LIRAG TEXTILE MILLS, INC. and FELIX K. LIRAG, petitioners, vs. COURT OF APPEALS and CRISTAN ALCANTARA, respondents.

. A. O. Benitez for petitioners. Rosauro Alvarez for private respondent.

ESGUERRA, J.:+.wph!1 Petitioners Lirag Textile Mills, Inc. and Felix K. Lirag seek a review by certiorari of the decision of the respondent Court of Appeals in its C. A. G.R. No. 33116-R, entitled "Cristan Alcantara, plaintiff-appellee vs. Lirag Textile Mills, Inc. and Felix Lirag, defendants-appellants", which affirmed with costs against the appellants the decision dated September 19, 1963, of the Court of First Instance of Rizal (Branch VI) in its Civil Case No. 6884, in favor of respondent Cristan Alcantara (plaintiff in Civil Case No. 6884 and appellee in C. A. G.R. No. 33116-R), which provides as follows: t.hqw However, as he (respondent Cristan Alcantara) was dismissed without cause in violation of the contract of employment, and as he was at the time earning P500.00 monthly, the Court finds, and so adjudges, that he is entitled to recover from defendants as actual damages the sum of P12,500.00 representing his salaries for 25 months ending September 22, 1963, plus the sum of P500.00 monthly thereafter until the whole amounts due him are fully paid and settled by defendants. As to moral damages claimed, the Court finds that, considering the circumstances of the case and there being no justification and/or cause for his removal or dismissal, he is entitled to recover from defendants moral damages in the sum of P5,000.00 plus attorney's fees in the sum of P3,000.00. In view of the foregoing, judgment is hereby rendered sentencing defendants, jointly and severally, to pay plaintiff the amounts above set forth, plus the costs of this suit. It is so ordered. During the trial of Civil Case No. 6884 in the Court of First Instance of Rizal (Branch VI), petitioners and private respondent Alcantara entered into a stipulation of facts, as follows: t.hqw 1. That on May 11, 1960 and for sometime prior and subsequent thereto, defendant Felix Lirag was a member of the Board of Directors of the Philippine Chamber of Industries; 2. That for about two months, more or less, prior to May 11, 1960, plaintiff worked in a temporary capacity with defendant Lirag Textile Mills, Inc.; 3. That during this same period of time, defendant Felix Lirag was a director and Chairman of the Board of Directors of defendant Lirag Textile Mills, Inc.; 4. That on May 9, 1960, defendant Lirag Textile Mills, Inc. wrote a letter to plaintiff (Alcantara) advising him that, effective May 11, 1960, his temporary designation as Technical Assistant to the Administrative Officer was made permanent, the said letter marked Exhibit "A", being attached herewith and made a part hereof; 5. That as Assistant to the Administrative Officer of the Lirag Textile Mills, Inc. as of May 11, 1960 plaintiff received a salary of P400.00 and allowance of P100.00 per month; 6. That plaintiff's tenure of employment, per defendant Lirag Textile Mills, Inc.'s above letter of May 9, 1960 was to be 'for an indefinite period, unless sooner terminated by reason of voluntary resignation or by virtue of a valid cause or causes' (Emphasis supplied) 7. That on March 4, 1960, per letter of defendant Lirag Textile Mills, Inc. of that date, signed by its Executive Vice President and General Manager, plaintiff was advised that effective November 15, 1960 he (Alcantara) was promoted to the position of Assistant Administrative Officer, the said letter, marked Exhibit "B", being attached herewith and made a part hereof; 8. That on July 22, 1961, defendant Lirag Textile Mills, Inc. wrote plaintiff (Alcantara) a letter advising him that because the company 'has suffered some serious reverses, both in terms of pecuniary loss and in market opportunities,' the company was terminating his services and effecting his separation from defendant corporation effective at the close of working hours of August 22, 1961, the said letter, marked Exhibit "C", being attached herewith and made a part thereof; (Emphasis supplied)

9. That defendant Lirag Textile Mills Inc.'s original capital of P5,000,000.00 was, on May 2, 1961, increased to P15,000,000.00 per certification issued by the Security and Exchange Commission, a copy of which marked Exhibit "D" is herewith attached and made a part hereof; 10. That the financial position of defendant Lirag Textile Mills, Inc. in the years 1960 and 1961 is reflected in the financial statements for the said years to be marked Exhibits "E" and "E-I", respectively, hereafter to be submitted by the parties and to be considered incorporated herewith and made a part hereof; 11. That plaintiff, through counsel, wrote a letter of demand to defendants, copies whereof marked Exhibits "F" and "F-1" with their respective registry receipts and registry return cards attached, are herewith appended and made a part hereof; and 12. That defendant Lirag Textile Mills, Inc., through counsel, in answer to plaintiff's letter, wrote the letter marked Exhibit "G" herewith attached and made a part hereof. Private respondent Cristan Alcantara as plaintiff in Civil Case No. 6884 (C.F.I. of Rizal, Branch VI), through his counsel, made a written request for admission of certain facts, pursuant to the provision of the Rules of Court, addressed to petitioners Lirag Textile Mills, Inc. and Felix Lirag (as defendants therein), which was answered by them as reproduced herein to wit: t.hqw 1. That, per payrolls of the defendant Lirag Textile Mills, Inc., the salaries of: (a). Mr. Basilio Lirag, President of the Lirag Textile Mills, Inc. was effective March 1, 1961, raised from P2,500.00 to P5,000.00 monthly; (b). Mr. Nemesio L. Reyes, executive vice president and general manager of said corporation, was, effective April 16, 1961, raised from P1,000.00 to P2,500.00 monthly; (c). Mr. Danilo Lacerna, corporate secretary of defendant Lirag Textile Mills, Inc. was effective April 16, 1961, raised from P700.00 to P1,000.00 monthly; (d). Mr. Winifred Salvacion, assistant of E. V. President, was, effective April 16, 1961 raised from P500.00 to P1,000.00 monthly; and (e). Mr. Manuel Sison, assistant corporate secretary of the aforementioned Company was, effective May 15, 1961, raised from P150.00 to P300.00 monthly." ('Defendants admit the matters set forth in sub-paragraphs (a) and (c) of paragraph 1, but specifically deny subparagraphs (b), (d) and (e), the figures therein being not accurate'.) 2. That the wages of the laborers of defendant Lirag Textile Mills, Inc. was increased 25 cents a day effective the year 1961. ('Defendants admit paragraph 2, but hereby manifest, however, that the increases in the salaries of the laborers and of the persons named in paragraph 1 were resolved at the time the corporation was still earning a reasonable return of its investment'.) 3. That, shortly before and/or after separation of plaintiff (Alcantara) from the services of defendant Corporation, the latter took in and employed new personnel among whom were: (a). a certain Mr. Niguidula with a salary of P800.00 a month; (b). Mr. Nemesio Joves with a salary of P600.00 a month; and (c). a general manager's new secretary who was employed and taken in only one or two days before plaintiff's separation from defendant's services. ('Defendants admit that Mr. Pacifico Niguidula who is a mechanical engineer was employed on July 6, 1961 with a salary of P800.00 a month, but his services were indispensably needed by the corporation for the planning of the machinery layout for its integration program. Besides, the services of a professional mechanical engineer for the size of an industrial plant as that of Lirag Textile Mills, Inc. is required by law.

