4th Week Obli Digests.docx

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G.R. No. 108630 April 2, 1996PHILIPPINE NATIONAL BANK, petitioner, !. "O#RT O$ APPEAL%&n' LORETO TAN, re!pon'ent!.

$&(t!)Private respondent Loreto Tan (Tan) is the owner of a parcel of land

abutting(against) the national highway in Bacolod City. Expropriationproceedings were instituted by the governent against private respondentTan and other property owners.

!n "ay ##$ %&'$ petitioner PB (Bacolod Branch) was re*uired by the trialcourt to release to Tan the aount of P+#$,-.-- deposited with it by thegovernent.!n "ay #,$ %&'$ petitioner$ through its ssistant Branch "anager /uanTagaolila$ issued a anager0s chec1 for P+#$,-.-- and delivered the saeto one 2onia 3on4aga without Tan0s 1nowledge$ consent or authority.

Private respondent Tan subse*uently deanded payent in the aount of P+#$,-.-- fro petitioner$ but the sae was refused on the ground thatpetitioner had already paid the aount to 2onia 3on4aga by 2pecial Powerof ttorney (2P) allegedly executed in her favor by Tan.5hen he failed to recover the aount fro PB$ private respondent 6led aotion with the court to re*uire PB to pay the sae to hi.

Petitioner 6led an opposition contending that 2onia 3on4aga presented to ita copy of the "ay ##$ %&' order and a special power of attorney by virtueof which petitioner delivered the chec1 to her.The atter was set for hearing on /uly #%$ %&' and petitioner was directedby the court to produce the said special power of attorney thereat. 7owever$petitioner failed to do so.

!n /une '$ %&&$ the trial court rendered 8udgent ordering petitioner andTagaolila to pay private respondent 8ointly and severally the aount of P+#$,-.-- with legal interest$

I!!*e)5! it can be considered that through 2P$ PB has copletely deliveredthe aount to private respondent

R*lin+)There is no *uestion that no payent was ade to private respondent as thechec1 was never delivered to hi. 5hen the court ordered petitioner to payprivate respondent the aount of P+#$,-.--$ it had the obligation to deliverthe sae to hi. 9nder rt. %#++ of the Civil Code$ a debt shall not beunderstood to have been paid unless the thing or service in which theobligation consists has been copletely delivered or rendered$ as the caseay be.

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The burden of proof of such payent lies with the debtor. :n the instantcase$ neither the 2P nor the chec1 issued by petitioner was not presentedin court.

;urtherore$ contrary to petitioner0s contention that all that is needed to beproved is the existence of the 2P$ it is also necessary to deterine whether

the docuent indeed authori4ed 2onia to receive payent intended forprivate respondent. 7owever$ no such evidence was ever presented.57E<E;!<E$ the decision of the Court of ppeals is ;;:<"E=.2! !<=E<E=.

G.R. No. L28-69 $er*&r/ 2, 190

. . T#A%ON "o. IN"., Plaintif-Appellant, .LIGA4A A5IER, Deendant-Appellee.

$&(t!)!n 2epteber '$ %&>,$ a contract was entered into between the plainti?$and defendant@appellee$ Ligaya /avier$ whereby plainti? agreed to sell$transfer and convey to the defendant a parcel of land in the 2ta. "esa7eights 2ubdivision$ for P+$A&%.#-$ with interest at the rate of ten (%-) percentu a year$ payable as follows P+&A.%# upon the execution of thecontract and P,+.&# every onth for a period of ten (%-) years.

9pon the execution of the contract and the payent of the 6rst installent

of P+&A.%#$ the defendant was placed in possession of the land. Thereafterand until /anuary >$ %&A#$ she paid the stipulated onthly installentswhich$ aggregated P,$%+,.-. 2ubse*uently$ however$ she defaulted in thepayent of said installents$ in view of which$ on "ay ##$ %&A,$ plainti? infored her that their contract had been rescinded. =efendant havingthereafter refused to vacate said land$ plainti? coenced the presentaction against her. Plainti? prayed in its coplaint that the aforeentionedcontract be declared validly rescinded and that the defendant and allpersons claiing under her be ordered to deliver the lot in *uestion$ with allthe iproveents. ditting that she had defaulted in the payent of thestipulated onthly installents$ fro /anuary >$ %&A#$ defendant alleged inher answer that this fact was due to unforeseen circustancesD that she is

willing to pay all arrears in installents under the contract$ the interestthereon fro the tie of default of payent$ reasonable attorneys fees$ andthe costs of suitD but o?er was turned down by the plainti?.

Lower court ordered that the contract to sell has not yet been rescinded$and ordering the defendant to pay to the plainti? within sixty (A-) days froreceipt hereof all the installent payents in arrears together with interestthereon.

2



I!!*e)5! there is a substantial perforance in good faith on the part of respondent

R*lin+)2C ruled that plainti? herein was not denied substantial 8ustice$ for$

according to rt. %#+, of said Code:f the obligation has been substantially perfored in good faith$ the obligoray recover as though there had been a strict and coplete ful6llent$ lessdaages su?ered by the obligee.cralaw virtua%aw library:t should be noted that$ apart fro the initial installent of P+&A.%#$ paidupon the execution of the contract$ the defendant satis6ed the onthlyinstallents accruing for a period of alost eight () yearsD that$ althoughthe principal obligation under the contract was P+$A&%.#-$ the totalpayents ade by the defendant up to /anuary >$ %&A#$ including interest$aggregated P,$%+,.-D that the defendant has o?ered to pay all of theinstallents overdue including the stipulated interest$ apart fro reasonableattorneys fees and the costsD and that$ accordingly. Thus$ plainti? will

thereby recover everything due thereto$ pursuant to its contract with thedefendant$ including such daages as the forer ay have su?ered inconse*uence of the latters default. 9nder these circustances$ 5e feel that$in the interest of 8ustice and e*uity$ the decision appealed fro ay beupheld upon the authority of rt. %#+, of the Civil Code.

57E<E;!<E$ said decision is hereby a?ired$ with out specialpronounceent as to costs in this instance. :t is so ordered

G.R. No. L26-8 &n*&r/ 28, 19LEGAR7A HERANO% &n' O%E LEGAR7A, petitioner!, 'een'&nt !.$ELIPE %AL7AA &n' "O#RT O$ APPEAL% :$I$TH 7I5I%ION; <re!pon'ent!. pl&inti=

$&(t!)The action originated for a coplaint for delivery of two parcels of land in2apaloc$ "anila and execution of the deed of conveyance after payent of the balance. Private respondent as plainti? had entered into two writtencontracts with petitioner Legarda 7eranos as defendant subdivisionowner$ whereby the latter agreed to sell to hi Lots os. ' and of thesubdivision for the su of P%$>--.-- per lot$ payable for %- years dividedinto %#- onthly installents of P%&.+ with %-F interest$ to coence on"ay #A$ %&,$ date of execution of the contracts.

:t is undisputed that respondent faithfully paid for continuous years about&> onthly installents totalling P+$>#.-A up to the onth of ;ebruary$%&>A.

