1193
Berg v. Magdalena Estate Inc. (92 phil 110)
FACTS:
PETITIONER: Ernest Berg
RESPONDENT: Magdalena Estate
PONENTE: Bautista Angelo, J.
Ever since September 22, 1943 plaintiff, Berg and defendants under
Magdalena Estate, Inc. were co-owners of the Property, Crystal Arcade.
One third of it belonged to the plaintiff-petitioner and two thirds, to the
defendant-respondent. These parties executed a deed of sale that should
either of them sell his share, the other party will have an irrevocable
option to purchase it at the seller’s at the seller’s price. The two,
eventually had a disagreement on what really happened with regard to the
deal.
On January. 1946, the petitioner offered his share for Php 200,000 and
was accepted by the defendant, including the stipulation that Berg was
giving the defendant a period of time which, including the extensions
granted, would expire on May 31, 1947.
The defendant claimed that, in spite of the acceptance of the offer,
plaintiff refused to accept the payment of the price and that because of
this, they suffered damages in the amount of Php 100,000 and asked for
specific performance. The plaintiff argued that this transaction, referred
to by the defendant, is not supported by any note or memorandum
subscribed by the parties and that this transaction falls under the statue of
frauds and cannot be the basis of the defendant’s special defense.
In an application to sell or dispose their properties, both parties filed for
separate applications regarding the subject property. In the defendant’s
application, it desired a license in order “to use a portion of the P400,000
requested as a loan from the National City Bank of New York, Manila, or
from any other bank in Manila, together with funds to be collected from
old and new sales of his real estate properties, for the purchase of the
one-third (1/3) of the Crystal Arcade property in the Escolta, Manila,
belonging to Mr. Ernest Berg.
The lower court found that there was no agreement reached between the
parties regarding the purchase and sale of the property in question, it
granted the case in favor of the petitioner.
ISSUE:
Whether the term of payment stipulated in the defendant’s application for
license to sell/purchase, “until they have obtained Php 400,000 from the
National City Bank of New York, or after it has obtained funds from
other sources”, is in line with the Civil Code.
APPLICABLE LAW:
Article 1193. Obligations for whose fulfillment a day certain has been
fixed, shall be demandable only when that day comes.
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.
If the uncertainty consists in whether the day will come or not, the
obligation is conditional, and it shall be regulated by the rules of the
preceding Section. (1125a)
HELD:
Yes. The term of payment stipulated in the defendant’s application for
license to sell/purchase, “until they have obtained Php 400,000 from the
National City Bank of New York, or after it has obtained funds from
other sources”,is in line with the Civil Code (Art. 1125).
A day certain is understood to be that which must necessarily arrive, even
though it is unknown when. In order that an obligation may be with a
term, it is, therefore, necessary that it should arrive, sooner or later;
otherwise, if its arrival is uncertain, the obligation is conditional. To
constitute a term, the period must end on a day certain.
In considering this article as to which the defendant relies for the
enforcement of its right to buy the property, it would seem that it is not a
term, but a condition. Considering the first alternative, that is, until
defendant shall have obtained a loan from the National City Bank of New
York – it is clear that the granting of such loans is not definite and cannot
be held to come within the terms “day certain” provided for in the Civil
code, for it may or it may not happen.
The loan did not materialize. And if we consider that the period given
was until such time as defendant could raise money from other sources,
we also find it to be indefinite and contingent and so it is also a condition
and not a term within the meaning of the law.
Both parties did not put the terms in their agreement clearly in writing.
The lower courts’ judgment is affirmed.
Compania General de Tabacos v. Araza (7 phil 455)
1. CONTRACT; DEBT; ACTION. — Where a debt is payable in
installments, recovery can be had only for those installments due and
payable when the action was commended, in the absence of any
stipulation to the contrary in the contract.
2. ID.; ID.; INTEREST; DEMAND. — Where the contract, not being a
mercantile loan, does not provide for interest nor expressly say that
failure to pay when due constitutes a default, no interest can be recovered
until a demand for payment is made.
FACTS:
The plaintiff brought this action in the court below to foreclose a
mortgage for 8,000 pesos upon certain land in the Province of Leyte.
A demurrer to the complaint was overruled, but to the order overruling it
the defendant did not except. The defendant answered, alleging that the
document, the basis of the plaintiff’s claim, was executed through error
on his part and through fraud on the part of the plaintiff.
A trial was had and judgment was entered for the plaintiff as prayed for
in its complaint. The defendant moved for a new trial on the ground that
the decision was not justified by the evidence, this motion was denied, to
its denial the defendant excepted, and he has brought the case here for
review.
Upon the questions of fact raised by the answer, the findings of the court
below are sustained by the evidence, in no event they can be said to be
plainly and manifestly against the weight of the evidence.
Those findings include a finding that there was no fraud on the part of the
plaintiff, no mistake on the part of the defendant, and that there was a
sufficient consideration for the contract, As has been said, there was in
the case to support all of these conclusions.
Upon one point, however, we think that the judgment was erroneous. The
contract send upon was executed on the 11th day of June, 1901. By terms
thereof the defendant promised to pay the plaintiff 8,000 pesos as
follows: 500 pesos on the 30th of June, 1901, and the remainder at the
rate of 100 pesos a month, payable on the 30th day of each month, until
the entire 8,000 pesos was paid. The defendant paid 400 pesos and no
more.
This suit was commenced on the 12th day of June, 1903. There was no
provision in the contract by which, upon failure to pay one installment of
the debt, the whole debt should thereupon become at once payable. We
are of the opinion that the obligation can be enforced in this action for
only the amount due and payable on the 12th day of June, 1903.
The court below gave no credit for the payment of 400 pesos admitted by
the complaint to have been received by the plaintiff. It is allowed interest
upon the entire debt from the 1st day of July, 1901. The contract does not
provide for the payment of any interest. There is no provision in it
declaring expressly that the failure to pay when due should put the debtor
in default. There was therefore no default which would make him liable
for interest until a demand was made. (Civil Code, art. 1100; Manresa,
Com. on Civil Code, vol 8, p. 56.) The transaction did not constitute a
mercantile loan and article 316 of the Code of Commerce is not
applicable. There was no evidence any demand prior to the presentation
of the complaint. The plaintiff is therefore entitled to interest only from
the commencement of the action.
The judgment is set aside and the case is remanded to the court below
with directions to determine the amount due in accordance with the views
hereinbefore expressed and to enter judgment for such amount. No costs
will be allowed to either party in this court. So ordered.
1197
Deudor v. J.M. Tuason & Inc. (2 Scra 129)
FACTS:
Plaintiff claimed a parcel of land of about 50 "quiñones", or 225 hectares,
located in Tatalon, QuezonCity, over which J. M. Tuason & Co., Inc.,
asserted ownership under the Land Registration Act, byvirtue of an
original certificate of title. The Deudors acknowledged therein the title of
J. M. Tuason &Co., Inc. and in consideration thereof, J. M. Tuason &
Co., Inc. undertook to pay them, to be paid inthe manner and under the
conditions set forth in the Compromise Agreement (April 10,
1953).Under the Compromise Agreement, and subject to its other terms
and conditions, the Deudors areobligated to deliver the clear and peaceful
possession of the entire 50 quiñones to the owners. Thefirst payment
shall be P100,000.00 and shall be made within sixty (60) days from the
date thedecision rendered approving the Compromise Agreement
becomes final; Provided, that within saidperiod the Deudors shall have
effected the delivery to the OWNERS of at least 20 quiñones. Theportion
of 20 "quiñones" was not delivered by the Deudors until January 14,
1956, and this was madepossible only because the appellees had agreed
to and did advance certain in sums to defray theexpenses necessary
therefor.On April 27, 1956, the appellees filed supplemental motion and
"manifestation" praying that paymentof balance of P79,800.00 to the
Deudors "be withheld until after the additional 129 illegalconstructions
the 30 'quiñones' area shall have been removed". On February 28, 1957,
the Court,therefore, hereby sets a period of 4 months within which the
'Deudors' shall deliver possession of theentire 30 quiñones to the owners.
Failure of the Deudors to do so will have the effect of freeing the J.M.
Tuason & Co., Inc. and the Gregorio Araneta, Inc. from all its obligations
under the CompromiseAgreement and judgment. The Deudors had not
delivered the aforementioned portion of 30 "Quiñones", despite the
expirationof the period of 4 months and that, owing to the failure of the
Deudors to make said delivery, theconstruction of houses by squatters
within said area had continued so unabated that, as of August 12,1957,
there were 341 constructions therein. Appellants maintain that the orders
are erroneous.
ISSUE:
Whether or not the orders issued by the Court to the appellants are
erroneous.
HELD:
With respect to the period fixed by the lower court for the delivery of
said 30 "quiñones" and the effect of the failure to deliver the same within
said period, it is urged that the order of February 28,1957, amounted to
an amendment of the Compromise Agreement, without the consent of the
partiestherein, and of the decision of April 10, 1953, long after the same
had become final and executory. There is no merit in this pretense.
Indeed, considering that the appellees had a Torrens title, they hadno
reason to agree on paying the Deudors, except upon the expectation of
delivery of said areawithout unreasonable delay. Accordingly, said
agreement is subject to the principle set forth in Article1197 of the Civil
Code of the Philippines that “If the obligation does not fix a period, but
from itsnature and the circumstances it can be inferred that a period was
intended the courts may fix theduration thereof.” Hence, whenever a
period is fixed pursuant to said Article, the court merelyenforces or
carries out an implied stipulation in the contract.It will be noted that
under the agreement, the Deudors are supposed to make delivery of the
areasunconditionally. In fact, the registered owners of the and made it
clear that they were agreeing to thesettlement only because they wanted
to obtain early possession of the whole property. There is noexcuse,
therefore, for the failure of the Deudors to deliver the remaining 30
quiñones 4 years and 8months after the execution and approval of the
compromise agreement. The failure to deliver and thecontinued
mushrooming of houses in the area, despite the compromise, justify the
release of J.M. Tuason & Co., Inc. and Gregorio Araneta, Inc. from
further obligation under the agreement of March16, 1953.Lastly,
appellants say that they have as much right as appellees herein to the
execution of thedecision herein, and yet the lower court granted the
letter's motion for a writ of execution thereof anddenied a motion of the
former to the same effect. It is not true, however, that the two (2)
motionswere identical. It was proper for the lower court to grant
appellees' motion. It would have beenimproper for the lower court to
grant appellants' squatters, who are neither parties in this proceedingnor
bound by the aforementioned decision, and, hence, are beyond the
jurisdiction of the court in thiscase. Therefore, the orders appealed from
are affirmed by the Court, with costs against the appellants.
Calero v. Carrion ( March 30, 1960)
On February 2, 1957, defendants Emilia Carrion, Maria Carrion, Jose
Falco, and Manuel Perez Guzman (the last two as husbands, respectively,
of the first two), filed a motion to dismiss, on the grounds that (1) the
complaint states no cause of action, and (2) the plaintiff's cause of action,
if any, is barred by the Statute of Limitations (Sec. 1[e], Rule 8, Rules of
Court). To this motion, plaintiff filed an opposition on March 16, 1957.
On June 1, 1957, the court required plaintiff to amend his complaint, in
an order which, in part, reads:
. . . inasmuch as plaintiff concedes in his answer (opposition) to the
motion to dismiss that ". . . por tratarse de una obligaicion sin plazo fijo,
este debe ser determinado por el Hon. Juzgado", it is plaintiff's duty to
amend his complaint to this effect, because there is nothing either in its
allegations or in its prayer asking that this Court fix a reasonable period
for the sale of the said property with a view to having defendants comply
with their obligations under the parties' aforesaid agreement.
. . . defendants' obligation has not even become demandable in view of
the suspensive condition found in the parties' agreement.
WHEREFORE, it is ordered that plaintiff amend his complaint within
twenty (20) days from notice hereof, failing which the same will be
dismissed.
On July 18,1957, defendant renewed their motion to dismiss, on the
grounds that (1) the amended complaint states no cause of action (2) the
plaintiff's cause of action, if any, is barred by the Statute of Limitations
(Sec. 1[e], Rule 8, Rule of Court), and (3) the plaintiff's original
complaint being without cause of action, it cannot be amended and/or
cured by said amended complaint which changes plaintiff's theory of the
case. In connection with the second ground mentioned, defendants stated:
Plaintiff's right of action accrued in the year 1937 when the first of
plaintiffs alleged various offers to defendants to sell the property at price
offered by buyers was refused by defendants (Pars. 13 and 14 of
Complaint). It is patent, therefore, that is, ten (10) years from the year
1937. Considering that plaintiff's complaint was filed on December 21,
1956, plaintiff's cause of action if any, is obviously unenforceable and
barred by the Statue of Limitations.
On October 1, 1957, the court issued an order dismissing plaintiff's
complaint on the ground of prescription, as follows:
ORDER
It is true that heretofore this Court did not entertain defendants' motion to
dismiss plaintiff's original complaint; that on June 1, 1957, plaintiff was
given twenty (20) days to amend his complaint; that on June 15, 1957,
the amended complaint was filed; that on July 22, 1957, defendants again
put in a motion to dismiss the said amended complaint, and that on
August 21, 1957, this Court also denied this latter motion to dismiss.
Defendants, however, have filed a motion for reconsideration of the order
just mentioned of the ground that plaintiff's action under his amended
complaint has already prescribed, and this Court has to pass upon the said
motion for reconsideration.
Concretely, defendants now contend that plaintiff's action asking this
Court to fix the period for the fulfillment of defendants' obligation, which
is the subject matter of his amended complaint, has already prescribed
under the law and the applicable authorities. While this Court in
conscience believes that defendants have such obligation to plaintiff
under the express terms and conditions of the parties' agreement Exhibit
A, nevertheless it cannot ignore defendants' aforesaid contention that
plaintiff's action asking this Court to fix a period for the fulfillment of the
said obligation has in fact already prescribed. For one thing, this action
which may be brought under Article 1197 of the New Civil Code cannot
be said to be imprescriptible. For another, as pointed out by defendants,
in the case of Gonzales vs. Jose, 66 Phil., 369, among others, it was
pertinently held that "The action to ask the court to fix the period has
already prescribed in accordance with section 43(1) of the Code of Civil
Procedure. This period of prescription is ten years, which has already
elapsed from the execution of the promissory notes until the filing of the
action on June 1, 1934." Inasmuch as in the instance case, the parties
agreement Exhibit A was executed on May 28, 1937, plaintiff's action to
fix the period for the fulfillment of defendants' obligation thereunder
should have been filed within ten (10) years from the date just mentioned,
following the said decision based on Section 43 (1) of the Code of Civil
Procedure, in relation to Article 1116 of the New Civil Code. It is plain to
see therefore that plaintiff's present action commenced only on December
21, 1956, is already long barred by prescription.
Plaintiff claims that the lower court erred in dismissing his complaint,
contending that (a) the agreement Exhibit A attached to the amended
complaint and made an integral part thereof, created "un fideicomiso
implicito" or an implied trust, which is not subject to prescription, and (b)
that even admitting the obligation is subject to a suspensive undetermined
period (not condition), the action to have such period fixed by the court
has not yet prescribed. In support of his submission that the agreement
created an implied trust, plaintiff-appellant cites the provisions of
Articles 1452 and 1453 of the new Civil Code which read as follows:
ART. 1452. If two or more persons agree to purchase property and by
common consent the legal title is taken in the name of one of them for the
benefit of all, a trust is created by force of law in favor of the others in
proportion to the interest of each.
ART. 1453. When property is conveyed to a person in reliance upon his
declared intention to hold it for, or transfer it to another or the grantor,
there is an implied trust in favor of the person whose benefit is
contemplated.
The contention is without merit, Article 1452 abovequoted is inapplicable
to this case for the reason that there is absolutely no stipulation in the
contract, Exhibit A, that there would be a joint purchase of the property
and that the legal title thereto was to be placed in the name of the
defendants for the benefit of themselves and herein plaintiff. The recitals
in the contracts preceding the paragraph containing the obligation
assumed by the defendants, merely refer to the services rendered by the
plaintiff as broker who negotiated the sale of the property to the
defendants and which the defendants agreed to compensate. Nothing
contained therein would indicate that the property was being purchased
for the benefit of the plaintiff and the defendants.
The terms of the contract admit no doubt that the 20% to be paid the
plaintiff is of any amount which may be obtained by the sale of the
property after deducting the purchase price thereof, which shall be taken
from the liquidated benefit obtained by the owners out of the sale of the
said property.
Neither is Article 1453 applicable, because there is absolutely nothing in
the agreement which even remotely indicates that the property was
conveyed to the defendants in reliance upon their declared intention to
hold it for, or transfer it to, another or the grantor.
Even the very allegations of plaintiff's complaint clearly reflect the true
nature of the agreement. It appears therefrom that although the original
parties to purchase the property tribute P10,000.00 and the defendants to
put up P15,000.00 on account of the down payment of P25,000.00), the
same was abandoned and the parties subsequently agreed that the
defendants would buy the property exclusively in their name and for their
own account because "era muy complicado constituir una comunidad de
bienes en esa finca, pues abria necesidad de rendir cuentas mensuales, y
consultares en caso de reparaciones, mejoras, etc." and that the plaintiff
"acepto esa proposicion, en el bien entendido de que la finca seria
vendida tan pronto como se encontrara un comprador por una cantidad no
menor de P300,000.00" "con la obligacion (on the part of the defendants)
de pagar al demandante el veinte por ciento (20%) de los beneficios,
cuando se vendiera la finca", and that, lastly, "el demandado acepto esa
proposicion, como ya se ha dicho, y las partes otorgaron el dia 28 de
marzo de 1937, un contrato formal en el cual se hizo constar el ultimo
convenio celebrado por las partes, es decir, que a la venta de la finca
situada en la Plaza Santa Cruz, las demandadas pagarian al demandante,
una cantidad equivalente a un Veinte Por Ciento (20%) de cualquier
cantidad que se obtenga de la venta de los mencionados edificios y
terrenos, despues de descontar el importe total pagado por dichas
demandadas. (See paragraphs 3, 6, 7, 8 and 9 of the amended complaint.)
Plaintiff-appellant next contends that the lower court also erred in
dismissing his complaint on the finding that plaintiff's right of action to
have the period fixed for the sale of the property had already prescribed.
It is urged that the time for enforcing their right of action to have the
period judicially determined did not begin to run until the defendants had
been formally demanded and they refused to sell the property. It was only
then, it is argued, that the period of prescription started to run. This seems
to be illogical. Before the period is fixed, the defendants' obligation to
sell is suspended and they, therefore, cannot be compelled to act.
For this reason, a complaint to enforce immediately the principal
obligation subject to the suspensive period before this is fixed, will not
prosper. But this is not to say that the plaintiff has no cause of action. His
cause of action under the agreement is to have the court fix the period and
after the expiration of that period, to compel the performance of the
principal obligation to sell. And this right to have the period judicially
fixed is born from the date of the agreement itself which contains the
undetermined period. Extrajudicial demand is not essential for the
creation of this cause of action to have the period fixed.1 It exists by
operation of law from the moment such an agreement subject to an
undetermined period is entered into, whether the period depends upon the
will of the debtor alone, or of the parties themselves, or where from the
nature and the circumstances of the obligation it can be inferred that a
period was intended.
