Professional Documents
Culture Documents
159617
de R.C. SICAM, INC.,
Petitioners,
Present:
YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO, and
NACHURA, JJ.
DECISION
AUSTRIA-MARTINEZ, J.:
1
March 31, 2003, and its Resolution2[2] dated August 8, 2003, in CA G.R. CV
No. 56633.
On October 19, 1987, two armed men entered the pawnshop and took
away whatever cash and jewelry were found inside the pawnshop vault. The
incident was entered in the police blotter of the Southern Police District,
Parañaque Police Station as follows:
Petitioner Sicam sent respondent Lulu a letter dated October 19, 1987
informing her of the loss of her jewelry due to the robbery incident in the
pawnshop. On November 2, 1987, respondent Lulu then wrote a letter4[4] to
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petitioner Sicam expressing disbelief stating that when the robbery
happened, all jewelry pawned were deposited with Far East Bank near the
pawnshop since it had been the practice that before they could withdraw,
advance notice must be given to the pawnshop so it could withdraw the
jewelry from the bank. Respondent Lulu then requested petitioner Sicam to
prepare the pawned jewelry for withdrawal on November 6, 1987 but
petitioner Sicam failed to return the jewelry.
Petitioner Sicam filed his Answer contending that he is not the real
party-in-interest as the pawnshop was incorporated on April 20, 1987 and
known as Agencia de R.C. Sicam, Inc; that petitioner corporation had
exercised due care and diligence in the safekeeping of the articles pledged
with it and could not be made liable for an event that is fortuitous.
After trial on the merits, the RTC rendered its Decision6[6] dated
January 12, 1993, dismissing respondents’ complaint as well as petitioners’
counterclaim. The RTC held that petitioner Sicam could not be made
personally liable for a claim arising out of a corporate transaction; that in
the Amended Complaint of respondents, they asserted that “plaintiff pawned
assorted jewelries in defendants' pawnshop”; and that as a consequence of
the separate juridical personality of a corporation, the corporate debt or
credit is not the debt or credit of a stockholder.
The RTC further ruled that petitioner corporation could not be held
liable for the loss of the pawned jewelry since it had not been rebutted by
respondents that the loss of the pledged pieces of jewelry in the possession
of the corporation was occasioned by armed robbery; that robbery is a
fortuitous event which exempts the victim from liability for the loss, citing
the case of Austria v. Court of Appeals;7[7] and that the parties’ transaction
was that of a pledgor and pledgee and under Art. 1174 of the Civil Code,
the pawnshop as a pledgee is not responsible for those events which could
not be foreseen.
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WHEREFORE, premises considered, the instant Appeal is
GRANTED, and the Decision dated January 12, 1993,of the Regional Trial
Court of Makati, Branch 62, is hereby REVERSED and SET ASIDE,
ordering the appellees to pay appellants the actual value of the lost jewelry
amounting to P272,000.00, and attorney' fees of P27,200.00.8[8]
Hence, the instant petition for review with the following assignment
of errors:
Anent the first assigned error, petitioners point out that the CA’s
finding that petitioner Sicam is personally liable for the loss of the pawned
jewelries is “a virtual and uncritical reproduction of the arguments set out on
pp. 5-6 of the Appellants’ brief.”10[10]
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(1) Respondents conclusively asserted in paragraph 2 of their
Amended Complaint that Agencia de R.C. Sicam, Inc. is the present
owner of Agencia de R.C. Sicam Pawnshop, and therefore, the CA cannot
rule against said conclusive assertion of respondents;
(2) The issue resolved against petitioner Sicam was not among
those raised and litigated in the trial court; and
Anent the second error, petitioners point out that the CA finding on
their negligence is likewise an unedited reproduction of respondents’ brief
which had the following defects:
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16
Section 4 Rule 129 of the Rules of Court provides that an admission,
verbal or written, made by a party in the course of the proceedings in the
same case, does not require proof. The admission may be contradicted only
by showing that it was made through palpable mistake or that no such
admission was made.
Thus, the general rule that a judicial admission is conclusive upon the
party making it and does not require proof, admits of two exceptions, to wit:
(1) when it is shown that such admission was made through palpable
mistake, and (2) when it is shown that no such admission was in fact made.
The latter exception allows one to contradict an admission by denying
that he made such an admission.17[17]
x x x that the party can also show that he made no “such admission”,
i.e., not in the sense in which the admission is made to appear.
That is the reason for the modifier “such” because if the rule simply states
that the admission may be contradicted by showing that “no admission
was made,” the rule would not really be providing for a contradiction of
the admission but just a denial.18[18] (Emphasis supplied).
Petitioner Sicam had alleged in his Answer filed with the trial court
that he was not the real party-in-interest because since April 20, 1987, the
pawnshop business initiated by him was incorporated and known as Agencia
de R.C. Sicam. In the pre-trial brief filed by petitioner Sicam, he submitted
that as far as he was concerned, the basic issue was whether he is the real
party in interest against whom the complaint should be directed.20[20] In fact,
he subsequently moved for the dismissal of the complaint as to him but was
not favorably acted upon by the trial court. Moreover, the issue was squarely
passed upon, although erroneously, by the trial court in its Decision in this
manner:
The next question is whether petitioners are liable for the loss of the
pawned articles in their possession.
Petitioners insist that they are not liable since robbery is a fortuitous
event and they are not negligent at all.
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fortuito or, if it can be foreseen, it must be impossible to avoid; (c) the
occurrence must be such as to render it impossible for the debtor to fulfill
obligations in a normal manner; and, (d) the obligor must be free from any
23[23]
participation in the aggravation of the injury or loss.
The burden of proving that the loss was due to a fortuitous event rests
on him who invokes it.24[24] And, in order for a fortuitous event to exempt
one from liability, it is necessary that one has committed no negligence or
misconduct that may have occasioned the loss. 25[25]
Petitioner Sicam had testified that there was a security guard in their
pawnshop at the time of the robbery. He likewise testified that when he
started the pawnshop business in 1983, he thought of opening a vault with
the nearby bank for the purpose of safekeeping the valuables but was
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discouraged by the Central Bank since pawned articles should only be stored
in a vault inside the pawnshop. The very measures which petitioners had
allegedly adopted show that to them the possibility of robbery was not only
foreseeable, but actually foreseen and anticipated. Petitioner Sicam’s
testimony, in effect, contradicts petitioners’ defense of fortuitous event.
Moreover, petitioners failed to show that they were free from any
negligence by which the loss of the pawned jewelry may have been
occasioned.
Robbery per se, just like carnapping, is not a fortuitous event. It does
not foreclose the possibility of negligence on the part of herein petitioners.
In Co v. Court of Appeals,27[27] the Court held:
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respondent.28[28]
Just like in Co, petitioners merely presented the police report of the
Parañaque Police Station on the robbery committed based on the report of
petitioners' employees which is not sufficient to establish robbery. Such
report also does not prove that petitioners were not at fault.
Article 2123 of the Civil Code provides that with regard to pawnshops
and other establishments which are engaged in making loans secured by
pledges, the special laws and regulations concerning them shall be observed,
and subsidiarily, the provisions on pledge, mortgage and antichresis.
Court:
Q. Then how come that the robbers were able to enter the premises when
according to you there was a security guard?
A. Sir, if these robbers can rob a bank, how much more a pawnshop.
Q. I am asking you how were the robbers able to enter despite the fact that
there was a security guard?
A. At the time of the incident which happened about 1:00 and 2:00 o'clock
in the afternoon and it happened on a Saturday and everything was quiet
in the area BF Homes Parañaque they pretended to pawn an article in
the pawnshop, so one of my employees allowed him to come in and it
was only when it was announced that it was a hold up.
Q. It is clear now that at the time of the robbery the vault was open the
reason why the robbers were able to get all the items pawned to you
inside the vault.
