the encashment of the checks signed or indorsed by Naguiat. If
indeed the checks were encashed or deposited, Naguiat would have certainly
presented the corresponding documentary evidence, such as the returned checks
and the pertinent bank records. Since Naguiat presented no such proof, it
follows that the checks were not encashed or credited to Queaño’s account.1awphi1.nét
Xxx
More fundamentally, whatever was
the true relationship between Naguiat and Ruebenfeldt is irrelevant in the face
of the fact that the checks issued or indorsed to Queaño were never encashed or
deposited to her account of Naguiat.
All told, we find no compelling
reason to disturb the finding of the courts a quo that the lender did not remit
and the borrower did not receive the proceeds of the loan. That being the case,
it follows that the mortgage which is supposed to secure the loan is null and
void. The consideration of the mortgage contract is the same as that of the principal
contract from which it receives life, and without which it cannot exist as an
independent contract.28 A
mortgage contract being a mere accessory contract, its validity would depend on
the validity of the loan secured by it.29
X x x x
Based on the above jurisprudence, the Court finds that the 24% per
annum interest rate, provided for in the subject mortgage contracts for a loan
of P225,000.00, may not be
considered unconscionable. Moreover, considering that the mortgage agreement
was freely entered into by both parties, the same is the law between them and they
are bound to comply with the provisions contained therein.26
Clearly, jurisprudence establish that the 24% p.a. stipulated
interest rate was not considered unconscionable, thus, the 23% p.a. interest
rate imposed on petitioners' loan in this case can by no means be considered
excessive or unconscionable.
We also do not find the stipulated 12% p.a. penalty charge
excessive or unconscionable.
In Ruiz v. CA,27 we held:
The 1% surcharge on the principal loan for every month of default
is valid.1âwphi1 This surcharge or penalty stipulated in a loan agreement in case of
default partakes of the nature of liquidated damages under Art. 2227 of the New
Civil Code, and is separate and distinct from interest payment. Also referred
to as a penalty clause, it is expressly recognized by law. It is an accessory
undertaking to assume greater liability on the part of an obligor in case of
breach of an obligation. The obligor would then be bound to pay the stipulated
amount of indemnity without the necessity of proof on the existence and on the
measure of damages caused by the breach. x x x28 And in Development Bank of the Philippines v. Family Foods
Manufacturing Co., Ltd.,29 we
held that:
x x x The enforcement of the penalty can be demanded by the
creditor only when the non-performance is due to the fault or fraud of the
debtor. The non-performance gives rise to the presumption of fault; in order to
avoid the payment of the penalty, the debtor has the burden of proving an
excuse - the failure of the performance was due to either force majeure or the
acts of the creditor himself.30
Here, petitioners defaulted in the payment of their loan obligation
with respondent bank and their contract provided for the payment of 12% p.a.
penalty charge, and since there was no showing that petitioners' failure to
perform their obligation was due to force majeure or to respondent bank's acts,
petitioners cannot now back out on their obligation to pay the penalty charge.
A contract is the law between the parties and they are bound by the
stipulations therein.
THIRD
DIVISION
G.R. No. 197861
June 5, 2013
SPOUSES FLORENTINO T. MALLARI and AUREA V. MALLARI, Petitioners,
vs.
PRUDENTIAL BANK (now BANK OF THE PHILIPPINE ISLANDS), Respondent.
vs.
PRUDENTIAL BANK (now BANK OF THE PHILIPPINE ISLANDS), Respondent.
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The
interest rates imposed and indicated in the 2nd up to the 26th Promissory Notes
are DECLARED NULL AND VOID, and such notes shall instead be subject to interest
at the rate of twelve percent (12%) per annum up to June 30, 2013, and starting
July 1, 2013, six percent (6%) per annum until full satisfaction.
SECOND
DIVISION
G.R. No. 181045
July 2, 2014
SPOUSES EDUARDO and LYDIA SILOS, Petitioners,
vs.
PHILIPPINE NATIONAL BANK, Respondent.
vs.
PHILIPPINE NATIONAL BANK, Respondent.
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In addition, pursuant to Circular No. 799, series of 2013, issued
by the Office of the Governor of the Bangko Sentral ng Pilipinas on 21 June
2013, and in accordance with the ruling of the Supreme Court in the recent case
of Dario Nacar v. Gallery Frames and/or Felipe Bordey, Jr.,20 effective 1 July 2013, the rate of
interest for the loan or forbearance of any money, goods or credits and the
rate allowed in judgments, in the absence of an express contract as to such
rate of interest, shall be six percent (6%) per annum. Accordingly, the rate of
interest of 12% per annum on petitioners-spouses’ obligation shall apply from
20 May 2011 – the date of default – until 30 June 2013 only. From 1 July 2013
until fully paid, the legal rate of 6% per annum shall be applied to
petitioners-spouses’ unpaid obligation.
