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EGMPC v CA

In a land development agreement, Eternal Gardens Memorial Park Corporation (EGMPC) undertook to develop a
parcel of land owned by the North Philippine Union Mission of the Seventh Day Adventists (NPUM) into a
memorial park subdivided into lots. Later, the Maysilo Estate and the heirs of Vicente Singson Encarnacion claimed
ownership over the land. EGMPC led an action for interpleader against Maysilo Estate and NPUM before the
Regional Trial Court of Kalookan City, while the Singson heirs led an action for quieting of title against EGMPC
and NPUM before the same court. In the consolidated cases, the trial court in the interpleader case dismissed the
claims of the intervenors and declared the titles of NPUM valid. On review, before the Court of Appeals the trial
court's decision in the interpleader case was affimed, and the trial court's decision in the quieting of title case in
favor of the Singson heirs was reversed and set aside. On petition for review, the Supreme Court settled with finality
the ownership of the property to NPUM and remanded the case to the Court of Appeals for mutual accounting. The
Court of Appeals referred, with concurrence of the parties, the accounting of the parties' respective obligations to its
accountant. On January 15, 1996, the CA in a resolution approved the report of the Court's accountant. EGMPC
received a copy of this Resolution on January 22, 1996. On February 2, 1996, EGMPC led its Motion for
Reconsideration. On April 18, 1996, EGMPC received the appellate court's resolution of April 12, 1996 denying its
Motion for Reconsideration. On April 29, 1996, EGMPC led a motion for extension of time to file its Petition for
Certiorari and Prohibition' and concurrently paid the legal fees. On May 27, 1996, EGMPC led the instant recourse
contending that the appellate court, in appointing an accountant to make the computations delegated judicial
function. NPUM, on the other hand, questions the timeliness of the petition.

EGMPC's Motion for Extension of Time to File a Petition Review was timely led on April 29, 1996, such motion
having been led eleven days from receipt of the appellate court's denial of its motion for reconsideration. Supreme
Court Circular No. 10 dated August 28, 1986 on modes and periods of appeal provides the in the event a motion for
reconsideration is led and denied, the period of fifteen days begins to run again from notice of denial.

No judicial function was exercised by the accountant who was designated by the court "to receive, collate and
analyze the documents to be filed by the parties." She was not asked to rule on the admissibility of the evidence.
While it may be true the report, when adopted by the appellate court, became part of its decision, judicial power lies,
not with the official who prepared the report, but with the court itself which wields the power of approval or
rejection.

Issue: EGMPC lastly contends that it is not liable for interest. It claims that it was justified in withholding payment
as there was still the unresolved issue of ownership over the property subject of the Land Development Agreement
of October 6, 1976.

Held: The argument is without merit. EGMPC under the agreement had the obligation to remit monthly to NPUM
forty percent (40%) of its net gross collection from the development of a memorial park on property owned by
NPUM. The same agreement provided for the designation of a depository/trustee bank to act as the
depository/trustee for all funds collected by EGMPC. There was no obstacle, legal or otherwise, to the compliance
by EGMPC of this provision in the contract, even on the affectation that it did not know to whom payment was to be
made.

Even disregarding the agreement, EGMPC cannot "suspend" payment on the pretext that it did not know who
among the subject property's claimants was the rightful owner. It had a remedy under the New Civil Code of the
Philippines to give in consignation the amounts due, as these fell due. 68 68 Consignation produces the effect of
payment.
The rationale for consignation is to avoid the performance of an obligation becoming more onerous to the debtor by
reason of causes not imputable to him. For its failure to consign the amounts due, Eternal Gardens' obligation to
NPUM necessarily became more onerous as it became liable for interest on the amounts it failed to remit.

Notably, EGMPC led an interpleader action, "the essence of which, aside from the disavowal of interest in the
property in litigation on the part of the petitioner, is the deposit of the property or funds in controversy with the
court." Yet from the outset, EGMPC had assailed any court ruling ordering the deposit with a reputable bank of the
amounts due from it under the Land Development Agreement. In G.R. No. 73794, the Court made the following
discourse on the disavowal of EGMPC of its obligations, thus:

In the case at bar, a careful analysis of the records will show that petitioner admitted among others in its
complaint in Interpleader that it is still obligated to pay certain amounts to private respondent; that it claims no
interest in such amounts due and is willing to pay whoever is declared entitled to said amounts.