A. Yes sir.32[32]
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care, precaution and vigilance that the circumstances justly demanded.
Petitioner Sicam testified that once the pawnshop was open, the combination
was already off. Considering petitioner Sicam's testimony that the robbery
took place on a Saturday afternoon and the area in BF Homes Parañaque at
that time was quiet, there was more reason for petitioners to have exercised
reasonable foresight and diligence in protecting the pawned jewelries.
Instead of taking the precaution to protect them, they let open the vault,
providing no difficulty for the robbers to cart away the pawned articles.
The diligence with which the law requires the individual at all times to
govern his conduct varies with the nature of the situation in which he is
placed and the importance of the act which he is to perform.34[34] Thus, the
cases of Austria v. Court of Appeals,35[35] Hernandez v. Chairman,
Commission on Audit36[36] and Cruz v. Gangan37[37] cited by petitioners in
their pleadings, where the victims of robbery were exonerated from liability,
find no application to the present case.
In contrast, the robbery in this case took place in 1987 when robbery
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was already prevalent and petitioners in fact had already foreseen it as they
wanted to deposit the pawn with a nearby bank for safekeeping. Moreover,
unlike in Austria, where no negligence was committed, we found petitioners
negligent in securing their pawnshop as earlier discussed.
SO ORDERED.
Promulgated:
MARLON REALTY CORPORATION,
Respondent. August 17, 2007
x-----------------------------------------------------------------------------------------x
DECISION
SANDOVAL-GUTIERREZ, J.:
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On November 4, 1992, the Urban Bank informed respondent
corporation that petitioners’ loan of P148,000.00, intended as payment for
their obligation, was approved. However, the bank imposed the following
conditions: the amount shall be released only after its mortgage lien shall
have been registered in the Registry of Deeds and annotated on petitioners’
land title; and that respondent must first execute a deed of absolute sale in
favor of petitioners.
SO ORDERED.46[8]
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46
Petitioners filed a motion for reconsideration but it was denied by the
Court of Appeals in its Resolution dated November 13, 1997.
The issue for our resolution is whether petitioners are liable to pay
interest on the balance of the purchase price.
Petitioners insist that they are not liable to pay interest since the loan
proceeds were released, not to petitioners, but directly to respondent; and
that pending the release, no interest should accrue.
Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.47[9] We must
look into the terms of the contract to determine the respective obligations of
the parties thereto. If the terms of a contract are clear and leave no doubt
upon the contracting parties’ intention, then such terms should be applied in
their literal meaning.48[10]
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In this case, there is no question that the parties voluntarily entered
into a Contract to Sell a parcel of land. The terms of payment of the
purchase price are clear and unambiguous, thus:
SO ORDERED.
YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
- versus -
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
CHICO-NAZARIO, J.:
The spouses Beluso availed themselves of the credit line under the
following Promissory Notes:
However, the spouses Beluso alleged that the amounts covered by these last
two promissory notes were never released or credited to their account and,
thus, claimed that the principal indebtedness was only P2 Million.
In any case, UCPB applied interest rates on the different promissory
notes ranging from 18% to 34%. From 1996 to February 1998 the spouses
Beluso were able to pay the total sum of P763,692.03.
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II
III
IV
UCPB asserts that this is a reversible error, and claims that while the
interest rate was not numerically quantified in the face of the promissory
notes, it was nonetheless categorically fixed, at the time of execution
thereof, at the “rate indicative of the DBD retail rate.” UCPB contends that
said provision must be read with another stipulation in the promissory notes
subjecting to review the interest rate as fixed:
In this regard, UCPB avers that these are valid reference rates akin to
a “prevailing rate” or “prime rate” allowed by this Court in Polotan v. Court
of Appeals.59[11] Furthermore, UCPB argues that even if the proviso “as
determined by the branch head” is considered void, such a declaration would
not ipso facto render the connecting clause “indicative of DBD retail rate”
void in view of the separability clause of the Credit Agreement, which reads:
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Section 9.08 Separability Clause. If any one or more of the
provisions contained in this AGREEMENT, or documents executed in
connection herewith shall be declared invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions hereof shall not in any way be affected or impaired.60[12]
Art. 1308. The contract must bind both contracting parties; its
validity or compliance cannot be left to the will of one of them.
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In order that obligations arising from contracts may have the force
of law between the parties, there must be mutuality between the parties
based on their essential equality. A contract containing a condition which
makes its fulfillment dependent exclusively upon the uncontrolled will of
one of the contracting parties, is void (Garcia vs. Rita Legarda, Inc., 21
SCRA 555). Hence, even assuming that the P1.8 million loan agreement
between the PNB and the private respondent gave the PNB a license
(although in fact there was none) to increase the interest rate at will during
the term of the loan, that license would have been null and void for being
violative of the principle of mutuality essential in contracts. It would have
invested the loan agreement with the character of a contract of adhesion,
where the parties do not bargain on equal footing, the weaker party's (the
debtor) participation being reduced to the alternative "to take it or leave it"
(Qua vs. Law Union & Rock Insurance Co., 95 Phil. 85). Such a contract is
a veritable trap for the weaker party whom the courts of justice must
protect against abuse and imposition.
The provision stating that the interest shall be at the “rate indicative of
DBD retail rate or as determined by the Branch Head” is indeed dependent
solely on the will of petitioner UCPB. Under such provision, petitioner
UCPB has two choices on what the interest rate shall be: (1) a rate indicative
of the DBD retail rate; or (2) a rate as determined by the Branch Head. As
UCPB is given this choice, the rate should be categorically determinable in
both choices. If either of these two choices presents an opportunity for
UCPB to fix the rate at will, the bank can easily choose such an option, thus
making the entire interest rate provision violative of the principle of
mutuality of contracts.
Not just one, but rather both, of these choices are dependent solely on
the will of UCPB. Clearly, a rate “as determined by the Branch Head” gives
the latter unfettered discretion on what the rate may be. The Branch Head
may choose any rate he or she desires. As regards the rate “indicative of the
DBD retail rate,” the same cannot be considered as valid for being akin to a
“prevailing rate” or “prime rate” allowed by this Court in Polotan. The
interest rate in Polotan reads:
The Cardholder agrees to pay interest per annum at 3% plus the prime rate
of Security Bank and Trust Company. x x x.64[16]
In this provision in Polotan, there is a fixed margin over the reference rate:
3%. Thus, the parties can easily determine the interest rate by applying
simple arithmetic. On the other hand, the provision in the case at bar does
not specify any margin above or below the DBD retail rate. UCPB can peg
the interest at any percentage above or below the DBD retail rate, again
giving it unfettered discretion in determining the interest rate.
It should be pointed out that the authority to review the interest rate was
given UCPB alone as the lender. Moreover, UCPB may apply the
considerations enumerated in this provision as it wishes. As worded in the
above provision, UCPB may give as much weight as it desires to each of the
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following considerations: (1) the prevailing financial and monetary
condition; (2) the rate of interest and charges which other banks or financial
institutions charge or offer to charge for similar accommodations; and/or (3)
the resulting profitability to the LENDER (UCPB) after due consideration of
all dealings with the BORROWER (the spouses Beluso). Again, as in the
case of the interest rate provision, there is no fixed margin above or below
these considerations.
The interest rate provisions in the case at bar are illegal not only
because of the provisions of the Civil Code on mutuality of contracts, but
also, as shall be discussed later, because they violate the Truth in Lending
Act. Not disclosing the true finance charges in connection with the
extensions of credit is, furthermore, a form of deception which we cannot
countenance. It is against the policy of the State as stated in the Truth in
Lending Act:
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Sec. 2. Declaration of Policy. – It is hereby declared to be the
policy of the State to protect its citizens from a lack of awareness of the
true cost of credit to the user by assuring a full disclosure of such cost with
a view of preventing the uninformed use of credit to the detriment of the
national economy.67[19]
Moreover, while the spouses Beluso indeed agreed to renew the credit
line, the offending provisions are found in the promissory notes themselves,
not in the credit line. In fixing the interest rates in the promissory notes to
cover the renewed credit line, UCPB still reserved to itself the same two
options – (1) a rate indicative of the DBD retail rate; or (2) a rate as
determined by the Branch Head.
