Spouses William & Jeanette Yao vs Carlomagno Matela

G.R. No. 167767

Facts:

These consolidated petitions for review assail the Decision of the Court of Appeals dated September 30,
2004, which modified the Decision of the Regional Trial Court of Las Piñas City, as well as the Resolution
dated April 15, 2005, denying the motions for reconsideration of both parties. Spouses William and Jeanette
Yao pray that the assailed decision and resolution of the Court of Appeals be reversed and set aside and that
the original complaint filed by Carlomagno B. Matela in the lower court be dismissed for lack of merit. On the
other hand, Matela prays that the judgment of the Court of Appeals be modified by ordering the spouses Yao
to pay the amount of P741,482.00 as actual damages instead of P391,582.00, plus interest and attorney’s
fees.

On March 30, 1997, the spouses Yao contracted the services of Matela, a licensed architect, to manage and
supervise the construction of a two-unit townhouse at a total cost of P5,090,560.00.

On the other hand, Matela prays that the judgment of the Court of Appeals be modified by ordering the
spouses Yao to pay the amount of P741,482.00 as actual damages instead of P391,582.00, plus interest and
attorney’s fees.

On April 1, 2002, the Regional Trial Court of Las Piñas City, Branch 275 rendered judgment in favor of Matela,
ordering the spouses to pay the architect the sum of P741,428.00 plus legal rate of interest from the filing of
the Complaint until fully paid and P50,000.00 as and by way of attorney’s fees and to pay the costs.
The trial court anchored its decision on the following findings of facts: Defendant spouses engaged the
professional services of the plaintiff on March 30, 1997 to manage and supervise the construction of their
two unit townhouses in Makati City at the agreed construction cost of P5,090,560.00. The construction
started in the first week of April, 1997 and was completed by the plaintiff in April, 1998.

On the other hand, the Court of Appeals declared that as to the second assigned error, defendants-appellants
claimed that plaintiff-appellee failed to finish the project within the agreed one hundred eighty (180) days.
They pointed out that one hundred eighty (180) days from April 1997 ended on October 1997, however, the
units were turned over only in April 1998. The Court does not find any merit in this argument either. Any
delay in the delivery is cured by acceptance of the thing after delay incurred.

Issues:

a)W/N respondent Matela is entitled to the additional construction cost?

Held:

Matela claims that although the spouses Yao did not expressly admit their obligation as regards the
additional construction cost of P300,000.00, they impliedly admitted the same as evidenced by the testimony
of Jeanette Yao before the court a quo.
On the other hand, the spouses Yao contend that the complaint for the collection of a sum of money filed by
Matela should be dismissed because it was the latter who breached his undertaking by using sub-standard
materials and not completing the project. They also allege that the payments they made amounting to
P4,699,610.93 should be considered as sufficient payment for the construction of the project.
In the instant case, we find that the factual findings of the trial court and Court of Appeals are contradicted
by the evidence on record. Thus, a review of the facts is in order.

As agreed by the parties, Matela will construct the townhouses in accordance with the Specification while
spouses Yao will pay Matela the agreed construction cost based on progress billings. The spouses Yao will not
pay Matela the agreed price in full unless the latter has fully complied with and has discharged his obligations
as specified in the contract.

In his book on Obligations and Contracts, the late Court of Appeals Justice Desiderio Jurado made the
following discussion on reciprocal obligations.
The rule then is that in reciprocal obligations, one party incurs in delay from the moment the other party
fulfills his obligation, while he himself does not comply or is not ready to comply in a proper manner with
what is incumbent upon him. If neither party complies or is ready to comply with what is incumbent upon
him, the default of one compensates for the default of the other. In such case, there can be no legal delay.

Evidently, both parties in this case breached their respective obligations. The well entrenched doctrine is that
the law does not relieve a party from the effects of an unwise, foolish or disastrous contract, entered into
with full awareness of what he was doing and entered into and carried out in good faith. Such a contract will
not be discarded even if there was a mistake of law or fact.

WHEREFORE, the Decision dated September 30, 2004 of the Court of Appeals in CA-G.R. CV No. 75264 which
affirmed with modification the Decision of the Regional Trial Court of Las Piñas City, Branch 275, and its
Resolution dated April 15, 2005 denying reconsideration thereof, are REVERSED and SET ASIDE. The contract
between spouses William and Jeanette Yao and Carlomagno B. Matela is DEEMED EXTINGUISHED and each of
the parties shall bear their own losses. SO ORDERED.