Even during the pendency of G.R. No. 73794, EGMPC was required to deposit the accruing interests with a
reputable commercial bank "to avoid possible wastage of funds" when the case was given due course. 72 72 Yet,
EGMPC hedged in depositing the amounts due and made obvious attempts to stay payment by filing sundry motions
and pleadings.

We thus find that the Court of Appeals correctly held Eternal Gardens liable for interest at the rate of twelve percent
(12%). The withholding of the amounts due under the agreement was tantamount to a forbearance of money.

CONSIDERING THE FOREGOING, the Court Resolved to DENY the petition. The Resolutions dated January 15,
1996 and April 12, 1996 are AFFIRMED. The temporary restraining order issued by this Court on January 15, 1997
is LIFTED.

RAYOS v REYES

Petitioner assailed the decision of the Court of Appeals which armed in toto the Decision of the Regional Trial
Court of Alaminos, Pangasinan declaring void the separate Deeds of Absolute Sale executed by Francisco Tazal in
favor of Blas Rayos, and to spouses Teolo and Simeona Rayos and by Blas Rayos to the same spouses, all
encompassing the three parcels of land sold under the Deed of Sale with Right to Repurchase in favor of Mamerto
Reyes, predecessor-in-interest of the respondents. In its Decision, the trial court declared the respondents, heirs of
Mamerto Reyes, as absolute owners of the subject property and ordered petitioner-spouses to vacate and surrender
the subject lot in favor of the respondents. It rationalized that petitioners did not present any evidence to prove that
they and their predecessor-in-interest were able to repurchase the property within the period of redemption.

Issue: Among others, petitioners argued that the consignation of P724.00 in the civil case provides the best evidence
of the repurchase of the subject property and had the full eect of redeeming the properties from respondents and
their predecessors-in-interest.

Held: The Court denied the petition and armed the decision of the Court of Appeals arming in toto the decision
of the court a quo, except for the sole modication to delete and set aside the award of damages. The Court found no
evidence to prove that petitioners paid at any time the repurchase price for the three parcels of land in dispute except
for the deposit of P724.00 in the then Court of First Instance which, however, fell short of all the acts necessary for a
valid consignation and discharge of their obligation to respondents. First, petitioners failed to oer a valid and
unconditional tender of payment. Consignation and tender of payment must not be encumbered by conditions if they
are to produce the intended result of fullling the obligation. Here, petitioners' tender of payment of P724.00 was
conditional upon his waiver of the two-year redemption period stipulated in the deed of sale with right to repurchase.
Second, petitioners failed to notify respondents of the intention to deposit the amount with the court. The
consignation as a means of payment is void without any announcement of the intention to resort to consignation rst
being made to the persons interested in the fulllment of the obligation. Third, petitioners failed to show the
acceptance by the creditor of the amount deposited as full settlement of the obligation, or in the alternative, a
declaration by the court of the validity of the consignation. While it was held that the approval of the court or the
obligee's acceptance of the deposit is not necessary where the obligor has performed all acts necessary to a valid
consignation such that court approval thereof cannot be doubted, the ruling is, however, applicable only where there
is unmistakable evidence on record that the prerequisites of a valid consignation are present, especially the
conformity of the proered payment to the terms of the obligation which is to be paid. In the instant case, there was
no clear and preponderant evidence that the consignation of P724.00 satised all the requirements for validity and
enforceability. Mamerto Reyes likewise vehemently contested the propriety of the consignation. Petitioners,
therefore, cannot rely upon sheer speculation and unfounded inference to construe the Decision of the then Court of
First Instance as one impliedly approving the consignation and perfecting the redemption of the three parcels of
land. Thus, the Court held that the failure of the petitioners to comply with the requirements rendered the
consignation ineective.

BADAYOS v CA

On 9 March 1973, petitioner executed in favor of private respondents spouses a Deed of Sale With The Right to
Repurchase over her undivided half portion of Lot No. 3493 of the Talisay-Minglanilla Estate located at Tabunok,
Talisay, Cebu for a consideration of Seven Thousand Four Hundred Pesos (P7,400.00); the sale was made subject to
the following stipulation:

"That it is the essence of this contract that the vendor, Clara Badayos has the right to repurchase the above
described property after two (2) years from and after the execution of this contract for the same amount of SEVEN
THOUSAND FOUR HUNDRED PESOS (P7,400.00)."