Error in Computation
UCPB asserts that while both the RTC and the Court of Appeals
voided the interest rates imposed by UCPB, both failed to include in their
computation of the outstanding obligation of the spouses Beluso the legal
rate of interest of 12% per annum. Furthermore, the penalty charges were
also deleted in the decisions of the RTC and the Court of Appeals. Section
2.04, Article II on “Interest and other Bank Charges” of the subject Credit
Agreement, provides:
Section 2.02 Compounding Interest. Interest not paid when due shall
form part of the principal and shall be subject to the same interest rate as
herein stipulated.71[23]
The spouses Beluso’s defense as to all these issues is that the demand
made by UCPB is for a considerably bigger amount and, therefore, the
demand should be considered void. There being no valid demand, according
to the spouses Beluso, there would be no default, and therefore the interests
and penalties would not commence to run. As it was likewise improper to
foreclose the mortgaged properties or file a case against the spouses Beluso,
attorney’s fees were not warranted.
There being a valid demand on the part of UCPB, albeit excessive, the
spouses Beluso are considered in default with respect to the proper amount
and, therefore, the interests and the penalties began to run at that point.
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be charged.”75[27] It seems that the RTC inadvertently overlooked its non-
inclusion in its computation.
The spouses Beluso had even originally asked for the RTC to impose
this legal rate of interest in both the body and the prayer of its petition with
the RTC:
12. Since the provision on the fixing of the rate of interest by the
sole will of the respondent Bank is null and void, only the legal rate of
interest which is 12% per annum can be legally charged and imposed by
the bank, which would amount to only about P599,000.00 since 1996 up
to August 31, 1998.
xxxx
xxxx
2. By way of example for the public good against the Bank’s taking
unfair advantage of the weaker party to their contract, declaring the legal
rate of 12% per annum, as the imposable rate of interest up to February 28,
1999 on the loan of 2.350 million.76[28]
All these show that the spouses Beluso had acknowledged before the RTC
their obligation to pay a 12% legal interest on their loans. When the RTC
failed to include the 12% legal interest in its computation, however, the
spouses Beluso merely defended in the appellate courts this non-inclusion,
as the same was beneficial to them. We see, however, sufficient basis to
impose a 12% legal interest in favor of petitioner in the case at bar, as what
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we have voided is merely the stipulated rate of interest and not the
stipulation that the loan shall earn interest.
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more a 30.41% to 36% penalty, over and above the payment of compounded
interest? UCPB itself must have realized this, as it gave us a sample
computation of the spouses Beluso’s obligation if both the interest and the
penalty charge are reduced to 12%.
The RTC, however, also held UCPB liable for attorney’s fees in this
case, as the spouses Beluso were forced to litigate the issue on the illegality
of the interest rate provision of the promissory notes. The award of
attorney’s fees, it must be recalled, falls under the sound discretion of the
court.81[33] Since both parties were forced to litigate to protect their
respective rights, and both are entitled to the award of attorney’s fees from
the other, practical reasons dictate that we set off or compensate both
parties’ liabilities for attorney’s fees. Therefore, instead of awarding
attorney’s fees in favor of petitioner, we shall merely affirm the deletion of
the award of attorney’s fees to the spouses Beluso.
In sum, we hold that spouses Beluso should still be held liable for a
compounded legal interest of 12% per annum and a penalty charge of 12%
per annum. We also hold that, instead of awarding attorney’s fees in favor
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of petitioner, we shall merely affirm the deletion of the award of attorney’s
fees to the spouses Beluso.
The spouses Beluso retort that since they had the right to refuse
payment of an excessive demand on their account, they cannot be said to be
in default for refusing to pay the same. Consequently, according to the
spouses Beluso, the “enforcement of such illegal and overcharged demand
through foreclosure of mortgage” should be voided.
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The RTC, affirmed by the Court of Appeals, imposed a fine of
P26,000.00 for UCPB’s alleged violation of Republic Act No. 3765,
otherwise known as the Truth in Lending Act.
UCPB further claims that the action to recover the penalty for the
violation of the Truth in Lending Act had been barred by the one-year
prescriptive period provided for in the Act. UCPB asserts that per the
records of the case, the latest of the subject promissory notes had been
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executed on 2 January 1998, but the original petition of the spouses Beluso
was filed before the RTC on 9 February 1999, which was after the expiration
of the period to file the same on 2 January 1999.
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The allegation that the promissory notes grant UCPB the power to
unilaterally fix the interest rates certainly also means that the promissory
notes do not contain a “clear statement in writing” of “(6) the finance charge
expressed in terms of pesos and centavos; and (7) the percentage that the
finance charge bears to the amount to be financed expressed as a simple
annual rate on the outstanding unpaid balance of the obligation.”86[38]
Furthermore, the spouses Beluso’s prayer “for such other reliefs just and
equitable in the premises” should be deemed to include the civil penalty
provided for in Section 6(a) of the Truth in Lending Act.
UCPB’s contention that this action to recover the penalty for the
violation of the Truth in Lending Act has already prescribed is likewise
without merit. The penalty for the violation of the act is P100 or an amount
equal to twice the finance charge required by such creditor in connection
with such transaction, whichever is greater, except that such liability shall
not exceed P2,000.00 on any credit transaction.87[39] As this penalty depends
on the finance charge required of the borrower, the borrower’s cause of
action would only accrue when such finance charge is required. In the case
at bar, the date of the demand for payment of the finance charge is 2
September 1998, while the foreclosure was made on 28 December 1998.
The filing of the case on 9 February 1999 is therefore within the one-year
prescriptive period.
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UCPB argues that a violation of the Truth in Lending Act, being a
criminal offense, cannot be inferred nor implied from the allegations made
in the complaint.88[40] Pertinent provisions of the Act read:
xxxx
As can be gleaned from Section 6(a) and (c) of the Truth in Lending Act, the
violation of the said Act gives rise to both criminal and civil liabilities.
Section 6(c) considers a criminal offense the willful violation of the Act,
imposing the penalty therefor of fine, imprisonment or both. Section 6(a),
on the other hand, clearly provides for a civil cause of action for failure to
disclose any information of the required information to any person in
violation of the Act. The penalty therefor is an amount of P100 or in an
amount equal to twice the finance charge required by the creditor in
connection with such transaction, whichever is greater, except that the
liability shall not exceed P2,000.00 on any credit transaction. The action to
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recover such penalty may be instituted by the aggrieved private person
separately and independently from the criminal case for the same offense.
In the case at bar, therefore, the civil action to recover the penalty
under Section 6(a) of the Truth in Lending Act had been jointly instituted
with (1) the action to declare the interests in the promissory notes void, and
(2) the action to declare the foreclosure void. This joinder is allowed under
Rule 2, Section 5 of the Rules of Court, which provides:
Moreover, since from the start, respondent bank violated the Truth in
Lending Act in not informing the borrower in writing before the execution
of the Promissory Notes of the interest rate expressed as a percentage of
the total loan, the respondent bank instead is liable to pay petitioners
double the amount the bank is charging petitioners by way of sanction for
its violation.89[41]
In the same pre-trial brief, the spouses Beluso also expressly raised
the following issue:
b.) Does the expression indicative rate of DBD retail (sic) comply
with the Truth in Lending Act provision to express the interest rate as a
simple annual percentage of the loan?90[42]
(c) Where the causes of action are between the same parties but
pertain to different venues or jurisdictions, the joinder may be allowed in
the Regional Trial Court provided one of the causes of action falls within
the jurisdiction of said court and the venue lies therein.
