Filinvest v. Phil. Acetylene Digest, G.R. No. L-50449

Special Form of Payment - Dacion

Filinvest v. Phil. Acetylene

G.R. No. L-50449 January 30, 1982

Facts:

Phil. Acetylene (Defendant) purchased a vehicle through a Deed of Sale from Alexander Lim payable on installment. The balance is to be paid under a promissory note with the said vehicle as the subject of a chattel mortgage to secure the obligation. Subsequently, Lim assigned his rights to the vehicle to appellee corporation (Filinvest). Phil. Acetylene defaulted after it failed to pay nine (9) successive installments. The petitioner through a demand letter informed the defendant to make the full payment plus interests and charges or return the mortgaged property. As a result, the defendant returned the vehicle together with the document "Voluntary Surrender with Special Power of Attorney To Sell" by appellant on March 12, 1973 and confirmed to by Filinvest’s vice-president.

Filinvest then informed appellant thru a letter that it cannot sell the vehicle due to its unpaid taxes in the amount of P70,122. On the last portion of the said letter, appellee requested the appellant to update its account by paying the instalments in arrears and accruing interest in the amount of P4,232.21 on or before April 9, 1973. On May 8, 1973, appellee, in a letter, offered to deliver back the motor vehicle to the appellant but the latter refused to accept it, so the appellee instituted an action for collection of a sum of money with damages in the CFI of Manila.

Phil. Acetylene argued that appellee has no cause of action against it since its obligation towards the appellee was extinguished when it returned the mortgaged property, and that assuming that the return of the property did not extinguish its obligation, it was nonetheless justified in refusing payment since the appellee is not entitled to recover the same due to the breach of warranty committed by the original vendor-assignor Alexander Lim.

Issue: whether or not the return of the mortgaged motor vehicle to the appellee by virtue of a voluntary surrender by the appellant totally extinguished and/or cancelled the obligation

RULING: No. No dacion en pago here since there’s nothing in the evidence to show that Filinvest consented or intended that the mere delivery to and acceptance by him of the vehicle be construed as actual payment or more specifically, dacion en pago. The mere return of the mortgaged motor vehicle by the mortgagor (herein appellant) to the mortgagee, (appellee), does not constitute dation in payment or dacion en pago in the absence, express or implied of the true intention of the parties. Dacion en pago, (according to Manresa) is the transmission of the ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of obligation.  In dacion en pago, as a special mode of payment, the debtor offers another thing to the creditor who accepts it as equivalent of payment of an outstanding debt. The undertaking really partakes in one sense of the nature of sale, that is, the creditor is really buying the thing or property of the debtor, payment for which is to be charged against the debtor's debt. As such, the essential elements of a contract of sale, namely, consent, object certain, and cause or consideration must be present. In its modern concept, what actually takes place in dacion en pago is an objective novation of the obligation where the thing offered as an accepted equivalent of the performance of an obligation is considered as the object of the contract of sale, while the debt is considered as the purchase price.  In any case, common consent is an essential prerequisite, be it sale or innovation to have the effect of totally extinguishing the debt or obligation.

The evidence fails to show that Filinvest consented, or at least intended, that the mere delivery to, and acceptance by him, of the mortgaged motor vehicle be construed as actual payment, more specifically dation in payment or dacion en pago. The fact that the mortgaged motor vehicle was delivered to him does not necessarily mean that ownership thereof, as juridically contemplated by dacion en pago, was transferred from appellant to appellee. In the absence of clear consent of appellee to the proferred special mode of payment, there can be no transfer of ownership of the mortgaged motor vehicle from appellant to appellee. If at all, only transfer of possession of the mortgaged motor vehicle took place, for it is quite possible that appellee, as mortgagee, merely wanted to secure possession to forestall the loss, destruction, fraudulent transfer of the vehicle to third persons, or its being rendered valueless if left in the hands of the appellant.

