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G.R. No.

L-44349 October 29, 1976 Respondent pray of the Rizal court of first instance that "after due trial, this Honorable Court
render judgment modifying the terms and conditions of the contract ... by fixing the proer
JESUS V. OCCENA and EFIGENIA C. OCCENA, petitioners, shares that shouls pertain to the herein parties out of the gross proceeds from the sales of
vs. subdivided lots of subjects subdivision".
HON. RAMON V. JABSON, Presiding Judge of the Court Of First Instance of Rizal,
Branch XXVI; COURT OF APPEALS and TROPICAL HOMES, INC., respondents. Petitioners moved to dismiss the complaint principally for lack of cause of action, and upon
denial thereof and of reconsideration by the lower court elevated the matter on certiorari to
Occena Law Office for petitioners. respondent Court of Appeals.

Serrano, Diokno & Serrano for respondents. Respondent court in its questioned resolution of June 28, 1976 set aside the preliminary
injunction previously issued by it and dimissed petition on the ground that under Article 1267
of the Civil Code which provides that

ART. 1267. When the service has become so difficult as to be manifestly


TEEHANKEE, J.: beyond the contemplation of the parties, the obligor may also be released
therefrom, in whole or in part. 1
The Court reverses the Court of Appeals appealed resolution. The Civil Code authorizes the
release of an obligor when the service has become so difficult as to be manifestly beyond the ... a positive right is created in favor of the obligor to be released from the
contemplation of the parties but does not authorize the courts to modify or revise the performance of an obligation in full or in part when its performance 'has
subdivision contract between the parties or fix a different sharing ratio from that contractually become so difficult as to be manifestly beyond the contemplation of the
stipulated with the force of law between the parties. Private respondent's complaint for parties.
modification of the contract manifestly has no basis in law and must therefore be dismissed for
failure to state a cause of action. On February 25, 1975 private respondent Tropical Homes,
Inc. filed a complaint for modification of the terms and conditions of its subdivision contract Hence, the petition at abar wherein petitioners insist that the worldwide increase inprices cited
with petitioners (landowners of a 55,330 square meter parcel of land in Davao City), making by respondent does not constitute a sufficient casue of action for modification of the
the following allegations: subdivision contrct. After receipt of respondent's comment, the Court in its Resolution of
September 13, 1976 resolved to treat the petition as special civil actionand declared the case
submitted for decision.
"That due to the increase in price of oil and its derivatives and the concomitant worldwide
spiralling of prices, which are not within the control of plaintiff, of all commodities including
basis raw materials required for such development work, the cost of development has risen to The petition must be granted.
levels which are unanticipated, unimagined and not within the remotest contemplation of the
parties at the time said agreement was entered into and to such a degree that the conditions and While respondent court correctly cited in its decision the Code Commission's report giving the
factors which formed the original basis of said contract, Annex 'A', have been totally changed; rationale for Article 1267 of the Civil Code, to wit;
'That further performance by the plaintiff under the contract.
The general rule is that impossibility of performance releases the obligor.
That further performance by the plaintiff under the contract,Annex 'S', will However, it is submitted that when the service has become so difficult as
result in situation where defendants would be unustly enriched at the to be manifestly beyond the contemplation of the parties, the court should
expense of the plaintiff; will cause an inequitous distribution of proceeds be authorized to release the obligor in whole or in part. The intention of
from the sales of subdivided lots in manifest actually result in the unjust the parties should govern and if it appears that the service turns out to be
and intolerable exposure of plaintiff to implacable losses, all such so difficult as have been beyond their contemplation, it would be doing
situations resulting in an unconscionable, unjust and immoral situation violence to that intention to hold the obligor still responsible. ... 2
contrary to and in violation of the primordial concepts of good faith,
fairness and equity which should pervade all human relations. It misapplied the same to respondent's complaint.