UCPB further argues that since the spouses Beluso were duly given
copies of the subject promissory notes after their execution, then they were
duly notified of the terms thereof, in substantial compliance with the Truth
in Lending Act.
Once more, we disagree. Section 4 of the Truth in Lending Act
clearly provides that the disclosure statement must be furnished prior to the
consummation of the transaction:
(3) the difference between the amounts set forth under clauses (1)
and (2)
(7) the percentage that the finance bears to the total amount to be
financed expressed as a simple annual rate on the outstanding
unpaid balance of the obligation.
Forum Shopping
UCPB had earlier moved to dismiss the petition (originally Case No.
99-314 in RTC, Makati City) on the ground that the spouses Beluso
instituted another case (Civil Case No. V-7227) before the RTC of Roxas
City, involving the same parties and issues. UCPB claims that while Civil
Case No. V-7227 initially appears to be a different action, as it prayed for
the issuance of a temporary restraining order and/or injunction to stop
foreclosure of spouses Beluso’s properties, it poses issues which are similar
to those of the present case.91[43] To prove its point, UCPB cited the spouses
Beluso’s Amended Petition in Civil Case No. V-7227, which contains
similar allegations as those in the present case. The RTC of Makati denied
UCPB’s Motion to Dismiss Case No. 99-314 for lack of merit. Petitioner
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UCPB raised the same issue with the Court of Appeals, and is raising the
same issue with us now.
The spouses Beluso claim that the issue in Civil Case No. V-7227
before the RTC of Roxas City, a Petition for Injunction Against Foreclosure,
is the propriety of the foreclosure before the true account of spouses Beluso
is determined. On the other hand, the issue in Case No. 99-314 before the
RTC of Makati City is the validity of the interest rate provision. The
spouses Beluso claim that Civil Case No. V-7227 has become moot because,
before the RTC of Roxas City could act on the restraining order, UCPB
proceeded with the foreclosure and auction sale. As the act sought to be
restrained by Civil Case No. V-7227 has already been accomplished, the
spouses Beluso had to file a different action, that of Annulment of the
Foreclosure Sale, Case No. 99-314 with the RTC, Makati City.
Even if we assume for the sake of argument, however, that only one
cause of action is involved in the two civil actions, namely, the violation of
the right of the spouses Beluso not to have their property foreclosed for an
amount they do not owe, the Rules of Court nevertheless allows the filing of
the second action. Civil Case No. V-7227 was dismissed by the RTC of
Roxas City before the filing of Case No. 99-314 with the RTC of Makati
City, since the venue of litigation as provided for in the Credit Agreement is
in Makati City.
(a) That the court has no jurisdiction over the person of the
defending party;
(b) That the court has no jurisdiction over the subject matter of the
claim;
(e) That there is another action pending between the same parties
for the same cause;
(g) That the pleading asserting the claim states no cause of action;
(h) That the claim or demand set forth in the plaintiff’s pleading
has been paid, waived, abandoned, or otherwise extinguished;
(j) That a condition precedent for filing the claim has not been
complied with.92[44] (Emphases supplied.)
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When an action is dismissed on the motion of the other party, it is
only when the ground for the dismissal of an action is found in paragraphs
(f), (h) and (i) that the action cannot be refiled. As regards all the other
grounds, the complainant is allowed to file same action, but should take care
that, this time, it is filed with the proper court or after the accomplishment of
the erstwhile absent condition precedent, as the case may be.
Even if this is not the purpose for the filing of the first action, it
may nevertheless be dismissed if the later action is the more
appropriate vehicle for the ventilation of the issues between the
parties. Thus, in Ramos v. Peralta, it was held:
93
[T]he rule on litis pendentia does not require that the
later case should yield to the earlier case. What is required
merely is that there be another pending action, not a prior
pending action. Considering the broader scope of inquiry
involved in Civil Case No. 4102 and the location of the
property involved, no error was committed by the lower
court in deferring to the Bataan court's jurisdiction.
Given, therefore, the pendency of two actions, the following are the
relevant considerations in determining which action should be dismissed:
(1) the date of filing, with preference generally given to the first action
filed to be retained; (2) whether the action sought to be dismissed was
filed merely to preempt the later action or to anticipate its filing and lay
the basis for its dismissal; and (3) whether the action is the appropriate
vehicle for litigating the issues between the parties.
In the case at bar, Civil Case No. V-7227 before the RTC of Roxas
City was an action for injunction against a foreclosure sale that has already
been held, while Civil Case No. 99-314 before the RTC of Makati City
includes an action for the annulment of said foreclosure, an action certainly
more proper in view of the execution of the foreclosure sale. The former
case was improperly filed in Roxas City, while the latter was filed in Makati
City, the proper venue of the action as mandated by the Credit Agreement.
It is evident, therefore, that Civil Case No. 99-314 is the more appropriate
vehicle for litigating the issues between the parties, as compared to Civil
Case No. V-7227. Thus, we rule that the RTC of Makati City was not in
error in not dismissing Civil Case No. 99-314.
94
95
i. penalty charges due and demandable as of time of
payment;
ii. interest due and demandable as of the time of
payment;
iii. principal amortization/payment in arrears as of the
time of payment;
iv. outstanding balance.
2. The foreclosure of mortgage is hereby declared VALID.
Consequently, the amounts which the Regional Trial Court and
the Court of Appeals ordered respondents to pay, as modified in
this Decision, shall be deducted from the proceeds of the
foreclosure sale.
SO ORDERED.
DIVISION
RESOLUTION
QUISUMBING, J.:
For review on certiorari are the Decision96[1] dated June 9, 2004 of the
Court of Appeals in CA-G.R. SP No. 79624, and its Resolution97[2] dated
August 3, 2004, denying the motion for reconsideration.
96
97
attorney’s fees, and expenses of litigation before the Housing and Land Use
Regulatory Board (HLURB).
98
99
WHEREFORE, the foregoing considered, judgment is hereby
rendered as follows:
IT IS SO ORDERED.100[5]
On appeal, asserting that both the HLURB and the Office of the
President committed reversible errors, Fil-Estate asked the Court of Appeals
to set aside the orders it is appealing.
The Court of Appeals affirmed the actions taken by the HLURB and
the Office of the President and declared that the Asian financial crisis could
not be considered a fortuitous event and that respondents’ right is provided
for in Section 23103[8] of Presidential Decree (P.D.) No. 957, otherwise
known as “The Subdivision and Condominium Buyers’ Protective Decree.”
The appellate court also noted that there was yet no crisis in 1995 and 1996
when the project should have been started, and petitioner cannot blame the
100
101
102
103
1997 crisis for failure of the project, nor for even not starting it, because the
project should have been completed by 1997.
Hence, this petition raising two issues for our resolution as follows:
I.
II.
On the first issue, did the Court of Appeals err in ruling that the Asian
financial crisis was not a fortuitous event?
Petitioner, citing Article 1174105[10] of the Civil Code, argues that the
Asian financial crisis was a fortuitous event being unforeseen or inevitable.
Petitioner likewise cites Servando v. Philippine Steam Navigation Co.,106[11]
to bolster its case. Petitioner explains that the extreme economic exigency
and extraordinary currency fluctuations could not have been reasonably
foreseen and were beyond the contemplation of both parties when they
entered the contract. Petitioner further asserts that the resultant economic
collapse of the real estate industry was unforeseen by the whole Asia and if
104
105
106
it was indeed foreseeable, then all those engaged in the real estate business
should have foreseen the impending fiasco. Petitioner adds that it had not
committed any fraud; that it had all the required government permits; and
that it had not abandoned the project but only suspended the work. It also
admits its obligation to complete the project. It says that it had in fact asked
the HLURB for extension to complete it.107[12]
107
108
Indeed, the question of whether or not an event is fortuitous is a
question of fact. As a general rule, questions of fact may not be raised in a
petition for review for as long as there is no variance between the findings of
the lower court and the appellate court, as in this case where the HLURB,
the Office of the President, and the Court of Appeals were agreed on the
fact.