Finally the Voluntary Surrender with SPA to Sell executed reveals that the possession of the mortgaged motor vehicle was voluntarily surrendered by the appellant to the appellee authorizing the latter to look for a buyer and sell the vehicle in behalf of the former who retains ownership thereof, and to apply the proceeds of the sale to the mortgage indebtedness, with the undertaking of the appellant to pay the difference, if any, between the selling price and the mortgage obligation. With the stipulated conditions as stated, the appellee, in essence was constituted as a mere agent to sell the motor vehicle which was delivered to the appellee, not as its property. There is no estoppel on part of Filinvest to demand payment from the unpaid obligation since it never accepted the mortgaged motor vehicle in cull satisfaction of the mortgaged debt.

Aranas v. Tutaan Digest

Payment or Performance

Aranas v Tutaan

127 SCRA 828

Facts: The stocks of Universal Textile Mills (UTEX) were issued to co-defendants Manuel and Castaneda. Subsequently, in 1971, the lower court declared that Luisa Aranas is the rightful owner of the 400 shares of stocks at Universal Textile Mills (UTEX. Further, it ordered that dividends in cash or stocks pertaining to the same be delivered to Aranas. UTEX then filed a motion to clarify the phrase in said decision which states “to deliver to her all dividends appertaining to the same, whether in cash or in stocks” meant dividends properly pertaining to the plaintiffs after the court’s declaration of her ownership. The said motion was granted, where the court ordered UTEX to pay the plaintiff the cash dividends which accrued to the stocks in question after the current decision was rendered but the cash dividends already paid to the co-defendants before the court decision may not be claimed by the plaintiffs.

The co-defendants filed for a new trial  and the decision was the same as the the 1971 ruling. Upon appeal to the CA, the said ruling was affirmed. The lower court issued a writ of execution in 1979 directed to UTEX to 1) cancel the certificate of stocks of the co-defendants and issue new ones in the name of the petitioners, and 2) Pay the cash dividends accrued from 1972 to 1979 (period from the new trial to the issuance of writ of execution). UTEX alleged that the cash dividends had already  been paid.

ISSUE: Whether or not there was valid payment

RULING: No. It is elementary that payment made by a judgment debtor to a wrong party cannot extinguish the obligation of such debtor to its creditor. It was clear in the motion for clarification that all dividends accruing to the said shares after the rendition of judgement belonged to the Aranas. When UTEX paid the wrong parties, despite its knowledge and understanding of the final judgment, it is still liable to pay Aranas as the lawful declared owners of the said shares. The burden to recover the wrong payment is on UTEX and cannot be passed on to the Aranas as the innocent parties.

My HP Photosmart All-in-One Printer Nightmare

All-in-One Printers seem to be the solution for a student's or small business owners' printing woes. This is my sad experience with the worst after-sales customer service I experienced with respect to a product from  HP. I bought an HP Photosmart Ink Advantage All-in-One printer model K510 about fifteen (15) months ago for a little less than PhP8000. It all went okay during the first round of the ink I got, then problems started to crop up, the most persistent one being -- the printer would not recognize the ink cartridge. The cartridges are of course brought from the same store where I purchased the printer. I never even used a refill. I don't have any knowledge about printer fixing so I did everything to somehow manage the problem which includes cleaning, restarting, etc. I literally felt that I am in the mercy of this expensive printer each time I want to print something. It would literally ruin my day, doing all that.

I got so frustrated that I stopped using the said printer altogether. It remained unused for the next four months or so. After which, I brought the printer to an authorized HP service center. I have no idea what they fixed in there but after about a week I got it back. Since it was still under warranty I never paid anything. So a few weeks of using it went by without any problem- and mind you I'm not a heavy user since I'm basically the only person in the house who does most printing - then the error message started showing again. It would print, then would show an error that the cartridge is not recognize, I mean, what the? I spent all that money expecting a seamless functioning printer and all I got are headaches each time. More than this, the rollers move so bad, that it would literally knock off the power!