Under the subdivision contract, respondent "guaranteed (petitioners as landowners) as the If respondent's complaint were to be released from having to comply with the subdivision
latter's fixed and sole share and participation an amount equivalent to forty (40%) percent of contract, assuming it could show at the trial that the service undertaken contractually by it had
all cash receifpts fromthe sale of the subdivision lots" "become so difficult as to be manifestly beyond the contemplation of the parties", then
respondent court's upholding of respondet's complaint and dismissal of the petition would be
justifiable under the cited codal article. Without said article, respondent would remain bound
by its contract under the theretofore prevailing doctrine that On January 20, 1956, a contract was
performance therewith is ot excused "by the fact that the executed whereby the Bian
contract turns out to be hard and improvident, unprofitable, Transportation Company leased to the
or unespectedly burdensome", 3 since in case a party desires Laguna-Tayabas Bus Company at a
to be excuse from performance in the event of such monthly rental of P2,500.00 its
contingencies arising, it is his duty to provide threfor in the certificates of public convenience over
contract. the lines known as Manila-Bian,
Manila-Canlubang and Sta. Rosa-Manila,
But respondent's complaint seeks not release from the and to the Batangas Transportation
subdivision contract but that the court "render judgment I Company its certificate of public
modifying the terms and Conditions of the Contract by fixing convenience over the line known as
the proper shares that should pertain to the herein parties out Manila-Batangas Wharf, together with
of the gross proceed., from the sales of subdivided lots of one "International" truck, for a period of
subject subdivision". The cited article does not grant the five years, renewable for another similar
courts this authority to remake, modify or revise the contract period, to commence from the approval
or to fix the division of shares between the parties as of the lease contract by the Public
contractually stipulated with the force of law between the Service Commission. On the same date
parties, so as to substitute its own terms for those covenanted the Public Service Commission
by the parties themselves. Respondent's complaint for provisionally approved the lease contract
modification of contract manifestly has no basis in law and on condition that the lessees should
therefore states no cause of action. Under the particular operate on the leased lines in accordance
allegations of respondent's complaint and the circumstances with the prescribed time schedule and
therein averred, the courts cannot even in equity grant the that such approval was subject to
relief sought. modification or cancellation and to
whatever decision that in due time might
be rendered in the case.
A final procedural note. Respondent cites the general rule that
an erroneous order denying a motion to dismiss is
interlocutory and should not be corrected by certiorari but by Sometime after the execution of the lease
appeal in due course. This case however manifestly falls contract, the plaintiff Bian
within the recognized exception that certiorari will lie when Transportation Company was declared
appeal would not prove to be a speedy and adequate remedy.' insolvent in Special Proceedings No. B-
Where the remedy of appeal would not, as in this case, 30 of the Court of First Instance of
promptly relieve petitioners from the injurious effects of the Laguna, and Francisco C. Manabat was
patently erroneous order maintaining respondent's baseless appointed as its assignee. From time to
action and compelling petitioners needlessly to go through a time, the defendants paid the lease rentals
protracted trial and clogging the court dockets by one more up to December, 1957, with the exception
futile case, certiorari will issue as the plain, speedy and of the rental for August 1957, from which
adequate remedy of an aggrieved party. there was deducted the sum of P1,836.92
without the consent of the plaintiff. This
deduction was based on the ground that
ACCORDINGLY, the resolution of respondent appellate the employees of the defendants on the
court is reversed and the petition for certiorari is granted and leased lines went on strike for 6 days in
private respondent's complaint in the lower court is ordered June and another 6 days in July, 1957,
dismissed for failure to state a sufficient cause of action. With and caused a loss of P500 for each strike,
costs in all instances against private respondent. or a total of P1,000.00; and that in Civil
Case No. 696 of the Court of First
G.R. No. L-23546 August 29, 1974 Instance of Batangas, Branch II,
judgment was rendered in favor of
LAGUNA TAYABAS BUS COMPANY and BATANGAS defendant Batangas Transportation
TRANSPORTATION COMPANY, petitioners, Company against the Bian
vs. Transportation Company for the sum of
FRANCISCO C. MANABAT, as assignee of Bian P836.92. The assignee of the plaintiff
Transportation Company, Insolvent, respondent. objected to such deduction, claiming that
the contract of lease would be suspended
only if the defendants could not operate
Domingo E. de Lara for petitioners. the leased lines due to the action of the
officers, employees or laborers of the
M. A. Concordia & V.A. Guevarra for respondent. lessor but not of the lessees, and that the
deduction of P836.92 amounted to a
fraudulent preference in the insolvency
proceedings as whatever judgment might
have been rendered in favor of any of the
MAKASIAR, J.:p lessees should have been filed as a claim
in said proceedings. The defendants
This is an appeal by certiorari from a judgment of the Court neither refunded the deductions nor paid
of Appeals dated August 31, 1964, which WE AFFIRM. the rentals beginning January, 1958,
notwithstanding demands therefor made
from time to time. At first, the defendants
The undisputed facts are recounted by the Court of Appeals
assured the plaintiff that the lease rentals
through then Associate Justice Salvador Esguerra thus:
would be paid, although it might be conditions of the certificate of public
delayed, but in the end they failed to convenience. The Public Service
comply with their promise. Commission further stated that the
petition to suspend operation did not
On February 18, 1958, the Batangas pertain to any act of dominion or
Transportation Company and Laguna- ownership but only to the use of the
Tayabas Bus Company separately filed certificate of public convenience which
with the Public Service Commission a had been transferred by the plaintiff to
petition for authority to suspend the the defendants, and that the suspension
operation on the lines covered by the prayed for was but an incident of the
certificates of public convenience leased operation of the lines leased to the
to each of them by the Bian defendants. The Public Service
Transportation Company. The defendants Commission further ruled that being a
alleged as reasons the reduction in the quasi-judicial body of limited
amount of dollars allowed by the jurisdiction, it had no authority to
Monetary Board of the Central Bank of interpret contracts, which function
the Philippines for the purchase of spare belongs to the exclusive domain of the
parts needed in the operation of their ordinary courts, but the petition did not
trucks, the alleged difficulty encountered call for interpretation of any provision of
in securing said parts, and their the lease contract as the authority of the
procurement at exorbitant costs, thus Public Service Commission to grant or
rendering the operation of the leased lines deny the prayer therein was derived from
prohibitive. The defendants further its regulatory power over the leased
alleged that the high cost of operation, certificates of public convenience.
coupled with the lack of passenger traffic
on the leased lines resulted in financial While proceedings before the Public Service Commission
losses. For these reasons they asked were thus going on, as a consequence of the continuing
permission to suspend the operation of failure of the lessees to fulfill their earlier promise to pay the
the leased lines until such time as the accruing rentals on the leased certificates,
operating expenses were restored to
normal levels so as to allow the lessees to On May 19, 1959, plaintiff Bian
realize a reasonable margin of profit from Transportation Company represented by
their operation. Francisco C. Manabat, assignee, filed this
action against defendants Laguna
Plaintiff's assignee opposed the petition Tayabas Bus Company and Batangas
on the ground that the Public Service Transportation Company for the recovery
Commission had no jurisdiction to grant of the sum of P42,500 representing the
the relief prayed for as it should involve accrued rentals for the lease of the
the interpretation of the lease contract, certificates of public convenience of the
which act falls exclusively within the former to the latter, corresponding to the
jurisdiction of the ordinary courts; that period from January 1958, to May 1959,
the petitioners had not asked for the inclusive, plus the sum of P1,836.92
suspension of the operation of the lines which was deducted by the defendants
covered by their own certificates of from the rentals due for August, 1957,
public convenience; that to grant the together with all subsequent rentals from
petition would amount to an impairment June, 1959, that became due and payable;
of the obligation of contract; and that the P5,000.00 for attorney's fees and such
defendants have no legal personality to corrective and exemplary damages as the
ask for suspension of the operation of the court may find reasonable.
leased lines since they belonged
exclusively to the plaintiffwho is the The defendants moved to dismiss the
grantee of the corresponding certificate complaint for lack of jurisdiction over the
of public convenience. Aside from the subject matter of the action, there being
assignee, the Commissioner of the another case pending in the Public
Internal Revenue and other creditors of Service Commission between the same
the Bian Transportation Company, like parties for the same cause. ... (pp. 20-21,
the Standard Vacuum Oil Co. and rec.; pp. 54-55, ROA).
Parsons Hardware Company, filed
oppositions to the petitions for
suspension of operation. The motion to dismiss was, however, denied. Meanwhile