IN VIEW OF THE FOREGOING, the Petition is DENIED and the Judgment
of the Court of Appeals in CA-G.R. CV No. 91250 is AFFIRMED with the
MODIFICATION that the 12% interest per annum shall be applied from the date of
default until 30 June 2013 only, after which date and until fully paid, the
outstanding obligation of petitioners-spouses shall earn interest at 6% per annum.
Let the records of this case be remanded to the trial court for the proper
computation of the amount of liability of petitioners Spouses Bayani H. Andal
and Gracia G. Andal, in accordance with the pronouncements of the Court herein
and with due regard to the payments previously made by petitioners-spouses.
SECOND
DIVISION
G.R. No. 194201
November 27, 2013
SPOUSES BAYANI H. ANDAL AND GRACIA G. ANDAL, Petitioners,
vs.
PHILIPPINE NATIONAL BANK REGISTER OF DEEDS OF BATANGAS CITY JOSE C. CORALES, Responden
vs.
PHILIPPINE NATIONAL BANK REGISTER OF DEEDS OF BATANGAS CITY JOSE C. CORALES, Responden
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The nature of simple loan is defined in Articles 1933 and 1953 of
the Civil Code.
Art. 1933. — By the contract of
loan, one of the parties delivers to another, either something not consumable
so that the latter may use the same for a certain time and return it, in which
case the contract is called a commodatum; or money or other consumable thing
upon the condition that the same amount of the same kind and quality shall be
paid, in which case the contract is simply called a loan or mutuum.
Commodatum is essentially
gratuitous.
Simple loan may be gratuitous or
with a stipulation to pay interest.
In commodatum the bailor retains
the ownership of the thing loaned, while in simple loam ownership passes to the
borrower.
Art. 1953. — A person who receives
a loan of money or any other fungible thing acquires the ownership thereof, and
is bound to pay to the creditor an equal amount of the same kind and quality.
SECOND
DIVISION
G.R. No. L-50550-52 October 31, 1979CHEE KIONG YAM, AMPANG MAH, ANITA YAM JOSE Y.C. YAM AND RICHARD YAM, petitioners,
vs.
HON. NABDAR J. MALIK, Municipal Judge of Jolo, Sulu (Branch I), THE PEOPLE OF THE PHILIPPINES, ROSALINDA AMIN, TAN CHU KAO and LT. COL. AGOSTO SAJOR respondents.
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Art.
1953 of the Civil Code. — A person who receives a loan of money or any other
fungible thing acquires the ownership thereof, and is bound to pay to the
creditor an equal amount of the same kind and quality.
Xxxx
As
we have explained earlier, the true nature of the contract between petitioner
and private respondents was that of a simple loan. In such a contract, the
debtor promises to pay to the creditor an equal amount of money plus interest
if stipulated. 23 It
is true that private respondents failed to fulfill their promise to petitioner
to return his money plus interest at the end of one month. However, mere
non-compliance of a promise to perform a thing does not constitute deceit 24 because
it is hard to determine and infer a priori the criminal intent to the person
promising. 25 In
other words, deceit should be proved and established by acts distinct from and
independent of, the non-compliance of the promise, 26 and this, petitioner failed to do.
SECOND
DIVISION
G.R. No. 106671 March 30,
2000
HARRY TANZO, petitioner,
vs.
HON. FRANKLIN M. DRILON, in his capacity as Secretary of Justice, MANUEL J. SALAZAR and MARIO J. SALAZAR, respondents.
vs.
HON. FRANKLIN M. DRILON, in his capacity as Secretary of Justice, MANUEL J. SALAZAR and MARIO J. SALAZAR, respondents.
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SMALL CLAIMS
Section 4. Applicability - The Metropolitan Trial Courts, Municipal Trial Courts in Cities, Municipal
Trial Courts, and Municipal Circuit Trial Courts shall apply this Rule in all
actions which are; (a) purely civil in nature where the claim or relief prayed
for by the plaintiff is solely for payment or reimbursement of sum of money,
and (b) the civil aspect of criminal action, or reserved upon the filing of the
criminal action in court, pursuant to Rule of 111 of the Revised Rules of
Criminal Procedure.
These claims or demands may be;
(a) For money owned under any of
the following;
1. Contract of Lease;
2. Contract of Loan;
3. Contract of Services;
4. Contract of Sale; or
5. Contract of Mortgage;
(b) For damages arising from any
of the following;
1. Fault or negligence;
2. Quasi-contract; or
3. Contract;
(c) The enforcement of a barangay
amicable settlement or an arbitration award involving a money claim covered by
this Rule pursuant to Sec. 417 of Republic Act 7160, otherwise known as the
Local Government Code of 1991.