I have never felt so cheated with this purchase. I bought this all in one printer thinking it would be a good investment and all but lo, I get frustrated each time I use it. The last straw came when, a few weeks back, I decided to bring it to the service center in the hope of somehow salvaging this worthless equipment. And you know what I found out? The CSR there told me that HP no longer services or repairs this printer and it is either I get a replacement or buy a new one. Sadly, I am no longer under warranty, so that means getting replacement which would literally cost me the same as buying a new printer. Whaat? So it is the same as saying I should just throw this printer. It is like buying a disposable printer that you would have no choice but to dispose of after a year.

This is not good and so unfair to consumers like me! I can't just sit down and let this horrible after sales conduct go on. It's like they are saying it's my fault that I bought this printer, and that it's my fault that it is no longer under warranty. What kind of customer service is that HP?

Eleizegui v. The Manila Lawn Tennis Club Digest G.R. No. 967

Eleizegui v. The Manila Lawn Tennis Club

G.R. No. 967 May 19, 1903

Facts:

A contract of lease was executed on January 25, 1980 over a piece of land owned by the plaintiffs Eleizegui (Lessor)  to the Manila Lawn Tennis Club, an English association (represented by Mr. Williamson) for a fixed consideration of P25 per month and accordingly, to last at the will of the lessee. Under the contract, the lessee can make improvements deemed desirable for the comfort and amusement of its members. It appeared that the plaintiffs terminated the lease right on the first month. The defendant is in the belief that there can be no other mode of terminating the lease than by its own will, as what they believe has been stipulated.

As a result the plaintiff filed a case for unlawful detainer for the restitution of the land claiming that article 1569 of the Civil Code provided that a lessor may judicially dispossess the lessee upon the expiration of the conventional term or of the legal term; the conventional term — that is, the one agreed upon by the parties; the legal term, in defect of the conventional, fixed for leases by articles 1577 and 1581. The Plaintiffs argued that the duration of the lease depends upon the will of the lessor on the basis of Art. 1581 which provides that, "When the term has not been fixed for the lease, it is understood to be for years when an annual rental has been fixed, for months when the rent is monthly. . . ." The second clause of the contract provides as follows: "The rent of the said land is fixed at 25 pesos per month."

The lower court ruled in favor of the Plaintiffs on the basis of Article 1581 of the Civil Code, the law which was in force at the time the contract was entered into. It is of the opinion that the contract of lease was terminated by the notice given by the plaintiff. The judgment was entered upon the theory of the expiration of a legal term which does not exist, as the case requires that a term be fixed by the courts under the provisions of article 1128 with respect to obligations which, as is the present, are terminable at the will of the obligee.

ISSUE: a) Whether or not the parties have agreed upon the duration of the lease

             b) Whether or not the lease depends upon the will of the lessee

RULING:

a)      YES, the parties have agreed upon a term hence Art. 1581 is inapplicable.

The legal term cannot be applied under Art 1581 as it appears that there was actually an agreement between the parties as to the duration of the lease, albeit implied that the lease is to be dependent upon the will of the lessee. It would be absurd to accept the argument of the plaintiff that the contract was terminated at its notice, given this implication.

Interestingly, the contract should not be understood as one stipulated as a life tenancy, and still less as a perpetual lease since the terms of the contract express nothing to this effect, even if they implied this idea. If the lease could last during such time as the lessee might see fit, because it has been so stipulated by the lessor, it would last, first, as long as the will of the lessee — that is, all his life; second, during all the time that he may have succession, inasmuch as he who contracts does so for himself and his heirs. (Art. 1257 of the Civil Code.) The lease in question does not fall within any of the cases in which the rights and obligations arising from a contract can not be transmitted to heirs, either by its nature, by agreement, or by provision of law. Moreover, being a lease, then it must be for a determinate period. (Art. 1543.) By its very nature it must be temporary, just as by reason of its nature, an emphyteusis must be perpetual, or for an unlimited period. (Art. 1608.)

B) The duration of the lease does not depend solely upon the will of the Lessee (defendant).