This is the clear intendment of Article 1197 of the New Civil Code as
well as Article 1128 of the Spanish Civil Code and the applicable
doctrine laid down by this Court.2 And since the agreement was executed
on May 28, 1937 and the complaint to have the period fixed was filed on
December 21, 1956 or after almost 20 years, plaintiff's action is clearly
and indisputably barred under the Statute of Limitations.
Wherefore, finding no reversible error in the order appealed from, the
same is hereby affirmed, with costs against the plaintiff-appellant. So
ordered.
Pacific Banking v. CA (173 scra 102)
Pacific Banking Corporation vs CA G.R. No. L-45656, May 5, 1989
Gutierrez, Jr., J.: FACTS:
 Joseph and Eleanor Hart, herein private respondents, organized Insular
Farms, Inc. (IFI). They approached John Clarkin for financial assistance.
They signed a Memorandum of Agreement that stated that the division of
shares outstanding, 510 for Clarkin and 490 for the Harts. Due to
financial problems, IFI borrowed P250,000 from Pacific Banking
Corporation (PBC) in July 1956. Then, a promissory note of P250,000 to
PBC payable for 5 equal annual installments and the first installment
payable on or before July 1957. In addition to this, in case of default in
the payment of any installment when due, all others shall become due and
payable. This loan was effected without any security except for the
Continuing Guaranty of Clarkin. The business floundered but PBC and
its then Executive Vice President, Chester Babst, did not demand
payment for the initial July 1957 installment nor the entire obligation.
The business further deteriorated so Hart pledged all IFI shares of stocks
to PBC in lieu of additional collateral and to insure an extension of the
periods to pay the July 1957 installment. This was executed on February
19, 1958. On March 3, 1958, Pacific Farms Inc. (PFI) was created and
was engage in the same business as IFI. The next day, PBC ,through
Babst, wrote IFI that the entire obligation is due in 48 hours. On March 7,
1958, Hart received a notice that the shares of stocks would be sold at a
public auction. This wa
s temporarily halted upon the court’s
grant of the preliminary injunction along with the complaint for
reconveyance abd danages. However, this was lifted by the court and on
March 21, the 1,000 shares of stocks of IFI was sold to PFI. Hart filed a
case which contends the validity of the sale of the shares because there
was an indefinite extension of time to pay their obligation under the
promissory note and no demand was made by the bank and the latter
merely asked for more collateral. The trial court decided against the
private respondents but had a favorable judgment on appeal; hence, this
petition.
ISSUE:
Whether or not the CA erred in committing grave error in finding that
petitioner bank agreed to an indefinite extension.
RULING:
In case the period of extension is not precise, the provisions of Art. 1197
should apply. In the case, there was an agreement to extend the payment
of the loan, including the first installment thereon which was due on or
before July 1957. The court is convinced that Hart had been given the
assurance by the conduct of Babst that the payment would not as yet be
pressed and following the said provision, the meaning must be that there
having been intended a period to pay modifying the fixe period in
original promissory note. The cause of action of PBC would have been to
ask the Courts for fixing the term. Furthermore, the pledge executed on
February
1958 contained no longer the provision “on an installment of P50,000
due on or before July 1957”
which can mean no other thing that the payment for the said installment
was extended. Moreover, the pledge on February 1958 on the shares of
stocks of IFI was sufficient consideration for the extension. Moreover,
the pledge which modified the fixed period in the original promissory
note did not provide for dates of payment of installments nor of any fixed
date of maturity of the whole amount of indebtedness. Therefore, under
Art. 1197, the date of maturity should be determined by the proper court.
Hence, the disputed foreclosure and the subsequent sale were premature
Cosminc Lumber Company, inc. V. Manaois (106 phil 1015)
The defendants appeal from a judgment of the Court of First Instance of
Pangasinan, Fourth Branch, ordering her to pay the plaintiff the sum of
P4,147.74, lawful interest thereon from 24 March 1954 when the original
complaint was by the Court of Appeals to this Court for it involves only a
question of law.
As agreed upon by the parties, the facts are: On different dates from 10
November 1952 to 30 June 1953 the appellant bought, took delivery and
received from the appellee hardware goods, lumber and construction
materials valued at the total sum of P12,127.57 (par. 1, stipulation of
facts; Exhibits A to Z; AA to OO), and from 4 November 1952 to 10
March 1954 the appellant paid the appellee the total sum of P6,979.83
which the latter credited to the former's account (par. 3, stipulation of
facts; Exhibits PP, PP-1, QQ, QQ-1 to QQ-2). On 23 December 1954,
after the original complaint had been filed by the appellee ( 24 March
1954), the appellant paid the appellee the sum on P1,000 which the latter
also credited to the former's account (par. 6, stipulation of facts), thereby
reducing her total indebtedness to P4, 147.74.
The appellant does not deny that she received the wares and materials
listed in the invoices (Exhibits A to Z and AA to OO), and that she is still
indebted to the appellee in the sum of P4,147.74. At the hearing of the
case on 4 June 1956, her counsel withdrew the objection (filed earlier
during the day) to the items listed in some of the invoices (Minutes of the
session of 4 June 1956). However, she argues that as no time for payment
was stipulated or fixed and from the nature and the circumstances of the
obligation it could be inferred that a period was intended, the Court
should fix the period for payment pursuant to article 1197 of the new
Civil Code.
The parties entered into a contract of sale on credit. In the invoices
(Exhibit A to Z and AA to OO) of the wares and material sold and
delivered to the appellant, the words "credit sales" appear and it is stated
that —
All civil actions on this contract shall be instituted in the courts of the
City of Dagupan and it is hereby agreed that all may/or purchases from
this Company are payable in the said City of Dagupan. It is agreed that if
this bill is not paid within . . . days from date hereof I/we will pay interest
at the rate of 10 percentum per annum on all overdue accounts. The buyer
hereby agrees to pay and all attorney's fees and court costs should the
seller institute legal action. Goods travel at buyer's risk. No claim of
whatsoever nature will be considered after 24 hours from date of
delivery.
The parties intended to fix a period for payment of the appellant's
obligation but failed to do so. Under article 1197 of the new Civil Code,
the Court may fix it. Taking into consideration that from 10 November
1952, the first sale, and 30 June 1953, the last sale, to the present, more
than six and nearly seven years already have elapsed, the appellant who
does not deny her obligation must be ordered to pay the appellee the
amount she still owes it within fifteen (15) days from the date the
judgment shall have become final.
With the slight modification just mentioned, the judgment appealed from
is affirmed, with costs against the appellant.
F.S. Divinagracia Agro-Commercial Inc. v. CA (G.R. No. L-47350,
April 21, 1981)
The facts of this case are clear, undisputed and may be summarized
briefly as follows:
Private respondent's father was the original lessee of the building and lot
owned by the late Doña Concepcion Gay de Loring and the spouses
Mercedes Van Kauffman and Jaime Ibañez de Aldecoa. This lease dates
back to 1899. After his father's demise, private respondent continued the
lease. The building and lot subject of the lease was bought by petitioner
herein from the interest state estate of the original owners for the sum of
P250,000.00 on July 9, 1974. Before its purchase, private respondent was
a lessee of the said owners and was paying them a rental of P1,250.00 a
month. After the purchase, the rental corresponding to first half of the
month of July, 1974 in the sum of P625.00 was paid by private
respondent to the original owners and that of the second half in the sum
of P625.00 to the new owner, petitioner herein. In the continuance of the
lease, it was verbally agreed by and between the petitioner and private
respondent that the rental for the succeeding months would be increased
to P2,000.00 starting August, 1974. This went on until September, 1975.
About the second week of October, 1975, private respondent was
informed by a representative of petitioner, Atty. Santiago Divinagracia,
that his contract of lease would terminate on October 31, 1975. When
private respondent refused to vacate the premises on October 31, 1975,
petitioner reiterated the advice earlier made in a letter dated November 4,
1975 formally advising him of the termination of the lease on October 31,
1975 and giving him, the private respondent, a final extension to occupy
the premises up to the end of November, 1975, for which reason
petitioner refused to accept further payment of rentals for December,
1975. Private respondent in turn informed petitioner that he was
depositing his rentals for the succeeding months with the Clerk of Court.
A complaint for unlawful detainer was filed by herein petitioner against
private respondent before the City Court of Iloilo, Branch I, which
rendered a decision in favor of private respondent, the dispositive portion
of which reads:
WHEREFORE, this court hereby renders its decision —
a. Dismissing the complaint;
b. Ordering defendant to pay plaintiff the sum of P3,000.00 a
month as the reasonable rent for the use of the premises, beginning
January, 1976;
c. Fixing the duration of the lease of defendant which, since 1899
to the present, is 76 years, at one year for every 10 years, i.e., that
defendant may continue to lease the premises for seven and a half (7-1/2)
years to commence from finality of the decision;
without pronouncement as to the costs.
From the decision, petitioner appealed to the Court of First Instance
which modified the City Court's decision by:
(a) Dismissing the complaint;
(b) Ordering defendant to pay plaintiff the sum of P3,000.00 a
month, as the reasonable rent for the use of the premises, beginning
January, 1976; and
(c) Extending the duration of the lease by defendant of plaintiff's
property to one (1) year to commence from finality of the decision;
without pronouncement as to costs.
From the latter decision, private respondent filed a petition for review
before the Court of Appeals which modified the previous decision. The
dispositive portion of the Appellate Court's decision states:
WHEREFORE, and as thus modified, in the sense that the lease should
be as it is hereby extended for another five (5) years, the judgment of the
court a quo is affirmed in all other respects. Without pronouncement as to
costs.
From the judgment of the Court of Appeals, petitioner herein appealed by
certiorari to this Coat, assigning a single error involving a legal issue, to
wit:
The respondent Court of Appeals committed a grave error in the correct
application of Article 1687 of the New Civil Code by extending the lease
for another five (5) years which is a grave abuse of discretion amounting
to lack or in excess of its jurisdiction.
Petitioner, in support of the foregoing assigned error argues upon the
following considerations:
I. The Court of Appeals practically made a contract between the
parties which is contrary to the spirit and intent of Article 1687 of the
New Civil Code;
II. The Court of Appeals did not show that the Court of First
instance of Iloilo Branch V, presided by the Hon. Judge Ricardo M.
Ilarde to which this case was originally appealed, gravely abused its
discretion by reducing the term of the lease to only one (1) year;
III. The conclusion arrived at by the Court of Appeals are contrary
to law, the admitted facts and admission of the parties;
IV. The Court of Appeals did not observe the criteria set out by this
honorable Court in the application of Article 1687 of the New Civil Code
in the exercise of its discretion.
The first and fourth arguments of the petitioner relate solely to the proper
application of Article 1687 of the New Civil Code, hence We are
constrained to consider and resolve them together. Petitioner alleges that
there was grave abuse of discretion by the Court of Appeals in reckoning
the occupancy of the lessee from 1899 when his predecessor-in-interest
was the occupant of the premises. It should have been reckoned only
from his personal occupancy of the premises. Petitioner further alleges
that the Court of Appeals was oblivious of the following facts: (1) There
was a change of ownership - the lessor became owner only on July 9,
1974; (2) The leased premises is a commercial lot; (3) the Private
respondent was made to understand that in the future, the petitioner may
need the premises for its own use; (4) The private respondent has
admitted that he has two stores, one at the premises subject of this case
and the other located at his own commercial building; and (5) The
petitioner herein was the one who filed the unlawful detainer case. It
could have been another matter had the private respondent filed an
independent action asking for the fixing of the period of the lease.
Withal, petitioner concluded that the decision of the respondent Court is
most unfair, arbitrary and inequitable. It is unjust and authoritarian. The
Court practically made a contract between the parties. It curtailed the
basic human right of the parties of their freedom to contract. Petitioner's
contention is devoid of merit. In the first place, it is beyond dispute that
Article 1687 of the New Civil Code is applicable, which article states:
Art. 1687. If the period for the lease has not been fixed, it is
understood to be from year to year, if the rent agreed upon is annual;
from month to month, if it is monthly, from week to week, if the rent is
weekly; and from day to day, if the rent is to be paid daily. However,
even though a monthly rent is paid and no period for the lease has been
set, the court may fix a longer term for the lease after the lessee has
occupied the premises for over one year. ...
Article 1687 of the New Civil Code must be correlated with Article 1197
of the New Civil Code which provides:
Art. 1197. If the obligation does not fix a period, but from its
nature and circumstances it can be inferred that a period was intended,
the court may fix the duration thereof. ...
Considering both Articles together, it is at once clear and evident that the
court is accorded the power to fix a longer term for the lease, which
power is potestative or discretionary in nature. This prerogative is
addressed to the court's sound judgment and is controlled by equitable
considerations. "The court may fix a longer term where equities come
into play demanding an extension." (Divino v. Fable de Marcos, 4 SCRA
186).
It may not, therefore, be contended that the Court of Appeals in the
exercise of its discretionary power under Article 1687 in relation with
Article 1197 made a contract between the parties, since the very purpose
of the law is not the fixing of a longer term for the lease, but to make the
indefinite period of lease definite by fixing once and for all the remaining
duration of the lease.
It is well to stress that in a petition for review, the appellate court has the
discretion to alter, modify or affirm the decision brought to it on appeal.
In the exercise of such discretion, it may either increase or decrease the
extension of the lease period granted by the lower court.
The onus probandi that the respondent Court committed grave abuse of
discretion is upon the petitioner himself, and not the court reviewing the
decision. The petitioner must show on certiorari that the appellate Court
exercised its discretion arbitrarily or despotically. We have examined the
records and We find nothing of importance to warrant a disturbance of
the conclusions reached by the respondent Court of Appeals. In view of
Our settled and established jurisprudence, that when the lower court has
jurisdiction over the subject matter of the case, its actuation in the
exercise of such jurisdiction is not correctible by certiorari (Matanog v.
Alejandro, G.R. Nos. L-22502-03, June 30, 1964).
The final argument of the petitioner faults the Court of Appeals' findings
as contrary to law, admitted facts and admission of the parties. The
advocation is without merit. It is a legal rule that not every error in the
proceeding or every erroneous conclusion of law or of fact is abuse of
discretion. In the absence of any indication and cogent reason, We will
not encroach upon the respondent Court's prerogative. After a careful
perusal of the judgment of the Court of Appeals, We find no reversible
error committed that would warrant the reversal of the present case. We
are in full accord with the findings and conclusions of the respondent
Court as the same are final and binding upon Us. Hence, We again
reiterate the voluminous jurisprudence to the effect that "findings of facts
of the Court of Appeals are binding on the Supreme Court and cannot be
reviewed. (Torres v. People, 39 SCRA 28; Heirs of Francisco Pasco v.
Han Pia, 45 SCRA 164; Tolentino v. De Jesus, 56 SCRA 167; Tiongco v.
De la Merced, 58 SCRA 89).
We find that not one of the exceptional circumstances aforementioned is
present in the case at bar. The findings of facts of the appealed decision
are sufficiently supported by substantial evidence, and the conclusions
drawn therefrom are not against the law or jurisprudence. The decision of
the Court, of Appeals rests on cited doctrinal jurisprudence, justice and
equity as it stated that:
Considering the doctrine laid down in the said decisions (Gregorio
Araneta, Inc. vs. Dolores de Mesa, 35 SCRA 137, and Divino vs. Marcos,
et al., 4 SCRA 186), and the fact that the petitioner had been in the
occupancy of the premises since 1899, petitioner's occupancy has gone
for no less than 70 years, We, therefore, find in the broader interest of
justice and equity the extension of the lease should be for a period of five
(5) years.
After having gone at length over the records of the present case, and in
the light of the above pronouncement, We are positively convinced that
the petitioner is not entitled to the writ of certiorari. There is absolutely
no showing that the respondent Court acted so "arbitrarily", "despoticall"
or "capriciously" as to amount to lack of jurisdiction in reviewing the
appealed decision. It is settled to the point of being elementary that the
only question involved in certiorari is jurisdiction, either want of
jurisdiction or excess thereof, and abuse of discretion shall warrant the
issuance of the extraordinary remedy of certiorari when the same is so
grave as when the power is exercised in an arbitrary or despotic manner
by reason of passion, prejudice or personal hostility, and it must be so
patent and gross as to amount to an evasion of positive duty, or to a
virtual refusal to perform a duty enjoined, or to act at all, in
contemplation of law (Abig v. Constantino, 2 SCRA 299; Abad Santos v.
Province of Tarlac, 67 Phil. 480; Alafriz v. Wable 72 Phil. 278). Even
mere abuse of discretion is not sufficient by itself to justify the issuance
of a writ of certiorari. For that purpose, the abuse of discretion must be
grave and patent and it must be shown that it was exercised arbitrarily or
despotically. (Travera Luna, Inc. v. Nable, 72 Phil. 278; Villa Rey
Transit, Inc. v. Bello, 75 SCRA 735) which is not the case made out by
the present petition.
WHEREFORE, IN VIEW OF THE FOREGOING, the decision of the
Court of Appeals is hereby AFFIRMED, with costs against the petitioner.
SO ORDERED
1203
Legarda v. Miailhe (88 Phil 637)
FACTS:
A creditor demanded either Philippine currency or english currency for a
mortgaged contract they agreed in 1943. This choice was made by the
creditor. It happened that during the time of maturity these currencies
were outlawed by the Japanese in 1942.
ISSUE:
Whether or not contract maybe closed?
HELD:
No, there are alternatives that can be use to have reasonable payment.
Since Japanese currency are permissible that time. Illegal and impossible
solutions are untenable. The same was agreed that in accordance with the
agreement of payment during the Military Japanese occupation it is the
same as the Philippine currency.
1207
Honrado, Jr. V. CA (198 SCRA 326)
On December 11, 1997, Premium Agro-Vet Products, Inc. (Premium)
filed with the RTC of Quezon City a complaint for sum of money against
Jose Honrado, who was doing business under the name and style of J.E.
Honrado Enterprises. The case was docketed as Civil Case No. Q-97-
32965. Premium sought to collect the amount of P240,765.00
representing the total price of veterinary products purchased on credit by
Honrado from November 18, 1996 until June 30, 1997.
For failure of Honrado, as well as his counsel, to appear at the pre-trial
conference, he was declared in default. Premium was, thus, allowed to
present evidence ex parte.
It turned out that the Spouses Jose and Andrerita Honrado had filed a
petition with the RTC of Calamba City for the judicial constitution of the
parcel of land registered in Honrados name under Transfer Certificate of
Title (TCT) No. T-143175 located in Calamba, Laguna, and the house
thereon, as their family house. The case was docketed as SP Case No.
489-1998-C. In his petition, Honrado declared that his creditors were
Atty. Domingo Luciano, P & J Agriculture Trading, Inc., and Mr. Tito
Dela Merced, and that the estimated value of the property was not more
than P240,000.00.
