SIGA-AN VS VILLANUEVA

SIGA-AN VS VILLANUEVA

G.R. No. 173227  January 20, 2009

SEBASTIAN SIGA-AN, Petitioner, 
ALICIA VILLANUEVA, Respondent.

Nature: Petition for Review on Certiorari under Rule 45

Keywords: Loan, not in writing, no stipulation of interest

Summary: Respondent filed a complaint for sum of money against petitioner. Respondent claimed that petitioner approached her inside the PNO and offered to loan her the amount of P540,000.00 of which the loan agreement was not reduced in writing and there was no stipulation as to the payment of interest for the loan. Respondent issued a check worth P500,000.00 to petitioner as partial payment of the loan.  She then issued another check in the amount of P200,000.00 to petitioner as payment of the remaining balance of the loan of which the excess amount of P160,000.00 would be applied as interest for the loan.  Not satisfied with the amount applied as interest, petitioner pestered her to pay additional interest and threatened to block or disapprove her transactions with the PNO if she would not comply with his demand. Thus, she paid additional amounts in cash and checks as interests for the loan.  She asked petitioner for receipt for the payments but was told that it was not necessary as there was mutual trust and confidence between them. According to her computation, the total amount she paid to petitioner for the loan and interest accumulated to P1,200,000.00.

The RTC rendered a Decision holding that respondent made an overpayment of her loan obligation to petitioner and that the latter should refund the excess amount to the former.  It ratiocinated that respondent’s obligation was only to pay the loaned amount of P540,000.00, and that the alleged interests due should not be included in the computation of respondent’s total monetary debt because there was no agreement between them regarding payment of interest.  It concluded that since respondent made an excess payment to petitioner in the amount of P660,000.00 through mistake, petitioner should return the said amount to respondent pursuant to the principle of solutio indebiti. Also, petitioner should pay moral damages for the sleepless nights and wounded feelings experienced by respondent.  Further, petitioner should pay exemplary damages by way of example or correction for the public good, plus attorney’s fees and costs of suit.

CHICO-NAZARIO, J.

Facts:

On 30 March 1998, respondent Alicia Villanueva filed a complaint⁵ for sum of money against petitioner Sebastian Siga-an before the Las Pinas City Regional Trial Court. Respondent alleged that she was a businesswoman engaged in supplying office materials and equipments to the Philippine Navy Office (PNO), while petitioner was a military officer and comptroller of the PNO from 1991 to 1996.

Villanueva claimed that sometime in 1992, petitioner Siga-an approached her inside the PNO and offered to loan her the amount of ₱540,000.00. Since she needed capital for her business transactions with the PNO, she accepted petitioner’s proposal. The loan agreement was not reduced in writing. Also, there was no stipulation as to the payment of interest for the loan.

On 31 August 1993, respondent issued a check worth ₱500,000.00 to petitioner as partial payment of the loan. On 31 October 1993, she issued another check in the amount of ₱200,000.00 to petitioner as payment of the remaining balance of the loan. Petitioner told her that since she paid a total amount of ₱700,000.00 for the ₱540,000.00 worth of loan, the excess amount of ₱160,000.00 would be applied as interest for the loan.

Not satisfied with the amount applied as interest, petitioner pestered her to pay additional interest. Petitioner threatened to block or disapprove her transactions with the PNO if she would not comply with his demand. As all her transactions with the PNO were subject to the approval of petitioner as comptroller of the PNO, and fearing that petitioner might block or unduly influence the payment of her vouchers in the PNO, she conceded. Thus, she paid additional amounts in cash and checks as interests for the loan. She asked petitioner for receipt for the payments but petitioner told her that it was not necessary as there was mutual trust and confidence between them. According to her computation, the total amount she paid to petitioner for the loan and interest accumulated to ₱1,200,000.00.⁷

Thereafter, respondent consulted a lawyer regarding the propriety of paying interest on the loan despite absence of agreement to that effect. Her lawyer told her that petitioner could not validly collect interest on the loan because there was no agreement between her and petitioner regarding payment of interest. Since she paid petitioner a total amount of ₱1,200,000.00 for the ₱540,000.00 worth of loan, and upon being advised by her lawyer that she made overpayment to petitioner, she sent a demand letter to petitioner asking for the return of the excess amount of ₱660,000.00. Petitioner, despite receipt of the demand letter, ignored her claim for reimbursement.

Respondent prayed that the RTC render judgment ordering petitioner to pay respondent (1) ₱660,000.00 plus legal interest from the time of demand; (2) ₱300,000.00 as moral damages; (3) ₱50,000.00 as exemplary damages; and (4) an amount equivalent to 25% of ₱660,000.00 as attorney’s fees.

