[G.R. No. 129018.

November 15, 2001]

CARMELITA LEAÑO, assisted by her husband GREGORIO CUACHON, petitioner, vs. COURT OF
APPEALS and HERMOGENES FERNANDO, respondents.

DECISION
PARDO, J.:

The Case

The case is a petition for review on certiorari of the decision[1] of the Court of Appeals affirming that of
the Regional Trial Court, Malolos, Branch 7 [2] ordering petitioner Leaño to pay respondent Hermogenes
Fernando the sum of P183,687.70 corresponding to her outstanding obligations under the contract to sell,
with interest and surcharges due thereon, attorney’s fees and costs.

The Facts

On November 13, 1985, Hermogenes Fernando, as vendor and Carmelita Leaño, as vendee
executed a contract to sell involving a piece of land, Lot No. 876-B, with an area of 431 square meters,
located at Sto. Cristo, Baliuag, Bulacan.[3]
In the contract, Carmelita Leaño bound herself to pay Hermogenes Fernando the sum of one
hundred seven thousand and seven hundred and fifty pesos (P107,750.00) as the total purchase price of
the lot. The manner of paying the total purchase price was as follows:

“The sum of TEN THOUSAND SEVEN HUNDRED SEVENTY FIVE (P10,775.00) PESOS, shall be paid
at the signing of this contract as DOWN PAYMENT, the balance of NINETY SIX THOUSAND NINE
HUNDRED SEVENTY FIVE PESOS (P96,975.00) shall be paid within a period of TEN (10) years at a
monthly amortization of P1,747.30 to begin from December 7, 1985 with interest at eighteen per cent
(18%) per annum based on balances.”[4]

The contract also provided for a grace period of one month within which to make payments, together
with the one corresponding to the month of grace. Should the month of grace expire without the
installments for both months having been satisfied, an interest of 18% per annum will be charged on the
unpaid installments.[5]
Should a period of ninety (90) days elapse from the expiration of the grace period without the
overdue and unpaid installments having been paid with the corresponding interests up to that date,
respondent Fernando, as vendor, was authorized to declare the contract cancelled and to dispose of the
parcel of land, as if the contract had not been entered into. The payments made, together with all the
improvements made on the premises, shall be considered as rents paid for the use and occupation of the
premises and as liquidated damages.[6]
After the execution of the contract, Carmelita Leaño made several payments in lump sum.
[7]
Thereafter, she constructed a house on the lot valued at P800,000.00.[8] The last payment that she
made was on April 1, 1989.
 On September 16, 1991, the trial court rendered a decision in an ejectment case [9] earlier filed by
respondent Fernando ordering petitioner Leaño to vacate the premises and to pay P250.00 per month by
way of compensation for the use and occupation of the property from May 27, 1991 until she vacated the
premises, attorney’s fees and costs of the suit. [10] On August 24, 1993, the trial court issued a writ of
execution which was duly served on petitioner Leaño.
On September 27, 1993, petitioner Leaño filed with the Regional Trial Court of Malolos, Bulacan a
complaint for specific performance with preliminary injunction.[11] Petitioner Leaño assailed the validity of
the judgment of the municipal trial court [12] for being violative of her right to due process and for being
contrary to the avowed intentions of Republic Act No. 6552 regarding protection to buyers of lots on
installments. Petitioner Leaño deposited P18,000.00 with the clerk of court, Regional Trial Court,
Bulacan, to cover the balance of the total cost of Lot 876-B. [13]
On November 4, 1993, after petitioner Leaño posted a cash bond of P50,000.00,[14] the trial court
issued a writ of preliminary injunction[15] to stay the enforcement of the decision of the municipal trial court.
[16]

On February 6, 1995, the trial court rendered a decision, the dispositive portion of which reads:

“WHEREFORE, judgment is hereby rendered as follows:

“1. The preliminary injunction issued by this court per its order dated November 4, 1993 is hereby made
permanent;

“2. Ordering the plaintiff to pay to the defendant the sum of P103,090.70 corresponding to her outstanding
obligations under the contract to sell (Exhibit “A” – Exhibit “B”) consisting of the principal of said obligation
together with the interest and surcharges due thereon as of February 28, 1994, plus interest thereon at
the rate of 18% per annum in accordance with the provision of said contract to be computed from March
1, 1994, until the same becomes fully paid;

“3. Ordering the defendant to pay to plaintiff the amount of P10,000 as and by way of attorney’s fees;

“4. Ordering the defendant to pay to plaintiff the costs of the suit in Civil Case No. 1680 aforementioned.

“SO ORDERED.

“Malolos, Bulacan, February 6, 1995.

“(sgd.) DANILO A. MANALASTAS

Judge”[17]
On February 21, 1995, respondent Fernando filed a motion for reconsideration [18] and the
supplement[19] thereto. The trial court increased the amount of P103,090.70 to P183,687.00 and ordered
petitioner Leaño ordered to pay attorney’s fees.[20]
According to the trial court, the transaction between the parties was an absolute sale, making
petitioner Leaño the owner of the lot upon actual and constructive delivery thereof. Respondent
Fernando, the seller, was divested of ownership and cannot recover the same unless the contract is
rescinded pursuant to Article 1592 of the Civil Code which requires a judicial or notarial demand. Since
there had been no rescission, petitioner Leaño, as the owner in possession of the property, cannot be
evicted.
On the issue of delay, the trial court held:

“While the said contract provides that the whole purchase price is payable within a ten-year period, yet
the same contract clearly specifies that the purchase price shall be payable in monthly installments for
which the corresponding penalty shall be imposed in case of default. The plaintiff certainly cannot ignore
the binding effect of such stipulation by merely asserting that the ten-year period for payment of the whole
purchase price has not yet lapsed. In other words, the plaintiff has clearly defaulted in the payment of the
amortizations due under the contract as recited in the statement of account (Exhibit “2”) and she should
be liable for the payment of interest and penalties in accordance with the stipulations in the contract
pertaining thereto.”[21]

The trial court disregarded petitioner Leaño’s claim that she made a downpayment of P10,000.00, at
the time of the execution of the contract.
The trial court relied on the statement of account [22] and the summary[23] prepared by respondent
Fernando to determine petitioner Leaño’s liability for the payment of interests and penalties.
The trial court held that the consignation made by petitioner Leaño in the amount of P18,000.00 did
not produce any legal effect as the same was not done in accordance with Articles 1176, 1177 and 1178
of the Civil Code.
In time, petitioner Leaño appealed the decision to the Court of Appeals. [24] On January 22, 1997,
Court of Appeals promulgated a decision affirming that of the Regional Trial Court in toto.[25] On February
11, 1997, petitioner Leaño filed a motion for reconsideration. [26] On April 17, 1997, the Court of Appeals
denied the motion.[27]
Hence, this petition.[28]

The Issues

The issues to be resolved in this petition for review are (1) whether the transaction between the
parties is an absolute sale or a conditional sale; (2) whether there was a proper cancellation of the
contract to sell; and (3) whether petitioner was in delay in the payment of the monthly amortizations.

The Court’s Ruling

Contrary to the findings of the trial court, the transaction between the parties was a conditional sale
not an absolute sale. The intention of the parties was to reserve the ownership of the land in the seller
until the buyer has paid the total purchase price.
Consider the following:
First, the contract to sell makes the sale, cession and conveyance “subject to conditions” set forth in
the contract to sell.[29]
Second, what was transferred was the possession of the property, not ownership. The possession is
even limited by the following: (1) that the vendee may continue therewith “as long as the VENDEE
complies with all the terms and conditions mentioned,” and (2) that the buyer may not sell, cede, assign,
transfer or mortgage or in any way encumber any right, interest or equity that she may have or acquire in
and to the said parcel of land nor to lease or to sublease it or give possession to another person without
the written consent of the seller.[30]
Finally, the ownership of the lot was not transferred to Carmelita Leaño. As the land is covered by a
torrens title, the act of registration of the deed of sale was the operative act that could transfer ownership
over the lot.[31] There is not even a deed that could be registered since the contract provides that the seller
will execute such a deed “upon complete payment by the VENDEE of the total purchase price of the
property” with the stipulated interest.[32]
In a contract to sell real property on installments, the full payment of the purchase price is a positive
suspensive condition, the failure of which is not considered a breach, casual or serious, but simply an
event that prevented the obligation of the vendor to convey title from acquiring any obligatory force. [33] The
transfer of ownership and title would occur after full payment of the price. [34]
 In the case at bar, petitioner Leaño’s non-payment of the installments after April 1, 1989, prevented
the obligation of respondent Fernando to convey the property from arising. In fact, it brought into effect
the provision of the contract on cancellation.
Contrary to the findings of the trial court, Article 1592 of the Civil Code is inapplicable to the case at
bar.[35] However, any attempt to cancel the contract to sell would have to comply with the provisions of
Republic Act No. 6552, the “Realty Installment Buyer Protection Act.”
R. A. No. 6552 recognizes in conditional sales of all kinds of real estate (industrial, commercial,
residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer,
which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding
force.[36] The law also provides for the rights of the buyer in case of cancellation. Thus, Sec. 3 (b) of the
law provides that:

“If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments
on the property equivalent to fifty percent of the total payments made and, after five years of installments,
an additional five percent every year but not to exceed ninety percent of the total payments
made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt
by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and
upon full payment of the cash surrender value to the buyer.” [Emphasis supplied]