Two (2) years after the execution of the document in question, or specifically on 17 April 1975, private respondents
filed with the then Court of First Instance (now Regional Trial Court) of Cebu an action, docketed as Civil Case No.
14516, to consolidate ownership over the property in question; it is alleged therein that "the two years (sic) period
from March 9, 1973 had already elapsed but defendant never repurchased the said property in violation of the
contract of p a c t o d e R e t r o Sale."

In her Answer With Counterclaim, petitioner, as defendant, alleges, in t e r alia , that: (1) the document in question is
actually an equitable mortgage intended to secure her loan of P4,000.00 from private respondents who charged an
interest of P3,400.00; (2) after the expiration of the two-year period counted from 9 March 1973, she approached the
private respondents to request for an extension of time within which to pay the obligation, which was granted, as she
was waiting for the approval of the loan of her daughter in the amount of P30,000.00 with the Philippine National
Bank; (3) she owns the property in question and is in possession thereof, enjoying its fruits, and paying the taxes
thereon; (4) the piece of land, located in the commercial district of Tabunok, Talisay, Cebu, is classified as
residential and has a commercial value of P100.00 per square meter; and (6) the private respondents are lessees
thereof, paying rentals of P18.00 only annually, for a term of 20 years to expire in 1976."

In their Reply, private respondents deny that the document in question is an equitable mortgage and that they had
granted the petitioner an extension of time within which to pay her obligation.

RTC ruled in favour of Badayo, but CA reversed such decision, since petitioner abandoned her theory of equitable
mortgage, she should have exercised her right of redemption within two (2) years from 9 March 1973, or on or
before 9 March 1975. Since she failed to do so, she lost that right.
Issue: Whether or not petitioner was able to repurchase the property in question within the period stipulated in the
deed of sale with right to repurchase.

Held: The foregoing stipulation is clear and needs no further interpretation; hence, its literal meaning is binding. It
simply means that petitioner can redeem the property in question "AFTER TWO (2) years from and after the
execution of the contract," NOT WITHIN two (2) years from such execution. Since the contract was executed on 9
March 1973, petitioner can redeem the property only a f t e r 9 M a r c h 1 9 7 5 . The rule in this jurisdiction is that
if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal
meaning of its stipulations shall control. And the period within which to exercise the right is within four (4) years as
per Article 1606 of the New Civil Code.

ADELFA PROPERTIES, INC. v CA et al

FACTS: Private respondents and their brothers Jose and Dominador were the registered CO-OWNERS of a parcel
of land in Las Pinas, covered by a TCT.
Jose and Dominador sold their share (eastern portion of the land) to Adelfa. Thereafter, Adelfa expressed interest in
buying the western portion of the property from private respondents herein. Accordingly, an exclusive Option to
Purchase was executed between Adelfa and Private respondents and an option money of 50,000 was given to the
latter.

A new owners copy of the certificate of title was issued (as the copy with respondent Salud was lost) was issued but
was kept by Adelfas counsel, Atty. Bernardo.

Before Adelfa could make payments, it received summons as a case was filed (RTC Makati) against Jose and
Dominador and Adelfa, because of a complaint in a civil case by the nephews and nieces of private respondents
herein. As a consequence, Adelfa, through a letter, informed the private respondents that it would hold payment of
the full purchase price and suggested that they settle the case with their said nephews and nieces. Salud did not heed
the suggestion; respondents informed Atty. Bernardo that they are canceling the transaction. Atty Bernardo made
offers but they were all rejected.

RTC Makati dismissed the civil case. A few days after, private respondents executed a Deed of Conditional Sale in
favor of Chua, over the same parcel of land.

Atty Bernardo wrote private respondents informing them that in view of the dismissal of the case, Adelfa is willing
to pay the purchase price, and requested that the corresponding deed of Absolute Sale be executed. This was ignored
by private respondents.

Private respondents sent a letter to Adelfa enclosing therein a check representing the refund of half the option money
paid under the exclusive option to purchase, and requested Adelfa to return the owners duplicate copy of Salud.
Adelfa failed to surrender the certificate of title, hence the private respondents filed a civil case before the RTC
Pasay, for annulment of contract with damages. The trial court directed the cancellation of the exclusive option to
purchase. On appeal, respondent CA affirmed in toto the decision of the RTC hence this petition.

ISSUE:
1. WON the agreement between Adelfa and Private respondents was strictly an option contract
2. WON Article 1590 applies in this case, thereby justifiying the refusal by Adelfa to pay the balance of the
purchase price
3. WON Private respondents could unilaterraly and prematurely terminate the option period, if indeed it is a
option contract, as the option period has not lapsed yet.