`Defendants specifically deny sub-paragraph (b) of paragraph 3; the corporation has not at any time employed any person by the name of Nemesio Joves. `Defendants specifically deny sub-paragraph (c) of paragraph 3; it was the General Manager, not the corporation, who hired a private secretary whose salary was paid out of his personal funds.') . Respondent Court of Appeals in its decision promulgated May 16, 1969, in C. A. G.R. No. 33116-R, penned by Hon. Hermogenes Concepcion, Jr. and concurred in by then Presiding Justice Julio Villamor and then Associate Justice Angel H. Mojica (deceased), affirmed the decision of the lower court in Civil Case No. 6884 (C.F.I., Branch VI, of Rizal), principally its conclusion that the trial court did not commit any error in its evaluation of the evidence when it found that it was not true that petitioner Lirag Textile Mills (then defendant) suffered pecuniary loss and in market opportunities which it used as a justification to terminate the services of plaintiff Alcantara; that it was not also true that the latter suffered from lack of skill; that, therefore, there was a violation of the written contract of employment executed by and between petitioners and private respondent Alcantara; that petitioner (then defendant) Felix Lirag was responsible for inducing private respondent Alcantara to leave his employment with the Philippine Chamber of Industries where he was holding a permanent position and to accept employment with petitioner (then defendant) Lirag Textile Mills; and that appellee Alcantara was correctly awarded moral damages and attorney's fees. Petitioners are now before Us questioning the respondent Appellate Court's decision and alleging that it erred in "sentencing the petitioners to pay respondent Cristan Alcantara back salaries from the time of dismissal up to final judgment for the dismissal without cause of respondent Alcantara as employee of the petitioner Lirag Textile Mills, Inc".; "in awarding moral damages to the respondent Alcantara by the mere fact alone that the respondent Alcantara was separated by the petitioner corporation from his employment without just cause in the absence of any finding that the employer acted with malice or evident bad faith"; and "in allowing respondent Alcantara to recover from the petitioner company attorney's fees." The main thrust of petitioners' contention is that an employer's liability for terminating without just cause the employment of an employee is governed by the provisions of Republic Act 1787, amending Republic Act 1052, which limits said liability as follows: t.hqw Sec. 1. In case of employment without a definite period, in a commercial, industrial, or agricultural establishment or enterprise, the employer ... may terminate at any time the employment with just cause, or without just cause ... or in the case of an employer, by serving such notice to the employee at least one month in advance or one half month for every year of service of the employee, whichever is longer, .... The emloyee, upon whom no such notice was served in case of termination of employment without just cause shall be entitled to compensation from the date of termination of his employment in an amount equivalent to his salaries or wages corresponding to the required period of notice. (Republic Act 1787) (Emphasis supplied) . The fatal defect of petitioner's argument is that the above quoted provision of the law does not and cannot apply to an employer-employee relationship with an express contract for a period of employment. As could be clearly seen from the stipulation of facts between the parties in Civil Case No. 6884 and as a fact recognized by both the trial court and the respondent Appellate Court, the contract of employment was for an indefinite period as it shall continue without ending, subject to a resolutory period, unless sooner terminated by reason of voluntary resignation or by virtue of a valid cause or causes (the resolutory period). There is an indefinite period of time for employment agreed upon by and between petitioners and the private respondent, subject only to the resolutory period agreed upon which may end the indeterminate period of employment, namely voluntary resignation on the part of private respondent Alcantara or termination of employment at the option of petitioner Lirag Textile Mills, but for a "valid cause or causes". It necessarily follows that if the petitioner-employer Lirag Textile Mills terminates the employment without a "valid cause or causes", as it admittedly did, it committed a breach of the contract of employment executed by and between the parties. The measure of an employer's liability provided for in Republic Act 1052, as amended by R. A. 1787, is solely intended for contracts of employment without a stipulated period. It cannot possibly apply as a limitation to an employer's liability in cases where the employer commits a breach of contract by violating an indefinite period of employment expressly agreed upon through his wrongful act of terminating said employment without any valid cause or causes, which act may even amount to bad faith on the employer's part. The law (Art. 1170 of the Civil Code) governing liability for damages is explicit when it states: t.hqw Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages. (Emphasis supplied). A "period" has been defined "as a space of time which has an influence on obligation as a result of a juridical act, and either suspends their demandableness or produces their extinguishment." Obligations with a period are those whose consequences are subjected in one way or another to the expiration of said period or term. (8 Manresa 158) Art. 1193 of the Civil Code, provides, among others, that "obligations with a resolutory period take effect at once, but terminate upon arrival of the day certain. A day certain is understood to be that which must necessarily come, although it may not be known when". In the light of the foregoing provisions We have no doubt that the "indefinite period" of employment