It cannot be concluded that the termination of the contract is to be left completely at the will of the lessee simply because it has been stipulated that its duration is to be left to his will.

The Civil Code has made provision for such a case in all kinds of obligations. In speaking in general of obligations with a term it has supplied the deficiency of the former law with respect to the "duration of the term when it has been left to the will of the debtor," and provides that in this case the term shall be fixed by the courts. (Art. 1128, sec. 2.) In every contract, as laid down by the authorities, there is always a creditor who is entitled to demand the performance, and a debtor upon whom rests the obligation to perform the undertaking. In bilateral contracts the contracting parties are mutually creditors and debtors. Thus, in this contract of lease, the lessee is the creditor with respect to the rights enumerated in article 1554, and is the debtor with respect to the obligations imposed by articles 1555 and 1561. The term within which performance of the latter obligation is due is what has been left to the will of the debtor. This term it is which must be fixed by the courts.

The only action which can be maintained under the terms of the contract is that by which it is sought to obtain from the judge the determination of this period, and not the unlawful detainer action which has been brought — an action which presupposes the expiration of the term and makes it the duty of the judge to simply decree an eviction. To maintain the latter action it is sufficient to show the expiration of the term of the contract, whether conventional or legal; in order to decree the relief to be granted in the former action it is necessary for the judge to look into the character and conditions of the mutual undertakings with a view to supplying the lacking element of a time at which the lease is to expire.

The lower court’s judgement is erroneous and  therefore reversed and the case was remanded with directions to enter a judgment of dismissal of the action in favor of the defendant, the Manila Lawn Tennis Club.

Telefast v. Castro Digest G.R. No. 73867

Telefast v. Castro

G.R. No. 73867 February 29, 1988

Facts:

1. The petitioner is a company engaged in transmitting telegrams. The plaintiffs are the children and spouse of Consolacion Castro who died in the Philippines. One of the plaintiffs, Sofia sent a telegram thru Telefast to her father and other siblings in the USA to inform about the death of their mother. Unfortunately, the deceased had already been interred but not one from the relatives abroad was able to pay their last respects. Sofia found out upon her return in the US that the telegram was never received. Hence the suit for damages on the ground of breach of contract. The defendant-petitioner argues that it should only pay the actual amount paid to it.
2. The lower court ruled in favor of the plaintiffs and awarded compensatory, moral, exemplary, damages to each of the plaintiffs with 6% interest p.a. plus attorney’s fees.  The Court of Appeals affirmed this ruling but modified and eliminated the compensatory damages to Sofia and exemplary damages to each plaintiff, it also reduced the moral damages for each. The petitioner appealed contending that, it can only be held liable for P 31.92, the fee or charges paid by Sofia C. Crouch for the telegram that was never sent to the addressee, and that the moral damages should be removed since defendant's negligent act was not motivated by "fraud, malice or recklessness.

Issue: Whether or not the award of the moral, compensatory and exemplary damages is proper.

RULING: Yes, there was a contract between the petitioner and private respondent Sofia C. Crouch whereby, for a fee, petitioner undertook to send said private respondent's message overseas by telegram. Petitioner failed to do this despite performance by said private respondent of her obligation by paying the required charges. Petitioner was therefore guilty of contravening its and is thus liable for damages. This liability is not limited to actual or quantified damages. To sustain petitioner's contrary position in this regard would result in an inequitous situation where petitioner will only be held liable for the actual cost of a telegram fixed thirty (30) years ago.

Art. 1170 of the Civil Code provides that "those who in the performance of their obligations are guilty of fraud, negligence or delay, and those who in any manner contravene the tenor thereof, are liable for damages." Art. 2176 also provides that "whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done."

Award of Moral, compensatory and exemplary damages is proper.

The petitioner's act or omission, which amounted to gross negligence, was precisely the cause of the suffering private respondents had to undergo.  Art. 2217 of the Civil Code states: "Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate results of the defendant's wrongful act or omission."