HELD: The judgement of the CA is AFFIRMED


1. NO. The agreement between the parties is a contract to sell, and not an option contract or a contract of sale.
Contract to SELL

by agreement the ownership is reserved in the vendor and is not to pass until the full payment of the price

title is retained by the vendor until the full payment of the price, such payment being a positive

Contract of SALE

the title passes to the vendee upon the delivery of the thing sold

the vendor has lost and cannot recover ownership until and unless the contract is resolved or rescinded

There are two features which convince us that the parties never intended to transfer ownership to petitioner except
upon the full payment of the purchase price.

(1) the exclusive option to purchase, although it provided for automatic rescission of the contract and partial
forfeiture of the amount already paid in case of default, does not mention that petitioner is obliged to
return possession or ownership of the property as a consequence of non-payment.
(2) Secondly, it has not been shown there was delivery of the property, actual or constructive, made to
herein petitioner. The exclusive option to purchase is not contained in a public instrument the execution
of which would have been considered equivalent to delivery. Neither did petitioner take actual, physical
possession of the property at any given time. It is true that after the reconstitution of private respondents
certificate of title, it remained in the possession of petitioners counsel, Atty. Bayani L. Bernardo, who
thereafter delivered the same to herein petitioner. Normally, under the law, such possession by the
vendee is to be understood as a delivery. 18 However, private respondents explained that there was
really no intention on their part to deliver the title to herein petitioner with the purpose of transferring
ownership to it. They claim that Atty. Bernardo had possession of the title only because he was their
counsel in the petition for reconstitution.

In effect, there was an implied agreement that ownership shall not pass to the purchaser until he had
fully paid the price in this case.

The important task in contract interpretation is always the ascertainment of the intention (parties
never intended to transfer ownership to petitioner except upon the full payment of the purchase price) of
the contracting parties and that task is, of course, to be discharged by looking to the words they used to
project that intention in their contract. The title of a contract does not necessarily determine its true
nature. Hence, the fact that the document under discussion is entitled Exclusive Option to Purchase is
not controlling where the text thereof shows that it is a contract to sell.

The test in determining whether a contract is a contract of sale or purchase or a mere option is
whether or not the agreement could be specifically enforced. There is no doubt that the
obligation of petitioner to pay the purchase price is specific, definite and certain, and consequently
binding and enforceable. Had private respondents chosen to enforce the contract, they could have
specifically compelled petitioner to pay the balance of P2M. This is distinctly made manifest in the
contract itself as an integral stipulation, compliance with which could legally and definitely be
demanded from petitioner as a consequence.

While there is jurisprudence to the effect that a contract which provides that the initial payment shall
be totally forfeited in case of default in payment is to be considered as an option contract, still we
are not inclined to conform with the findings of respondent court and the court a quo that the
contract executed between the parties is an option contract, for the reason that the parties
were already contemplating the payment of the balance of the purchase price, and were not
merely quoting an agreed value for the property. The term balance, connotes a remainder or
something remaining from the original total sum already agreed upon.

In other words, the alleged option money was actually earnest money which was intended to form
part of the purchase price. The amount was not distinct from the cause or consideration for the sale
of the property, but was itself a part thereof.

2. Such being the case, petitioner was justified in suspending payment of the balance of the purchase price by reason
of the aforesaid vindicatory action filed against it. The assurance made by private respondents that petitioner did not
have to worry about the case because it was pure and simple harassment is not the kind of guaranty contemplated
under the exceptive clause in Article 1590 wherein the vendor is bound to make payment even with the existence of
a vindicatory action if the vendee should give a security for the return of the price.

3. YES. The private respondents may no longer be compelled to sell and deliver the subject property to petitioner for
two reasons, that is, petitioners failure to duly effect the consignation of the purchase price after the disturbance had
ceased; and, secondarily, the fact that the contract to sell had been validly rescinded by private respondents.

The mere sending of a letter by the vendee expressing the intention to pay, without the
accompanying payment, is not considered a valid tender of payment. Besides, a mere tender of
payment is not sufficient to compel private respondents to deliver the property and execute the deed
of absolute sale. It is consignation which is essential in order to extinguish petitioners obligation to
pay the balance of the purchase price.

Furthermore, petitioner no longer had the right to suspend payment after the disturbance ceased with
the dismissal of the civil case filed against it. Necessarily, therefore, its obligation to pay the balance
again arose and resumed after it received notice of such dismissal.

