SSS vs. Moonwalk Development and Housing Corporation

FACTS:

- Plaintiff SSS approved the application of Defendant Moonwalk for a loan of P30,000,000 for the purpose of developing and constructing a housing project.

- Out of P30,000,000 approved loan, the sum of P9,595,000 was released to defendant Moonwalk.

- A third Amendment Deed of Mortgage was executed for the payment of the amount of P9,595,000.

- Moonwalk made a total payment of P23,657,901.84 to SSS for the loan principal of P12,254,700.

- After settlement of the account, SSS issued to Moonwalk the release of Mortgage for Moonwalk’s Mortgaged properties.

- In letter to Moonwalk, SSS alleged that it committed an honest mistake in releasing defendant.

- That Moonwalk has still 12% penalty for failure to pay on time the amortization which is in the penal clause of the contract.

- Moonwalk’s counsel told SSS that it had completely paid its obligation to SSS and therefore there is no recovery of any penalty.

ISSUE:Is the penalty demandable even after the extinguishment of the principal obligation?

HELD:

No. There has been a waiver of the penal clause as it was not demanded before the full obligation was fully paid and extinguished.Default begins from the moment the creditor demands the performance of the obligation.

In this case, although there were late amortizations there was no demand made by SSS for the payment of the penalty hence Moonwalk is not in delay in the payment of the penalty.

No delay occurred and there was no occasion when the penalty became demandable and enforceable.

Since there was no default in the performance of the main obligation-payment of the loan- SSS was never entitled to recover any penalty.

If the demand for the payment of the penalty was made prior to the extinguishment of the obligation which are: 1. e principal obligation 2. The interest of 12% on the principal

obligation 3. The penalty of 12% for late payment for after demand, Moonwalk would be in delay and therefore liable for the penalty.AGCAOILI V GSIS 165 SCRA 484 (1988)

FACTS: GSIS approved the application of appellee Agcaoili for the purchase of a house and lot in the GSIS Housing Project in Marikina. Said application was subject to the conditions that he should immediately occupy said house failure to comply would mean revocation of his award. Agcaoili lost no time in occupying the house but he could not stay in it because the house was uninhabitable (no ceiling, stairs, double walling, lighting facilities, water connection, bathroom, toilet, kitchen, drainage). Agcaoili, then, asked a homeless friend (a certain Villanueva) to stay in the premises as a watchman, pending the completion of the construction of the house.

Subsequently, GSIS asked Agcaoili to pay monthly amortizations in the amount of P35.56 and other fees. Agcaoili paid the first monthly amortizations and incidental fees, but refused to make further payments until and unless GSIS completed the housing unit. Thereafter, GSIS cancelled the award and required Agcaoili to vacate the premise. The house and lot was consequently awarded to another applicant. Agcaoili, then, filed before the CFI an action for specific performance and damages. The CFI rendered in favor of Agcaoili. GSIS appealed said judgment.

GSIS argument:

1. Said unit was sold “in the condition and state of completion,” Agcaoili is deemed to have accepted the same in the condition he found it when he accepted the reward

2. Perfection of the contract of sale between GSIS and Agcaoili was conditioned upon the latter’s immediate occupancy of the house. Since Agcaoili failed to comply with this condition, no contract was perfected between them

3. Agcaoili’s act of placing Villanueva as watchman over the premises without prior or subsequent knowledge or consent of GSIS was a repudiation on the part of Agcaoili of the award and a deprivation of GSIS of reasonable rental value of the property

ISSUE: W/N the cancellation by GSIS of the award in favor of Agcaoili just and proper

HELD: NO.It was the duty of the GSIS, as seller, to deliver the thing sold in a condition suitable for its enjoyment by the buyer for the purpose contemplated. There would be no sense to require the awardee to immediately occupy and live in a shell of a house, structure consisting only of four walls with openings, and a roof. GSIS had an obligation to deliver to Agcaoili a reasonably habitable dwelling in return for his undertaking to pay the stipulated price.   Since GSIS did not fulfill that obligation, and was not willing to put the house in habitable state, it cannot invoke Agcaoili’s suspension of payment of amortizations as cause to cancel the contract between them. It is axiomatic that “In reciprocal obligations, neither party incurs in delay if the other does not comply in a proper manner with what is incumbent upon him.

