G.R. No.

L-52478 October 30, 1986 Gsis v ca This is a petition for review on certiorari of the decision of the Court of Appeals in CA-G.R. No. 62541-R (Nemencio R. Medina and Josefina G. Medina, Plaintiffs-Appellants vs. The Government Service Insurance System, Defendant-Appellant) affirming the January 21, 1977 Decision of the trial court, and at the same time ordering the GSIS to reimburse the amount of P9,580.00 as over-payment and to pay the spouses Nemencio R. Medina and Josefina G. Medina P3,000.00 and P1,000.00 as attorney's fees and litigation expenses. In 1961, herein private respondents spouses Nemencio R. Medina and Josefina G. Medina (Medinas for short) applied with the herein petitioner Government Service Insurance System (GSIS for short) for a loan of P600,000.00. The GSIS Board of Trustees, in its Resolution of December 20, 1961, approved under Resolution No. 5041 only the amount of P350,000.00, subject to the following conditions: that the rate of interest shall be 9% per annum compounded monthly; repayable in ten (10) years at a monthly amortization of P4,433.65 including principal and interest, and that any installment or amortization that remains due and unpaid shall bear interest at the rate of 9%/12% per month. The Office of the Economic Coordinator, in a 2nd Indorsement dated March 26, 1962, further reduced the approved amount to P295,000.00. On April 4, 1962, the Medinas accepting the reduced amount, executed a promissory note and a real estate mortgage in favor of GSIS. On May 29, 1962, the GSIS, and on June 6, 1962, the Office of the Economic Coordinator, upon request of the Medinas, both approved the restoration of the amount of P350,000.00 (P295,000.00 + P55,000.00) originally approved by the GSIS. This P350,000.00 loan was denominated by the GSIS as Account No. 31055. On July 6, 1962, the Medinas executed in favor of the GSIS an Amendment of Real Estate Mortgage, the pertinent portion of which reads: WHEREAS, on the 4th day of April, 1962, the Mortgagor executed signed and delivered a real estate mortgage to and in favor of the Mortgagee on real estate properties located in the City of Manila, ... to secure payment to the mortgages of a loan of Two Hundred Ninety Five Thousand Pesos (P295,000.00) Philippine Currency, granted by the mortgagee to the Mortgagors, ...; WHEREAS, the parties herein have agreed as they hereby agree to increase the aforementioned loan from Two Hundred Ninety Five Thousand Pesos (P295,000.00) to Three Hundred Fifty Thousand Pesos (P350,000.00), Philippine Currency; NOW, THEREFORE, for and in consideration of the foregoing premises, the aforementioned parties have amended and by these presents do hereby amend the said mortgage dated April 4, 1962, mentioned in the second paragraph hereof by increasing the loan from Two Hundred Ninety Five Thousand Pesos (P295,000.00) to Three Hundred Fifty Thousand Pesos (P350,000.00) subject to this additional condition. (1) That the mortgagor shall pay to the system P4,433.65 monthly including principal and interest. It is hereby expressly understood that with the foregoing amendment, all other terms and conditions of the said real estate mortgage dated April 4, 1962 insofar as they are not inconsistent herewith, are hereby confirmed, ratified and continued in full force and effect and that the parties thereto agree that this amendment be an integral part of said real estate mortgage. (Rollo, p. 153-154). Upon application by the Medinas, the GSIS Board of Trustees adopted Resolution No. 121 on January 18, 1963, as amended by Resolution No. 348 dated February 25, 1963, approving an additional loan of P230,000.00 in favor of the Medinas on the security of the same mortgaged properties and the additional properties covered by TCT Nos. 49234, 49235 and 49236, to bear interest at 9% per annum compounded monthly and repayable in ten years. This additional loan of P230,000.00 was denominated by the GSIS as Account No. 31442. On March 18, 1963, the Economic Coordinator thru the Auditor General interposed no objection thereto, subject to the conditions of Resolution No. 121 as amended by Resolution No. 348 of the GSIS. Beginning 1965, the Medinas having defaulted in the payment of the monthly amortization on their loan, the GSIS imposed 9%/12% interest on an installments due and unpaid. In 1967, the Medinas began defaulting in the payment of fire insurance premiums. On May 3, 1974, the GSIS notified the Medinas that they had arrearages in the aggregate amount of P575,652.42 as of April 18, 1974 (Exhibit 9, p. 149, Joint Record on Appeal, Rollo, p. 79), and demanded payment within seven (7) days from notice thereof, otherwise, it would foreclose the mortgage. On April 21, 1975, the GSIS filed an Application for Foreclosure of Mortgage with the Sheriff of the City of Manila (Exhibit "22," pp. 63 and 149; Rollo, p. 79). On June 30, 1975, the Medinas filed with the Court of