On October 15, 1958, the Public Service The Public Service Commission
Commission overruled all oppositions delegated its Chief Attorney to receive
filed by the assignee and other creditors evidence of the parties on the petition of
of the insolvent, holding that upon its the herein defendants for authority to
approval of the lease contract, the lessees suspend operation on the lines leased to
acquired the operating rights of the lessor them by the plaintiff. The defendants, the
and assumed full responsibility for assignee of the plaintiff and other
compliance with all the terms and creditors of the insolvent presented
evidence before the Chief Attorney and P836.92 at the rate of 6% per annum
the hearing was concluded on June 29, from the date of the filing of the
1959. On October 20, 1959, the Public complaint, with interest on the
Service Commission issued an order the subsequent rentals at the same rate
dispositive part of which reads as beginning the first of the following
follows: month, plus the sum of P3,000.00 as
attorney's fees, and the cost of the suit.
In view of the (pp. 25-26, rec.)
foregoing, the
petitioners herein are From the decision of the Court of First Instance, defendants
authorized to suspend appealed to the Court of Appeals, which affirmed the same in
their operation of the toto in its decision dated August 31, 1964. Said decision was
trips of the Bian received by the appellants on September 7, 1964.
Transportation
Company between On September 21, 1964, appellants filed the present appeal,
Batangas Piers- raising the following questions of law:
Manila, Bian-
Manila, Sta. Rosa-
Manila and 1. Considering that the Court of Appeals
Canlubang-Manila found that the Public Service
authorized in the Commission provisionally approved the
aforementioned cases lease contract of January 20, 1956
from the date of the between petitioners and Bian
filing of their petition Transportation Company upon the
on February 18, condition, amongothers, that such
1958, until December approval was subject to modification and
31, 1959. (p. 25, rec.; cancellation and towhatever decision that
pp. 60-61, ROA). in due time might be rendered in the case,
the Court ofAppeals erred in giving no
legal effect and significance whatever to
Going back to the Court of First Instance of Laguna the suspension of operations later granted
by the Public Service Commission after
... The motion (to dismiss) having been due hearing covering the lines leased to
denied, the defendants answered the petitioners thereby nullifying, contrary to
complaint, alleging among others, that law and decisions of this Honorable
the Public Service Commission Court, the authority and powersconferred
authorized the suspension of operation on the Public Service Commission.
over the leased lines from February 18,
1950, up to December 31, 1959, and 2. The Court of Appeals misapplied the
hence the lease contract should be statutory rules on interpreting contracts
deemed suspended during that period; and erred in its construction of the
that plaintiff failed to place defendants in clauses in the lease agreement
peaceful and adequate enjoyment and authorizing petitioners to suspend
possession of the things leased; that as a operation without the corresponding
result of the plaintiff being declared liability for rentals during the period of
insolvent the lease contract lost further suspension.
force and effect and payment of rentals
thereafter was made under a mistake and
should be refunded to the defendants. (p. 3. Contrary to various decisions of this
21; rec.; p. 55, ROA). Honorable Court relieving the lessee
from the obligation to pay rent where
there is failure to use or enjoy the thing
The Court of Appeals proceeded to state that leased, the Court of Appeals erroneously
required petitioners to pay rentals, with
After hearing in the court a quo and interest, during the period of suspension
presentation by the parties herein of their of the lease from January, 1958 up to the
respective memoranda, the trial court on expiration of the agreement on January
March 18, 1960, rendered judgment in 20, 1961. (p. 7, rec.)
favor of plaintiff, ordering the defendants
jointly and severally to pay to the former On October 12, 1964, the Supreme Court issued a resolution
the sum of P65,000.00 for the rentals of dismissing said petition "for lack of merit." (p. 43, rec.). Said
the certificates of public convenience resolution was received by petitioners on October 16, 1964.
corresponding to the period from January,
1958, to February, 1960, inclusive,
including the withheld amount of On October 31, 1964, the day the Court's resolution was to
P836.92 from the rentals for August, become final, petitioners filed a "Motion to Admit Amended
1957, plus the rentals that might become Petition and to Give Due Course Thereto." In said motion,
due and payable beginning March, 1960, petitioners explained
at the rate of P2,500.00 a month, with
interest on the sums of P42,500 and
... The amendment includes an alternative Consequently, we limit the resolution of this case solely on
ground relating to petitioners' prayer for the discussions on the last (fourth) question of law raised,
the reduction of the rentals payable by taking into consideration the discussion on the first three
them. This alternative petition was not questions only insofar as they place the petitioners'
included in the original one as petitioners discussion on the fourth question in its proper context and
where genuinely convinced that they perspective.
should have been absolved from all
liabilities whatever. However, in view of II
the apparent position taken by this
Honorable Court, as implied in its
resolution on October 12, 1964, notice of The undisguised object of petitioners' discussion on the
which was received on October 16, 1964, fourth question of law raised is to justify their plea for a
petitioners now squarely submit their reduction of the rentals on the ground that the subject matter
alternative position for consideration. of the lease was allegedly not used by them as a result of the
There is decisional authority for the suspension of operations on the lines authorized by the Public
reduction of rentals payable (see Reyes v. Service Commission.
Caltex, 47 O.G. 1193, 1203-1204) (p. 44,
rec). In support of said plea, petitioners invoke article 1680 of the
Civil Code which grants lessees of rural lands a right to a
The new question raised is presented thus: reduction of rentals whenever the harvest on the land leased
is considerably damaged by an extraordinary fortuitous event.
Reliance was also placed by the petitioners on Our decision
xxx xxx xxx in Reyes v. Caltex (Phil.) Inc., 84 Phil. 654, which
supposedly applied said article by analogy to a lease other
IV than that covered by said legal provision.

