G.R. No.

L-30597 June 30, 1987

GUILLERMO AZCONA and FE JALANDONI AZCONA, petitioners,
vs.
JOSE JAMANDRE, Administrator of the Intestate Estate of Cirilo Jamandre (Sp. Proc. 6921 of the Court of
First Instance of Negros Occidental), and the HONORABLE COURT OF APPEALS, respondents.



CRUZ, J.:

This involves the interpretation of a contract of lease which was found by the trial court to have been
violated by both the plaintiff and the defendant. On appeal, its decision was modified by the respondent
court in favor of the plaintiff, for which reason the defendant has now come to us in a petition for
certiorari.

By the said contract, 1 Guillermo Azcona (hereinafter called the petitioner) leased 80 hectares of his
150-hectare pro indiviso share in Hacienda Sta. Fe in Escalante, Negros Occidental, to Cirilo Jamandre
(represented here by the administrator of his intestate estate, and hereinafter called the private
respondent). The agreed yearly rental was P7,200.00. The lease was for three agricultural years
beginning 1960, extendible at the lessee's option to two more agricultural years, up to 1965.

The first annual rental was due on or before March 30, 1960, but because the petitioner did not deliver
possession of the leased property to the respondent, he "waived" payment, as he put it, of that rental. 2
The respondent actually entered the premises only on October 26, 1960, after payment by him to the
petitioner of the sum of P7,000.00, which was acknowledged in the receipt later offered as Exhibit "B".

On April 6, 1961, the petitioner, through his lawyer, notified the respondent that the contract of lease
was deemed cancelled, terminated, and of no further effect," pursuant to its paragraph 8, for violation
of the conditions specified in the said agreement. 3 Earlier, in fact, the respondent had been ousted
from the possession of 60 hectares of the leased premises and left with only 20 hectares of the original
area. 4

The reaction of the respondent to these developments was to file a complaint for damages against the
petitioner, who retaliated with a counterclaim. As previously stated, both the complaint and the
counterclaim were dismissed by the trial court * on the finding that the parties were in pari delicto. 5

The specific reasons invoked by the petitioner for canceling the lease contract were the respondent's
failure: 1) to attach thereto the parcelary plan Identifying the exact area subject of the agreement, as
stipulated in the contract; 2; to secure the approval by the Philippine National Bank of the said contract;
and 3) to pay the rentals. 6

The parcelary plan was provided for in the contract as follows:

That the LESSOR by these presents do hereby agree to lease in favor of the LESSEE a portion of the said
lots above-described with an extension of EIGHTY (80) hectares, more or less, which portion is to be
Identified by the parcelary plan duly marked and to be initialed by both LESSOR and LESSEE, and which
parcelary plan is known as Annex "A" of this contract and considered as an integral part hereof. 7

According to the petitioners, the parcelary plan was never agreed upon or annexed to the contract,
which thereby became null and void under Article 1318 of the Civil Code for lack of a subject matter.
Moreover, the failure of the parties to approve and annex the said parcelary plan had the effect of a
breach of the contract that justified its cancellation under its paragraph 8. 8

In one breath, the petitioner is arguing that there was no contract because there was no object and at
the same time that there was a contract except that it was violated.

The correct view, as we see it, is that there was an agreed subject-matter, to wit, the 80 hectares of the
petitioner's share in the Sta. Fe hacienda, although it was not expressly defined because the parcelary
plan was not annexed and never approved by the parties. Despite this lack, however, there was an
ascertainable object because the leased premises were sufficiently Identified and delineated as the
petitioner admitted in his amended answer and in his direct testimony. 9

Thus, in his amended answer, he asserted that "the plaintiff . . .must delimit his work to the area
previously designated and delivered." Asked during the trial how many hectares the private respondent
actually occupied, the petitioner declared: "About 80 hectares. The whole 80 hectares." 10 The
petitioner cannot now contradict these written and oral admissions." 11

Moreover, it appears that the failure to attach the parcelary plan to the contract is imputable to the
petitioner himself because it was he who was supposed to cause the preparation of the said plan. As he
testified on direct examination, "Our agreement was to sign our agreement, then I will have the
parcelary plan prepared so that it will be a part of our contract." 12 That this was never done is not the
respondent's fault as he had no control of the survey of the petitioner's land.

Apparently, the Court of Appeals ** found, the parties impliedly decided to forego the annexing of the
parcelary plan because they had already agreed on the area and limits of the leased premises. 13 The
Identification of the 80 hectares being leased rendered the parcelary plan unnecessary, and its absence
did not nullify the agreement.