Petitioner insisted that there was no overpayment because respondent admitted in the latter’s promissory note that her monetary obligation as of 12 September 1994 amounted to ₱1,240,000.00 inclusive of interests. He argued that respondent was already estopped from complaining that she should not have paid any interest, because she was given several times to settle her obligation but failed to do so. He maintained that to rule in favor of respondent is tantamount to concluding that the loan was given interest-free. Based on the foregoing averments, he asked the RTC to dismiss respondent’s complaint.

Issue:

1. Whether or not interest was due to petitioner;  (

2. Whether the principle of solutio indebiti applies to the case at bar.

Held: (1) No. Compensatory interest is not chargeable in the instant case because it was not duly proven that respondent defaulted in paying the loan and no interest was due on the loan because there was no written agreement as regards payment of interest. Article 1956 of the Civil Code, which refers to monetary interest, specifically mandates that no interest shall be due unless it has been expressly stipulated in writing.  As can be gleaned from the foregoing provision, payment of monetary interest is allowed only if: (1) there was an express stipulation for the payment of interest; and (2) the agreement for the payment of interest was reduced in writing.  The concurrence of the two conditions is required for the payment of monetary interest.  Thus, we have held that collection of interest without any stipulation therefor in writing is prohibited by law.  

(2) Petitioner cannot be compelled to return the alleged excess amount paid by respondent as interest. Under Article 1960 of the Civil Code, if the borrower of loan pays interest when there has been no stipulation therefor, the provisions of the Civil Code concerning solutio indebiti shall be applied.  Article 2154 of the Civil Code explains the principle of solutio indebiti.  Said provision provides that if something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises.  In such a case, a creditor-debtor relationship is created under a quasi-contract whereby the payor becomes the creditor who then has the right to demand the return of payment made by mistake, and the person who has no right to receive such payment becomes obligated to return the same.  The quasi-contract of solutio indebiti harks back to the ancient principle that no one shall enrich himself unjustly at the expense of another.  The principle of solutio indebiti applies where (1) a payment is made when there exists no binding relation between the payor, who has no duty to pay, and the person who received the payment; and (2) the payment is made through mistake, and not through liberality or some other cause.  We have held that the principle of solutio indebiti applies in case of erroneous payment of undue interest. 

Article 2232 of the Civil Code states that in a quasi-contract, such as solutio indebiti, exemplary damages may be imposed if the defendant acted in an oppressive manner.  Petitioner acted oppressively when he pestered respondent to pay interest and threatened to block her transactions with the PNO if she would not pay interest.  This forced respondent to pay interest despite lack of agreement thereto.  Thus, the award of exemplary damages is appropriate so as to deter petitioner and other lenders from committing similar and other serious wrongdoings.

Ruling: WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 71814, dated 16 December 2005, is hereby AFFIRMED with the following MODIFICATIONS: (1) the amount of ₱660,000.00 as refundable amount of interest is reduced to THREE HUNDRED THIRTY FIVE THOUSAND PESOS (₱335,000.00); (2) the amount of ₱300,000.00 imposed as moral damages is reduced to ONE HUNDRED FIFTY THOUSAND PESOS (₱150,000.00); (3) an interest of 6% per annum is imposed on the ₱335,000.00, on the damages awarded and on the attorney’s fees to be computed from the time of the extra-judicial demand on 3 March 1998 up to the finality of this Decision; and (4) an interest of 12% per annum is also imposed from the finality of this Decision up to its satisfaction. Costs against petitioner.

Newsounds Broadcasting vs. Dy, G.R. No. 170270, April 2, 2009

Newsounds Broadcasting vs. Dy, G.R. No. 170270, April 2, 2009

Nature: Petition for Review emanated from a petition for mandamus

Keywords: Prior restraint, Permit to operate, Agricultural land to Commercial

Summary: RTC rendered a Decision denying the petition for mandamus. The RTC upheld all the arguments of the respondents, including their right to deny the sought after mayors permit unless they were duly satisfied that the subject property has been classified as commercial in nature. The Decision made no reference to the application for a writ of preliminary mandatory injunction.

CA dismissed the Petition for Certiorari, ruling that the RTC did not commit any grave abuse of discretion in impliedly denying the application for preliminary mandatory injunction.

TINGA, J.:

Facts: Petitioners operate and run Bombo Radyo DZNC Cauayan (DZNC), an AM radio broadcast station, and Star FM DWIT Cauayan, an FM radio broadcast station, in Cauayan Citry, Isabela. Back in 1996, Newsounds commenced relocation of its broadcasting station, management office, and transmitters on propery located in Minante 2, Cauayan City, Isabela.

On July 1996, the Housing & Land Use Regulatory Board (HLURB) and Office of the Municipal Planning and Development Coordinator (OMPDC) affirmed and certified that the commercial structure to be constructed conformed to local zoning regulations, noting as well that the location is classified as a “commercial area”. The radio station was able to fully operate smoothly thereafter.

