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 Moonwalks 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. Moonwalks 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.

Jison vs. CA FACTS: Petitioners spouses Jison, entered into a contract of sell with respondent Robert O. Phillips & Sons, Inc. In the said contract, Phillips agreed to sell to spouses Jison a lot at the Victoria Valley Subdivision for the price of P55,000 payable on installment basis. ISSUE: Spouses Jison paid respondents a down payment and its monthly installments. Petitioners failed to build a house as provided in the contract, thereby, the stipulated penalty of P5.00 per sq. m. was imposed. Petitioners failed to pay monthly installments for 3 consecutive months but the late payments were accepted by the respondent. Again, the petitioners failed to pay 4 consecutive months of its monthly installments. Respondent sent a letter to petitioners calling petitioners attention to the fact that their account was four months overdue. This letter was followed up by another letter where respondent reminded petitioner for the automatic rescission of the contract. Petitioner eventually paid the amounts due. Petitioner on its third time failed to pay the monthly installments for another 3 consecutive months. Respondent sent petitioners a letter which returned petitioners check and informed them that the contract was cancelled when they failed to pay the monthly installments due, thereby making their account delinquent for 3 months. WON the forfeiture of the payments made by petitioners is valid? HELD: Yes. The forfeiture of the payments made by petitioners is valid. But the forfeiture of 50% of the amount already paid appears to be a fair settlement. The forfeiture of the amount of P47,312.64, although it includes the fines for petitioners failure to construct a house required by the contract, is clearly iniquitous considering that the contract price is only P55,000. Although petitioners have been delinquent in paying their amortizations several times to be prejudice of respondent, with the cancellation of the contract the possession of the lot reverts to respondent who is free to resell it. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with the debtor and when the penalty is iniquitous and unconscionable. Petitioners filed a complaint for specific performance. The trial court rendered judgment in favor of private respondent declaring the payments amounting to P47,312.64 made by petitioner be forfeited. Petitioners tendered payment for all the installments already due but the tender was refused.

Florentino vs. Supervalue Inc.

In the second letter, respondent informed the petitioner that it will no longer renew the Contracts of Lease for the three outlets. After the expiration of the lease contract, respondent demanded to return the security deposits amounting to P192,000 upon signing the Contract of Lease. Petitioner sent respondent another letter reiterating her previous demands, but respondent refuses to comply with. ISSUE: WON the forfeiture of the entire security deposits is unconscionable? HELD:

FACTS: Petitioner is doing a business under the business name Empanada Royale, with outlets in different malls.

Respondent is engaged in the business of leasing stalls and commercial store spaces located inside SM Malls. Petitioner and respondent executed three Contracts of Lease containing similar terms and conditions over the cart-type stalls at SM North Edsa, Southmall and Megamall. The term of each contract is for a period of four months and may renewed upon agreement of the parties. Upon the expiration of said contracts of lease, the parties agreed to renew it. Before the expiration of said contracts of lease, petitioner received two letters from respondent. In the first letter, petitioner was charged with: o o violating the contracts of lease by not opening on Dec. 16 and 26 1999. selling a new variety of the price of her merchandise from P20.00 to P22.00, without the approval of the respondent. frequently closing earlier that the usual mall hours, again in violation of the terms of the contract.

The forfeiture of the entire amount of the security deposits was excessive and unconscionable considering that the gravity of the breaches committed by the petitioner is not as such degree that the respondent was unduly prejudiced thereby. It is but equitable to reduce the penalty of the petitioner to 50% of the total amount of security deposits.

A stern warning was given to petitioner to refrain from committing similar infractions.

GSIS vs. CA

ISSUE: WON the extrajudicial foreclosure and Sheriffs Certificate invalid?

FACTS: In 1961, respondent spouses Medina applied for a loan of P350,000 with petitioner GSIS. The loan was approved and is repayable in ten years; the rate of interest shall be 9% per annum compounded monthly; that any installment amortization that remains due and unpaid shall bear an interest of 9%/12% per month. In 1962, the Medinas executed an Amendment of Real Estate Mortgages in favor of GSIS. In 1963, an additional loan of P230,000 was approved by GSIS on the security of the same mortgaged properties and additional properties, to bear interest at 9%per annum and repayable in 10 years. 1965, the Medinas having defaulted in the payment of the monthly amortization on their loan, the GSIS imposed 9% / 12% interest on all installments due and unpaid. 1974, GSIS notified the Medinas that they had arrearages and demanded payment within 7 days from notice thereof, otherwise, it would foreclose the mortgage. 1975, GSIS filed an application for Foreclosure of Mortgage. The real estate properties of Medinas were sold at public auction to the GSIS as the highest bidder for the total amount of P440,080 Medinas maintained that there is no express stipulation on compounded interest in the amendment of mortgage contract. Medinas claim an overpayment.

Held: No. The extrajudicial foreclosure of the Real Estate Mortgages of spouses Medina valid. Medinas failed to settle their accounts with the GSIS which as computed by the GSIS reached an outstanding balance of P630, 130.55 and that the GSIS had a perfect right to foreclose the mortgage. There is merit in GSIS contention that the Sheriffs 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. Hence, the date of the foreclosed mortgage is not even a material content of the said certificate.