The clause in the contract the Agcaoili is supposed to occupy said property presupposes that said property is inhabitable. Since GSIS did not fulfill that obligation, and was not willing to put the house in habitable state, it cannot invoke Agcaoili’s suspension of payment of amortizations as cause to cancel the contract between them.

Likewise, GSIS cannot blame Agcaoili for the imprecision and vagueness of the contract since it was GSIS which caused the contract to come into being by its written acceptance of Agcaoili’s offer to purchase. If there is any ambiguity in the said contract, it should be resolved against the one who prepared it (GSIS) contracts of adhesion.

SANTOS VENTURA HOCORMA FDN V SANTOSQUISUMBING; November 4, 2004FACTS- Santos Ventura Hocorma Foundation Inc (SVHFI) and Ernesto Santos executed aCompromise Agreement on October 26, 1990. The agreement was judiciallyapproved on September 30, 1991. The agreement stipulated that 1) SVHFI shallSantos P1.5 Million immediately upon the execution of the agreement, and thebalance of P13 Million shall be paid within a period of not more than two years fromthe execution of the agreement; 2) Immediately upon the execution of theagreement Santos shall cause the dismissal with prejudice of Civil Cases and for theimmediate lifting of the various notices of lis pendens on the real properties;provided, however, that in the event that defendant Foundation shall sell or disposeof any of the lands previously subject of lis pendens, the proceeds of any such saleshall be partially devoted to the payment of the Foundation’s obligations.- SVHFI sold two real properties, which were previously subjects of lis pendens.Discovering the disposition made by the SVHFI, Santos sent a letter to the petitionerdemanding the payment of the remaining P13 million, which SVFHI ignored. Santosapplied with the RTC for the issuance of a writ of execution of its compromisejudgment. The RTC granted the writ. On November 22, 1994, petitioner’s realproperties located in Mabalacat, Pampanga were auctioned.Santos filed a Complaintfor Declaratory Relief and Damages alleging that there was delay on the part ofpetitioner in paying the balance of P13 million. TC dismissed petition. CA reversedand ordered SVHFI to pay legal interest on the principal amount of P13 million atthe rate of 12% per annum from the date of demand on October 28, 1992 up to thedate of actual payment of the whole obligation.ISSUEWON Santos is entitled to legal interest.HELDYES.- When the petitioner failed to pay its due obligation after the demand was made, itincurred delay. Interest as damages is generally allowed as a matter of right.Santos has been deprived of funds to which he is entitled by virtue of theircompromise agreement. The goal of compensation requires that the complainant becompensated for the loss of use of those funds. This compensation is in the form ofinterest.- Article 1169 of the New Civil Code provides: Those obliged to deliver or to dosomething incur in delay from the time the obligee judicially or extra-judiciallydemands from them the fulfillment of their obligation.- In order for the debtor to be in default, it is necessary that the following requisitesbe present: (1) that the obligation be demandable and already liquidated; (2) thatthe debtor delays performance; and (3) that the creditor requires the performancejudicially or extra-judicially.- The compromise agreement as a consensual contract became binding betweenthe parties upon its execution and not upon its court approval. From the time acompromise is validly entered into, it becomes the source of the rights andobligations of the parties thereto. The two-year period must be counted fromOctober 26, 1990 (date of execution of the compromise agreement, not on thejudicial approval on September 30, 1991). When Santos wrote a demand letter onOctober 28, 1992, the obligation was already due and demandable. Therefore 3requisites present: 1) The obligation was already due and demandable after thelapse of the two-year period from the execution of the contract. The obligation isliquidated because the debtor knows precisely how much he is to pay and when heis to pay it. 2) Petitioner delayed in the performance. It was able to fully settle itsoutstanding balance only on February 8, 1995. 3) The demand letter sent to thepetitioner was in accordance with an extra-judicial demand contemplated by law.