In 2002 however, when petitioners applied for a renewal of mayor’s permit, City Zoning Administratior-Designate Bagnos Maximo refused to issue zoning clearance on the grounds that petitioners were not able to submit conversion papers showing that the agricultural land was converted to commercial land. Petitioners asked the court to compel the issuance of mayor’s permit but the court denied the action. In the meantime, the Department of Agrarian Reform (DAR) Region II office issued to petitioners a formal recognition of conversion of the property from agricultural to commercial.

In 2003, petitioners again filed their application for renewal of mayor’s permit, attaching the DAR Order. Respondent Felicisimo Meer, acting City Administrator of Cauayan City denied the same, claiming that it was void on the grounds that they did not have record of the DAR Order.

The deadline lapsed on Febuary 15, 2004, and respondents Meer and Racma Fernandez-Garcia, City Legal Officer of Cauayan City, closed the radio station. Due to the prvosion of Omnibus Election Code which prohibits the closure of radio station during the pendency of election period, COMELEC issued an order allowing the petitioners to operate before Febuary 17, 2004, but was barred again by respondent Mayor Ceasar Dy on the grounds that the radio station had no permit. Nonetheless, COMELEC allowed them to run again until June 10, 2004 after elections. Petitioners filed the case to the RTC and CA for the issuance of mayor’s permit but both courts denied the petition.

A municipal or city mayor is likewise authorized under the LGC to issue licenses and permits, and suspend or revoke the same for any violation of the conditions upon which said licenses or permits had been issued, pursuant to law or ordinance. In case of Cauayan City, the authority to require a mayor’s permit was enacted through Ordinance No. 92-004, enacted in 1993. However, nothing in the ordinance requires an application for a mayor’s permit to submit “either an approved land conversion papers from DAR, showing that its property was converted from prime agricultural land or an approved resolution from the Sangguniang Bayan or Sangguniang Panglungsod authorizing the reclassification of property from agricultural to commercial land.

In 1996, the HLURB issued a zoning decision that classified the property as commercial. Petitioners are also armed with several certifications stating that the property is indeed a commercial area. Also, petitioners paid real property taxes based on the classification of property as commercial without objections raised by the respondents.

Petitioners argued that this consistent recognition by the local government of Cauayan of the commercial character of the property constitutes estoppels against respondents from denying the fact before the courts. The lower courts had ruled that “the government of Cauayan City is not bound by estoppels, but petitioners classified that this concept is understood to only refer to acts and mistakes of its official especially to those which are irregular.

Issue: WON there is prior restraint against DZNC

Ratio: YES.

Petitioners have taken great pains to depict their struggle as a textbook case of denial of the right to free speech and of the press. In their tale, there is undeniable political color. They admit that in 2001, Bombo Radyo was aggressive in exposing the widespread election irregularities in Isabela that appear to have favored respondent Dy and other members of the Dy political dynasty. Respondent Ceasar Dy is the brother of Faustino Dy, Jr., governor of Isabela from 2001 until he was defeated in his re-election bid in 2004 by Grace Padaca, a former assistant station manager at petitioners own DZNC Bombo Radyo. A rival AM radio station in Cauayan City, DWDY, is owned and operated by the Dy family. Petitioners likewise direct our attention to a 20 February 2004 article printed in the Philippine Daily Inquirer where Dy is quoted as intending to file disenfranchisement proceedings against DZNC-AM.

The partisan component of this dispute will no doubt sway many observers towards one opinion or the other, but not us. The comfort offered by the constitutional shelter of free expression is neutral as to personality, affinity, ideology and popularity. The judges tasked to enforce constitutional order are expected to rule accordingly from the comfort of that neutral shelter.

The following undisputed facts bring the issue of free expression to fore. Petitioners are authorized by law to operate radio stations in Cauayan City, and had been doing so for some years undisturbed by local authorities. Beginning in 2002, respondents in their official capacities have taken actions, whatever may be the motive, that have impeded the ability of petitioners to freely broadcast, if not broadcast at all. These actions have ranged from withholding permits to operate to the physical closure of those stations under color of legal authority. While once petitioners were able to broadcast freely, the weight of government has since bore down upon them to silence their voices on the airwaves. An elementary school child with a basic understanding of civics lessons will recognize that free speech animates these cases.

Without taking into account any extenuating circumstances that may favor the respondents, we can identify the bare acts of closing the radio stations or preventing their operations as an act of prior restraint against speech, expression or of the press. Prior restraint refers to official governmental restrictions on the press or other forms of expression in advance of actual publication or dissemination. While any system of prior restraint comes to court bearing a heavy burden against its constitutionality, not all prior restraints on speech are invalid.