The decision in the ejectment case [37] operated as the notice of cancellation required by Sec.
3(b). As petitioner Leaño was not given the cash surrender value of the payments that she made, there
was still no actual cancellation of the contract. Consequently, petitioner Leaño may still reinstate the
contract by updating the account during the grace period and before actual cancellation. [38]
Should petitioner Leaño wish to reinstate the contract, she would have to update her accounts with
respondent Fernando in accordance with the statement of account [39] which amount was P183,687.00.[40]
On the issue of whether petitioner Leaño was in delay in paying the amortizations , we rule that while
the contract provided that the total purchase price was payable within a ten-year period, the same
contract specified that the purchase price shall be paid in monthly installments for which the
corresponding penalty shall be imposed in case of default. Petitioner Leaño cannot ignore the provision
on the payment of monthly installments by claiming that the ten-year period within which to pay has not
elapsed.
Article 1169 of the Civil Code provides that in reciprocal obligations, neither party incurs in delay if
the other does not comply or is not ready to comply in a proper manner with what is incumbent upon
him. From the moment one of the parties fulfills his obligation, delay by the other begins.
In the case at bar, respondent Fernando performed his part of the obligation by allowing petitioner
Leaño to continue in possession and use of the property. Clearly, when petitioner Leaño did not pay the
monthly amortizations in accordance with the terms of the contract, she was in delay and liable for
damages.[41] However, we agree with the trial court that the default committed by petitioner Leaño in
respect of the obligation could be compensated by the interest and surcharges imposed upon her under
the contract in question.[42]
It is a cardinal rule in the interpretation of contracts 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 stipulation shall control.
[43]
Thus, as there is no ambiguity in the language of the contract, there is no room for construction, only
compliance.

The Fallo

IN VIEW WHEREOF, we DENY the petition and AFFIRM the decision of the Court of Appeals [44] in
toto.
No costs.
 SO ORDERED.

[G.R. No. 127695. December 3, 2001]

HEIRS OF LUIS BACUS, namely: CLARA RESMA BACUS, ROQUE R. BACUS, SR., SATURNINO R.
BACUS, PRISCILA VDA. DE CABANERO, CARMELITA B. SUQUIB, BERNARDITA B.
CARDENAS, RAUL R. BACUS, MEDARDO R. BACUS, ANSELMA B. ALBAN, RICARDO R.
BACUS, FELICISIMA B. JUDICO, and DOMINICIANA B. TANGAL, petitioners, vs. HON.
COURT OF APPEALS and SPOUSES FAUSTINO DURAY and VICTORIANA
DURAY,respondents.

DECISION
QUISUMBING, J.:

This petition assails the decision dated November 29, 1996, of the Court of Appeals in CA-G.R. CV
No. 37566, affirming the decision dated August 3, 1991, of the Regional Trial Court of Cebu City, Branch
6, in Civil Case No. CEB-8935.
The facts, as culled from the records, are as follows:
On June 1, 1984, Luis Bacus leased to private respondent Faustino Duray a parcel of agricultural
land in Bulacao, Talisay, Cebu. Designated as Lot No. 3661-A-3-B-2, it had an area of 3,002 square
meters, covered by Transfer Certificate of Title No. 48866. The lease was for six years, ending May 31,
1990. The contract contained an option to buy clause. Under said option, the lessee had the exclusive
and irrevocable right to buy 2,000 square meters of the property within five years from a year after the
effectivity of the contract, at P200 per square meter. That rate shall be proportionately adjusted
depending on the peso rate against the US dollar, which at the time of the execution of the contract was
fourteen pesos. [1]
Close to the expiration of the contract, Luis Bacus died on October 10, 1989. Thereafter, on March
15, 1990, the Duray spouses informed Roque Bacus, one of the heirs of Luis Bacus, that they were willing
and ready to purchase the property under the option to buy clause. They requested Roque Bacus to
prepare the necessary documents, such as a Special Power of Attorney authorizing him to enter into a
contract of sale,[2] on behalf of his sisters who were then abroad.
On March 30, 1990, due to the refusal of petitioners to sell the property, Faustino Duray’s adverse
claim was annotated by the Register of Deeds of Cebu, at the back of TCT No. 63269, covering the
segregated 2,000 square meter portion of Lot No. 3661-A-3-B-2-A. [3]
Subsequently, on April 5, 1990, Duray filed a complaint for specific performance against the heirs of
Luis Bacus with the Lupon Tagapamayapa of Barangay Bulacao, asking that he be allowed to purchase
the lot specifically referred to in the lease contract with option to buy. At the hearing, Duray presented a
certification[4] from the manager of Standard Chartered Bank, Cebu City, addressed to Luis Bacus, stating
that at the request of Mr. Lawrence Glauber, a bank client, arrangements were being made to allow
Faustino Duray to borrow funds of approximately P700,000 to enable him to meet his obligations under
the contract with Luis Bacus.[5]
Having failed to reach an agreement before the Lupon, on April 27, 1990, private respondents filed a
complaint for specific performance with damages against petitioners before the Regional Trial Court,
praying that the latter, (a) execute a deed of sale over the subject property in favor of private respondents;
(b) receive the payment of the purchase price; and (c) pay the damages.
On the other hand, petitioners alleged that before Luis Bacus’ death, private respondents conveyed
to them the former’s lack of interest to exercise their option because of insufficiency of funds, but they
were surprised to learn of private respondents’ demand. In turn, they requested private respondents to
pay the purchase price in full but the latter refused. They further alleged that private respondents did not
deposit the money as required by the Lupon and instead presented a bank certification which cannot be
deemed legal tender.
On October 30, 1990, private respondents manifested in court that they caused the issuance of a
cashier’s check in the amount of P650,000[6] payable to petitioners at anytime upon demand.
On August 3, 1991, the Regional Trial Court ruled in favor of private respondents, the dispositive
portion of which reads:

Premises considered, the court finds for the plaintiffs and orders the defendants to specifically perform
their obligation in the option to buy and to execute a document of sale over the property covered by
Transfer Certificate of Title # T-63269 upon payment by the plaintiffs to them in the amount of Six
Hundred Seventy-Five Thousand Six Hundred Seventy-Five (P675,675.00) Pesos within a period of thirty
(30) days from the date this decision becomes final.

SO ORDERED.[7]

Unsatisfied, petitioners appealed to the respondent Court of Appeals which denied the appeal on
November 29, 1996, on the ground that the private respondents exercised their option to buy the leased
property before the expiration of the contract of lease. It held:

... After a careful review of the entire records of this case, we are convinced that the plaintiffs-appellees
validly and effectively exercised their option to buy the subject property. As opined by the lower court,
“the readiness and preparedness of the plaintiff on his part, is manifested by his cautionary letters, the
prepared bank certification long before the date of May 31, 1990, the final day of the option, and his filing
of this suit before said date. If the plaintiff-appellee Francisco Duray had no intention to purchase the
property, he would not have bothered to write those letters to the defendant-appellants (which were all
received by them) and neither would he be interested in having his adverse claim annotated at the back
of the T.C.T. of the subject property, two (2) months before the expiration of the lease. Moreover, he even
went to the extent of seeking the help of the Lupon Tagapamayapa to compel the defendants-appellants
to recognize his right to purchase the property and for them to perform their corresponding obligation. [8]

xxx

We therefore find no merit in this appeal.

WHEREFORE, the decision appealed from is hereby AFFIRMED. [9]

