G.R. No.

182963

June 3, 2013

SPOUSES DEO AGNER and MARICON AGNER, Petitioners, vs. BPI FAMILY SAVINGS BANK, INC., Respondent.

FACTS:
On February 15, 2001, the petitioners executed a Promissory Note with Chattel Mortgage in favor of Citimotors, Inc. The contract provides, among others, that: for receiving the amount of Php834, 768.00, petitioners shall pay Php 17,391.00 every 15th day of each succeeding month until fully paid; the loan is secured by a 2001 Mitsubishi Adventure Super Sport; and an interest of 6% per month shall be imposed for failure to pay each installment on or before the stated due date. On the same day, Citimotors, Inc. assigned all its rights, title and interests in the Promissory Note with Chattel Mortgage to ABN AMRO Savings Bank, Inc., which, on May 31, 2002, likewise assigned the same to respondent BPI Family Savings Bank, Inc. Spouses Agner failed to pay four successive installments from May 15, 2002 to August 15, 2002, respondent, through counsel, sent to petitioners a demand letter dated August 29, 2002, declaring the entire obligation as due and demandable and requiring to pay Php576,664.04, or surrender the mortgaged vehicle immediately upon receiving the letter. Getting no response, respondent filed on October 4, 2002 an action for Replevin and Damages before the Manila Regional Trial Court. A writ of replevin was issued. But still, the subject vehicle was not seized. Trial on the merits succeeded. August 11, 2005, the Manila RTC Br. 33 ruled in favor of BPI Family Savings Bank, Inc. and ordered Spouses Agner to jointly and severally pay the amount of Php576,664.04 plus interest at the rate of 72% per annum from August 20, 2002 until fully paid, and the costs of suit. Petitioners appealed the decision to the Court of Appeals, but the CA affirmed the lower courts decision and, subsequently, denied the motion for reconsideration. ISSUE/S: (1) Whether or Not the Respondent have cause of action, because the Deed of Assignment executed in its favor did not specifically mention ABN AMROs account receivable from petitioners; (2) Whether or Not petitioners can be considered to have defaulted in payment for lack of competent proof that they received the demand letter; (3) Whether or Not Respondents remedy of resorting to both actions of replevin and collection of sum of money is contrary to the provision of Article 1484 of the Civil Code. RULING: (1) Yes, BPI Family Saving Bank, Inc. have a cause of action. It would be sufficient to state that the matter surrounding the Deed of Assignment had already been considered by the trial court and the CA. (2) No, petitioners cannot be considered to have defaulted in payment. Because even if there is no demand letter sent by respondent, there is really no need for it because petitioners legally waived the necessity of notice or demand in the Promissory Note with Chattel Mortgage, which they voluntarily and knowingly signed in favor of respondents predecessor-in-interest. The Civil Code in Article 1169 provides that one incurs in delay or is in default from the time the obligor demands the fulfillment of the obligation from the obligee. However, the law expressly provides that demand is not necessary under certain circumstances, and one of these circumstances is when the parties expressly waive demand. Hence, since the cosignors expressly waived demand in the promissory notes, demand was unnecessary for them to be in default. (3) No, the Respondents remedy is not violative of Article 1484 of the Civil Code. Compared with the Elisco Case, the vehicle subject matter of this case was never recovered and delivered to respondent despite the issuance of a writ of replevin. As there was no seizure that transpired, it cannot be said that petitioners were deprived of the use and enjoyment of the mortgaged vehicle or that respondent pursued, commenced or concluded its actual foreclosure. The trial court, therefore, rightfully granted the alternative prayer for sum of money, which is equivalent to the remedy of "exacting fulfillment of the obligation." Certainly, there is no double recovery or unjust enrichment to speak of.
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G.R. No.171692