Also, we cannot generalize that the Asian financial crisis in 1997 was
unforeseeable and beyond the control of a business corporation. It is
unfortunate that petitioner apparently met with considerable difficulty e.g.
increase cost of materials and labor, even before the scheduled
commencement of its real estate project as early as 1995. However, a real
estate enterprise engaged in the pre-selling of condominium units is
concededly a master in projections on commodities and currency movements
and business risks. The fluctuating movement of the Philippine peso in the
foreign exchange market is an everyday occurrence, and fluctuations in
currency exchange rates happen everyday, thus, not an instance of caso
fortuito.
109
110
Are respondents entitled to reimbursement of the amount paid, plus
interest and attorney’s fees?
111
112
years to protect their interest due to petitioner’s delay in the performance of
their clear obligation.
SO ORDERED.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - x
DECISION
xxxx
xxxx
• The Owner agrees to make partial payments during each of the various
stages of the Design Architect’s work upon his request, provided it is within the
framework of the schedule of payments outlined above.
xxxx
xxxx
xxxx
• Change Order by Owner: If changes occur after the final design has
been approved and confirmed, or changes and additions during construction, then
the Architect is to be paid by the Owner for additional services rendered
equivalent to six (6) percent of revised construction cost of the affected design
submitted by the Contractor concerned.
114
The agreement contained no provision within which respondent was
to accomplish its services.
xxxx
. . . copies of the Master Plans (e.g. Ground, Second and Third) of the
latest plans of above project showing all the changes we have agreed
including the changes made from last meeting with your interior design
group at City Garden Restaurants.115[3]
116
117
I refer to your letter of December 15, 1995 demanding payment
from our firm of the amount of Eight Hundred Thirty Seven Thousand
Five Hundred Pesos (Php 837,500.00) for the Uniwide Coastal Mall
Project.
Please be advised that we are still in the process of reconciling
our records. We would, therefore, appreciate it if you can provide us with
the supporting documents for said amount.
118
119
3. The costs of suit.120[8]
In affirming the trial court’s decision, the appellate court found that
respondent submitted to petitioner the complete and final set of architectural
designs, plans and specifications prior to the termination of its services,122[10]
but the termination appeared to be a mere ploy of petitioner to avoid its
obligation to pay respondent’s fees.123[11]
The appellate court went on to note that petitioner never presented any
proof showing that it was dissatisfied with respondent’s services,124[12] for if
it was, it could have, early on, terminated the same without waiting for
respondent to complete its undertakings under the agreement.
The appellate court even noted that at the time petitioner terminated
respondent’s services, the construction of the mall had already begun.125[13]
Both the trial and appellate courts found that the architectural design
prepared by respondent was delivered to petitioner before the termination of
the agreement. Absent any sufficient and convincing evidence to the
contrary, such finding binds this Court as it is supported by sufficient
evidence.
Albeit this Court entertains factual determination of a case brought to
it via Rule 45 under certain circumstances, e.g. (a) where there is grave
abuse of discretion; (b) when the finding is grounded entirely on
speculations, surmises or conjectures; (c) when the inference made is
manifestly mistaken, absurd or impossible; (d) when the judgment of the
Court of Appeals was based on a misapprehension of facts; (e) when the
factual findings are themselves conflicting; (f) 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; (g) 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; (h) where the findings of fact of the Court of Appeals are
contrary to those of the trial court; (i) where the findings of fact are mere
conclusions without citation of specific evidence on which they are based;
and (j) where the findings of fact of the Court of Appeals are premised on
the absence of evidence and are contradicted by the evidence on record,130[18]
the petition at bar does not present any similar or analogous circumstance.
As noted earlier, the agreement forged by the parties does not provide
for a period within which respondent has to accomplish its undertakings
thereunder. Petitioner claims, however, that there was a verbal agreement
with respondent that the architectural design should be finalized and
approved by petitioner within six (6) months from signing of their written
agreement. Why the parties did not incorporate in the agreement this
alleged period within which respondent had to accomplish its services
escapes comprehension.
In fact, the August 22, 1995 notice of termination of services did not
specify the ground behind such termination.
Petitioner was to later claim that it terminated the services of
respondent due to “material deficiencies in the architectural design
proposals” submitted on August 9, 1995. But did it not earlier claim that it
had priorly terminated respondent’s services in June 1995 or on August 8,
1995?
131
132
Additionally, if indeed petitioner verbally terminated the agreement as
early as June 1995, why did it still send a representative to attend the
meeting with respondent’s representatives on July 18, 1995 at City Garden
Restaurant to discuss revisions of the design, which revisions were
subsequently incorporated in the architectural drawing package transmitted
to petitioner on August 9, 1995?133[21]
133
134
135
WHEREFORE, the Court of Appeals Decision of November 14,
2005 is AFFIRMED.
SO ORDERED.
LICOMCEN INCORPORATED,
Petitioner, G.R. No. 167022
- versus -
Present:
DECISION
NACHURA, J.:
136
137
138
139
140
consultant to suspend the work, wholly or partly. LICOMCEN was also
given the right to suspend the work or terminate the contract. Among other
caveats, GC-05 provided that questions arising out or in connection with the
contract or its breach should be litigated in the courts of Legaspi, except
where otherwise stated, or when such question is submitted for settlement
through arbitration. GC-61 also provided that disputes arising out of the
execution of the work should first be submitted to LICOMCEN for
resolution, whose decision shall be final and binding, if not contested within
thirty (30) days from receipt. Otherwise, the dispute shall be submitted to
the Construction Industry Arbitration Commission (CIAC) for arbitration.
141
142
On January 15, 1998, LICOMCEN sent another letter to FSI ordering
all the construction activities suspended, because Albay Accredited
Constructions Association (AACA) had contested the award of the Contract
of Lease to LICOMCEN and filed criminal complaints with the Office of the
Ombudsman for violation of the Anti-Graft and Corrupt Practices Act
against LICOMCEN and the City Government of Legaspi. Thus, pending a
clear resolution of the case, LICOMCEN decided to suspend all construction
activities. It also requested FSI not to unload the steel bars.143[8]
On January 17, 1998, the steel bars for the CITIMALL arrived at the
Legaspi port, and despite LICOMCEN’s previous request, these were
unloaded and delivered to the jobsite and some to Tuanzon compound,144[9]
FSI’s batching site. Then, on January 19, 1998, LICOMCEN reiterated its
decision to suspend construction, and ordered demobilization of the
materials and equipment for the project.145[10] Finally, on February 17, 1998,
LICOMCEN indefinitely suspended the project, due to the pending cases in
the Ombudsman.146[11]
FSI reiterated its demand for payment from LICOMCEN, but the
latter failed and refused to pay, prompting FSI to file a petition for
arbitration with the CIAC, docketed as CIAC Case No. 37-2002.
LICOMCEN denied the claim of FSI, arguing that it lacks factual and
legal basis. It also assailed the jurisdiction of the CIAC to take cognizance
of the suit, claiming that jurisdiction over the controversy was vested in the
regular courts, and that arbitration under the GC-61 of the GCC may only be
resorted to if the dispute concerns the execution of works, not if it concerns
breach of contract.
153
154
FURTHER, the said Respondent is ordered to solely and
exclusively bear the entire cost of arbitration proceedings in the total
amount of P474,407.95 as indicated in the TOR, and to reimburse the
herein Claimant of any amount thereof which it had advanced and paid
pursuant to TOR.