This Honorable Court is authorized to The authorities from which the petitioners draw support,
equitably reduce the rentals payableby however, are not applicable to the case at bar.
the petitioners, should this Honorable
Court adopt the position of the Courtof Article 1680 of the Civil Code reads thus:
Appeals and the lower court that
petitioners have not been releived from
thepayment of rentals on the leased lines. Art. 1680. The lessee shall have no right
(p. 7 Amended Petition for Certiorari,pp. to a reduction of the rent on accountof the
46, 52, rec.). sterility of the land leased, or by reason
of the loss of fruits due toordinary
fortuitous events; but he shall have such
On November 5, 1964, the Supreme right in case of the loss ofmore than one-
Court required respondents herein to file half of the fruits through extraordinary
an answer to the amended petition. On and unforeseen fortuitous events, save
the same date, respondents filed, quite always when there is a specific
belatedly, an opposition to the motion of stipulation to the contrary.
the petitioners. Said opposition was later
"noted" by the Court in its resolution
dated December 1, 1964. Extraordinary fortuitous events are
understood to be: fire, war, pestilence,
unusual flood, locusts, earthquake, or
I others which are uncommon, and which
thecontracting parties could not have
First, it must be pointed out that the first three questions of reasonably foreseen.
law raised by petitioners were already disposed of in Our
resolution dated October 12, 1964 dismissing the original Article 1680, it will be observed is a special provision for
petition for lack of merit, which in effect affirmed the leases of rural lands. No other legal provision makes it
appealed decision of the Court of Appeals. Although, in their applicable to ordinary leases. Had theintention of the
motion to admit amended petition dated October 31, 1964, lawmakers been so, they would have placed the article among
petitioners sought a reconsideration of the said resolution not the general provisions on lease. Nor can the article be applied
only in the light of the fourth legal issue raised but also on analogously to ordinary leases, for precisely because of its
the said first three legal questions, the petitioners advanced special character, it was meant to apply only to a special
no additional arguments nor cited new authorities in support specie of lease. It is a provision of social justice designed to
of their stand on the first three questions of law. They merely relieve poor farmers from the harsh consequences of their
reproduced verbatim from their original petition their contracts with rich landowners. And taken in that light, the
discussion on said questions. article provides no refuge to lessees whose financial standing
or social position is equal to, or even better than, the lessor as
To the extent therefore that the motion filed by the petitioner in the case at bar.
seeks a reconsideration of our order of dismissal by
submitting anew, through the amended petition, the very Even if the cited article were a general rule on lease, its
same arguments already dismissed by this Court, the motion provisions nevertheless do not extend to petitioners. One of
shall be considered pro forma, (See Estrada v. Sto. Domingo, its requisites is that the cause of loss of the fruits of the leased
28 SCRA 890, 905-906, 911) and hence is without merit. property must be an "extraordinary and unforeseen fortuitous
event." The circumstances of the instant case fail tosatisfy the act of God, by the law, or by the other
such requisite. As correctly ruled by the Court of Appeals, the party, it being the rule that in case the
alleged causes for the suspension of operations on the lines party desires to be excused from the
leased, namely, the high prices of spare parts and gasoline performance in the event of
and the reduction of the dollar allocations, "already existed contingencies arising, it is his duty to
when the contract of lease was executed" (p. 11, Decision; p. provide therefor in his contract. Hence,
30, rec.; Cuyugan v. Dizon, 89 Phil. 80). The cause of performance is not excused by
petitioners' inability to operate on the lines cannot, therefore, subsequent inability to perform, by
be ascribed to fortuitous events or circumstances beyond their unforeseen difficulties, by unusual or
control, but to their own voluntary desistance (p. 13, unexpected expenses, by danger, by
Decision; p. 32, rec.). inevitable accident, by breaking of
machinery, by strikes, by sickness, by
If the petitioners would predicate their plea on the basis failure of a party to avail himself of the
solely of their inability to use the certificates of public benefits tobe had under the contract, by
convenience, absent the requisite of fortuitous event, the cited weather conditions, by financial
article would speak strongly against their plea.Article 1680 stringency or bystagnation of business.
opens with the statement: "The lessee shall have no right to Neither is performance excused by the
reduction of the rent on account of the sterility of the land fact that the contract turns out to be hard
leased ... ." Obviously, no reduction can be sustained on the and improvident, unprofitable, or
ground that the operation of the leased lines was suspended impracticable, ill-advised, or even
upon the mere speculation that it would yield no substantial foolish, or less profitable, unexpectedly
profit for the lessee bus company. Petitioners' profits may be burdensome. (17 CJS 946-948) (Reyes
reduced due to increase operating costs; but the volume of vs. Caltex, supra, 664. Emphasis
passenger traffic along the leased lines not only remains same supplied).
but may even increase as the tempo of the movement of
population is intensified by the industrial development of the Also expressed in said case is a ruling in American
areas covered or connected by the leased routes. Moreover, jurisprudence, which found relevance again in the case at bar,
upon proper showing, the Public Service Commission might to wit: "(S)ince, by the lease, the lessee was to have the
have granted petitioners an increase in rates, as it has done so advantage of casual profits of the leased premises, he should
in several instances, so that public interest will always be run the hazard of casual losses during the term and not lay the
promoted by a continuous flow of transportation facilities to whole burden upon the lessor." (Reyes vs. Caltex, supra,
service the population and the economy. The citizenry and 664).
the economy will suffer by reason of any disruption in the
transportation facilities. Militating further against a grant of reduction of the rentals to
the petitioners is the petitioners' conduct which is not in
Furthermore, we are not at all convinced that the lease accord with the rules of fair play and justice. Petitioners, it
contract brought no material advantage to the lessor for the must be recalled, promised to pay the accrued rentals in due
period of suspension. It must be recalled that the lease time. Later, however, when they believed they found a
contract not only stipulated for the transfer of the lessor's convenient excuse for escaping their obligation, they reneged
right to operate the lines covered by the contract, but also for on their earlier promise. Moreover, petitioners' option to
a forbearance on the part of the lessor to operate suspend operation on the leased lines appears malicious.
transportation business along the same lines and to hold a Thus, Justice Esguerra, speaking for the Court of Appeals,
certificate for that purpose. Thus, even if the lessee would not propounded the following questions: "If it were true that
actually make use of the lessor's certificates over the leased thecause of the suspension was the high prices of spare parts,
lines, the contractual commitment of the lessor not to operate gasoline and needed materials and the reduction of the dollar
on the lines would sufficiently insure added profit to the allocation, why was it that only plaintiff-appellee's certificate
lessees on account of the lease contract. In other words, the of public convenience was sought to be suspended? Why did
commitment alone of the lessor under the contract would not the defendants-appellants ask for a corresponding
enable the lessees to reap full benefits therefrom since the reduction or suspension under their own certificate along the
commuting public would, after all, be forced at their same route? Suppose the prices of the spare parts and needed
inconvenience and prejudice to patronize petitioner's materials were cheap, would the defendants-appellants have
remaining buses. paid more than what is stipulated in the lease contract? We
believe not. Hence, the suspension of operation on the leased
Contrary to what petitioners want to suggest, WE refused in lines was conceived as a scheme to lessen operation costs
the Reyes case, supra, to apply by analogy Article 1680 and with the expectation of greater profit." (p. 14, Decision).
consequently, WE denied the plea oflessee therein for an
equitable reduction of the stipulated rentals, holding that: Indeed, petitioners came to court with unclean hands, which
fact militates against their plea for equity.
The general rule on performance of
contracts is graphically set forth in WHEREFORE, THE ORIGINAL AND AMENDED
American treatises which is also the rule, PETITIONS ARE HEREBY DISMISSED, AND THE
in our opinion, obtaining under the Civil DECISION OF THE COURT OF APPEALS DATED
Code. AUGUST 31, 1964 IS HEREBY AFFIRMED, WITH
COSTS AGAINST PETITIONERS.
Where a person by his contract charges
himself with an obligation possible to be G.R. No. 109172 August 19, 1994
performed, he must perform it, unless the
performance is rendered impossible by
TRANS-PACIFIC INDUSTRIAL SUPPLIES, INC., the amount of P492,100.00 representing accrued interest on
petitioner, PN No. TL-9077-82. According to the bank, the promissory
vs. notes were erroneously released.
The COURT OF APPEALS and ASSOCIATED BANK,
respondents. Initially, Trans-Pacific expressed its willingness to pay the
amount demanded by respondent bank. Later, it had a change
Gancayco Law Offices for petitioners. of heart and instead initiated an action before the Regional
Trial Court of Makati, Br. 146, for specific performance and
Jose A. Soluta, Jr. & Associates for private respondent. damages. There it prayed that the mortgage over the two
parcels of land be released and its stock inventory be lifted
and that its obligation to the bank be declared as having been
fully paid.