June 3, 2013

SPOUSES DELFIN O. TUMIBAY and AURORA T. TUMIBAY-deceased; GRACE JULIE ANN TUMIBAY MANUEL, legal representative, Petitioners, vs. SPOUSES MELVIN A. LOPEZ and ROWENA GAY T. VISITACION LOPEZ, Respondents. FACTS: On March 23, 1998, petitioners filed a Complaint for declaration of nullity ab initio of sale, and recovery of ownership and possession of land with the RTC of Malaybalay City. The case was raffled to Branch 9 and docketed as Civil Case No. 2759-98. In their Complaint, petitioners alleged that they are the owners of a parcel of land located in Sumpong, Malaybalay, Bukidnon covered by Transfer Certificate of Title (TCT) No. T-25334 (subject land) in the name of petitioner Aurora; that they are natural born Filipino citizens but petitioner Delfin acquired American citizenship while his wife, petitioner Aurora, remained a Filipino citizen; that petitioner Aurora is the sister of Reynalda Visitacion (Reynalda); that on July 23, 1997, Reynalda sold the subject land to her daughter, Rowena Gay T. Visitacion Lopez (respondent Rowena), through a deed of sale for an unconscionable amount of P95,000.00 although said property had a market value of more than P2,000,000.00; that the subject sale was done without the knowledge and consent of petitioners; and that, for these fraudulent acts, respondents should be held liable for damages. Petitioners prayed that (1) the deed of sale dated July 23, 1997 be declared void ab initio, (2) the subject land be reconveyed to petitioners, and (3) respondents be ordered to pay damages. On May 19, 1998, respondents filed their Answer with counterclaim. Respondents stated that on December 12, 1990, petitioners executed a special power of attorney (SPA) in favor of Reynalda granting the latter the power to offer for sale the subject land; that sometime in 1994, respondent Rowena and petitioners agreed that the former would buy the subject land for the price of P800,000.00 to be paid on installment; that on January 25, 1995, respondent Rowena paid in cash to petitioners the sum of $1,000.00; that from 1995 to 1997, respondent Rowena paid the monthly installments thereon as evidenced by money orders; that, in continuance of the agreement, a deed of sale was executed and the corresponding title was issued in favor of respondent Rowena; that the subject sale was done with the knowledge and consent of the petitioners as evidenced by the receipt of payment by petitioners; and that petitioners should be held liable for damages for filing the subject Complaint in bad faith. Respondents prayed that the Complaint be dismissed and that petitioners be ordered to pay damages. On May 25, 1998, petitioners filed an Answer to Counterclaim. Petitioners admitted the existence of the SPA but claimed that Reynalda violated the terms thereof when she (Reynalda) sold the subject land without seeking the approval of petitioners as to the selling price. Petitioners also claimed that the monthly payments from 1995 to 1997 were mere deposits as requested by respondent Rowena so that she (Rowena) would not spend the same pending their agreement as to the purchase price; and that Reynalda, acting with evident bad faith, executed the deed of sale in her favor but placed it in the name of her daughter, respondent Rowena, which sale is null and void because an agent cannot purchase for herself the property subject of the agency. ISSUE/S: (1) (2) Whether under the SPA Reynalda had the power to sell the subject land. Whether the actuations of petitioner Aurora in receiving money from respondent Rowena amounted to the ratification of the breach in the exercise of the SPA.

RULING: (1) Reynalda, as agent, acted beyond the scope of her authority under the SPA. She had the power to sell, when she executed the deed of sale dated July 23, 1997 in favor of respondent Rowena, as buyer, without the knowledge and consent of petitioners, and conveyed the subject land to respondent Rowena at a price not approved by petitioners, as principals and sellers, the subject land. (2) Respondent Rowena was aware of the limits of the authority of Reynalda under the SPA, and Petitioners did not ratify, impliedly or expressly, the acts of Reynalda. Under Article 1898 of the Civil Code, the sale is void and petitioners are, thus, entitled to the reconveyance of the subject land.

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.