Rivera vs. Chua, G.R. No. 184458 January 14, 2015

FACTS: The parties were friends and kumpadres for a long time already. Rivera obtained a loan from the
Spouses Chua evidenced by a Promissory Note. The relevant parts of the note are the following:

(a) FOR VALUE RECEIVED, I, RODRIGO RIVERA promise to pay spouses SALVADOR C. CHUA and VIOLETA SY
CHUA, the sum of One Hundred Twenty Thousand Philippine Currency (_120,000.00) on December 31, 1995.

(b) It is agreed and understood that failure on my part to pay the amount of (_120,000.00) One Hundred
Twenty Thousand Pesos on December 31, 1995. I agree to pay the sum equivalent to FIVEPERCENT (5%)
interest monthly from the date of default until the entire obligation is fully paid for.

Three years from the date of payment stipulated in the promissory note, Rivera, issued

and delivered to Spouses Chua two (2) checks drawn against his account at Philippine Commercial
International Bank (PCIB) but upon presentment for payment, the two checks were dishonored forthe reason
“account closed.” As of 31 May 1999, the amount due the Spouses Chua was pegged at P366,000.00 covering
the principal of P120,000.00 plus five percent (5%) interest per month from 1 January 1996 to 31 May 1999.

The Spouses Chua alleged that they have repeatedly demanded payment from Rivera to no avail. Because of
Rivera’s unjustified refusal to pay, the Spouses Chua were constrained to file a suit before the MeTC, Branch
30, Manila.

The MeTC ruled against Rivera requiring him to pay the spouses Chua P120,000.00 plus stipulated interest at
the rate of 5% per month from 1 January 1996, and legal interest at the rate of 12% percent per annum from
11 June 1999 and was affirmed by the RTC of Manila. The Court of Appeals further affirmed the decision
upon appeal of the two inferior courts but with modification of lowering the stipulated interest to 12% per
annum. Hence, a petition at the Supreme Court.
ISSUES:

1. Whether or not the Promissory Note executed as evidence of loan falls under Negiotiable Instruments Law.

2. Whether or not a demand from spouses Chua is needed to make Rivera liable.

3. Whether or not the stipulated interest is unconscionable and should really be lowered.

Held: 1. NO, the Promissory Note executed as evidence of loan does not fall under Negotiable Instruments
Law. The instrument is still governed by the Civil Code as to interpretation of their obligations. The Supreme
Court held that the Instrument was not able to meet the requisites laid down by Section 1 of the Negotiable
Instruments Law as the instrument was made out to specific persons, herein respondents, the Spouses Chua,
and not to order or to bearer, or to the order of the Spouses Chua as payees.

cals not a negotiable instrument and therefore outside the coverage of Section 70 of the NIL which provides
that presentment for payment is not necessary to charge the person liable on the instrument, Rivera is still
liable under the terms of the Promissory Note that he issued. Article 1169 of the Civil Code explicitly provides
that the demand by the creditor shall not be necessary in order that delay may exist when the obligation or
the law expressly so declare. The clause in the Promissory Note containing the stipulation of interest (letter B
in the above facts) which expressly requires the debtor (Rivera) to pay a 5% monthly interest from the “date
of default” until the entire obligation is fully paid for. Theparties evidently agreed that the maturity of the
obligation at a date certain, 31 December 1995, will give rise to the obligation to pay interest.

3. YES, the stipulated interest is unconscionable and should really be lowered. The Supreme Court held that
as observed by Rivera, the stipulated interest of 5% per month or 60% per annum in addition to legal
interests and attorney’s fees is, indeed, highly iniquitous and unreasonable and stipulated interest rates if
illegal and are unconscionable the Court is allowed to temper interest rates when necessary. Since the
interest rate agreed upon is void, the parties are considered to have no stipulation regarding the interest
rate, thus, the rate of interest should be 12% per annum computed from the date of judicial or extrajudicial
demand. However, the 12% per annum rate of legal interest is only applicable until 30 June 2013, before the
advent and effectivity of Bangko Sentral ng Pilipinas (BSP) Circular No. 799, Series of 2013 reducing the rate
of legal interest to 6% per annum. Pursuant to our ruling in Nacar v. Gallery Frames,30 BSP Circular No. 799 is
prospectively applied from 1 July 2013.