:t is also undisputed that after ;ebruary$ %&>A up to the 6ling of respondent0s coplaint in %&A%$ respondent did not a1e further payents.The account shows that he owed petitioners P%$+%'.'# on account of the

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balance of the two lots (in the total su of P+$---.--)$ although he had paidore than the stipulated purchase price of P%$>--.-- for one lot.

Before the 6ling of the action$ respondent wrote petitioners re*uestinginforation of the aount owing to update his account.

Petitioners replied in their letter of ;ebruary %%$ %&A% that as respondenthad failed to coplete total payent of the %#- installents by "ay$ %&> asstipulated in the contracts thus resulting to the cancellation of the sae;ro the adverse decision of /uly %'$ %&A+ of the trial court sustainingpetitioners0 cancellation of the contracts and disissing respondent0scoplaint$ respondent appellate court on appeal reversed the lower court0s

8udgent and ordering petitioners to deliver to the plainti? possession of one of the two lots$ at the choice of defendants

I!!*e)5! there is a substantial perforance in good faith on the part of respondent

R*lin+)The Court 6nds that the appellate court0s 8udgent 6nding that of the totalsu of P+$>#.-A (including interests of P%$&.') already paid byrespondent (which was ore than the value of two lots)$ the su applied bypetitioners to the principal alone is in the aount of P%$A#.# ore thanthe value of one lot of P%$>--.-- and hence one of the two lots chosen byrespondent would be considered as fully paid$ is fair and 8ust and inaccordance with law and e*uity.The Court0s doctrine in the analogous case of /.". Tuason G Co. :nc. vs.

/avier is fully applicable to the present case. :n a?iring$ we 6nd thatplainti? herein has not been denied substantial 8ustice$ nor there was defeatin their rights under the spirit of the contracts in *uestion. ;or$ according to

rt. %#+, of said Code 0:f the obligation has been substantially perfored ingood faith$ the obligor ay recover as though there had been a strict andcoplete ful6llent$ less daages su?ered by the obligee$0 and that in theinterest of 8ustice and e*uity$ the decision appealed fro ay be upheldupon the authority of rticle %#+, of the Civil Code.

CC!<=:3LH$ the appealed 8udgent of the appellate court is herebya?ired. 5ithout pronounceent as to costs.

G.R. No. L23191 7e(e>er 19, 196GERONIO G. E%G#ERRA &n' "RI%TINA G. E%G#ERRA !. THEHON. $ELIPE . 5ILLAN#E5A et &l.

$&(t!)!n /uly %+$ %&A%$ petitioner 3eronio 3. Esguerra and respondent :sidro de3u4an. Entered into a contract whereby Esguerra leased to =e 3u4an aportion of the Esguerra@3ueco building$ for a ten (%-) years$ at a onthlyrental of P+--.--. =e 3u4an had failed to pay the rental fro ;ebruary to

ugust$ %&A#(A)$ aggregating P%$--.--$ in addition of P+--.--$representing the balance of the purchase price of e*uipent bought by hi

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fro the Esguerras$ on ugust A$ %&A#$ respondent0s other$ 2egunda de3u4an executed$ in favor of the Esguerras$ a proissory note forP#$%--.--$ payable as follows P%$---.-- not later than ugust %#$ %&A# andP%$%--.-- not later than ugust +%$ %&A#.

one of the aforeentioned payents having been ade when due$ the

Esguerras coenced$ for the collection of said su of P#$%--.--$ withinterest thereon fro ugust A$ %&A#.!n !ctober ##$ %&A#$ the parties therein reached a coproise agreeent.

That both defendants adit$ 8ointly and severally$ liable to plainti?s in theaount of (P #$#A-.--) which they proise to pay on or before oveber#A$ %&A#D That upon failure of any or both of defendants to perfor theirrespective underta1ings under this coproise agreeent$ they agree andurge the 7onorable Court to cause iediate execution of the 8udgentagainst the upon their respective properties which have been attached.

This coproise agreeent was approved by /udge ;elipe ". Iillanueva$ of

the unicipal court. dittedly$ the su of P#$#A-.--(J%A- unpaid rentals) was not paid ordelivered to the Esguerras on or before oveber #A$ %&A#. !n otion of the Esguerras$ /udge Iillanueva issued$ the corresponding writs of execution. lleging that =e 3u4an had$ delivered to Esguerra P--.--$ on=eceber %+$ %&A#$ and P%$,A-.--$ on /anuary >$ %&A+$ and that the receiptof said sus by the Esguerras$ constituted full satisfaction of the 8udgentby coproise.

<espondents aintain$ that the receipt of said sus of P--.-- andP%$,--.-- by the Esguerras constituted acceptance of the incoplete andirregular perforance of respondents0 obligation$ this acceptance havingbeen ade without any protest or ob8ection the obligation ust bedeeed fully coplied with$ pursuant to rticle %#+> of the Civil Code of the Philippine

I!!*e)5! partial payent by respondent is considered satisfactory coplianceto their obligation

R*lin+):ndeed$ the day iediately following the 6rst payent of P--.--$ on=eceber %+$ %&A#$ the Esguerras as1ed /udge Iillanueva to issue thecorresponding writs of execution. Thus$ the Esguerras patently(deliberately)anifested their dissatisfaction$ which necessarily iplied an ob8ection orprotest to the said partial payent. The insistence of the Esguerras incausing the attached properties of respondents to be disposed$ pursuant tothe writs of execution$ despite said additional payents$ leave no doubt thatthe forer had never regarded the partial payents as satisfactorycopliance with the latter0s obligation.57E<E;!<E$ the decision appealed fro should be$ as it is hereby$reversed$ and another one shall be entered directing respondent "unicipal

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/udge to issue the corresponding alias writs of execution$ with costs againstrespondents :sidro de 3u4an and "rs. 2egunda de 3u4an. :t is soordered

G.R. No. 960-3 &r(? 3, 1993 O%E$INA TA4AG, RI"AR7O GALI"IA, TERE%ITA GALI"IA, E5EL4N

GALI"IA, #AN GALI"IA, R. &n' RO7RIGO GALI"IA, petitioner!, !."O#RT O$ APPEAL% &n' ALBRIGI7O LE45A, re!pon'ent!.

$&(t!)

The deed of conveyance executed on "ay #$ %&'> by /uan 3alicia$ 2r.$ priorto his death in %&'&$ and Celerina Labuguin$ in favor of lbrigido Leyvainvolving the undivided one@half portion of a piece of land in ueva Eci8a forthe su of P>-$---.-- to be paid on , instalent basis a) +$---.-- at theexecution of the contractD b) %-$---.-- shall be paid %- days after executionof contract c) P%-$---.-- represents the IE=!<20 indebtedness with thePhilippine Ieterans Ban1 is assued by the IE=EE and d)#'$---.-- to bepaid after % year after the execution of the contract$ is the sub8ect atter of the present litigation between the heirs of /uan 3alicia$ 2r. who assertbreach of the conditions. s against private respondent0s clai anchored onfull payent and copliance with the stipulations.

