1) Mario Espina owned a condominium unit that he provisionally sold to Rene Diaz through a deed of sale allowing payment in installments.
2) Diaz failed to make the installment payments and Espina cancelled the provisional deed of sale. However, Diaz remained in possession of the unit.
3) Espina then filed an unlawful detainer case against Diaz to evict him from the property for failure to pay rent. The Court of Appeals dismissed the complaint finding the provisional deed of sale novated the lease contract.
1) Mario Espina owned a condominium unit that he provisionally sold to Rene Diaz through a deed of sale allowing payment in installments.
2) Diaz failed to make the installment payments and Espina cancelled the provisional deed of sale. However, Diaz remained in possession of the unit.
3) Espina then filed an unlawful detainer case against Diaz to evict him from the property for failure to pay rent. The Court of Appeals dismissed the complaint finding the provisional deed of sale novated the lease contract.
1) Mario Espina owned a condominium unit that he provisionally sold to Rene Diaz through a deed of sale allowing payment in installments.
2) Diaz failed to make the installment payments and Espina cancelled the provisional deed of sale. However, Diaz remained in possession of the unit.
3) Espina then filed an unlawful detainer case against Diaz to evict him from the property for failure to pay rent. The Court of Appeals dismissed the complaint finding the provisional deed of sale novated the lease contract.
1) Mario Espina owned a condominium unit that he provisionally sold to Rene Diaz through a deed of sale allowing payment in installments.
2) Diaz failed to make the installment payments and Espina cancelled the provisional deed of sale. However, Diaz remained in possession of the unit.
3) Espina then filed an unlawful detainer case against Diaz to evict him from the property for failure to pay rent. The Court of Appeals dismissed the complaint finding the provisional deed of sale novated the lease contract.
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Oblicon
Espina v CA and Rene G Diaz
Facts: "Mario S. Espina is the registered owner of a Condominium Unit No. 403, Victoria Valley Condominium, Valley Golf Subdivision, Antipolo, Rizal. Such ownership is evidenced by Condominium Certificate of Title No. N-10 (p. 31, Rollo). "On November 29, 1991, Mario S. Espina, the private respondent as seller, and Rene G. Diaz, the petitioner as buyer, executed a Provisional Deed of Sale, whereby the former sold to the latter the aforesaid condominium unit for the amount of P100,000.00 to be paid upon the execution of the contract and the balance to be paid through PCI Bank postdated checks "Subsequently, in a letter dated January 22, 1992, petitioner informed private respondent that his checking account with PCI Bank has been closed and a new checking account with the same drawee bank is opened for practical purposes. The letter further stated that the postdated checks issued will be replaced with new ones in the same drawee bank (p. 63, Rollo). "On January 25, 1992, petitioner through Ms. Socorro Diaz, wife of petitioner, paid private respondent Mario Espina P200,000.00, acknowledged by him as partial payment for the condominium unit subject of this controversy (p.64, Rollo). "On July 26, 1992, private respondent sent petitioner a "Notice of Cancellation" of the Provisional Deed of Sale (p. 48, Rollo). "However, despite the Notice of Cancellation from private respondent, the latter accepted payment from petitioner per Metrobank Check No. 395694 dated and encashed on October 28, 1992 in the amount of P 100,000.00 (p. 64, Rollo). "On February 24, 1993, private respondent filed a complaint for Unlawful Detainer against petitioner. The trial court rendered its decision ordering private respondent to vacate the condominium and to pay back rentals. However, plaintiff shall refund the amount paid for the purchase price. On July 20, 1994, the Court of Appeals promulgated its decision reversing the appealed decision and dismissing the complaint for unlawful detainer. Hence, this appeal via petition for review on certiorari. Issue: Whether or not the provisional deed of sale novated the existing contract of lease. Ruling: We resolve the issue in favor of petitioner. According to respondent Diaz, the provisional deed of sale that was subsequently executed by the parties novated the original existing contract of lease. The contention cannot be sustained. Respondent originally occupied the condominium unit in question in 1987 as a lessee. While he occupied the premises as lessee, petitioner agreed to sell the condominium unit to respondent by installments. The agreement to sell was provisional as the consideration was payable in installments. The question is, did the provisional deed of sale novate the existing lease contract? The answer is no. The novation must be clearly proved since its existence is not presumed. "In this light, novation is never presumed; it must be proven as a fact either by express stipulation of the parties or by implication derived from an irreconcilable incompatibility between old and new obligations or contracts." Novation takes place only if the parties expressly so provide, otherwise, the original contract remains in force. In other words, the parties to a contract must expressly agree that they are abrogating their old contract in favor of a new one. Where there is no clear agreement to create a new contract in place of the existing one, novation cannot be presumed to take place, unless the terms of the new contract are fully incompatible with the former agreement on every point. Thus, a deed of cession of the right to repurchase a piece of land does not supersede a contract of lease over the same property. In the provisional deed of sale in this case, after the initial down payment, respondent's checks in payment of six installments all bounced and were dishonored upon presentment for the reason that the bank account was closed. Consequently, on July 26, 1992, petitioner terminated the provisional deed of sale by a notarial notice of cancellation. Nonetheless, respondent Diaz continued to occupy the premises, as lessee, but failed to pay the rentals due. On October 28, 1992, respondent made a payment of P100,000.00 that may be applied either to the back rentals or for the purchase of the condominium unit. On February 13, 1993, petitioner gave respondent a notice to vacate the premises and to pay his back rentals. Failing to do so, respondent's possession became unlawful and his eviction was proper. Hence, on February 24, 1993, petitioner filed with the Municipal Trial Court, Antipolo, Rizal, Branch 01 an action for unlawful detainer against respondent Diaz. Now respondent contends that the petitioner's subsequent acceptance of such payment effectively withdrew the cancellation of the provisional sale. We do not agree. Unless the application of payment is expressly indicated, the payment shall be applied to the obligation most onerous to the debtor. In this case, the unpaid rentals constituted the more onerous obligation of the respondent to petitioner. As the payment did not fully settle the unpaid rentals, petitioner's cause of action for ejectment survives. Thus, the Court of Appeals erred in ruling that the payment was "additional payment" for the purchase of the property.