First Instance of Manila a complaint, praying, among other things, that a restraining order or writ of preliminary injunction be issued to prevent the GSIS and the Sheriff of the City of Manila from proceeding with the extra-judicial foreclosure of their mortgaged properties (CFI Decision, p. 121; Rollo, p. 79). However, in view of Section 2 of Presidential Decree No. 385, no restraining order or writ of preliminary injunction was issued by the trial court (CFI Decision, p. 212; Rollo, p. 79). On April 25, 1975, the Medinas made a last partial payment in the amount of P209,662.80. Under a Notice of Sale on Extra-Judicial Foreclosure dated June 18, 1975, the real properties of the Medinas covered by Transfer Certificates of Title Nos. 32231, 43527, 51394, 58626, 60534, 63304, 67550, 67551 and 67552 of the Registry of Property of the City of Manila were sold at public auction to the GSIS as the highest bidder for the total amount of P440,080.00 on January 12, 1976, and the corresponding Certificate of Sale was executed by the Sheriff of Manila on January 27, 1976 (CFI Decision, pp. 212-213; Rollo, p. 79). On January 30, 1976, the Medinas filed an Amended Complaint with the trial court, praying for (a) the declaration of nullity of their two real estate mortgage contracts with the GSIS as well as of the extra-judicial foreclosure proceedings; and (b) the refund of excess payments, plus damages and attorney's fees (CFI Decision, p. 213; Rollo, p. 79). On March 19, 1976, the GSIS filed its Amended Answer (Joint Record on Appeal, pp. 99-105; Rollo, p. 79). After trial, the trial court rendered a Decision dated January 21, 1977 (Joint Record on Appeal, pp. 210-232), the pertinent dispositive portion of which reads: WHEREFORE, judgment is hereby rendered declaring the extra-judicial foreclosure conducted by the Sheriff of Manila of real estate mortgage contracts executed by plaintiffs on April 4, 1962, as amended on July 6, 1962, and February 17, 1963, null and void and the Sheriff's Certificate of Sale dated January 27, 1976, in favor of the GSIS of no legal force and effect; and directing plaintiffs to pay the GSIS the sum of P1,611.12 in full payment of their obligation to the latter with interest of 9% per annum from December 11, 1975, until fully paid. Dissatisfied with the said judgment, both parties appealed with the Court of Appeals. The Court of Appeals, in a Decision promulgated on January 18, 1980 (Record, pp. 72-77), ruled in favor of the Medinas WHEREFORE, the defendant GSIS is ordered to reimburse the amount of P9,580.00 as overpayment and to pay plaintiffs P3,000.00 and Pl,000.00 as attorney's fees and litigation expenses, respectively. With these modifications, the judgment appealed from is AFFIRMED in all other respects, with costs against defendant GSIS." Hence this petition. The Second Division of this Court, in a Resolution dated April 25, 1980 (Rollo, p.. 88), resolved to deny the petition for lack of merit. Petitioner filed on June 26, 1980 a Motion for Reconsideration dated June 17, 1980 (Rollo, pp. 95-103), of the above-stated Resolution and respondents in a Resolution dated July 9, 1980 (Rollo, p. 105), were required to comment thereon which comment they filed on August 6, 1980. (Rollo, pp. 106-116). The petition was given due course in the Resolution dated July 6, 1981 (Rollo, p. 128). Petitioner filed its brief on November 26, 1981 (Rollo, pp. 147-177); while private respondents filed their brief on January 27, 1982 (Rollo, pp. 181-224), and the case was considered submitted for decision in the Resolution of July 19, 1982 (Rollo, p. 229). The issues in this case are: 1. WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT THE AMENDMENT OF REAL ESTATE MORTGAGE DATED JULY 6, 1962 SUPERSEDED THE MORTGAGE CONTRACT DATED APRIL 4, 1962, PARTICULARLY WITH RESPECT TO COMPOUNDING OF INTEREST; 2. WHETHER OR NOT THE COURT OF APPEALS ERRED IN SUSTAINING THE RESPONDENT-APPELLEE SPOUSES MEDINA'S CLAIM OR OVERPAYMENT, BY CREDITING THE FIRE INSURANCE PROCEEDS IN THE SUM OF P11,152.02 TO THE TOTAL PAYMENT MADE BY SAID SPOUSES AS OF DECEMBER 11, 1975; 3. WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT THE INTEREST RATES ON THE LOAN ACCOUNTS OF RESPONDENT-APPELLEE SPOUSES ARE USURIOUS;