Hence, this petition where petitioners aver that the Court of Appeals gravely erred and abused its
discretion in:
I. ...UPHOLDING THE TRIAL COURT’S RULING IN THE SPECIFIC PERFORMANCE CASE
BY ORDERING PETITIONERS (DEFENDANTS THEREIN) TO EXECUTE A DOCUMENT
OF SALE OVER THE PROPERTY IN QUESTION (WITH TCT NO. T-63269) TO THEM IN
THE AMOUNT OF P675,675.00 WITHIN THIRTY (30) DAYS FROM THE DATE THE
DECISION BECOMES FINAL;
II. ...DISREGARDING LEGAL PRINCIPLES, SPECIFIC PROVISIONS OF LAW AND
JURISPRUDENCE IN UPHOLDING THE DECISION OF THE TRIAL COURT TO THE
EFFECT THAT PRIVATE RESPONDENTS HAD EXERCISED THEIR RIGHT OF OPTION
TO BUY ON TIME; THUS THE PRESENTATION OF THE CERTIFICATION OF THE BANK
MANAGER OF A BANK DEPOSIT IN THE NAME OF ANOTHER PERSON FOR LOAN TO
RESPONDENTS WAS EQUIVALENT TO A VALID TENDER OF PAYMENT AND A
SUFFICIENT COMPLAINCE (SIC) OF A CONDITION FOR THE EXERCISE OF THE
OPTION TO BUY; AND
 III … UPHOLDING THE TRIAL COURT’S RULING THAT THE PRESENTATION OF A
CASHER’S (SIC) CHECK BY THE RESPONDENTS IN THE AMOUNT OF P625,000.00
EVEN AFTER THE TERMINATION OF THE TRIAL ON THE MERITS WITH BOTH PARTIES
ALREADY HAVING RESTED THEIR CASE, WAS STILL VALID COMPLIANCE OF THE
CONDITION FOR THE PRIVATE RESPONDENTS’ (PLAINTIFFS THEREIN) EXERCISE OF
RIGHT OF OPTION TO BUY AND HAD A FORCE OF VALID AND FULL TENDER OF
PAYMENT WITHIN THE AGREED PERIOD.[10]
Petitioners insist that they cannot be compelled to sell the disputed property by virtue of the
nonfulfillment of the obligation under the option contract of the private respondents.
Private respondents first aver that petitioners are unclear if Rule 65 or Rule 45 of the Rules of Court
govern their petition, and that petitioners only raised questions of facts which this Court cannot properly
entertain in a petition for review. They claim that even assuming that the instant petition is one under
Rule 45, the same must be denied for the Court of Appeals has correctly determined that they had validly
exercised their option to buy the leased property before the contract expired.
In response, petitioners state that private respondents erred in initially classifying the instant petition
as one under Rule 65 of the Rules of Court. They argue that the petition is one under Rule 45 where
errors of the Court of Appeals, whether evidentiary or legal in nature, may be reviewed.
We agree with private respondents that in a petition for review under Rule 45, only questions of law
may be raised.[11] However, a close reading of petitioners’ arguments reveal the following legal issues
which may properly be entertained in the instant petition:
a) When private respondents opted to buy the property covered by the lease contract with
option to buy, were they already required to deliver the money or consign it in court before
petitioner executes a deed of transfer?
b) Did private respondents incur in delay when they did not deliver the purchase price or
consign it in court on or before the expiration of the contract?
On the first issue, petitioners contend that private respondents failed to comply with their obligation
because there was neither actual delivery to them nor consignation in court or with the Municipal, City or
Provincial Treasurer of the purchase price before the contract expired. Private respondents’ bank
certificate stating that arrangements were being made by the bank to release P700,000 as a loan to
private respondents cannot be considered as legal tender that may substitute for delivery of payment to
petitioners nor was it a consignation.
Obligations under an option to buy are reciprocal obligations. [12] The performance of one obligation is
conditioned on the simultaneous fulfillment of the other obligation.[13] In other words, in an option to buy,
the payment of the purchase price by the creditor is contingent upon the execution and delivery of a deed
of sale by the debtor. In this case, when private respondents opted to buy the property, their obligation
was to advise petitioners of their decision and their readiness to pay the price. They were not yet obliged
to make actual payment. Only upon petitioners’ actual execution and delivery of the deed of sale were
they required to pay. As earlier stated, the latter was contingent upon the former. In Nietes vs. Court of
Appeals, 46 SCRA 654 (1972), we held that notice of the creditor’s decision to exercise his option to buy
need not be coupled with actual payment of the price, so long as this is delivered to the owner of the
property upon performance of his part of the agreement. Consequently, since the obligation was not yet
due, consignation in court of the purchase price was not yet required.
Consignation is the act of depositing the thing due with the court or judicial authorities whenever the
creditor cannot accept or refuses to accept payment and it generally requires a prior tender of
payment. In instances, where no debt is due and owing, consignation is not proper. [14] Therefore,
petitioners’ contention that private respondents failed to comply with their obligation under the option to
buy because they failed to actually deliver the purchase price or consign it in court before the contract
expired and before they execute a deed, has no leg to stand on.
Corollary, private respondents did not incur in delay when they did not yet deliver payment nor make
a consignation before the expiration of the contract. In reciprocal obligations, neither party incurs in delay
if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon
him. Only from the moment one of the parties fulfills his obligation, does delay by the other begin.[15]
 In this case, private respondents, as early as March 15, 1990, communicated to petitioners their
intention to buy the property and they were at that time undertaking to meet their obligation before the
expiration of the contract on May 31, 1990. However, petitioners refused to execute the deed of sale and
it was their demand to private respondents to first deliver the money before they would execute the same
which prompted private respondents to institute a case for specific performance in the Lupong
Tagapamayapa and then in the RTC. On October 30, 1990, after the case had been submitted for
decision but before the trial court rendered its decision, private respondents issued a cashier’s check in
petitioners’ favor purportedly to bolster their claim that they were ready to pay the purchase price. The
trial court considered this in private respondents’ favor and we believe that it rightly did so, because at the
time the check was issued, petitioners had not yet executed a deed of sale nor expressed readiness to do
so. Accordingly, as there was no compliance yet with what was incumbent upon petitioners under the
option to buy, private respondents had not incurred in delay when the cashier’s check was issued even
after the contract expired.
WHEREFORE, the instant petition is DENIED. The decision dated November 29, 1996 of the Court
of Appeals is hereby AFFIRMED.
Costs against petitioners.
SO ORDERED.

MEGAWORLD GLOBUS ASIA, INC., Petitioner,

- versus –
MILA S. TANSECO, Respondent.
G.R. No. 181206
DECISION

CARPIO MORALES, J.:

On July 7, 1995, petitioner Megaworld Globus Asia, Inc. (Megaworld) and respondent Mila S.
Tanseco (Tanseco) entered into a Contract to Buy and Sell [1] a 224 square-meter (more or less)
condominium unit at a pre-selling project, “The Salcedo Park,” located along Senator Gil Puyat Avenue,
Makati City.

The purchase price was P16,802,037.32, to be paid as follows: (1) 30% less the reservation fee
of P100,000, or P4,940,611.19, by postdated check payable on July 14, 1995; (2) P9,241,120.50 through
30 equal monthly installments of P308,037.35 from August 14, 1995 to January 14, 1998; and (3) the
balance of P2,520,305.63 on October 31, 1998, the stipulated delivery date of the unit; provided that if the
construction is completed earlier, Tanseco would pay the balance within seven days from receipt of a
notice of turnover.

Section 4 of the Contract to Buy and Sell provided for the construction schedule as follows:

4. CONSTRUCTION SCHEDULE – The construction of the Project and the

unit/s herein purchased shall be completed and delivered not later than October 31, 1998
with additional grace period of six (6) months within which to complete the Project and
the unit/s, barring delays due to fire, earthquakes, the elements, acts of God, war, civil
disturbances, strikes or other labor disturbances, government and economic controls
making it, among others, impossible or difficult to obtain the necessary materials, acts of
third person, or any other cause or conditions beyond the control of the SELLER. In this
event, the completion and delivery of the unit are deemed extended accordingly without
liability on the part of the SELLER. The foregoing notwithstanding, the SELLER reserves
the right to withdraw from this transaction and refund to the BUYER without interest the
 amounts received from him under this contract if for any reason not attributable to
SELLER, such as but not limited to fire, storms, floods, earthquakes, rebellion,
insurrection, wars, coup de etat, civil disturbances or for other reasons beyond its control,
the Project may not be completed or it can only be completed at a financial loss to the
SELLER. In any event, all construction on or of the Project shall remain the property of
the SELLER. (Underscoring supplied)

Tanseco paid all installments due up to January, 1998, leaving unpaid the balance
of P2,520,305.63 pending delivery of the unit.[2] Megaworld, however, failed to deliver the unit within the
stipulated period on October 31, 1998 or April 30, 1999, the last day of the six-month grace period.

A few days shy of three years later, Megaworld, by notice dated April 23, 2002 (notice of turnover),
informed Tanseco that the unit was ready for inspection preparatory to delivery.[3] Tanseco replied
through counsel, by letter of May 6, 2002, that in view of Megaworld’s failure to deliver the unit on time,
she was demanding the return ofP14,281,731.70 representing the total installment payment she had
made, with interest at 12% per annum from April 30, 1999, the expiration of the six-month grace
period. Tanseco pointed out that none of the excepted causes of delay existed.[4]

Her demand having been unheeded, Tanseco filed on June 5, 2002 with the Housing and Land Use
Regulatory Board’s (HLURB) Expanded National Capital Region Field Office a complaint against
Megaworld for rescission of contract, refund of payment, and damages. [5]

In its Answer, Megaworld attributed the delay to the 1997 Asian financial crisis which was beyond
its control; and argued that default had not set in, Tanseco not having made any judicial or extrajudicial
demand for delivery before receipt of the notice of turnover. [6]

By Decision of May 28, 2003, [7] the HLURB Arbiter dismissed Tanseco’s complaint for lack of cause
of action, finding that Megaworld had effected delivery by the notice of turnover before Tanseco made a
demand. Tanseco was thereupon ordered to pay Megaworld the balance of the purchase price,
plus P25,000 as moral damages, P25,000 as exemplary damages, and P25,000 as attorney’s fees.

On appeal by Tanseco, the HLURB Board of Commissioners, by Decision of November 28, 2003,
[8]
sustained the HLURB Arbiter’s Decision on the ground of laches for failure to demand rescission when
the right thereto accrued. It deleted the award of damages, however. Tanseco’s Motion for
Reconsideration having been denied,[9] she appealed to the Office of the President which dismissed the
appeal by Decision of April 28, 2006 [10] for failure to show that the findings of the HLURB were tainted with
grave abuse of discretion. Her Motion for Reconsideration having been denied by Resolution dated
August 30, 2006,[11] Tanseco filed a Petition for Review under Rule 43 with the Court of Appeals. [12]

By Decision of September 28, 2007, [13] the appellate court granted Tanseco’s petition, disposing
thus:

WHEREFORE, premises considered, petition is hereby GRANTED and the

assailed May 28, 2003 decision of the HLURB Field Office, the November 28, 2003
decision of the HLURB Board of Commissioners in HLURB Case No. REM-A-030711-
0162, the April 28, 2006 Decision and August 30, 2006 Resolution of the Office of the
President in O.P. Case No. 05-I-318, are hereby REVERSED and SET ASIDE and a new
one entered: (1) RESCINDING, as prayed for by TANSECO, the aggrieved party, the
contract to buy and sell; (2) DIRECTINGMEGAWORLD TO PAY TANSECO the amount
she had paid totaling P14,281,731.70 with Twelve (12%) Percent interest per
annum from October 31, 1998; (3) ORDERINGMEGAWORLD TO
PAY TANSECO P200,000.00 by way of exemplary damages;
(4) ORDERING MEGAWORLD TO PAY TANSECO P200,000.00 as attorney’s fees; and
(5)ORDERING MEGAWORLD TO PAY TANSECO the cost of suit. (Emphasis in the
original; underscoring supplied)
 The appellate court held that under Article 1169 of the Civil Code, no judicial or extrajudicial
demand is needed to put the obligor in default if the contract, as in the herein parties’ contract, states the
date when the obligation should be performed; that time was of the essence because Tanseco relied on
Megaworld’s promise of timely delivery when she agreed to part with her money; that the delay should
be reckoned from October 31, 1998, there being no force majeure to warrant the application of the April
30, 1999 alternative date; and that specific performance could not be ordered in lieu of rescission as the
right to choose the remedy belongs to the aggrieved party.