Then, the award of P16,000.00 as compensatory damages to Sofia C. Crouch representing the expenses she incurred when she came to the Philippines from the United States to testify before the trial court. Had petitioner not been remiss in performing its obligation, there would have been no need for this suit or for Mrs. Crouch's testimony.

The award of exemplary damages by the trial court is likewise justified for each of the private respondents, as a warning to all telegram companies to observe due diligence in transmitting the messages of their customers.

Palay Inc. v. Clave Digest G.R. No. L-56076

Palay Inc. v. Clave

G.R. No. L-56076 September 21, 1983

Facts:

1.       On March 28, 1965, petitioner Palay, Inc., through its President, Albert Onstott sold a parcel of land owned by the corporation to the private respondent, Nazario Dumpit, by virtue of a Contract to Sell. The sale price was P23,300.00 with 9% interest per annum, payable with a down payment of P4,660.00 and monthly instalments of P246.42 until fully paid. Paragraph 6 of the contract provided for automatic extrajudicial rescission upon default in payment of any monthly instalment after the lapse of 90 days from the expiration of the grace period of one month, without need of notice and with forfeiture of all instalments paid.

2.    Respondent Dumpit paid the down payment and several instalments amounting to P13,722.50 with the last payment was made on December 5, 1967 for instalments up to September 1967. Almost six (6) years later, private respondent wrote petitioner offering to update all his overdue accounts and sought consent to the assignment of his rights to a certain Lourdes Dizon. Petitioners informed respondent that his Contract to Sell had long been rescinded pursuant to paragraph 6 of the contract, and that the lot had already been resold.

3.       Respondent filed a letter complaint with the National Housing Authority (NHA) questioning the validity of the rescission. The NHA held that the rescission is void in the absence of either judicial or notarial demand.  Palay, Inc. and Onstott in his capacity as President of the corporation, jointly and severally, was ordered to refund Dumpit the amount paid plus  12% interest from the filing of the complaint. Petitioners' MR was denied by the NHA. Respondent Presidential Executive Assistant, on May 2, 1980, affirmed the Resolution of the NHA. Reconsideration sought by petitioners was denied for lack of merit. Thus, the present petition.

Issue: W/N demand is necessary to rescind a contract

Ruling: As held in previous jurisprudence, the judicial action for the rescission of a contract is not necessary where the contract provides that it may be revoked and cancelled for violation of any of its terms and conditions. However, even in the cited cases, there was at least a written notice sent to the defaulter informing him of the rescission. A written notice is indispensable to inform the defaulter of the rescission. Hence, the resolution by petitioners of the contract was ineffective and inoperative against private respondent for lack of notice of resolution (as held in the U.P. vs. Angeles case). The act of a party in treating a contract as cancelled should be made known to the other. 

Later, RA 6551 6551 entitled "An Act to Provide Protection to Buyers of Real Estate on Instalment Payments,” emphasized the indispensability of notice of cancellation to the buyer when it specifically provided:

Sec. 3(b) ... 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).

Moreover, there was no waiver on the part of the private respondent of his right to be notified under paragraph 6 of the contract since it was a contract of adhesion, a standard form of petitioner corporation, and private respondent had no freedom to stipulate. Finally, it is a matter of public policy to protect buyers of real estate on instalment payments against onerous and oppressive conditions. Waiver of notice is one such onerous and oppressive condition to buyers of real estate on instalment payments.

As a consequence of the resolution by petitioners, rights to the lot should be restored to private respondent or the same should be replaced by another acceptable lot but since the property had already been sold to a third person and there is no evidence on record that other lots are still available, private respondent is entitled to the refund of instalments paid plus interest at the legal rate of 12% computed from the date of the institution of the action. It would be most inequitable if petitioners were to be allowed to retain private respondent's payments and at the same time appropriate the proceeds of the second sale to another.