4. WHETHER OR NOT THE COURT OF APPEALS ERRED IN AFFIRMING THE ANNULMENT OF THE SUBJECT EXTRAJUDICIAL FORECLOSURE AND SHERIFF'S CERTIFICATE OF SALE; AND 5. WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THE GSIS LIABLE FOR ATTORNEY'S FEES, EXPENSES OF LITIGATION AND COSTS. The petition is impressed with merit. There is no dispute as to the facts of the case. By agreement of the parties the issues in this case are limited to the loan of P350,000.00 denominated as Account No. 31055 (Rollo, p. 79; Joint Record on Appeal, p. 129) subject of the Amendment of Real Mortgage dated July 6, 1962, the interpretation of which is the major issue in this case. GSIS claims that the amendment of the real estate mortgage did not supersede the original mortgage contract dated April 4, 1962 which was being amended only with respect to the amount secured thereby, and the amount of monthly amortizations. All other provisions of aforesaid mortgage contract including that on compounding of interest were deemed rewritten and thus binding on and enforceable against the respondent spouses. (Rollo, pp. 162-166). Accordingly, payments made by the Medinas in the total amount of P991,845.53 was applied as follows: the amount of P600,495.51 to Account No. 31055, P466,965.31 of which to interest and P133,530.20 to principal and P390,845.66 to Account No. 31442, P230,774.29 to interest and P159,971.37 to principal. (Joint Record on Appeal, p. 216; Rollo, p. 79). On the other hand the Medinas maintain that there is no express stipulation on compounded interest in the amendment of mortgage contract of July 6, 1962 so that the compounded interest stipulation in the original mortgage contract of April 4, 1962 which has been superseded cannot be enforced in the later mortgage. (Rollo, p. 185). Hence the Medinas claim an overpayment in Account No. 31055. The application of their total payment in the amount of P991,845.53 as computed by the trial court and by the Court of Appeals is as follows: ... It appearing and so the parties admit in their own exhibits that as of December 11, 1975, plaintiffs had paid a total of P991,241.17 excluding fire insurance, P532,038.00 of said amount should have been applied to the full payment of Acct. No. 31055 and the balance of P459,203.17 applied to the payment of Acct. No. 31442. According to the computation of the GSIS (Exhibit C, also Exhibit 38) the total amounts, collected on Acct. No. 31442 as of December 11, 1975 total P390,745.66 thus leaving an unpaid balance of P70,028.63. The total amount plaintiffs should pay on said account should therefore be P460,774.29. Deduct this amount from P459,163.17 which has been shown to be the difference between the total payments made by plaintiffs to the G.S.I.S. as of December 11, 1975 and the amount said plaintiffs should pay under their Acct. No. 31055, there remains an outstanding balance of P1,611.12. This amount represents the balance of the obligation of the plaintiffs to the G.S.I.S. on Acct. No. 31442 as of December 11, 1975." (Decision, Civil Case No. 98390; Joint Record on Appeal, pp. 227228; Rollo, p. 79). To recapitulate, the difference in the computation lies in the inclusion of the compounded interest as demanded by the GSIS on the one hand and the exclusion thereof, as insisted by the Medinas on the other. It is a basic and fundamental rule in the interpretation of contract that if the terms thereof are clear and leave no doubt as to the intention of the contracting parties, the literal meaning of the stipulations shall control but when the words appear contrary to the evident intention of the parties, the latter shall prevail over, the former. In order to judge the intention of the parties, their contemporaneous and subsequent acts shall be principally considered. (Sy v. Court of Appeals, 131 SCRA 116; July 31, 1984). There appears no ambiguity whatsoever in the terms and conditions of the amendment of the mortgage contract herein quoted earlier. On the contrary, an opposite conclusion cannot be otherwise but absurd. As correctly stated by the GSIS in its brief (Rollo, pp. 162166), a careful perusal of the title, preamble and body of the Amendment of Real Estate Mortgage dated July 6, 1962, taking into account the prior, contemporaneous, and subsequent acts of the parties, ineluctably shows that said Amendment was never intended to completely supersede the mortgage contract dated April 4, 1962. First, the title "Amendment of Real Estate Mortgage" recognizes the existence and effectivity of the previous mortgage contract. Second, nowhere in the aforesaid Amendment did the parties manifest their intention to supersede the original contract. On the contrary in the WHEREAS clauses, the existence of the previous mortgage contract was fully recognized and the fact that the same was just being amended as to amount and amortization is fully established as to obviate any doubt. Third, the Amendment of Real Estate Mortgage