Honrado filed a petition for certiorari with the CA assailing the April 14,
2003 Resolution of the RTC. On June 30, 2004, the CA dismissed the
petition.[19] The CA declared that there was no proof that the public
respondents committed grave abuse of discretion. The CA ruled that the
petitioner failed to assert his claim for exemption at the time of the levy
or within a reasonable time thereafter. It held that once a judgment
becomes final and executory, the prevailing party can have it executed as
a matter of right, and the issuance of a writ of execution becomes a
ministerial duty of the court
The petitioner contends that the trial court committed grave abuse of
discretion in disallowing his prayer for exemption of his family home
from execution. The petitioner avers that the ruling of the RTC of
Calamba, Laguna, Branch 35 in SP Case No. 489-1998-C, declaring that
the property in question is a family home, has already become final;
hence, it can no longer be disturbed. The family home cannot be levied
upon considering that the debt, which was the basis of the judgment
under execution, was incurred between the period from November 18,
1996 and June 30, 1997, or after the Family Code had been in effect.
Hence, the family home of the petitioner is exempt from execution under
Article 155 of the Family Code.
The petitioner further asserts that he and his family had been occupying
the property as their family home as early as 1992. Under Article 153 of
the Family Code, his house was constituted as a family home in that year.
Thus, even if he failed to contest the levy on his property or move for the
lifting thereof, the same cannot be deemed a waiver of his right to claim
the exemption of his family home. He avers that his right cannot be
waived, for it would be contrary to public policy. He claims that the
policy of the State, in conferring such exemption, is to allow a particular
family to occupy, use and enjoy their family home, which must remain
with the person constituting it and his heirs. Moreover, the waiver must
be shown by
overt acts and it cannot be presumed from the mere failure to assert the
claim for exemption within a reasonable time.
The private respondent avers that the petitioner is estopped from claiming
that the property is exempt from execution and from assailing the levy of
the property, the sale thereof at public auction and the September 18,
2002 and April 14, 2003 Orders of the RTC. It points out that the
petitioner agreed to the levy and sale of the property at public auction; he
even surrendered the key to the house and vacated the property after it
was purchased by the private respondent at the public auction. The
private respondent averred that the petitioner hoped to get a higher
amount than his debt. The petitioner never adverted to his petition in the
RTC of Calamba, Laguna, for the constitution of the property as a family
home. The petitioner revealed the decision of the RTC in SP Case No.
489-1998-C only on November 25, 2002 when he opposed the private
respondents motion for a final deed of conveyance. It was only after the
RTC of Calamba, Laguna, rendered its decision that the petitioner re-
occupied the property and claimed, for the first time, that the property is a
family home and exempt from execution. By then, the period for the
petitioner to redeem the property had long lapsed.
The petition has no merit.
In dismissing Honrados petition, the CA declared that:
Article 153 of the Family Code provides that the family home is deemed
constituted on a house and lot from the time it is occupied as the family
residence. From the time of its constitution and so long as its
beneficiaries actually resides therein, the family home continues to be
such and is exempt from execution, forced sale or attachment, except as
hereinafter provided and to the extent of the value allowed by Law. A
family home is a real right, which is gratuitous, inalienable and free from
attachment, constituted over the dwelling place and the land on which it
is situated, which confers upon a particular family the right to enjoy such
properties, which must remain with the person constituting it and his
heirs. It cannot be seized by creditors except in certain special cases.
Such provision finds no application in this case.
Although the Rules of Court does not prescribe the period within which
to claim the exemption, the rule is, nevertheless, well-settled that the
right of exemption must be claimed by the debtor himself at the time of
levy or within a reasonable period thereafter. It is self-evident that
petitioner did not assert their claim of exemption within a reasonable
time. Any claim for exemption from execution of properties under
Section 12 of Rule 39 of the Rules of Court must be presented before its
sale on execution by the sheriff. Petitioner and his wife failed to disclose
in their petition for the judicial constitution of a family home that
Premium Agro-Vet Products, Inc. is one of their creditors considering the
fact that the collection case filed against Honrado was filed in 1997 or
prior to the institution of said petition in 1998. Petitioner never raised the
argument of exemption of his family home before the trial court before
and during the auction sale. We find that such actions reveal a dilatory
intent to render nugatory the sale on execution and defeat the very
purpose of execution to put an end to litigation. Petitioner previously
failed to appear in the pre-trial conference, failed to submit his appellants
brief and now conveniently raised the issue of exemption almost a year
from the auction sale.
We find no proof of grave abuse of discretion [on] the part of public
respondents. Once a judgment becomes final and executory, the
prevailing party can have it executed as a matter of right, and the issuance
of a Writ of Execution becomes a ministerial duty of the court. It is well-
settled that the sheriffs duty in the execution of a writ issued by a court is
purely ministerial. The function of ordering the execution of a judgment,
being judicial, devolves upon the judge.[25]
The ruling of the appellate court is correct. The respondent court, tribunal
or administrative agency acts without jurisdiction if it does not have the
legal power to determine the case. There is excess of jurisdiction where
the respondent, being clothed with the power to determine the case,
oversteps its authority as determined by law. There is grave abuse of
discretion where the public respondent acts in a capricious, whimsical,
arbitrary or despotic manner in the exercise of its judgment as to be said
to be equivalent to lack of jurisdiction. Mere abuse of discretion is not
enough.[26]
Moreover, in a petition for certiorari, the jurisdiction of the court is
narrow in scope. It is limited to resolving only cases of jurisdiction.[27]
A writ of certiorari is an equitable remedy and he who comes to court for
equity must do so with clean hands.
In this case, the RTC acted in accord with case law when it issued the
assailed order. The petitioner admits to having been notified of the levy
of his property and of its sale at public auction at 9:30 a.m. on May 17,
2001 at the Municipal Hall of Calamba, Laguna. However, he did not
bother to object to the levy and the projected sale on the ground that the
property and the house thereon was a family home. The petitioner
allowed the sale at public auction to proceed and the Sheriff to execute a
certificate of sale over the property in favor of the private respondent for
P650,204.10. He even vacated the property after the said sale. The
petitioner remained silent and failed to seek relief from the Sheriff or the
court until May 3, 2002, when he filed his motion to declare the property
exempt from execution under Article 155 of the Family Code and Section
13, Rule 39 of the Rules on Civil Procedure. Even then, there was no
showing that, during the hearing of said motion, the petitioner adduced
evidence to prove the value of the property and that it is, indeed, a family
home.
Moreover, the petitioner set the hearing of his motion on May 10, 2002 at
8:30 a.m. The private respondent opposed the motion, but the petitioner
did not file any reply thereto. Moreover, the petitioner never informed the
Court that the RTC of Calamba, Laguna, had rendered judgment in SP
Case No. 489-1998-C earlier on April 29, 2002. It was only on November
25, 2002 that the petitioner revealed to the RTC of Quezon City that there
was such a case and a decision had already been rendered. The petitioner
has not justified why he concealed such matters for such considerable
period of time.
While it is true that the family home is constituted on a house and lot
from the time it is occupied as a family residence and is exempt from
execution or forced sale under Article 153 of the Family Code, such
claim for exemption should be set up and proved to the Sheriff before the
sale of the property at public auction. Failure to do so would estop the
party from later claiming the exemption. As this Court ruled in Gomez v.
Gealone:[28]
Although the Rules of Court does not prescribe the period within which
to claim the exemption, the rule is, nevertheless, well-settled that the
right of exemption is a personal privilege granted to the judgment debtor
and as such, it must be claimed not by the sheriff, but by the debtor
himself at the time of the levy or within a reasonable period thereafter;
In the absence of express provision it has variously held that claim (for
exemption) must be made at the time of the levy if the debtor is present,
that it must be made within a reasonable time, or promptly, or before the
creditor has taken any step involving further costs, or before
advertisement of sale, or at any time before sale, or within a reasonable
time before the sale, or before the sale has commenced, but as to the last
there is contrary authority.
In the light of the facts above summarized, it is self-evident that
appellants did not assert their claim of exemption within a reasonable
time. Certainly, reasonable time, for purposes of the law on exemption,
does not mean a time after the expiration of the one-year period provided
for in Section 30 of Rule 39 of the Rules of Court for judgment debtors to
redeem the property sold on execution, otherwise it would render
nugatory final bills of sale on execution and defeat the very purpose of
executionto put an end to litigation. We said before, and We repeat it
now, that litigation must end and terminate sometime and somewhere,
and it is essential to an effective administration of justice that, once a
judgment has become final, the winning party be not, through a mere
subterfuge, deprived of the fruits of the verdict. We now rule that claims
for exemption from execution of properties under Section 12 of Rule 39
of the Rules of Court must be presented before its sale on execution by
the sheriff.[29]
IN VIEW OF ALL THE FOREGOING, the petition is DENIED. Costs
against the petitioner.
Perez v. Gutierrez (53 SCRA 149)
This appeal from the decision dated June 9, 1967 of the Court of First
Instance of Davao in its civil case 3163 poses objections to the manner
the trial court adjudicated the claim for damages filed by the plaintiff-
appellant Fe Perez against the defendant-third-party plaintiff-appellee
Josefina Gutierrez.
The complaint (later amended) filed on October 29, 1959 by Fe Perez
with the Court of First Instance of Davao against Josefina Gutierrez, for
breach of contract of carriage, alleges that on September 6, 1959 while
she, together with nine co-teachers, was a passenger of an AC jeepney
registered under the name of the defendant Gutierrez, the said vehicle,
due to the reckless negligence of its driver Leopoldo Cordero, met with
an accident, resulting in injuries to herself which required her
hospitalization. In her answer, Josefina Gutierrez averred that if the claim
of Fe Perez is at all justified, responsibility therefor should devolve on
one Panfilo Alajar, the actual owner, by purchase, of the said passenger
jeepney when the accident occurred and against whom she has filed a
third-party complaint.
The deed of sale attached to the third-party complaint recites, inter alia,
That it is mutually agreed by the herein vendor and vendee that the
TITLE to the aforementioned vehicle shall remain with the VENDOR,
pending approval of the herein SALE by the Public Service Commission,
said motor vehicle being registered as a public utility auto-calesa under
"AC" denomination; ...
That the vendee herein, by these presents, do [sic] hereby binds himself
and do [sic] hereby assume, [sic] responsibility for all actions, claims,
demands, and rights of action, and whatever kind and nature, that may
hereafter develop as a consequence of or in the course of operation of the
aforementioned vehicle; ...
In his answer to the third-party complaint, Panfilo Alajar disclaimed
responsibility for the accident, alleging that (a) the mentioned deed of
sale is null and void because it has not been registered with the Public
Service Commission despite repeated demands on the 3rd-party
complainant to do so; (b) the said passenger jeepney remained in the
control of the 3rd-party complainant who, together with her lawyer-
husband, had been collecting rentals from him for the use of the said
vehicle; and (c) by express agreement, title to the said vehicle remained
with the 3rd-party complainant pending approval of the sale by the Public
Service Commission.
The defendant Leopoldo Cordero was declared in default and did not
appeal.
On June 9, 1967, after trial on the merits, the court a quo rendered its
decision, in the main finding Leopoldo Cordero guilty of reckless
imprudence, and finding that Panfilo Alajar owned and operated the auto
calesa in question and, in fact, after the accident, even assumed
responsibility for the payment of the hospital bills due to the Brokenshire
Memorial Hospital for treatment of the injuries suffered by Fe Perez.
Based on these findings as well as the proof of the damages suffered by
Fe Perez, the court adjudged as follows:
WHEREFORE, premises considered, judgment is hereby rendered
ordering third-party defendant Panfilo Alajar to pay plaintiff the amount
of P1,552.20 hospital expenses; P2,000.00, actual damages; P5,000.00
moral damages; P500.00 incidental expenses; and P2,000.00 attorney's
fees.
Ordering likewise Panfilo Alajar to pay defendant third-party plaintiff
Josefina Gutierrez P500.00 moral damages; and P1,000.00 attorney's
fees, and to pay the costs of the proceedings on both cases.
The present appeal questions the correctness of the dispositive portion of
the decision a quo which adjudged Panfilo Alajar, instead of Josefina
Gutierrez, as the party liable to her for the payment of the damages
adjudicated in her favor. Specifically, Fe Perez argues that the registered
owner of a motor vehicle should be the one held liable for damages
resulting from breach of contract of carriage by a common carrier.
In the earlier case of Erezo vs. Jepte, 2 which is cited in the foregoing
opinion, this Court held that the doctrine making the registered owner of
a common carrier answerable to the public for negligence injuries to its
passengers or third persons, even though the vehicle had already been
transferred to another, is based upon the principle —
... that in dealing with vehicles registered under the Public Service Law,
the public has the right to assume or presume that the registered owner is
the actual owner thereof, for it would be difficult for the public to enforce
the actions that they may have for injuries caused to them by the vehicles
being negligently operated if the public should be required to prove who
the actual owner is. How would the public or third persons know against
whom to enforce their rights in case of subsequent transfers of the
vehicles? We do not imply by this doctrine, however, that the registered
owner may not recover whatever amount he had paid by virtue of his
liability to third persons from the person to whom he had actually sold,
assigned or conveyed the vehicle.
The question that is posed, therefore, is how should the holder of the
certificate of public convenience Tamayo participate with his transferee
operator Rayos, in the damages recoverable by the heirs of the deceased
passenger, if their liability is not that of joint tortfeasors in accordance
with Article 2194 of the Civil Code. The following considerations must
be borne in mind in determining this question. As Tamayo is the
registered owner of the truck, his responsibility to the public or to any
passenger riding in the vehicle or truck must be direct, for the reasons
given in our decision in the case of Erezo vs. Jepte, supra, as quoted
above. But as the transferee, who operated the vehicle when the
passenger died, is the one directly responsible for the accident and death,
he should in turn be made responsible to the registered owner for what
the latter may have been adjudged to pay. In operating the truck without
transfer thereof having been approved by the Public Service Commission,
the transferee acted merely as agent of the registered owner and should be
responsible to him (the registered owner), for any damages that he may
cause the latter by his negligence."
Upon the foregoing, it is quite clear that the court below erred in holding
Panfilo Alajar, rather than Josefina Gutierrez, as the one directly liable to
Fe Perez for the latter's injuries and the corresponding damages incurred.
This Court notes moreover, that the court below inexplicably failed to
hold the driver (Leopoldo Cordero), whom it found guilty of reckless
imprudence, jointly and solidarily liable with Josefina Gutierrez to Fe
Perez in accordance with the provisions of article 2184 in relation to
article 2180 of the new Civil Code. 4
ACCORDINGLY, the judgment below is hereby modified in the sense
that Josefina Gutierrez and Leopoldo Cordero are hereby adjudged
directly and jointly and solidarily liable to Fe Perez for the sums
adjudicated in the judgment below in her (Fe Perez') favor, while Panfilo
Alajar is, in turn, hereby held answerable to Josefina Gutierrez for such
amount as the latter may pay to Fe Perez in satisfaction of the judgment
appealed from. Costs against both the defendant-third party plaintiff-
appellee Josefina Gutierrez and the third party defendant-appellee Panfilo
Alajar.
1226
Siy v. CA (138 Scra 536)
This is a petition for review which seeks to annul and set aside the
decision of the Court of Appeals, now Intermediate Appellate Court
affirming the trial court's decision, ordering, among others, the rescission
of the contract of sale entered into between the petitioner and the private
respondents.
The private respondents, spouses Valdez are the owners of a parcel of
land containing an area of 155 square meters, more or less, and the house
constructed thereon, situated at No. 333 Jefferson Street, Makati, and
covered by Transfer Certificate of Title No. 32718 of the Registry of
Deeds of Rizal. There is no dispute that the petitioner and private
respondents entered into a contract of sale regarding the said property.
The controversy, however, stemmed from subsequent agreements
executed by the parties.
The first agreement entered into by the petitioner and private respondents
was the Deed of Conditional Sale (Exh. A) whereby for and in
consideration of P22,000.00, the private respondents as vendors agreed to
sell to the petitioner as vendee the lot covered by TCT No. 32718 with all
the improvements thereon. The sale was subject to the condition that
immediately upon the approval of the petitioner's loan with the Social
Security System (SSS) and its payment to the respondents, the vendor
shall execute the deed of absolute sale in favor of the vendee. The
petitioner applied for a loan with the SSS, through the Home Financing
Commission (HFC). Since the property in question was mortgaged to the
Government Service Insurance System (GSIS), the HFC requested both
parties to execute a Deed of Sale with Assumption of Mortgage (Exh. G)
which they did, stating among others that the respondents sell, transfer,
and convey to the petitioner the property for and in consideration of the
sum of P22,000.00, of which P6,400.00 (representing the amount
allegedly incurred by the petitioners for improvements on said property)
had been paid and the balance of P15,600. 00 payable upon approval of
the petitioners loan with the SSS. In reality, however, the respondents
had not received a single centavo from the petitioner at the time.
Subsequently, the parties executed three more contracts. The first
contract (Exh. I) which was executed more than one month after Exhibit
A provided that the respondents agreed to sell the property to the
petitioner at P14,000.00 while the latter must negotiate a loan with the
SSS in order to settle the amount within a period of thirty days from
March 17, 1963. The contract also provided for the payment of rentals by
the petitioner at P50.00 a month from March 1, 1963 until the date of
final settlement and damages at the rate of P30.00 a day for each day of
delay. The next day, another contract was executed by the parties which
was essentially the same as Exh. "1". Respondent Virginia Valdez
explained that she did not agree with the granting of another thirty-day
extension to the petitioner and so Exh. "1" was torn up. However, the
respondents changed their minds after the mother of the petitioner
pleaded with them for another extension. Thus, Exh. "2" came into being.
It provided that the full amount of P14,000.00 would be paid on or before
the 30th day from the date of the execution of the contract and that failure
of the petitioner to settle his obligation within that period shall make him
liable for damages at P30.00 for every day of delay.
The last agreement entered into by the parties, (Exh. 5), provided among
others, that the respondents agreed to receive the partial amount of
P12,000.00 on the condition that the balance of P4,376.00 is completely
paid forty-five days after the date fixed by them and that failure of the
petitioner to pay the said balance on the agreed time will entitle the
respondents to damages at P20.00 for every day of delay until said
balance shall have been fully paid.
Within the forty-five (45) days deadline, however, the petitioner failed to
pay both the P12,000.00 which was supposed to be received by the
respondents upon the execution of the agreement, (Exh. 5) and the
balance of P4,376.00. Thus, when the petitioner's loan with the SSS was
finally ready for release, he requested the respondents to sign the deed of
absolute sale and other papers required by the SSS but the latter refused
on the ground that the petitioner had already breached their latest
agreement (Exh. 5). The petitioner filed an action for specific
performance with writ of preliminary mandatory injunction seeking to
compel the respondents to execute the deed of absolute sale of the
property and other such documents required by the SSS for the
immediate release of the approved loan.
n due time, the private respondents filed a motion for reconsideration
stating, among others, that the decision of the lower court failed to
consider the other contracts executed by the parties. Among them was the
agreement marked as Exhibit "5" which would clearly show that there
was a limited period within which the petitioner was given time to secure
a loan from the SSS and pay P14,000.00, the real consideration for the
property agreed upon by the parties.