BIDIN, J.: After trial, the court a quo rendered judgment in favor of
Trans-Pacific, to wit:
In this petition for review on certiorari, petitioner Trans-
Pacific Industrial Supplies, Inc. seeks the reversal of the WHEREFORE, premises considered and
decision of respondent court, the decretal portion of which upon a clear preponderance of evidence
reads: in support of the stated causes of action,
the Court finds for the plaintiffs and
WHEREFORE, the decision of June 11, against defendant, and
1991 is SET ASIDE and NULLIFIED;
the complaint is dismissed, and on the (a) declares plaintiff's
counterclaim, Transpacific is ordered to obligations to
pay Associated attorney's fees of defendant to have
P15,000.00. been already fully
paid;
Costs against Transpacific.
(b) orders defendant
SO ORDERED. (Rollo, p. 47) to execute and
deliver to plaintiffs a
Sometime in 1979, petitioner applied for and was granted release on the i
several financial accommodations amounting to September 11, 1981
P1,300,000.00 by respondent Associated Bank. The loans mortgage over TCT
were evidenced and secured by four (4) promissory notes, a (50858)
real estate mortgage covering three parcels of land and a S-10086 and TCT
chattel mortgage over petitioner's stock and inventories. (50859) S-109087,
and ii December 20,
1983 chattel
Unable to settle its obligation in full, petitioner requested for, mortgage, within
and was granted by respondent bank, a restructuring of the fifteen (15) days
remaining indebtedness which then amounted to from the finality
P1,057,500.00, as all the previous payments made were hereof;
applied to penalties and interests.
(c) orders defendant
To secure the re-structured loan of P1,213,400.00, three new to pay plaintiffs
promissory notes were executed by Trans-Pacific as follows: Romeo Javier and
(1) Promissory Note No. TL-9077-82 for the amount of Romana Bataclan-
P1,050,000.00 denominated as working capital; (2) Javier the sum of
Promissory Note No. TL-9078-82 for the amount of P50,000.00 as and for
P121,166.00 denominated as restructured interest; (3) moral damages; and
Promissory Note No. TL-9079-82 for the amount of
P42,234.00 denominated similarly as restructured interest
(Rollo. pp. 113-115). (d) orders defendant
to pay plaintiffs the
sum of P30,000.00 as
The mortgaged parcels of land were substituted by another attorney's fees, plus
mortgage covering two other parcels of land and a chattel expenses of the suit.
mortgage on petitioner's stock inventory. The released parcels
of land were then sold and the proceeds amounting to
P1,386,614.20, according to petitioner, were turned over to Defendant's counterclaims are dismissed
the bank and applied to Trans-Pacific's restructured loan. for lack of merit.
Subsequently, respondent bank returned the duplicate original
copies of the three promissory notes to Trans-Pacific with the With costs against defendant.
word "PAID" stamped thereon.
SO ORDERED. (Rollo, p. 101)
Despite the return of the notes, or on December 12, 1985,
Associated Bank demanded from Trans-Pacific payment of
Respondent bank elevated the case to the appellate court Art. 1271. The delivery of a private
which, as aforesaid, reversed the decision of the trial court. In document evidencing a credit, made
this appeal, petitioner raises four errors allegedly committed voluntarily by the creditor to the debtor,
by the respondent court, namely: implies the renunciation of the action
which the former had against the latter.
I
Respondent court is of the view that the above provision must
RESPONDENT APPELLATE COURT be construed to mean the original copy of the document
ERRED IN HOLDING THAT THE evidencing the credit and not its duplicate, thus:
ACCRUED INTEREST IN THE
AMOUNT OF 492,100.00 HAS NOT . . . [W]hen the law speaks of the delivery
BEEN PAID WHEN ARTICLE 1176 OF of the private document evidencing a
THE CIVIL CODE PROVIDES THAT credit, it must be construed as referring to
SUCH CLAIM FOR INTEREST UPON the original. In this case, appellees
RECEIPT OF PAYMENT OF THE (Trans-Pacific) presented, not the
PRINCIPAL MUST BE RESERVED originals but the duplicates of the three
OTHERWISE IT IS DEEMED PAID. promissory notes." (Rollo, p. 42)

II The above pronouncement of respondent court is manifestly


groundless. It is undisputed that the documents presented
RESPONDENT APPELLATE COURT were duplicate originals and are therefore admissible as
ERRED IN HOLDING THAT WITH evidence. Further, it must be noted that respondent bank itself
THE DELIVERY OF THE did not bother to challenge the authenticity of the duplicate
DOCUMENTS EVIDENCING THE copies submitted by petitioner. In People vs. Tan, (105 Phil.
PRINCIPAL OBLIGATION, THE 1242 [1959]), we said:
ANCILLARY OBLIGATION OF
PAYING INTEREST WAS NOT When carbon sheets are inserted between
RENOUNCED CONTRARY TO THE two or more sheets of writing paper so
PROVISIONS OF ART. 1273 OF THE that the writing of a contract upon the
CIVIL CODE AND THE UNDISPUTED outside sheet, including the signature of
EVIDENCE ON RECORD. the party to be charged thereby, produces
a facsimile upon the sheets beneath, such
III signature being thus reproduced by the
same stroke of pen which made the
surface or exposed impression, all of the
RESPONDENT APPELLATE COURT sheets so written on are regarded as
ERRED IN NOT HOLDING THAT duplicate originals and either of them
PETITIONER HAS FULLY PAID ITS may be introduced in evidence as such
OBLIGATION CONFORMABLY WITH without accounting for the nonproduction
ARTICLE 1234 OF THE CIVIL CODE. of the others.