expressly agreed upon by and between the parties in this case is really a resolutory period because the employment is bound to terminate on a future "day certain" such as the employee's resignation or employer's termination of employment upon a valid cause or causes, like death of the employee or termination of employer's corporate existence, although it may not be known when. A cursory examination of the complaint filed by private Alcantara in the Court of First Instance of Rizal Civil Case No. 6884) immediately discloses that this was originally an action for damages based on petitioner's (then defendant's)alleged wrongful acts in terminating without just cause his employment with the petitioner (then defendant) Lirag Textile Mills, thus violating the contract of employment; and that the "clearly unfounded, unwarranted and illegal act of enticing and instigating him (Alcantara) to leave his first job and dismissing him without a valid cause from the second" caused him feelings of "mental anguish, besmirched reputation, wounded feelings and moral degradation". In short, at the very incipiency of the action, private respondent Alcantara already alleged that petitioner's act in terminating the employment without just cause was tainted with fraud and bad faith. Evaluating the evidence presented, the trial court found no truth nor basis for petitioner Lirag Textile Mills' contention that the valid cause for terminating private respondent Alcantara's employment was that the former "has suffered serious reverses, both in terms of pecuniary loss and in market opportunities. " On the contrary, the trial court found that petitioner Lirag Textile Mills, Inc.'s original capital of five million pesos was, on May 2, 1961, or just two months prior to defendants sending the note of separation (Exh. "C"), increased to fifteen million; that the salary of Mr. Basilio Lirag, president of defendant Lirag Textile Mills, Inc. was, effective March 1, 1961, or just four months before the notice of separation, raised from P2,500.00 to P5,000.00 monthly, whereas that of Mr. Danilo Lacerna, corporate secretary of defendant corporation was, three months prior to notice of separation, raised from P700.00 to P1,000.00 monthly; that shortly before and/or after plaintiff's separation from the service of defendant corporation, the latter took in and employed new personnel among whom was a certain Mr. Niguidula with a starting salary of P800 monthly; that from the financial statements, Exhs. "E" to "I", presented by defendants themselves and the testimony of their accountants, it appears that although in 1961 the corporation did not realize as big a profit as in the previous year, nevertheless, it realized profits in the amount of P1,173,098.00 rather than sustain losses; that reserves for incentive bonuses were increased to 106,436.50 as compared to P90,744.23 for 1960; and that finally the defendant corporation's total assets in 1961 was P39,640,153.53 as compared to P26,900,562.63 for 1960, or an increase of about P13,000,000. The findings of respondent Appellate Court as to petitioner Lirag Textile Mills, Inc's. financial condition during that period is substantially the same as that of the trial court, to wit: t.hqw Anent the first ground (serious losses both in terms of pecuniary loss and in market opportunities that appellant company has suffered), it is enough to point out that of the eight exhibits (Exhs. 1-8) enumerated by the appelants on pages 10 and 11 of their brief, only Exhibit 1 shows that appelant company suffered a gross loss of P36,826.70 during July, 1961. On the other hand, the rest of the exhibits (Exhs. 2-8) veritably show that the same company realized net profits. True enough that the net profits decreased as compared to previous years, but just the same they are profits in any language, and they are not small ones. So that, it is not true that the corporation has suffered serious losses during the months immediately prior to appellee's dismissal. On the contrary, it realized profits, not gigantic in the in the way it wanted them. The Appellate Court went further when, on the question raised by petitioner Lirag Textile Mills, Inc. of the alleged lack of skill of respondent Alcantara as a valid cause to terminate his employment, it ruled: t.hqw With respect to the second ground (lack of skill on the part of the appellee) suffice it to say that it is too late for the appellants to allege such lack of skill. Nowhere in appellant's answer did they plead the defense of lack of skill on the part of the appellee. We can, however, glean from appellant corporation's letter dated November 14, 1960, congratulating the appellee for his promotion he fully deserves, that the latter was proficient for the position he was taken in (Exh. "B"). And if the appellee lacked skills for the position he was originally appointed to on a temporary basis, he would not have been promoted, and his temporary designation would not have been made permanent (Exh. "A"). Inasmuch as We see no compelling reason to disturb both the trial court's and the respondent Appellate Court's rulings that the written contract of employment was violated by petitioner Lirag Textile Mills, Inc. when it terminated the employment of private respondent Alcantara without a valid cause, what remains to be determined is whether or not there was fraud or bad faith on the part of petitioner Lirag Textile Mills, Inc. when it committed that breach of contract. To Our mind, there can be no greater, nor more eloquent manifestation of fraud when petitioner Lirag Textile Mills, Inc. tried its very best both in the trial court and in the respondent Appellate Court to convince both courts that it suffered "serious losses both in terms of pecuniary loss and in market opportunities" as a valid cause for the termination of private respondent Alcantara's employment, said petitioners knowing fully well that such was not the truth as said allegation was a falsehood. The bad faith consisted of petitioner's knowledge that its allegation was a falsehood and yet used it as basis for the wrongful act of terminating the contract of employment. Its bad faith in committing the breach of the contract of employment was compounded when petitioners as appellants in the respondent Appellate Court tried to raise for the first time the question of private respondent Alcantara's alleged lack of skill in its desperate effort to find a "valid cause" for that wrongful breach. The very act of petitioners in trying to pull the wool over the eyes of both the trial court and the respondent Appellate Court as to its true financial condition in its attempt to establish a false "valid cause" for its wrongful act is not only indicative of fraud and bad faith but likewise highly reprehensible because it is deliberate distortion of the truth to subvert the ends of justice.

Article 2201 of the Civil Code provides "... In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation", which, in effect, makes the petitioners in this case liable for all damages which may be reasonably attributed to the non-performance of its obligation. In Fernando Lopez et al vs. Pan American Airways, 16 SCRA 431, this Court, held: t.hqw Bad faith means a breach of a known duty through some motive of interest or ill will. Self-enrichment or fraternal interest, and not personal ill-will, may have been the motive, but it is malice nevertheless. First, moral damages are recoverable in breach of contracts where the defendant acted fraudulently or in bad faith (Art. 2220, new Civil Code). Second, in addition to moral damages, exemplary or corrective damages may be imposed by way of example or correction for the public good, in breach of contract where the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. (Arts, 2229, 2232, new Civil Code) On petitioner Felix Lirag's liability, the respondent Appellate Court correctly ruled: t.hqw In his attempt to escape liability whatsoever for the dismissal of the appellee by appellant corporation, appellant Felix Lirag claims that he had nothing to do with appellee's appointment. This is of no moment, for it was appellant Felix Lirag who invited the appellee (Alcantara) to join appellant corporation. And in doing so, the appellee gave up his employment with the Philippine Chamber of Industries where he was holding a permanent position as a writer-statistician. And when the then Executive Secretary Armando Isip of the Philippine Chamber of Industries was resigning from his post, appellee applied for the position and furnished the Board of Directors of which Felix Lirag was a member, with his application and curriculum vitae that, thereafter, Felix Lirag called him over the phone and told him that he (Felix Lirag) wanted to see him; that because of the phone call, appellee went to see Felix Lirag who was then the Chairman of the Board of Directors of defendant corporation, and then invited him (appellee) to join appellant corporation, saying that he (appellee) would have a better job there; that appellee answered that he would think it over; that after a week, appellant Felix Lirag called him again to his office; that because of this call, appellee went to see him (Felix Lirag) in the latter's office; that appellant Felix Lirag asked appellee if he had already reached a decision as to his proposal to which appellee answered that he could not accept the proposition because his job in the Philippine Chamber of Industries was permanent while the one offered by said appellant was just temporary; that then appelant Felix Lirag answered that the problem could easily be solved .... The foregoing finding shows without the slightest doubt that it was petitioner Felix Lirag who induced private respondent Alcantara to resign from his permanent position in the Philippine Chamber of Industries and accept, the job offered to him by the petitioner Felix Lirag in the petitioner Lirag Textile Mills, Inc. The respondent Appellate Court was also convinced that private respondent Alcantara did his best to contact petitioner Felix Lirag so he could remonstrate against his unjust separation from the service, but he was not able to do so; hence the conclusion of the respondent Court that petitioner Felix Lirag should also be held liable for moral damages. It is clear that petitioner Lirag Textile Mills, Inc. violated the contract of employment with private respondent Alcantara when the former terminated his services without a valid cause. The act was attended with bad faith and deceit because said petitioner made false allegations of a supposed valid cause knowing them to be false, thus making itself liable for payment of actual, moral and exemplary damages, plus attorneys fees to private respondent Alcantara. Petitioner Lirag Textile Mills, Inc. cannot with impunity be allowed the absolute and unilateral power to terminate without valid cause a contract of employment with a definite period it voluntarily entered into merely on the basis of its whim or caprice and under the false pretense of financial distress. To countenance its wrongful act would be to place its employees in the disadvantageous position of not being able to protect themselves from the arbitrary, oppressive and wrongful acts of an economically powerful employer. The laudable ends of social justice would not be served in that manner, especially in the era of a compassionate society. Petitioner Felix Lirag should also be held liable to private respondent Alcantara for having induced the latter to leave a permanent position in the Philippine Chamber of Industries to accept a job in the Lirag Textile Mills, Inc., and when private respondent Alcantara was dismissed without any valid cause, petitioner Felix Lirag did not do anything to help him although he was in a position to do so by reason of his eminent position in the petitioner corporation. His responsibility is not only moral but also legal as under Art. 21 of the Civil Code: "Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good custom or public policy shall compensate the latter for the damage." . WHEREFORE, the decision of the respondent Court of Appeals is affirmed with costs against petitioners. SO ORDERED.