Villamar vs. Mangaoil

Facts:
Estelita villamar a registered owner of 3.6080 hectares of parcel of land, decided to sell it Balbino Mangaoil
with the certain conditions; The price of the land is ONE HUNDRED AND EIGHTY THOUSAND (180,000.00)
PESOS per hectare but only the 3.5000 hec. shall be paid and the rest shall be given free, so that the total
purchase or selling price shall be [P]630,000.00 only. The respondent paid the amount of 185,000 as a down
payment for the land title to be given to him . After some time, Mangaoil decided to back out from the
agreement because the area is not yet fully cleared by incumbrances as these are tenants who are not willing
to vacate the land without giving them back the amount that they mortgage the lad.

Mangaoil demanded a refund for his 185,000, reiterating his demand on another date but the same as
unheeded. The respondent filed a complaint in the RTC and the latter ordered the rescission of the
agreement and the deed of absolute sale in accordance of Art. 1458 and Art. 1191 of the Civil Code. The
petitioner filed before the CA an appeal to challenge the foregoing. She ascribed error on the part of the RTC
when the latter ruled that the agreement and deed of sale executed by and between the parties can be
rescinded as she failed to deliver to the respondent both the subject property and the certificate of title
covering the same. On February 20, 2009, the CA rendered the now assailed decision dismissing the
petitioners appeal.

The Petitioner filed an instant petition in the supreme court. The petitioner contends that in her case, she
had already complied with her obligations under the agreement and the law when she had caused the
release of TCT No. T-92958-A from the Rural Bank of Cauayan, paid individual mortgagees Romeo Lacaden
and Florante Parangan, and executed an absolute deed of sale in the respondent’s favor.

Issue:
Whether or not the failure of petitioner-seller to deliver the certificate of title over the property to
respondent-buyer is a breach of obligation in a contract of sale of real property that would warrant rescission
of the contract?
Held:
The RTC and CA both found the petitioner failed to comply with her obligations to deliver to the respondent
both the possession of the subject property and the certificate of title covering the same.
The petition was denied for failure to deliver to the respondent the possession of the subject property due to
the continued presence and occupation of one Parangan and Lacaden. The Court directed the rescission of
the agreement and absolute deed of sale entered by Estelita Villamar and Balbino Mangaoil and return of the
down payment made for the purchase of the subject property. And an interest of 12% per annum on the sum
of 185,000 to be returned to Balbino Mangaoil.
Digested case 11

Adorable vs CA - 319 SCRA 200 G.R No. 119466 .

FACTS:
Saturnino Bareng own 2 lot No. 661-D-5A with area 20,000 sq mtr and lot No. 661-E w area 4,062sq mtr.
He and his son Francisco Bareng loan from Petitioner (Adorables) amounting 26k pesos and in return they
will transfer the possession and fruit of lot No. 661-E. Saturnino Bareng sold to his son Francisco Bareng
18,500 sqr mtr from lot 661-D-A and his son sold to Jose Ramos a portion (3,000 sq mtr) of lot No 661-D-
5A. Bareng failed to pay their indebtedness amounting to 56,385 pesos to the Petitioner. Petitioner
learned the contract between Franscisco Bareng and Jose Ramos. The Petitioner filed annulment of
contract between Bareng and Ramos, however on the said hearing date the Petitioner is absent.

ISSUES:
(1) Whether or not the Petitioner has legal right to annul the contract between Francisco Bareng and Jose
Ramos
(2) Whether or not the CA erred in sustaining the decision of the lower court on the lack of cause of action.

HELD:
(1) The Petitioner has no legal right to annul the contract between Francisco Bareng and Jose Ramos due
to none payment of the loan to the petitioner. The Petitioner must exhaust all legal means for Bareng to
paid the debt since Bareng has other property or other means to pay the said loan to the Petitioner. The
lesses ( Petitioner) has personal right but not real right therefore the lot is not subject for payment unless
it is the only property remained to the defendant.
(2) The CA has no error in sustaining the decision of the lower court since the petitioner does not appear
in the said date of hearing, thus the Petitioner wave his right to present evidence and cross examine by
the defendant council that resulted to the decision of the the lower court to dismiss n case for lack of
cause of action.