There is no dispute that the su of P+$---.-- as 6rst installent wasreceived by /uan 3alicia$ 2r. ccording to petitioners$ the P%-$---.-- to bepaid within ten days fro execution of the instruent$ only P&$'-'.-- wasreceived by the on nuerous occasions fro "ay #&$ %&'>$ up tooveber +$ %&'&. Concerning private respondent0s assuption of the

vendors0 obligation to the Philippine Ieterans Ban1$ the vendee paid only thesu of PA$&#A.,% and Celerina Labuguin$ the sister and co@vendor of /uan3alicia$ 2r. paid P+$''.''. "oreover$ petitioners asserted that not a singlecentavo of the P#'$---.-- was paid to the. Because of theapprehension(hesitation) that the heirs of /uan 3alicia$ 2r. aredisavowing(re8ecting) the contract in1ed by their predecessor$ privaterespondent 6led the coplaint for speci6c perforance.

:n addressing the issue of whether the conditions of the instruent wereperfored by herein private respondent as vendee$ <egional Trial Court$decided to uphold private respondent0s theory on the basis of constructiveful6llent under rticle %%A and estoppel through acceptance of pieceealpayents in line with rticle %#+> of the Civil Code.

The acceptance by petitioners of the various payents even beyond theperiods agreed upon$ was perceived by the lower court as tantaount tofaithful perforance of the obligation pursuant to rticle %#+> of the CivilCode.

I!!*e)5! petitioners are estopped in declaring the contract rescind on theground of breach

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R*lin+)The suggestion of petitioners that the contract ust be cancelled in the lightof private respondent0s breach sees to overloo1 petitioners0deeanour(conduct) who$ instead of iediately 6ling the case to rescindthe instruent because of non@copliance$ allowed private respondent to

e?ect nuerous payents posterior to the grace periods provided in thecontract.

Both the trial and appellate courts were$ correct in sustaining the clai of private respondent anchored on estoppel or waiver by acceptance of delayedpayents under rticle %#+> of the Civil Code

Considering that the heirs of /uan 3alicia$ 2r. accepted private respondentsdelayed payents not only beyond the grace periods but also during thependency of the case for speci6c perforance. :ndeed$ the right to rescind isnot absolute and will not be granted where there has been substantialcopliance by partial payents. By and large$ petitioners0 are now estopped

fro reneging(bac1 out) fro their coitent on account of acceptance of bene6ts arising fro overdue accounts of private respondent.

Lastly$ petitioners argue that there was no valid tender of payent norconsignation of the su of P%$>#-.-- which they ac1nowledge to have beendeposited in court$ 6ve years after the aount of P#'$---.-- had to be paid.This consignation alone produced the e?ect of payent in the case at barbecause it was established below that two or ore heirs of /uan 3alicia$ 2r.claied the sae right to collect. "oreover$ aside fro the P%$>#-.--which was consigned$ private respondent also paid the su of P%+$&-.#>.These two 6gures representing private respondent0s payent of the fourthcondition aount to P+#$,#.#>$ less the P+$''.'' paid by petitioners tothe ban1$ will lead us to the su of P#$A,&., or a refund of P%$A,&., toprivate respondent as overpayent of the P#'$---.-- balance.

57E<E;!<E$ the petition is hereby =:2":22E= and the decision appealedfro is hereby ;;:<"E= with the slight odi6cation of Paragraph , of thedispositive thereof2! !<=E<E=.

G.R. No. 203 Noe>er 13, 1992"ALTE@ :PHILIPPINE%;, IN"., petitioner, !.THE INTERE7IATE APPELLATE "O#RT &n' A%IA PA"I$I" AIRA4%, IN"., re!pon'ent!.

$&(t!)

!n /anuary %#$ %&'$ private respondent sia Paci6c irways :nc.$ enteredinto an agreeent with petitioner Caltex (Philippines) :nc.$ whereby

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petitioner agreed to supply private respondent0s aviation fuel re*uireentsfor two (#) years covering the period fro /anuary %$ %&' until =eceber+%$ %&'&. s of /une +-$ %&-$ private respondents had an outstandingobligation in the total aount of P,$-'#$A#.%+$ representing the unpaidprice of the fuel supplied. To settle this outstanding obligation$ privaterespondent executed a =eed of ssignent wherein it assigned to petitioner

its refunds of the 2pecial ;und :port Payents fro ational Treasury of the Philippines to be applied as payent of the aount of P,$-'#$A#.%+. !n;ebruary %#$ %&%$ pursuant to the =eed of ssignent$ Treasury 5arrant inthe aount of P>$,'>$#&,.-- was issued by the ational Treasury in favor of the petitioner. ;our days later$ private respondent$ having learned that theaount reitted to petitioner exceeded the aount covered by the =eed of

ssignent$ wrote a letter to petitioner$ re*uesting a refund in the aountof P&--$---.-- plus. :n response$ petitioner infored private respondentthat the aount not returned (P>%-$>>-.A+) represented interest andservice charges at the rate of %F per annu on the unpaid and overdueaccount of respondent fro /une %$ %&- to /uly +%$ %&%.

Thus$ on 2epteber %+$ %&#$ private respondent 6led a coplaint againstpetitioner to collect the su of P>%-$>>-.A+.--.

The trial court rendered its decision disissing the coplaint$ Privaterespondent (plainti?) appealed to the :nterediate ppellate Court (:C). decision was rendered reversing the decision of the trial court$ and orderingpetitioner to return the aount of P>%-$>>-.A+ to private respondent.

I!!*e)

5! the =eed of ssignent entered into by the parties constituted dacionen pago such that the obligation is totally extinguished

R*lin+)

5e rule that the =eed of ssignent executed by the parties on /uly +%$%&- is not a dation in payent and did not totally extinguish respondent0sobligation.

=eed of ssignent spea1s of three (+) obligations K (%) the outstandingobligation of P,$-'#$A#.%+ as of /une +-$ %&-D (#) the applicable interestcharges on overdue accountsD and (+) the other avturbo fuel lifting anddeliveries that assignor (private respondent) ay fro tie to tie receivefro assignee (Petitioner). s argued by petitioner$ if it were the intention of the parties to liit respondent0s obligation to P,$-'#.A#.%+D they shouldhave stated that there is no need for the to *ualify the stateent of saidaount with the clause as of /une +-$ %&- plus any applicable interestcharges on overdue account and the clause and other avturbo fuel liftingand deliveries that 22:3!< ay fro tie to tie receive fro the

22:3EE.

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The :nterediate ppellate Court failed to ta1e into consideration thesubse*uent acts of the parties which clearly show that they did not intendthe =eed of ssignent to totally extinguish the obligation K (%) fter theexecution of the =eed of ssignent on /uly +%$ %&-$ petitioner continuedto charge respondent with interest on its overdue account up to /anuary +%$%&%. This was pursuant to the =eed of ssignent which provides for

respondent0s obligation for applicable interest charges on overdueaccount.