SO ORDERED.155[20]
SO ORDERED.156[21]
155
156
Both LICOMCEN and FSI filed motions for partial reconsideration, but
these were denied by the CA in its Resolutions dated February 4, 2005157[22]
and September 13, 2005.158[23]
1.
2.
3.
4.
157
158
159
FSI, on the other hand, interposes the following:
LICOMCEN insists that the CIAC had no jurisdiction over the suit.
Citing GC-05 and GC-61 of the GCC, it posits that jurisdiction over the
dispute rests with the regular courts of Legaspi City.
The power and authority of a court to hear, try, and decide a case is
defined as jurisdiction. Elementary is the distinction between jurisdiction
over the subject matter and jurisdiction over the person. The former is
conferred by the Constitution or by law, while the latter is acquired by virtue
of the party's voluntary submission to the authority of the court through the
exercise of its coercive process.161[26]
160
161
Section 4 of Executive Order (E.O.) No. 1008, or the Construction
Industry Arbitration Law, provides:
Excluded from the coverage of this law are disputes arising from
employer-employee relationships which shall continue to be covered by
the Labor Code of the Philippines. (Emphasis supplied)
The GCC signed by LICOMCEN and FSI had the following arbitral
clause:
162
163
LICOMCEN theorizes that this arbitration clause cannot vest
jurisdiction in the CIAC, because it covers only disputes arising out of or in
connection with the execution of works, whether permanent or temporary. It
argues that since the claim of FSI was not connected to or did not arise out
of the execution of the works as contemplated in GC-61, but is based
on alleged breach of contract, under GC-05164[29] of the GCC, the dispute can
only be taken cognizance of by the regular courts. Furthermore, FSI failed
to comply with the condition precedent for arbitration. Thus, according to
LICOMCEN, the CIAC erred in assuming jurisdiction over the case.
V. MODE OF ARBITRATION
SALVADOR C. CEGUERA
Chairman
Secondly, we agree with the CA that the suit arose from the execution of
works defined in the contract. As it aptly ratiocinated:
164
165
166
[T]he dispute between [FSI] and [LICOMCEN] arose out of or in
connection with the execution of works. [LICOMCEN] has gone quite far
in interpreting “disputes arising out of or in connection with the execution
of work” as separate and distinct from “disputes arising out of or in
connection with the contract” citing the various provisions of the
Construction Agreement and Bid Documents to preclude CIAC from
taking cognizance of the case. To the mind of this Court, such
differentiation is immaterial. Article 1374 of the Civil Code on the
interpretation of contracts ordains that “the various stipulations of a
contract shall be interpreted together, attributing to the doubtful ones that
sense which may result from all of them taken jointly.” Essentially, while
we agree that [FSI’s] money claims against [LICOMCEN] arose out of or
in connection with the contract, the same necessarily arose from the work
it accomplished or sought to accomplish pursuant thereto. Thus, said
monetary claims can be categorized as a dispute arising out of or in
connection with the execution of work.167[32]
172
173
174
175
LICOMCEN faults the CIAC and the CA for ruling that the contract
had been terminated, insisting that it was merely indefinitely suspended. To
bolster its position, LICOMCEN cited GC-41 of the GCC which reads:
xxxx
If any time before completion of work under the Contract it shall be found
by the LICOMCEN, INCORPORATED that reasons beyond the control of
the parties render it impossible or against the interest of LICOMCEN,
INCORPORATED to complete the work, the LICOMCEN,
INCORPORATED at any time, by written notice to the Contractor, may
discontinue the work and terminate the Contract in whole or in part. Upon
issuance of such notice of termination, the Contractor shall discontinue the
work in such manner, sequence and at such time as the LICOMCEN,
INCORPORATED/Engineer may direct, continuing and doing after said
notice only such work and only until such time or times as the
LICOMCEN, INCORPORATED/Engineer may direct. x x x176[41]
(Emphasis supplied)
176
177
The termination of the contract was made obvious and unmistakable
when LICOMCEN’s new project consultant rebidded the contract for the
bored piling works for the CITIMALL.178[43] The claim that the rebidding
was conducted for purposes of getting cost estimates for a possible new
design179[44] taxes our credulity. It impresses us as nothing more than a lame
attempt of LICOMCEN to avoid liability under the contract. As the CIAC
had taken pains to demonstrate:
Perhaps because of this LCC came up with the assertion that what
we have is an “indefinite suspension.” There is no such term in the
Construction Agreement or the Contract Documents. In fact, it is
unknown in the construction industry. Construction work may either be
suspended or terminated, but never indefinitely suspended. Since it is not
sanctioned by practice and not mentioned in the herein Construction
Agreement and the Contract Documents, “indefinite suspension” is
irregular and invalid. Due to the apparent incongruity of an “indefinite
suspension,” LCC changed the term to “continued suspension” in its
Memorandum. Unfortunately for it, the factual situation remains
unchanged. The Works stay suspended for an indefinite period of time. 180
[45]
Accordingly, the CA did not err in affirming the CIAC ruling that the
contract had already been terminated.
178
179
180
Neither can LICOMCEN find refuge in the principle of laches to steer
clear of liability. It is not just the lapse of time or delay that constitutes
laches. The essence of laches is the failure or neglect, for an unreasonable
and unexplained length of time, to do that which, through due diligence,
could or should have been done earlier, thus giving rise to a presumption
that the party entitled to assert it had either abandoned or declined to assert
it. 181[46]
Indeed, FSI filed its petition for arbitration only on October 8, 2002,
or after the lapse of more than four years since the project was “indefinitely
suspended.” But we agree with the CIAC and the CA that such delay can
hardly be considered unreasonable to give rise to the conclusion that FSI
already abandoned its claim. On the contrary, the delay was due to the fact
that FSI exerted efforts to have the claim settled extra-judicially which
LICOMCEN rebuffed. Besides, except for LICOMCEN’s allegation that the
filing of the suit is already barred by laches, no proof was offered to show
that the filing of the suit was iniquitous or unfair to LICOMCEN. We
reiterate that, unless reasons of inequitable proportions are adduced, a delay
within the prescriptive period is sanctioned by law and is not to be
considered delay that would bar relief.182[47] In the instant case, FSI filed its
claim well within the ten-year prescriptive period provided for in Article
1144 of the Civil Code.183[48] Therefore, laches cannot be invoked to bar FSI
from instituting this suit.
181
182
183
The doctrine of laches is based upon grounds of public policy which
require, for the peace of society, discouraging stale claims. It is principally a
question of the inequity or unfairness of permitting a right or claim to be
enforced or asserted. There is no absolute rule as to what constitutes laches;
each case is to be determined according to its particular circumstances. The
question of laches is addressed to the sound discretion of the court, and since
it is an equitable doctrine, its application is controlled by equitable
considerations. It cannot be worked to defeat justice or to perpetrate fraud
and injustice. 184[49]
avers that the award lacked factual and legal basis. FSI, on the other hand,
posits otherwise, and cries foul on the modification made by the CA. It
asserts that the CA erred in disregarding the pieces of evidence that it
submitted in support of the claim despite the lack of objection and
opposition from LICOMCEN. It insists entitlement to the full amount of
material costs at site, for equipment and labor standard costs, as well as
unrealized profits.