The appellate court awarded Tanseco exemplary damages on a finding of bad faith on the part of
Megaworld in forcing her to accept its long-delayed delivery; and attorney’s fees, she having been
compelled to sue to protect her rights.

Its Motion for Reconsideration having been denied by Resolution of January 8, 2008, [14] Megaworld
filed the present Petition for Review on Certiorari, echoing its position before the HLURB, adding that
Tanseco had not shown any basis for the award of damages and attorney’s fees. [15]

Tanseco, on the other hand, maintained her position too, and citing Megaworld’s bad faith which
became evident when it insisted on making the delivery despite the long delay, [16] insisted that she
deserved the award of damages and attorney’s fees.

Article 1169 of the Civil Code provides:

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.

However, the demand by the creditor shall not be necessary in order that delay
may exist:

(1) When the obligation or the law expressly so declares; or

(2) When from the nature and the circumstances of the obligation it appears
that the designation of the time when the thing is to be delivered or the service is to be
rendered was a controlling motive for the establishment of the contract; or

(3) When demand would be useless, as when the obligor has rendered it
beyond his power to perform.

In reciprocal obligations, neither party incurs in delay if the other does not comply
or is not ready to comply in a proper manner with what is incumbent upon him. From the
moment one of the parties fulfills his obligation, delay by the other
begins. (Underscoring supplied)

The Contract to Buy and Sell of the parties contains reciprocal obligations, i.e., to complete and
deliver the condominium unit on October 31, 1998 or six months thereafteron the part of Megaworld, and
to pay the balance of the purchase price at or about the time of delivery on the part of
Tanseco. Compliance by Megaworld with its obligation is determinative of compliance by Tanseco with
her obligation to pay the balance of the purchase price. Megaworld having failed to comply with its
obligation under the contract, it is liable therefor.[17]

That Megaworld’s sending of a notice of turnover preceded Tanseco’s demand for refund does
not abate her cause. For demand would have been useless, Megaworld admittedly having failed in its
obligation to deliver the unit on the agreed date.

Article 1174 of the Civil Code provides:

 Art. 1174. Except in cases expressly specified by the law, or when it is otherwise
declared by stipulation, or when the nature of the obligation requires the assumption of
risk, no person shall be responsible for those events which could not be foreseen, or
which, though foreseen, were inevitable.[18]

The Court cannot generalize the 1997 Asian financial crisis to be unforeseeable and beyond the control of
a business corporation. A real estate enterprise engaged in the pre-selling of condominium units is
concededly a master in projections on commodities and currency movements, as well as business
risks. The fluctuating movement of the Philippine peso in the foreign exchange market is an everyday
occurrence, hence, not an instance of caso fortuito.[19] Megaworld’s excuse for its delay does not thus lie.

As for Megaworld’s argument that Tanseco’s claim is considered barred by laches on account of
her belated demand, it does not lie too. Laches is a creation of equity and its application is controlled by
equitable considerations.[20] It bears noting that Tanseco religiously paid all the installments due up to
January, 1998, whereas Megaworld reneged on its obligation to deliver within the stipulated period. A
circumspect weighing of equitable considerations thus tilts the scale of justice in favor of Tanseco.

Pursuant to Section 23 of Presidential Decree No. 957 [21] which reads:

Sec. 23. Non-Forfeiture of Payments. - No installment payment made by a buyer

in a subdivision or condominium project for the lot or unit he contracted to buy shall be
forfeited in favor of the owner or developer when the buyer, after due notice to the owner
or developer, desists from further payment due to the failure of the owner or developer to
develop the subdivision or condominium project according to the approved plans and
within the time limit for complying with the same.
Such buyer may, at his option, be reimbursed the total amount paidincluding amort
ization interests but excluding delinquency
interests, with interest thereon at the legal rate. (Emphasis and underscoring
supplied),

Tanseco is, as thus prayed for, entitled to be reimbursed the total amount she paid Megaworld.

While the appellate court correctly awarded P14,281,731.70 then, the interest rate should,
however, be 6% per annum accruing from the date of demand on May 6, 2002, and then 12% per annum
from the time this judgment becomes final and executory, conformably with Eastern Shipping Lines, Inc.
v. Court of Appeals.[22]

The award of P200,000 attorney’s fees and of costs of suit is in order too, the parties having
stipulated in the Contract to Buy and Sell that these shall be borne by the losing party in a suit based
thereon,[23] not to mention that Tanseco was compelled to retain the services of counsel to protect her
interest. And so is the award of exemplary damages. With pre-selling ventures mushrooming in the
metropolis, there is an increasing need to correct the insidious practice of real estate companies of
proffering all sorts of empty promises to entice innocent buyers and ensure the profitability of their
projects.

The Court finds the appellate court’s award of P200,000 as exemplary damages excessive,
however. Exemplary damages are imposed not to enrich one party or impoverish another but to serve as
a deterrent against or as a negative incentive to curb socially deleterious actions. [24] The Court finds
that P100,000 is reasonable in this case.

Finally, since Article 1191[25] of the Civil Code does not apply to a contract to buy and sell, the
suspensive condition of full payment of the purchase price not having occurred to trigger the obligation to
convey title, cancellation, not rescission, of the contract is thus the correct remedy in the premises. [26]

WHEREFORE, the challenged Decision of the Court of Appeals is, in light of the foregoing,
AFFIRMED with MODIFICATION.
 As modified, the dispositive portion of the Decision reads:

The July 7, 1995 Contract to Buy and Sell between the parties
is cancelled. Petitioner, Megaworld Globus Asia, Inc., is directed to pay respondent, Mila
S. Tanseco, the amount ofP14,281,731.70, to bear 6% interest per annum starting May 6,
2002 and 12% interest per annum from the time the judgment becomes final and
executory; and to pay P200,000 attorney’s fees,P100,000 exemplary damages, and
costs of suit.

Costs against petitioner.

SO ORDERED.

GENERAL MILLING CORPORATION, Petitioner,

- versus –
SPS. LIBRADO RAMOS and REMEDIOS RAMOS, Respondents.
G.R. No. 193723
DECISION

VELASCO, JR., J.:

The Case

This is a petition for review of the April 15, 2010 Decision of the Court of Appeals (CA) in CA-G.R.
CR-H.C. No. 85400 entitled Spouses Librado Ramos & Remedios Ramos v. General Milling Corporation,
et al., which affirmed the May 31, 2005 Decision of the Regional Trial Court (RTC), Branch 12 in Lipa City,
in Civil Case No. 00-0129 for Annulment and/or Declaration of Nullity of Extrajudicial Foreclosure Sale
with Damages.

The Facts

On August 24, 1989, General Milling Corporation (GMC) entered into a Growers Contract with
spouses Librado and Remedios Ramos (Spouses Ramos). Under the contract, GMC was to supply
broiler chickens for the spouses to raise on their land in Barangay Banaybanay, Lipa City, Batangas.[1] To
guarantee full compliance, the Growers Contract was accompanied by a Deed of Real Estate Mortgage
over a piece of real property upon which their conjugal home was built. The spouses further agreed to put
up a surety bond at the rate of PhP 20,000 per 1,000 chicks delivered by GMC. The Deed of Real Estate
Mortgage extended to Spouses Ramos a maximum credit line of PhP 215,000 payable within an indefinite
period with an interest of twelve percent (12%) per annum.[2]

The Deed of Real Estate Mortgage contained the following provision:

WHEREAS, the MORTGAGOR/S has/have agreed to guarantee and secure the

full and faithful compliance of [MORTGAGORS’] obligation/s with the MORTGAGEE by a
First Real Estate Mortgage in favor of the MORTGAGEE, over a 1 parcel of land and the
improvements existing thereon, situated in the Barrio/s of Banaybanay, Municipality
of Lipa City, Province of Batangas, Philippines, his/her/their title/s thereto being
evidenced by Transfer Certificate/s No./s T-9214 of the Registry of Deeds for the
Province of Batangas in the amount of TWO HUNDRED FIFTEEN THOUSAND (P
215,000.00), Philippine Currency, which the maximum credit line payable within a x x x
 day term and to secure the payment of the same plus interest of twelve percent (12%)
per annum.