The petitioner filed his opposition to the respondents' motion for
reconsideration. The respondents in turn asked the lower court for five
(5) days within which to submit a rejoinder. The extension was granted in
open court. However, even before the end of the five-day period, the
court already issued an order denying the respondents' motion for
reconsideration. Another motion to reconsider was, therefore, filed by the
respondents praying that their rejoinder be taken into account since the
same was filed within the five-day period granted by the court.
The petitioner maintains that the motions for reconsideration filed by the
respondents are both pro forma because they presented issues which the
trial court had already considered and ruled upon and that the second
motion for reconsideration merely asked the court to consider two
documents which were already submitted by respondents in evidence.
The petitioner argues that the said motion did not interrupt the running of
the period to appeal and thus, when the second decision was rendered the
trial court had already lost its jurisdiction over the case, making such
decision null and void.
The above contentions are untenable.
In the first place, the very purpose of a motion for reconsideration is to
point out the findings and conclusions of the decision which in the
movant's view, are not supported by law or the evidence. The movant is,
therefore, very often confined to the amplification or further discussion of
the same issues already passed upon by the court. Otherwise, his remedy
would not be a reconsideration of the decision but a new trial or some
other remedy. In the case of Vina v. Court of Appeals (126 SCRA 381-
382), we emphasized the nature of a motion for reconsideration. We
ruled:
Contrary to petitioner's contention, REPUBLIC's Motion for
Reconsideration dated January 10, 1973 was not pro forma, even if we
were to concede that it was a reiteration of its previous Motion for
suspension of the proceedings.
... Among the ends to which a motion for reconsideration is addressed,
one is precisely to convince the court that its ruling is erroneous and
improper, contrary to the law or the evidence (Rule 37, Section 1,
subsection [c]; and in doing so, the movant has to dwell of necessity upon
the issues passed upon by the court. If a motion for reconsideration may
not discuss these issues, the consequence would be that after a decision is
rendered, the losing party would be confined to filing only motions for
reopening and new trial. We find in the Rules of Court no warrant for
ruling to that effect, a ruling that would, in effect eliminate subsection (c)
of Section I of Rule 37. (Guerra Enterprises Co., Inc. v. Court of First
Instance of Lanao del Sur, 32 SCRA 317 [1970]).
Secondly, as far as the second motion of respondents is concerned, the
same should not be strictly construed as a motion for reconsideration
although captioned as such because in reality, it is merely a
supplementary pleading aimed to call the court's attention to the fact that
it had given the respondents five days to file their rejoinder, with which
they complied and, therefore, said rejoinder should have been considered
before the court acted upon the respondents' first motion for
reconsideration. Supplemental pleadings are meant to supply deficiencies
in aid of original pleadings, not to entirely substitute the latter (See Pasay
City Government v. CFI of Manila, 132 SCRA 169), and neither should
they be considered independently nor separately from such original
pleadings.
We, therefore, hold that the appellate court did not commit grave abuse
of discretion in upholding the trial court's jurisdiction when it rendered
the second decision.
In the second assignment of error, the petitioner contends that the Court
of Appeals committed a reversible error in affirming the rescission of the
contract when the respondents did not pray for rescission and in ordering
the payment of damages and attorney's fees notwithstanding the fact that
the complaint for specific performance was not instituted in bad faith.
It is noteworthy to mention that in their answer to the petitioner's
complaint, the respondents prayed for the annulment of both the Deed of
Conditional Sale (Exh. 'A') and the Deed of Sale with Assumption of
Mortgage (Exh. 'G') which are the very bases of the supplemental
agreements (Exhs. '1', '2' and '5') executed between the petitioner and the
respondent. The technical argument that the respondents never prayed for
the rescission of the contracts and that the trial court and the appellate
court should never have rescinded the same has no merit. Furthermore,
by failing to pay the amount of P12,000.00 and the balance of P4,376.00
as stipulated in the contract within the forty-five (45) days period, the
petitioner clearly committed a breach of contract which sufficiently and
justly entitled the respondents to ask for the rescission of the contracts. In
the case of Nagarmull v. Binalbagan-Isabel Sugar Co., Inc. (33 SCRA
52), we ruled that " ... The Breach of contract committed by appellee
gave appellant, under the law and even under general principles of
fairness, the right to rescind the contract or to ask for its specific
performance, in either case with right to demand damages ... It is evident,
in the case at bar, that the respondents chose to rescind the contracts after
the petitioner repeatedly failed to pay not only the balance but the initial
amount as downpayment in consideration of which the contracts or
agreements were executed. As a matter of fact, the petitioner later asked
the SSS to cancel his loan application. He thereby abandoned his own
claim for specific performance. Therefore, the appellate court correctly
affirmed the rescission of the above-mentioned contracts. It also correctly
affirmed the payment of attorney's fees. While the petitioner may not
have acted in bad faith in filing his complaint, still the payment of
attorney's fees is warranted in this case because of the environmental
circumstances which compelled the respondents to litigate for the
protection of their interests. (See Bert Osmena & Associates v. Court of
Appeals, 120 SCRA 401 and Article 2208 (2) New Civil Code).
We, however, find the award of damages in the amount of P4,376.00
unwarranted. In their motion for reconsideration, the respondents
explained how they arrived at this amount—
Plaintiff obliged himself to pay P30.00 for everyday of delay after the
lapse of thirty days from the execution of the document of March 17,
1963 (Exh. 1-Defendants). Thirty days from March 17, 1963 would be
April 18, which will mark the beginning of the counting of the days of
delays. From April 18, 1963 to July 9, 1963, the number of days of delay
was 82 days. Plaintiff requested that this be reduced to 70 days and
defendants agreed. At P30.00 per day of delay the amount in 70 days will
be P2,100.00. The rental as provided for in the same exhibit 1 for
defendants was P50.00 per month. From March 1, 1963 to June 20, 1963,
4 months elapsed. At P50.00 per month the rental would be P200.00.
Plaintiff got or utilized adobe stones belonging to defendant which he
found in the premises when he and his parents transferred to the lot in
question in March 1963 the value of which was P76.00. Adding this to
the P2,100.00 which is the amount to be paid for the delay in making
payments and the P200.00 for 4 months rental, the total will be
P2,376.00. The agreed purchase price was Pl4,000.00 but Pl2,000.00 was
the amount of loan the Social Security System was then willing to give to
plaintiff so that there will be a shortage of P2,000.00 more to complete
the payment of the purchase price. This shortage of P2,000.00 was added
to the P2,376.00 and the sum will be P4,376.00. Hence, in the agreement
of July 9, 1963, this amount of P4,376.00 was to be paid within 45 days
from the date thereof and the P12,000.00 which was the loan then
approved by the Social Security System was to be paid to defendants on
the day of the execution of the said agreement.
It is evident from the motion that the amount of P4,376.00 awarded by
the appellate court as damages is mainly based on "P30.00 per day of
delay" penalty clause embodied in the agreement marked Exhibit "1".
Enforcement of the clause on daily penalties now would result in
excessive damages considering that the agreement was entered into way
back in 1963. Moreover, the P2,000.00 represents part of the purchase
price of the sale which was already rescinded.
Under Article 1191 of the Civil Code, "the injured party may choose
between the fulfillment and rescission of the obligation, with the payment
of damages in either case. He may also seek rescission, even after he has
chosen fulfillment, if the latter should become impossible ... ." The law,
however, does not authorize the injured party to rescind the obligation
and at the same time seek its partial fulfillment under the guise of
recovering damages.
The appellate court, therefore, erred in including both the penalty clause
and the part of the purchase price in the computation of damages. There
is no question that the petitioner must pay damages for the use of the
house and lot until he vacates the premises. The petitioner and his family
have lived in the respondents' house all these years without paying either
the price he obligated himself to pay or the monthly rentals he agreed to
pay as early as 1963. At the very least, the petitioner should pay P50.00
monthly rentals with legal interest from March, 1963.
WHEREFORE, the decision appealed from is MODIFIED in that the
award of damages in the amount of P4,376.00 is set aside. The petitioner
is ordered to vacate the disputed property and to pay FIFTY PESOS
(P50.00) as monthly rentals with interest at the legal rate from March,
1963 up to the time he and his successors-in-interest vacate the property
in question. In all other respects, the decision is AFFIRMED.
SO ORDERED.
1229
Jison v. CA (164 scra 339)
Facts:
Under a Contract to Sell, respondent Robert O.Phillips & Sons, Inc. sold
a subdivision lot topetitioners, spouses Jison for the agreed price of
Php55,000.00 with 8% interest per annum, payable oninstallment basis.
Pursuant to the contract, thespouses paid the Php 11,000 down payment
onOctober 20, 1961.
October 27, 1961 May 8, 1965
= spouses paidPhp 533.85
Due to failure of petitioners to build a house asprovided in the contract, a
penalty of Php5.00/sqm. was imposed. Monthly amortizationincreased to
Php 707.24
Jan. 1, 1966 ; Feb. 1, 1966; March 1, 1966 =spouses failed to pay on said
dates although thespouses subsequently paid the amounts dueand was
accepted.
( Na-late sa bayad )
From October 1966 January 1967
1, petitionersfailed to pay their loans. On Jan. 11, 1967,respondent sent a
letter to petitioners statingthat their account was 4 months
overdue.Another letter was sent on Feb. 27, 1967reminding petitioners of
the automaticrescission clause of the contract.
March 1, 1967 petitioners eventually paid.
Feb. 1967 April 1967
petitioners failed topay.
On April 6, 1967 respondent sent a letter tothe spouses informing them
that the contractwas cancelled
April 19, 1967 petitioners tendered paymentfor all the installments
already due but tenderwas refused.
Petitioners filed a complaint for specificperformance. Trial court
dismissed the case anddeclared contract cancelled. CA affirmed
trialcourt s ruling.Issue: Whether the CA erred in not holding
therespondent s act of forfeiting all previous paymentsmade by
petitioners is CONTRARY TO LAW, highly iniquitous and
unconscionable
Ruling:In obligations with a penal clause, the judge shallequitably reduce
the penalty when the principalobligation has been partly or irregularly
compliedwith by the debtor [Art. 1229; Hodges v. Javellana,G.R. No. L-
17247, April 28, 1962, 4 SCRA 1228]. Inthis connection, the Court said:
It follows that, in any case wherein therehas been a partial or irregular
compliancewith the provisions in a contract for specialindemnification in
the event of failure tocomply with its terms, courts will rigidly apply the On July 13, 1985, the Velezes sold the subject lot and commercial
doctrine of strict construction and against the enforcement in its entirety building to the Avenue Group (Private Respondent Avenue
of the industry.' where it is clear from theterms of the contract that the Merchandising Inc.) for P1,050,000.00 net of taxes, registration fees, and
amount or character of the indemnity is fixed withoutregard to the
probable damages whichmight be anticipated as a result of a breachof the expenses of the sale.
terms of the contract; or, in other words, where the indemnity provided
for isessentially a mere penalty having for itsprincipal object the
enforcement of compliance with the corporations;(Laureano v. Kilayco,
32 Phil. 194 (1943). At the time the Avenue Group purchased the subject property on July 13,
1985 from the Velezes, the certificate of title of the said property was
This principle was reiterated in clean and free of any annotation of adverse claims or lis pendens.
Makati Development Corp. v. Empire Insurance Co
. [G.R. No. L-21780, June30, 1967, 20 SCRA 557] where the Court
affirmed the judgment of the Court of First Instance reducing
thesubdivision lot buyer's liability from the stipulatedP12,000.00 to On July 31, 1985 as aforestated, herein (petitioners) filed the instant
Plaintiffs after finding that he hadpartially performed his obligation to
complaint against the Velezes.
complete atleast fifty percent (50%) of his house within two (2)years
from March 31, 1961, fifty percent (50%) of the house having been
completed by the end of April1961.

***In short, spouses failed to pay the respondent ontheir due dates. On August 1, 1985, (herein petitioners) registered a notice of lis pendens
over the property in question with the Office of the Register of Deeds.[6]
1231
Uraca v. CA ( Gr. No. 115158, Sept. 5, 1997)
Novation is never presumed; it must be sufficiently established that a
valid new agreement or obligation has extinguished or changed an On October 30, 1985, the Avenue Group filed an ejectment case against
existing one. The registration of a later sale must be done in good faith to (herein petitioners) ordering the latter to vacate the commercial building
entitle the registrant to priority in ownership over the vendee in an earlier standing on the lot in question.
sale.

The Velezes (herein private respondents) were the owners of the lot and
commercial building in question located at Progreso and M.C. Briones Thereafter, herein (petitioners) filed an amended complaint impleading
Streets in Cebu City. the Avenue Group as new defendants (after about 4 years after the filing
of the original complaint).

Herein (petitioners) were the lessees of said commercial building.[5]

On July 8, 1985, the Velezes through Carmen Velez Ting wrote a letter to
herein (petitioners) offering to sell the subject property for P1,050,000.00
and at the same time requesting (herein petitioners) to reply in three days.
On July 10, 1985, (herein petitioners) through Atty. Escolastico Daitol
sent a reply-letter to the Velezes accepting the aforesaid offer to sell.
On July 11, 1985, (herein petitioner) Emilia Uraca went to see Carmen
Ting about the offer to sell but she was told by the latter that the price
was P1,400,000.00 in cash or managers check and not P1,050,000.00 as
erroneously stated in their letter-offer after some haggling. Emilia Uraca
agreed to the price of P1,400,000.00 but counter-proposed that payment
be paid in installments with a down payment of P1,000,000.00 and the
balance of P400,000 to be paid in 30 days. Carmen Velez Ting did not
accept the said counter-offer of Emilia Uraca although this fact is
disputed by Uraca.
No payment was made by (herein petitioners) to the Velezes on July 12,
1985 and July 13, 1985.
The trial court found two perfected contracts of sale between the Velezes
and the petitioners, involving the real property in question. The first sale
was for P1,050,000.00 and the second was for P1,400,000.00. In respect
to the first sale, the trial court held that [d]ue to the unqualified
acceptance by the plaintiffs within the period set by the Velezes, there
consequently came about a meeting of the minds of the parties not only
as to the object certain but also as to the definite consideration or cause of
the contract.[7] And even assuming arguendo that the second sale was
not perfected, the trial court ruled that the same still constituted a mere
modificatory novation which did not extinguish the first sale. Hence, the
trial court held that the Velezes were not free to sell the properties to the
Avenue Group.[8] It also found that the Avenue Group purchased the
property in bad faith.[9]
Private respondents appealed to the Court of Appeals. As noted earlier,
the CA found the appeal meritorious. Like the trial court, the public
respondent held that there was a perfected contract of sale of the property
for P1,050,000.00 between the Velezes and herein petitioners. It added,
however, that such perfected contract of sale was subsequently novated.
Thus, it ruled: Evidence shows that that was the original contract.
However, the same was mutually withdrawn, cancelled and rescinded by
novation, and was therefore abandoned by the parties when Carmen
Velez Ting raised the consideration of the contract [by] P350,000.00,
thus making the price P1,400,000.00 instead of the original price of
P1,050,000.00. Since there was no agreement as to the second price
offered, there was likewise no meeting of minds between the parties,
hence, no contract of sale was perfected.[10] The Court of Appeals added
that, assuming there was agreement as to the price and a second contract
was perfected, the later contract would be unenforceable under the
Statute of Frauds. It further held that such second agreement, if there was
one, constituted a mere promise to sell which was not binding for lack of
acceptance or a separate consideration.[11]
The Issue:
Petitioners allege the following errors in the Decision of Respondent
Court:
Since it ruled in its decision that there was no meeting of the minds on
the second price offered (P1,400,000.00), hence no contract of sale was
perfected, the Court of Appeals erred in not holding that the original
written contract to buy and sell for P1,050,000.00 the Velezes property
continued to be valid and enforceable pursuant to Art. 1279 in relation
with Art. 1479, first paragraph, and Art. 1403, subparagraph 2 (e) of the
Civil Code.
II
The Court of Appeals erred in not ruling that petitioners have better
rights to buy and own the Velezes property for registering their notice of
lis pendens ahead of the Avenue Groups registration of their deeds of sale
taking into account Art. 1544, 2nd paragraph, of the Civil Code.
The Courts Ruling
The petition is meritorious.
No Extinctive Novation
The lynchpin of the assailed Decision is the public respondents
conclusion that the sale of the real property in controversy, by the
Velezes to petitioners for P1,050,000.00, was extinguished by novation
after the said parties negotiated to increase the price to P1,400,000.00.
Since there was no agreement on the sale at the increased price, then
there was no perfected contract to enforce. We disagree.
The Court notes that the petitioners accepted in writing and without
qualification the Velezes written offer to sell at P1,050,000.00 within the
three-day period stipulated therein. Hence, from the moment of
acceptance on July 10, 1985, a contract of sale was perfected since
undisputedly the contractual elements of consent, object certain and
cause concurred.[13] Thus, this question is posed for our resolution: Was
there a novation of this perfected contract?
Article 1600 of the Civil Code provides that (s)ales are extinguished by
the same causes as all other obligations, x x x. Article 1231 of the same
Code states that novation is one of the ways to wipe out an obligation.
Extinctive novation requires: (1) the existence of a previous valid
obligation; (2) the agreement of all the parties to the new contract; (3) the
extinguishment of the old obligation or contract; and (4) the validity of
the new one.[14] The foregoing clearly show that novation is effected
only when a new contract has extinguished an earlier contract between
the same parties. In this light, novation is never presumed; it must be
proven as a fact either by express stipulation of the parties or by
implication derived from an irreconcilable incompatibility between old
and new obligations or contracts.After a thorough review of the records,
we find this element lacking in the case at bar.
As aptly found by the Court of Appeals, the petitioners and the Velezes
did not reach an agreement on the new price of P1,400,000.00 demanded
by the latter. In this case, the petitioners and the Velezes clearly did not
perfect a new contract because the essential requisite of consent was
absent, the parties having failed to agree on the terms of the payment.
True, petitioners made a qualified acceptance of this offer by proposing
that the payment of this higher sale price be made by installment, with
P1,000,000.00 as down payment and the balance of P400,000.00 payable
thirty days thereafter. Under Article 1319 of the Civil Code,[16] such
qualified acceptance constitutes a counter-offer and has the ineludible
effect of rejecting the Velezes offer.[17] Indeed, petitioners counter-offer
was not accepted by the Velezes. It is well-settled that (a)n offer must be
clear and definite, while an acceptance must be unconditional and
unbounded, in order that their concurrence can give rise to a perfected
contract.[18] In line with this basic postulate of contract law, a definite
agreement on the manner of payment of the price is an essential element
in the formation of a binding and enforceable contract of sale.[19] Since
the parties failed to enter into a new contract that could have extinguished
their previously perfected contract of sale, there can be no novation of the
latter. Consequently, the first sale of the property in controversy, by the
Velezes to petitioners for P1,050,000.00, remained valid and existing
In view of the validity and subsistence of their original contract of sale as
previously discussed, it is unnecessary to discuss public respondents
theses that the second agreement is unenforceable under the Statute of
Frauds and that the agreement constitutes a mere promise to sell.