FACTS: December 11, 1984, when petitioner Florentino T. Mallari obtained from respondent Prudential Bank-Tarlac Branch, a loan in the amount of P300,000.00 as evidenced by Promissory Note No. BD 84-055. Under the promissory note, the loan was subject to an interest rate of 21% per annum (p.a.), attorney's fees equivalent to 15% of the total amount due but not less than P200.00 and, in case of default, a penalty and collection charges of 12% p.a. of the total amount due. The loan had a maturity date of January 10, 1985, but was renewed up to February 17, 1985. Petitioner Florentino executed a Deed of Assignment wherein he authorized the respondent bank to pay his loan with his time deposit with the latter in the amount ofP300,000.00. On December 22, 1989 Spouses Mallari obtained again from Prudential Bank another loan of P1.7 million as evidenced by PN No. BDS 606-89 with a maturity date of March 22, 1990. They stipulated that the loan will bear 23% interest p.a., attorney's fees equivalent to 15% p.a. of the total amount due, but not less than P200.00, and penalty and collection charges of 12% p.a. The Mallaris executed a Deed of Real Estate Mortgage in favor of respondent bank covering their property under Transfer Certificate of Title No. T-215175 of the Register of Deeds of Tarlac to answer for the said loan. Petitioners failed to settle their loan obligations with respondent bank, thus, the latter, through its lawyer, sent a demand letter to the former for them to pay their obligations, which when computed up to January 31, 1992, amounted to P571,218.54 for PN No. BD 84-055 and P2,991,294.82 for PN No. BDS 606-89. On February 25, 1992, respondent bank filed with the Regional Trial Court of Tarlac, a petition for the extrajudicial foreclosure of petitioners' mortgaged property for the satisfaction of the latter's obligation ofP1,700,000.00 secured by such mortgage, thus, the auction sale was set by the Provincial Sheriff on April 23, 1992. On April 10, 1992, respondent bank's Assistant Manager sent petitioners two (2) separate Statements of Account as of April 23, 1992, i.e., the loan of P300,000.00 was increased to P594,043.54, while the P1,700,000.00 loan was already P3,171,836.18. On April 20, 1992, petitioners filed a complaint for annulment of mortgage, deeds, injunction, preliminary injunction, temporary restraining order and damages claiming, among others, that: (1) the P300,000.00 loan obligation should have been considered paid, because the time deposit with the same amount under Certificate of Time Deposit No. 284051 had already been assigned to respondent bank; (2) respondent bank still added theP300,000.00 loan to the P1.7 million loan obligation for purposes of applying the proceeds of the auction sale; and (3) they realized that there were onerous terms and conditions imposed by respondent bank when it tried to unilaterally increase the charges and interest over and above those stipulated. Petitioners asked the court to restrain respondent bank from proceeding with the scheduled foreclosure sale. Respondent bank filed its Answer with counterclaim arguing that: (1) the interest rates were clearly provided in the promissory notes, which were used in computing for interest charges; (2) as early as January 1986, petitioners' time deposit was made to apply for the payment of interest of their P300,000.00 loan; and (3) the statement of account as of April 10, 1992 provided for a computation of interest and penalty charges only from May 26, 1989, since the proceeds of petitioners' time deposit was applied to the payment of interest and penalty charges for the preceding period. Respondent bank also claimed that petitioners were fully apprised of the bank's terms and conditions; and that the extrajudicial foreclosure was sought for the satisfaction of the second loan in the amount of P1.7 million covered by PN No. BDS 606-89 and the real estate mortgage, and not the P300,000.00 loan covered by another PN No. 84-055.

In an Order dated November 10, 1992, the RTC denied the Application for a Writ of Preliminary Injunction. However, in petitioners' Supplemental Motion for Issuance of a Restraining Order and/or Preliminary Injunction to enjoin respondent bank and the Provincial Sheriff from effecting or conducting the auction sale, the RTC reversed itself and issued the restraining order in its Order dated January 14, 1993. Respondent bank filed its Motion to Lift Restraining Order, which the RTC granted in its Order dated March 9, 1993. Respondent bank then proceeded with the extrajudicial foreclosure of the mortgaged property. On July 7, 1993, a Certificate of Sale was issued to respondent bank being the highest bidder in the amount ofP3,500,000.00. Subsequently, respondent bank filed a Motion to Dismiss Complaint for failure to prosecute action for unreasonable length of time to which petitioners filed their Opposition. On November 19, 1998, the RTC issued its Order denying respondent bank's Motion to Dismiss Complaint. Trial thereafter followed. Petitioner Florentino was presented as the lone witness for the plaintiffs. Subsequently, respondent bank filed a Demurrer to Evidence. On November 15, 1999, the RTC issued its Order granting respondent's demurrer to evidence.

ISSUE: is whether the 23% p.a. interest rate and the 12% p.a. penalty charge on petitioners'P1,700,000.00 loan to which they agreed upon is excessive or unconscionable under the circumstances.

