Case Digest (G.R. No. 111858)
Facts:
Tropical Homes, Inc. v. The Honorable Court of Appeals & People's Homesite and Housing Corporation, G.R. No. 111858, May 14, 1997, Supreme Court Second Division, Romero, J., writing for the Court.On December 21, 1964, private respondent People’s Homesite and Housing Corporation (PHHC) sold twelve parcels in Parañaque to petitioner Tropical Homes, Inc. for P4,200,000.00, an amount later reduced to P3,450,000.00 after crediting prior payments of P750,000. The written contract provided for registration of a Deed of Absolute Sale with Mortgage (registered February 12, 1965) and a payment scheme requiring P1,727,500.00 on signing/registration and three equal amortizations of P574,166.68 within 18 months; it also stipulated that failure to pay the first installment would render the whole sum due and payable and would entitle PHHC to foreclose and to 25% liquidated damages plus legal interest and charges.
Petitioner made partial and irregular payments (P150,000 on December 21, 1964; P1,000,000 on April 20, 1965; and other token payments). PHHC demanded payment on September 23, 1965; by April 15, 1967 petitioner’s account had grown (per Bill No. 53-67) to P1,866,454.12, inclusive of accrued interest. Petitioner proposed to apply an approved GSIS loan of P1,714,000.00 toward the account and to secure the balance with time deposit certificates; PHHC accepted, applied the GSIS credit memo, accepted the time deposit certificates as security, and released TCT No. 140829 from mortgage. The Office of the Auditor General, however, in a January 8, 1970 decision, rejected both parties’ claims; the Office of the President later modified that decision (OP Decision No. 643, January 4, 1974) to hold that PHHC’s acceptance of the GSIS credit memo did not extinguish its claim for accrued interest.
PHHC filed suit for collection on December 26, 1974, claiming that its account reached P216,951.23 as of January 31, 1974 plus legal interest on a principal of P154,221.22. Petitioner admitted most factual allegations but disputed liability for liquidated damages and the amounts claimed, asserting that PHHC Board Resolution No. 801 (April 14, 1966) amended the payment terms, constituting a waiver or novation that eliminated liability for accrued interest; petitioner counterclaimed for an alleged overpayment of P29,169.20. At pre-trial (May 8, 1975) the trial court found petitioner’s Special Power of Attorney inadequate and declared petitioner in default; petitioner secured relief by special civil action (Tropical Homes, Inc. v. Hon. Onofre Villaluz et al., G.R. No. L-40628, 170 SCRA 577, Feb. 24, 1989), after which the case was reset.
On March 6, 1990 the parties agreed to submit the case for judgment on the pleadings. The Regional Trial Court, Quezon City, Branch 87, rendered judgment on August 21, 1991 ordering petitioner...(Subscriber-Only)
Issues:
- Did PHHC’s Board Resolution No. 801 dated April 14, 1966, constitute an abandonment or waiver of accrued legal interest or effect a novation of the original contract?
- Is petitioner liable for legal interest, at what rate, and from what date should interest run?
- May PHHC recover liquidated damages and costs of suit on the basis o...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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