Sasa-Akiyama v. Spouses Casal

THIRD DIVISION

[G.R. No. 216573. April 18, 2016.]

LEONORA SASA-AKIYAMA, petitioner, vs. SPOUSES ROMEO AND TERESITA CASAL, respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, Third Division, issued a Resolution datedApril 18, 2016, which reads as follows:

"G.R. No. 216573 (Leonora Sasa-Akiyama vs. Spouses Romeo and Teresita Casal). — This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside the Decision 1 dated March 25, 2014 and Resolution dated January 27, 2015 of the Court of Appeals (CA) in CA-G.R. CV No. 95786.

Petitioner Leonora Sasa-Akiyama bought a house and lot located in Multinational Village Subdivision, Moonwalk, Parañaque City (the subject property) from respondent spouses Romeo and Teresita Casal for P1,700,000, the amount of P300,000 payable upon contract signing and the balance payable in monthly installments. The conveying Contract to Sell 2 the parties signed on December 14, 1999 (First Contract to Sell) contained the following payment terms:

Article 1. PURCHASE PRICE AND MANNER OF PAYMENT

xxx xxx xxx

1.01. The purchase price of P1,700,000.00 shall be paid at the principal office of the SELLER or at such other place as the SELLER shall designate in writing and without need of demands or the services of a collector, as follows:

a) The sum of THREE HUNDRED THOUSAND PESOS (P300,000.00) upon signing of this Contract, and;

b) The balance of ONE MILLION FOUR HUNDRED THOUSAND PESOS (P1,400,000.00) shall be paid within eight (8) years in equal consecutive monthly installments of THIRTY TWO THOUSAND NINE HUNDRED EIGHTEEN AND THIRTY SEVEN CENTS (P32,918.37) until the principal sum shall have been paid; with interest on all deferred payments at the rate of 2% per month payable each month as the principal is paid. The first installment and interest shall become due and payable without need of demand, on January 15, 2000 and the succeeding monthly installments to be paid every month thereafter until the remainder of the purchase price including interests due has been paid in full.

After paying the stipulated downpayment, petitioner made periodic, albeit irregular, installment payments. However, from October 2002 to April 2003, respondents allegedly refused to accept petitioner's monthly payments since the latter breached their contract by failing to pay her monthly amortizations on time. In March 2003, respondent Teresita Casal filed a complaint with the Barangay Lupon of Moonwalk, Parañaque City, and allegedly threatened to eject petitioner and her family from the subject property.

To settle the impasse between them, the parties executed on June 25, 2003 another Contract to Sell 3 (Second Contract to Sell), wherein petitioner obligated herself to pay this time the principal amount of P1,010,000 for the same property with 2% interest per month, which is equivalent to P39,625.20 monthly payments for three years inclusive of interest, and 5% penalty interest on late payments, to wit:

ARTICLE 1 — PURCHASE PRICE AND MANNER OF PAYMENT

1.01 For and in consideration of the sum of ONE MILLION TEN THOUSAND PESOS (PhP1,010,000.00) payable in installments in the manner herein below specified, the SELLER hereby sells, transfers and conveys unto and in favor of the BUYER, her heirs, executors, administrators and assigns, the above-described parcel of land together with the improvements existing thereon;

1.02 The purchase price of ONE MILLION TEN THOUSAND PESOS (PhP1,010,000.00) shall be paid . . . without need of demands or the services of a collector, as follows:

a) That the balance of ONE MILLION TEN THOUSAND PESOS (PhP1,010,000.00) shall be paid within three (3) years in equal consecutive monthly installments of THIRTY NINE THOUSAND SIX HUNDRED TWENTY FIVE AND TWENTY CENTAVOS (PhP39,625.20) until the principal sum shall have been paid, with an interest of two percent (2%) per month. All late payments shall be subject to five percent (5%) penalty charges per month. The first installment and interest shall become due and payable without need of demand on June 30, 2003 and the succeeding monthly installments to be paid every month thereafter until the remainder of the purchase price, including interests due has been paid in full. (emphasis supplied)

Petitioner then remitted payments until August 2004, albeit demand notices were already sent on April 22, 2004 and June 18, 2004. However, on January 6, 2005, petitioner filed a suit for Specific Performance with Damages against respondents with the Regional Trial Court (RTC) of Parañaque City, Branch 196.

In her Complaint, petitioner claimed that, as of August 2004, she already paid the total amount of P2,270,500 to respondents, the figure representing the principal obligation and monthly interest of 2%. She contended that the interest and penalty charges are unconscionable, exorbitant, and inequitable, and that by reason thereof, she overpaid P530,788 since the principal obligation was only for P1,700,000. She thus prayed that: a) the interest and penalty charges stipulated in the First and Second Contracts to Sell be declared null and void; b) respondents be ordered to execute a Deed of Absolute Sale in her favor and to transfer the title of the subject property to her name; c) respondents be ordered to return the overpayments in an amount not less than P530,788 plus legal interest; and d) respondents be ordered to pay moral and exemplary damages, attorney's fees and cost of the suit.