IV A duplicate copy of the original may be admitted in evidence


when the original is in the possession of the party against
RESPONDENT APPELLATE COURT whom the evidence is offered, and the latter fails to produce
ERRED IN AWARDING ATTORNEY'S it after reasonable notice (Sec. 2[b], Rule 130), as in the case
FEES IN FAVOR OF ASSOCIATED of respondent bank.
BANK (Rollo, p. 15).
This notwithstanding, we find no reversible error committed
The first three assigned errors will be treated jointly since by the respondent court in disposing of the appealed decision.
their resolution border on the common issue, i.e., whether or As gleaned from the decision of the court a quo, judgment
not petitioner has indeed paid in full its obligation to was rendered in favor of petitioner on the basis of
respondent bank. presumptions, to wit:

Applying the legal presumption provided by Art. 1271 of the The surrender and return to plaintiffs of
Civil Code, the trial court ruled that petitioner has fully the promissory notes evidencing the
discharged its obligation by virtue of its possession of the consolidated obligation as restructured,
documents (stamped "PAID") evidencing its indebtedness. produces a legal presumption that
Respondent court disagreed and held, among others, that the Associated had thereby renounced its
documents found in possession of Trans-Pacific are mere actionable claim against plaintiffs (Art.
duplicates and cannot be the basis of petitioner's claim that its 1271, NCC). The presumption is fortified
obligation has been fully paid. Accordingly, since the by a showing that said promissory notes
promissory notes submitted by petitioner were duplicates and all bear the stamp "PAID", and has not
not the originals, the delivery thereof by respondent bank to been otherwise overcome. Upon a clear
the petitioner does not merit the application of Article 1271 perception that Associated's record
(1st par.) of the Civil Code which reads: keeping has been less than
exemplary . . ., a proffer of bank copies
of the promissory notes without the
"PAID" stamps thereon does not impress debtor would normally retain a copy. It would thus be absurd
the Court as sufficient to overcome if Article 1271 were to be applied differently.
presumed remission of the obligation vis-
a-vis the return of said promissory notes. While it has been consistently held that findings of facts are
Indeed, applicable law is supportive of a not reviewable by this Court, this rule does not find
finding that in interest bearing application where both the trial and the appellate courts differ
obligations-as is the case here, payment thereon (Asia Brewery, Inc. v. CA, 224 SCRA 437 [1993]).
of principal (sic) shall not be deemed to
have been made until the interests have
been covered (Art. 1253, NCC). Petitioner maintains that the findings of the trial court should
Conversely, competent showing that the be sustained because of its advantage in observing the
principal has been paid, militates against demeanor of the witnesses while testifying (citing
postured entitlement to unpaid interests. Crisostomo v. Court of Appeals, 197 SCRA 833) more so
where it is supported by the records (Roman Catholic Bishop
of Malolos v. Court of Appeals, 192 SCRA 169).
In fine. the Court is satisfied that
plaintiffs must be found to have settled
their obligations in full. This case, however, does not concern itself with the
demeanor of witnesses. As for the records, there is actually
none submitted by petitioner to prove that the contested
As corollary, a finding is accordingly amount, i.e., the interest, has been paid in full. In civil cases,
compelled that plaintiffs (sic) accessory the party that alleges a fact has the burden of proving it
obligations under the real estate mortgage (Imperial Victory Shipping Agency v. NLRC 200 SCRA 178
over two (2) substituted lots as well as [1991]). Petitioner could have easily adduced the receipts
the chattel mortgage, have been corresponding to the amounts paid inclusive of the interest to
extinguished by the renunciation of the prove that it has fully discharged its obligation but it did not.
principal debt (Art. 1273, NCC),
following the time-honored axiom that
the accessory follows the principal. There There is likewise nothing on the records relied upon by the
is, therefore, compelling warrant (sic) to trial court to support its claim, by empirical evidence, that the
find in favor of plaintiffs insofar as amount corresponding to the interest has indeed been paid.
specific performance for the release of The trial court totally relied on a disputable presumption that
the mortgages on the substituted lots and the obligation of petitioner as regards interest has been fully
chattel is concerned. (Rollo, p. 100) liquidated by the respondent's act of delivering the instrument
evidencing the principal obligation. Rebuttable as they are,
the court a quo chose to ignore an earlier testimony of Mr.
premised by: Mesina anent the outstanding balance pertaining to interest,
as follows:
Records show that Associated's Salvador
M. Mesina is on record as having Court:
testified that all three (3) December 8,
1990 promissory notes for the
consolidated principal obligation, interest Q Notwithstanding,
and penalties had been fully paid (TSN, let us go now
July 18, 1990, p. 18). It is, moreover, specifically to
admitted that said promissory notes were promissory note No.
accordingly returned to Romeo Javier. 9077-82 in the
(Ibid.) amount of
consolidated
principal of
The above disquisition finds no factual support, however, per P1,050,000.00. Does
review of the records. The presumption created by the Art. the Court get it
1271 of the Civil Code is not conclusive but merely prima correctly that this
facie. If there be no evidence to the contrary, the presumption consolidated balance
stands. Conversely, the presumption loses its legal efficacy in has been fully paid?
the face of proof or evidence to the contrary. In the case
before us, we find sufficient justification to overthrow the
presumption of payment generated by the delivery of the A Yes, the principal,
documents evidencing petitioners indebtedness. yes, sir.