EN BANC
A.M. No. 08-8-7-SC
November 21, 2000
RE: THE
RULE OF PROCEDURE FOR SMALL CLAIMS CASES
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In
loan agreements, it cannot be denied that the rate of interest is a principal
condition, if not the most important component. Thus, any modification thereof
must be mutually agreed upon; otherwise, it has no binding effect. Moreover,
the Court cannot consider a stipulation granting a party the option to prepay
the loan if said party is not agreeable to the arbitrary interest rates
imposed. Premium may not be placed upon a stipulation in a contract which
grants one party the right to choose whether to continue with or withdraw from
the agreement if it discovers that what the other party has been doing all
along is improper or illegal.
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In the present case, as proof of his claim of lack of consideration, respondent denied under oath that he owed petitioner a single centavo. He added that he did not apply for a loan and that when he signed the promissory notes, they were all blank forms and all the blank spaces were to be filled up only if the sale transaction over the subject properties would not push through because of a possible adverse decision in the civil cases involving them (the properties). He thus posits that since the sale pushed through, the promissory notes did not become effective.
Contrary to the conclusions of the RTC and the CA, we find such proof insufficient to overcome the presumption of consideration. The presumption that a contract has sufficient consideration cannot be overthrown by the bare, uncorroborated and self-serving assertion of respondent that it has no consideration.41 The alleged lack of consideration must be shown by preponderance of evidence.42
As it now appears, the promissory notes clearly stated that respondent promised to pay petitioner
Respondent’s liability is not negated by the fact that he has uncollected commissions from the sale of the Molino properties. As the records of the case show, at the time of the execution of the promissory notes, the Molino properties were subject of various court actions commenced by different parties. Thus, the sale of the properties and, consequently, the payment of respondent’s commissions were put on hold. The non-payment of his commissions could very well be the reason why he obtained a loan from petitioner.
In Sierra v. Court of Appeals,44 we held that:
A promissory note is a solemn acknowledgment of a debt and a formal
commitment to repay it on the date and under the conditions agreed upon by the
borrower and the lender. A person who signs such an instrument is bound to
honor it as a legitimate obligation duly assumed by him through the signature
he affixes thereto as a token of his good faith. If he reneges on his promise
without cause, he forfeits the sympathy and assistance of this Court and
deserves instead its sharp repudiation.
Aside from the payment of the principal obligation of P1,936,800.00,
the parties agreed that respondent pay interest at the rate of 25% from
February 17, 1997 until fully paid. Such rate, however, is excessive and thus,
void. Since the stipulation on the interest rate is void, it is as if there was
no express contract thereon. To be sure, courts may reduce the interest rate as
reason and equity demand.45 In this case, 12% interest is reasonable.
The promissory notes likewise required the payment of a penalty charge of 3%
per month or 36% per annum. We find such rates unconscionable. This Court has
recognized a penalty clause as an accessory obligation which the parties attach
to a principal obligation for the purpose of ensuring the performance thereof
by imposing on the debtor a special prestation (generally consisting of the
payment of a sum of money) in case the obligation is not fulfilled or is
irregularly or inadequately fulfilled.46 However, a penalty charge of 3% per month is
unconscionable;47 hence, we reduce it to 1% per month or 12%
per annum, pursuant to Article 1229 of the Civil Code which states:
Art. 1229. The judge shall equitably reduce the penalty when the principal
obligation has been partly or irregularly complied with by the debtor. Even if
there has been no performance, the penalty may also be reduced by the courts if
it is iniquitous or unconscionable.48
Lastly, respondent promised to pay 25% of his outstanding obligations as
attorney’s fees in case of non-payment thereof. Attorney’s fees here are in the
nature of liquidated damages. As long as said stipulation does not contravene
law, morals, or public order, it is strictly binding upon respondent.
Nonetheless, courts are empowered to reduce such rate if the same is iniquitous
or unconscionable pursuant to the above-quoted provision.49 This sentiment is echoed in Article 2227 of
the Civil Code, to wit:
Art. 2227. Liquidated damages, whether intended as an indemnity or a
penalty, shall be equitably reduced if they are iniquitous or unconscionable.Hence, we reduce the stipulated attorney’s fees from 25% to 10%.50
Respondent’s Counterclaim and Supplemental Counterclaim
The RTC, affirmed by the CA, granted respondent’s counterclaims as it applied the doctrine of piercing the veil of corporate fiction. It is undisputed that the parties to the contract of sale of the subject properties are Pentacapital Realty as the buyer, CRDI as the seller, and respondent as the agent of CRDI. Respondent insisted, and the RTC and the CA agreed, that petitioner, as the parent company of Pentacapital Realty, was aware of the sale transaction, and that it was the former who paid the consideration of the sale. Hence, they concluded that the two corporations should be treated as one entity.
SECOND
DIVISION
G.R. No. 171736
July 5, 2010PENTACAPITAL INVESTMENT CORPORATION, Petitioner,
vs.
MAKILITO B. MAHINAY, Respondent.
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G.R. No. 181482
PENTACAPITAL INVESTMENT CORPORATION, Petitioner,
vs.
MAKILITO B. MAHINAY, Respondent.