Answering, respondents, as defendants, asserted that petitioner had breached her obligations under the First Contract to Sell, which was novated by the Second Contract to Sell. Consequently, they demanded payment for the balance due as of date. CAIHTE

Petitioner then filed an Amended Complaint, 4 praying for the declaration of nullity of the Second Contract to Sell instead. She also sought the reformation of the First Contract to Sell to conform to the true intention of the parties, or in the alternative, to declare the interest payments therein as iniquitous and unconscionable and to reduce the same to 12% per annum.

Ruling of the RTC

In its Decision 5 in Civil Case No. CV-05-0007 dated May 17, 2010, the RTC upheld the validity of the Second Contract to Sell and dismissed the complaint for lack of merit. Petitioner moved for reconsideration, but the RTC denied the motion per its Order dated August 4, 2010.

Ruling of the CA

The CA affirmed with modification the trial court's Decision. It deleted the unconscionable 5% monthly penalty interest under the Second Contract to Sell. The fallo of the CA Decision dated March 25, 2014 reads:

WHEREFORE, premises considered, the Decision dated May 17, 2010 of the Regional Trial Court, Branch 196, Parañaque City, and the subsequent Order dated August 4, 2010, in Civil Case No. 05-0007, are MODIFIED in that the penalty interest under the second Contract to Sell is hereby DELETED.

SO ORDERED.

Petitioner moved for reconsideration, but the CA denied the motion in its Resolution dated January 27, 2015.

Hence, this petition.

Petitioner submits that her consent to the Second Contract to Sell was vitiated since, as alleged, she signed it under threat of forfeiture of payments made under the First Contract to Sell and ejectment from the subject property. In addition, petitioner states that respondent Teresita Casal misrepresented that her (petitioner) outstanding obligation as of June 25, 2003 was P1,010,000. Thus, the execution of the Second Contract to Sell, so petitioner claims, was allegedly attended by fraud, mistake, and intimidation, factors which vitiated her consent thereto.

In their Comment dated July 6, 2015, respondents deny having intimidated or influenced petitioner into signing the Second Contract to Sell and pray for the reinstatement of the 5% monthly penalty interest.

The sole issue for the resolution of the Court boils down to the validity of the Second Contract to Sell, which in turn resolves itself into the question of the existence of consent-vitiating factors.

The petition is denied.

To secure the annulment of the Second Contract to Sell, petitioner must prove the existence of elements which vitiate consent as provided in Article 1390 of the Civil Code, which states:

ART. 1390. The following contracts are voidable or annullable, even though there may have been no damage to the contracting parties:

xxx xxx xxx

(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.

Under Article 1335 6 of the Code, there is intimidation when one of the contracting parties is compelled by a reasonable and well-grounded fear of an imminent and grave evil upon his person or property, or upon the person or property of his spouse, descendants or ascendants, to give his consent. A threat to enforce one's claim through competent authority, if the claim is just or legal, does not vitiate consent. 7 DETACa

Spouses Binua v. Ong8 teaches that intimidation may be considered as vitiating consent and thus render the contract invalid if the following requisites are present: (1) that the intimidation must be the determining cause of the contract, or must have caused the consent to be given; (2) that the threatened act be unjust or unlawful; (3) that the threat be real and serious, there being an evident disproportion between the evil and the resistance which all men can offer, leading to the choice of the contract as the lesser evil; and (4) that it produces a reasonable and well-grounded fear from the fact that the person from whom it comes has the necessary means or ability to inflict the threatened injury.

On the other hand, Article 1331 9 of the Civil Code provides that the mistake which vitiates consent should refer to the substance of the thing which is the object of the contract, or to those conditions which have principally moved one or both parties to enter into the contract. To invalidate consent on the ground of mistake, the error must be real and not one that could have been avoided by the party alleging it. The error must arise from facts unknown to him. He cannot allege an error which refers to a fact known to him or which he should have known by ordinary diligent examination of the facts. An error so patent and obvious that nobody could have made it, or one which could have been avoided by ordinary prudence, cannot be invoked by the one who made it in order to annul his contract. 10

Finally, the succeeding Article 1338 of the Code states that there is fraud when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to.

The elements which purportedly vitiated

None of the elements which vitiate consent obtain under the premises. Respondents' threats of forfeiture of petitioner's payments or her ejectment from the property, if this be the case, are insufficient to show that they employed intimidation upon her. Apart from petitioner's self-serving testimony, the records are bereft of evidence showing that respondents deprived her of her freewill or left her with no choice but to sign the contract.