It may not be amiss to add that Article 1271 of the Civil Code Q Fully settled?
raises a presumption, not of payment, but of the renunciation
of the credit where more convincing evidence would be A Fully settled, but
required than what normally would be called for to prove the interest of that
payment. The rationale for allowing the presumption of promissory note has
renunciation in the delivery of a private instrument is that, not been paid, Your
unlike that of a public instrument, there could be just one Honor.
copy of the evidence of credit. Where several originals are
made out of a private document, the intendment of the law Q In other words,
would thus be to refer to the delivery only of the original you are saying, fully
original rather than to the original duplicate of which the
settled but not truly . . . We continue to find ourselves in a
fully settled? very fluid (sic) situation in as much as
the overall outlook of the industry has not
A The interest was substantially improved. Principally for
not paid. this reason, we had proposed to settle our
remaining obligations to you by way of
dacion en pago of the equipments (sic)
Q Not fully settled? and spare parts mortgaged to you to
(the) extent of their applicable loan
A The interest was values. (Rollo, p. 155; Emphasis
not paid, but the supplied)
principal obligation
was removed from Petitioner claims that the above offer of settlement or
our books, Your compromise is not an admission that anything is due and is
Honor. inadmissible against the party making the offer (Sec. 24, Rule
130, Rules of Court). Unfortunately, this is not an iron-clad
Q And you returned rule.
the promissory note?
To determine the admissibility or non-admissibility of an
A We returned the offer to compromise, the circumstances of the case and the
promissory note. intent of the party making the offer should be considered.
(TSN, July 18, 1990, Thus, if a party denies the existence of a debt but offers to
p. 22) pay the same for the purpose of buying peace and avoiding
litigation, the offer of settlement is inadmissible. If in the
That petitioner has not fully liquidated its financial obligation course thereof, the party making the offer admits the
to the Associated Bank finds more than ample confirmation existence of an indebtedness combined with a proposal to
and self-defeating posture in its letter dated December 16, settle the claim amicably, then, the admission is admissible to
1985, addressed to respondent bank, viz.: prove such indebtedness (Moran, Comments on the Rules of
Court, Vol. 5, p. 233 [1980 ed.); Francisco, Rules of Court,
Vol. VII, p. 325 [1973 ed.] citing McNiel v. Holbrook, 12
. . . that because of the prevailing Pac. (US) 84, 9 L.ed. 1009). Indeed, an offer of settlement is
unhealthy economic conditions, the an effective admission of a borrower's loan balance (L.M.
business is unable to generate sufficient Handicraft Manufacturing Corp. v. Court of Appeals, 186
resources for debt servicing. SCRA 640 [1990]). Exactly, this is what petitioner did in the
case before us for review.
Fundamentally on account of this, we
propose that you permit us to fully Finally, respondent court is faulted in awarding attorney's
liquidate the remaining obligations to fees in favor of Associated Bank. True, attorney's fees may be
you of P492,100 through a payment in awarded in a case of clearly unfounded civil action (Art.
kind (dacion en pago) arrangement by 2208 [4], CC). However, petitioner claims that it was
way of the equipments (sic) and spare compelled to file the suit for damages in the honest belief that
parts under chattel mortgage to you to it has fully discharged its obligations in favor of respondent
the extent of their latest appraised bank and therefore not unfounded.
values." (Rollo, pp. 153-154; Emphasis
supplied)
We believe otherwise. As petitioner would rather vehemently
deny, undisputed is the fact of its admission regarding the
Followed by its August 20, 1986 letter unpaid balance of P492,100.00 representing interests. It
which reads: cannot also be denied that petitioner opted to sue for specific
performance and damages after consultation with a lawyer
We have had a series of communications (Rollo, p. 99) who advised that not even the claim for
with your bank regarding our proposal interests could be recovered; hence, petitioner's attempt to
for the eventual settlement of our seek refuge under Art. 1271 (CC). As previously discussed,
remaining obligations . . . the presumption generated by Art. 1271 is not conclusive and
was successfully rebutted by private respondent. Under the
As you may be able to glean from these circumstances, i.e., outright and honest letters of admission
letters and from your credit files, we have vis-a-vis counsel-induced recalcitrance, there could hardly be
always been conscious of our obligation honest belief. In this regard, we quote with approval
to you which had not been faithfully respondent court's observation:
serviced on account of unfortunate
business reverses. Notwithstanding these The countervailing evidence against the
however, total payments thus far remitted claim of full payment emanated from
to you already exceede (sic) the original Transpacific itself. It cannot profess
principal amount of our obligation. But ignorance of the existence of the two
because of interest and other charges, we letters, Exhs. 3 & 4, or of the import of
find ourselves still obligated to you by what they contain. Notwithstanding the
P492,100.00. . . . letters, Transpacific opted to file suit and
insist(ed) that its liabilities had already
been paid. There was thus an
ill-advised attempt on the part of Tayabas Bus Company at a monthly rental of
Transpacific to capitalize on the delivery P2,500.00 its certificates of public convenience
of the duplicates of the promissory notes, over the lines known as ManilaBian, Manila
in complete disregard of what its own Canlubang and Sta. RosaManila, and to the
records show. In the circumstances, Art. Batangas Transportation Company its certificate of
2208 (4) and (11) justify the award of public convenience over the line known as Manila
attorney's fees. The sum of P15,000.00 is Batangas Wharf, together with one "International"
fair and equitable. (Rollo, pp. 46-47) truck, for a period of five years, renewable for
another similar period, to commence from the
WHEREFORE, the petition is DENIED for lack of merit. approval of the lease contract by the Public Service
Costs against petitioner. Commission. On the same date the Public Service
Commission provisionally approved the lease
contract on condition that the lessees should
SO ORDERED. operate on the leased lines in accordance with the
prescribed time schedule and that such approval
CASE DIGEST: FEB. 23, 2017 was subject to modification or cancellation and to
whatever decision that in due time might be
JESUS V. OCCENA and EFIGENIA C. OCCENA, rendered in the case.
vs.
HON. RAMON V. JABSON, Presiding Judge of the Court Sometime after the execution of the lease contract,
Of First Instance of Rizal, the plaintiff Bian Transportation Company was
declared insolvent and Francisco C. Manabat was
FACTS: appointed as its assignee. From time to time, the
defendants paid the lease rentals up to December,
Private respondent Tropical Homes, Inc. filed a complaint for 1957, with the exception of the rental for August
modification of the terms and conditions of its subdivision 1957, from which there was deducted the sum of
contract with petitioners. Petitioners dismissed the complaint P1,836.92 without the consent of the plaintiff. This
principally for lack of cause of action, and upon denial deduction was based on the ground that the
thereof and of reconsideration by the lower court elevated the employees of the defendants on the leased lines
matter on certiorari to respondent Court of Appeals. went on strike for 6 days in June and another 6
days in July,1957, and caused a loss of P500 for
ISSUE: each strike, or a total of P1,000.00; and that in Civil
WON COURTS ARE AUTHORIZED TO MODIFY OR Case No. 696 of the Court of First Instance of
REVISE CONTRACTS BETWEEN PARTIES Batangas, Branch II, judgment was rendered in
favor of defendant Batangas Transportation
RULING: Company against the Bian Transportation
Company for the sum of P836.92.
NO.
ART. 1267 of the Civil Code: The assignee of the plaintiff objected to such
When the service has become so difficult as to be deduction, claiming that the contract of lease would
manifestly beyond the contemplation of the parties, be suspended only if the defendants could not
the obligor may also be released therefrom, in operate the leased lines due to the action of the
whole or in part. officers, employees or laborers of the lessor but not
of the lessees, and that the deduction of P836.92
Respondent's complaint seeks not release from the amounted to a fraudulent preference in the
subdivision contract but that the court "render insolvency proceedings as whatever judgment
judgment I modifying the terms and Conditions of might have been rendered in favor of any of the
the Contract by fixing the proper shares that should lessees should have been filed as a claim in said
pertain to the herein parties out of the gross proceedings. The defendants neither refunded the
proceed from the sales of subdivided lots of subject deductions nor paid the rentals beginning January,
subdivision". The cited article does not grant the 1958, notwithstanding demands therefor made
courts this authority to remake, modify or revise from time to time. At first, the defendants assured
the contract or to fix the division of shares between the plaintiff that the lease rentals would be paid,
the parties as contractually stipulated with the force although it might be delayed, but in the end they
of law between the parties, so as to substitute its failed to comply with their promise.
own terms for those covenanted by the parties
themselves. Respondent's complaint for On February 18, 1958, the Batangas Transportation
modification of contract manifestly has no basis in Company and LagunaTayabas Bus Company
law and therefore states no cause of action. Under separately filed with the Public Service
the particular allegations of respondent's complaint Commission a petition for authority to suspend the
and the circumstances therein averred, the courts operation on the lines covered by the certificates of
cannot even in equity grant the relief sought. public convenience leased to each of them by the
Bian Transportation Company. The defendants
LAGUNA v MANABAT alleged as reasons the reduction in the amount of
dollars allowed by the Monetary Board of the
FACTS: Central Bank of the Philippines for the purchase of
spare parts needed in the operation of their trucks,
A contract was executed whereby the Bian the alleged difficulty encountered in securing said
Transportation Company leased to the Laguna parts, and their procurement at exorbitant costs,
thus rendering the operation of the leased lines he should run the hazard of casual losses during the
prohibitive. The defendants further alleged that the term and not lay the whole burden upon the lessor.
high cost of operation, coupled with the lack of
passenger traffic on the leased lines resulted in The suspension of operation on the leased lines was
financial losses. For these reasons they asked conceived as a scheme to lessen operation costs
permission to suspend the operation of the leased with the expectation of greater profit. The
lines until such time as the operating expenses were petitioners are thus not entitled to reduced rentals.
restored to normal levels so as to allow the lessees
to realize a reasonable margin of profit from their TRANSPACIFIC INDUSTRIAL SUPPLIES INC. VS CA
operation. PSC granted the suspension. ( 235 s 494 )