dated July 6, 1962 does not embody the act of conveyancing the subject properties by way of mortgage. In fact the intention of the parties to be bound by the unaffected provisions of the mortgage contract of April 4, 1962 expressed in unmistakable language is clearly evident in the last provision of the Amendment of Real Estate Mortgage dated July 6, 1962 which reads: It is hereby expressly understood that with the foregoing amendment, all other terms and conditions of the said real estate mortgage dated April 4, 1962, insofar as they are not inconsistent herewith, are hereby confirmed, ratified and continued to be in full force and effect, and that the parties hereto agree that the amendment be an integral part of said real estate mortgage. (Emphasis supplied). A review of prior, contemporaneous, and subsequent acts supports the conclusion that both contracts are fully subsisting insofar as the latter is not inconsistent with the former. The fact is the GSIS, as a matter of policy, imposes uniform terms and conditions for all its real estate loans, particularly with respect to compounding of interest. As shown in the case at bar, the original mortgage contract embodies the same terms and conditions as in the additional loan denominated as Account No. 31442 while the amendment carries the provision that it shall be subject to the same terms and conditions as the real estate mortgage of April 4, 1962 except as to amount and amortization. Furthermore, it would be contrary to human experience and to ordinary practice for the mortgagee to impose less onerous conditions on an increased loan by the deletion of compound interest exacted on a lesser loan. II There is an obvious error in the ruling of the Court of Appeals in its Decision dated January 18, 1980, which reads: ... We agree that plaintiff should be credited with P11,152.02 of the fire insurance proceeds as the same is admitted in paragraph (4) of its Answer and should be added to their payments. (par. 13). Contrary thereto, paragraph 4 of the Answer of the GSIS states: That they (GSIS) specifically deny the allegations in Paragraph 11, the truth being that plaintiffs are not entitled to a credit of P19,381.07 as fire insurance proceeds since they were only entitled to, and were credited with, the amount of P11,152.02 as proceeds of their fire insurance policy. (par. 4, Amended Answer). As can be gleaned from the foregoing, petitioner-appellant GSIS had already credited the amount of P11,152.02. Thus, when the Court of Appeals made the aforequoted ruling, it was actually doubly crediting the amount of P11,152.02 which had been previously credited by petitioner-appellant GSIS (Rollo, pp. 170171). III. As to whether or not the interest rates on the loan accounts of the Medinas are usurious, it has already been settled that the Usury Law applies only to interest by way of compensation for the use or forbearance of money (Lopez v. Hernaez, 32 Phil. 631; Bachrach Motor Co. v. Espiritu, 52 Phil. 346; Equitable Banking Corporation v. Liwanag, 32 SCRA 293, March 30, 1970). Interest by way of damages is governed by Article 2209 of the Civil Code of the Philippines which provides: Art. 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,... In the Bachrach case (supra) the Supreme 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. Reiterating the same principle in the later case of Equitable Banking Corp. ( supra), 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. IV.Based on the finding that the GSIS had the legal right to impose an interest 9% per annum, compounded monthly, on the loans of the Medinas and an interest of 9%/12% per annum on all due and unpaid amortizations or installments, there is no question that the Medinas failed to settle their accounts with the GSIS which as computed by the latter reached an outstanding balance of P630,130.55 as of April 12, 1975 and that the GSIS had a perfect right to foreclose the mortgage. In the same manner, there is obvious error in invalidating the extra-judicial foreclosure on the basis of a typographical error in the Sheriff's Certificate of Sale which stated that the mortgage was foreclosed on May 17, 1963 instead of February 17, 1963.