RULING: Parties are free to enter into agreements and stipulate as to the terms and conditions of their contract, but such freedom is not absolute. As Article 1306 of the Civil Code provides, "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." Hence, if the stipulations in the contract are valid, the parties thereto are bound to comply with them, since such contract is the law between the parties. In this case, petitioners and respondent bank agreed upon on a 23% p.a. interest rate on the P1.7 million loan.

G.R. No. 202690

June 5, 2013

HENRY L. SY, Petitioner, vs. LOCAL GOVERNMENT OF QUEZON CITY, Respondent. FACTS: November 7, 1996, the City, through then Mayor Ismael Mathay, Jr., filed a complaint for expropriation with the RTC in order to acquire a 1,000 sq. m. parcel of land, owned and registered under the name of the petitioner,which was intended to be used as a site for a multi-purpose barangay hall, day-care center, playground and community activity center for the benefit of the residents of Barangay Balingasa, Balintawak, Quezon City. The requisite ordinance to undertake the aforesaid expropriation namely, Ordinance No. Sp-181, s-94, was enacted on April 12, 1994.7 On March 18, 1997, pursuant to Section 19 of Republic Act No. 7160 (RA 7160), otherwise known as the "Local Government Code of 1991," the City deposited the amount of P241,090.00 with the Office of the Clerk of Court, representing 15% of the fair market value of the subject property based on its tax declaration. During the preliminary conference on November 8, 2006, Sy did not question the Citys right to expropriate the subject property. Thus, only the amount of just compensation remained at issue. On July 6, 2006, the RTC appointed Edgardo Ostaco, Engr. Victor Salinas and Atty. Carlo Alcantara as commissioners to determine the proper amount of just compensation to be paid by the City for the subject property. Subsequently, Commissioners Ostaco and Alcantara, in a Report dated February 11, 2008, recommended the payment of P5,500.00 per sq. m., to be computed from the date of the filing of the expropriation complaint, or on November 7, 1996. On the other hand, Commissioner Salinas filed a separate Report dated March 7, 2008, recommending the higher amount ofP13,500.00 per sq. m. as just compensation. ISSUE/S: Whether or Not the CA correctly: (1) (2) (3) RULING: (1) Failure to seasonably move for reconsideration; excusable negligence; relaxation of procedural rules. Yes, the Court of Appeals properly dismissed the motion for reconsideration filed by Sy. The motion for reconsideration was filed out of time. Even Atty. Meris, claims that his secretarys inadvertent placing of the date January 27, 2012, instead of January 26, 2012, on the Notice of Decision constitutes excusable negligence which should therefore, justify a relaxation of the rules. The excuse given was untenable in the eyes of the court. (2) No, the Court of Appeals was wrong in making the legal interest as six percent. The Supreme Court held that the correct rate of legal interest to be applied is twelve percent (12%) and not six percent (6%) per annum, owing to the nature of the Citys obligation as an effective forbearance. (3) Yes, but the Supreme Court cannot sustain the amount of P5,500.00/sq. m. as just compensation which was set by the RTC and upheld by the CA. The respondent Local Government of Quezon City is ordered to PAY exemplary damages in the amount ofP200,000.00 and attorney's fees equivalent to one percent (1%) of the amount due, after final determination of the amount of just compensation. Dismissed Sys motion for reconsideration for being filed out of time; Upheld the amount of just compensation as determined by the RTC as well as its grant of six percent (6%) legal interest; and Awarded exemplary damages and attorneys fees.

G.R. No. 176425 HEIRS OF MANUEL UY EK LIONG, represented by BELEN LIM VDA. DE UY, Petitioners, vs. MAURICIA MEER CASTILLO, HEIRS OF BUENAFLOR C. UMALI, represented by NANCY UMALI, VICTORIA H. CASTILLO, BERTILLA C. RADA, MARIETTA C. CAVANEZ, LEOVINA C. JALBUENA and PHILIP M. CASTILLO,Respondents.

G.R. No. 190957

June 5, 2013

PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, Petitioner, vs. APAC MARKETING CORPORATION, represented by CESAR M. ONG, JR., Respondents.

