575 Phil. 498
PUNO, C.J.:
(1) The PURCHASER agrees to pay to the OWNER upon execution of this Contract the sum of FORTY THOUSAND PESOS (P40,000) as first payment on account of the purchase price and agrees to pay the balance of FIVE HUNDRED TEN THOUSAND PESOS (P510,000) at the office of the OWNER in the City of Quezon, Philippines, or such other office as the OWNER may designate in 120 equal monthly installment of NINE THOUSAND ONE HUNDRED EIGHTY NINE AND 45/100 PESOS (P9,189.45) interest being included on successive monthly balance at 18% per annum, and payments to be made on the _____ day of each month thereafter beginning April 20, 1988.Under the Agreement, the ownership of the land remains with Del-Nacia until full payment of the stipulated purchase price under the following terms and conditions:
x x x x
(5) In the event that any of the payments as stipulated be not paid when, where, and as the same become due; it is agreed that sums in arrears shall bear interest at the rate of EIGHTEEN (18%) per centum per annum payable monthly from the date on which said sums is due and payable.
(6) If any such payment or payments shall continue in arrears for more than sixty-days, or if the PURCHASER shall violate any of the conditions herein set forth then the entire unpaid balance due under this contract, with any interest which may have attached shall at once become due and payable and shall bear interest at the rate of TWELVE (12%) per centum per annum until paid, and in such case, the PURCHASER further agrees to pay to the OWNER a sum equal to ten (10%) per centum of the amount due as attorney's fees.[3]
(3) Title to said parcel of land shall remain in the name of the OWNER until complete payment by the PURCHASER of all obligations herein stipulated, at which time the OWNER agree to execute a final deed of sale in favor of the PURCHASER and cause the issuance of a certificate of title in the name of the latter, free from liens and encumbrances except those provided in the Land Registration Act, those imposed by the authorities, and those contained in Clauses (10) and (16) of this agreement. Registration fees and documentary stamps of the deed of sale shall be paid by the PURCHASER.Upon signing of the Agreement, the Spouses Nicolas paid the down payment of P40,000. Thereupon, the Spouses Nicolas took possession of the land, and for several months thereafter, paid on or before the 20th of each month, the monthly amortizations.[5]
(4) Only the PURCHASER shall be deemed for all legal purposes to take possession of the parcel of land upon payment of the down payment provided, however, that his/her possession under this section shall be only that of a tenant or lessee, and subject to ejectment proceedings during all the period of this agreement.
x x x x
(7) In case the PURCHASER fails to comply with any conditions of this contract and/or to pay any payments herein agreed upon, the PURCHASER shall be granted a period or periods of grace which in no case shall exceed (60) days to be counted from the condition breached ought to be complied with or the said payments ought have been made, during which period of grace the PURCHASER must comply with the said condition or satisfy all due monetary obligations including those which correspond to the period of grace. OTHERWISE, the Contract shall be automatically cancelled and rescinded and of no force and effect, and as a consequence therefore, the OWNER may dispose of the parcels of land covered by this Contract in favor of other persons, as if this Contract had never been entered into. In case of such cancellation of this Contract all amounts paid in accordance with this agreement, together with all the improvements introduced in the premises, shall be considered as rents for the use and occupation of the abovementioned premises and as payments for the damages suffered on the OWNER on account of the failure of the PURCHASER to fulfill his part of this Contract and the PURCHASER hereby renounces all his rights to demand or reclaim the return of the same and further obligates himself to peacefully vacate the premises and deliver the same to the OWNER; PROVIDED, HOWEVER, that any consideration, concession, tolerance or relaxation of provisions shall not be interpreted as a renunciation on the part of OWNER of any rights granted in this Contract.[4]
PREMISES considered, judgment is hereby rendered as follows:Mrs. Nicolas sought review of the Arbiter Decision by the HLURB Board of Commissions (HLURB Board) on the following assignment of errors:So Ordered.[11]
- Declaring the notarial cancellation of the contract on December 3, 1991 as null and void.
- Ordering respondent to fortwith furnish complainant accounting of the paid and unpaid amortizations including interests and penalty interests and other stipulated fees or charges covering the period or delinquent payments, as a consequence of the latter's default stating clearly and specifically the bases as stated in the contract and for the complainant to pay her unpaid obligations within forty five (45) days from receipt of the said computation/accounting.
- Ordering the same respondent to execute the pertinent deed in favor of the complainant within fifteen (15) days from receipt of complainant's full payment under paragraph b aforementioned and thereafter to deliver to the latter the Transfer Certificate of Title of the lot in question.
- Remedies provided under R.A. 6552 and other legal remedies may be resorted to, at the option of the respondent, if complainant fails or refuses to pay within the period provided under paragraph b.
