Republic of the
FIRST DIVISION
DORIE ABESA
NICOLAS, G.R.
No. 158026
Petitioner,
Present:
PUNO, C.J., Chairperson,
CARPIO,
- versus - *
AZCUNA, and
LEONARDO-DE CASTRO,
JJ.
DEL-NACIA
CORPORATION, Promulgated:
Respondent. April 23, 2008
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D E C I S I O N
PUNO, C.J.:
This case arose from a complaint for
unfair business practice[1]
filed by petitioner Dorie Abesa Nicolas (Mrs. Nicolas) against respondent
Del-Nacia Corporation (Del-Nacia) before the Housing and Land Use Regulatory
Board (HLURB).
On February 20, 1988, the spouses Armando Nicolas and Dorie
Abesa Nicolas (Spouses Nicolas) and Del-Nacia entered into a Land Purchase
Agreement[2]
(Agreement) for the sale by the latter to the former of a parcel of land,
covered by Transfer Certificate of Title No. 233702, consisting of 10,000
square meters, situated at Lot No. 3-B-4, Del Nacia Ville No. 5, San Jose del
Monte, Bulacan.
The relevant parts of the Agreement
are:
(1) The PURCHASER agrees to pay to the OWNER upon
execution of this Contract the sum of FORTY THOUSAND PESOS (P40,000) as
first payment on account of the purchase price and agrees to pay the balance of
FIVE HUNDRED TEN THOUSAND PESOS (P510,000) at the office of the OWNER in
the City of Quezon, Philippines, or such other office as the OWNER may
designate in 120 equal monthly installment of NINE THOUSAND ONE HUNDRED EIGHTY
NINE AND 45/100 PESOS (P9,189.45) interest being included on successive
monthly balance at 18% per annum, and payments to be made on the _____ day of
each month thereafter beginning April 20, 1988.
x x x x
(5) In the event that any of the payments as stipulated be not paid when, where, and as the same become due; it is agreed that sums in arrears shall bear interest at the rate of EIGHTEEN (18%) per centum per annum payable monthly from the date on which said sums is due and payable.
(6) If any such payment or payments shall continue in arrears for more than sixty-days, or if the PURCHASER shall violate any of the conditions herein set forth then the entire unpaid balance due under this contract, with any interest which may have attached shall at once become due and payable and shall bear interest at the rate of TWELVE (12%) per centum per annum until paid, and in such case, the PURCHASER further agrees to pay to the OWNER a sum equal to ten (10%) per centum of the amount due as attorney’s fees.[3]
Under the Agreement, the ownership of
the land remains with Del-Nacia until full payment of the stipulated purchase
price under the following terms and conditions:
(3) Title to said parcel of land shall remain in the name of the OWNER until complete payment by the PURCHASER of all obligations herein stipulated, at which time the OWNER agree to execute a final deed of sale in favor of the PURCHASER and cause the issuance of a certificate of title in the name of the latter, free from liens and encumbrances except those provided in the Land Registration Act, those imposed by the authorities, and those contained in Clauses (10) and (16) of this agreement. Registration fees and documentary stamps of the deed of sale shall be paid by the PURCHASER.
(4) Only the PURCHASER shall be deemed for all legal purposes to take possession of the parcel of land upon payment of the down payment provided, however, that his/her possession under this section shall be only that of a tenant or lessee, and subject to ejectment proceedings during all the period of this agreement.