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Respondent Makilito B. Mahinay is ordered to pay petitioner Pentacapital Investment Corporation
is likewise ordered to pay 10% of his outstanding obligation as attorney’s fees. No pronouncement as to costs.
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promissory notes
A promissory note or promissory
letter is a legal instrument similar in nature to any common law contract. In
order for a contract to be enforceable, it must contain certain legal
conditions such as an offer and an acceptance of that offer. Contracts indicate
the type and amount of payment for services or goods rendered. In the case of a
legal promissory note, the contract will be shaped around the amount of money
or capital loaned and the terms of repayment of the promissory note.
As with any contract, the promissory note
will contain all the terms and conditions associated with the agreement that
have been established between the two parties. It will detail the total amount
of money or capital loaned, the interest rate that is charged, and the timeline
for repayment. When all of these conditions are addressed in the promissory
note details and it is signed by both parties, the promissory note meets all
the elements of a legally binding contract.
Promissory note forms
can be crafted to address any type of lending situation, and as long as they
are crafted with the necessary elements to fulfill the legal precedents of a
contract, they are a legitimately binding legal instrument. Many promissory
notes are crafted to cover simple agreements regarding the loaning of money
from one person to another. They can also be used when an individual sells a
vehicle to another person in a private transaction.
When money is loaned
between individuals, most promissory notes act as a simple promise to pay. They do not have any collateral
assigned that can be used to satisfy the note should the borrower default.
Legal promissory notes used for the buying and selling of vehicles and other
equipment can be secured through repossession of the vehicle or property should
the borrower fail to fulfill the terms of the note.
3
Whether or not a promissory note
is secured with collateral or is unsecured and based solely on the promise to
repay, the same principles of legality apply. If the borrower should default on
the note and not be able to repay, the lender of a secured note can find relief
by legally repossessing the property that was promised as collateral on the
note.
If the note is for a monetary loan and is
not secured, the lender has the legal authority to seek restitution through the
court system and secure a judgment against the borrower. While this does not
absolutely guarantee repayment of the promissory note, it does create a legal judgment against
the borrower which can then be pursued through collection activity.The other disadvantage to an unsecured promissory note or promissory letter is that if the borrower should file bankruptcy, creditors with secured interests will be repaid before any creditor with unsecured interests. This creates a possibility where the unsecured lender might not receive any repayment for the breach of agreement.
There are two principal qualities essential to the validity of a note; first, that it be payable at all events, not dependenton any contingency; 20 Pick. 132; 22 Pick. 132 nor payable out of any particular fund. 3 J. J. Marsh. 542; 5 Pike, R. 441; 2Blackf. 48; 1 Bibb, 503; 1 S. M. 393; 3 J. J. Marsh. 170; 3 Pick. R. 541; 4 Hawks, 102; 5 How. S. C. R. 382. And, secondly,it is required that it be for the payment of money only; 10 Serg. & Rawle, 94; 4 Watts, R. 400; 11 Verm. R. 268; and not inbank notes, though it has been held differently in the state of New York. 9 Johns. R. 120; 19 Johns. R. 144.
6. A promissory note payable to order or bearer passes by indorsement, and although a chose in action, the holder maybring suit on it in his own name. Although a simple contract, a sufficient consideration is implied from the nature of theinstrument. Vide 5 Com. Dig. 133, n., 151, 472 Smith on Merc. Law, B. 3, c. 1; 4 B. & Cr. 235 7 D. P. C. 598; 8 D. P. C. 4411 Car. & Marsh. 16. Vide Bank note; Note; Reissuable note.
There are two principal qualities essential to the validity
of a note; first, that it be payable at all events, not dependent on any
contingency nor payable out of any particular fund. And, secondly, it is
required that it be for the payment of money only and not in bank notes, though
it has been held differently in the state of New York.A promissory note payable
to order or bearer passes by indorsement, and although a chose in action, the
holder may bring suit on it in his own name. Although a simple contract, a
sufficient consideration is implied from the nature of the instrument.
Sunday, October 26, 2014
NATIONAL GRAINS AUTHORITY and WILLLAM CABAL, vs. THE INTERMEDIATE APPELLATE COURT
G.R. No. 74470 March
8, 1989
NATIONAL GRAINS
AUTHORITY and WILLLAM CABAL,
vs.
THE INTERMEDIATE APPELLATE COURT and LEON SORIANO
vs.
THE INTERMEDIATE APPELLATE COURT and LEON SORIANO
Facts: On August 23, 1979,
private respondent Leon Soriano offered to sell palay grains to the NFA,
through William Cabal, the Provincial Manager of NFA stationed at Tuguegarao,
Cagayan. He submitted the documents required by the NFA for pre-qualifying as a
seller, namely: (1) Farmer's Information Sheet accomplished by Soriano and
certified by a Bureau of Agricultural Extension (BAEX) technician, Napoleon
Callangan, (2) Xerox copies of four (4) tax declarations of the riceland leased
to him and copies of the lease contract between him and Judge Concepcion Salud,
and (3) his Residence Tax Certificate. Private respondent Soriano's documents
were processed and accordingly, he was given a quota of 2,640 cavans of palay.