The HLURB Board was partly receptive of the appeal and, on December 1, 1995, it handed down a Decision[13] (HLURB Board Decision) adjudging that:FIRST ASSIGNMENT OF ERROR THE HON. ARBITER ERRED IN ORDERING THE INCLUSION OF INTERESTS, PENALTY INTERESTS AND OTHER STIPULATED FEES OR CHARGES IN THE UNILATERAL COMPUTATION TO BE MADE BY THE RESPONDENT-APPELLEE AS THE UNPAID OBLIGATION OF COMPLAINANT-APPELLANT.THE HON. ARBITER ERRED IN ORDERING THE COMPLAINANT-APPELLANT TO PAY HER SUPPOSED UNPAID OBLIGATION BASED UPON THE UNILATERAL COMPUTATION OF RESPONDENT-APPELLEE WITHIN FORTY FIVE (45) DAYS FROM RECEIPT OF SAID COMPUTATION/ACCOUNTING.
SECOND ASSIGNMENT OF ERRORTHIRD ASSIGNMENT OF ERROR THE HON. ARBITER ERRED IN GIVING RESPONDENT-APPELLEE THE RIGHT TO RESORT TO REMEDIES PROVIDED UNDER R.A. 6552 AND OTHER LEGAL REMEDIES.FOURTH ASSIGNMENT OF ERROR
THE HON. ARBITER ERRED IN NOT AWARDING ATTORNEY'S FEES IN THE SUM OF P50,000.00 TO COMPLAINANT-APPELLANT.FIFTH ASSIGNMENT OF ERROR
THE HON. ARBITER ERRED IN NOT GRANTING THE PRAYER OF COMPLAINANT-APPELLANT IN HER COMPLAINT.[12]
WHEREFORE, in light of the foregoing premises, we hereby MODIFY the Decision dated 15 December 1994 of the Office a Quo, insofar as paragraph (b) of the dispositive portion is concerned and an additional paragraph e, to wit:Del-Nacia filed a Motion for Reconsideration[15] and a Supplement to Motion for Reconsideration.[16] Meanwhile, Mrs. Nicolas filed a motion for the "consignment" of P173,957.29, representing the balance of the purchase price of the land as found by the HLURB Board.
(b) Ordering complainant to pay respondent within sixty (60) days from receipt hereof the amount of one hundred seventy three thousand nine hundred fifty seven pesos and 29/1000 (P173,957.29) representing the remaining balance of the installment purchase price of the land inclusive of legal interests at the rate of twelve percent (12%) per annum. (e) Ordering respondent to pay this Board the amount of ten thousand (P10,000) as an administrative fine for violation of Section 5 of P.D. 957 within thirty (30) days from finality hereof.
SO ORDERED. Quezon City.[14]
WHEREFORE, finding no flaw in the appealed O.P. Resolution, the same is hereby AFFIRMED in toto, with costs against Mrs. Nicolas.The Motion for Reconsideration[25] filed by Mrs. Nicolas was denied by the CA in its Resolution dated April 29, 2003.[26]
SO ORDERED.
"WHETHER OR NOT complainant (now petitioner) is bound to pay the interests, penalty interests and other stipulated charges based on the unilateral accounting or computation made by respondent."[28]The instant petition prays that the O.P. Original Decision, which affirmed the HLURB Board Decision, be reinstated by this Court.
We must stress that cases should be determined on the merits, after all parties have been given full opportunity to ventilate their causes and defenses, rather than on technicalities or procedural imperfections. In that way, the ends of justice would be served better. Rules of procedure are mere tools designed to expedite the decision or resolution of cases and other matters pending in court. A strict and rigid application of rules, resulting in technicalities that tend to frustrate rather than promote substantial justice, must be avoided. In fact, Section 6 of Rule 1 states that the Rules shall be liberally construed in order to promote their objective of ensuring the just, speedy and inexpensive disposition of every action andNow on the merits of the case. The issue is whether Mrs. Nicolas is liable to pay interests, penalty interests and other stipulated charges to Del-Nacia.
proceeding.[31]
Cursory reading of the abovementioned document reveal that there is indeed no specific date indicated, as to when complainant should pay her monthly installments. It is clear that that the space provided for in Paragraph 1 of said document for the date or day of the month on which payment is to be made has been left blank.According to Del-Nacia, however, Mrs. Nicolas disregarded paying the regular rate of interest, overdue interest and penalty interest which were voluntarily agreed upon under paragraphs (1), (5) and (6), respectively, of their Agreement.[37] Del-Nacia contends that the records clearly establish that Mrs. Nicolas was in delay in her payments of the monthly amortizations and she has not disputed the same.[38]
Considering that the Land Purchase Agreement is a pro-forma document prepared by respondent, any ambiguity therein should be interpreted in favor of the complainant.