x x x x
(7) In case the PURCHASER fails to comply with any conditions of this contract and/or to pay any payments herein agreed upon, the PURCHASER shall be granted a period or periods of grace which in no case shall exceed (60) days to be counted from the condition breached ought to be complied with or the said payments ought have been made, during which period of grace the PURCHASER must comply with the said condition or satisfy all due monetary obligations including those which correspond to the period of grace. OTHERWISE, the Contract shall be automatically cancelled and rescinded and of no force and effect, and as a consequence therefore, the OWNER may dispose of the parcels of land covered by this Contract in favor of other persons, as if this Contract had never been entered into. In case of such cancellation of this Contract all amounts paid in accordance with this agreement, together with all the improvements introduced in the premises, shall be considered as rents for the use and occupation of the abovementioned premises and as payments for the damages suffered on the OWNER on account of the failure of the PURCHASER to fulfill his part of this Contract and the PURCHASER hereby renounces all his rights to demand or reclaim the return of the same and further obligates himself to peacefully vacate the premises and deliver the same to the OWNER; PROVIDED, HOWEVER, that any consideration, concession, tolerance or relaxation of provisions shall not be interpreted as a renunciation on the part of OWNER of any rights granted in this Contract.[4]
Upon signing of the Agreement, the
Spouses Nicolas paid the down payment of P40,000. Thereupon, the Spouses Nicolas took
possession of the land, and for several months thereafter, paid on or before
the 20th of each month, the monthly amortizations.[5]
Unfortunately, however, Armando
Nicolas died shortly after the signing of the Agreement and Mrs. Nicolas began
to falter in her payments. As found by
Arbiter Jose A. Atencio, Jr. (HLURB Arbiter) of the Office of Appeals,
Adjudication and Legal Affairs (OAAL), HLURB Region III, the records of
Del-Nacia indicate that Mrs. Nicolas is delinquent in her monthly amortization
for the following months: November 1988; March 1989; May 1989; June 1989-July
1989; September 1989; October 1989; November 1989-December 1989; February
1990-September 1990; October 1990-November 1990; December 1990-April 1991. The last payment of Mrs. Nicolas was made on
Del-Nacia sent Mrs. Nicolas notice to
pay her arrearages with a grace period of sixty (60) days within which to make
payment but to no avail. Del-Nacia then caused the notarial cancellation of the
Agreement on
Subsequently, Del-Nacia verbally informed Mrs. Nicolas to get
the cash surrender value of her payment at its office. However, Mrs. Nicolas did not claim the
same. Del-Nacia prepared a check in the
amount of P270,651.88 representing the cash surrender value of Mrs.
Nicolas’s payment and sent it to her by registered mail. The check was received by Mrs. Nicolas and
until now it remains in her possession.[8]
On
PREMISES considered, judgment is hereby rendered as follows:
a. Declaring the notarial cancellation of
the contract on
b. Ordering respondent to fortwith furnish complainant accounting of the paid and unpaid amortizations including interests and penalty interests and other stipulated fees or charges covering the period or delinquent payments, as a consequence of the latter’s default stating clearly and specifically the bases as stated in the contract and for the complainant to pay her unpaid obligations within forty five (45) days from receipt of the said computation/accounting.
c. Ordering the same respondent to execute the pertinent deed in favor of the complainant within fifteen (15) days from receipt of complainant’s full payment under paragraph b aforementioned and thereafter to deliver to the latter the Transfer Certificate of Title of the lot in question.
d. Remedies provided under R.A. 6552 and other legal remedies may be resorted to, at the option of the respondent, if complainant fails or refuses to pay within the period provided under paragraph b.
So Ordered.[11]
Mrs. Nicolas sought review of the
Arbiter Decision by the HLURB Board of Commissions (HLURB Board) on the
following assignment of errors:
FIRST
ASSIGNMENT OF ERROR
THE HON. ARBITER ERRED IN ORDERING THE INCLUSION OF INTERESTS, PENALTY INTERESTS AND OTHER STIPULATED FEES OR CHARGES IN THE UNILATERAL COMPUTATION TO BE MADE BY THE RESPONDENT-APPELLEE AS THE UNPAID OBLIGATION OF COMPLAINANT-APPELLANT.
SECOND
ASSIGNMENT OF ERROR
THE HON. ARBITER ERRED IN ORDERING THE COMPLAINANT-APPELLANT TO PAY HER SUPPOSED UNPAID OBLIGATION BASED UPON THE UNILATERAL COMPUTATION OF RESPONDENT-APPELLEE WITHIN FORTY FIVE (45) DAYS FROM RECEIPT OF SAID COMPUTATION/ACCOUNTING.
THIRD
ASSIGNMENT OF ERROR
THE HON. ARBITER ERRED IN GIVING RESPONDENT-APPELLEE THE RIGHT TO RESORT TO REMEDIES PROVIDED UNDER R.A. 6552 AND OTHER LEGAL REMEDIES.
FOURTH
ASSIGNMENT OF ERROR
THE HON. ARBITER ERRED IN NOT
AWARDING ATTORNEY’S FEES IN THE SUM OF P50,000.00 TO
COMPLAINANT-APPELLANT.