Spouses Ramos eventually were unable to settle their account with GMC. They alleged that they
suffered business losses because of the negligence of GMC and its violation of the Growers Contract.[3]

On March 31, 1997, the counsel for GMC notified Spouses Ramos that GMC would institute
foreclosure proceedings on their mortgaged property. [4]

On May 7, 1997, GMC filed a Petition for Extrajudicial Foreclosure of Mortgage. On June 10, 1997,
the property subject of the foreclosure was subsequently sold by public auction to GMC after the required
posting and publication.[5] It was foreclosed for PhP 935,882,075, an amount representing the losses on
chicks and feeds exclusive of interest at 12% per annum and attorney’s fees. [6] To complicate matters, on
October 27, 1997, GMC informed the spouses that its Agribusiness Division had closed its business and
poultry operations.[7]

On March 3, 2000, Spouses Ramos filed a Complaint for Annulment and/or Declaration of Nullity of
the Extrajudicial Foreclosure Sale with Damages. They contended that the extrajudicial foreclosure sale
on June 10, 1997 was null and void, since there was no compliance with the requirements of posting and
publication of notices under Act No. 3135, as amended, or An Act to Regulate the Sale of Property under
Special Powers Inserted in or Annexed to Real Estate Mortgages. They likewise claimed that there was
no sheriff’s affidavit to prove compliance with the requirements on posting and publication of notices. It
was further alleged that the Deed of Real Estate Mortgage had no fixed term. A prayer for moral and
exemplary damages and attorney’s fees was also included in the complaint. [8] Librado Ramos alleged
that, when the property was foreclosed, GMC did not notify him at all of the foreclosure.[9]

During the trial, the parties agreed to limit the issues to the following: (1) the validity of the Deed of
Real Estate Mortgage; (2) the validity of the extrajudicial foreclosure; and (3) the party liable for damages.
[10]

In its Answer, GMC argued that it repeatedly reminded Spouses Ramos of their liabilities under the
Growers Contract. It argued that it was compelled to foreclose the mortgage because of Spouses Ramos’
failure to pay their obligation. GMC insisted that it had observed all the requirements of posting and
publication of notices under Act No. 3135.[11]

The Ruling of the Trial Court

Holding in favor of Spouses Ramos, the trial court ruled that the Deed of Real Estate Mortgage was
valid even if its term was not fixed. Since the duration of the term was made to depend exclusively upon
the will of the debtors-spouses, the trial court cited jurisprudence and said that “the obligation is not due
and payable until an action is commenced by the mortgagee against the mortgagor for the purpose of
having the court fix the date on and after which the instrument is payable and the date of maturity is fixed
in pursuance thereto.”[12]

The trial court held that the action of GMC in moving for the foreclosure of the spouses’ properties
was premature, because the latter’s obligation under their contract was not yet due.

The trial court awarded attorney’s fees because of the premature action taken by GMC in filing
extrajudicial foreclosure proceedings before the obligation of the spouses became due.

The RTC ruled, thus:

 WHEREFORE, premises considered, judgment is rendered as follows:

1. The Extra-Judicial Foreclosure Proceedings under docket no. 0107-97 is

hereby declared null and void;

2. The Deed of Real Estate Mortgage is hereby declared valid and legal for all
intents and puposes;

3. Defendant-corporation General Milling Corporation is ordered to pay

Spouses Librado and Remedios Ramos attorney’s fees in the total amount of P
57,000.00 representing acceptance fee of P30,000.00 and P3,000.00 appearance fee for
nine (9) trial dates or a total appearance fee of P 27,000.00;

4. The claims for moral and exemplary damages are denied for lack of merit.

IT IS SO ORDERED.[13]

The Ruling of the Appellate Court

On appeal, GMC argued that the trial court erred in: (1) declaring the extrajudicial foreclosure
proceedings null and void; (2) ordering GMC to pay Spouses Ramos attorney’s fees; and (3) not awarding
damages in favor of GMC.

The CA sustained the decision of the trial court but anchored its ruling on a different ground.
Contrary to the findings of the trial court, the CA ruled that the requirements of posting and publication of
notices under Act No. 3135 were complied with. The CA, however, still found that GMC’s action against
Spouses Ramos was premature, as they were not in default when the action was filed on May 7, 1997.[14]

The CA ruled:

In this case, a careful scrutiny of the evidence on record shows that defendant-
appellant GMC made no demand to spouses Ramos for the full payment of their
obligation. While it was alleged in the Answer as well as in the Affidavit constituting the
direct testimony of Joseph Dominise, the principal witness of defendant-appellant GMC,
that demands were sent to spouses Ramos, the documentary evidence proves
otherwise. A perusal of the letters presented and offered as evidence by defendant-
appellant GMC did not “demand” but only request spouses Ramos to go to the office of
GMC to “discuss” the settlement of their account.[15]

According to the CA, however, the RTC erroneously awarded attorney’s fees to Spouses Ramos,
since the presumption of good faith on the part of GMC was not overturned.

The CA disposed of the case as follows:

WHEREFORE, and in view of the foregoing considerations, the Decision of

the Regional Trial Court of Lipa City, Branch 12, dated May 21, 2005 is hereby
AFFIRMED with MODIFICATION by deleting the award of attorney’s fees to plaintiffs-
appellees spouses Librado Ramos and Remedios Ramos.[16]

Hence, We have this appeal.

The Issues
 A. WHETHER [THE CA] MAY CONSIDER ISSUES NOT ALLEGED AND DISCUSSED
IN THE LOWER COURT AND LIKEWISE NOT RAISED BY THE PARTIES ON
APPEAL, THEREFORE HAD DECIDED THE CASE NOT IN ACCORD WITH LAW
AND APPLICABLE DECISIONS OF THE SUPREME COURT.

B. WHETHER [THE CA] ERRED IN RULING THAT PETITIONER GMC MADE NO

DEMAND TO RESPONDENT SPOUSES FOR THE FULL PAYMENT OF THEIR
OBLIGATION CONSIDERING THAT THE LETTER DATED MARCH 31, 1997 OF
PETITIONER GMC TO RESPONDENT SPOUSES IS TANTAMOUNT TO A FINAL
DEMAND TO PAY, THEREFORE IT DEPARTED FROM THE ACCEPTED AND
USUAL COURSE OF JUDICIAL PROCEEDINGS.[17]

The Ruling of this Court

Can the CA consider matters not alleged?

GMC asserts that since the issue on the existence of the demand letter was not raised in the trial
court, the CA, by considering such issue, violated the basic requirements of fair play, justice, and due
process.[18]

In their Comment,[19] respondents-spouses aver that the CA has ample authority to rule on matters
not assigned as errors on appeal if these are indispensable or necessary to the just resolution of the
pleaded issues.

In Diamonon v. Department of Labor and Employment,[20] We explained that an appellate court has
a broad discretionary power in waiving the lack of assignment of errors in the following instances:

(a) Grounds not assigned as errors but affecting the jurisdiction of the court over
the subject matter;

(b) Matters not assigned as errors on appeal but are evidently plain or clerical
errors within contemplation of law;

(c) Matters not assigned as errors on appeal but consideration of which is

necessary in arriving at a just decision and complete resolution of the case or to serve
the interests of a justice or to avoid dispensing piecemeal justice;

(d) Matters not specifically assigned as errors on appeal but raised in the trial
court and are matters of record having some bearing on the issue submitted which the
parties failed to raise or which the lower court ignored;

(e) Matters not assigned as errors on appeal but closely related to an error
assigned;

(f) Matters not assigned as errors on appeal but upon which the determination of
a question properly assigned, is dependent.

Paragraph (c) above applies to the instant case, for there would be a just and complete resolution
of the appeal if there is a ruling on whether the Spouses Ramos were actually in default of their obligation
to GMC.

Was there sufficient demand?

We now go to the second issue raised by GMC. GMC asserts error on the part of the CA in finding
that no demand was made on Spouses Ramos to pay their obligation. On the contrary, it claims that its
March 31, 1997 letter is akin to a demand.
 We disagree.

There are three requisites necessary for a finding of default. First, the obligation is demandable and
liquidated; second, the debtor delays performance; and third, the creditor judicially or extrajudicially
requires the debtor’s performance.[21]

According to the CA, GMC did not make a demand on Spouses Ramos but merely requested them
to go to GMC’s office to discuss the settlement of their account. In spite of the lack of demand made on
the spouses, however, GMC proceeded with the foreclosure proceedings. Neither was there any provision
in the Deed of Real Estate Mortgage allowing GMC to extrajudicially foreclose the mortgage without need
of demand.

Indeed, Article 1169 of the Civil Code on delay requires the following:

Those obliged to deliver or to do something incur in delay from the time the obligee
judicially or extrajudicially demands from them the fulfilment of their obligation.
However, the demand by the creditor shall not be necessary in order that delay
may exist:

(1) When the obligation or the law expressly so declares; x x x

As the contract in the instant case carries no such provision on demand not being necessary for
delay to exist, We agree with the appellate court that GMC should have first made a demand on the
spouses before proceeding to foreclose the real estate mortgage.

Development Bank of the Philippines v. Licuanan finds application to the instant case:

The issue of whether demand was made before the foreclosure was effected is
essential. If demand was made and duly received by the respondents and the latter still
did not pay, then they were already in default and foreclosure was proper. However, if
demand was not made, then the loans had not yet become due and demandable. This
meant that respondents had not defaulted in their payments and the foreclosure by
petitioner was premature. Foreclosure is valid only when the debtor is in default in
the payment of his obligation.[22]

In turn, whether or not demand was made is a question of fact. [23] This petition filed under Rule 45
of the Rules of Court shall raise only questions of law. For a question to be one of law, it must not involve
an examination of the probative value of the evidence presented by the litigants or any of them. The
resolution of the issue must rest solely on what the law provides on the given set of circumstances. Once
it is clear that the issue invites a review of the evidence presented, the question posed is one of fact. [24] It
need not be reiterated that this Court is not a trier of facts. [25] We will defer to the factual findings of the
trial court, because petitioner GMC has not shown any circumstances making this case an exception to
the rule.