There is merit in GSIS' contention that the Sheriff's Certificate of Sale is merely provisional in character and is not intended to operate as an absolute transfer of the subject property, but merely to Identify the property, to show the price paid and the date when the right of redemption expires (Section 27, Rule 39, Rules of Court, Francisco, The Revised Rules of Court, 1972 Vol., IV-B, Part I, p. 681). Hence the date of the foreclosed mortgage is not even a material content of the said Certificate. (Rollo, p. 174). V. PREMISES CONSIDERED, the decision of the Court of Appeals, in CA-G.R. No. 62541-R Medina, et al. v. Government Service Insurance System et al., is hereby REVERSED and SET ASIDE, and a new one is hereby RENDERED, affirming the validity of the extra-judicial foreclosure of the real estate mortgages of the respondent-appellee spouses Medina dated April 4, 1962, as amended on July 6, 1962, and February 17, 1963.SO ORDERED.

G.R. No. 70826 October 12, 1987 #179 On December 27, 1966, the UP and Beta, Construction Co., Inc., entered into a contract for the latter to construct the Biological Science Building of the U.P. College of Agriculture at Los Baos, Laguna for a total lump sum price of Three Million Seven Hundred Ninety Two Thousand Two Hundred Eighteen Pesos and Seven Centavos (P3,792,218.07). On January 4, 1967, Beta, sub-contracted its plumbing works to private respondent Allied Plumbing Company represented by its general manager Domingo P. Gabriel for the total amount of One Hundred Fifty Five Thousand Eighteen Hundred Twenty Eight and 60/100 Pesos (P155,828.60). On the ground that after Allied Plumbing Company completed its works, Beta, refused to remit the balance of P64,626.08. plus the payment of additional works asked by Beta, in the total amount of P4,017.90, the former filed a complaint for "sum of money with damages" against U.P. and Beta, with the Court of First Instance of Rizal. he lower court rendered a decision in favor of the plaintiff. CA- The decision was affirmed. A motion for reconsideration was denied. Hence, this petition. whether or not petitioner University of the Philippines (UP) is solidarity liable with Beta, Construction Company, Inc., to pay the amount of P68,843.98, representing the unpaid balance for labor and materials expended in the plumbing and extra works performed at the Biological Science Building of the U.P. College of Agriculture, by the sub-contractor, Allied Plumbing Company, the private respondent herein. we agree with the Solicitor General that the private respondent had no valid claim against the petitioner. Article 1729 of the New Civil Code also states that its provisions are subject to special laws. In this connection, the appellate court applying Act No. 3959. (An Act making it obligatory for any person, company, firm or corporation owning any work of any kind executed by contract to require the contractor to furnish a bond guaranteeing the payment of the laborers, providing penalties for the violation hereof, and for other purposes) stated: The applicable law is Act 3688 which is titled "AN ACT FOR THE PROTECTION OF PERSONS FURNISHING MATERIAL AND LABOR FOR THE CONSTRUCTION OF PUBLIC WORKS." Thus, the private respondent should have requested for a certified copy of the contract and bond from UP and sued Beta Construction and the surety company for unpaid labor and materials instead of proceeding against UP. Under the circumstances of this case, UP is not solidarity liable with Beta, for the claims of the sub-contractor against Beta. WHEREFORE, the instant petition is hereby GRANTED. The questioned decision of the then Intermediate Appellate Court is MODIFIED. Petitioner University of the Philippines is absolved from paying respondent Allied Plumbing Company the amount of P68,843.98, representing the unpaid balance for labor and materials expended in the plumbing and extra works it performed as sub-contractor of Beta, Construction Company, Inc., at the Biological Science Building of the UP College of Agriculture. No costs. Fule v. CA Facts:Gregorio Fule, a banker and a jeweller, offered to sell his parcel of land to Dr. Cruz in exchange for P40,000 and a diamond earring owned by the latter. A deed of absolute sale was prepared by Atty. Belarmino, and on the same day Fule went to the bank with Dichoso and Mendoza, and Dr. Cruz arrived shortly thereafter. Dr. Cruz got the earrings from her safety deposit box and handed it to Fule who, when asked if those were alright, nodded and took the earrings. Two hours after, Fule complained that the earrings were fake. He files a complaint to declare the sale null and void on the ground of fraud and deceit. Issue:Whether the sale should be nullified on the ground of fraud Held:A contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price. Being consensual, a contract of sale has the force of law between the contracting parties and they are expected to abide in good faith by their respective contractual commitments. It is evident from the facts of the case that there was a meeting of the minds between petitioner and Dr. Cruz. As such, they are bound by the contract unless there are reasons or circumstances that warrant its nullification.