In addition, the mistake petitioner alludes to refers to the amount of the balance of the principal obligation under the First Contract to Sell that was used in determining the purchase price under the Second Contract to Sell. However, petitioner could have easily avoided this mistake by exercising ordinary diligence, since all the facts and information necessary for the determination of the alleged proper amount were available to her. She could have raised the alleged discrepancy had she been vigilant in ascertaining the remaining balance of the total payments due under the First Contract to Sell.

For the same reason, petitioner's claim that respondents employed fraud in making her sign the second contract does not hold water. Fraud is never presumed.

The First Contract to Sell was novated

As a civil law concept, novation is defined as a mode of extinguishing an obligation by changing its objects or principal obligations, by substituting a new debtor in place of the old one, or by subrogating a third person to the rights of the creditor. 11 In Garcia, Jr. v. Llamas, 12 this Court held that for novation to take place, the following requisites must concur: (1) a previous valid obligation; (2) the agreement of all the parties to the new contract; (3) the extinguishment of the old contract; and (4) validity of the new one. There must be consent of all the parties to the substitution, resulting in the extinction of the old obligation and the creation of a valid new one.

As discussed, the Second Contract to Sell is valid, intended by the parties to replace the First Contract to Sell, the latter likewise valid and enforceable during its effectivity. The Second Contract to Sell changed, as it were, the principal obligation of petitioner, i.e., to pay respondents P1,010,000 with 2% interest per month for three years (or P39,625.20 monthly payments for 36 months) and 5% penalty interest on delayed payments, instead of the P1,300,000 remaining balance of the full initial purchase price of P1,700,000, with 2% interest on deferred payments, under the First Contract to Sell.

The 5% penalty interest per month is

Respondents' plea for the reinstatement of the stipulated 5% monthly penalty interest cannot be granted inasmuch as they did not appeal from the CA Decision decreeing the deletion of the 5% penalty charges assessment. Under Article 1229 13 of the Civil Code, penalties in obligations may be equitably reduced when the principal obligation has been partly or irregularly complied with by the debtor, or even if there has been no performance, if the same is iniquitous or unconscionable. In this case, the 2% monthly interest already translates to 24% annual interest. The imposition of additional interest as a penalty at the rate of 5% monthly is already unconscionable and iniquitous.

In lieu of the 5% a month penalty interest, a 6% interest per annum on the unpaid balance is warranted for petitioner's delayed payments, as provided under Article 2209 of the Civil Code:

Art. 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, and in the absence of stipulation, the legal interest, which is six per cent per annum. aDSIHc

While petitioner failed to pay her monthly amortizations on time, delinquency in payment does not necessarily mean delay in the legal concept. 14 Interest accrues from the time judicial or extrajudicial demand was made on the obligor, in accordance with the provisions of Article 1169 15 of the Civil Code. Thus, where there has been an extra-judicial demand before a suit for performance was filed, interest on the amount thus due begins to run, not from the date of the filing of the complaint, but from the date of that extra-judicial demand. 16

Respondents demanded payment for petitioner's arrears on three separate occasions. Two extra-judicial demands were made through a Delinquency Notice dated April 22, 2004 for the arrears falling within the period of June 25, 2003 to March 30, 2004, and a Notice of Balance dated June 18, 2004 for the arrears as of the said date. On the other hand, respondents' Answer dated February 21, 2005 constituted a judicial demand to pay the balance due as of that date. The 6% interest per annum for the delayed payments, thus, should be imposed on the arrears reckoned from the respective dates of demand.

Based on the records, the total payments made by petitioner from the execution of the Second Contract to Sell on June 25, 2003 amounted to an aggregate of P487,000, as follows:

	Exhibit	Date of Payment	Amount Paid
	G-42	July 8, 2003	P35,000.00
	G-43	August 29, 2003	P40,000.00
	G-44	September 22, 2003	P50,000.00
	G-45	October 10, 2003	P45,000.00
	G-46	October 28, 2003	P10,000.00
	G-47	October 31, 2003	P8,000.00
	G-48	November 11, 2003	P15,000.00
	G-49	December 27, 2013	P15,000.00
	G-50	February 28, 2004	P10,000.00
	G-51	March 14, 2004	P5,000.00
	G-52	March 24, 2004	P20,000.00
	G-53	April 2, 2004	P25,000.00
	G-54	May 5, 2004	P30,000.00
	G-55	May 20, 2004	P10,000.00
	G-56	May 24, 2004	P22,000.00
	G-57	June 2, 2004	P25,000.00
	G-58	June 16, 2004	P60,000.00
	G-59	June 18, 2004	P12,000.00
	G-60	June 24, 2004	P10,000.00
	G-61	June 27, 2004	P8,000.00
	G-62	July 3, 2004	P5,000.00
	G-63	July 7, 2004	P15,000.00
	G-64	August 11, 2004	P12,000.00
Total payments made
under the Second Contract	P487,000.00
to Sell:

 

The payments claimed to have been made on July 25, 2004, July 30, 2004, and August 2, 2004 supposedly in the amounts of P18,000, P17,000, and P6,000, 17 respectively, and alleged to have been received by the respondents, are not supported by evidence. Any of the three (3) figures, therefore, cannot be considered in computing the total payments made under the Second Contract to Sell.