We have carefully gone over the records and are satisfied that the
findings of the CA are well supported by evidence. As mentioned above, the
contract between LICOMCEN and FSI had already been terminated and, in
such case, the GCC expressly provides that:
For any payment due the Contractor under the above conditions, the
LICOMCEN, INCORPORATED, however, shall deduct any outstanding
balance due from the Contractor for advances in respect to mobilization
and materials, and any other sum the LICOMCEN, INCORPORATED is
entitled to be credited.186[51]
LICOMCEN, however, cannot deny liability for 50% of the steel bars
because, as mentioned, it ordered their delivery to the jobsite. The steel bars
had in fact been delivered to the jobsite and inventoried by Cesar Cortez of
ESCA,191[56] contrary to LICOMCEN’s claim. The payment of these
materials is, therefore, in order, pursuant to GC-41:
We also uphold the denial of FSI’s claim for equipment and labor
standard costs, as no convincing evidence was presented to prove it. The list
187
188
189
190
191
192
of rented equipment193[58] and the list of workers194[59] offered by FSI and
which were admitted by CIAC, are far from being clear and convincing
proof that FSI actually incurred the expenses stated therein.
As aptly said by the CA, FSI should have presented convincing pieces
of documentary evidence, such as the lease contract or the receipts of
payment issued by the owners of the rented equipment, to establish the
claim. As to its claimed labor expenses, the list of employees does not
categorically prove that these listed employees were actually employed at
the construction site during the suspension. Hence, even assuming that
LICOMCEN failed to submit evidence to rebut these lists, they do not ipso
facto translate into duly proven facts. FSI still had the burden of proving its
cause of action, because it is the one asserting entitlement to an affirmative
relief.195[60] On this score, FSI failed. The CA, therefore, committed no
reversible error in denying the claim.
193
194
195
196
The provision was agreed upon by the parties freely, and significantly, FSI
did not question this. It is not for the Court to change the stipulations in the
contract when they are not illegal. Article 1306 of the Civil Code provides
that the contracting parties may establish such stipulations, clauses, terms
and conditions as they may deem convenient, provided they are not contrary
to law, morals, good customs, public order, or public policy.197[62] Besides,
no convincing proof was offered to prove the claim. In light of the
foregoing, the CA, therefore, correctly denied the claim for unrealized profit.
WHEREFORE, the herein petitions for review are DENIED, and the
assailed Decision and Resolutions of the Court of Appeals are AFFIRMED.
SO ORDERED.
Promulgated:
*
DECISION
CHICO-NAZARIO, J.:
199
200
201
202
203
Thereafter, respondent Eulogio issued several checks in favor of
petitioner as payment for the loan. Some of these checks were dishonored,
prompting the petitioner to file a criminal case against respondent Eulogio
for violation of Batas Pambansa Blg. 22 before the Olongapo City RTC,
Branch 72, docketed as Criminal Cases No. 612-90 to No. 615-90. During
the pre-trial conference of these cases, petitioner and respondent Eulogio
entered into a compromise agreement, which was contained in the Order of
the court, to wit:
ORDER
When this case was called for pre-trial conference in the presence
of the Honorable Prosecutor, accused Eulogio Santos and private
complainant Antonio Chieng came to an agreement that the total
indebtedness of Mr. Santos as of today, July 15, 1991 amounts to Two
Hundred Thousand (P200,000.00) Pesos including interest since the
beginning and excluding those already paid for. It is understood that at a
payment of P20,000.00 each month starting on or before July 31, 1991
and upon the completion of the amount of P200,000.00 without any
interest, the indebtedness of Mr. Santos shall/have been discharged and
upon payment of P20,000.00 on or before July 31 1991, the next payment
on or before August 31 1991, these cases will be considered terminated.
204
real property docketed as Civil Case No. 239-0-93. Petitioner alleged that
he extended a loan of P600,000.00 in favor of respondents for which
respondents executed the Deed of Real Estate Mortgage dated 17 August
1987 in his favor. Despite his repeated demands, respondents failed to pay
the loan.
205
206
207
already pegged the obligation of the herein [respondents] to the said
[petitioner] in the sum of P200,000.00.
On 6 October 1997, the court issued an Order setting aside its earlier
Decision dated 9 July 1997.208[10]
208
209
210
211
On 23 October 2001, the Olongapo City RTC, Branch 74 rendered a
Decision in Civil Case No. 239-0-93 directing the respondents to pay
petitioner the amount of P377,000.00 with interest, plus attorney’s fees and
costs.212[14] The decretal portion of the decision reads:
It agreed with respondents that the Deed of Real Estate Mortgage was
simulated and that the loan obligation was only P200,000.00. It also found
that respondents made payments amounting to P107,000.00. Respondent’s
liability was arrived at in this manner:
214
215
216
217
America v. American Realty Corporation,218[20] it held that a mortgagor-
creditor has two choices of action: he may either file an ordinary action to
recover the indebtedness or foreclose the mortgage. In short, once a
collection suit is filed, the action to foreclose the mortgage is barred.
218
WHEREFORE, in view of the foregoing, the Decision of the
Regional Trial Court of Olangapo, Branch 74, in Civil Case No. 239-0-93
is hereby REVERSED and a new one entered DISMISSING the
complaint.219[21]
219
220
221
222
223
action for collection of the loan which will preclude him from pursuing the
remedy of foreclosure of real estate mortgage.224[26] He asserts that no
evidence was adduced proving that the obligation for which the checks were
issued in Criminal Cases No. 612-90 to No. 615-90 was the same loan
obligation secured by the Deed of Real Estate Mortgage in Civil Case No.
239-0-93. Petitioner’s complaint-affidavit and the informations filed against
respondent Eulogio in the said criminal cases, which could have shed light
on the rights of the parties therein, were not presented during the trial before
the Olongapo City RTC, Branch 74 in Civil Case No. 239-0-93. Petitioner
argues that, if indeed the obligation for which the checks were issued in said
criminal cases is the same as the obligation secured by the Deed of Real
Estate Mortgage, the Olongapo City RTC, Branch 72 would have mentioned
in its Order dated 15 July 1991 in Criminal Cases No. 612-90 to No. 615-90
that the consideration in the Deed of Real Estate Mortgage was being
reduced to only P200,000.00.225[27]
224
225
his action to foreclose the real estate mortgage would be an injustice since he
would be left with no other recourse in recovering the loan balance from
respondents.226[28]
When petitioner filed Criminal Cases No. 612-90 to No. 615-90 for
violation of Batas Pambansa Blg. 22 against respondent Eulogio, petitioner’s
civil action for the recovery of the amount of the dishonored checks was
impliedly instituted therein pursuant to Section 1(b) of Rule 111 of the 2000
Rules on Criminal Procedure. In the case of Hyatt Industrial Manufacturing
Corporation v. Asia Dynamic Electrix Corporation,229[31] we elucidated thus:
We agree with the ruling of the Court of Appeals that upon filing
of the criminal cases for violation of B.P. 22, the civil action for the
recovery of the amount of the checks was also impliedly instituted under
Section 1(b) of Rule 111 of the 2000 Rules on Criminal Procedure. Under
the present revised Rules, the criminal action for violation of B.P. 22 shall
be deemed to include the corresponding civil action. The reservation to
file a separate civil action is no longer needed. The Rules provide:
(a) xxxx
229
Upon filing of the aforesaid joint criminal and civil actions, the
offended party shall pay in full the filing fees based on the amount of the
check involved, which shall be considered as the actual damages claimed.
Where the complaint or information also seeks to recover liquidated,
moral, nominal, temperate or exemplary damages, the offended party shall
pay additional filing fees based on the amounts alleged therein. If the
amounts are not so alleged but any of these damages are subsequently
awarded by the court, the filing fees based on the amount awarded shall
constitute a first lien on the judgment.
Where the civil action has been filed separately and trial thereof
has not yet commenced, it may be consolidated with the criminal action
upon application with the court trying the latter case. If the application is
granted, the trial of both actions shall proceed in accordance with section 2
of this Rule governing consolidation of the civil and criminal actions.