Contracts that are voidable or annullable, even though there may have been no damage to the contracting parties are: (1) those where one of the parties is incapable of giving consent to a contract; and (2) those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud. The records, however, are bare of any evidence manifesting that private respondents employed such insidious words or machinations to entice petitioner into entering the contract of barter. It was in fact petitioner who resorted to machinations to convince Dr. Cruz to exchange her jewelry for the Tanay property.

Furthermore, petitioner was afforded the reasonable opportunity required in Article 1584 of the Civil Code within which to examine the jewelry as he in fact accepted them when asked by Dr. Cruz if he was satisfied with the same. By taking the jewelry outside the bank, petitioner executed an act which was more consistent with his exercise of ownership over it. This gains credence when it is borne in mind that he himself had earlier delivered the Tanay property to Dr. Cruz by affixing his signature to the contract of sale. That after two hours he later claimed that the jewelry was not the one he intended in exchange for his Tanay property, could not sever the juridical tie that now bound him and Dr. Cruz. The nature and value of the thing he had taken preclude its return after that supervening period within which anything could have happened, not excluding the alteration of the jewelry or its being switched with an inferior kind. Ownership over the parcel of land and the pair of emerald-cut diamond earrings had been transferred to Dr. Cruz and petitioner, respectively, upon the actual and constructive delivery thereof. Said contract of sale being absolute in nature, title passed to the vendee upon delivery of the thing sold since there was no stipulation in the contract that title to the property sold has been reserved in the seller until full payment of the price or that the vendor has the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period. While it is true that the amount of P40,000.00 forming part of the consideration was still payable to petitioner, its nonpayment by Dr. Cruz is not a sufficient cause to invalidate the contract or bar the transfer of ownership and possession of the things exchanged considering the fact that their contract is silent as to when it becomes due and demandable. G.R. No. 92871 August 2, 1991 MARIA P. VDA. DE JOMOC, ET AL., petitioners he main issue raised in these consolidated petitions is whether or not private respondent Maura So abandoned or backed out from the agreement for the purchase of a lot belonging to the heirs of Pantaleon Jomoc, so that the subsequent sale to petitioner spouses Lim is null and void. The subject lot in Cagayan de Oro City forms part of the estate of the late Pantaleon Jomoc. Because it was fictitiously sold and transferred to third persons, petitioner Maria P. Vda. Jomoc, as administratrix of the estate and in behalf of all the heirs, filed suit to recover the property before the trial court of Misamis Oriental in Civil Case No. 4750. Mariano So, the last of the transferees and the husband of Maria So, intervened. The case was decided in favor of Jomoc and was accordingly appealed by Mariano So and one Gaw Sur Cheng to the Court of Appeals. In February 1979, pending the appeal, Jomoc executed a Deed of Extrajudicial Settlement and Sale of Land (Exhibit "A") with private respondent for P300,000.00. The document was not yet signed by all the parties nor notarized but in the meantime, Maura So had made partial payments amounting to P49,000.00. The lower court, finding that there was no sufficient evidence to show complainant-respondents' withdrawal from the sale, concluded that: (1) the case is one of double sale; (2) the spouses-intervenors are registrants in bad faith who registered their questioned deed of sale long after the notice of lis pendens of Civil Case No. 8983 was recorded. On appeal, the trial court decision was affirmed except for the award of moral and exemplary damages and attorney's fees and expenses for litigation. Hence, these petitions. The petitioners' allegation that the contract of sale by Maria P. Jomoc with private respondent is unenforceable under the Statute of Frauds, is without merit. The petitioners-heirs, in their brief before the appellate court, admitted that the extrajudicial settlement with sale in favor of Maura So is valid and enforceable under the Statute of Frauds. In view of this provision, the two courts below correctly ruled that the spouses Lim do not have a better right. They purchased the land with full knowledge of a previous sale to private respondent and without requiring from the vendors-heirs any proof' of the prior vendee's revocation of her purchase. They should have exercised extra caution in their purchase especially if at the time of the sale, the land was still covered by TCT No. 19648 bearing the name of Mariano So and was not yet registered in the name of petitioners- heirs of Pantaleon Jomoc (Original Records, p. 80), although it had been reconveyed to said heirs. Not having done this, petitioners spouses Lim cannot be said to be buyers in good faith. When they registered the sale on April 27, 1983 after having been charged with notice of lis pendens annotated as early as February 28, 1983 (the same date of their purchase), they did so in bad faith or on the belief that a registration may improve their position being subsequent buyers of the same lot. Under Article 1544, mere registration is not enough to acquire new title. Good faith must concur. ( Bergado v. Court of Appeals, 173 SCRA 497 [1989]; Concepcion V. Court of Appeals, G.R. No. 83208, February 6,1991) Considering the failure of the petitioners to show that the findings of the two courts below are not supported by substantial trial evidence or that their conclusions are contrary to law and jurisprudence, we find no reversible error in the questioned decision. WHEREFORE, the petitions are hereby DISMISSED for lack of merit.