The foregoing subse*uent acts of the parties clearly show that they did notintend the =eed of ssignent to have the e?ect of total extinguishent of the obligations of private respondent without payent of the applicableinterest charges on the overdue account.;inally$ the payent of applicable interest charges on overdue account$separate fro the principal obligation of P,$-'#.A#.%+ was expresslystipulated in the =eed of ssignent. The law provides that if the debtproduces interest$ payent of the principal shall not be deeed to havebeen ade until the interests have been covered. (rt. %#>+$ Civil Code).

57E<E;!<E$ the decision of the then :nterediate ppellate Court dated ugust #'$ %&> is hereby 2ET 2:=E$ and the oveber '$ %&+ decisionof the trial court is <E:2TTE=.2! !<=E<E=.

G.R. No. 2110. Noe>er 16, 1990.ROAN "ATHOLI" BI%HOP O$ ALOLO%, IN"., petitioner, !.INTERE7IATE APPELLATE "O#RT, &n' ROBE%$RAN"I%"OREALT4 AN7 7E5ELOPENT "ORPORATION, re!pon'ent!.$&(t!)The property sub8ect atter of the contract consists of a parcel of theProvince of Bulacan$ registered in the nae of the petitioner which it sold tothe private respondent in consideration of P%#+$&+-.--.

!n /uly '$ %&'%$ the contract over the land was executed between thepetitioner as vendor and the private respondent through its then president$"r. Carlos ;. <obes$ as vendee$ stipulating for a downpayent of P#+$&+-.--

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and the balance of P%--$---.-- plus %#F interest be paid within four (,) years fro execution of the contract. The contract li1ewise provides forcancellation$ forfeiture of previous payents$ of the land in case the privaterespondent would fail to coplete payent.The private respondent$ through its new president$ tty. dalia ;rancisco.

fter the expiration of the stipulated period for payent$ wrote fro the

petitioner a foral re*uest that her copany be allowed to pay the principalaount of P%--$---.-- in three (+) e*ual installents of six (A) onths eachwith the 6rst installent and the accrued interest of P#,$---.-- to be paidiediately upon approval of the re*uest.

!n /uly #&$ %&'>$ the petitioner$ through its counsel$ denied the re*uest butgranted a grace period of 6ve (>) days fro the receipt of the denial to paythe total balance of P%#,$---.--$ otherwise$ the contract will be cancelled.

Conse*uently$ tty. ;rancisco$ the private respondents president$ wrote aletter dated ugust ##$ %&'>$ directly addressed to the petitioner$ protestingthe alleged refusal of the latter to accept tender of payent ade on ugust

>$ %&'>$ the last day of the grace period. :n the sae letter received on thefollowing day$ the private respondent deanded the execution of a deed of absolute sale over the land and after it would pay its account in full$otherwise$ 8udicial action would be resorted to.!n ugust #'$ %&'>$ the petitioners counsel$ tty. ;ernande4$ wrote a replyto the private respondent stating the refusal of his client to execute the deedof absolute sale due to its failure to pay its full obligation. :n view of thisalleged breach of contract$ the petitioner cancelled the contract.The trial court rendered a decision in favor of the petitioner declares thesub8ect contract cancelled and plainti?s down payent of P#+$&+-.--forfeited.I!!*e)5! chec1 is a valid tender of payent of an obligation on contract whichstipulates that the consideration of the sale be in Philippine CurrencyR*lin+)The case of the private respondent cannot succeed in view of the fact thatthe latter used a personal chec1 which is not legal tender nor the currencystipulated$ and therefore$ cannot constitute valid tender of payent$ under

rt %#,& of the Civil Code. chec1$ whether a anagers chec1 or ordinarychec1$ is not legal tender$ and an o?er of a chec1 in payent of a debt is nota valid tender of payent and ay be refused by the obligee or creditor.7ence$ the tender of payent by the private respondent was not valid forfailure to coply with the re*uisite of payent in legal tender or currencystipulated within the grace period as such$ was validly refused by thepetitioner$ the subse*uent consignation did not operate to discharge theforer fro its obligation to the latter.57E<E;!<E$ the petition for review on certiorari is 3<TE= and the=EC:2:! of the respondent court proulgated on pril #>$ %&> is hereby2ET 2:=E and 9LLE= and the =EC:2:! of the trial court dated "ay#>$ %&% is hereby <E:2TTE=. Costs against the private respondent. 2!!<=E<E=.

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G.R. No. L18390 7e(e>er 20, 191PE7RO . 5ELA%"O, pl&inti=&ppell&nt, !. ANILA ELE"TRI" "O.,ET AL., 'een'&nt!&ppellee!.

$&(t!)Both appellant Ielasco and appellee "anila Electric have 6led their

respective otions to reconsider the decision of this Court dated A ugust%&'%.

The thrust of this otion is that the decision has incorrectly assessedappellant0s daages and unreasonably reduced their aount. :t is 6rstargued that the decision did not ta1e into account$ the appellant0sundeclared incoe of P$++.#-$ assessed by the Bureau of :nternal<evenue for the year %&>, in coputing appellant0s loss of incoe$ inaddition to his declared incoe for that year (P%-$&'>)$ it being contendedthat appellant never clai any other source of incoe besides hisprofessional earnings. 2everal circustances of record disprove(contradict)this clai. (%) That the aount of P$++.#- was 1ept apart fro ordinary

earnings of appellant for the year %&>, (P%-$&'>)$ and since not declared$ isin itself circustantial evidence. (+) The decision pointed that by includingthe undeclared aount of $++.#-$ will grand a total of P%&$+%+.#-$ theincoe for said year becoes abnorally high$ as copared to appellant0searnings for the preceding years$ %&>%@%&>+$ that averaged not ore thatP'$--- per annu. 2uch abnorality 8usti6es the Court0s refusal to considerthe undisclosed P$++.#- as part of appellant0s regular incoe.

ppellant Ielasco urges that the daages awarded hi are inade*uateconsidering the present high cost of living$ and calls attention to rticle%#>- of the present Civil Code.

I!!*e)5! daage awarded to petitioner is inade*uate considering the high costof living

R*lin+)5e do not see the rules invo1ed to be applicable. rticle %#>- of the CivilCode is to the e?ect that

<T. %#>-. :n case an extraordinary ination or deation of the currencystipulated should supervene$ the value of the currency at the tie of theestablishent of the obligation shall be the basis of payent$ unless there isan agreeent to the contrary.

:t can be seen fro the eployent of the words extraordinary ination ordeation of the currency stipulated that the legal rule envisages(envisions)contractual obligations where a speci6c currency is selected by the partiesas the ediu of payentD hence it is inapplicable to obligations arisingfro tort and not fro contract. Lastly the aount granted to hi hadalready ta1en into account the changed econoic circustances.

57E<E;!<E$ appellee0s otion to reconsider is li1ewise denied.

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G.R. No. L3606 &r(? 31, 1980"OI%%IONER O$ P#BLI" HlGHA4%, petitioner, !. HON.$RAN"I%"O P. B#RGO%, in ?i! (&p&(it/ &! *'+e o t?e "o*rt o $ir!tIn!t&n(e o "e* "it/, Br&n(? 11, &n' 5i(tori& A>i+&le,re!pon'ent!.