FERNANDO A. GAITE, plaintiff-appellee, vs. ISABELO FONACIER, GEORGE KRAKOWER, LARAP MINES & SMELTING CO., INC., SEGUNDINA VIVAS, FRNACISCO DANTE, PACIFICO ESCANDOR and FERNANDO TY, defendants-appellants. Alejo Mabanag for plaintiff-appellee. Simplicio U. Tapia, Antonio Barredo and Pedro Guevarra for defendants-appellants. REYES, J.B.L., J.: This appeal comes to us directly from the Court of First Instance because the claims involved aggregate more than P200,000.00. Defendant-appellant Isabelo Fonacier was the owner and/or holder, either by himself or in a representative capacity, of 11 iron lode mineral claims, known as the Dawahan Group, situated in the municipality of Jose Panganiban, province of Camarines Norte. By a "Deed of Assignment" dated September 29, 1952(Exhibit "3"), Fonacier constituted and appointed plaintiff-appellee Fernando A. Gaite as his true and lawful attorney-in-fact to enter into a contract with any individual or juridical person for the exploration and development of the mining claims aforementioned on a royalty basis of not less than P0.50 per ton of ore that might be extracted therefrom. On March 19, 1954, Gaite in turn executed a general assignment (Record on Appeal, pp. 17-19) conveying the development and exploitation of said mining claims into the Larap Iron Mines, a single proprietorship owned solely by and belonging to him, on the same royalty basis provided for in Exhibit "3". Thereafter, Gaite embarked upon the development and exploitation of the mining claims in question, opening and paving roads within and outside their boundaries, making other improvements and installing facilities therein for use in the development of the mines, and in time extracted therefrom what he claim and estimated to be approximately 24,000 metric tons of iron ore. For some reason or another, Isabelo Fonacier decided to revoke the authority granted by him to Gaite to exploit and develop the mining claims in question, and Gaite assented thereto subject to certain conditions. As a result, a document entitled "Revocation of Power of Attorney and Contract" was executed on December 8, 1954 (Exhibit "A"),wherein Gaite transferred to Fonacier, for the consideration of P20,000.00, plus 10% of the royalties that Fonacier would receive from the mining claims, all his rights and interests on all the roads, improvements, and facilities in or outside said claims, the right to use the business name "Larap Iron Mines" and its goodwill, and all the records and documents relative to the mines. In the same document, Gaite transferred to Fonacier all his rights and interests over the "24,000 tons of iron ore, more or less" that the former had already extracted from the mineral claims, in consideration of the sum of P75,000.00, P10,000.00 of which was paid upon the signing of the agreement, and b. The balance of SIXTY-FIVE THOUSAND PESOS (P65,000.00) will be paid from and out of the first letter of credit covering the first shipment of iron ores and of the first amount derived from the local sale of iron ore made by the Larap Mines & Smelting Co. Inc., its assigns, administrators, or successors in interests. To secure the payment of the said balance of P65,000.00, Fonacier promised to execute in favor of Gaite a surety bond, and pursuant to the promise, Fonacier delivered to Gaite a surety bond dated December 8, 1954 with himself (Fonacier) as principal and the Larap Mines and Smelting Co. and its stockholders George Krakower, Segundina Vivas, Pacifico Escandor, Francisco Dante, and Fernando Ty as sureties (Exhibit "A-1"). Gaite testified, however, that when this bond was presented to him by Fonacier together with the "Revocation of Power of Attorney and Contract", Exhibit "A", on December 8, 1954, he refused to sign said Exhibit "A" unless another bond under written by a bonding company was put up by defendants to secure the payment of the P65,000.00 balance of their price of the iron ore in the stockpiles in the mining claims. Hence, a second bond, also dated December 8, 1954 (Exhibit "B"),was executed by the same parties to the first bond Exhibit "A-1", with the Far Eastern Surety and Insurance Co. as additional surety, but it provided that the liability of the surety company would attach only when there had been an actual sale of iron ore by the Larap Mines & Smelting Co. for an amount of not less then P65,000.00, and that, furthermore, the liability of said surety company would automatically expire on December 8, 1955. Both bonds were attached to the "Revocation of Power of Attorney and Contract", Exhibit "A", and made integral parts thereof. On the same day that Fonacier revoked the power of attorney he gave to Gaite and the two executed and signed the "Revocation of Power of Attorney and Contract", Exhibit "A", Fonacier entered into a "Contract of Mining Operation", ceding, transferring, and conveying unto the Larap Mines and Smelting Co., Inc. the right to develop, exploit, and explore the mining claims in question, together with the improvements therein and the use of the name "Larap Iron Mines" and its good will, in consideration of certain royalties. Fonacier likewise transferred, in the same document, the complete title to the approximately 24,000 tons of iron ore which he acquired from Gaite, to the Larap & Smelting Co., in consideration for the signing by the company and its stockholders of the surety bonds delivered by Fonacier to Gaite (Record on Appeal, pp. 82-94). Up to December 8, 1955, when the bond Exhibit "B" expired with respect to the Far Eastern Surety and Insurance

