FIRST DIVISION
[G.R. No. 116805. June 22, 2000]
MARIO S.
ESPINA, petitioner, vs. THE COURT OF APPEALS and RENE G. DIAZ, respondents. batas
D E C I S I O N
PARDO, J.:
The case before the Court is an appeal from
a decision of the Court of Appeals[1] reversing that of the Regional Trial Court,
Antipolo, Rizal,[2] affirming in all respects the decision of the
Municipal Trial Court, Antipolo, Rizal,[3] ordering respondent Rene G. Diaz to vacate the
condominium unit owned by petitioner and to pay back current rentals,
attorney's fees and costs.
The facts, as found by the Court of Appeals,
are as follows:
"Mario S.
Espina is the registered owner of a Condominium Unit No. 403, Victoria Valley
Condominium, Valley Golf Subdivision, Antipolo, Rizal. Such ownership is
evidenced by Condominium Certificate of Title No. N-10 (p. 31, Rollo).
"On November
29, 1991, Mario S. Espina, the private respondent as seller, and Rene G. Diaz,
the petitioner as buyer, executed a Provisional Deed of Sale, whereby the
former sold to the latter the aforesaid condominium unit for the amount of
P100,000.00 to be paid upon the execution of the contract and the balance to be
paid through PCI Bank postdated checks as follows:
"1...........P400,000.00
..............Check No. 301245
..............January 15, 1992
"2...........P200,000.00
..............Check No. 301246
..............February 1, 1992
"3...........P200,000.00
..............Check No. 301247
..............February 22, 1992
"4...........P200,000.00
..............Check No. 301248
..............March 14, 1992 haideem
"5...........P200,000.00
..............Check No. 301249
..............April 4, 1992
"6...........P200,000.00
..............Check No. 301250
..............April 25, 1992
.............................(pp. 59-61, Rollo).
"Subsequently,
in a letter dated January 22, 1992, petitioner informed private respondent that
his checking account with PCI Bank has been closed and a new checking account
with the same drawee bank is opened for practical purposes. The letter further
stated that the postdated checks issued will be replaced with new ones in the
same drawee bank (p. 63, Rollo).
"On January
25, 1992, petitioner through Ms. Socorro Diaz, wife of petitioner, paid private
respondent Mario Espina P200,000.00, acknowledged by him as partial payment for
the condominium unit subject of this controversy (p.64, Rollo).
"On July 26,
1992, private respondent sent petitioner a "Notice of Cancellation"
of the Provisional Deed of Sale (p. 48, Rollo).
"However,
despite the Notice of Cancellation from private respondent, the latter accepted
payment from petitioner per Metrobank Check No. 395694 dated and encashed on
October 28, 1992 in the amount of P 100,000.00 (p. 64, Rollo).
"On February
24, 1993, private respondent filed a complaint docketed as Civil Case No. 2104
for Unlawful Detainer against petitioner before the Municipal Trial Court of
Antipolo, Branch 1.
"On November
12, 1993, the trial court rendered its decision, the dispositive portion of
which reads:
‘WHEREFORE, in
view of the foregoing consideration, judgment is hereby rendered ordering the
defendant and all persons claiming rights under him to vacate unit 403 of the
Victoria Golf Valley Condominium, Valley Golf Subdivision, Antipolo, Rizal; to
pay the total arrears of P126,000.00, covering the period July 1991 up to the
filing (sic) complaint, and to pay P7,000.00 every month thereafter as rentals
unit (sic) he vacates the premises; to pay the amount of P5,000.00 as and
attorney's fees; the amount of P300.00 per appearance, and costs of suit. Chiefx
‘However, the
plaintiff may refund to the defendant the balance from (sic) P400,000.00 after
deducting all the total obligations of the defendant as specified in the
decision from receipt of said decision.
‘SO ORDERED.'
(Decision, Annex "B"; p. 27, Rollo)
"From the
said decision, petitioner appealed to the Regional Trial Court Branch 71,
Antipolo, Rizal. On April 29, 1994, said appellate court affirmed in all
respects the decision of the trial court."[4]
On June 14, 1994, petitioner filed with the
Court of Appeals a petition for review.
On July 20, 1994, the Court of Appeals
promulgated its decision reversing the appealed decision and dismissing the
complaint for unlawful detainer with costs against petitioner Espina.
On August 8, 1994, petitioner filed a motion
for reconsideration of the decision of the Court of Appeals.[5]
On August 19, 1994, the Court of Appeals
denied the motion.[6]
Hence, this appeal via petition for review
on certiorari.[7]
The basic issue raised is whether the Court
of Appeals erred in ruling that the provisional deed of sale novated the
existing contract of lease and that petitioner had no cause of action for
ejectment against respondent Diaz.
We resolve the issue in favor of petitioner.
According to respondent Diaz, the
provisional deed of sale that was subsequently executed by the parties novated
the original existing contract of lease. The contention cannot be sustained.