$&(t!) Iictoria igable is the owner of parcel of land situated in Cebu City.2oetie in %&#,$ the 3overnent too1 this land for road@right@of@waypurpose. The land had since becoe streets 1nown as "ango venue and3orordo venue in Cebu City.

!n ;ebruary A$ %&>&$ Iictoria igable 6led in the Court of ;irst :nstance acoplaint$ to recover ownership and possession of the land$ and fordaages in the su of P>-$---.-- for the alleged illegal occupation of theland by the 3overnent.

:n its answer$ the <epublic alleged$ that the land was either donated or soldby its owners to the province of Cebu$ and that in any case$ the right of theowner$ to recover the value of said property was already barred by estoppeland the statute of liitations$ defendants also invo1ing the non@suability of the 3overnent.

:n a decision rendered the plainti?0s coplaint was disissed on thegrounds relied upon by the defendants. The plainti? appealed the decision tothe 2upree Court where it was reversed$ and the case was reanded tothe court of origin for the deterination of the copensation to be paid toplainti?@appellant as owner of the land. The 2upree Court decision alsodirected to deterine 8ust copensation for the land$ the basis should be theprice or value at the tie of the ta1ing.

:n the hearing held pursuant to the decision of the 2upree Court$ the3overnent proved the value of the property at the tie of the ta1ingthereof in %&#, showing the price to be at P#.+' per s*uare eter. ;or herpart$ Iictoria igable presented newspaper clippings of the "anila Tiesshowing the value of the peso to the dollar obtaining about the iddle of %&'#$ which was PA.''> to a dollar.

12



9pon consideration of the evidence presented by both parties$ the courtwhich is now the public respondent$ rendered 8udgent directing the<epublic to pay Iictoria igable the su of P,&$,>&.+, as the value of theproperty ta1en$ plus P%,>$,%-.,, representing interest at AF on theprincipal aount of P,&$,>&.+, fro the year %&#, up to the date of thedecision.

I!!*e)5! respondent court is correct in deterining the due copensation to bepaid for the property ta1en base on the value of the peso to dollar at thetie of hearing

R*lin+)<espondent 8udge did consider the value of the property at the tie of theta1ing$ which as proven by the petitioner was P#.+' per s*uare eter in%&#,. 7owever$ applying rticle %#>- of the ew Civil Code$ andconsidering the value of the peso to dollar during the hearing in %&'# wasPA.''> to a dollar$ the Court 6xed the value of the property at the deated

value of the peso in relation$ to the dollar$ and cae up with the su of P,&$,>&.+, as the 8ust copensation.

:t is clear that rticle %#>- applies only to cases where a contract oragreeent is involved. :t does not apply where the obligation to pay arisesfro law. The ta1ing of private property by the 3overnent in the exerciseof its power of einent doain does not give rise to a contractual obligation.5e hold$ therefore$ in the absence of any agreeent to the contrary$ evenassuing that there has been an extraordinary ination within the eaningof rticle %#>- of the ew Civil Code. The value of the peso at the tie of the establishent of the obligation$ ust be considered for the purpose of deterining 8ust copensation$ which in the instant case is when theproperty was ta1en by the 3overnent. !bviously$ there can be noagreeent to the contrary to spea1 of because the obligation of the3overnent sought to be enforced does not originate fro contract$ butfro law. The value of the property as it is when the 3overnent too1 possession of the land in *uestion$ not the increased value resulting fro thepassage of tie$ represents the true value to be paid as 8ust copensationfor the property ta1en.

;ro what has been said$ the correct aount of copensation due privaterespondent for the ta1ing of her land is only P%,$A%>.'& at P#.+' per s*uareeter$ the actual value of the land of A$%A' s*uare eters when it was ta1enin %&#,.

57E<E;!<E$ the 8udgent appealed fro is hereby reversed as to thebasis in the deterination of the price of the land ta1en as 8ustcopensation for its expropriation$ which should be the value of the land atthe tie of the ta1ing$ in %&#,. ccordingly$ the sae is hereby 6xed atP%,$A%>.'& at P#.+' per s*uare eter$ with interest thereon at AF perannu$ fro the ta1ing of the property in %&#,$ to be also paid by

13



3overnent to private respondent$ Iictoria igable$ until the aount dueis fully paid$ plus attorney0s fees of P>$---.--.2! !<=E<E=.

G.R. No. L36 &/ 3, 1988$ILIPINO PIPE AN7 $O#N7R4 "ORPORATION, pl&inti=&ppell&nt,

!.NATIONAL ATERORK% AN7 %EERAGE A#THORIT4, 'een'&nt&ppellee.;acts!n /une %#$%&A%$ the 52 entered into a contract with the plainti? ;P;C for the latter to supply it with , and A diaeter centrifugally castiron pressure pipes worth P#'-$%'.>- to be used in the construction of the

nonoy 5aterwor1s in "asbate and Barrio 2an ndres@Iillareal 5aterwor1sin 2aar. =efendant 52 paid in installents on various dates$ for atotal of (P%+,$A-.--) leaving a balance of (P%+>$>-'.>-) excluding interest.7aving copleted the delivery of the pipes$ the plainti? deanded payentof the unpaid balance with interest in accordance with the ters of theircontract. 5hen the 52 failed to pay the balance$ the plainti? 6led acollection suit.!n oveber #+$ %&A'$ the trial court rendered 8udgent in Civil Case o.AA', ordering the defendant to pay the unpaid balance of P%+>$>-'.>- in52 negotiable bonds. =efendant$ however$ failed to satisfy thedecision. :t did not deliver the bonds to the 8udgent creditor. !n ;ebruary%$ %&'%$ the plainti? ;P;C 6led another coplaint$ see1ing an ad8ustentof the unpaid balance in accordance with the value of the Philippine pesowhen the decision in Civil Case o. AA', was rendered on oveber #+$%&A'.oting that the situation situation during the /apanese !ccupation cannotbe copared with the econoic conditions today$ the trial court$ rendered

8udgent disissing the coplaint.:ssue5! spiralling price index shown by the plainti?$ there exists anextraordinary ination of the currency 8ustifying an ad8ustent of defendantappellee0s unpaid 8udgent obligation<uling5hile appellant0s voluinous records and statistics proved that there hasbeen a decline in the purchasing power of the Philippine peso$ thisdownward fall of the currency cannot be considered extraordinary. :t issiply a universal trend that has not spared our country.57E<E;!<E$ 6nding no reversible error in the appealed decision of thetrial court$ 5e a?ir it in toto. o costs. 2! !<=E<E=.

G.R. No. L286 A*+*!t 19, 1988%IEON 7EL RO%ARIO, pl&inti=&ppell&nt, !.THE %HELL "OPAN4 O$ THE PHILIPPINE% LIITE7, 'een'&nt&ppellee.

;acts

14



!n 2epteber #-$ %&A- the parties entered into a Lease greeentwhereby the plainti?@ appellant leased a parcel of land of the cadastral2urvey of Ligao$ lbay to the defendant@appellee at a onthly rental of (P#>-.--).