The quota noted in the Farmer's Information Sheet represented the maximum
number of cavans of palay that Soriano may sell to the NFA.In the afternoon of
August 23, 1979 and on the following day, August 24, 1979, Soriano delivered
630 cavans of palay. The palay delivered during these two days were not
rebagged, classified and weighed. when Soriano demanded payment of the 630
cavans of palay, he was informed that its payment will be held in abeyance
since Mr. Cabal was still investigating on an information he received that
Soriano was not a bona tide farmer and the palay delivered by him was not
produced from his farmland but was taken from the warehouse of a rice trader,
Ben de Guzman. On August 28, 1979, Cabal wrote Soriano advising him to withdraw
from the NFA warehouse the 630 cavans Soriano delivered stating that NFA cannot
legally accept the said delivery on the basis of the subsequent certification of
the BAEX technician, Napoleon Callangan that Soriano is not a bona fide
farmer.Instead of withdrawing the 630 cavans of palay, private respondent
Soriano insisted that the palay grains delivered be paid. He then filed a
complaint for specific performance and/or collection of money with damages on
November 2, 1979, against the National Food Authority and Mr. William Cabal,
Provincial Manager of NFA with the Court of First Instance of Tuguegarao.
Issue: whether or not there
was a contract of sale in the case at bar
Ruling: Article 1458 of the Civil Code of
the Philippines defines sale as a contract whereby one of the contracting
parties obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other party to pay therefore a price certain in
money or its equivalent. A contract, on the other hand, is a meeting of minds
between two (2) persons whereby one binds himself, with respect to the other,
to give something or to render some service (Art. 1305, Civil Code of the Philippines).
The essential requisites of contracts are: (1) consent of the contracting
parties, (2) object certain which is the subject matter of the contract, and
(3) cause of the obligation which is established (Art. 1318, Civil Code of the
Philippines.
In the case at bar,
Soriano initially offered to sell palay grains produced in his farmland to NFA.
When the latter accepted the offer by noting in Soriano's Farmer's Information
Sheet a quota of 2,640 cavans, there was already a meeting of the minds between
the parties. The object of the contract, being the palay grains produced in
Soriano's farmland and the NFA was to pay the same depending upon its quality.
The fact that the exact number of cavans of palay to be delivered has not been
determined does not affect the perfection of the contract. Article 1349 of the
New Civil Code provides: ". . .. The fact that the quantity is not
determinate shall not be an obstacle to the existence of the contract, provided
it is possible to determine the same, without the need of a new contract
between the parties." In this case, there was no need for NFA and Soriano
to enter into a new contract to determine the exact number of cavans of palay
to be sold. Soriano can deliver so much of his produce as long as it does not exceed
2,640 cavans.
The acceptance referred to which
determines consent is the acceptance of the offer of one party by the other and
not of the goods delivered as contended by petitioners.From the moment the
contract of sale is perfected, it is incumbent upon the parties to comply with
their mutual obligations or "the parties may reciprocally demand
performance" thereof. (Article 1475, Civil Code, 2nd par.).The reason why
NFA initially refused acceptance of the 630 cavans of palay delivered by
Soriano is that it (NFA) cannot legally accept the said delivery because
Soriano is allegedly not a bona fide farmer. The trial court and the appellate
court found that Soriano was a bona fide farmer and therefore, he was qualified
to sell palay grains to NFA.
G.R.
No. 156437 March 1, 2004
NATIONAL
HOUSING AUTHORITY,
vs.
GRACE BAPTIST CHURCH and the COURT OF APPEALS,
vs.
GRACE BAPTIST CHURCH and the COURT OF APPEALS,
Facts: On June 13, 1986,
respondent Grace Baptist Church (hereinafter, the Church) wrote a letter to
petitioner National Housing Authority (NHA), manifesting its interest in
acquiring Lots 4 and 17 of the General Mariano Alvarez Resettlement Project in
Cavite. In its letter-reply dated July 9, 1986, petitioner informed
respondent: In reference to your
request letter dated 13 June 1986, regarding your application for Lots 4 and
17, Block C-3-CL, we are glad to inform you that your request was granted and
you may now visit our Project Office at General Mariano Alvarez for processing
of your application to purchase said lots.
On February 22, 1991, the NHA’s Board of Directors
passed Resolution No. 2126, approving the sale of the subject lots to
respondent Church at the price of P700.00 per square meter, or a total price of
P430,500.00. The Church was duly informed of this Resolution through a letter
sent by the NHA.On
April 8, 1991, the Church tendered to the NHA a manager’s check in the amount
of P55,350.00, purportedly in full payment of the subject properties. The
Church insisted that this was the price quoted to them by the NHA Field Office,
as shown by an unsigned piece of paper with a handwritten computation scribbled
thereon. Petitioner NHA returned the check, stating that the amount
was insufficient considering that the price of the properties have changed. The
Church made several demands on the NHA to accept their tender of payment, but
the latter refused. Thus, the Church instituted a complaint for specific
performance and damages against the NHA with the Regional Trial Court of Quezon
City.