On the basis of the foregoing, we find that complainant did not incur any delay, hence, the imposition of surcharges and penalty interests are unjustified.[36]
Appellant's [Del-Nacia] submission, however, that appellee [Mrs. Nicolas] incurred delay in the manner of payment of her monthly installment obligations is impressed with merit. The Housing Arbiter, in his evaluation as trier of facts of appellee's records of payment, was of the same view. Under #1 of the basic purchase agreement, supra, appellee undertook to pay "120 equal monthly installments" of P9,189.45, "payments to be made on the __ day of each month thereafter beginning April 20, 1988." A fair understanding of this provision would simply mean that payment should be made effected every 20th day of each month following April 20, 1988. Based on the records, one can safely presume that the same was fully understood by appellee, as she had repeatedly paid her monthly amortization on the 20th day of each, or a few days thereafter. Neither did she question the interest imposed by appellant for her payments made after the 20th. Be that as it may, this Office is at a loss to understand the HLURB's conclusion about appellee not having defaulted in her installment payments. The explanation given by the HLURB Proper why it considered appellee not to have been in delay, i. e., because "no specific date [ is] indicated [in the purchase agreement] as to when complainant should pay her monthly installments" adding that "the space provided for . . . the date or day of the month which payment is to be made has been left blank," strikes this Office as too simplistic to be accorded cogency. The adverted fact of a "space in blank" is of no moment for, to reiterate, the agreement was for appellee to [the] pay the balance (P510,000.00) of the purchase price in 120 equal monthly installments, the installment period to start from April 20, 1988. The use of the phrase "120 equal monthly installments" and "thereafter beginning April 20, 1988" can mean only one thing - that after April 20, 1988, the monthly installment is to fall due and be payable on the 20th day of the succeeding months. The explanation adverted to above of the HLURB, if pursued to its logical conclusion, would virtually allow appellee to perpetually withhold installment payment without risk of being considered in default. The absurdity of this explanation needs no belaboring.[41]Clearly, under paragraphs (1), (5) and (6) of the Agreement, supra, Mrs. Nicolas was bound to pay regular interest, and in case of delay, overdue interest and penalty. It cannot be overemphasized that a contract is the law between the parties,[42] and courts have no choice but to enforce such contract so long as they are not contrary to law, morals, good customs or public policy.[43]
Article 1956. No interest shall be due unless it has been expressly stipulated in writing.In Bachrach Motor Company v. Espiritu,[44] the Court ruled that the Civil Code permits the agreement upon a penalty apart from the interest. Should there be such an agreement, the penalty does not include the interest, and as such the two are different and distinct things which may be demanded separately. The same principle was reiterated in Equitable Banking Corp. v. Liwanag et al.,[45] where this Court held that the stipulation about payment of such additional rate partakes of the nature of a penalty clause, which is sanctioned by law.
Article 1226. In obligations with a penal clause, the penalty shall substitute the indemnity for damages and the payment of interests in case of non-compliance, if there is no stipulation to the contrary.
Article 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon x x x.
Examination of the record shows that the questioned Contract to Buy and Sell the subdivision lots provided for payment by private respondent of the sum of P200.00 as downpayment, and that "the balance [of P10,600.00] shall be paid in 180 monthly installments at P89.45 per month, including interest rate at six percent (6%) per annum, until the purchase price is fully paid." This stipulation clearly specified that an interest charge of six percent (6%) per annum was included in the monthly installment price: private respondent could not have helped noticing that P89.45 multiplied by 180 monthly installments equals P16,101.00, and not P10,600.00. The contract price of P10,800.00 may thus be seen to be the cash price of the subdivision lots, that is, the amount payable if the price of the lots were to be paid in cash and in full at the execution of the contract; it is not the amount that the vendor will have received in the aggregate after fifteen (15) years if the vendee shall have religiously paid the monthly installments. The installment price, upon the other hand, of the subdivision lots — the sum total of the monthly installments (i.e., P16,101.00) — typically, as in the instant case, has an interest component which compensates the vendor for waiting fifteen (15) years before receiving the total principal amount of P10,600.00. Economically or financially, P10,600.00 delivered in full today is simply worth much more than a long series of small payments totalling, after fifteen (15) years, P10,600.00. For the vendor, upon receiving the full cash price, could have deposited that amount in a bank, for instance, and earned interest income which at six percent (6%) per year and for fifteen (15) years, would precisely total P5,501.00 (the difference between the installment price of P16,101.00 — and the cash price of P10,600.00 — ) To suppose, as private respondent argues, that mere prompt payment of the monthly installments as they fell due would obviate application of the interest charge of six percent (6%) per annum, is to ignore that simple economic fact. That economic fact is, of course, recognized by law, which authorizes the payment of interest when contractually stipulated for by the parties or when implied in recognized commercial custom or usage.In Relucio, the Court also sustained the seller's theory of declining balance whereby the seller credited a bigger sum of the monthly amortization to interest rather than the principal, such that in "[During] the succeeding monthly payments, however, as the outstanding balance on the principal gradually declined, the interest component (in absolute terms) correspondingly fell while the component credited to the principal increased proportionately, thus amortizing the balance of the principal purchase price as that balance gradually declined."[49]
Vendor and vendee are legally free to stipulate for the payment of either the cash price of a subdivision lot or its installment price. Should the vendee opt to purchase a subdivision lot via the installment payment system, he is in effect paying interest on the cash price, whether the fact and rate of such interest payment is disclosed in the contract or not. The contract for the purchase and sale of a piece of land on the installment payment system in the case at bar is not only quite lawful; it also reflects a very wide spread usage or custom in our present day commercial life.[48]