Having already ruled that petitioners actual knowledge of the first sale
tainted their registration, we find no more reason to pass upon the issue
of whether the annotation of lis pendens automatically negated good faith
in such registration
WHEREFORE, the petition is GRANTED. The assailed Decision of the
Court of Appeals is hereby SET ASIDE and the dispositive portion of the
trial courts decision dated October 19, 1990 is REVIVED with the
following MODIFICATION -- the consideration to be paid under par. 2
of the disposition is P1,050,000.00 and not P1,400,000.00. No Costs.
SO ORDERED.
Ace-Agro Development Corp. v. CA (GR. No. 119729, Jan 21, 1997)
Petitioner Ace-Agro Development Corporation and private respondent
Cosmos Bottling Corporation are corporations duly organized and
existing under Philippine laws. Private respondent Cosmos Bottling
Corp. is engaged in the manufacture of soft drinks. Since 1979 petitioner
Ace-Agro Development Corp. (Ace-Agro) had been cleaning soft drink
bottles and repairing wooden shells for Cosmos, rendering its services
within the company premises in San Fernando, Pampanga. The parties
entered into service contracts which they renewed every year. On January
18, 1990, they signed a contract covering the period January 1, 1990 to
December 31, 1990. Private respondent had earlier contracted the
services of Aren Enterprises in view of the fact that petitioner could
handle only from 2,000 to 2,500 cases a day and could not cope with
private respondents daily production of 8,000 cases. Unlike petitioner,
Aren Enterprises rendered service outside private respondents plant.
On April 25, 1990, fire broke out in private respondents plant, destroying,
among other places, the area where petitioner did its work. As a result,
petitioners work was stopped.
On May 15, 1990, petitioner asked private respondent to allow it to
resume its service, but petitioner was advised that on account of the fire,
which had practically burned all . . . old soft drink bottles and wooden
shells, private respondent was terminating their contract.
Petitioner expressed surprise at the termination of the contract and
requested private respondent, on June 13, 1990, to reconsider its decision
and allow petitioner to resume its work in order to cushion the sudden
impact of the unemployment of many of [its] workers. As it received no
reply from private respondent, petitioner, on June 20, 1990, informed its
employees of the termination of their employment.
This led the employees to file a complaint for illegal dismissal before the
Labor Arbiter against petitioner and private respondent.
On July 17, 1990, petitioner sent another letter to private respondent,
reiterating its request for reconsideration.
Petitioner refused the offer, claiming that to do its work outside the
companys premises would make it (petitioner) incur additional costs for
transportation which will eat up the meager profits that [it] realizes from
its original contract with Cosmos. In subsequent meetings with Danilo M.
de Castro, Butch Cea and Norman Uy of Cosmos, petitioners manager,
Antonio I. Arquiza, asked for an extension of the term of the contract in
view of the suspension of work. But its request was apparently turned
down.
On November 7, 1990, private respondent advised petitioner that the
latter could then resume its work inside the plant in accordance with its
original contract with Cosmos.
On January 3, 1991, petitioner brought this case against private
respondent for breach of contract and damages in the Regional Trial
Court of Malabon. It complained that the termination of its service
contract was illegal and arbitrary and that, as a result, it stood to lose
profits and to be held liable to its employees for backwages, damages
and/or separation pay.
On January 16, 1991, a decision was rendered in the labor case, finding
petitioner liable for the claims of its employees. Petitioner was ordered to
reinstate the employees and pay them backwages. However, private
respondent Cosmos was absolved from the employees claims on the
ground that there was no privity of contract between them and private
respondent.
On the other hand, in its decision rendered on November 21, 1991, the
RTC found private respondent guilty of breach of contract and ordered it
to pay damages to petitioner. Petitioners claim for reimbursement for
what it had paid to its employees in the labor case was denied.
Private respondent appealed to the Court of Appeals, which on December
29, 1994, reversed the trial courts decision and dismissed petitioners
complaint. The appellate court found that it was petitioner which had
refused to resume work, after failing to secure an extension of its
contract. Petitioner now seeks a review of the Court of Appeals decision.
First. Petitioner claims that the appellate court erred in ruling that
respondent was justified in unilaterally terminating the contract on
account of a force majeure. Quite possibly it did not understand the
appellate courts decision, or it would not be contending that there was no
valid cause for the termination of the contract but only for its suspension.
The following is what the appellate court said: [6]
Article 1231 of the New Civil Code on extinguishment of obligations
does not specifically mention unilateral termination as a mode of
extinguishment of obligation but, according to Tolentino, there are other
causes of extinguishment of obligations which are not expressly provided
for in this chapter (Tolentino, Civil Code of the Phils., Vol. IV, 1986 ed.,
p. 273). He further said:
But in some contracts, either because of its indeterminate duration or
because of the nature of the prestation which is its object, one of the
parties may free himself from the contractual tie by his own will
(unilateral extinguishment); x x x. (p. 274-275, Ibid)
And that was just what defendant-appellant did when it unilaterally
terminated the agreement it had with plaintiff-appellee by sending the
May 23, 1990 letter. As per its letter, the reason given by defendant-
appellant for unilaterally terminating the agreement was because the
April 25, 1990 fire practically burned all of the softdrink bottles and
wooden shells which plaintiff-appellee was working on under the
agreement. What defendant-appellant was trying to say was that the
prestation or the object of their agreement had been lost and destroyed in
the above-described fire. Apparently, the defendant-appellant would like
this situation to fall within what -- according to Tolentino -- would be:
x x x (O)bligations may be extinguished by the happening of unforeseen
events, under whose influence the obligation would never have been
contracted, because in such cases, the very basis upon which the
existence of the obligation is founded would be wanting.
Both parties admitted that the April 25, 1990 fire was a force majeure or
unforeseen event and that the same even burned practically all the
softdrink bottles and wooden shells -- which are the objects of the
agreement. But the story did not end there.
It is true that defendant-appellant still had other bottles that needed
cleaning and wooden shells that needed repairing (pp. 110-111, orig.
rec.); therefore, the suspension of the work of the plaintiff-appellee
brought about by the fire is, at best, temporary as found by the trial court
. Hence, plaintiff-appellees letters of reconsideration of the termination of
the agreement addressed to defendant-appellant dated June 13, 1990 and
July 17, 1990.
It is obvious that what petitioner thought was the appellate courts ruling
is merely its summary of private respondents allegations. Precisely the
appellate court does not agree with private respondent, that is why, in the
last paragraph of the above excerpt, the court says that there was no cause
for terminating the contract but at most a temporary suspension of work.
The court thus rejects private respondents claim that, as a result of the
fire, the obligation of contract must be deemed to have been
extinguished.
Nonetheless, the Court of Appeals found that private respondent had
reconsidered its decision to terminate the contract and tried to
accommodate the request of petitioner, first, by notifying petitioner on
August 28, 1990 that it could resume work provided that this was done
outside the premises and, later, on November 7, 1990, by notifying
petitioner that it could then work in its premises, under the terms of their
contract. However, petitioner unjustifiably refused the offer because it
wanted an extension of the contract to make up for the period of
inactivity. As the Court of Appeals said in its decision: [7]
It took defendant-appellant time to make a reply to plaintiff-appellees
letters. But when it did on August 28, 1990, it granted plaintiff-appellee
priority to resume its work under the terms of their agreement (but
outside its premises), and the plaintiff-appellee refused the same on the
ground that working outside the defendant-appellants San Fernando Plant
would mean added transportation costs that would offset any profit it
would earn.
The appellee was without legal ground to refuse resumption of work as
offered by the appellant, under the terms of their above agreement. It
could not legally insist on staying inside property it did not own, nor was
under lease to it . . . . In its refusal to resume its work because of the
additional transportation costs to be brought about by working outside the
appellants San Fernando plant, the appellee could be held liable for
damages for breach of contract.
Thereafter, appellant sent its November 7, 1990 letter to appellee, this
time specifically stating that plaintiff-appellee can now resume work in
accordance with their existing agreement. This time, it could not be
denied that by the tenor of the letter, appellant was willing to honor its
agreement with appellee, that it had finally made a reconsideration of
appellees plea to resume work under the contract. But again, plaintiff-
appellee refused this offer to resume work.

Why did the appellee refuse to resume work? Its November 17, 1990
letter stated that it had something to do with the settlement of the NLRC
case filed against it by its employees. But that was not the real reason. In
his cross-examination, the witness for appellee stated that its real reason
for refusing to resume work with the appellant was -- as in its previous
refusal -- because it wanted an extension of the period or duration of the
contract beyond December 31, 1991, to cover the period within which it
was unable to work.
The agreement between the appellee and the appellant is with a
resolutory period, beginning from January 1, 1990 and ending on
December 31, 1990. When the fire broke out on April 25, 1990, there
resulted a suspension of the appellees work as per agreement. But this
suspension of work due to force majeure did not merit an automatic
extension of the period of the agreement between them. According to
Tolentino:
The stipulation that in the event of a fortuitous event or force majeure the
contract shall be deemed suspended during the said period does not mean
that the happening of any of those events stops the running of the period
the contract has been agreed upon to run. It only relieves the parties from
the fulfillment of their respective obligations during that time. If during
six of the thirty years fixed as the duration of a contract, one of the
parties is prevented by force majeure to perform his obligation during
those years, he cannot after the expiration of the thirty-year period, be
compelled to perform his obligation for six more years to make up for
what he failed to perform during the said six years, because it would in
effect be an extension of the term of the contract. The contract is
stipulated to run for thirty years, and the period expires on the thirtieth
year; the period of six years during which performance by one of the
parties is prevented by force majeure cannot be deducted from the period
stipulated.
In fine, the appellant withdrew its unilateral termination of its agreement
with appellee in its letter dated November 7, 1990. But the appellees
refusal to resume work was, in effect, a unilateral termination of the
parties agreement -- an act that was without basis. When the appellee
asked for an extension of the period of the contract beyond December 31,
1990 it was, in effect, asking for a new contract which needed the consent
of defendant-appellant. The appellee might be forgiven for its first refusal
(pertaining to defendant-appellants August 28, 1990 letter), but the
second refusal must be construed as a breach of contract by plaintiff-
appellee. . . .
The Court of Appeals was right that petitioner had no basis for refusing
private respondents offer unless petitioner was allowed to carry out its
work in the company premises. That petitioner would incur additional
cost for transportation was not a good reason for its refusal. Petitioner has
not shown that on August 28, 1990, when it was notified of the private
respondents offer, the latters premises had so far been restored so as to
permit petitioner to resume work there. In fact, even when petitioner was
finally allowed to resume work within the plant, it was not in the former
work place but in a new one, which shows that private respondents
reason for not granting petitioners request was not just a pretext.
Nor was petitioner justified in refusing to resume work on November 7
when it was again notified by petitioner to work. Although it cited the
pending labor case as reason for turning down private respondents offer,
it would appear that the real reason for petitioners refusal was the fact
that the term of the contract was expiring in two months and its request
for an extension was not granted. But, as the appellate court correctly
ruled, the suspension of work under the contract was brought about by
force majeure. Therefore, the period during which work was suspended
did not justify an extension of the term of the contract. [8] For the fact is
that the contract was subject to a resolutory period which relieved the
parties of their respective obligations but did not stop the running of the
period of their contract.
The truth of the matter is that while private respondent had made efforts
towards accommodation, petitioner was unwilling to make adjustments as
it insisted that it cannot profitably resume operation under the same terms
and conditions [of] the terminated contract but with an outside work
venue [as] transportation costs alone will eat up the meager profit that
Ace-Agro realizes from its original contract. [9] While this so- called job-
out offer of private respondent had the effect of varying the terms of the
contract in the sense that it could increase its cost, what petitioner did not
seem to realize was that the change was brought about by circumstances
not of private respondents making.
Second. Petitioner slams the Court of Appeals for ruling that it was
[petitioners] unjustified refusal which finally terminated the contract
between the parties. This contention is likewise without merit. Petitioner
may not be responsible for the termination of the contract, but neither is
private respondent, since the question in this case is whether private
respondent is guilty of breach of contract. The trial court held that private
respondent committed a breach of contract because, even as its August
28, 1990 letter allowed petitioner to resume work, private respondents
offer was limited to the repairs of wooden shells and this had to be done
outside the companys premises. On the other hand, the final offer made
on November 7, 1990, while allowing the repair of wooden shells [to be
done] inside the plant according to your contract with the company, was
still limited to the repair of the wooden shells, when the fact was that the
parties contract was both for the repair of wooden crates and for the
cleaning of soft drink bottles.
But this was not the petitioners complaint. There was never an issue
whether the companys offer included the cleaning of bottles. Both parties
understood private respondents offer as including the cleaning of empty
soft drink bottles and the repair of the wooden crates. Rather, the
discussions between petitioner and private respondents representatives
focused first, on the insistence of petitioner that it be allowed to work
inside the company plant and, later, on its request for the extension of the
life of the contract.
Petitioner claims that private respondent had a reason to want to
terminate the contract and that was to give the business to Aren
Enterprises, as the latter offered its services at a much lower rate than
petitioner. Aren Enterprises rate was P2.50 per shell while petitioners
rates were P4.00 and P6.00 per shell for ordinary and super sized bottles,
respectively. [11]
The contention has no basis in fact. The contract between private
respondent and Aren Enterprises had been made on March 29, 1990 -
before the fire broke out. The contract between petitioner and private
respondent did not prohibit the hiring by private respondent of another
service contractor. With private respondent hitting production at 8,000
bottles of soft drinks per day, petitioner could clearly not handle the
business, since it could clean only 2,500 bottles a day. [12] These facts
show that although Aren Enterprises rate was lower than petitioners, they
did not affect private respondents business relation with petitioner.
Despite private respondents contract with Aren Enterprises, private
respondent continued doing business with petitioner and would probably
have done so were it not for the fire. On the other hand, Aren Enterprises
could not be begrudged for being allowed to continue rendering service
even after the fire because it was doing its work outside private
respondents plant. For that matter, after the fire, private respondent on
August 28, 1990 offered to let petitioner resume its service provided this
was done outside the plant.
Petitioner may not be to blame for the failure to resume work after the
fire, but neither is private respondent. Since the question is whether
private respondent is guilty of breach of contract, the fact that private
respondent is blameless can only lead to the conclusion that the appealed
decision is correct.
WHEREFORE, the petition for review is DENIED and the decision of
the Court of Appeals is AFFIRMED.
SO ORDERED.
Fabrigas v. San Francisco del Monte Inc. ( Gr. No. 152346, Nov. 25
2005)
FACTS:
Spouses Fabrigas(petitioner) and respondent San francisco Del Monte,
Inc.(Del Monte) entered into an agreement, denominated as Contract to
Sell No. 2482-V, whereby the latter agreed to sell to Spouses Fabrigas a
parcel of residential land. The said lot was worth P109,200.00 and it was
registered in the name of respondent Del Monte. The agreement
stipulated that Spouses Fabrigas shall pay P30,000.00 as downpayment
and the balance within ten years in monthly successive installments of
P1,285.69.
After paying P30,000.00, Spouses Fabrigas took possession of the
property but failed to make any installment payments on the balance of
the purchase price. Despite the demand letter made by Del Monte and the
grace period given still the said Spouses did not comply with their
obligations.
On January 21, 1985, petitioner Marcelina and Del Monte entered into
another agreement denominated as Contract to Sell No. 2941-V, covering
the same property but under restructed terms of payment. Under the
second contract, the parties agreed on a new purchase price of
P131,642.58, the amount of P26,328.52 as downpayment and the balance
to be paid in monthly installments of P2,984.60 each.
After the said deal, the petitioner made some delinquent installments
paying less than the stated amount, to which Del Monte made a demand
letter to the petitioners. And this time they ordered the cancellation of the
Contract to Sell No. 2941-V
ISSUE:
Whether or not the Contract to Sell No. 2941-V was valid.
HELD:
The Court quotes with approval the following factual observations of the
trial court, which cannot be disturbed in this case, to wit:
The Court notes that defendant, Marcelina Fabrigas, although she had to
sign contract No. 2491-V, to avoid forfeiture of her downpayment, and
her other monthly amortizations, was entirely free to refuse to accept the
new contract. There was no clear case of intimidation or threat on the part
of plaintiff in offering the new contract to her. At most, since she was of
sufficient intelligence to discern the agreement she is entering into, her
signing of Contract No. 2491-V is taken to be valid and binding. The fact
that she has paid monthly amortizations subsequent to the execution of
Contract to Sell No. 2491-V, is an indication that she had recognized the
validity of such contract. . . .
In sum, Contract to Sell No. 2491-V is valid and binding. There is
nothing to prevent respondent Del Monte from enforcing its contractual
stipulations and pursuing the proper court action to hold petitioners liable
for their breach thereof.
1240
BPI v. CA (232 SCRA 307)
The petitioner urges us to review and set aside the amended Decision 1 of
6 March 1992 of respondent Court of Appeals in CA- G.R. CV No.
25739 which modified the Decision of 15 November 1990 of Branch 19
of the Regional Trial Court (RTC) of Manila in Civil Case No. 87-42967,
entitled Bank of the Philippine Islands (successor-in-interest of
Commercial Bank and Trust Company) versus Eastern Plywood
Corporation and Benigno D. Lim. The Court of Appeals had affirmed the
dismissal of the complaint but had granted the defendants' counterclaim
for P331,261.44 which represents the outstanding balance of their
account with the plaintiff.
As culled from the records and the pleadings of the parties, the following
facts were duly established:
Private respondents Eastern Plywood Corporation (Eastern) and
Benigno D. Lim (Lim), an officer and stockholder of Eastern, held at
least one joint bank account ("and/or" account) with the Commercial
Bank and Trust Co. (CBTC), the predecessor-in-interest of petitioner
Bank of the Philippine Islands (BPI). Sometime in March 1975, a joint
checking account ("and" account) with Lim in the amount of P120,000.00
was opened by Mariano Velasco with funds withdrawn from the account
of Eastern and/or Lim. Various amounts were later deposited or
withdrawn from the joint account of Velasco and Lim. The money
therein was placed in the money market.
Velasco died on 7 April 1977. At the time of his death, the outstanding
balance of the account stood at P662,522.87. On 5 May 1977, by virtue
of an Indemnity Undertaking executed by Lim for himself and as
President and General Manager of Eastern, 2 one-half of this amount was
provisionally released and transferred to one of the bank accounts of
Eastern with CBTC. 3
Thereafter, on 18 August 1978, Eastern obtained a loan of P73,000.00
from CBTC as "Additional Working Capital," evidenced by the
"Disclosure Statement on Loan/Credit Transaction" (Disclosure
Statement) signed by CBTC through its branch manager, Ceferino
Jimenez, and Eastern, through Lim, as its President and General
Manager. 4 The loan was payable on demand with interest at 14% per
annum.