Issue: Can the NHA be
compelled to sell the subject lots to Grace Baptist Church in the absence of
any perfected contract of sale between the parties?
Ruling:
No.
The contract has not been perfected.In the case at bar, the offer of the NHA to
sell the subject property, as embodied in Resolution No. 2126, was similarly
not accepted by the respondent. Thus, the alleged contract involved in
this case should be more accurately denominated as inexistent.
There being no concurrence of the offer and acceptance, it did not pass the
stage of generation to the point of perfection. As such, it is without
force and effect from the very beginning or from its incipiency, as if it had
never been entered into, and hence, cannot be validated either by lapse of time
or ratification. Equity can not give validity to a void contract, and
this rule should apply with equal force to inexistent contracts. We note from
the records, however, that the Church, despite knowledge that its intended
contract of sale with the NHA had not been perfected, proceeded to introduce
improvements on the disputed land. On the other hand, the NHA knowingly granted
the Church temporary use of the subject properties and did not prevent the
Church from making improvements thereon. Thus, the Church and the NHA, who both
acted in bad faith, shall be treated as if they were both in good
faith. In this connection, Article 448 of the Civil Code provides:The
owner of the land on which anything has been built, sown or planted in good
faith, shall have the right to appropriate as his own the works, sowing or planting,
after payment of the indemnity provided for in articles 546 and 548, or to
oblige the one who built or planted to pay the price of the land, and the one
who sowed, the proper rent. However, the builder or planter cannot be obliged
to buy the land and if its value is considerably more than that of the building
or trees. In such case, he shall pay reasonable rent, if the owner of the land
does not choose to appropriate the building or trees after proper indemnity.
The parties shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.
G.R.
No. 151815 February 23, 2005
SPOUSES
JUAN NUGUID AND ERLINDA T. NUGUID,
vs.
HON. COURT OF APPEALS AND PEDRO P. PECSON
vs.
HON. COURT OF APPEALS AND PEDRO P. PECSON
Facts: Pedro P. Pecson owned a commercial lot
located at 27 Kamias Road, Quezon City, on which he built a four-door
two-storey apartment building. For failure to pay realty taxes, the lot was
sold at public auction by the City Treasurer of Quezon City to Mamerto
Nepomuceno, who in turn sold it for P103,000 to the spouses Juan and
Erlinda Nuguid.Pecson challenged the validity of the auction sale before the
RTC of Quezon City . In its Decision, dated February 8, 1989, the RTC
upheld the spouses’ title but declared that the four-door two-storey apartment
building was not included in the auction sale. This was affirmed in toto
by the Court of Appeals and thereafter by this Court, in its
Decision dated May 25, 1993, in G.R. No. 105360 entitled Pecson v. Court
of Appeals.
On June 23, 1993, by virtue of
the Entry of Judgment of the aforesaid decision in G.R. No. 105360, the Nuguids
became the uncontested owners of the 256-square meter commercial lot.
As a result, the Nuguid spouses
moved for delivery of possession of the lot and the apartment building.
In the same order the RTC also
directed Pecson to pay the same amount of monthly rentals to the Nuguids as
paid by the tenants occupying the apartment units or P21,000 per month
from June 23, 1993, and allowed the offset of the amount of P53,000 due
from the Nuguids against the amount of rents collected by Pecson from June 23,
1993 to September 23, 1993 from the tenants of the apartment.
Pecson duly moved for
reconsideration, but on November 8, 1993, the RTC issued a Writ of Possession,
directing the deputy sheriff to put the spouses Nuguid in possession of
the subject property with all the improvements thereon and to eject all the
occupants therein.
Issue: W/Not the Nuguids
should reimburse Pecson for the benefits derived from the
apartment building.
Ruling: Yes. It is not
disputed that the construction of the four-door two-storey apartment, subject
of this dispute, was undertaken at the time when Pecson was still the owner of
the lot. When the Nuguids became the uncontested owner of the lot on June 23,
1993, by virtue of entry of judgment of the Court’s decision, dated May 25,
1993, in G.R. No. 105360, the apartment building was already in existence and
occupied by tenants. In its decision dated May 26, 1995 in G.R. No. 115814, the
Court declared the rights and obligations of the litigants in accordance with
Articles 448 and 546 of the Civil Code. These provisions of the Code are
directly applicable to the instant case.