That the acts imputed against respondents constitute a prior restraint on the freedom of expression of respondents who happen to be members of the press is clear enough. There is a long-standing tradition of special judicial solicitude for free speech, meaning that governmental action directed at expression must satisfy a greater burden of justification than governmental action directed at most other forms of behavior. We had said in SWS v. COMELEC: Because of the preferred status of the constitutional rights of speech, expression, and the press, such a measure is vitiated by a weighty presumption of invalidity. Indeed, any system of prior restraints of expression comes to this Court bearing a heavy presumption against its constitutional validity. . . . The Government 'thus carries a heavy burden of showing justification for the enforcement of such restraint. There is thus a reversal of the normal presumption of validity that inheres in every legislation.

At the same time, jurisprudence distinguishes between  a content-neutral regulation, i.e., merely concerned with the incidents of the speech, or one that merely controls the time, place or manner, and under well defined standards; and a content-based  restraint or censorship, i.e., the restriction is based on the subject matter of the utterance or speech. Content-based laws are generally treated as more suspect than content-neutral laws because of judicial concern with discrimination in the regulation of expression.[44] Content-neutral regulations of speech or of conduct that may amount to speech, are subject to lesser but still heightened scrutiny.

Ostensibly, the act of an LGU requiring a business of proof that the property from which it operates has been zoned for commercial use can be argued, when applied to a radio station, as content-neutral since such a regulation would presumably apply to any other radio station or business enterprise within the LGU.

However, the circumstances of this case dictate that we view the action of the respondents as a content-based restraint.

35.3. The timing of respondents closure of petitioners radio stations is also very telling. The closure comes at a most critical time when the people are set to exercise their right of suffrage. Such timing emphasizes the ill motives of respondents.

In their Answer with Comment to the petition for mandamus, respondents admitted that petitioners had made such exposes during the 2001 elections, though they denied the nature and truthfulness of such reports. They conceded that the Philippine Daily Inquirer story reported that Dy said he planned to file disenfranchisement proceedings against [DZNC]-AM. While respondents assert that there are other AM radio stations in Isabela, they do not specifically refute that station DWDY was owned by the Dy family, or that DZNC and DWDY are the two only stations that operate out of Cauayan.

Prior to 2002, petitioners had not been frustrated in securing the various local government requirements for the operation of their stations. It was only in the beginning of 2002, after the election of respondent Ceasar Dy as mayor of Cauayan, that the local government started to impose these new requirements substantiating the conversion of CDCs property for commercial use. Petitioners admit that during the 2001 elections, Bombo Radyo was aggressive in exposing the widespread election irregularities in Isabela that appear to have favored Respondent Dy and other members of the Dy political dynasty.[52] Respondents efforts to close petitioners radio station clearly intensified immediately before the May 2004 elections, where a former employee of DZNC Bombo Radyo, Grace Padaca, was mounting a credible and ultimately successful challenge against the incumbent Isabela governor, who happened to be the brother of respondent Dy. It also bears notice that the requirements required of petitioners by the Cauayan City government are frankly beyond the pale and not conventionally adopted by local governments throughout the Philippines.

All those circumstances lead us to believe that the steps employed by respondents to ultimately shut down petitioners radio station were ultimately content-based. The United States Supreme Court generally treats restriction of the expression of a particular point of view as the paradigm violation of the First Amendment.[53] The facts confronting us now could have easily been drawn up by a constitutional law professor eager to provide a plain example on how free speech may be violated.

The Court is of the position that the actions of the respondents warrant heightened or strict scrutiny from the Court, the test which we have deemed appropriate in assessing content-based restrictions on free speech, as well as for laws dealing with freedom of the mind or restricting the political process, of laws dealing with the regulation of speech, gender, or race as well as other fundamental rights as expansion from its earlier applications to equal protection.[54] The immediate implication of the application of the strict scrutiny test is that the burden falls upon respondents as agents of government to prove that their actions do not infringe upon petitioners constitutional rights. As content regulation cannot be done in the absence of any compelling reason,[55] the burden lies with the government to establish such compelling reason to infringe the right to free expression.

Ruling: WHEREFORE, the petitions are GRANTED. The assailed decisions of the Court of Appeals and the Regional Trial Court of Cauayan City, Branch 24, are hereby REVERSED and SET ASIDE. The instant petition for mandamus is hereby GRANTED and respondents are directed to immediately issue petitioners zoning clearances and mayors permits for 2004 to petitioners

Notes: Whenever the force of government or any of its political subdivisions bears upon to close down a private broadcasting station, the issue of free speech infringement cannot be minimized, no matter the legal justifications offered for the closure. In many respects, the present petitions offer a textbook example of how the constitutional guarantee of freedom of speech, expression and of the press may be unlawfully compromised. Tragically, the lower courts involved in this case failed to recognize or assert the fundamental dimensions, and it is our duty to reverse, and to affirm the Constitution and the most sacred rights it guarantees.