G.R. No. L-55480 June 30, 1987 PACIFICA MILLARE, petitioner, On 17 June 1975, a five-year Contract of Lease 1 was executed between petitioner Pacifica Millare as lessor and private respondent Elsa Co, married to Antonio Co, as lessee. Under the written agreement, which was scheduled to expire on 31 May 1980, the lessor-petitioner agreed to rent out to thelessee at a monthly rate of P350.00 the "People's Restaurant", a commercial establishment sometime during the last week of May 1980, the lessor informed them that they could continue leasing the People's Restaurant so long as they were amenable to paying creased rentals of P1,200.00 a month. In response, a counteroffer of P700.00 a month was made by the Co spouses. In contrast, the lessor flatly denied ever having considered, much less offered, a renewal of the Contract of Lease. the Co spouses filed a Complaint with the then Court of First Instance of Abra against Mrs. Millare and seeking judgment (a) ordering the renewal of the Contract of Lease at a rental rate of P700.00 a nionth and for a period of ten years, whether or not the complaint in Civil Case No. 1434 filed by the respondent Co spouses claiming renewal of the contract of lease stated a valid cause of action. Failure to reach agreement on the terms and conditions of the renewal contract will of course prevent the contract from being renewed at all. In the instant case, the lessor and the lessee conspicuously failed to reach agreement both on the amount of the rental to be payable during the renewal term, and on the term of the renewed contract. t follows that the respondent judge's decision requiring renewal of the lease has no basis in law or in fact. As pointed out by Mr. Justice J.B.L. Reyes in Republic vs. Philippine Long Distance Telephone,Co., 18 [P]arties cannot be coerced to enter into a contract where no agreement is had between them as to the principal terms and conditions of the contract. Freedom to stipulate such terms and conditions is of the essence of our contractual system, and by express provision of the statute, a contract may be annulled if tainted by violence, intimidation or undue influence (Article 1306, 1336, 1337, Civil Code of the Philippines). WHEREFORE, the Petition for Certiorari, Prohibition and mandamus is granted. G.R. No. L-45710 October 3, 1985 On January 20, 1969, Sulpicio M. Tolentino filed a petition with the Court of First Instance of Agusan for injunction, specific performance or rescission and damages with preliminary injunction, alleging that since Island Savings Bank failed to deliver the P63,000.00 balance of the P80,000.00 loan, he is entitled to specific performance by ordering Island Savings Bank to deliver the P63,000.00 with interest of 12% per annum from April 28, 1965, and if said balance cannot be delivered, to rescind the real estate mortgage (pp. 32-43, rec.). On January 21, 1969, the trial court, upon the filing of a P5,000.00 surety bond, issued a temporary restraining order enjoining the Island Savings Bank from continuing with the foreclosure of the mortgage (pp. 86-87, rec.). On January 29, 1969, the trial court admitted the answer in intervention praying for the dismissal of the petition of Sulpicio M. Tolentino and the setting aside of the restraining order, filed by the Central Bank and by the Acting Superintendent of Banks (pp. 65-76, rec.). On February 15, 1972, the trial court, after trial on the merits rendered its decision, finding unmeritorious the petition of Sulpicio M. Tolentino, ordering him to pay Island Savings Bank the amount of PI 7 000.00 plus legal interest and legal charges due thereon, and lifting the restraining order so that the sheriff may proceed with the foreclosure (pp. 135-136. rec. On February 11, 1977, the Court of Appeals, on appeal by Sulpicio M. Tolentino, modified the Court of First Instance decision by affirming the dismissal of Sulpicio M. Tolentino's petition for specific performance, but it ruled that Island Savings Bank can neither foreclose the real estate mortgage nor collect the P17,000.00 loan pp. 30-:31. rec.). Hence, this instant petition by the central Bank.
he issues are: 1. Can the action of Sulpicio M. Tolentino for specific performance prosper?