Under Article 448,
the landowner is given the option, either to appropriate the improvement as his
own upon payment of the proper amount of indemnity or to sell the land to the
possessor in good faith. Relatedly, Article 546 provides that a builder in good
faith is entitled to full reimbursement for all the necessary and useful
expenses incurred; it also gives him right of retention until full
reimbursement is made. While the law aims to concentrate in one person the
ownership of the land and the improvements thereon in view of the
impracticability of creating a state of forced co-ownership, it guards
against unjust enrichment insofar as the good-faith builder’s improvements are
concerned. The right of retention is considered as one of the measures devised
by the law for the protection of builders in good faith. Its object is to
guarantee full and prompt reimbursement as it permits the actual possessor to
remain in possession while he has not been reimbursed (by the person who
defeated him in the case for possession of the property) for those necessary
expenses and useful improvements made by him on the thing possessed. Accordingly,
a builder in good faith cannot be compelled to pay rentals during the period of
retention nor be disturbed in his possession by ordering him
to vacate. In addition, as in this case, the owner of the land is prohibited
from offsetting or compensating the necessary and useful expenses with the
fruits received by the builder-possessor in good faith. Otherwise, the security
provided by law would be impaired. This is so because the right to the expenses
and the right to the fruits both pertain to the possessor, making compensation
juridically impossible; and one cannot be used to reduce the other.
As we earlier held, since
petitioners opted to appropriate the improvement for themselves as early as
June 1993, when they applied for a writ of execution despite knowledge that the
auction sale did not include the apartment building, they could not benefit
from the lot’s improvement, until they reimbursed the improver in full, based
on the current market value of the property.Given the circumstances of the
instant case where the builder in good faith has been clearly denied his right
of retention for almost half a decade, we find that the increased award of
rentals by the RTC was reasonable and equitable. The petitioners had reaped all
the benefits from the improvement introduced by the respondent during said
period, without paying any amount to the latter as reimbursement for his
construction costs and expenses. They should account and pay for such benefits.
PROGRAMME INCORPORATED, vs. PROVINCE OF
BATAAN
G.R. No. 144635 June 26, 2006
Facts: BASECO was the owner of Piazza Hotel and Mariveles Lodge,
both located in Mariveles, Bataan. On May 14, 1986, BASECO granted
petitioner a contract of lease over Piazza Hotel at a monthly rental
of P6,500 for three years,i.e., from January 1, 1986 to January 1,
1989, subject to renewal by mutual agreement of the parties. After
the expiration of the three-year lease period, petitioner was allowed to
continue operating the hotel on monthly extensions of the lease.
In
April 1989, however, the Presidential Commission on Good Government (PCGG)
issued a sequestration order against BASECO pursuant to Executive Order No. 1
of former President Corazon C. Aquino. Among the properties
provisionally seized and taken over was the lot on which Piazza Hotel stood.On
July 19, 1989, however, Piazza Hotel was sold at a public auction for
non-payment of taxes to respondent Province of Bataan. The title of
the property was transferred to respondent. BASECO’s Transfer
Certificate of Title (TCT) No. T-59631 was cancelled and a new one, TCT No.
T-128456, was issued to the Province of Bataan.
On
July 21, 1989, petitioner filed a complaint for preliminary injunction and
collection of sum of money against BASECO (Civil Case No.
129-ML). Respondent, as the new owner of the property, filed a
motion for leave to intervene on November 22, 1990. After its motion was
granted, respondent filed a complaint-in-intervention praying, inter alia,
that petitioner be ordered to vacate Piazza Hotel and Mariveles Lodge
for lack of legal interest.
Issue: W/Not
the petitioner is a possessor in good faith of the Piazza Hotel and Mariveles
Lodge.
Ruling: The
evidence clearly established respondent’s ownership of Piazza Hotel. First, the title of the land on which
Piazza Hotel stands was in the name of respondent. Second, Tax Declaration No. 12782 was
in the name of respondent as owner of Piazza Hotel. Third, petitioner was doubtlessly just a
lessee. In the lease
contract annexed to the complaint, petitioner in fact admitted BASECO’s (respondent’s
predecessor-in-interest) ownership then of the subject property.
Furthermore,
petitioner’s reference to Article 448 of the
Civil Code to justify its supposed
rights as “possessor in good faith” was erroneous.
The benefits granted to a
possessor in good faith cannot be maintained by the lessee against
the lessor because, such benefits are intended to apply only to a
case where one builds or sows or plants on land which he believes himself to
have a claim of title and not to lands wherein one’s only interest is that of a
tenant under a rental contract, otherwise, it would always be in the power of a
tenant to improve his landlord out of his property. Besides, as
between lessor and lessee, the Code applies specific provisions
designed to cover their rights.
Hence, the lessee cannot
claim reimbursement, as a matter of right, for useful improvements he has made
on the property, nor can he assert a right of retention until
reimbursed. His only remedy is to remove the improvement if
the lessor does not choose to pay its value; but the court cannot
give him the right to buy the land.