Paragraph %, of said contract of lease provides

%,. :n the event of an o?icial devaluation or appreciation of the Philippinecurrency the rental speci6ed shall be ad8usted in accordance with theprovisions of any law or decree declaring such devaluation or appreciationas ay speci6cally apply to rentals.

!n oveber A$ %&A>$ President =iosdado "acapagal proulgatedExecutive !rder o. %&> titled Changing the Par (e*uivalent) Ialue of thePeso fro 92M-.>- to 92M-.#>A,%-+. This too1 e?ect at noon of oveber$ %&A>.

By reason of this Executive !rder o. %&>$ plainti?@appellant deandedfro the defendant@appellee increase in the onthly rentals fro P#>-.-- a

onth to P,'.>- a onth. =efendant@appellee refused to pay the increasedonthly rentals.

!n /anuary %A$ %&A'$ plainti?@appellant 6led a coplaint praying thatdefendant@appellee be ordered to pay the onthly rentals as increased byreason of Executive !rder %&>.

!n /anuary $ %&A the trial court in disissing the coplaint stated thatExecutive !rder o. %&>$ has not o?icially devalued(reduced) the Philippinepeso but erely odi6ed the par value of the peso fro 92M.>- to92M-.#>A,%-+ 2aid Executive !rder does not pretend to change the gold

value of the Philippine peso as set forth in 2ec. , of the Central Ban1 ct

:ssue5! Executive !rder o. %&> has not o?icially devalued the Philippinepeso.

<uling:t will be noted that devaluation is an o?icial act of the governent andrefers to a reduction in etallic contentD depreciation can ta1e place with orwithout an o?icial act$ and does not depend on etallic content.:n the case at bar$ no express reference has been ade to etallic content$there is no reduction in par(e*uivalent) value or in the purchasing power of Philippine currency. "oreover$ when layen use the ters devaluation ordepreciation they certainly ean in their ordinary signi6cation K decreasein value. 7ence as conteplated by the parties in their lease agreeent$ theter devaluation ay be regarded as synonyous with depreciation$both refer to a decrease in the value of the currency. The rentals shouldtherefore by their agreeent be proportionately increased.57E<E;!<E$ the 8udgent appealed fro is <EIE<2E= and 2ET 2:=E$and the rental prayed for by the plainti?@appellant is hereby 3<TE=$

15



e?ective on the date the coplaint was 6led. o award of daages and nocosts.2! !<=E<E=

;ootnotes

2EC. ,. Par Ialue K The gold value of the peso is seven and thirteen@twenty6rst ('@%+N#%) grains of gold$ nine@tenths (-.&--) 6ne$ which is e*uivalent tothe 9nited 2tates dollar parity of the peso as provided in section A of Coonwealth ct o. A&&.

ny odi6cation in the gold or dollar value of the peso ust be inconfority with the provisions of all executive and international agreeentsas subscribed to and rati6ed by the <epublic of the Philippines$ and suchodi6cation shall be ade only by the President of the <epublic upon theproposal of the "onetary Board. The proposal of the "onetary Board shall

re*uire the concurrency of at least 6ve of the ebers of the Board.

:n 3on4alo L. "anuel G Co.$ :nc. v. Central Ban1 5e ruledPar value and rate of exchange are not necessarily synonyous. The6rst$ tered 0legal exchange rate or par of exchange$ is the o?icial rate of exchange$ established by governent$ in contrast to the free ar1et rate.0 :tsigni6es the aount it ta1es of one currency (for exaple$ based on gold) tobuy a unit in another currency (also based on gold) that is$ how any piecesof the one unit (or their gold content) are necessary to e*ual the goldcontent of the other unit ... . The par value of a currency is the valueo?icially de6ned in ters of gold or$ under the silver standard$ where therewas such a standard$ in ters of silver. The 0par of exchange0 thereforeapplies only between countries having a 6xed etallic content for theircurrency unit. :t would be possible to de6ne a currency0s par value in tersof another currency such as the dollar or pound sterling$ but usage con6nesthe eaning of par to the o?icial value in ters of gold.

The rate of exchange or exchange rate$ on the other hand$ is the price$or the indication of the price$ at which one can sell or buy with one0s owndoestic currency a foreign currency unit. orally$ the rate is deterinedby the law of supply and deand for a particular currency. The price of onecurrency in ters of another is 1nown as the rate of exchange. Thus$ therate of exchange in ew Hor1 or London has at various ties been M ,.A$ M,.-+$ M #.&$ etc. The rate is the aount of erican oney re*uired to payL%. There is a di?erence between par value and rate of exchange the 6rst isde6ned by law$ and (as in the case of the peso) is based upon its goldcontent. The second is conditioned by prevailing econoic factors whichbear upon the deand for a particular currency and its availability in thear1et.

Based on the above entioned de6nition$ the word 0devaluation0 can eanany decrease or lowering of the onetary value of the peso vis@a@vis other

16



foreign currencies without any reference at all to the gold value of thePhilippine peso.

G.R. No. 13398 April 18, 2002

".$. %HARP "O., IN"., petitioner, !. NORTHE%T AIRLINE%,IN"., re!pon'ent.

;acts!n "ay &$ %&',$ respondent$ through its /apan Branch$ entered into an:nternational Passenger 2ales gency greeent with petitioner$authori4ing the latter to sell its air transport tic1ets. Petitioner failed toreit the proceeds of the tic1et sales$ for which reason$ respondent 6led acollection suit against petitioner before the To1yo =istrict Court whichrendered 8udgent on /anuary #&$ %&%$ ordering petitioner to payrespondent the aount of +$%>$%&> Hen and daages for the delay at therate of AF per annu fro ugust #$ %&- up to and until payent is

copleted. 9nable to execute the decision in /apan$ respondent 6led a caseto enforce said foreign 8udgent with the <egional Trial Court. 7owever$ thecase was disissed on the ground of failure of the /apanese Court to ac*uire

8urisdiction over the person of the petitioner. <espondent appealed to theCourt of ppeals$ which a?ired the decision of the trial court.

<espondent 6led a petition for review with this Court$ and !<=E<:3private respondent C.;. 27<P G C!"PH$ :C. to pay to !<T75E2Tthe aounts ad8udged in the foreign 8udgent sub8ect of said case$ withinterest thereon at the legal rate fro the 6ling of the coplaint

ccordingly$ the <egional Trial Court$ issued a writ of execution of theforegoing decision. !rdering said C; 2harp G Co. to pay the plainti? thesu of +$%>$%&> Hen at the exchange rate prevailing on the date of theforeign 8udgent on /anuary #&$ %&%.

!n =eceber %$ %&&>$ petitioner 6led a petition for certiorari to the Courtof ppeals. Petitioner contended that it had already ade partial payentsDhence$ it was liable only for the aount of A%$'+,$A++ Hen.