WHEREFORE, the petition is DENIED. The CA Decision in CA-G.R. CR-H.C. No. 85400
is AFFIRMED.

SO ORDERED.

R. S. TOMAS, INC. v RIZAL CEMENT CO

March 2012 G. R. No. 173155
DECISION
PERALTA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by petitioner
R.S. Tomas, Inc. against respondent Rizal Cement Company, Inc. assailing the Court of Appeals (CA)
Decision[1] dated December 19, 2005 and Resolution [2] dated June 6, 2006 in CA-G.R. CV No. 61049. The
assailed decision reversed and set aside the Regional Trial Court [3] (RTC) Decision[4] dated June 5, 1998
in Civil Case No. 92-1562.

The facts of the case, as culled from the records, are as follows:

On December 28, 1990, respondent and petitioner entered into a Contract [5] for the supply of labor,
materials, and technical supervision of the following projects:

1. J.O. #P-90-212 – Wiring and installation of primary and secondary lines system.

2. J.O. #P-90-213 – Supply and installation of primary protection and disconnecting

switch.

3. J.O. #P-90-214 – Rewinding and conversion of one (1) unit 3125 KVA, 34.5 KV/2.4
KV, 3ø Transformer to 4000 KVA, 34.5 KV/480V, 3ø Delta Primary, Wye with neutral
secondary.[6]

Petitioner agreed to perform the above-mentioned job orders. Specifically, it undertook to supply
the labor, equipment, supervision, and materials as specified in the detailed scope of work. [7] For its part,
respondent agreed to pay the total sum of P2,944,000.00 in consideration of the performance of the job
orders. Petitioner undertook to complete the projects within one hundred twenty (120) days from the
effectivity of the contract.[8] It was agreed upon that petitioner would be liable to respondent for liquidated
damages in the amount of P29,440.00 per day of delay in the completion of the projects which shall be
limited to 10% of the project cost.[9] To secure the full and faithful performance of all its obligations and
responsibilities under the contract, petitioner obtained from Times Surety & Insurance Co. Inc. (Times
Insurance) a performance bond [10]in an amount equivalent to fifty percent (50%) of the contract price
or P1,458,618.18. Pursuant to the terms of the contract, respondent made an initial payment
of P1,458,618.18 on January 8, 1991.[11]
In a letter[12] dated March 9, 1991, petitioner requested for an extension of seventy-five (75) days
within which to complete the projects because of the need to import some of the materials needed . In the
same letter, it also asked for a price adjustment of P255,000.00 to cover the higher cost of materials. [13] In
another letter[14] dated March 27, 1991, petitioner requested for another 75 days extension for the
completion of the transformer portion of the projects for failure of its supplier to deliver the materials.

On June 14, 1991,[15] petitioner manifested its desire to complete the project as soon as possible
to prevent further losses and maintain goodwill between the companies. Petitioner requested for
respondent’s assistance by facilitating the acquisition of materials and supplies needed to complete J.O.
#P-90-212 and J.O. #P-90-213 by directly paying the suppliers. It further sought that it be allowed to back
out from J.O. #P-90-214 covering the rewinding and conversion of the damaged transformer.

In response[16] to petitioner’s requests, respondent, through counsel, manifested its observation

that petitioner’s financial status showed that it could no longer complete the projects as agreed upon.
Respondent also informed petitioner that it was already in default having failed to complete the projects
within 120 days from the effectivity of the contract. Respondent further notified petitioner that the former
was terminating the contract. It also demanded for the refund of the amount already paid to petitioner,
otherwise, the necessary action would be instituted. Respondent sent another demand letter[17] to Times
Insurance for the payment of P1,472,000.00 pursuant to the performance bond it issued.
 On November 14, 1991,[18] respondent entered into two contracts with Geostar Philippines, Inc.
(Geostar) for the completion of the projects commenced but not completed by petitioner for a total
consideration of P3,435,000.00.

On December 14, 1991, petitioner reiterated its desire to complete J.O. #P-90-212 and J.O. #P-
90-213 and to exclude J.O. #P-90-214, [19] but the same was denied by respondent in a letter[20] dated
January 14, 1992. In the same letter, respondent pointed out that amicable settlement is impossible.
Hence, the Complaint for Sum of Money [21]filed by respondent against petitioner and Times Surety &
Insurance Co., Inc. praying for the payment of the following: P493,695.00 representing the amount which
they owed respondent from the downpayment and advances made by the latter vis-à-vis the work
accomplishment; P2,550,945.87 representing the amount incurred in excess of the cost of the projects as
agreed upon; P294,000.00 as liquidated damages; plus interest and attorney’s fees. [22]

Times Insurance did not file any pleading nor appeared in court. For its part, petitioner
denied[23] liability and claimed instead that it failed to complete the projects due to respondent’s fault. It
explained that it relied in good faith on respondent’s representation that the transformer subject of the
contract could still be rewound and converted but upon dismantling the core-coil assembly, it discovered
that the coils were already badly damaged and the primary bushing broken. This discovery allegedly
entailed price adjustment. Petitioner thus requested respondent for additional time within which to
complete the project and additional amount to finance the same. Petitioner also insisted that the
proximate cause of the delay is the misrepresentation of the respondent on the extent of the defect of the
transformer.

After the presentation of the parties’ respective evidence, the RTC rendered a decision on June 5,
1998 in favor of petitioner, the dispositive portion of which reads:

Wherefore, finding defendant-contractor’s evidence more preponderant than that

of the plaintiff, judgment is hereby rendered in favor of the defendant-contractor against
the plaintiff and hereby orders:

(1) that the instant case be DISMISSED;

(2) that plaintiff pays defendant the amount of P4,000,000.00; for moral
and exemplary & other damages;

(3) P100,000.00 for attorney’s fees and cost of suit.

SO ORDERED.[24]

The RTC held that the failure of petitioner to complete the projects was not solely due to its fault
but more on respondent’s misrepresentation and bad faith. [25] Therefore, the Court dismissed
respondent’s complaint. Since respondent was found to have committed deceit in its dealings with
petitioner, the court awarded damages in favor of the latter. [26]

Respondent, however, successfully obtained a favorable decision when its appeal was granted by
the CA. The appellate court reversed and set aside the RTC decision and awarded
respondent P493,695.34 for the excess payment made to petitioner, P508,510.00 for the amount spent in
contracting Geostar and P294,400.00 as liquidated damages. [27] Contrary to the conclusion of the RTC,
the CA found that petitioner failed to prove that respondent made fraudulent misrepresentation to induce
the former to enter into the contract. It further held that petitioner was given the opportunity to inspect the
transformer before offering its bid. [28] This being so, the CA added that petitioner’s failure to avail of such
opportunity is inexcusable, considering that it is a company engaged in the electrical business and the
contract involved a sizable amount of money.[29] As to the condition of the subject transformer unit, the
appellate court found the testimony of petitioner’s president insufficient to prove that the same could no
longer be rewound or converted.[30] Considering that advance payments had been made to petitioner, the
court deemed it necessary to require it to return to respondent the excess amounts, vis-à-vis its actual
accomplishment.[31] In addition to the refund of the excess payment, the CA also ordered the
reimbursement of what respondent paid to Geostar for the unfinished projects of petitioner as well as the
payment of liquidated damages as stipulated in the contract. [32]

Aggrieved, petitioner comes before the Court in this petition for review on certiorari under Rule 45
of the Rules of Court raising the following issues: (1) whether or not respondent was guilty of fraud or
misrepresentation as to the actual condition of the transformer subject of the contract; [33] (2) whether or
not the evidence presented by petitioner adequately established the true nature and condition of the
subject transformer;[34] (3) whether or not petitioner is guilty of inexcusable delay in the completion of the
projects;[35] (4) whether or not petitioner is liable for liquidated damages; [36] and (5) whether or not
petitioner is liable for the cost of the contract between respondent and Geostar. [37]

The petition is without merit.

The case stemmed from an action for sum of money or damages arising from breach of contract.
The contract involved in this case refers to the rewinding and conversion of one unit of transformer to be
installed and energized to supply respondent’s power requirements. [38] This project was embodied in three
(3) job orders, all of which were awarded to petitioner who represented itself to be capable, competent,
and duly licensed to handle the projects. [39] Petitioner, however, failed to complete the projects within the
agreed period allegedly because of misrepresentation and fraud committed by respondent as to the true
nature of the subject transformer. The trial court found that respondent indeed failed to inform petitioner of
the true condition of the transformer which amounted to fraud thereby justifying the latter’s failure to
complete the projects. The CA, however, had a different conclusion and decided in favor of respondent.
Ultimately, the issue before us is whether or not there was breach of contract which essentially is a factual
matter not usually reviewable in a petition filed under Rule 45. [40]

In resolving the issues, the Court inquires into the probative value of the evidence presented
before the trial court.[41] Petitioner, indeed, endeavors to convince us to determine once again the weight,
credence, and probative value of the evidence presented before the trial court. [42] While in general, the
findings of fact of the CA are final and conclusive and cannot be reviewed on appeal to the Court because
it is not a trier of facts, [43] there are recognized exceptions[44] as when the findings of fact are conflicting,
which is obtaining in this case. The conflicting conclusions of the trial and appellate courts impel us to re-
examine the evidence presented.
After a thorough review of the records of the case, we find no reason to depart from the
conclusions of the CA.