For this loan, Eastern issued on the same day a negotiable promissory
note for P73,000.00 payable on demand to the order of CBTC with
interest at 14% per annum. 5 The note was signed by Lim both in his own
capacity and as President and General Manager of Eastern. No reference
to any security for the loan appears on the note. In the Disclosure
Statement, the box with the printed word "UNSECURED" was marked
with "X" — meaning unsecured, while the line with the words "this loan
is wholly/partly secured by" is followed by the typewritten words "Hold-
Out on a 1:1 on C/A No. 2310-001-42," which refers to the joint account
of Velasco and Lim with a balance of P331,261.44.
In addition, Eastern and Lim, and CBTC signed another document
entitled "Holdout Agreement," also dated 18 August 1978, 6 wherein it
was stated that "as security for the Loan [Lim and Eastern] have offered
[CBTC] and the latter accepts a holdout on said [Current Account No.
2310-011-42 in the joint names of Lim and Velasco] to the full extent of
their alleged interests therein as these may appear as a result of final and
definitive judicial action or a settlement between and among the
contesting parties thereto." 7 Paragraph 02 of the Agreement provides as
follows:
Eastply [Eastern] and Mr. Lim hereby confer upon Comtrust [CBTC],
when and if their alleged interests in the Account Balance shall have been
established with finality, ample and sufficient power as shall be necessary
to retain said Account Balance and enable Comtrust to apply the Account
Balance for the purpose of liquidating the Loan in respect of principal
and/or accrued interest.
And paragraph 05 thereof reads:
The acceptance of this holdout shall not impair the right of Comtrust to
declare the loan payable on demand at any time, nor shall the existence
hereof and the non-resolution of the dispute between the contending
parties in respect of entitlement to the Account Balance, preclude
Comtrust from instituting an action for recovery against Eastply and/or
Mr. Lim in the event the Loan is declared due and payable and Eastply
and/or Mr. Lim shall default in payment of all obligations and liabilities
thereunder.
In the meantime, a case for the settlement of Velasco's estate was filed
with Branch 152 of the RTC of Pasig, entitled "In re Intestate Estate of
Mariano Velasco," and docketed as Sp. Proc. No. 8959. In the said case,
the whole balance of P331,261.44 in the aforesaid joint account of
Velasco and Lim was being claimed as part of Velasco's estate. On 9
September 1986, the intestate court granted the urgent motion of the heirs
of Velasco to withdraw the deposit under the joint account of Lim and
Velasco and authorized the heirs to divide among themselves the amount
withdrawn. 8
Sometime in 1980, CBTC was merged with BPI. 9 On 2 December 1987,
BPI filed with the RTC of Manila a complaint against Lim and Eastern
demanding payment of the promissory note for P73,000.00. The
complaint was docketed as Civil Case No. 87- 42967 and was raffled to
Branch 19 of the said court, then presided over by Judge Wenceslao M.
Polo. Defendants Lim and Eastern, in turn, filed a counterclaim against
BPI for the return of the balance in the disputed account subject of the
Holdout Agreement and the interests thereon after deducting the amount
due on the promissory note.
After due proceedings, the trial court rendered its decision on
15 November 1990 dismissing the complaint because BPI failed to make
out its case. Furthermore, it ruled that "the promissory note in question is
subject to the 'hold-out' agreement," 10 and that based on this agreement,
"it was the duty of plaintiff Bank [BPI] to debit the account of the
defendants under the promissory note to set off the loan even though the
same has no fixed maturity." 11 As to the defendants' counterclaim, the
trial court, recognizing the fact that the entire amount in question had
been withdrawn by Velasco's heirs pursuant to the order of the intestate
court in Sp. Proc. No. 8959, denied it because the "said claim cannot be
awarded without disturbing the resolution" of the intestate court. 12
Both parties appealed from the said decision to the Court of Appeals.
Their appeal was docketed as CA-G.R. CV No. 25739.
On 23 January 1991, the Court of Appeals rendered a decision affirming
the decision of the trial court. It, however, failed to rule on the
defendants' (private respondents') partial appeal from the trial court's
denial of their counterclaim. Upon their motion for reconsideration, the
Court of Appeals promulgated on 6 March 1992 an Amended Decision
13 wherein it ruled that the settlement of Velasco's estate had nothing to
do with the claim of the defendants for the return of the balance of their
account with CBTC/BPI as they were not privy to that case, and that the
defendants, as depositors of CBTC/BPI, are the latter's creditors; hence,
CBTC/BPI should have protected the defendants' interest in Sp. Proc. No.
8959 when the said account was claimed by Velasco's estate. It then
ordered BPI "to pay defendants the amount of P331,261.44 representing
the outstanding balance in the bank account of defendants." 14
On 22 April 1992, BPI filed the instant petition alleging therein that the
Holdout Agreement in question was subject to a suspensive condition
stated therein, viz., that the "P331,261.44 shall become a security for
respondent Lim's promissory note only if respondents' Lim and Eastern
Plywood Corporation's interests to that amount are established as a result
of a final and definitive judicial action or a settlement between and
among the contesting parties thereto." 15 Hence, BPI asserts, the Court of
Appeals erred in affirming the trial court's decision dismissing the
complaint on the ground that it was the duty of CBTC to debit the
account of the defendants to set off the amount of P73,000.00 covered by
the promissory note.
Private respondents Eastern and Lim dispute the "suspensive condition"
argument of the petitioner. They interpret the findings of both the trial
and appellate courts that the money deposited in the joint account of
Velasco and Lim came from Eastern and Lim's own account as a finding
that the money deposited in the joint account of Lim and Velasco
"rightfully belong[ed] to Eastern Plywood Corporation and/or Benigno
Lim." And because the latter are the rightful owners of the money in
question, the suspensive condition does not find any application in this
case and the bank had the duty to set off this deposit with the loan. They
add that the ruling of the lower court that they own the disputed amount
is the final and definitive judicial action required by the Holdout
Agreement; hence, the petitioner can only hold the amount of P73,000.00
representing the security required for the note and must return the rest. 16
The petitioner filed a Reply to the aforesaid Comment. The private
respondents filed a Rejoinder thereto.
We gave due course to the petition and required the parties to submit
simultaneously their memoranda.
The key issues in this case are whether BPI can demand payment of the
loan of P73,000.00 despite the existence of the Holdout Agreement and
whether BPI is still liable to the private respondents on the account
subject of the Holdout Agreement after its withdrawal by the heirs of
Velasco.
The collection suit of BPI is based on the promissory note for
P73,000.00. On its face, the note is an unconditional promise to pay the
said amount, and as stated by the respondent Court of Appeals, "[t]here is
no question that the promissory note is a negotiable instrument." 17 It
further correctly ruled that BPI was not a holder in due course because
the note was not indorsed to BPI by the payee, CBTC. Only a negotiation
by indorsement could have operated as a valid transfer to make BPI a
holder in due course. It acquired the note from CBTC by the contract of
merger or sale between the two banks. BPI, therefore, took the note
subject to the Holdout Agreement.
We disagree, however, with the Court of Appeals in its interpretation of
the Holdout Agreement. It is clear from paragraph 02 thereof that CBTC,
or BPI as its successor-in-interest, had every right to demand that Eastern
and Lim settle their liability under the promissory note. It cannot be
compelled to retain and apply the deposit in Lim and Velasco's joint
account to the payment of the note. What the agreement conferred on
CBTC was a power, not a duty. Generally, a bank is under no duty or
obligation to make the application. 18 To apply the deposit to the
payment of a loan is a privilege, a right of set-off which the bank has the
option to exercise. 19
Also, paragraph 05 of the Holdout Agreement itself states that
notwithstanding the agreement, CBTC was not in any way precluded
from demanding payment from Eastern and from instituting an action to
recover payment of the loan. What it provides is an alternative, not an
exclusive, method of enforcing its claim on the note. When it demanded
payment of the debt directly from Eastern and Lim, BPI had opted not to
exercise its right to apply part of the deposit subject of the Holdout
Agreement to the payment of the promissory note for P73,000.00. Its suit
for the enforcement of the note was then in order and it was error for the
trial court to dismiss it on the theory that it was set off by an equivalent
portion in C/A No. 2310-001-42 which BPI should have debited. The
Court of Appeals also erred in affirming such dismissal.
The "suspensive condition" theory of the petitioner is, therefore,
untenable.
The Court of Appeals correctly decided on the counterclaim. The
counterclaim of Eastern and Lim for the return of the P331,261.44 20
was equivalent to a demand that they be allowed to withdraw their
deposit with the bank. Article 1980 of the Civil Code expressly provides
that "[f]ixed, savings, and current deposits of money in banks and similar
institutions shall be governed by the provisions concerning simple loan."
In Serrano vs. Central Bank of the Philippines, 21 we held that bank
deposits are in the nature of irregular deposits; they are really loans
because they earn interest. The relationship then between a depositor and
a bank is one of creditor and debtor. The deposit under the questioned
account was an ordinary bank deposit; hence, it was payable on demand
of the depositor. 22
The account was proved and established to belong to Eastern even if it
was deposited in the names of Lim and Velasco. As the real creditor of
the bank, Eastern has the right to withdraw it or to demand payment
thereof. BPI cannot be relieved of its duty to pay Eastern simply because
it already allowed the heirs of Velasco to withdraw the whole balance of
the account. The petitioner should not have allowed such withdrawal
because it had admitted in the Holdout Agreement the questioned
ownership of the money deposited in the account. As early as 12 May
1979, CBTC was notified by the Corporate Secretary of Eastern that the
deposit in the joint account of Velasco and Lim was being claimed by
them and that one-half was being claimed by the heirs of Velasco. 23
Moreover, the order of the court in Sp. Proc. No. 8959 merely authorized
the heirs of Velasco to withdraw the account. BPI was not specifically
ordered to release the account to the said heirs; hence, it was under no
judicial compulsion to do so. The authorization given to the heirs of
Velasco cannot be construed as a final determination or adjudication that
the account belonged to Velasco. We have ruled that when the ownership
of a particular property is disputed, the determination by a probate court
of whether that property is included in the estate of a deceased is merely
provisional in character and cannot be the subject of execution. 24
Because the ownership of the deposit remained undetermined, BPI, as the
debtor with respect thereto, had no right to pay to persons other than
those in whose favor the obligation was constituted or whose right or
authority to receive payment is indisputable. The payment of the money
deposited with BPI that will extinguish its obligation to the creditor-
depositor is payment to the person of the creditor or to one authorized by
him or by the law to receive it. 25 Payment made by the debtor to the
wrong party does not extinguish the obligation as to the creditor who is
without fault or negligence, even if the debtor acted in utmost good faith
and by mistake as to the person of the creditor, or through error induced
by fraud of a third person. 26 The payment then by BPI to the heirs of
Velasco, even if done in good faith, did not extinguish its obligation to
the true depositor, Eastern.
In the light of the above findings, the dismissal of the petitioner's
complaint is reversed and set aside. The award on the counterclaim is
sustained subject to a modification of the interest.

WHEREFORE, the instant petition is partly GRANTED. The challenged
amended decision in CA-G.R. CV No. 25735 is hereby MODIFIED
1245
PNB v. Pineda (197 Scra 1)
Facts:
In this petition for certiorari, petitioner Philippine National Bank (PNB)
seeks to annul and set aside the orders dated March 4, 1977 and May 31,
1977 rendered in Civil Case No. 24422 1 of the Court of First Instance of
Rizal, Branch XXI, respectively granting private respondent Tayabas
Cement Company, Inc.'s application for a writ of preliminary injunction
to enjoin the foreclosure sale of certain properties in Quezon City and
Negros Occidental and denying petitioner's motion for reconsideration
thereof.
In 1963, Ignacio Arroyo and Tuason Arroyo (the Arroyo Spouses),
obtained a loan of P580,000.00 from PNB secured by La Vista, a parcel
of land in order too purchase 60% of the subscribed capital stock, and
thereby acquire the controlling interest of private respondent Tayabas
Cement Company, Inc. (TCC).
Thereafter, TCC filed with petitioner bank an application and agreement
for the establishment of an eight (8) year deferred letter of credit (L/C)
for $7,000,000.00 in favor of Toyo Menka Kaisha, Ltd. of Tokyo, Japan,
to cover the importation of a cement plant machinery and equipment.
Upon approval of said application and opening of an L/C by PNB in
favor of Toyo Menka Kaisha, Ltd. for the account of TCC, the Arroyo
spouses executed the following documents to secure this loan
accommodation: Surety Agreement dated August 5, 1964 and Covenant
dated August 6, 1964.
The imported cement plant machinery and equipment arrived from Japan
and were released to TCC under a trust receipt agreement. Subsequently,
Toyo Menka Kaisha, Ltd. made the corresponding drawings against the
L/C as scheduled. TCC, however, failed to remit and/or pay the
corresponding amount covered by the drawings. Thus, on May 19, 1968,
pursuant to the trust receipt agreement, PNB notified TCC of its intention
to repossess, as it later did, the imported machinery and equipment for
failure of TCC to settle its obligations under the L/C.
The Arroyos failed to settle their obligations the La Vista property was
foreclosed with PNB winning the bid.
However, when said property was about to be awarded to PNB, the
representative of the mortgagor-spouses objected and demanded from the
PNB the difference between the bid price of P1,000,001.00 and the
indebtedness of P499,060.25 of the Arroyo spouses on their personal
account. It was the contention of the spouses Arroyo's representative that
the foreclosure proceedings referred only to the personal account of the
mortgagor spouses without reference to the account of TCC.
To remedy the situation, PNB filed a supplemental petition on August 13,
1975 requesting the Sheriff's Office to proceed with the sale of the
subject real properties to satisfy not only the amount of P499,060.25
owed by the spouses Arroyos on their personal account but also the
amount of P35,019,901.49 exclusive of interest, commission charges and
other expenses owed by said spouses as sureties of TCC. Said petition
was opposed by the spouses Arroyo and the other bidder, Jose L.
Araneta.
On October 5, 1976, the CFI, thru respondent Judge Gregorio Pineda,
issued a restraining order and on March 4, 1977, granted a writ of
preliminary injunction. PNB's motion for reconsideration was denied,
hence this petition.
Issue: Whether or not TCC's liability has been extinguished by the
repossession of PNB of the imported cement plant machinery and
equipment.
Ruling:
“We rule for the petitioner PNB. It must be remembered that PNB took
possession of the imported cement plant machinery and equipment
pursuant to the trust receipt agreement executed by and between PNB and
TCC giving the former the unqualified right to the possession and
disposal of all property shipped under the Letter of Credit until such time
as all the liabilities and obligations under said letter had been discharged.
PNB's possession of the subject machinery and equipment being
precisely as a form of security for the advances given to TCC under the
Letter of Credit, said possession by itself cannot be considered payment
of the loan secured thereby. Payment would legally result only after PNB
had foreclosed on said securities, sold the same and applied the proceeds
thereof to TCC's loan obligation. Mere possession does not amount to
foreclosure for foreclosure denotes the procedure adopted by the
mortgagee to terminate the rights of the mortgagor on the property and
includes the sale itself.
Neither can said repossession amount to dacion en pago. Dation in
payment takes place when property is alienated to the creditor in
satisfaction of a debt in money and the same is governed by sales. Dation
in payment is the delivery and transmission of ownership of a thing by
the debtor to the creditor as an accepted equivalent of the performance of
the obligation. As aforesaid, the repossession of the machinery and
equipment in question was merely to secure the payment of TCC's loan
obligation and not for the purpose of transferring ownership thereof to
PNB in satisfaction of said loan. Thus, no dacion en pago was ever
accomplished.
Proceeding from this finding, PNB has the right to foreclose the
mortgages executed by the spouses Arroyo as sureties of TCC. A surety
is considered in law as being the same party as the debtor in relation to
whatever is adjudged touching the obligation of the latter, and their
liabilities are interwoven as to be inseparable. 21 As sureties, the Arroyo
spouses are primarily liable as original promissors and are bound
immediately to pay the creditor the amount outstanding.
Under Presidential Decree No. 385 which took effect on January 31,
1974, government financial institutions like herein petitioner PNB are
required to foreclose on the collaterals and/or securities for any loan,
credit or accommodation whenever the arrearages on such account
amount to at least twenty percent (20%) of the total outstanding
obligations, including interests and charges, as appearing in the books of
account of the financial institution concerned. 23 It is further provided
therein that "no restraining order, temporary or permanent injunction
shall be issued by the court against any government financial institution
in any action taken by such institution in compliance with the mandatory
foreclosure provided in Section 1 hereof, whether such restraining order,
temporary or permanent injunction is sought by the borrower(s) or any
third party or parties . . ."
WHEREFORE, the instant petition is hereby granted.
Tayag v. CA ( March 3, 1993)
The deed of conveyance executed on May 28, 1975 by Juan Galicia, Sr.,
prior to his demise in 1979, and Celerina Labuguin, in favor of Albrigido
Leyva involving the undivided one-half portion of a piece of land situated
at Poblacion, Guimba, Nueva Ecija for the sum of P50,000.00 under the
following terms:
"1. The sum of PESOS: THREE THOUSAND (P3,000.00) is
HEREBY acknowledged to have been paid upon the execution of this
agreement;
2. The sum of PESOS: TEN THOUSAND (P10,000.00) shall be
paid within ten (10) days from and after the execution of this agreement;
3. The sum of PESOS: TEN THOUSAND (P10,000.00)
represents the VENDORS’ indebtedness with the Philippine Veterans
Bank which is hereby assumed by the VENDEE; and
4. The balance of PESOS: TWENTY SEVEN THOUSAND
(P27,000.00) shall be paid within one (1) year from and after the
execution of this instrument." (p. 53, Rollo).chanroblesvirtualawlibrary0
is the subject matter of the present litigation between the heirs of Juan
Galicia, Sr. who assert breach of the conditions as against private
respondent’s claim anchored on full payment and compliance with the
stipulations thereof.

The court of origin which tried the suit for specific performance filed by
private respondent on account of the herein petitioners’ reluctance to
abide by the covenant, ruled in favor of the vendee (p. 64, Rollo) while
respondent court practically agreed with the trial court except as to the
amount to be paid to petitioners and the refund to private respondent are
concerned (p. 46, Rollo).
There is no dispute that the sum of P3,000.00 listed as first installment
was received by Juan Galicia, Sr. According to petitioners, of the
P10,000.00 to be paid within ten days from execution of the instrument,
only P9,707.00 was tendered to, and received by, them on numerous
occasions from May 29, 1975, up to November 3, 1979. Concerning
private respondent’s assumption of the vendors’ obligation to the
Philippine Veterans Bank, the vendee paid only the sum of P6,926.41
while the difference of the indebtedness came from Celerina Labuguin (p.
73, Rollo). Moreover, petitioners asserted that not a single centavo of the
P27,000.00 representing the remaining balance was paid to them.
Because of the apprehension that the heirs of Juan Galicia, Sr. are
disavowing the contract inked by their predecessor, private respondent
filed the complaint for specific performance.
In addressing the issue of whether the conditions of the instrument were
performed by herein private respondent as vendee, the Honorable
Godofredo G. Rilloraza, Presiding Judge of Branch 31 of the Regional
Trial Court, Third Judicial Region stationed at Guimba, Nueva Ecija,
decided to uphold private respondent’s theory on the basis of constructive
fulfillment under Article 1186 and estoppel through acceptance of
piecemeal payments in line with Article 1235 of the Civil Code.