FACTS: The case involves a simple purchase transaction between defendant-appellant Philippine National Construction Corporation (PNCC), represented by defendants-appellants Rogelio Espiritu and Rolando Macasaet, and plaintiff-appellee APAC, represented by Cesar M. Ong, Jr., involving crushed basalt rock delivered by plaintiff-appellee to defendant-appellant PNCC. August 17, 1999, when the plaintiff-appellee filed with the trial court a complaint against defendantsappellees for collection of sum of money with damages, alleging that; (i) in March 1998, defendants-appellants engaged the services of plaintiff-appellee by buying aggregates materials from plaintiff-appellee, for which the latter had delivered and supplied good quality crushed basalt rock; the parties had initially agreed on the terms of payment, whereby defendants-appellants would issue the check corresponding to the value of the materials to be delivered, or "Check Before Delivery," but prior to the implementation of the said payment agreement, defendants-appellants requested from plaintiff-appellee a 30-day term from the delivery date within which to pay, which plaintiff-appellee accepted; and after making deliveries pursuant to the purchase orders and despite demands by plaintiffappellee, defendants appellants failed and refused to pay and settle their overdue accounts. The complaint prayed for payment of the amount of P782,296.80 "plus legal interest at the rate of not less than 6% monthly, to start in April, 1999 until the full obligation is completely settled and paid," among others.

(ii)

(iii)

On November 16, 1999, defendants-appellants filed a motion to dismiss, alleging that the complaint was premature considering that defendant-appellant PNCC had been faithfully paying its obligations to plaintiff-appellee, as can be seen from the substantial reduction of its overdue account as of August 1999. January 17, 2000, the trial court denied the motion to dismiss. Thus, defendants-appellants filed their answer, alleging that the obligation of defendant-appellant PNCC was only with respect to the balance of the principal obligation that had not been fully paid which, based on the latest liquidation report, amounted to onlyP474,095.92. Defendants-appellants filed a motion for reconsideration, alleging that during the pendency of the case, the principal obligation was fully paid and hence, the award by the trial court of actual damages in the amount ofP782,269.80 was without factual and legal bases. ISSUE: Whether the CA gravely erred in awarding attorneys fees to respondent. RULING: Yes, the Court of Appeals gravely erred in awarding attorneys fees to respondent. Article 2208 of the New Civil Code of the Philippines states the policy that should guide the courts when awarding attorneys fees to a litigant. As a general rule, the parties may stipulate the recovery of attorneys fees. In the absence on such stipulation, this article restrictively enumerates the instances when these fees may be recovered, to wit: Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except: (1) When exemplary damages are awarded; (2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; (3) In criminal cases of malicious prosecution against the plaintiff; (4) In case of a clearly unfounded civil action or proceeding against the plaintiff;

(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim; (6) In actions for legal support; (7) In actions for the recovery of wages of household helpers, laborers and skilled workers; (8) In actions for indemnity under workmen's compensation and employer's liability laws; (9) In a separate civil action to recover civil liability arising from a crime; (10) When at least double judicial costs are awarded; (11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered. In the ordinary sense, attorney's fees represent the reasonable compensation paid to a lawyer by his client for the legal services he has rendered to the latter; while in its extraordinary concept, they may be awarded by the court as indemnity for damages to be paid by the losing party to the prevailing party. Attorney's fees as part of damages are awarded only in the instances specified in Article 2208 of the Civil Code. As such, it is necessary for the court to make findings of fact and law that would bring the case within the ambit of these enumerated instances to justify the grant of such award, and in all cases it must be reasonable. The Supreme Court perused the assailed CAs Decision, but cannot find any factual, legal, or equitable justification for the award of attorneys fees in favor of respondent. The only discernible reason proffered by the trial court in granting the award was that respondent, as complainant in the civil case, was forced to litigate to protect the latters interest. Thus, the court find that there is an obvious lack of a compelling legal reason to consider the present case as one that falls within the exception provided under Article 2208 of the Civil Code. Absent such finding, the SC hold that the award of attorneys fees by the court a quo, as sustained by the appellate court, was improper and must be deleted.

G.R. No. 193453

June 5, 2013

SPOUSES RUBIN AND PORTIA HOJAS, Petitioners, vs. PHILIPPINE AMANAH BANK AND RAMON KUE, Respondents.