On May 19, 1959, plaintiff Bian Transportation FACTS:


Company represented by Francisco C. Manabat, Petitioner was granted financial accommodation
assignee, filed this action against defendants amounting to P 1.3 M by respondent Associated
Laguna Tayabas Bus Company and Batangas Bank. The loans were secured by 4 promissory
Transportation Company for the recovery of the notes, a real estate mortgage covering 3 parcels of
sum of P42,500 representing the accrued rentals for land & a chattel mortgage over petitioners stock &
the lease of the certificates of public convenience inventories.
of the former to the latter, corresponding to the
period from January 1958, to May 1959, inclusive, To secure the re-structured loan of P1,213,400.00,
plus the sum of P1,836.92 which was deducted by 3 new promissory notes were executed by Trans-
the defendants from the rentals due for August, pacific. The mortgage parcels of land were
1957, together with all subsequent rentals from substituted by another mortgage covering 2 other
June, 1959, that became due and payable; parcels of land & chattel mortgage on petitioners
P5,000.00 for attorney's fees and such corrective stock inventory.
and exemplary damages as the court may find
reasonable. The release parcels of land were then sold & the
proceeds were turned over to the bank & applied to
ISSUE: petitioners restructured loan.
Subsequently, respondent bank returned the
W/N Petitioner is entitled to a reduced amount of duplicate original copies of the 3 promissory notes
rentals on the subject matter of the lease was to trans-pacific with the word Paid stamped
allegedly not used by them as a result of the thereon. Despite the return of the notes, the bank
suspension of operations on the lines authorized by demanded from petitioner the accrued interest of
the Public Service Commission? one of the promissory notes. According to the bank
the notes were erroneously released.
RULING:
Initially, Trans-pacific expressed the willingness to
Where a person by his contract charges himself pay but later it had a change of heart & initiated an
with an obligation possible to be performed, he action before the RTC for specific performance &
must perform it, unless the performance is rendered damages.
impossible by the act of God, by the law, or by the
other party, it being the rule that in case the party ISSUE:
desires to be excused from the performance in the
event of contingencies arising, it is his duty to WON respondent has indeed paid in full its obligation to
provide therefor in his contract. Hence, respondent bank? NO
performance is not excused by subsequent inability
to perform, by unforeseen difficulties, by unusual HELD:
or unexpected expenses, by danger, by inevitable Under Art. 1271, provides that The delivery of a
accident, by breaking of machinery, by strikes, by private document evidencing a credit made
sickness, by failure of a party to avail himself of voluntarily by the creditor to the debtor implies the
the benefits tobe had under the contract, by weather renunciation of the action which the former had
conditions, by financial stringency or by stagnation against the latter.
of business. Neither is performance excused by the
fact that the contract turns out to be hard and Art. 1271, is not conclusive but merely prima-facie
improvident, unprofitable, or impracticable, ill if there be no evidence to the contrary, the
advised, or even foolish, or less profitable, presumption stands. Conversely, the presumption
unexpectedly burdensome. loses its legal efficacy in the face of proof or
evidence to the contrary.
Petitioners, it must be recalled, promised to pay the
accrued rentals in due time. Later, however, when The SC found sufficient justification to overthrow
they believed they found a convenient excuse for the presumption of payment generated by the
escaping their obligation, they reneged on their delivery of the documents evidencing petitioners
earlier promise. Moreover, petitioners' option to indebtedness.
suspend operation on the leased lines appears
malicious. Art. 1271, raises a presumption, not of payment but
of the renunciation of the credit, were more
Since, by the lease, the lessee was to have the
convincing evidence would be required than what
advantage of casual profits of the leased premises, normally would be called for to prove payment.
The rationale for allowing the presumption of interest to prove that it has fully discharged its
renunciation in the delivery of a private instrument obligation but it did not.
is that, unlike that a public instrument, there could
be just on copy of the evidence of credit. Where The trial court totally relied on a disputable
several originals are made out of a private presumption that the interest has been fully
document, the intendment of the law would thus be liquidated by respondents act of delivering the
to refer to the delivery only of the original original instrument and ignore the testimony of Mr. Mesina
rather than to the original duplicate f which the anent the outstanding balance pertaining to interest.
debtor would normally retain a copy it would thus Petitioner has not fully liquidated its financial
be absurd if Art. 1271, were to be applied obligation to the associated bank by its
differently. confirmation & self-defeating posture in its letter
addressed to respondent bank.
Petitioner could have easily adduce the receipts
corresponding to the amounts paid inclusive of the