Onstott not personally liable

Onstott was made liable because he was then the President of the corporation and the controlling stockholder but there was no sufficient proof that he used the corporation to defraud private respondent. He cannot, therefore, be made personally liable just because he "appears to be the controlling stockholder". Mere ownership by a single stockholder or by another corporation is not of itself sufficient ground for disregarding the separate corporate personality. 

Finally, there are no badges of fraud on the petitioners' part. They had literally relied, albeit mistakenly, on paragraph 6 (supra) of the contract when it rescinded the contract to sell extrajudicially and had sold it to a third person.

Petitioner Palay, Inc. is liable to refund to respondent Dumpit the amount of P13,722.50, with interest at twelve (12%) p.a. from November 8, 1974, the date of the filing of the Complaint.

The Bachrach Motor Co v. Espiritu Digest

The Bachrach Motor Co v. Espiritu

G.R. No. L-28497    November 6, 1928

Facts:

1.       This is a consolidated case(Cases no. 28497 and 28948) involving two separate sale transactions. One made in Feb. 18, 1925 (case 28498), when the defendant earlier bought a truck on instalment from the petitioner and said truck was mortgaged together with the two others (no. 77197 & 92744 in the the subsequent sale transaction dated July 28, 1925. The said two of the other trucks were also purchased (but already paid previously) from the plaintiff.  The defendant failed to pay the balance. In July 1925, defendant again purchased another truck from Bachrach. The said truck, together with the 3 other vehicles were mortgaged to the plaintiff to secure the remaining balance. The defendant failed to pay the balance for the latest truck obtained.

2.     It was agreed in both sales that 12% interest will be paid on the unpaid price, and in case of the non-payment of the total debt at maturity, 25% shall be the penalty. The defendant also signed a promissory note solidarily with his brother Rosario (acting as intervenor), the sums secured by the mortgages. Rosario is alleged to be the owner of the two white trucks no. 77197 & 92744 mortgaged.

3.       While these two cases were pending in the lower court the mortgaged trucks were sold by virtue of the mortgage, all of them together bringing in, after deducting the sheriff's fees and transportation charges to Manila, the net sum of P3,269.58.

4.       The lower court ordered the defendants and the intervenor to pay plaintiff in case 28497 the sum of P7,732.09 with interest at the rate of 12 per cent per annum from May 1, 1926 until fully paid, and 25 per cent thereof in addition as penalty. In case 28498, the trial court ordered the defendant and the intervenor to pay plaintiff the sum of P4,208.28 with interest at 12 per cent per annum from December 1, 1925 until fully paid, and 25 per cent thereon as penalty.

5.       The appellants contend that trucks 77197 and 92744 were not mortgaged, because, when the defendant signed the mortgage deeds these trucks were not included in those documents, and were only put in later, without defendant's knowledge. Appellants also alleged that on February 4, 1925, the defendant sold his rights in said trucks Nos. 77197 and 92744 to the intervenor, and that as the latter did not sign the mortgage deeds, such trucks cannot be considered as mortgaged.

6.       But there is positive proof that they were included at the time the defendant signed these documents. Besides, there were presented two of defendant's letters to Hidalgo, an employee of the plaintiff's written a few days before the transaction, acquiescing in the inclusion of all his White trucks already paid for, in the mortgage (Exhibit H-I).

Issue: W/N the 25% penalty upon the debt in addition to the 25% p.a. is usurious

Ruling: No, Article 1152 of the Civil Code permits the agreement upon a penalty apart from the interest. Should there be such an agreement, the penalty, as was held in the case of Lopez vs. Hernaez (32 Phil., 631), does not include the interest, and which may be demanded separately. The penalty is not to be added to the interest for the determination of whether the interest exceeds the rate fixed by the law, since said rate was fixed only for the interest. But considering that the obligation was partly performed, and making use of the power given to the court by article 1154 of the Civil Code, this penalty is reduced to 10 per cent of the unpaid debt. The penalty is however reduced from 25 % upon the sum owed, the defendants need pay only 10 % thereon as penalty. (Judgment appealed from is affirmed in all other respects).