Respondent originally occupied the condominium unit in question in 1987 as a
lessee.[8] While he occupied the premises as lessee, petitioner
agreed to sell the condominium unit to respondent by installments.[9] The agreement to sell was provisional as the
consideration was payable in installments. Esmsc
The question is, did the provisional deed of
sale novate the existing lease contract? The answer is no. The novation must be
clearly proved since its existence is not presumed.[10] "In this light, novation is never presumed; it
must be proven as a fact either by express stipulation of the parties or by
implication derived from an irreconcilable incompatibility between old and new
obligations or contracts."[11] Novation takes place only if the parties expressly
so provide, otherwise, the original contract remains in force. In other words,
the parties to a contract must expressly agree that they are abrogating their
old contract in favor of a new one.[12] Where there is no clear agreement to create a new
contract in place of the existing one, novation cannot be presumed to take
place, unless the terms of the new contract are fully incompatible with the
former agreement on every point.[13] Thus, a deed of cession of the right to repurchase a
piece of land does not supersede a contract of lease over the same property.[14] In the provisional deed of sale in this case, after
the initial down payment, respondent's checks in payment of six installments
all bounced and were dishonored upon presentment for the reason that the bank
account was closed.[15] Consequently, on July 26, 1992, petitioner
terminated the provisional deed of sale by a notarial notice of cancellation.[16] Nonetheless, respondent Diaz continued to occupy the
premises, as lessee, but failed to pay the rentals due. On October 28, 1992,
respondent made a payment of P100,000.00 that may be applied either to the back
rentals or for the purchase of the condominium unit. On February 13, 1993,
petitioner gave respondent a notice to vacate the premises and to pay his back
rentals.[17] Failing to do so, respondent's possession became unlawful
and his eviction was proper. Hence, on February 24, 1993, petitioner filed with
the Municipal Trial Court, Antipolo, Rizal, Branch 01 an action for unlawful
detainer against respondent Diaz.[18]
Now respondent contends that the
petitioner's subsequent acceptance of such payment effectively withdrew the
cancellation of the provisional sale. We do not agree. Unless the application
of payment is expressly indicated, the payment shall be applied to the
obligation most onerous to the debtor.[19] In this case, the unpaid rentals constituted the
more onerous obligation of the respondent to petitioner. As the payment did not
fully settle the unpaid rentals, petitioner's cause of action for ejectment
survives. Thus, the Court of Appeals erred in ruling that the payment was
"additional payment" for the purchase of the property.
WHEREFORE, the Court GRANTS the petition for review on certiorari,
and REVERSES the decision of the Court of Appeals.[20] Consequently, the Court REVIVES the decision
of the Regional Trial Court, Antipolo, Rizal, Branch 71,[21] affirming in toto the decision of the
Municipal Trial Court, Antipolo, Rizal, Branch 01.[22]
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno,
Kapunan, and Ynares-Santiago,
JJ., concur. CODES
[1] In CA-G.R. SP No. 34214, promulgated on July 20,
1994, Labitoria, J., ponente, Cui and Martin, Jr., JJ., concurring.
[2] In Civil Case No. 94-2997, decision, dated Apri0l 29,
1994, Judge Felix S. Caballes, presiding.
[3] In Civil Case No. 2104, decision, dated November 12,
1993, Judge Ruth C. Santos, presiding.
[4] Petition, Annex "G", Rollo, pp.
64-69.
[5] Ibid., Annex "H", Rollo, pp.
70-87.
[6] Petition, Annex "I", Rollo, p. 89.
[7] Filed on October 5, 1994, Petition for Review on Certiorari,
Rollo, pp. 9-34. On November 22, 1995, we gave due course to the
petition, Rollo, p. 199.
[8] Petition for Review on Certiorari, paragraph
18, Section (b), Rollo, p.13.
[9] Petition, Annex "K", Rollo, pp.
105-108.
[10] Rillo v. Court of Appeals, 274 SCRA 461, 469 (1997),
citing Pacific Mills, Inc. v. Court of Appeals, 206 SCRA 317 (1992);
Bisaya Land Transportation v. Sanchez, 153 SCRA 532 (1987)
[11] Uraca v. Court of Appeals, 278 SCRA 702, 710 (1997)
[12] Rillo v. Court of Appeals, supra,
citing Ajax Marketing and Development Corporation v. Court of Appeals,
248 SCRA 222 (1995)
[13] Rillo v. Court of Appeals, supra; Nyco
Sales Corporation v. BA Finance Corporation, 200 SCRA 637 (1991); Lim
Tay v. Court of Appeals, 293 SCRA 634, 657 (1998)
[14] Tolentino, Civil Code of the Philippines, Vol. IV,
1993 Reprinting, p. 383-384.
[15] Petition for Review on Certiorari, paragraph
18, Section (e), Rollo, p. 13.
[16] Ibid., Section (f), Rollo, p. 14.
[17] Ibid., Section (g), Rollo, p. 14.
[18] CA Decision, Rollo, p. 65.
[19] Article 1254, Civil Code.
[20] In CA-G.R. SP NO. 34214.
[21] In Civil Case No. 94-2997, dated April 29, 1994.
[22] In Civil Case No. 2104, dated November 12, 1993.