Ignacio v. Ragasa - Interests
Ignacio v. Ragasa - Interests
Ragasa
G.R. No. 227896 Jan 29, 2020
Peralta, C.J.,
Topic: Interests
Facts: On Jan 11, 2000, petitioners engaged, on an exclusive basis, the services of the respondents,
who are both licensed real estate brokers, to look for and negotiate with a person or entity for a
joint venture project involving petitioners' undeveloped lands in Mindanao Ave, Quezon City and
the developed subdivision sites in Las Piñas City, Parañaque City, and Bacoor. The contract was
embodied in the Authority to Look and Negotiate for a Joint Venture Partner, effective for six
months from January 10, 2000, or until July 10, 2000. The said Authority provided that the
petitioners will pay the respondents a commission equivalent to five percent (5%) of the price of
the properties. On Jan 13, 2000, respondents met with Mr. Porfirio Yusingbo, Jr. (Yusingbo), the
General Manager of Woodridge Properties, Inc. (Woodridge),and they presented to him the
different subdivisions and project sites available for investment. After inspecting the properties,
Yusingbo expressed Woodridge's interest in acquiring and developing the Krause Park and Teresa
Park properties. As a result, Woodridge sent respondents a formal proposal dated Jan 21, 2000 for
a joint venture agreement with the petitioners covering the Teresa Park. The proposal was sent by
the respondents to the petitioners via facsimile. On Jan 25, 2000, the petitioners met with the
representatives of Woodridge to discuss the prices of the properties, and Woodridge likewise
intimated that it would develop both the Krause Park and the Teresa Park. On Feb 4, 2000,
respondents met again with Yusingbo and Mr. Elmer Loredo (Loredo), Woodridge's broker, to
discuss Woodridge's proposal for bulk purchase covering the Teresa Park, including the terms of
payment. On Feb 9, 2000, respondents presented Woodridge's offer to petitioner Roberto Ignacio.
They discussed the projected cash inflows and the advantages of the scheme. Petitioner Ignacio
said he wanted to sell the lots in batches at a lower volume, instead of in bulk. Respondents
communicated the offer to Woodridge and the latter intimated that it would make a revised offer.
On Mar 9, 2000, Woodridge, however, changed its offer from direct acquisition to joint venture,
covering 200 lots in Teresa Park, and sent the proposal to the respondents, who, in turn, relayed it
to the petitioners. In a meeting on Ma 13, 2000, petitioners and respondents discussed the
proposal for joint venture. Petitioners commented that Woodridge's offer was low, but
respondents reassured them that they could negotiate for a better price. After this March 13, 2000
meeting, however, petitioners stopped communicating with the respondents. Several attempts
were made by the respondents to contact the petitioners to follow-up on the proposal of
Woodridge, but to no avail. Sometime thereafter, respondents learned that the petitioners
continued to negotiate with Woodridge, and this led to the execution of two joint venture
agreements between the petitioners and Woodridge, covering the Krause Park. The two joint
venture agreements were notarized on March 7, 2000 and October 16, 2000. For the Teresa Park
four joint venture agreements were executed between the petitioners and Woodridge, and these
were notarized on Dec 6, 2000, Mar 12, 2001, Sept 25, 2001, and Oct 1, 2002. Aside from the joint
venture agreements, several deeds of sale were also executed between the petitioners and
Woodridge, and these are dated Sept 24, 2001 and Aug 25, 2003. Per respondents' estimate,
petitioners earned P26,068,000.00 and P22,497,000.00 for the sale of the Krause Park and Teresa
Park projects, respectively. Respondents demanded payment of their commission from the
petitioners, contending that the joint venture agreements and the sales over the Krause Park and
Teresa Park were products of their successful negotiation with Woodridge. Petitioners, however,
refused to pay despite demand. Thus, respondents filed a complaint for sum of money, damages,
attorney's fees, and litigation expenses before the RTC of Parañaque City. In their
Answer, petitioners denied that they have an obligation to pay the respondents. Petitioners
contend that the respondents offered their services as exclusive real estate brokers, but they were
never engaged. Petitioners further state that they were not looking for an exclusive agency and
they entertained brokers on a "first come, first served" basis. Petitioners, likewise, contend that
they were not agreeable with the respondents' proposal to sell the lots below the prevailing
market value with no escalation clause, and that the sale of the Krause Park and the Teresa Park
was made through the joint efforts of their consultants, Engr. Julius Aragon and Florence
Cabansag. No sales transaction was realized on account of the respondents. RTC favored
respondents. CA affirmed RTC’s decision in toto.
Issue: Is the petitioner entitled to the fees? Is the petitioner correct on which rates should prevail?
Ruling: No, the petitioner is not entitled to fee because petitioners seeks the SC to review the
evidence, which is not allowed under the Rules of Procedure. As to the interests, we agree with
the petitioners that the interest rate should be at the prevailing rate of 6% per annum, and not
12% per annum. In Nacar v. Gallery Frames, et al., We modified the guidelines laid down in the
case of Eastern Shipping Lines, Inc. v. Court of Appeals to embody BSP-MB Circular No. 799. And, in
addition to the above, judgments that have become final and executory prior to July 1, 2013, shall
not be disturbed, and shall continue to be implemented applying the rate of interest fixed therein.
It should be noted, however, that the rate of 6% per annum could only be applied prospectively
and not retroactively. Consequently, the 12% per annum legal interest shall apply only until June
30, 2013. Starting July 1, 2013, the rate of 6% per annum shall be the prevailing rate of interest
when applicable. Thus, the need to determine whether the obligation involved herein is a loan and
forbearance of money nonetheless exists. The term "forbearance," within the context of usury
law, has been described as a contractual obligation of a lender or creditor to refrain, during a given
period of time, from requiring the borrower or debtor to repay the loan or debt then due and
payable. Forbearance of money, goods or credits, therefore, refers to arrangements other than
loan agreements, where a person acquiesces to the temporary use of his money, goods or credits
pending the happening of certain events or fulfilment of certain conditions. Consequently, if those
conditions are breached, said person is entitled not only to the return of the principal amount
paid, but also to compensation for the use of his money which would be the same rate of legal
interest applicable to a loan since the use or deprivation of funds therein is similar to a loan. This
case, however, does not involve an acquiescence to the temporary use of a party's money but the
performance of a brokerage service. Thus, the matter of interest award arising from the dispute in
this case falls under the paragraph II, subparagraph 2, of the above-quoted modified guidelines,
which necessitates the imposition of interest at the rate of 6%,instead of the 12% imposed by the
courts below.