Company, no sale of the approximately 24,000 tons of iron ore had been made by the Larap Mines & Smelting Co., Inc., nor had the P65,000.00 balance of the price of said ore been paid to Gaite by Fonacier and his sureties payment of said amount, on the theory that they had lost right to make use of the period given them when their bond, Exhibit "B" automatically expired (Exhibits "C" to "C-24"). And when Fonacier and his sureties failed to pay as demanded by Gaite, the latter filed the present complaint against them in the Court of First Instance of Manila (Civil Case No. 29310) for the payment of the P65,000.00 balance of the price of the ore, consequential damages, and attorney's fees. All the defendants except Francisco Dante set up the uniform defense that the obligation sued upon by Gaite was subject to a condition that the amount of P65,000.00 would be payable out of the first letter of credit covering the first shipment of iron ore and/or the first amount derived from the local sale of the iron ore by the Larap Mines & Smelting Co., Inc.; that up to the time of the filing of the complaint, no sale of the iron ore had been made, hence the condition had not yet been fulfilled; and that consequently, the obligation was not yet due and demandable. Defendant Fonacier also contended that only 7,573 tons of the estimated 24,000 tons of iron ore sold to him by Gaite was actually delivered, and counterclaimed for more than P200,000.00 damages. At the trial of the case, the parties agreed to limit the presentation of evidence to two issues: (1) Whether or not the obligation of Fonacier and his sureties to pay Gaite P65,000.00 become due and demandable when the defendants failed to renew the surety bond underwritten by the Far Eastern Surety and Insurance Co., Inc. (Exhibit "B"), which expired on December 8, 1955; and (2) Whether the estimated 24,000 tons of iron ore sold by plaintiff Gaite to defendant Fonacier were actually in existence in the mining claims when these parties executed the "Revocation of Power of Attorney and Contract", Exhibit "A." On the first question, the lower court held that the obligation of the defendants to pay plaintiff the P65,000.00 balance of the price of the approximately 24,000 tons of iron ore was one with a term: i.e., that it would be paid upon the sale of sufficient iron ore by defendants, such sale to be effected within one year or before December 8, 1955; that the giving of security was a condition precedent to Gait's giving of credit to defendants; and that as the latter failed to put up a good and sufficient security in lieu of the Far Eastern Surety bond (Exhibit "B") which expired on December 8, 1955, the obligation became due and demandable under Article 1198 of the New Civil Code. As to the second question, the lower court found that plaintiff Gaite did have approximately 24,000 tons of iron ore at the mining claims in question at the time of the execution of the contract Exhibit "A." Judgment was, accordingly, rendered in favor of plaintiff Gaite ordering defendants to pay him, jointly and severally, P65,000.00 with interest at 6% per annum from December 9, 1955 until payment, plus costs. From this judgment, defendants jointly appealed to this Court. During the pendency of this appeal, several incidental motions were presented for resolution: a motion to declare the appellants Larap Mines & Smelting Co., Inc. and George Krakower in contempt, filed by appellant Fonacier, and two motions to dismiss the appeal as having become academic and a motion for new trial and/or to take judicial notice of certain documents, filed by appellee Gaite. The motion for contempt is unmeritorious because the main allegation therein that the appellants Larap Mines & Smelting Co., Inc. and Krakower had sold the iron ore here in question, which allegedly is "property in litigation", has not been substantiated; and even if true, does not make these appellants guilty of contempt, because what is under litigation in this appeal is appellee Gaite's right to the payment of the balance of the price of the ore, and not the iron ore itself. As for the several motions presented by appellee Gaite, it is unnecessary to resolve these motions in view of the results that we have reached in this case, which we shall hereafter discuss. The main issues presented by appellants in this appeal are: (1) that the lower court erred in holding that the obligation of appellant Fonacier to pay appellee Gaite the P65,000.00 (balance of the price of the iron ore in question)is one with a period or term and not one with a suspensive condition, and that the term expired on December 8, 1955; and (2) that the lower court erred in not holding that there were only 10,954.5 tons in the stockpiles of iron ore sold by appellee Gaite to appellant Fonacier. The first issue involves an interpretation of the following provision in the contract Exhibit "A": 7. That Fernando Gaite or Larap Iron Mines hereby transfers to Isabelo F. Fonacier all his rights and interests over the 24,000 tons of iron ore, more or less, above-referred to together with all his rights and interests to operate the mine in consideration of the sum of SEVENTY-FIVE THOUSAND PESOS (P75,000.00) which the latter binds to pay as follows:

a. TEN THOUSAND PESOS (P10,000.00) will be paid upon the signing of this agreement. b. The balance of SIXTY-FIVE THOUSAND PESOS (P65,000.00)will be paid from and out of the first letter of credit covering the first shipment of iron ore made by the Larap Mines & Smelting Co., Inc., its assigns, administrators, or successors in interest. We find the court below to be legally correct in holding that the shipment or local sale of the iron ore is not a condition precedent (or suspensive) to the payment of the balance of P65,000.00, but was only a suspensive period or term. What characterizes a conditional obligation is the fact that its efficacy or obligatory force (as distinguished from its demandability) is subordinated to the happening of a future and uncertain event; so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed. That the parties to the contract Exhibit "A" did not intend any such state of things to prevail is supported by several circumstances: 1) The words of the contract express no contingency in the buyer's obligation to pay: "The balance of Sixty-Five Thousand Pesos (P65,000.00) will be paid out of the first letter of credit covering the first shipment of iron ores . . ." etc. There is no uncertainty that the payment will have to be made sooner or later; what is undetermined is merely the exact date at which it will be made. By the very terms of the contract, therefore, the existence of the obligation to pay is recognized; only its maturity or demandability is deferred. 2) A contract of sale is normally commutative and onerous: not only does each one of the parties assume a correlative obligation (the seller to deliver and transfer ownership of the thing sold and the buyer to pay the price),but each party anticipates performance by the other from the very start. While in a sale the obligation of one party can be lawfully subordinated to an uncertain event, so that the other understands that he assumes the risk of receiving nothing for what he gives (as in the case of a sale of hopes or expectations, emptio spei), it is not in the usual course of business to do so; hence, the contingent character of the obligation must clearly appear. Nothing is found in the record to evidence that Gaite desired or assumed to run the risk of losing his right over the ore without getting paid for it, or that Fonacier understood that Gaite assumed any such risk. This is proved by the fact that Gaite insisted on a bond a to guarantee payment of the P65,000.00, an not only upon a bond by Fonacier, the Larap Mines & Smelting Co., and the company's stockholders, but also on one by a surety company; and the fact that appellants did put up such bonds indicates that they admitted the definite existence of their obligation to pay the balance of P65,000.00. 3) To subordinate the obligation to pay the remaining P65,000.00 to the sale or shipment of the ore as a condition precedent, would be tantamount to leaving the payment at the discretion of the debtor, for the sale or shipment could not be made unless the appellants took steps to sell the ore. Appellants would thus be able to postpone payment indefinitely. The desireability of avoiding such a construction of the contract Exhibit "A" needs no stressing. 4) Assuming that there could be doubt whether by the wording of the contract the parties indented a suspensive condition or a suspensive period (dies ad quem) for the payment of the P65,000.00, the rules of interpretation would incline the scales in favor of "the greater reciprocity of interests", since sale is essentially onerous. The Civil Code of the Philippines, Article 1378, paragraph 1, in fine, provides: If the contract is onerous, the doubt shall be settled in favor of the greatest reciprocity of interests. and there can be no question that greater reciprocity obtains if the buyer' obligation is deemed to be actually existing, with only its maturity (due date) postponed or deferred, that if such obligation were viewed as non-existent or not binding until the ore was sold. The only rational view that can be taken is that the sale of the ore to Fonacier was a sale on credit, and not an aleatory contract where the transferor, Gaite, would assume the risk of not being paid at all; and that the previous sale or shipment of the ore was not a suspensive condition for the payment of the balance of the agreed price, but was intended merely to fix the future date of the payment. This issue settled, the next point of inquiry is whether appellants, Fonacier and his sureties, still have the right to insist that Gaite should wait for the sale or shipment of the ore before receiving payment; or, in other words, whether or not they are entitled to take full advantage of the period granted them for making the payment. We agree with the court below that the appellant have forfeited the right court below that the appellants have forfeited the right to compel Gaite to wait for the sale of the ore before receiving payment of the balance of P65,000.00, because of their failure to renew the bond of the Far Eastern Surety Company or else replace it with an equivalent guarantee. The expiration of the bonding company's undertaking on December 8, 1955 substantially reduced the security of the vendor's rights as creditor for the unpaid P65,000.00, a security that Gaite considered essential and upon which he had insisted when he executed the deed of sale of the ore to Fonacier (Exhibit "A"). The case squarely comes under paragraphs 2 and 3 of Article 1198 of the Civil Code of the Philippines:

"ART. 1198. The debtor shall lose every right to make use of the period: (1) . . . (2) When he does not furnish to the creditor the guaranties or securities which he has promised. (3) When by his own acts he has impaired said guaranties or securities after their establishment, and when through fortuitous event they disappear, unless he immediately gives new ones equally satisfactory. Appellants' failure to renew or extend the surety company's bond upon its expiration plainly impaired the securities given to the creditor (appellee Gaite), unless immediately renewed or replaced. There is no merit in appellants' argument that Gaite's acceptance of the surety company's bond with full knowledge that on its face it would automatically expire within one year was a waiver of its renewal after the expiration date. No such waiver could have been intended, for Gaite stood to lose and had nothing to gain barely; and if there was any, it could be rationally explained only if the appellants had agreed to sell the ore and pay Gaite before the surety company's bond expired on December 8, 1955. But in the latter case the defendants-appellants' obligation to pay became absolute after one year from the transfer of the ore to Fonacier by virtue of the deed Exhibit "A.". All the alternatives, therefore, lead to the same result: that Gaite acted within his rights in demanding payment and instituting this action one year from and after the contract (Exhibit "A") was executed, either because the appellant debtors had impaired the securities originally given and thereby forfeited any further time within which to pay; or because the term of payment was originally of no more than one year, and the balance of P65,000.00 became due and payable thereafter. Coming now to the second issue in this appeal, which is whether there were really 24,000 tons of iron ore in the stockpiles sold by appellee Gaite to appellant Fonacier, and whether, if there had been a short-delivery as claimed by appellants, they are entitled to the payment of damages, we must, at the outset, stress two things: first, that this is a case of a sale of a specific mass of fungible goods for a single price or a lump sum, the quantity of "24,000 tons of iron ore, more or less," stated in the contract Exhibit "A," being a mere estimate by the parties of the total tonnage weight of the mass; and second, that the evidence shows that neither of the parties had actually measured of weighed the mass, so that they both tried to arrive at the total quantity by making an estimate of the volume thereof in cubic meters and then multiplying it by the estimated weight per ton of each cubic meter. The sale between the parties is a sale of a specific mass or iron ore because no provision was made in their contract for the measuring or weighing of the ore sold in order to complete or perfect the sale, nor was the price of P75,000,00 agreed upon by the parties based upon any such measurement.(see Art. 1480, second par., New Civil Code). The subject matter of the sale is, therefore, a determinate object, the mass, and not the actual number of units or tons contained therein, so that all that was required of the seller Gaite was to deliver in good faith to his buyer all of the ore found in the mass, notwithstanding that the quantity delivered is less than the amount estimated by them (Mobile Machinery & Supply Co., Inc. vs. York Oilfield Salvage Co., Inc. 171 So. 872, applying art. 2459 of the Louisiana Civil Code). There is no charge in this case that Gaite did not deliver to appellants all the ore found in the stockpiles in the mining claims in questions; Gaite had, therefore, complied with his promise to deliver, and appellants in turn are bound to pay the lump price. But assuming that plaintiff Gaite undertook to sell and appellants undertook to buy, not a definite mass, but approximately 24,000 tons of ore, so that any substantial difference in this quantity delivered would entitle the buyers to recover damages for the short-delivery, was there really a short-delivery in this case? We think not. As already stated, neither of the parties had actually measured or weighed the whole mass of ore cubic meter by cubic meter, or ton by ton. Both parties predicate their respective claims only upon an estimated number of cubic meters of ore multiplied by the average tonnage factor per cubic meter. Now, appellee Gaite asserts that there was a total of 7,375 cubic meters in the stockpiles of ore that he sold to Fonacier, while appellants contend that by actual measurement, their witness Cirpriano Manlagit found the total volume of ore in the stockpiles to be only 6.609 cubic meters. As to the average weight in tons per cubic meter, the parties are again in disagreement, with appellants claiming the correct tonnage factor to be 2.18 tons to a cubic meter, while appellee Gaite claims that the correct tonnage factor is about 3.7. In the face of the conflict of evidence, we take as the most reliable estimate of the tonnage factor of iron ore in this case to be that made by Leopoldo F. Abad, chief of the Mines and Metallurgical Division of the Bureau of Mines, a government pensionado to the States and a mining engineering graduate of the Universities of Nevada and California, with almost 22 years of experience in the Bureau of Mines. This witness placed the tonnage factor of every cubic meter of iron ore at between 3 metric tons as minimum to 5 metric tons as maximum. This estimate, in turn, closely corresponds to the average tonnage factor of 3.3 adopted in his corrected report (Exhibits "FF" and FF-1") by engineer Nemesio Gamatero, who was sent by the Bureau of Mines to the mining claims involved at the request of appellant Krakower, precisely to

make an official estimate of the amount of iron ore in Gaite's stockpiles after the dispute arose. Even granting, then, that the estimate of 6,609 cubic meters of ore in the stockpiles made by appellant's witness Cipriano Manlagit is correct, if we multiply it by the average tonnage factor of 3.3 tons to a cubic meter, the product is 21,809.7 tons, which is not very far from the estimate of 24,000 tons made by appellee Gaite, considering that actual weighing of each unit of the mass was practically impossible, so that a reasonable percentage of error should be allowed anyone making an estimate of the exact quantity in tons found in the mass. It must not be forgotten that the contract Exhibit "A" expressly stated the amount to be 24,000 tons, more or less. (ch. Pine River Logging & Improvement Co. vs U.S., 279, 46 L. Ed. 1164). There was, consequently, no short-delivery in this case as would entitle appellants to the payment of damages, nor could Gaite have been guilty of any fraud in making any misrepresentation to appellants as to the total quantity of ore in the stockpiles of the mining claims in question, as charged by appellants, since Gaite's estimate appears to be substantially correct. WHEREFORE, finding no error in the decision appealed from, we hereby affirm the same, with costs against appellants.