The Court of ppeals rendered the assailed decision on ;ebruary %'$ %&&'.!rdering petitioner to pay of A%$'+,$A++ Hen and sustained the iposition of additional interest on the liability of petitioner as ad8udged in the foreign

8udgent. :t further ruled that the basis of the conversion of petitionersliability in its peso e*uivalent should be the prevailing rate at the tie of payent and not the rate on the date of the foreign 8udgent.

:ssue5! the contention of petitioner that rt %#>- of CC is applicable

<uling:n ruling that the applicable conversion rate of petitioners liability is therate at the tie of payent$ the Court of ppeals cited the case of Oagala v.

17



/iene4$ interpreting the provisions of <epublic ct o. >#&$ as aended by<.. o. ,%--. 9nder this law$ payents of onetary obligations$ shall bedischarged in the currency which is the legal tender in the Philippines. Butsince <.. o. >#& does not provide for the rate of exchange for the payentof foreign currency obligations incurred after its enactent$ the Court heldthat the rate of exchange for the conversion in the peso e*uivalent should be

the prevailing rate at the tie of payent.

/ust li1e <.. o. >#&$ however$ the new law (<%+) does not provide forthe applicable rate of exchange for the conversion of foreign currency@incurred obligations in their peso e*uivalent. :t follows$ therefore$ that the

8urisprudence established in <.. o. >#& regarding the rate of conversionreains applicable. (rate of exchange for the conversion in the pesoe*uivalent should be the prevailing rate at the tie of payent.)

Petitioners contention that it is rticle %#>- of the Civil Code that should beapplied is untenable. The rule that the value of the currency at the tie of the establishent of the obligation shall be the basis of payent 6nds

application only when there is an o?icial pronounceent or declaration of the existence of an extraordinary ination or deation.

57E<E;!<E$ in view of all the foregoing$ the instant petition is =E:E=.The ;ebruary %'$ %&&' decision and the pril #$ %&& resolution of the Courtof ppeals in C@3.<. 2P o. ,-&&A are ;;:<"E= with "!=:;:CT:!.Petitioner is directed to pay respondent A%$'+,$A++ Hen plus daages forthe delay at the rate of AF per annufro ugust #$ %&- up to and untilpayent is copleted$ with interest at the rate of %#F per annu countedfro the date of 6ling of the coplaint on ugust #$ %&-$ until fullysatis6ed. Petitioners liability ay be paid in Philippine currency$ coputedat the exchange rate prevailing at the tie of payent.2! !<=E<E=.

G.R. No. 90169. April , 1993.PILAR PAG%IBIGAN, petitioner, !."O#RT O$ APPEAL% &n' PLANTER% 7E5ELOPENT BANK,re!pon'ent!.

;acts!n ugust ,$ %&',$ plainti?@appellee$ petitioner$ hereinQ obtained anagricultural loan fro the Planters =evelopent Ban1 in the su of P,$>--.-- secured by a ortgage over a parcel of land which loan was laterfully paid. nother loan for the sae aount was obtained fro the ban1 onoveber +$ %&'A secured by the sae parcel of land. The Proissory otefor the second loan stipulated that for a 6rst payent to be ade on "ay +$%&'' and payents every six onths thereafter at P%$-%.%, with %&Finterest for unpaid aorti4ations.

:nitial payent was ade on /uly A$ %&'' followed by several payents inthe total aount of P%%$&--.--. 7owever$ only four of these payents were

18



applied to the loan$ while the rest were teporarily lodged to accountspayable since the account was already past due !n the basis of a Petitionfor Extra8udicial ;oreclosure of "ortgage the property was foreclosedextra8udicially on "ay '$ %&, for failure to pay an outstanding balance of P#&$>>,.%. This resulted in the property being sold to the ban1 forP$%A+.--$ and the ban1 thereafter claied a de6ciency(shortage) of

P#%$+&%.%.

:ssue5! the respondent ban1 is estopped fro applying the payents of petitioner in the interest instead of principal 6rst

<uling<espondent ban1 does not dispute the fact that petitioner had ade severalpayents in an aount totalling to P%%$&--.--. :t li1ewise adits that onlypart of the aount tendered was applied to the loan and the bul1 of suchpayent was teporarily lodged to accounts payable since the account wasalready past due Petitioner assails the respondent ban1 for not applying her

payent to the loan. Because of said act$ the loan reained outstandingwhen it should have been extinguished.

5hen respondent ban1 received payents on /une A$ %&' and ugust #A$%&'. 5e also noticed that the receipt which the respondent ban1 issued topetitioner for the ugust #A$ %&' partial payent$ it waived its right under

rticle %#>+ of the Civil Code on pplication of Payents when it appliedthe payent to the principal instead of the interest. Thus$ on that date theoutstanding obligation of petitioner was already reduced to P+$>>.#% aftershe had paid a total of P#$#--.-- over a period of nine onths fro the tiethe loan was obtained.

;or ore than four years$ the respondent ban1 ade petitioner believe thatit was applying her payent on the loan and interest 8ust li1e before whenthe respondent ban1 accepted such payent and issued a receipt. :t isbound by estoppel to apply the sae as payent for petitioner0s obligationas it did when it received previous payents on three occasions. :ts act of applying said payents to accounts payable is clearly pre8udicial topetitioner. 5e cannot countenance this act of the ban1.

57E<E;!<E$ the appealed decision is hereby 2ET 2:=E and a new oneentered ordering the reconveyance of the foreclosed property and thepayent of oral daages$ exeplary daages and attorney0s fees as abovespeci6ed$ with costs against private respondent Planters =evelopent Ban1.2! !<=E<E=.

G.R. No. 1238-- Noe>er 20, 2000NEREO . PA"#L7O, petitioner, le!!ee !.

19



BONI$A"IO ". REGALA7O, re!pon'ent. le!!or

;acts

!n =eceber #'$ %&&-$ petitioner ereo /. Paculdo and respondentBonifacio C. <egalado entered into a contract of lease over a parcel of land

with a wet ar1et building$ located along ;airview Par1$ Rue4on City. Thecontract was for twenty 6ve (#>) years. ;or the 6rst 6ve (>) years of thecontract beginning =eceber #'$ %&&-$ ereo would pay a onthly rental of P,>-$---.--$ payable within the 6rst 6ve (>) days of each onth atBonifacios o?ice.

side fro the above lease$ petitioner leased eleven (%%) other propertyfro respondent$ ten (%-) of which were located within the ;airviewcopound$ while the eleventh was located along Ruirino 7ighway$ Rue4onCity. Petitioner also purchased fro respondent eight () units of heavye*uipent and vehicles in the aggregate aount of P%$-#-$---.--.

!n account of petitioners failure to pay P+A%$&>.>> in rental for the onthof "ay$ %&&#$ and the onthly rental of P,>-$---.-- for the onths of /uneand /uly %&&#$ on /uly A$ %&&#$ respondent sent a deand letter to petitionerdeanding payent of the bac1 rentals$ and if no payent was ade within6fteen (%>) days fro receipt of the letter$ it would cause the cancellation of the lease contract.

5ithout the 1nowledge of petitioner$ respondent ortgaged the land sub8ectof the lease contract$ including the iproveents aounting toP+>$---$---.--$ to "onte de Piedad 2avings Ban1$ as security for a loan inthe aount of P#-$---$---.--.