Petitioner’s assertion that Piazza Hotel was constructed
“at (its) expense” found no support in the records. Neither did any
document or testimony prove this claim. At best, what was confirmed
was that petitioner managed and operated the
hotel. There was no evidence that petitioner was the one which spent
for the construction or renovation of the property. And since petitioner’s
alleged expenditures were never proven, it could not even seek reimbursement of
one-half of the value of the improvements upon termination of the lease under
Article 1678 of the Civil Code.
Finally, both the trial and
appellate courts declared that the land as well as the improvement thereon
(Piazza Hotel) belonged to respondent. We find no reason to overturn
this factual conclusion.
G.R. No. 105387
November 11, 1993
JOHANNES SCHUBACK
& SONS PHILIPPINE TRADING CORPORATION
vs.
THE HON. COURT OF APPEALS, RAMON SAN JOSE, JR.,
vs.
THE HON. COURT OF APPEALS, RAMON SAN JOSE, JR.,
Facts: Sometime
in 1981, defendant established contact with
plaintiff through the Philippine Consulate General in Hamburg, West
Germany, because he wanted to purchase MAN bus spare parts from Germany.
Plaintiff communicated with its trading partner. Johannes Schuback and Sohne
Handelsgesellschaft m.b.n. & Co. (Schuback Hamburg) regarding the spare
parts defendant wanted to order.On October 16, 1981, defendant submitted to plaintiff
a list of the parts (Exhibit B) he wanted to purchase with specific part
numbers and description. Plaintiff referred the list to Schuback Hamburg for
quotations. Upon receipt of the quotations, plaintiff sent to defendant a
letter dated 25 November, 1981 (Exh. C) enclosing its offer on the items listed
by defendant.On December 4, 1981, defendant informed plaintiff that he
preferred genuine to replacement parts,
and requested that he be given 15% on all items (Exh. D).On December 17, 1981,
plaintiff submitted its formal offer (Exh. E) containing the item number,
quantity, part number, description, unit price and total to defendant. On
December, 24, 1981, defendant informed plaintiff of his desire to avail of the
prices of the parts at that time and enclosed Purchase Order No. 0101 dated 14
December 1981 (Exh. F to F-4). Said Purchase Order contained the item number,
part number and description. Defendant promised to submit the quantity per unit
he wanted to order on December 28 or 29 (Exh. F).
On October 18, 1982, Plaintiff
again reminded defendant of his order and advised that the case may be endorsed
to its lawyers (Exh. L). Defendant replied
that he did not make any valid Purchase Order and that there was no definite
contract between him and plaintiff (Exh. M). Plaintiff sent a rejoinder
explaining that there is a valid Purchase Order and suggesting that defendant
either proceed with the order and open a letter of credit or cancel the order
and pay the cancellation fee of 30% of F.O.B. value, or plaintiff will endorse
the case to its lawyers (Exh. N).
Issue: whether or not a
contract of sale has been perfected between the parties.
Ruling:
Article
1319 of the Civil Code states: "Consent is manifested by the meeting of
the offer and acceptance upon the thing and the cause which are to constitute
the contract. The offer must be certain and the acceptance absolute. A
qualified acceptance constitutes a counter offer." The facts presented to
us indicate that consent on both sides has been manifested.The offer by
petitioner was manifested on December 17, 1981 when petitioner submitted its
proposal containing the item number, quantity, part number, description, the
unit price and total to private respondent. On December 24, 1981, private
respondent informed petitioner of his desire to avail of the prices of the
parts at that time and simultaneously enclosed its Purchase Order No. 0l01
dated December 14, 1981. At this stage, a meeting of the minds between vendor
and vendee has occurred, the object of the contract: being the spare parts and
the consideration, the price stated in petitioner's offer dated December 17,
1981 and accepted by the respondent on December 24,1981.Although said purchase
order did not contain the quantity he wanted to order, private respondent made
good, his promise to communicate the same on December 29, 1981. At this
juncture, it should be pointed out that private respondent was already in the
process of executing the agreement previously reached between the parties. While
we agree with the trial court's conclusion that indeed a perfection of contract
was reached between the parties, we differ as to the exact date when it
occurred, for perfection took place, not on December 29, 1981. Although the
quantity to be ordered was made determinate only on December 29, 1981, quantity
is immaterial in the perfection of a sales contract. What is of importance is
the meeting of the minds as to the object and cause,
which from the facts disclosed, show that as of December 24, 1981, these
essential elements had already occurred.
On the part of the buyer, the
situation reveals that private respondent failed to open an irrevocable letter
of credit without recourse in favor of Johannes Schuback of Hamburg, Germany.
This omission, however. does not prevent the perfection of the contract between
the parties, for the opening of the letter of credit is not to be deemed a
suspensive condition. The facts herein do not show that petitioner reserved
title to the goods until private respondent had opened a letter of credit.
Petitioner, in the course of its dealings with private respondent, did not
incorporate any provision declaring their contract of sale without effect until
after the fulfillment of the act of opening a letter of credit.
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