Petitioner's monthly amortization of P39,625.20 for 36 months translates to a total amount of P1,426,507.20. Deducting P487,000 from P1,426,507, petitioner still has a balance of P939,507.20 under the Second Contract to Sell, inclusive of the stipulated 2% interest per month on the diminishing principal. In addition, petitioner owes respondents for the interest on her monthly arrears covered by the notices of demand.

From the finality of the judgment awarding a sum of money until it is satisfied, the award shall be considered a forbearance of credit, regardless of whether the award in fact pertained to one. 18 Consistent with Nacar v. Gallery Frames, 19 and in accordance with Section 1 of Resolution 796 of the Monetary Board of the Bangko Sentral ng Pilipinas dated May 16, 2013, the rate of interest from the finality of judgment until satisfaction thereof shall be 6% per annum.

IN VIEW OF THE FOREGOING, the petition is DENIED. The Decision dated March 25, 2014 and Resolution dated January 27, 2015 of the Court of Appeals in CA-G.R. CV No. 95786 are hereby AFFIRMED with MODIFICATIONS.

1. Petitioner Leonora Sasa-Akiyama is hereby ordered to pay respondent spouses Romeo and Teresita Casal within sixty (60) days from receipt of this Resolution:

a) The unpaid balance of P939,507.20 under the Contract to Sell executed on June 25, 2003.

b) A 6% interest per annum on the respective balance due reckoned from April 22, 2004, June 18, 2004, and February 21, 2005 up to the finality of this Resolution.

c) A 6% legal interest per annum on the total amount due from the finality of this Resolution until fully paid. ETHIDa

2. Upon payment of the full amount, respondents shall immediately execute a Deed of Absolute Sale over the subject property and deliver the corresponding transfer certificate of title to petitioner.

SO ORDERED."

Very truly yours,

 

(SGD.) WILFREDO V. LAPITANDivision Clerk of Court

Footnotes

1. Penned by Associate Justice Victoria Isabel A. Paredes and concurred in by Associate Justices Isaias P. Dicdican and Michael P. Elbinias.

2. Rollo, pp. 151-154.

3. Id. at 155-158.

4. Records, pp. 286-290.

5. Penned by Judge Brigido Artemon M. Luna II.

6. Article 1335. There is violence when in order to wrest consent, serious or irresistible force is employed. There is intimidation when one of the contracting parties is compelled by a reasonable and well-grounded fear of an imminent and grave evil upon his person or property, or upon the person or property of his spouse, descendants or ascendants, to give his consent.

  To determine the degree of intimidation, the age, sex and condition of the person shall be borne in mind.

  A threat to enforce one's claim through competent authority, if the claim is just or legal, does not vitiate consent.

7. Spouses Victor and Euna Binua v. Ong, G.R. No. 207176, June 18, 2014.

8. G.R. No. 207176, June 18, 2014; citing De Leon v. Court of Appeals, 264 Phil. 711 (1990).

9. Article 1331. In order that mistake may invalidate consent, it should refer to the substance of the thing which is the object of the contract, or to those conditions which have principally moved one or both parties to enter into the contract.

  Mistake as to the identity or qualifications of one of the parties will vitiate consent only when such identity or qualifications have been the principal cause of the contract.

  A simple mistake of account shall give rise to its correction.

10. Alcasid v. Lim, G.R. No. 104751, October 7, 1994, 237 SCRA 419; citing 4 A.M. Tolentino, COMMENTARIES ON THE CIVIL CODE OF THE PHILIPPINES 486-487 (1991 ed.).

11. S.C. Megaworld Construction and Development Corporation v. Engr. Parada, G.R. No. 183804, September 11, 2013, 705 SCRA 584; citing Garcia v. Llamas, 462 Phil. 779, 788 (2003).

12. G.R. No. 154127, December 8, 2003.

13. Art. 1229. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable.

14. Social Security Systems v. Moonwalk Development and Housing Corporation, et al., G.R. No. 73345, April 7, 1993.

15. Art. 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation.

16. Gilat Satellite Network, Ltd. v. United Coconut Planters Bank General Insurance Co, Inc., G.R. No. 189563, April 7, 2014; citing Commonwealth Insurance Corporation v. Court of Appeals, 466 Phil. 104 (2004).

17. Rollo, p. 71.

18. ECE Realty and Development, Inc. v. Hernandez, G.R. No. 212689, August 6, 2014.

19. G.R. No. 189871, August 13, 2013, 703 SCRA 439.