Since Island Savings Bank was in default in fulfilling its reciprocal obligation under their loan agreement, Sulpicio M. Tolentino, under Article 1191 of the Civil Code, may choose between specific performance or rescission with damages in either case. But since Island Savings Bank is now prohibited from doing further business by Monetary Board Resolution No. 967, WE cannot grant specific performance in favor of Sulpicio M, Tolentino. Rescission is the only alternative remedy left. WE rule, however, that rescission is only for the P63,000.00 balance of the P80,000.00 loan, because the bank is in default only insofar as such amount is concerned, as there is no doubt that the bank failed to give the P63,000.00. As far as the partial release of P17,000.00, which Sulpicio M. Tolentino accepted and executed a promissory note to cover it, the bank was deemed to have complied with its reciprocal obligation to furnish a P17,000.00 loan. The promissory note gave rise to Sulpicio M. Tolentino's reciprocal obligation to pay the P17,000.00 loan when it falls due. His failure to pay the overdue amortizations under the promissory note made him a party in default, hence not entitled to rescission (Article 1191 of the Civil Code). If there is a right to rescind the promissory note, it shall belong to the aggrieved party, that is, Island Savings Bank. If Tolentino had not signed a promissory note setting the date for payment of P17,000.00 within 3 years, he would be entitled to ask for rescission of the entire loan because he cannot possibly be in default as there was no date for him to perform his reciprocal obligation to pay. Since both parties were in default in the performance of their respective reciprocal obligations, that is, Island Savings Bank failed to comply with its obligation to furnish the entire loan and Sulpicio M. Tolentino failed to comply with his obligation to pay his P17,000.00 debt within 3 years as stipulated, they are both liable for damages.

G.R. No. L-57936 September 28, 1984 DMRC ENTERPRISES, petitioner,

Petitioner is a partnership engaged in the business of general construction and leasing heavy equipment and other allied transactions. On May 12, 1978, the petitioner made an offer in writing to the private respondent for the lease to it of three (3) units of heavy equipment namely: One 1 unit Payloader "KIMCO" 21/2 cubic yard at P 130.00 per hour; One (1) unit Bulldozer D-80-A with ripper at P150.00 per hour; and One (1) unit Bulldozer at P130.00 per hour with a guaranteed minimum use of two hundred (200) hours, a month, excluding breakdown and that the expenses of bringing the subject equipment to the jobsite shall be for the account of the respondent. As further conditions of the agreement, respondent was to advance the sum of P5,000.00 per unit to be deducted from the first collection to be made by the petitioner; that the payments due to the petitioner shall be made every 15th and 30th of each calendar month and that an amount equivalent to 30% of the collection shall be invested in the purchase of shares of stock of the defendant corporation at the market value of P37,000.00 per share. The offer was accepted. As a result of the agreement between petitioner and private respondent, the former proceeded to perform what was incumbent upon it. For the period from September 1, 1978 up to October 15, 1978, inclusive the three equipments' total job performance amounted to P122,207.31 of which P87,106.83 was to be paid in cash, and P35,100.48 invested in the purchase of shares of stock in accordance with the agreement between the parties. Statements of account were periodically sent to the respondent. However, despite repeated demands made by the petitioner to the respondent for the payment of outstanding obligations, the respondent refused to comply with its obligations to the petitioner. omplaint is simply an action for the collection of money and delivery of personal property representing unpaid obligations within the competence of the regular courts. We agree with the petitioner. Jurisdiction of a court is conferred by the Constitution and by the laws in force at the time of the commencement of the action. (People v. Mariano, 71 SCRA 600; Villamayor v. Luciano, 88 SCRA 156). however, whether or not a court has jurisdiction over the subject matter of a case is determined from the allegations of the complaint Magay v. Estandan 69 SCRA 456; Republic v. Sebastian, 72 SCRA 222). Therefore, to resolve the issue raised to us, an interpretation and application of the law on jurisdiction, must be made vis-a-vis the avernments of the petitioner's complaint. WHEREFORE, in view of the foregoing, the petition is hereby GRANTED