The foregoing rule was adopted from Circular No. 57-97 of this
Court. It specifically states that the criminal action for violation of B.P. 22
shall be deemed to include the corresponding civil action. It also requires
the complainant to pay in full the filing fees based on the amount of the
check involved. Generally, no filing fees are required for criminal cases,
but because of the inclusion of the civil action in complaints for violation
of B.P. 22, the Rules require the payment of docket fees upon the filing of
the complaint. This rule was enacted to help declog court dockets which
are filled with B.P. 22 cases as creditors actually use the courts as
collectors. Because ordinarily no filing fee is charged in criminal cases
for actual damages, the payee uses the intimidating effect of a criminal
charge to collect his credit gratis and sometimes, upon being paid, the trial
court is not even informed thereof. The inclusion of the civil action in the
criminal case is expected to significantly lower the number of cases filed
before the courts for collection based on dishonored checks. It is also
expected to expedite the disposition of these cases. Instead of instituting
two separate cases, one for criminal and another for civil, only a single
suit shall be filed and tried. It should be stressed that the policy laid down
by the Rules is to discourage the separate filing of the civil action. The
Rules even prohibit the reservation of a separate civil action, which means
that one can no longer file a separate civil case after the criminal
complaint is filed in court. The only instance when separate proceedings
are allowed is when the civil action is filed ahead of the criminal case.
Even then, the Rules encourage the consolidation of the civil and criminal
cases. We have previously observed that a separate civil action for the
purpose of recovering the amount of the dishonored checks would only
prove to be costly, burdensome and time-consuming for both parties and
would further delay the final disposition of the case. This multiplicity of
suits must be avoided. Where petitioners’ rights may be fully adjudicated
in the proceedings before the trial court, resort to a separate action to
recover civil liability is clearly unwarranted. x x x.
xxxx
xxxx
The Court has likewise taken note of the fact that plaintiff is a
businessman by his admission, and the fact that the purpose of the
defendants’ seeing him on August 17, 1989 is in order to borrow money.
The testimony of plaintiff that defendants are known to him cannot be
related to any special occasion or event of meeting and later becoming
friends, otherwise plaintiff could have stated so. His having known the
defendants refer to only one occasion, that is, when the defendants came to
his business office to obtain a loan. Anyone can do that. That person
would then be his debtor. And so, defendants on August 17, 1989 became
debtors of the plaintiff.
230
creditor, petitioner is barred from subsequently resorting to an action for
foreclosure.
235
236
237
annum from such finality until its satisfaction, this interim period being
deemed to be then equivalent to a forbearance of credit.
SO ORDERED.
238
REMINGTON INDUSTRIAL G.R. No. 171858
SALES CORPORATION,
Petitioner, Present:
Ynares-Santiago, J. (Chairperson),
- versus - Austria-Martinez,
Chico-Nazario,
Nachura, and
Reyes, JJ.
CHINESE YOUNG MEN’S
CHRISTIAN ASSOCIATION OF
THE PHIL. ISLANDS, doing Promulgated:
business under the name MANILA
DOWNTOWN YMCA,
Respondent. August 31, 2007
x ---------------------------------------------------------------------------------------- x
RESOLUTION
YNARES-SANTIAGO, J.:
SO ORDERED.239[1]
239
Respondent YMCA owns a two storey-building in Binondo, Manila.
It leased Unit No. 963 located at the second floor to petitioner RISC from
December 1, 1993 to November 30, 1995. It also leased to petitioner RISC
Unit No. 966 located at the ground floor from December 1, 1995 to
November 30, 1997, while the adjoining unit or Unit 964 was leased to
petitioner’s sister company RSC. Petitioner removed the partition between
Units 964 and 966 and used the combined areas as its office, hardware store
and display shop for steel products. It was also used as a passageway to
Unit 963, which was utilized by petitioner as its staff room.
On August 11, 1998, the trial court hearing the consolidated cases
rendered a Decision extending the lease period for three years from finality
of the Decision and dismissed YMCA’s complaint for ejectment. Petitioner
filed a Motion to Constitute Passageway alleging that it has no means of
ingress or egress to its second floor Unit. An ocular inspection was
conducted on February 5, 1999. The Commissioner’s Report revealed that
petitioner is still in possession of the keys to the two ground floor units
because YMCA failed to provide an adequate passageway to the second
floor.245[7] Thereafter, YMCA manifested its willingness to constitute a
passageway provided Remington will surrender possession of the ground
floor unit.246[8]
245
246
was followed by Statements of Account dated July 28, 2000 and August 7,
2000 according to which the rental arrears amounted to P571,153.85.
The ejectment case against petitioner RSIC over ground floor Unit
No. 966, the subject matter of the case at bar, was raffled to Branch 17 of the
MeTC-Manila.247[9] In its Decision dated June 20, 2003, it ordered petitioner
RSIC to vacate the premises and to pay back rents.248[10] Consequently,
petitioner appealed to the RTC which ruled in its favor dismissing the
complaint for ejectment for lack of cause of action.249[11] Thereafter, YMCA
appealed to the Court of Appeals which reversed the RTC and reinstated the
Decision of the MeTC.
RISC thus filed the instant petition for review on certiorari assailing
the Decision of the Court of Appeals. In the assailed Decision, we ruled
that petitioner has effectively surrendered possession of Units 964 and 966;
that the filing of petitioner’s Formal Surrender of the Leased Premises
constitute constructive delivery of the said premises effective July 1, 1998 as
it thereafter emptied and vacated the premises; and that respondent could
have easily removed the padlock and take legal and actual possession of the
premises.
The filing of the Formal Surrender of Leased Premises and the actual
emptying of the premises constitute constructive delivery of possession.
Hence, the contract of lease was terminated on July 1, 1998 and it is
incumbent upon petitioner, as lessee, to comply with its obligation to return
the thing leased to the lessor and vacate the premises.
250
251
252
253
However, petitioner failed to comply with its obligation to return the
premises to respondent. In order to return the thing leased to the lessor, it is
not enough that the lessee vacates it. It is necessary that he places the thing
at the disposal of the lessor, so that the latter can receive it without any
obstacle. He must return the keys and leave no sub-lessees or other persons
in the property; otherwise he shall continue to be liable for rents.254[16]
254
255
time it sent its first demand to pay back rentals until the complaint for
ejectment was filed but it never availed of these opportunities.
Under Section 17, Rule 70 of the Rules of Court, the trial court may
award reasonable compensation for the use and occupation of the leased
premises after the same is duly proved. In Asian Transmission Corporation
v. Canlubang Sugar Estates,258[20] the Court ruled that the reasonable
compensation contemplated under said Rule partakes of the nature of actual
damages based on the evidence adduced by the parties. The Court also ruled
that “fair rental value is defined as the amount at which a willing lessee
would pay and a willing lessor would receive for the use of a certain
property, neither being under compulsion and both parties having a
reasonable knowledge of all facts, such as the extent, character and utility of
256
257
258
the property, sales and holding prices of similar land and the highest and
best use of the property.”259[21]
The reasonable compensation for the leased premises fixed by the trial
court based on the stipulated rent under the lease contract which is
P22,531.00, must be equitably reduced in view of the circumstances
attendant in the case at bar. First, it should be noted that the premises was
used only as a means of passageway caused by respondent’s failure to
provide sufficient passageway towards the second floor unit it also occupies.
Second, respondent was negligent because it waited for more than a year
before it actually demanded payment for back rentals as reflected in its
Statement of Accounts dated September 7, 1999. When both parties to a
transaction are mutually negligent in the performance of their obligations,
the fault of one cancels the negligence of the other and, as in this case, their
rights and obligations may be determined equitably under the law
proscribing unjust enrichment.260[22] From the foregoing, we find the amount
of P11,000.00 a month equitable and reasonable compensation for
petitioner’s continued use of the premises.
259
260
P11,000.00 a month from July 1, 1998 until March 12, 2004 as reasonable
compensation for the use of the premises.
SO ORDERED.