LAUREANO SIA, petitioner, vs. COURT OF APPEALS and NUMERIANO VALENCIA, respondents. Jose L. Almario for petitioner. Angustia and Valencia for respondents.

PARAS, C.J.: This is an appeal from a decision of the Court of Appeals. As found by said court, the facts are as follows: On May 22, 1940, the petitioner, Laureano Sia, executed in favor of the respondent, Numeriano Valencia, the following promissory note: Pagare a la orden del Sr. Laureano Sia en Masbate, Masbate, al plazo de cinco aos contados desde esta fecha, la suma de sietecientos cincuenta y tres con sesenta y tres centimos (P753.63) en moneda filipina, valor recibido del mismo en virtud de una hipoteca de terreno cocal de que es parte integrante este pagare. On September 4, 1944, Atty. Ernesto Valencia, son of respondent Numeriano Valencia, offered to pay to the petitioner the mortgage debt of P753.63 in Japanese military notes, which the petitioner refused to receive, alleging that the currency had no value and that he wanted to be paid in Philippine currency. In view whereof, Attorney Valencia, on behalf of his father, informed the petitioner that he would consign the amount in the Court of First Instance of Masbate. Accordingly, on September 5, 1944, Attorney Valencia deposited with the Clerk of the Court of First Instance of Masbate the sum of P753.63 in Japanese military notes, and filed a sworn pleading for consignation, in which it was made to appear that the debt was being paid to the petitioner who refused to accept the payments, and that the latter was notified of the consignation. The clerk of the Court of First Instance of Masbate receipted for the amount thus deposited by Attorney Valencia who thereupon prepared a notice to the petitioner of the deposit of the sum of P753.63 in Japanese military notes with the clerk of the Court of First Instance of Masbate, which notice Attorney Valencia personally delivered in the office of the petitioner. The clerk of the Court of First Instance of Masbate in turn sent a notice of consignation by registered mail to the petitioner. The latter, however, never withdrew the money thus consigned. As a result of the bombing by American planes between September and December, 1944, the records of Attorney Valencia relating to the consignation, as well as the records of the Court of First Instance of Masbate, including the amount of P753.63 deposited by respondent Valencia, were lost or destroyed. After the promissory note herein-above quoted had matured on May 2, 1945, the petitioner demanded from the

respondent, Numeriano Valencia, the payment of the mortgage debt in the sum of P753.63. The respondent refused to accede to the demand, alleging that the debt had already been paid. Whereupon, on August 5, 1946, the petitioner filed in the Court of First Instance of Masbate a complaint for the recovery of the debt, with foreclosure of mortgage. After trial, the court rendered a decision, holding that the debt in question had already been paid in virtue of the consignation abovementioned, and dismissing the complaint without pronouncement as to costs. Upon appeal by the petitioner, the Court of Appeals affirmed the decision, without pronouncement as to costs.lawphil.net The petitioner contends (1) that he was justified in refusing to accept the tendered payment on September 4, 1944, because the Japanese military notes were almost valueless and the debt was not then due and payable; (2) that there was no valid consignation; (3) that the loss of the amount deposited or consigned should not be suffered by the petitioner; and (4) that, at any rate, the Japanese military notes deposited in September, 1944, should not be valued at par with the Philippine peso. The promissory note executed on May 22, 1940, recited that the sum of P753.63 was payable "al plazo de cinco aos contados desde esta fecha." The Court of Appeals held, and correctly, that the expression "Al plazo de cinco aos contados esta fecha" may mean as well that payment could be made at the end of five years from May 22, 1940, or May 22, 1945, as that the debt could be settled at any time within five years from May 22, 1940; in such case, the respondent Valencia was justified in offering to pay on September 4, 1944, and the petitioner, Laureano Sia, had no reason to reject said payment. The conclusion of the Court of Appeals is well-founded, specially because the refusal of the petitioner to accept the tendered payment was premised on the allegation that the Japanese military notes were valueless, and not upon the allegation that the debt had not yet matured. The contention that the notes tendered by respondent Valencia were valueless is of course untenable, since it is already settled that the Japanese war notes were legal tender during the enemy occupation. The result is that the petitioner was not justified in refusing to accept payment in said notes on September 4, 1944. With respect to the validity of the consignation upheld by the Court of Appeals, the pertinent findings of said court are as follows: "No tenemos a la vista el documento por el cual se consigno en el juzgado la suma de P753.63 en billetes militares Japones y no podemos determinar si tal escrito era simplemente de consignacion o si ademas se solicitaba del tribunal que, tras los tramites de rigor, declarase saldada la obligacion y cancelada la hipoteca, mas, en lo que atane a la consignacion propiamente dicha, puede verse de los hechos expuestos que se ha cumplido con todos los requisitos prescritos por el Codigo. De las pruebas consta que se hizo el ofrecimiento de pago en forma al acredor, que este recibio los avisos correspondientes antes y despues de hecha la consignacion judicial; que los billetes Japoneses, que eran moneda de curso legal en Filipinas al tiempo de la consignacion, constituian la "cosa debida" que se deposito a disposicion de la Autoridad judicial; que la consignacion se ajusto estrictamente a las disposiciones que regulan el pago de una obligacion que podia liberarse; y, en su consecuencia, que el acreedor a quien se hizo el ofrecimiento de pago se nego sin razon valida a recibirlo." We cannot, therefore, in this instance depart from the finding of the Court of Appeals that all the steps for a valid consignation has been taken by respondent Valencia. The only important question that arises is whether the loss of the amount consigned should be borne by the petitioner or by the respondent. In the case of Haw Pia vs. Jose, etc. 1 decided on May 13, 1947, 44 Off. Gaz., 2704, this court held that the loss of the thing validly consigned, without the fault of the debtor, is to be borne by the creditor. We quote the following from said decision: But there are certain other considerations which we deem worthy to be noted. Petitioner lays much emphasis upon the point that the aforesaid order of January 6, 1944, has become impossible of execution because she says the amount consigned by respondent Altea in September or October, 1940, with the Clerk of Court of First Instance, which was later deposited by said official with the Provincial Treasurer, was "frozen" by the Japanese authorities, and she adds that to this day the present government has not made provision for the payment of said amount. Be this as it may, and even supposing that the so-called freezing of said amount and the alleged failure of the government to provide for its payment have made it impossible for petitioner to collect the same, the loss, if any there would be, must be suffered by petitioner. Art. 1176. If a creditor to whom tender of payment has been made should refuse without reason to accept it, the debtor may relieve himself of liability by the consignation of the thing due. The same effect shall be produced by consignation alone when made in the absence of the creditor, or if the latter should be incapacitated to accept payment when it is due, or when several persons claim to be entitled to receive it, or when the muniments of the obligation have been lost or mislaid. (Civil Code) The amount consigned was in Philippine genuine money before the war and the record shows that all the record shows that all the requisites of a valid consignation were complied with