!n pril ##$ %&&+$ respondent 6led the e8ectent coplaint with the"etropolitan Trial Court$ Coputed fro ugust %&&# until "arch +%$ %&&+$the onthly reasonable copensation that petitioner was liable for was inthe total su of P+$&#,$---.--

!n /anuary +%$ %&&,$ the "etropolitan Trial Court$ rendered a decision infavor of respondent which was a?ired by <TC !n /uly A$ %&&,

"eanwhile$ on /uly #%$ %&&,$ petitioner 6led a petition for review with theCourt of ppeals. 7e alleged that he had paid the aount of P%%$,'$%#%.>for security deposit and rentals on the wet ar1et building$ but respondent$without his consent$ applied portions of the payent to his other obligations.The vouchers and receipts indicated that the payents ade were forrentals. Thus$ at the tie of payent petitioner had declared as to whichobligation the payent ust be applied.

:ssue5! petitioners silence on the letter dated /uly %>$ %&&# constitute consenton his part regarding the contrary application of payent

20



<uling s found by the "etropolitan Trial Court and <egional Trial Court$petitioner ade a total payent of P%-$&,&$,,'.%$ to respondent on /uly #$%&&#.

:n an earlier letter$ dated /uly %>$ %&&%$ respondent infored petitioner that

the payent was to be applied not only to petitioners accounts under boththe sub8ect land and the Ruirino lot but also to heavy e*uipent bought bythe latter fro respondent..The controversy steed fro the fact that unli1e the oveber %&$ %&&%letter$ which bore a confority portion with petitioners signature$ the /uly%>$ %&&% letter did not contain the signature of petitioner.

Petitioner subits that his silence is not consent but is in fact a re8ection.

t the tie petitioner ade the payents$ he ade it clear to respondentthat they were to be applied to his rental obligations on the ;airview wetar1et property. ll the payents ade$ about P%%$---$---.--$ were to be

applied to rental and security deposit on the ;airview wet ar1et property.

<espondent <egalado argues that assuing that petitioner expressed at thetie of payent which aong his obligations were to be satis6ed 6rst$petitioner is estopped by his assent to the application ade by therespondent. This assent is inferred fro the silence of petitioner on the /uly%>$ %&&% letter containing a stateent of the application of payents$ whichwas di?erent fro the application ade by petitioner. big chun1 of theaount paid by petitioner went into the satisfaction of an obligation whichwas not yet due and deandable@@the payent of the eight () heavye*uipent aounting to about P%$-#-$---.--.

There was no clear assent by petitioner to the change in the anner of application of payent. The petitioners silence as regards the application of payent by respondent cannot ean that he consented. There was noeeting of the inds. 7ence$ petitioner could not be in estoppel.

:n the instant case$ the purchase price of the eight () heavy e*uipent wasnot yet due at the tie the payent was ade$ for there was no date set forsuch payent. either was there a deand by the creditor to a1e theobligation to pay the purchase price due and deandable. 7ence$ theapplication ade by respondent is contrary to the provisions of the law.

The lease over the ;airview wet ar1et property is the ost onerous aongall the obligations of petitioner to respondent. :t was established that thewet ar1et is a going@concern and that petitioner has invested aboutP+>$---$---.--$ in the for of iproveents$ on the property. 7ence$petitioner would stand to lose ore if the lease would be rescinded$ thanthat if the contract of sale of heavy e*uipent would not proceed.

57E<E;!<E$ the Court 3<T2 the petition. The Court <EIE<2E2 and2ET2 2:=E the decision of the Court of ppeals in C@3. <. 2P o. +,A+,.

21



CC!<=:3LH$ the Court <EIE<2E2 the decision of the <egional TrialCourt$ Rue4on City$ Branch ##- in Civil Case o. &,@#-%+$ and disissesthe coplaint 6led with the "etropolitan Trial Court$ Rue4on City$ Branch+A in Civil Case o. "TC SSSI:@'-&.o costs.2! !<=E<E=.

G.R. No. 109680 *l/ 1, 199-7IEGO RAPAN#T, petitioner, !. THE "O#RT O$ APPEAL% &n'%#%AN $L#NKER, re!pon'ent!.

$&(t!)!n oveber #&$ %&>$ petitioner and private respondent executed a =eedof Conditional 2ale with "ortgage. 9nder the contract$ private respondentagreed to sell to petitioner a parcel of land in Pasay City for P,#$,-.--payable in onthly installents of P>--.-- to be paid not later than the 6fthday of every onth and in sei@annual installents of P%$---.-- to be paidon /une +- and =eceber +% of every year.

:n pril %&A$ petitioner and private respondent entered into a2uppleental greeent stating that Payents of the onthly installentsP>--.-- shall be ade not later than the 6fth day of every onth withoutneed of deand starting /anuary$ %&A

Petitioner$ thus$ had been a1ing the P>--.-- onthly installent payentsuntil he received a letter dated ;ebruary %+$ %&&- fro private respondent0 scounsel inforing hi for his failure to pay the onthly installents$ the=eed of Conditional 2ale with "ortgage and the 2uppleental greeentwere rescinded and payents ade were considered rentals. The letterfurther deanded that petitioner vacate the preises.

Petitioner had paid private respondent the aount of P#,$>--.--$ consistingof the P>--.-- onthly installents fro /anuary %&A to /anuary %&&-.

The trial court and the appellate court agreed with private respondent thatthe above payents should be applied to the unpaid accrued(added) interest(%-F per annu on the balance) for the years %&A to %&& totallingP%-$&AA.%$ pursuant to rticle %#>+ of the Civil Code. Thus$ after suchapplication of payent$ petitioner had unpaid installents in the aount of P#+$'>%.% representing #% onthly installents.

22



I!!*e)5! it is the duty of private respondent to infor petitioner that hispayent shall be applied to the interest 6rst

R*lin+)The fact that private respondent accepted the payents of petitioner adefor four years. Private respondent cannot rely on the clause in the contractstating that no deand is necessary to explain her silence as to the %-Finterest$ as such clause refers to the P>--.-- onthly installents.Even granting as acceptable private respondent0s theory that the onthlyaorti4ations shall 6rst be applied to the payent of the interests$ we uststill rule for petitioner.

fter pondering on the eaning of rticle %#>+$ we reach the conclusionthat in a contract involving installent payents with interest chargeableagainst the reaining balance of the obligation$ it is the duty of the creditorto infor of the aount of interest that falls due and that he is applying the

installent payents to cover said interest. !therwise$ the creditor cannotapply the payents to the interest and then hold the debtor in default fornon@payent of installents on the principal.57E<E;!<E$ the petition is 3<TE=. The =ecision of the Court of

ppeals is <EIE<2E= and a new one entered as follows Private respondent0s rescission of the contracts is 9LLE=D and #Private respondent is !<=E<E= to CCEPT the onthly installents of petitioner without penalty until the full aount of the contracts$ includingthe accrued interest$ is paid in full.2! !<=E<E=.

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