FIFTH ASSIGNMENT OF ERROR
THE HON. ARBITER ERRED IN NOT GRANTING THE PRAYER OF COMPLAINANT-APPELLANT IN HER COMPLAINT.[12]
The HLURB Board was partly receptive
of the appeal and, on
WHEREFORE, in light of the foregoing premises, we hereby
MODIFY the Decision dated
(b) Ordering complainant to pay respondent within sixty (60) days from receipt hereof the amount of one hundred seventy three thousand nine hundred fifty seven pesos and 29/1000 (P173,957.29) representing the remaining balance of the installment purchase price of the land inclusive of legal interests at the rate of twelve percent (12%) per annum.
(e) Ordering respondent to pay this Board the amount of ten thousand (P10,000) as an administrative fine for violation of Section 5 of P.D. 957 within thirty (30) days from finality hereof.
SO ORDERED.
Del-Nacia filed a Motion for
Reconsideration[15]
and a Supplement to Motion for Reconsideration.[16] Meanwhile, Mrs. Nicolas filed a motion for
the “consignment” of P173,957.29, representing the balance of the
purchase price of the land as found by the HLURB Board.
On
Consequently, Del-Nacia appealed to
the Office of the President which, however, was dismissed by its Decision dated
Unsuccessful
in her bid at overturning the O.P. Resolution, Mrs. Nicolas filed a Petition
for Review[20]
with the Court of Appeals (CA) docketed as CA-G.R. SP No. 68407. The CA initially dismissed her petition for
failing to comply with the procedural requirements of Section 6(c) of Rule 43
of the Revised Rules of Court.[21] Mrs. Nicolas filed an omnibus motion praying
that the CA reconsider and set aside the dismissal of her petition and to admit
her amended petition.[22] The CA then required Del-Nacia to submit its
comment to the petition.[23]
On
WHEREFORE, finding no flaw in the appealed O.P. Resolution, the same is hereby AFFIRMED in toto, with costs against Mrs. Nicolas.
SO ORDERED.
The Motion for Reconsideration[25]
filed by Mrs. Nicolas was denied by the CA in its Resolution dated
Hence, this Petition for Review on Certiorari[27],
raising the lone issue of:
“WHETHER OR NOT complainant (now petitioner) is bound to pay the interests, penalty interests and other stipulated charges based on the unilateral accounting or computation made by respondent.”[28]
The instant
petition prays that the O.P. Original Decision, which affirmed the HLURB Board
Decision, be reinstated by this Court.
In its Comment, Del-Nacia argues that the instant petition be
denied for the following reasons:
(1) failure to comply with
section 4, Rule 45, and (2) failure to
advance any special reason that would warrant the exercise by this Court of its
discretionary power of review.
Before
discussing the merits of the case, we shall first discuss its procedural
aspect.
Del-Nacia urges this Court to dismiss the instant petition
for failing to attach material portions of the records of the case that will
support the same as required under Section 6 of Rule 46 of the Revised Rules of
Court, such as, for instance, copies of her own pleadings filed before the
proceedings below.[29] It
appears that the Agreement of the parties, subject of the dispute, was not
attached to the petition. Nevertheless,
since the Agreement and the other documents that were not attached to the
petition are already part of the records of this case, and could easily be
referred to by this Court if necessary, a dismissal of the instant petition
purely on technical grounds is not warranted.
Indeed, the Court has, in past cases, granted relief in favor of the
petitioner despite this procedural infirmity.[30] Thus, we explained the rationale behind the
Court’s liberal stance as follows:
We
must stress that cases should be determined on the merits, after all parties
have been given full opportunity to ventilate their causes and defenses, rather
than on technicalities or procedural imperfections. In that way, the ends of
justice would be served better. Rules of procedure are mere tools designed to
expedite the decision or resolution of cases and other matters pending in
court. A strict and rigid application of rules, resulting in technicalities
that tend to frustrate rather than promote substantial justice, must be
avoided. In fact, Section 6 of Rule 1 states that the Rules shall be liberally
construed in order to promote their objective of ensuring the just, speedy and
inexpensive disposition of every action and
proceeding.[31]
Now on the merits of the case. The
issue is whether Mrs. Nicolas is liable to pay interests, penalty interests and
other stipulated charges to Del-Nacia.
We
rule in the affirmative.