Furthermore, judicial action for rescission of a contract is not necessary where the contract provides
for automatic rescission in case of breach, as in the contract involved in the present controversy.

DE MESA v CA

Petitioners Dolores Ligaya de Mesa owns several parcels of land which were mortgaged to the Development Bank
of the Philippines (DBP) as security for the loan she obtained from the bank. Failing to pay all her mortgage debts,
all her mortgaged properties were foreclosed and sold at public auction. In all said auction sales, DBP was the
winning bidder. Petitioner requested DBP that she be allowed to repurchase her foreclosed properties. In the
meantime, petitioner sold the foreclosed properties to private respondent OSSA House Inc. (OSSA), under a "Deed
of Sale with Assumption of Mortgage," under the condition that the latter was to assume the payment of the
mortgage on installment basis. DBP granted petitioner's request to repurchase the foreclosed properties. Private
respondent OSSA paid DBP the first to eight quarterly installments in the total amount of P137,593.31, which
installment payments were applied to petitioner's obligation with the DBP.

After OSSA paid the eighth quarterly installment, petitioner notified private respondent OSSA that she was
rescinding the Deed of Sale with Assumption of Mortgage in favor of the latter on the ground that OSSA failed to
comply with the terms and conditions of their agreement. OSSA offered to pay the difference between the purchase
price and the mortgage obligation to DBP after deducting the down payment as stipulated in the Deed of Sale with
Assumption of Mortgage, but petitioner refused to accept such payment.

OSSA filed a complaint for consignation against the petitioner. DBP, likewise, refused to accept the 9th quarterly
installment paid by OSSA, forcing the latter to file against DBP and petitioner a case for specific performance and
consignation. The two cases were eventually consolidated upon petitioner's motion. The trial court rendered a
decision declaring the consignation of OSSA proper and valid and ordered de Mesa and DBP to withdraw and
receive said payments due them which OSSA had consigned with the court. Petitioner appealed to the Court of
Appeals. The appellate court modified the trial court's decision declaring the consignation valid only as far as
petitioner de Mesa is concerned and ordered de Mesa to receive the said amount consigned with the court and pay
DBP the said amount. Petitioner de Mesa filed a motion for reconsideration but was denied. Hence, the present
petition.

Issue: Petitioner insisted that what she sold to respondent OSSA was merely the right to redeem the foreclosed
properties and not the foreclosed properties themselves.

Held: NO. The Supreme Court affirmed the decision of the Court of Appeals. The Court ruled that the terms of the
"Deed of Sale with Assumption of Mortgage" are clear and leave no doubt as to what was sold thereunder. Nowhere
is it provided in the deed, as the petitioner insisted that what she sold to respondent OSSA was merely the right to
redeem the mortgaged properties and not the foreclosed properties themselves. According to the Court, the contract
was so explicit and unambiguous that it does not justify any attempt to read into it any supposed intention of the
parties, as the said contract is to be understood literally, just as they appear on its face.

1. CIVIL LAW; CONTRACTS; INTERPRETATION OF CONTRACTS; THE CONTRACT UNDER


SCRUTINY IS SO EXPLICIT AND UNAMBIGUOUS THAT IT DOES NOT JUSTIFY ANY
ATTEMPT TO READ INTO IT ANY SUPPOSED INTENTION OF THE PARTIES, AS THE SAID
CONTRACT IS TO BE UNDERSTOOD LITERALLY, JUST AS THEY APPEAR ON ITS FACE.

2. FOR REASONS OF EQUITY, THE PROCEDURAL REQUIREMENTS OF CONSIGNATION ARE


DEEMED COMPLIED WITH IN THE PRESENT CASE. Petitioner next argues that there was no
notice to her regarding OSSA's consignation of the amounts corresponding to the 12th up to the 20th
quarterly installments. The records, however, show that several tenders of payment were consistently
turned down by the petitioner, so much so that the respondent OSSA found it pointless to keep on
making formal tenders of payment and serving notices of consignation to petitioner. Moreover, in a
motion dated May 7, 1987, OSSA prayed before the lower court that it be allowed to deposit by way of
consignation all the quarterly installments, without making formal tenders of payment and serving
notice of consignation, which prayer was granted by the trial court in the Order dated July 3, 1982.
The motion and the subsequent court order served on the petitioner in the consignation proceedings
sufficiently served as notice to petitioner of OSSA's willingness to pay the quarterly installments and
the consignation of such payments with the court. For reasons of equity, the procedural requirements of
consignation are deemed substantially complied with in the present case.