. . . Ademas de quedar extinguida la obligacion produce la consignacion valida el efecto de quedar libre el duedor de responsabilidad por los riesgos que despues, y sin que procedan de actos suyos, sobrevengan a la cosa debida y consignada. (8 Manresa, 4th edition, page 297; emphasis supplied.) Upon the other hand, in the case of China Insurance & Surety Co., Inc., vs. Berkenkotter 2(46 Off. Gaz. 5466), we promulgated on April 29, 1949, a resolution to the following effect: "On this point, the reconstituted documents show that while the consignation was really made and the adverse party notified thereof, the same has neither been accepted by the latter nor approved by the court and in any event, there is no clear proof before us that the essentials of a valid consignation are here present specially the conformity of the preferred payment to terms of the obligation which is to be paid. It should be remarked in this connection that strict conformity in that regard is required, for as Manresa says "... el acreedor tan solo, y no el juez, puede autorizar la variacion que para los derechos de aquel suponga la que se intente en el objeto, cuantia o forma de las obligaciones." (Manresa, 312)." In the case of Padua vs. Rizal Surety & Insurance Co. 3 decided on July 27, 1950 (47 Off. Gaz., Supp. No. 12, page 308), it was held that under article 1180 of the Civil Code, the approval of the consignation by the court is indispensable to the extinction of the obligation. We quote the following pertinent passages of said decision: Los dos citados autores opinan que es necesaria a la aprobacion judicial de la consignacion, no por disposicion expresa del articulo 1180 del Codigo Civil, sino por deduccion forzosa. Dicho articulo dice que "podra el deudor pedir al Juez que mande cancelar la obligacion. La mocion tiene que fundarse en algun hecho y no sera otro sino el de que la consignacion ha sido "debidamente hecha". El juez no ordenara la cancelacion a menos que se le demuestre que en la consignacion se cumplieron todos los requisitos necesarios para su validez. Por ejemplo, 1. que se ofrecio el pago y fue rechazado; 2. que se ha hecho la notificacion de la consignacion; 3. que, hecha al consignacion, se notifico debidamente del hecho al interesado (art. 1180, Codigo Civil); 4. que la consignacion constituye el pago completo de la obligacion (art. 1177) Si el juez no esta convencido de que "la cancelacion esta hecha debidamente,"no rendira la cancelacion de la obligacion. La extincion de esta no depende de la sola voluntad del deudor; debe intervenir la autoridad judicial para comprobar si ha sido debidamente hecha la consignacion. Seria injusto que dependiese solamento del acto del deudor la cancelacion de la deuda. El orden publico y el sentido de justicia exigen que un tercero asi lo dictamine. "Mientras el acreedor dice el articulo 1180 no hubiere aceptado la consignacion o no hubiere recado la declaracion judicial de que esta bien hecha, podra el deudor retirar la cantidad consignada." Bajo esta circunstancia, que la consignacion esta aun la disposicion del acreeder su obligacion queda subsistente. No puede considerarse pagada, como pretende la apelante. En el caso presente se uemo la consignacion mientras estaba a la disposicion completa de ella; ella, pues, debe sufrir la perdida, no el acreedor. En conclusion declaramos; primero, que bajo el articulo 1180 del Codigo Civil la aprobacion de la consignacion por el juzgado es indespensable para que la obligacion se considere extinguida; segundo que los P10,000 en papel moneda Japonesa depositados no cubren todo el importe de la sentencia apelada que monta a P10,833.82 sin incluir las costas judiciales, y por tanto, la apelante no ha hecho una debida consignacion; y tercero, que la obligacion de la apelante en virtud de la sentencia del Tribunal de Apelacion de 3 de Julio de 1944 queda aun subsistente. It would seem, therefore, that while under the earlier case of Haw Pia vs. San Jose, we held that the loss of the thing consigned, without the fault of the debtor, is to be for the account of the creditor, under the ruling in China Insurance & Surety Co., Inc. vs. Berkenkotter, and Padua vs. Rixal Surety & Insurance Co., in order that the debtor may be released from the obligation, there must first be approval of the consignation by the court. Although there is an apparent conflict, we may reconcile the decisions by stating that, where all the requisites for a valid consignation have been complied with, and there can be no reason for disapproving said consignation, the loss of the thing of the debtor before the acceptance of the consignation by the creditor or its approval by the court, should be for account of the creditor. This is obvious even from the decisions in the two later cases. Thus, in China Insurance & Surety Co. Inc. vs. Berkenkotter, this court had to make reference to the fact that "there is no clear proof before us that the essentials of a valid consignation are here present specially the conformity of the preferred payment to the terms of the obligation which is to be paid". And in the case of Padua vs. Rizal Surety & Insurance Co., the court held as a fact that "los P10,000 en papel moneda Japonesa depositados no cubren todo el importe de la sentencia apelada que monta a P10,833.82 sin incluir las costas judiciales, y por tanto, la apelante no ha hecho una debida consignacion." In the last analysis, therefore, the decisive consideration is that there be a valid consignation which may not be disapproved by the court. In the case before us, as already noted, the Court of Appeals found that respondent Valencia had performed all the acts necessary to a valid consignation. It is not pretended that the amount consigned was less than that specified in the promissory note. If the matter of the approval of the consignation was therefore presented to the court prior to the loss of the thing consigned, there can be no doubt about its approval. Our conclusion in this case merely gives effect and essence to the purposes of consignation. It is true that, under article 1180 of the Civil Code, at anytime before the creditor has accepted the consignation or the court has declared that it was properly made, the debtor may withdraw the thing or sum of money consigned, leaving the obligation in force; but it cannot be denied also that, until the thing or amount consigned shall have been withdrawn by the debtor, the creditor may accept the same, with the result that in the meantime the consignation is at the disposal both of the debtor and the creditor. The risk of loss before acceptance by the creditor or approval by the court is likewise mutual, because if it be determined that there was no valid consignation, the

loss must be suffered by the debtor; otherwise by the creditor. The petition further invokes the equitable consideration that the amount consigned in Japanese military notes should not have been given a value at par with the Philippine peso, actual currency. Having come to the conclusion that the obligation was payable during the enemy occupation, and that the Japanese war notes were then legal tender at par with the Philippine peso, we are constrained to disagree with the petitioner. Wherefore, the appealed decision is affirmed without costs. So ordered.