Mrs. Nicolas contends that based on
the payments she already made, she has overpaid the purchase price due under
the Agreement.[32] She assails the application of her payments
made by Del-Nacia since the latter applied the bulk of her payments to interest
rather than the principal.[33] According to her, therefore, the penalties,
interests and surcharges being collected by Del-Nacia have no basis in fact or
in law.[34] In this regard, she urges this Court to
affirm the HLURB Board Decision[35]
which reads:
Cursory reading of the abovementioned document reveal that there is indeed no specific date indicated, as to when complainant should pay her monthly installments. It is clear that that the space provided for in Paragraph 1 of said document for the date or day of the month on which payment is to be made has been left blank.
Considering that the Land Purchase Agreement is a pro-forma document prepared by respondent, any ambiguity therein should be interpreted in favor of the complainant.
On the basis of the foregoing, we find that complainant did not incur any delay, hence, the imposition of surcharges and penalty interests are unjustified.[36]
According to Del-Nacia, however, Mrs.
Nicolas disregarded paying the regular rate of interest, overdue interest and
penalty interest which were voluntarily agreed upon under paragraphs (1), (5)
and (6), respectively, of their Agreement.[37] Del-Nacia contends that the records clearly
establish that Mrs. Nicolas was in delay in her payments of the monthly
amortizations and she has not disputed the same.[38]
As found by the HLURB Arbiter, the records of Del-Nacia shows
that Mrs. Nicolas incurred delay in the payment of her monthly amortizations.[39] It is a well-settled rule that factual
findings of administrative agencies are conclusive and binding on the Court
when supported by substantial evidence. We agree with the O.P. Resolution,[40]
which was adopted and affirmed by the CA, to wit:
Appellant’s [Del-Nacia] submission,
however, that appellee [Mrs. Nicolas] incurred delay in the manner of payment
of her monthly installment obligations is impressed with merit. The Housing Arbiter, in his evaluation as
trier of facts of appellee’s records of payment, was of the same view. Under #1 of the basic purchase agreement, supra, appellee undertook to pay “120 equal monthly installments” of
P9,189.45, “payments to be made on the __
day of each month thereafter beginning
Clearly,
under paragraphs (1), (5) and (6) of the Agreement, supra, Mrs. Nicolas was bound to pay regular interest, and in case
of delay, overdue interest and penalty.
It cannot be overemphasized that a contract is the law between the
parties,[42]
and courts have no choice but to enforce such contract so long as they are not
contrary to law, morals, good customs or public policy.[43]
In this connection, a stipulation for
the payment of interest and penalty apart from interest in case of delay is not
contrary to law, moral, good customs or public policy. To be sure, the same is sanctioned by the
following provisions of the Civil Code:
Article 1956. No interest shall be due unless it has been expressly stipulated in writing.
Article 1226. In obligations with a penal clause, the penalty shall substitute the indemnity for damages and the payment of interests in case of non-compliance, if there is no stipulation to the contrary.
Article 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon x x x.
In Bachrach Motor Company v. Espiritu,[44]
the Court ruled that the Civil Code permits the agreement upon a penalty apart
from the interest. Should there be such an agreement, the penalty does not
include the interest, and as such the two are different and distinct things
which may be demanded separately. The same principle was reiterated in Equitable Banking Corp. v. Liwanag et al.,[45]
where this Court held that the stipulation about payment of such additional
rate partakes of the nature of a penalty clause, which is sanctioned by law.
On Mrs.
Nicolas’ contention that she should not pay interest and the other charges
based on the unilateral accounting or computation made by Del-Nacia, a perusal
of the formula[46]
for the computation of regular interest, overdue interest and penalty interest
used by Del-Nacia reveal that the same is in accord with the provisions of the
Agreement and cannot be said to have been unilaterally imposed by
Del-Nacia.