It is undisputed that petitioner and respondent entered into a contract for the supply of labor,
materials, and technical supervision primarily for the rewinding and conversion of one (1) unit of
transformer and related works aimed at providing the power needs of respondent. As agreed upon by the
parties, the projects were to be completed within 120 days from the effectivity of the contract. Admittedly,
however, respondent failed, not only to perform its part of the contract on time but, in fact, to complete the
projects. Petitioner tried to exempt itself from the consequences of said breach by passing the fault to
respondent. It explained that its failure to complete the project was due to the misrepresentation of the
respondent. It claimed that more time and money were needed, because the condition of the subject
transformer was worse than the representations of respondent. Is this defense tenable?

We answer in the negative.

Records show that petitioner indeed asked for price adjustment and extension of time within
which to complete the projects. In its letter[45] dated March 9, 1991, petitioner anchored its request for
extension on the following grounds:

1. To maximize the existing 3125 KVA to 4000 KVA capacity using the
same core, we will replace the secondary windings from rectangular type to copper sheet
which is more accurate in winding to the required number of turns than using parallel
rectangular or circular type of copper magnet wires. However, these copper sheets are
not readily available locally in volume quantities, and therefore, we will be importing this
material and it will take 60 days minimum time for its delivery.
 2. We also find it difficult to source locally the replacement for the
damaged high voltage bushing.

3. The delivery of power cable no. 2/0 will also be delayed. This will
take 90 days to deliver from January 1991.[46]

Also in its letter[47] dated March 27, 1991, petitioner informed respondent that the projects would
be completed within the contract time table but explained that the delivery of the transformer would only
be delayed. The reasons advanced by petitioner to justify the delay are as follows:

1. Our supplier for copper sheets cannot complete the delivery until April 30, 1991.

2. Importation of HV Bushing will take approximately 45 days delivery per advice

of our supplier. x x x[48]

Clearly, in the above letters, petitioner justified its inability to complete the projects within the
stipulated period on the alleged unavailability of the materials to be used to perform the projects as stated
in the job orders. Nowhere in said letters did petitioner claim that it could not finish the projects,
particularly the conversion of the transformer unit because the defects were worse than the
representation of respondent. In other words, there was no allegation of fraud, bad faith, concealment or
misrepresentation on the part of respondent as to the true condition of the subject transformer. Even in its
letter[49] dated May 25, 1991, petitioner only requested respondent that payment to the first progress
billing be released as soon as possible and without deduction. It further proposed that respondent make a
direct payment to petitioner’s suppliers.

It was only in its June 14, 1991 letter[50] when petitioner raised its observations that the subject
transformer needed more repairs than what it knew during the bidding. [51] In the same letter, however,
petitioner repeated its request that direct payment be made by respondent to petitioner’s suppliers.
[52]
More importantly, petitioner admitted that it made a judgment error when it quoted for
only P440,770.00 for the contract relating to J.O. #P-90-214 based on limited information.

It can be inferred from the foregoing facts that there was not only a delay but a failure to complete
the projects as stated in the contract; that petitioner could not complete the projects because it did not
have the materials needed; and that it is in need of financial assistance.

As the Court sees it, the bid submitted by petitioner may have been sufficient to be declared the
winner but it failed to anticipate all expenses necessary to complete the projects. [53] When it incurred
expenses it failed to foresee, it began requesting for price adjustment to cover the cost of high voltage
bushing and difference in cost of copper sheet and rectangular wire. [54] However, the scope of work
presented by respondent specifically stated that the wires to be used shall be pure copper and that there
was a need to supply new bushings for the complete rewinding and conversion of 3125 KVA to 4 MVA
Transformer.[55] In other words, petitioner was aware that there was a need for complete replacement of
windings to copper and of secondary bushings. [56] It is, therefore, improper for petitioner to ask for
additional amount to answer for the expenses that were already part and parcel of the undertaking it was
bound to perform. For petitioner, the contract entered into may have turned out to be an unwise
investment, but there is no one to blame but petitioner for plunging into an undertaking without fully
studying it in its entirety.[57]

The Court likewise notes that petitioner repeatedly asked for extension allegedly because it
needed to import the materials and that the same could not be delivered on time. Petitioner also
repeatedly requested that respondent make a direct payment to the suppliers notwithstanding the fact that
it contracted with respondent for the supply of labor, materials, and technical supervision. It is, therefore,
expected that petitioner would be responsible in paying its suppliers because respondent is not privy to
their (petitioner and its suppliers) contract. This is especially true in this case since respondent had
already made advance payments to petitioner. It appears, therefore, that in offering its bid, the source and
cost of materials were not seriously taken into consideration. It appears, further, that petitioner had a hard
time in fulfilling its obligations under the contract that is why it asked for financial assistance from
respondent. This is contrary to petitioner’s representation that it was capable, competent, and duly
licensed to handle the projects.

As to the alleged damaged condition of the subject transformer, we quote with approval the CA
conclusion in this wise:

In the same vein, We cannot readily accept the testimony of Tomas that the
transformer unit was severely damaged and was beyond repair as it was not
substantiated with any other evidence. R.S. Tomas could have presented an independent
expert witness whose opinion may corroborate its stance that the transformer unit was
indeed incapable of being restored. To our mind, the testimony of Tomas is self-serving
as it is easy to concoct, yet difficult to verify.[58]

This lack of evidence, coupled with petitioner’s failure to raise the same at the earliest opportunity, belies
petitioner’s claim that it could not complete the projects because the subject transformer could no longer
be repaired.

Assuming for the sake of argument that the subject transformer was indeed in a damaged condition
even before the bidding which makes it impossible for petitioner to perform its obligations under the
contract, we also agree with the CA that petitioner failed to prove that respondent was guilty of bad faith,
fraud, deceit or misrepresentation.

Bad faith does not simply connote bad judgment or negligence; it imports a dishonest purpose or
some moral obliquity and conscious doing of a wrong, a breach of a known duty through some motive or
interest or ill will that partakes of the nature of fraud. [59] Fraud has been defined to include an inducement
through insidious machination. Insidious machination refers to a deceitful scheme or plot with an evil or
devious purpose. Deceit exists where the party, with intent to deceive, conceals or omits to state material
facts and, by reason of such omission or concealment, the other party was induced to give consent that
would not otherwise have been given.[60] These are allegations of fact that demand clear and convincing
proof. They are serious accusations that can be so conveniently and casually invoked, and that is why
they are never presumed.[61] In this case, the evidence presented is insufficient to prove that respondent
acted in bad faith or fraudulently in dealing with petitioner.

Petitioner in fact admitted that its representatives were given the opportunity to inspect the
subject transformer before it offered its bid. If indeed the transformer was completely sealed, it should
have demanded that the same be opened if it found it necessary before it offered its bid. As contractor,
petitioner had been remiss in its obligation to obtain as much information as possible on the actual
condition of the subject transformer or at least it should have provided a qualification in its bid so as to
make clear its right to claim contract price and time adjustment. [62] As aptly held by the CA, considering
that petitioner is a company engaged in the electrical business and the contract it had entered into
involved a sizable amount of money, its failure to conduct an inspection of the subject transformer is
inexcusable.[63]

In sum, the evidence presented by the parties lead to the following conclusions: (1) that the
projects were not completed by petitioner; (2) that petitioner was given the opportunity to inspect the
subject transformer; (3) that petitioner failed to thoroughly study the entirety of the projects before it
offered its bid; (4) that petitioner failed to complete the projects because of the unavailability of the
required materials and that petitioner needed financial assistance; (5) that the evidence presented by
petitioner were inadequate to prove that the subject transformer could no longer be repaired; and (6) that
there was no evidence to show that respondent was in bad faith, acted fraudulently, or guilty of deceit and
misrepresentation in dealing with petitioner.

In view of the foregoing disquisitions, we find that there was not only delay but non-completion of
the projects undertaken by petitioner without justifiable ground. Undoubtedly, petitioner is guilty of breach
of contract. Breach of contract is defined as the failure without legal reason to comply with the terms of a
contract. It is also defined as the failure, without legal excuse, to perform any promise which forms the
whole or part of the contract. [64] In the present case, petitioner did not complete the projects. This gives
respondent the right to terminate the contract by serving petitioner a written notice. The contract
specifically stated that it may be terminated for any of the following causes:

1. Violation by Contractor of the terms and conditions of this Contract;

2. Non-completion of the Work within the time agreed upon, or upon the expiration
of extension agreed upon;

3. Institution of insolvency or receivership proceedings involving Contractor; and

4. Other causes provided by law applicable to this contract. [65]

Consequently, and pursuant to the agreement of the parties, [66] petitioner is liable for liquidated damages
in the amount of P29,440.00 per day of delay, which shall be limited to a maximum of 10% of the project
cost or P294,400.00. In this case, petitioner bound itself to complete the projects within 120 days from
December 29, 1990. However, petitioner failed to fulfill the same prompting respondent to engage the
services of another contractor on November 14, 1991. Thus, despite the lapse of eleven months from the
time of the effectivity of the contract entered into between respondent and petitioner, the latter had not
completed the projects. Undoubtedly, petitioner may be held to answer for liquidated damages in its
maximum amount which is 10% of the contract price. While we have reduced the amount of liquidated
damages in some cases,[67] because of partial fulfillment of the contract and/or the amount is
unconscionable, we do not find the same to be applicable in this case. It must be recalled that the
contract entered into by petitioner consists of three projects, all of which were not completed by petitioner.
Moreover, the percentage of work accomplishment was not adequately shown by petitioner. Hence, we
apply the general rule not to ignore the freedom of the parties to agree on such terms and conditions as
they see fit as long as they are not contrary to law, morals, good customs, public order or public policy.
[68]
Thus, as agreed upon by the parties, we apply the 10% liquidated damages.