Anent the P10,000.00 specified as second installment, the lower court
counted against the vendors the candid statement of Josefina Tayag who
sat on the witness stand and made the admission that the check issued as
payment thereof was nonetheless paid on a staggered basis when the
check was dishonored (TSN, September 1, 1983, pp. 3-4; p. 3, Decision;
p. 66, Rollo). Regarding the third condition, the trial court noted that
plaintiff below paid more than P6,000.00 to the Philippine Veterans Bank
but Celerina Labuquin, the sister and co-vendor of Juan Galicia, Sr. paid
P3,778.77 which circumstance was construed to be a ploy under Article
1186 of the Civil Code that "prematurely prevented plaintiff from paying
the installment fully" and "for the purpose of withdrawing the title to the
lot." The acceptance by petitioners of the various payments even beyond
the periods agreed upon, was perceived by the lower court as tantamount
to faithful performance of the obligation pursuant to Article 1235 of the
Civil Code. Furthermore, the trial court noted that private respondent
consigned P18,520.00, an amount sufficient to offset the remaining
balance, leaving the sum of P1,315.00 to be credited to private
Respondent.
On September 12, 1984, judgment was rendered:
"1. Ordering the defendants — heirs of Juan Galicia, to execute the
Deed of Sale of their undivided ONE HALF (1/2) portion of Lot No.
1130, Guimba Cadastre, covered by TCT No. NT-120563, in favor of
plaintiff Albrigido Leyva, with an equal frontage facing the national road
upon finality of judgment; that, in their default, the Clerk of Court II, is
hereby ordered to execute the deed of conveyance in line with the
provisions of Section 10, Rule 39 of the Rules of Court;chanrobles.com :
virtual law library
2. Ordering the defendants, heirs of Juan Galicia, jointly and
severally to pay attorney’s fees of P6,000.00 and the further sum of
P3,000.00 for actual and compensatory damages;
3. Ordering Celerina Labuguin and the other defendants herein to
surrender to the Court the owner’s duplicate of TCT No. NT-120563,
province of Nueva Ecija, for the use of plaintiff in registering the portion,
subject matter of the instant suit;
4. Ordering the withdrawal of the amount of P18,520.00 now
consigned with the Court, and the amount of P17,204.75 be delivered to
the heirs of Juan Galicia as payment of the balance of the sale of the lot
in question, the defendants herein after deducting the amount of
attorney’s fees and damages awarded to the plaintiff hereof and the
delivery to the plaintiff of the further sum of P1,315.25 excess or over
payment and, defendants to pay the cost of the suit." (p. 69, Rollo).
and following the appeal interposed with respondent court, Justice Dayrit
with whom Justices Purisima and Aldecoa, Jr. concurred, modified the
fourth paragraph of the decretal portion to read:jgc:chanrobles.com.ph
"4. Ordering the withdrawal of the amount of P18,500.00 now
consigned with the Court, and that the amount of P16,870.52 be delivered
to the heirs of Juan Galicia, Sr. as payment to the unpaid balance of the
sale, including the reimbursement of the amount paid to Philippine
Veterans Bank, minus the amount of attorney’s fees and damages
awarded in favor of plaintiff. The excess of P1,649.48 will be returned to
plaintiff. The costs against defendants." (p. 51, Rollo).
As to how the foregoing directive was arrived at, the appellate court
declared:jgc:chanrobles.com.ph
"With respect to the fourth condition stipulated in the contract, the period
indicated therein is deemed modified by the parties when the heirs of
Juan Galicia, Sr. accepted payments without objection up to November 3,
1979. On the basis of receipts presented by appellee commencing from
August 8, 1975 up to November 3, 1979, a total amount of P13,908.25
has been paid, thereby leaving a balance of P13,091.75. Said unpaid
balance plus the amount reimbursable to appellant in the amount of
P3,778.77 will leave an unpaid total of P16,870.52. Since appellee
consigned in court the sum of P18,500.00, he is entitled to get the excess
of P1,629.48. Thus, when the heirs of Juan Galicia, Sr. (obligees)
accepted the performance, knowing its incompleteness or irregularity and
without expressing any protest or objection, the obligation is deemed
fully complied with (Article 1235, Civil Code)." (p. 50, Rollo)
Petitioners are of the impression that the decision appealed from, which
agreed with the conclusions of the trial court, is vulnerable to attack via
the recourse before Us on the principal supposition that the full
consideration of the agreement to sell was not paid by private respondent
and, therefore, the contract must be rescinded.
The suggestion of petitioners that the covenant must be cancelled in the
light of private respondent’s so-called breach seems to overlook
petitioners’ demeanor who, instead of immediately filing the case
precisely to rescind the instrument because of non-compliance, allowed
private respondent to effect numerous payments posterior to the grace
periods provided in the contract. This apathy of petitioners who even
permitted private respondent to take the initiative in filing the suit for
specific performance against them, is akin to waiver or abandonment of
the right to rescind normally conferred by Article 1191 of the Civil Code.
As aptly observed by Justice Gutierrez, Jr. in Angeles v. Calasanz (135
SCRA 323 [1985]; 4 Paras, Civil Code of the Philippines Annotated,
Twelfth Ed. [1989], p. 203):chanrobles.com : virtual law library
". . . We agree with the plaintiffs-appellees that when the defendants-
appellants, instead of availing of their alleged right to rescind, have
accepted and received delayed payments of installments, though the
plaintiffs-appellees have been in arrears beyond the grace period
mentioned in paragraph 6 of the contract, the defendants-appellants have
waived, and are now estopped from exercising their alleged right of
rescission . . ."cralaw virtua1aw library
In Development Bank of the Philippines v. Sarandi (5 CAR (25) 811;
817-818; cited in 4 Padilla, Civil Code Annotated, Seventh Ed. [1987],
pp. 212-213) a similar opinion was expressed to the effect
that:jgc:chanrobles.com.ph
"In a perfected contract of sale of land under an agreed schedule of
payments, while the parties may mutually oblige each other to compel the
specific performance of the monthly amortization plan, and upon failure
of the buyer to make the payment, the seller has the right to ask for a
rescission of the contract under Art. 1191 of the Civil Code, this shall be
deemed waived by acceptance of posterior payments."cralaw virtua1aw
library
Both the trial and appellate courts were, therefore, correct in sustaining
the claim of private respondent anchored on estoppel or waiver by
acceptance of delayed payments under Article 1235 of the Civil Code in
that:jgc:chanrobles.com.ph
"When the obligee accepts the performance, knowing its incompleteness
or irregularity, and without expressing any protest or objection, the
obligation is deemed fully complied with."cralaw virtua1aw library
considering that the heirs of Juan Galicia, Sr. accommodated private
respondent by accepting the latter’s delayed payments not only beyond
the grace periods but also during the pendency of the case for specific
performance (p. 27, Memorandum for petitioners; p. 166, Rollo). Indeed,
the right to rescind is not absolute and will not be granted where there has
been substantial compliance by partial payments (4 Caquioa, Comments
and Cases on Civil Law, First Ed. [1968], p. 132). By and large,
petitioners’ actuation is susceptible of but one construction — that they
are now estopped from reneging from their commitment on account of
acceptance of benefits arising from overdue accounts of private
Respondent.
Now, as to the issue of whether payments had in fact been made, there is
no doubt that the second installment was actually paid to the heirs of Juan
Galicia, Sr. due to Josefina Tayag’s admission in judicio that the sum of
P10,000.00 was fully liquidated. It is thus erroneous for petitioners to
suppose that "the evidence in the records do not support this conclusion"
(p. 18, Memorandum for Petitioners; p. 157, Rollo). A contrario, when
the court of origin, as well as the appellate court, emphasized the frank
representation along this line of Josefina Tayag before the trial court
(TSN, September 1, 1983, pp. 3-4; p. 5, Decision in CA-G.R. CV No.
13339, p. 50, Rollo; p. 3, Decision in Civil Case No. 681-G, p. 66,
Rollo), petitioners chose to remain completely mute even at this stage
despite the opportunity accorded to them, for clarification. Consequently,
the prejudicial aftermath of Josefina Tayag’s spontaneous reaction may
no longer be obliterated on the basis of estoppel (Article 1431, Civil
Code; Section 4, Rule 129; Section 2(a), Rule 131, Revised Rules on
Evidence).
Insofar as the third item of the contract is concerned, it may be recalled
that respondent court applied Article 1186 of the Civil Code on
constructive fulfillment which petitioners claim should not have been
appreciated because they are the obligees while the proviso in point
speaks of the obligor. But, petitioners must concede that in a reciprocal
obligation like a contract of purchase (Ang v. Court of Appeals, 170
SCRA 286 [1989]; 4 Paras, supra, at p. 201), both parties are mutually
obligors and also obligees (4 Padilla, supra, at p. 197), and any of the
contracting parties may, upon non-fulfillment by the other privy of his
part of the prestation, rescind the contract or seek fulfillment (Article
1191, Civil Code). In short, it is puerile for petitioners to say that they are
the only obligees under the contract since they are also bound as obligors
to respect the stipulation in permitting private respondent to assume the
loan with the Philippine Veterans Bank which petitioners impeded when
they paid the balance of said loan. As vendors, they are supposed to
execute the final deed of sale upon full payment of the balance as
determined hereafter. Lastly, petitioners argue that there was no valid
tender of payment nor consignation of the sum of P18,520.00 which they
acknowledge to have been deposited in court on January 22, 1981 five
years after the amount of P27,000.00 had to be paid (p. 23, Memorandum
for Petitioners; p. 162, Rollo). Again this suggestion ignores the fact that
consignation alone produced the effect of payment in the case at bar
because it was established below that two or more heirs of Juan Galicia,
Sr. claimed the same right to collect (Article 1256, (4), Civil Code; pp. 4-
5, Decision in Civil Case No. 681-G; pp. 67-68, Rollo). Moreover,
petitioners did not bother to refute the evidence on hand that, aside from
the P18,520.00 (not P18,500.00 as computed by respondent court) which
was consigned, private respondent also paid the sum of P13,908.25
(Exhibits "F" to "CC" ; p. 50, Rollo). These two figures representing
private respondent’s payment of the fourth condition amount to
P32,428.25, less the P3,778.77 paid by petitioners to the bank, will lead
us to the sum of P28,649.48 or a refund of P1,649.48 to private
respondent as overpayment of the P27,000.00 balance.
WHEREFORE, the petition is hereby DISMISSED and the decision
appealed from is hereby AFFIRMED with the slight modification
SO ORDERED.
1249
Cebu v. Ca ( October 12, 1999)
FACTS
Vicente Alegre invested with Cebu International Finance Corporation
(CIFC) P500,000 in cash. CIFC issued promissory note which covered
private respondent’s placement. CIFC issued BPI Check No. 513397 (the
Check) in favor of private respondent as proceeds of his matured
investment. Mrs. Alegre deposited the Check with RCBC but BPI
dishonoured it, annotating therein that the “Check is subject of an
investigation”. BPI took possession of the Check pending investigation of
several counterfeit checks drawn against CIFC’s checking account.
Private respondent demanded from CIFC that he be paid in cash but the
latter refused. Private respondent Alegre filed a case for recovery of a
sum of money against CIFC.
CIFC asserts that since BPI accepted the instrument, the bank became
primarily liable for the payment of the Check. When BPI offset the value
of the Check against the losses from the forged cheks allegedly
committed by private respondent, the Check was deemed paid.
ISSUE
Whether or not petitioner CIFC is discharged from the liability of paying
the value of the Check.
HELD
The Court held in the negative. In a money market transaction, the
investor is a lender who loans his money to a borrower through a
middleman or dealer. A check is not legal tender, and therefore cannot
constitute valid tender of payment. Since a negotiable instrument is only
substitute for money and not money, the delivery of such an instrument
does not by itself, operate as payment. Mere delivery of checks does not
discharge the obligation under a judgment. The obligation is not
extinguished and remains suspended until the payment by commercial
document is actually realized. (Article 1249)
Petition denied.
Tibajia v. Ca (223 Scra 163)
FACTS
Tibajia spouses delivered to Sheriff the total money judgment in cashier’s
check and cash.Private respondent, Eden Tan, refused to accept the
payment made by the Tibajia spouses and instead insisted that the
garnished funds deposited with the cashier of the Regional Trial Court of
Pasig, Metro Manila be withdrawn to satisfy the judgment obligation.
Tibajias filed a motion to lift the writ of execution on the ground that the
judgment debt had already been paid. The motion was denied.
ISSUE
Whether or not payment by means of cashier’s check is considered
payment in legal tender.
RULING
NO. A check, whether a manager’s check or ordinary check, is not legal
tender, and an offer of a check in payment of a debt is not a valid tender
of payment and may be refused receipt by the obligee or creditor. A
check is not legal tender and that a creditor may validly refuse payment
by check, whether it be a manager’s, cashier’s or personal check. The
Supreme Court stressed that, “We are not, by this decision, sanctioning
the use of a check for the payment of obligations over the objection of the
creditor.”
1256
Tayag v. CA ( March 3, 1993)
Tibajia v. Ca (223 Scra 163)
(please refer to 1249)
Velez v. Avelino (127 Scra 602)
This is a petition for certiorari filed by Cresencio, Magin, Juanito,
Socrates and Imelda, all surnamed Velez, seeking the reversal, for grave
abuse of discretion, the decision dated May 22, 1978 of the Court of First
Instance of Cebu, Branch XIII dismissing their complaint for recovery of
possession of five parcels of land pursuant to Presidential Decree No. 20.
The evidence shows that the five parcels of land all located at Katipunan
Street, Cebu City, then assessed at P17,000.00 and known as Lots 5311-
A-2-A, 5311-A-2-B, 5311-A-2-C, 5311-A-2-D and 5311-A-2-F, were
formerly owned by Rodrigo Velez, the father of petitioners. In an
extrajudicial partition, the said lots were adjudicated to petitioners herein
on June 16, 1970. As early as 1970, petitioners made a demand to vacate
upon respondents who asked an extension of one year but thereafter,
respondents changed their minds and refused to vacate. Around the end
of 1973, petitioners again advised respondents that they needed the
premises for their own use and ordered them to vacate the premises by
removing their dwelling units from the lots. Upon their refusal,
petitioners filed an ejectment case before the City Court of Cebu, which
case was docketed as Civil Case No. R-17011. On motion of respondents,
the City Court dismissed the case without prejudice in an Order dated
August 3, 1974 on the ground that there exists no cause of action,
following the suspension of judicial ejectment by Presidential Decree No.
20. On July 3, 1976, petitioners made again an extrajudicial demand in a
letter which required respondents to vacate the premises within 15 days at
the same time threatening them with prosecution under Presidential
Decree No. 772 for the crime of squatting. On August 5, 1976, petitioners
filed the complaint for recovery of possession of the aforesaid five
parcels of land alleging that except for Magin Velez, they have no other
lot of their own and are living on other persons’ premises; that
respondents are not only occupying the premises but also accepting
boarders and/or using the same for commercial purposes and that several
demands have been made to give way to the needs of petitioners and their
respective families but respondents maliciously, abusively and defiantly
refused to accede to petitioners’ lawful demands.
In their answer, respondents admitted the ownership of the land by
petitioners. But in their special and affirmative defenses, they alleged that
they have been occupying portions of the lots by virtue of oral
agreements of lease for an indefinite period, paying monthly rentals for
their respective portions ranging from P4.00 to P12.00; that the present
action is barred by res judicata and or prior judgment and that the present
action, if at all there is any cause of action, is essentially one for unlawful
detainer since the last demand to vacate was made less than a year ago.
Eight of the twenty respondents testified that they are the original
occupants of the lots while two of them, Segundo Macatol and Hilario
Gaviola, claimed to have bought their houses from third persons with the
understanding that they should pay rentals to the landowner, Rodrigo
Velez. They also testified that they have been paying rentals for their
respective portions ranging from P4.00 to P12.00. In support of their
claim of payment of rentals, at least six of them presented one or two
receipts dated 1973 or earlier (Exhibits 2, 2-A to 2-I) and claimed that
other receipts were lost. But all respondents admitted not having paid
rentals since 1973, some reasoning out that nobody collected and others
claiming that Fabiola Velez Garganera, Rodrigo Velez’ daughter, refused
to accept their rentals. At least one of them, Hilario Gaviola, produced
what he claimed as a building permit but the same turned out to be a mere
application.chanrobles virtual lawlibrary
After the case was submitted for decision, the trial court ruled
"It appearing that the defendants are lessees of the portions of the land in
question wherein their respective dwelling units are erected, personal use
by the plaintiffs and/or then families of the said land, cannot be a valid
ground for judicial ejectment of the former, pursuant to Presidential
Decree No. 20, issued by the President on March 15, 1977." (sic, should
be October 12, 1972). (Decision of the CFI, p. 5; Rollo, p. 30).
On the ground that respondent Judge of the Court of First Instance of
Cebu acted with grave abuse of discretion in the exercise of his judicial
functions by holding that private respondents are lessees and, therefore,
privileged to continue staying on the lots in question pursuant to
Presidential Decree No. 20, the plaintiffs below brought this instant
petition for certiorari.
Petitioners contend that the preponderance of evidence shows that the
occupancy of private respondents on the lots in question is due to the
tolerance of the owners thereof and against the latter’s will.
Conceding that respondents are lessees, petitioners claim that Presidential
Decree No. 20 does not mean that (1) they are freed from paying rentals
for the lots in question; (2) they can use the lots for commercial purposes;
and (3) they can refuse to adduce evidence — specifically referring to the
twelve respondents who did not testify on their behalf.
In answer to the argument of respondents that they are willing to pay
rentals if petitioners send collectors, petitioners cite Article 1256 of the
Civil Code where mere willingness to pay is not payment,
thus:jgc:chanrobles.com.ph
"Art. 1256. If the creditor to whom tender of payment has been
made refuses without just cause to accept it, the debtor shall be released
from responsibility by the consignation of the thing or sum due."cralaw
virtua1aw library
Petitioners also claim that they had presented evidence that some
respondents, particularly Natividad Bajaras, Maura Belarma and Placida
Tejano, are using the premises not only as residences but also stores
while Alding Acedera is using her residence as a boarding house, thereby
removing said respondents from the protective mantle of Presidential
Decree No. 20.
Finally, petitioners invoke the equal protection rights guaranteed by the
Constitution contending that respondent Judge’s undue application of
Presidential Decree No. 20 in spite of the undisputed fact that petitioners
have no other lot of their own and are renting other people’s properties,
except Magin Velez (who nevertheless wants to recover his property for
the use of one of his children who is married), constitutes a denial of said
constitutional provision.chanrobles law library : red
Whether or not respondent Judge acted with grave abuse of discretion
must be resolved in the affirmative.
It should be recalled that this is a case of accion publiciana, the purpose
of which is being to establish who have a better right to possess.
(Bernabe, Et. Al. v. Judge Dayrit, Et Al., G.R. No. 58399, Oct. 27, 1983).