Moreover, the case of Relucio v. Brillante-Garfin (Relucio),[47]
involves similar facts to the case at bar where we ruled as follows:
Examination of the record shows that the questioned Contract to Buy and Sell the subdivision lots provided for payment by private respondent of the sum of P200.00 as downpayment, and that "the balance [of P10,600.00] shall be paid in 180 monthly installments at P89.45 per month, including interest rate at six percent (6%) per annum, until the purchase price is fully paid." This stipulation clearly specified that an interest charge of six percent (6%) per annum was included in the monthly installment price: private respondent could not have helped noticing that P89.45 multiplied by 180 monthly installments equals P16,101.00, and not P10,600.00. The contract price of P10,800.00 may thus be seen to be the cash price of the subdivision lots, that is, the amount payable if the price of the lots were to be paid in cash and in full at the execution of the contract; it is not the amount that the vendor will have received in the aggregate after fifteen (15) years if the vendee shall have religiously paid the monthly installments. The installment price, upon the other hand, of the subdivision lots — the sum total of the monthly installments (i.e., P16,101.00) — typically, as in the instant case, has an interest component which compensates the vendor for waiting fifteen (15) years before receiving the total principal amount of P10,600.00. Economically or financially, P10,600.00 delivered in full today is simply worth much more than a long series of small payments totalling, after fifteen (15) years, P10,600.00. For the vendor, upon receiving the full cash price, could have deposited that amount in a bank, for instance, and earned interest income which at six percent (6%) per year and for fifteen (15) years, would precisely total P5,501.00 (the difference between the installment price of P16,101.00 — and the cash price of P10,600.00 — ) To suppose, as private respondent argues, that mere prompt payment of the monthly installments as they fell due would obviate application of the interest charge of six percent (6%) per annum, is to ignore that simple economic fact. That economic fact is, of course, recognized by law, which authorizes the payment of interest when contractually stipulated for by the parties or when implied in recognized commercial custom or usage.
Vendor and vendee are legally free to
stipulate for the payment of either the cash price of a subdivision lot or its
installment price. Should the vendee opt to purchase a subdivision lot via the
installment payment system, he is in effect paying interest on the cash price,
whether the fact and rate of such interest payment is disclosed in the contract
or not. The contract for the purchase and sale of a piece of land on the
installment payment system in the case at bar is not only quite lawful; it also
reflects a very wide spread usage or custom in our present day commercial life.[48]
In Relucio, the Court also sustained the seller’s theory of declining
balance whereby the seller credited a bigger sum of the monthly amortization to
interest rather than the principal, such that in “[During] the succeeding
monthly payments, however, as the outstanding balance on the principal
gradually declined, the interest component (in absolute terms) correspondingly
fell while the component credited to the principal increased proportionately,
thus amortizing the balance of the principal purchase price as that balance
gradually declined.”[49]
In the same vein, an examination of
the application of Mrs. Nicolas’ payments by Del-Nacia in the table[50]
the latter prepared as reflected in the records of the case, shows that the
same is in accord with the theory of declining balance which was affirmed by
this Court in Relucio.
Given the foregoing, it appears that the only dilemma which
Mrs. Nicolas currently finds herself in is that the obligations which she
voluntary
undertook under the Agreement turned out to be more onerous than what she
expected. Doctrinal is the rule that
courts may not extricate parties from the necessary consequences of their acts.[51]
That the terms of a contract turn out to be financially disadvantageous to them
will not relieve them of their obligations therein.[52]
IN VIEW
WHEREOF, the petition is DISMISSED. The decision of the Court
of Appeals is affirmed. Costs against
the petitioner.
SO ORDERED.
REYNATO S. PUNO
Chief Justice
WE CONCUR:
TERESITA J.
LEONARDO-DE CASTRO
Associate
Justice
Pursuant to
Section 13, Article VIII of the Constitution, I certify that the conclusions in
the above decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
* On leave.
[1] Docketed as Case No. REM-C-03-4-974, CA rollo, pp. 88-92.
[30] Paredes, et al. v. Verano, et al, G.R. No. 164375, October 12, 2006, 504 SCRA 264; Cortez-Estrada v. Heirs of Samut, G.R. No. 154407, February 14, 2005, 451 SCRA 275.
[31] Posadas-Moya
and Associates Construction Co., Inc v. Greenfield Development Corporation et
al., 451 Phil. 647, 661 (2003).
[46] The formula used by Del-Nacia is as follows (CA rollo, p. 234):
a. Regular interest of 18% per annum under par. 1 of the Land Purchase Agreement:
18% Regular Interest = Running Balance x 18% x 30 days/360
b. Overdue interest of 18% per annum under par. 5 of the Land Purchase Agreement:
18% Overdue Interest = Monthly amortization x 18% x days delayed/ 360
c. Penalty interest of 12% per annum under par. 6 of the Land Purchase Agreement:
12% Penalty Interest = Overdue Interest + Regular Interest + Previous Running Balance x
12% x days delayed/360
[47] G.R. No. 76518,