Considering that petitioner was already in delay and in breach of contract, it is liable for damages
that are the natural and probable consequences of its breach of obligation.[69] Since advanced payments
had been made by respondent, petitioner is bound to return the excess vis-à-vis its work
accomplishments. In order to finish the projects, respondent had to contract the services of another
contractor. We, therefore, find no reason to depart from the CA conclusion requiring the return of the
excess payments as well as the payment of the cost of contracting Geostar, in addition to liquidated
damages.[70]

WHEREFORE, premises considered, the petition is hereby DENIED. The Court of Appeals
Decision dated December 19, 2005 and Resolution dated June 6, 2006 in CA-G.R. CV No. 61049
are AFFIRMED.

SO ORDERED.

DECISION

BRION, J.:

Before the Court is the petition for review on certiorari1 filed under Rule 45 of the Rules of Court, assailing
the decision2 dated July 30, 2009 and the resolution3 dated February 19, 2010 of the Court of Appeals
(CA) in CA-G.R. CV No. 86083. The CA rulings affirmed with modification the decision dated September
27, 2004 of the Regional Trial Court (RTC) of Bacoor, Cavite, Branch 19, in Civil Case No. BCV-99-146
which granted respondent Atty. Delfin Grupe’s claim for payment of sum of money against petitioners
Rodolfo G. Cruz and Esperanza Ibias.4

THE FACTUAL BACKGROUND

The claim arose from an accident that occurred on October 24, 1999, when the mini bus owned and
operated by Cruz and driven by one Arturo Davin collided with the Toyota Corolla car of Gruspe; Gruspe’s
car was a total wreck. The next day, on October 25, 1999, Cruz, along with Leonardo Q. Ibias went to
Gruspe’s office, apologized for the incident, and executed a Joint Affidavit of Undertaking promising jointly
and severally to replace the Gruspe’s damaged car in 20 days, or until November 15, 1999, of the same
model and of at least the same quality; or, alternatively, they would pay the cost of Gruspe’s car
amounting to P350,000.00, with interest at

12% per month for any delayed payment after November 15, 1999, until fully paid.5 When Cruz and
Leonardo failed to comply with their undertaking, Gruspe filed a complaint for collection of sum of money
against them on November 19, 1999 before the RTC.

In their answer, Cruz and Leonardo denied Gruspe’s allegation, claiming that Gruspe, a lawyer, prepared
the Joint Affidavit of Undertaking and forced them to affix their signatures thereon, without explaining and
informing them of its contents; Cruz affixed his signature so that his mini bus could be released as it was
his only means of income; Leonardo, a barangay official, accompanied Cruz to Gruspe’s office for the
release of the mini bus, but was also deceived into signing the Joint Affidavit of Undertaking.

Leonardo died during the pendency of the case and was substituted by his widow, Esperanza.
Meanwhile, Gruspe sold the wrecked car for P130,000.00.

In a decision dated September 27, 2004, the RTC ruled in favor of Gruspe and ordered Cruz and
Leonardo to pay P220,000.00,6 plus 15% per annum from November 15, 1999 until fully paid, and the
cost of suit.

On appeal, the CA affirmed the RTC decision, but reduced the interest rate to 12% per annum pursuant to
the Joint Affidavit of Undertaking.7 It declared that despite its title, the Joint Affidavit of Undertaking is a
contract, as it has all the essential elements of consent, object certain, and consideration required under
Article 1318 of the Civil

Code. The CA further said that Cruz and Leonardo failed to present evidence to support their contention
of vitiated consent. By signing the Joint Affidavit of Undertaking, they voluntarily assumed the obligation
for the damage they caused to Gruspe’s car; Leonardo, who was not a party to the incident, could have
refused to sign the affidavit, but he did not.

THE PETITION

In their appeal by certiorari with the Court, Cruz and Esperanza assail the CA ruling, contending that the
Joint Affidavit of Undertaking is not a contract that can be the basis of an obligation to pay a sum of
money in favor of Gruspe. They consider an affidavit as different from a contract: an affidavit’s purpose is
simply to attest to facts that are within his knowledge, while a contract requires that there be a meeting of
the minds between the two contracting parties.

Even if the Joint Affidavit of Undertaking was considered as a contract, Cruz and Esperanza claim that it
is invalid because Cruz and Leonardo’s consent thereto was vitiated; the contract was prepared by
Gruspe who is a lawyer, and its contents were never explained to them. Moreover, Cruz and Leonardo
were simply forced to affix their signatures, otherwise, the mini van would not be released.

Also, they claim that prior to the filing of the complaint for sum of money, Gruspe did not make any
demand upon them. Hence, pursuant to Article 1169 of the Civil Code, they could not be considered in
default. Without this demand, Cruz and Esperanza contend that Gruspe could not yet take any action.

THE COURT’S RULING

The Court finds the petition partly meritorious and accordingly modifies the judgment of the CA.
Contracts are obligatory no matter what their forms may be, whenever the essential requisites for their
validity are present. In determining whether a document is an affidavit or a contract, the Court looks
beyond the title of the document, since the denomination or title given by the parties in their document is
not conclusive of the nature of its contents.8 In the construction or interpretation of an instrument, the
intention of the parties is primordial and is to be pursued. If the terms of the document are clear and leave
no doubt on the intention of the contracting parties, the literal meaning of its stipulations shall control. If
the words appear to be contrary to the parties’ evident intention, the latter shall prevail over the former. 9

A simple reading of the terms of the Joint Affidavit of Undertaking readily discloses that it contains
stipulations characteristic of a contract. As quoted in the CA decision,10 the Joint Affidavit of Undertaking
contained a stipulation where Cruz and Leonardo promised to replace the damaged car of Gruspe, 20
days from October 25, 1999 or up to November 15, 1999, of the same model and of at least the same
quality. In the event that they cannot replace the car within the same period, they would pay the cost of
Gruspe’s car in the total amount ofP350,000.00, with interest at 12% per month for any delayed payment
after November 15, 1999, until fully paid. These, as read by the CA, are very simple terms that both Cruz
and Leonardo could easily understand.

There is also no merit to the argument of vitiated consent.1âwphi1 An allegation of vitiated consent must
be proven by preponderance of evidence; Cruz and Leonardo failed to support their allegation.

Although the undertaking in the affidavit appears to be onerous and lopsided, this does not necessarily
prove the alleged vitiation of consent. They, in fact, admitted the genuineness and due execution of the
Joint Affidavit and Undertaking when they said that they signed the same to secure possession of their
vehicle. If they truly believed that the vehicle had been illegally impounded, they could have refused to
sign the Joint Affidavit of Undertaking and filed a complaint, but they did not. That the release of their mini
bus was conditioned on their signing the Joint Affidavit of Undertaking does not, by itself, indicate that
their consent was forced – they may have given it grudgingly, but it is not indicative of a vitiated consent
that is a ground for the annulment of a contract.

Thus, on the issue of the validity and enforceability of the Joint Affidavit of Undertaking, the CA did not
commit any legal error that merits the reversal of the assailed decision.

Nevertheless, the CA glossed over the issue of demand which is material in the computation of interest on
the amount due. The RTC ordered Cruz and Leonardo to pay Gruspe "P350,000.00 as cost of the car xxx
plus fifteen percent (15%) per annum from November 15, 1999 until fully paid." 11 The 15% interest (later
modified by the CA to be 12%) was computed from November 15, 1999 – the date stipulated in the Joint
Affidavit of Undertaking for the payment of the value of Gruspe’s car. In the absence of a finding by the
lower courts that Gruspe made a demand prior to the filing of the complaint, the interest cannot be
computed from November 15, 1999 because until a demand has been made, Cruz and Leonardo could
not be said to be in default.12 "In order that the debtor may be in default, it is necessary that the following
requisites be present: (1) that the obligation be demandable and already liquidated; (2) that the debtor
delays performance; and (3) that the creditor requires the performance judicially and
extrajudicially."13 Default generally begins from the moment the creditor demands the performance of the
obligation. In this case, demand could be considered to have been made upon the filing of the complaint
on November 19, 1999, and it is only from this date that the interest should be computed.

Although the CA upheld the Joint Affidavit of Undertaking, we note that it imposed interest rate on a per
annum basis, instead of the per month basis that was stated in the Joint Affidavit of Undertaking without
explaining its reason for doing so.14 Neither party, however, questioned the change. Nonetheless, the
Court affirms the change in the interest rate from 12% per month to 12% per annum, as we find the
interest rate agreed upon in the Joint Affidavit of Undertaking excessive. 15

WHEREFORE, we AFFIRM the decision dated July 30, 2009 and the resolution dated February 19, 2010
of the Court of Appeals in CA-G.R. CV No. 86083, subject to the Modification that the twelve percent
(12%) per annum interest imposed on the amount due shall accrue only from November 19, 1999, when
judicial demand was made.
SO ORDERED.