There is no allegation of forcible entry in the complaint. Neither is it a
case of unlawful detainer because the preponderance of evidence shows
that the occupancy of private respondents on the lot in question is due to
the tolerance of the owners thereof and against the latter’s will. Private
respondents admit that they have no written contract of lease with the
petitioners not with petitioners’ predecessor in interest. Only Marcial
Burgos alleged that he had an oral agreement with Rodrigo Velez, all
others surprisingly failed to testify that they had such an oral agreement
of lease. They likewise admit that their houses were constructed without
building permits. In the true sense of the word, respondents are squatters.
As such, their possession is by tolerance. (Pangilinan v. Aguilar, 43
SCRA 136). Although respondents had been paying nominal rentals
ranging from P4.00 to P12.00 per month for some time, they did not
thereby acquire the legal status of tenants. Squatting is unlawful and no
amount of acquiescence converts it into a lawful act. Illegal constructions
constitute public nuisance per se. They pose problems of health and
sanitation. (Cf. City of Manila v. Garcia, Et Al., 19 SCRA 413).

Even if the case were to be decided as an ejectment case, the insistence of
respondents that they are lessees and, therefore, under the protective
mantle of Presidential Decree No. 20 loses ground when We consider the
finding of fact that respondents had not been paying any consideration for
the occupancy of their respective premises. Said Presidential Decree No.
20 suspended ejectment when the lease is for an indefinite period. It did
not suspend ejectment on other grounds like lack of payment of the rental
stipulated.chanrobles virtual lawlibrary
The failure of the owners to collect, or their refusal to accept the rentals
are not valid defenses. Article 1256 of the Civil Code provides that "if the
creditor to whom tender of payment has been made refuses without just
cause to accept it, the debtor shall be released from responsibility by the
consignation of the thing or sum due."cralaw virtua1aw library
Independently of the foregoing, the petitioners’ need of the premises for
their own use or for the use of any member of his family as a residential
unit entitles them to the possession of the lots in question. Batas
Pambansa Blg. 25, which took effect on April 10, 1979, provides as
additional ground for judicial ejectment the need of the owner/lessor to
repossess his property for his own use or for the use of any member of his
family as a residential unit, such owner or immediate member not being
the owner of any other available residential unit.chanrobles.com.ph :
virtual law library
Even before the effectivity of Batas Pambansa Blg. 25, Presidential
Decree No. 20 had been held to be not without exception. In Ongchengco
v. City Court of Zamboanga, 95 SCRA 313, this Court ruled that
"extreme necessity for personal use of the property entitles the owner to
exemption from the operation of PD 20 which suspends the provision of
Article 1673 of the Civil Code on judicial ejectment." The case of Betts
v. Matias, 97 SCRA 439, reaffirmed that "Presidential Decree No. 20
does not sanction the deprivation of a lessor of residential property in
extreme need of the leased premises for his own use of his right to
terminate the lease and recover possession of his property." Then, in
Sinclair v. Court of Appeals, 115 SCRA 318, this Court held that "a strict
and rigid compliance with Presidential Decree No. 20 is not in order, for
an exemption from its provisions is warranted for humanitarian reasons."
Again, in Tan Tok Lee v. CFI of Kaloocan City, 121 SCRA 438, this
Court said that "petitioners’ reliance on the provision of Presidential
Decree No. 20 is not well taken. It could not have been the intention of
the said decree to deprive the owner of the rightful use of her home, more
so, when petitioners reneged on their promise to look for another house in
the mistaken belief that PD 20 gave them a preferential right over that of
the owner. To deny the owner of the use and possession of her property
would be tantamount to depriving her of her constitutional right to
abode." In Rantael v. Court of Appeals, Et Al., 97 SCRA 453, this Court
upheld the right of the lessor to judicially eject the lessee on the ground
not only that "expiration of period of written lease contract is manifestly
present" but also because Batas Pambansa Blg. 25 which superseded P.D.
20 "buttresses the right of respondent Llave to judicially eject petitioner
Rantael from the leased premises." In Santos v. Court of Appeals and
Paraguas, G.R. No. L-45071, May 30, 1983, this Court held that "the
retroactive application of Batas Pambansa Blg. 25 to pending ejectment
cases is already a settled matter and may no longer be questioned.
(Alejandro Melchor, Jr., etc. v. Hon. Jose L. Morja, etc., Et Al., G.R. No.
L-35256, March 17, 1983; Gutierrez v. Cantada, 90 SCRA 1;
Ongchengco v. City Court of Zamboanga, 95 SCRA 313; Betts v. Matias,
97 SCRA 439). It was also held therein that "the right of the private
respondents over the property which they own in order to use the same as
their residence, not being owners of any other dwelling place, may not be
denied. Such right is expressly recognized by Batas Pambansa Blg. 25.
Elemental sense of justice and fairness dictates that it must be so."
WHEREFORE, the petition for certiorari is granted.
1258
Cebu v. CA ( october 12, 1999)
FACTS
Vicente Alegre invested with Cebu International Finance Corporation
(CIFC) P500,000 in cash. CIFC issued promissory note which covered
private respondent’s placement. CIFC issued BPI Check No. 513397 (the
Check) in favor of private respondent as proceeds of his matured
investment. Mrs. Alegre deposited the Check with RCBC but BPI
dishonoured it, annotating therein that the “Check is subject of an
investigation”. BPI took possession of the Check pending investigation of
several counterfeit checks drawn against CIFC’s checking account.
Private respondent demanded from CIFC that he be paid in cash but the
latter refused. Private respondent Alegre filed a case for recovery of a
sum of money against CIFC.
CIFC asserts that since BPI accepted the instrument, the bank became
primarily liable for the payment of the Check. When BPI offset the value
of the Check against the losses from the forged cheks allegedly
committed by private respondent, the Check was deemed paid.
ISSUE
Whether or not petitioner CIFC is discharged from the liability of paying
the value of the Check.
HELD
The Court held in the negative. In a money market transaction, the
investor is a lender who loans his money to a borrower through a
middleman or dealer. A check is not legal tender, and therefore cannot
constitute valid tender of payment. Since a negotiable instrument is only
substitute for money and not money, the delivery of such an instrument
does not by itself, operate as payment. Mere delivery of checks does not
discharge the obligation under a judgment. The obligation is not
extinguished and remains suspended until the payment by commercial
document is actually realized. (Article 1249)
Petition denied.
De Mesa v. Ca ( october 19, 1999)
The antecedent facts are as follows:
Petitioner Dolores Ligaya de Mesa owns several parcels of land in
Makati, Pasay City, Cavite, and General Santos City[3] which were
mortgaged to the Development Bank of the Philippines (DBP) as security
for a loan she obtained from the bank. Failing to pay her mortgage debt,
all her mortgaged properties were foreclosed and sold at public auction
held on different days. On April 30, 1977, the Makar property was sold
and the corresponding certificate of sale inscribed on March 10, 1978. On
August 25, 1977, the Naic, Cavite property was sold and the certificate of
sale registered on the same day. On August 30, 1977, the two (2) parcels
of land in Makati were sold at public auction and the certificate of sale
was inscribed on November 25, 1977. And on January 12, 1978, the three
(3) parcels of land in Pasay City were also sold and the certificate of sale
was recorded on the same date. In all the said auction sales, DBP was the
winning bidder.
In a letter dated May 29, 1978, petitioner de Mesa requested DBP that
she be allowed to repurchase her foreclosed properties.
On October 23, 1978, Mrs. de Mesa, under a Deed of Sale with
Assumption of Mortgage,[4] sold the foreclosed properties to private
respondent OSSA under the condition that the latter was to assume the
payment of the mortgage debt by the repurchase of all the properties
mortgaged on installment basis, with an initial payment of P90,000.00
representing 20% of the total obligation.
On October 23, 1978, private respondent OSSA remitted to DBP the
initial payment of P90,000.00, in addition to the amount of P10,000.00
previously paid to the petitioner.
On February 22, 1979, DBP granted petitioners request to repurchase the
foreclosed properties such that in March 1979 a Deed of Conditional Sale
was executed under which DBP agreed to sell the said properties to the
petitioner for the sum of P363,408.20, P90,000.00 of which was to be
paid as initial payment and the balance in seven (7) years on a quarterly
amortization plan, with a first quarterly installment of P15,475.17.
Private respondent OSSA paid DBP the first to eight quarterly
installments from April 11, 1979 to May 8, 1991, in the total amount of
P137,595.31, which installment payments were applied to petitioners
obligation with DBP pursuant to the Deed of Conditional Sale.
On March 11, 1981, petitioner de Mesa notified private respondent
OSSA that she was rescinding the Deed of Sale with Assumption of
Mortgage she executed in favor of the latter on the ground that OSSA
failed to comply with the terms and conditions of their agreement,
particularly the payment of installments to the Development Bank of the
Philippines, the discharge and cancellation of the mortgage on the
property listed in item IV of the first whereas clause, and the payment of
the balance of more or less P45,000.00 to petitioner, representing the
difference between the purchase price of subject properties and the actual
obligation to the DBP.
On April 11, 1981, OSSA offered to pay the amount of P34,363.08,
which is the difference between the purchase price of P500,000.00 and
the mortgage obligation to DBP of P455,636.92, after deducting the
downpayment of P10,000.00 stipulated in said Deed of Sale with
Assumption of Mortgage, but the petitioner refused to accept such
payment. So, on April 28, 1981, OSSA brought a Complaint for
Consignation against the petitioner, docketed as Civil Case No. 41059
before the then Court of First Instance of Rizal, Branch XV, and at the
same time, deposited the amount of P34,363.08 with said court.
On August 5, 1981, DBP refused to accept the 9th quarterly installment
paid by OSSA, prompting the latter to file against DBP and the
petitioner, on August 11, 1981, Civil Case No. 42381 for specific
performance and consignation, with the then Court of First Instance of
Pasig, Rizal, depositing in said case the amount of P15,824.92.
In an Order dated July 23, 1982, the lower court allowed OSSA to
deposit with the Court a quo by way of consignation, all future quarterly
installments without need of formal tenders of payment and service of
notices of consignation. Correspondingly and over the period of time
stipulated, OSSA deposited with the lower court the 10th to the 20th
installments in the aggregate amount of P172, 562.11.
After trial, the lower court came out with a Decision for the private
respondent OSSA, holding thus:
WHEREFORE, premises considered, judgment is hereby rendered (a)
declaring the consignation made by plaintiff as proper and valid and
ordering defendants Dolores Ligaya de Mesa and Development Bank of
the Philippines to withdraw and receive said payments due them which
plaintiff has consigned with the Court;
(b) Ordering defendant Development Bank of the Philippines to furnish
plaintiff with a statement of payments and balance, if any, still due from
defendant de Mesa after applying all payments already received,
including the amounts placed under consignation;
(c) Upon payment by the plaintiff of the balance if any, still due on the
properties, defendant Development Bank of the Philippines shall execute
a Deed of Absolute Sale in favor of the plaintiff over the properties
subject matter of the Deed of Absolute Sale with Assumption of
Mortgage executed by and between plaintiff and defendant de Mesa;
(d) Ordering plaintiff to pay defendant de Mesa the difference, if any,
between the agreed purchase price of P500,000.00 and the payments
made to the defendant Development Bank of the Philippines, less the
P10,000.00 down payment already paid and the P34,363.08 consigned
with the Court; and
(e) Ordering defendant de Mesa to pay plaintiff the sum of P10,000.00 as
attorneys fees.
SO ORDERED.' [5]
The petitioner appealed to the Court of Appeals which handed down on
March 31, 1992, its decision modifying the challenged decision, as
follows:
WHEREFORE, the decision appealed from is hereby MODIFIED:
(a) declaring the consignation made by OSSA as proper and valid as far
as de Mesa is concerned, and ordering de Mesa to receive the said
amount consigned with the court and pay DBP with the said amount;
(b) ordering DBP to furnish de Mesa with a statement of payments and
the balance, if any, still due from de Mesa after applying all payments
already received, including the amounts paid under consignation;
(c) ordering de Mesa to furnish OSSA with a copy of the statement of
payments described in the preceding paragraph, and the balance
appearing therein, if any, shall be paid by OSSA for the account of de
Mesa;
(d) ordering DBP to execute a Deed of Absolute Sale in favor of de Mesa
over the properties subject of the Deed of Conditional Sale;
(e) ordering Ossa to pay de Mesa the difference, if any, between the
agreed purchase price of P500,000.00 and the payments made to DBP,
less the P10,000.00 down payment and the P34,363.08 consigned with
the court;
(f) ordering de Mesa thereafter, to execute a Deed of Absolute Sale in
favor of OSSA over the properties subject of the Deed of Sale with
assumption of Mortgage; and
(g) ordering de Mesa to pay OSSA the sum of P10,000.00 as and for
attorneys fees.
No pronouncement as to costs.
SO ORDERED.[6]
Article 1370 of the New Civil Code, reads:
"Art. 1370. If the terms of a contract are clear and leave no doubt upon
the intention of the contracting parties, the literal meaning of its
stipulation shall control.
xxx
When the words of a contract are plain and readily understood, there is
no room for construction. As the agreement of the parties are reduced to
writing, such agreement is considered as containing all its terms and there
can be, between the parties and their successors-in-interest, no evidence
of the terms of the written agreement other than the contents of the
writing.[8]
In the case under consideration, the terms of the Deed of Sale with
Assumption of Mortgage Debt are clear and leave no doubt as to what
were sold thereunder. It provided as follows:
"WHEREAS, the VENDOR has agreed to sell to the VENDEE (plaintiff
Ossa House, Inc.), and the VENDEE has agreed to purchase form the
VENDOR, all the properties described in Items I, II, and III, of the First
Whereas Clause, for the price and under the terms hereinafter contained;
NOW, THEREFORE, for and in consideration of the premises and the
sum of TEN THOUSAND PESOS (P10,000.00), the receipt whereof is
hereby acknowledged, and the assumption by the VENDEE of the total
mortgage obligation of the VENDOR has sold, transferred, and
conveyed, and by these presents does sell, transfer and convey, unto the
said VENDEE, its administrators and assigns, free from all liens and
encumbrances except as noted herein, the parcels of land hereinabove
described in Items I, II, and III, together with all the buildings and
improvements thereon;

The VENDEE does hereby assume the payment of the mortgage
obligations by repurchase of all the properties mortgaged on installment,
with an initial payment of P90,000.00 representing payment 20% of the
total obligation; and consequently, the within sale is subject to the
mortgage in favor of the Development Bank of the Philippines;
Order dated July 3, 1982. The motion and the subsequent court order
served on the petitioner in the consignation proceedings sufficiently
served as notice to petitioner of OSSAs willingness to pay the quarterly
installments and the consignation of such payments with the court. For
reasons of equity, the procedural requirements of consignation are
deemed substantially complied with in the present case.[13]

Nowhere is it provided in the aforequoted provisions, as the petitioner
insists, that what she sold to respondent OSSA was merely the right to
redeem the mortgaged properties and not the foreclosed properties
themselves. On the contrary, the very words of the contract reveal that
the subject of the sale were all the properties described in items I, II, III
of the First Whereas Clause.
Petitioner also insists that there was no valid tender of payment because
the amount tendered was P34,363.08, not P51,243.26, and assuming ex
gratia argumenti that it was the correct amount, the tender thereof was
still not valid, the same having been made by check. This claim,
however, does not accord with the records on hand. Thus, the Court of
Appeals ratiocinated:

Indeed, the contract under scrutiny is so explicit and unambiguous that it
does not justify any attempt to read into it any supposed intention of the
parties, as the said contract is to be understood literally, just as they
appear on its face.[9]
Petitioner capitalizes on the following prefatory clause of the contract, to
wit:
WHEREAS, the VENDOR (defendant De Mesa) is the registered owner
with a preferential right of redemption of the following mortgaged
properties with the Development Bank of the Philippines, more
particularly described as follows:
The Deed of Sale with Assumption of Mortgage, was for a consideration
of P500,000.00, from which shall be deducted de Mesass outstanding
obligation, with the DBP pegged as of May 10, 1978, by the parties
themselves, at P455,636.92. This amount of P455,636.92 owing DBP, is
what OSSA agreed to assume. What remained to be paid de Mesa was
P44,636.08, but OSSA made an advance payment of P10,000.00, hence
the remaining amount payable to de Mesa is P34,363.08, which OSSA
tendered in cash (Exhibits X, BB and CC).[14]
It is thus beyond cavil that the respondent OSSA tendered the correct
amount, the tender of which was in cash and not by check, as theorized
by petitioner.

However, not the slightest indication can be gleaned from the Premises studiedly considered, the Court is of the ineluctable conclusion,
abovequoted provision that the subject of the Deed of Sale with and so holds, that the Court of Appeals erred not in affirming the decision
Assumption of Mortgage was petitioners right of redemption. The said of the trial court of origin.
provision merely speaks of the preferential right of the latter to redeem
the real properties involved. WHEREFORE, the petition is DENIED and the assailed Decision of the
Court of Appeals in CA-G.R. Nos. 19145 and 19156 dated March 31,
Furthermore, the court discerns no inconsistency between the contracts 1992 AFFIRMED. No pronouncement as to costs.
recognition of the preferential right of petitioner to redeem the mortgaged
properties, and the sale of the said properties to respondent OSSA. SO ORDERED.
Petitioner can validly redeem subject properties and still recognize the
sale thereof to the respondent corporation because nothing therein is
contrary to law, morals, good customs, public order or public policy.
Besides, it is a well-settled doctrine that in the construction of an
instrument where there are several provisions, or particulars, such a
construction is, if possible, to be adopted as will give effect to all.[10]
Thus, the recognition of both the preferential right of the petitioner to
redeem the mortgaged properties and the sale of the same properties to
respondent OSSA is in order, as it would harmonize and give effect to all
the provisions of the Deed of Sale with Assumption of Mortgage under
controversy.
Petitioner contends that she is not estopped from questioning DBPs
application to her account of OSSAs initial payment of P90,000.00 as
well as the first to eight quarterly installments. It bears stressing,
however, that the remittance of the said payment was made in
implementation of the provisions of their contract. The belated claim of
the petitioner, which was not given credence by the trial court, that she
objected to the application by DBP to her account of all the remittances
of OSSA is tainted with bad faith as this is an attempt to renegade against
her contract with respondent OSSA. Besides, the issue of whether or not
petitioner objected is a question of fact that has already been settled by
the trial court which best performs the matter of assigning values to the
testimony of witnesses,[11] and whose findings are accorded great
weight especially when affirmed by the Court of Appeals[12], as in the
case at bar.

Petitioner next argues that there was no notice to her regarding OSSAs
consignation of the amounts corresponding to the 12th up to the 20th
quarterly installments. The records, however, show that several tenders of
payment were consistently turned down by the petitioner, so much so that
the respondent OSSA found it pointless to keep on making formal tenders
of payment and serving notices of consignation to petitioner. Moreover,
in a motion dated May 7, 1987, OSSA prayed before the lower court that
it be allowed to deposit by way of consignation all the quarterly
installments, without making formal tenders of payment and serving
notice of consignation, which prayer was granted by the trial court in the