Coming next to the alleged default in the payment of the stipulated rentals, we observe first that when
in Exhibit "B" the petitioner declared that "I hereby waive payment for the rentals corresponding to the
crop year 1960-61 and which was due on March 30, 1960, " there was really nothing to waive because,
as he himself put it in the same document, possession of the leased property "was not actually
delivered" to the respondent. 14

The petitioner claims that such possession was not delivered because the approval by the PNB of the
lease contract had not "materialized" due to the respondent's neglect. Such approval, he submitted, was
to have been obtained by the respondents, which seems logical to us, for it was the respondent who
was negotiating the loan from the PNB. As the respondent court saw it, however, "paragraph 6 (of the
contract) does not state upon whom fell the obligation to secure the approval" so that it was not clear
that "the fault, if any, was due solely to one or the other." 15

At any rate, that issue and the omission of the parcelary plan became immaterial when the parties
agreed on the lease for the succeeding agricultural year 1961-62, the respondent paying and the
petitioner receiving therefrom the sum of P7,000.00, as acknowledged in Exhibit "B," which is
reproduced in full as follows:

Bacolod City

October 26, 1960

R E C E I P T

RECEIVED from Mr. Cirilo Jamandre at the City of Bacolod, Philippines, this 26th day of October, 1960,
Philippine National Bank Check No. 180646-A (Manager's Check Binalbagan Branch) for the amount of
SEVEN THOUSAND PESOS (P7,000.00), Philippine Currency as payment for the rental corresponding to
crop year 1961-62, by virtue of the contract of lease I have executed in his favor dated November 23,
1959, and ratified under Notary Public Mr. Enrique F. Marino as Doc. No. 119, Page No. 25, Book No. XII,
Series of 1959. It is hereby understood, that this payment corresponds to the rentals due on or before
January 30, 1961, as per contract. It is further understood that I hereby waive payment for the rentals
corresponding to crop year 1960-61 and which was due on March 30, 1960, as possession of the
property lease in favor of Mr. Cirilo Jamandre was not actually delivered to him, but the same to be
delivered only after receipt of the amount as stated in this receipt. That Mr. Cirilo Jamandre is hereby
authorized to take immediate possession of the property under lease effective today, October 26, 1960.

WITNESS my hand at the City of Bacolod, Philippines, this 26th day of October, 1960.

(SGD.) GUILLERMO AZCONA

SIGNED IN THE PRESENCE OF:

(SGD.) JOSE T. JAMANDRE

Citing the stipulation in the lease contract for an annual rental of P7,200.00, the petitioner now submits
that there was default in the payment thereof by the respondent because he was P200.00 short of such
rental. That deficiency never having been repaired, the petitioner concludes, the contract should be
deemed cancelled in accordance with its paragraph 8. 16

For his part, the respondent argues that the receipt represented an express reduction of the stipulated
rental in consideration of his allowing the use of 16 hectares of the leased area by the petitioner as
grazing land for his cattle. Having unqualifiedly accepted the amount of P7,000.00 as rental for the
agricultural year 1961-62, the petitioner should not now be heard to argue that the payment was
incomplete. 17

After a study of the receipt as signed by the petitioner and witnessed for the respondent, this Court has
come to the conclusion, and so holds, that the amount of P7,000.00 paid to by the respondent and
received by the petitioner represented payment in full of the rental for the agricultural year 1961-62.

The language is clear enough: "The amount of SEVEN THOUSAND PESOS (P7,000.00), Philippine
Currency, as payment for the rental corresponding to crop year 1961-62 ... to the rental due on or
before January 30, 1961, as per contract." The conclusion should be equally clear.

The words "as per contract" are especially significant as they suggest that the parties were aware of the
provisions of the agreement, which was described in detail elsewhere in the receipt. The rental
stipulated therein was P7,200.00. The payment being acknowledged in the receipt was P7,000.00 only.
Yet no mention was made in the receipt of the discrepancy and, on the contrary, the payment was
acknowledged "as per contract." We read this as meaning that the provisions of the contract were being
maintained and respected except only for the reduction of the agreed rental.

The respondent court held that the amount of P200.00 had been condoned, but we do not think so. The
petitioner is correct in arguing that the requisites of condonation under Article 1270 of the Civil Code
are not present. What we see here instead is a mere reduction of the stipulated rental in consideration
of the withdrawal from the leased premises of the 16 hectares where the petitioner intended to graze
his cattle. The signing of Exhibit "B " by the petitioner and its acceptance by the respondent manifested
their agreement on the reduction, which modified the lease contract as to the agreed consideration
while leaving the other stipulations intact.

The petitioner says that having admittedly been drafted by lawyer Jose Jamandre, the respondent's son,
the receipt would have described the amount of P7,000.00 as "payment in full" of the rental if that were
really the case.

It seems to us that this meaning was adequately conveyed in the acknowledgment made by the
petitioner that this was "payment for the rental corresponding to crop year 1961-62" and "corresponds
to the rentals due on or before January 30, 1961, as per contract." On the other hand, if this was not the
intention, the petitioner does not explain why he did not specify in the receipt that there was still a
balance of P200.00 and, to be complete, the date when it was to be paid by the respondent.

It is noted that the receipt was meticulously worded, suggesting that the parties were taking great pains,
indeed, to provide against any possible misunderstanding, as if they were even then already
apprehensive of future litigation. Such a reservation-if there was one-would have been easily
incorporated in the receipt, as befitted the legal document it was intended to be.

In any event, the relative insignificance of the alleged balance seems to us a paltry justification for
annulling the contract for its supposed violation. If the petitioner is fussy enough to invoke it now, it
stands to reason that he would have fussed over it too in the receipt he willingly signed after accepting,
without reservation and apparently without protest, only P7,000.00.

The applicable provision is Article 1235 of the Civil Code, declaring that:

Art. 1235. 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.

The petitioner says that he could not demand payment of the balance of P200.00 on October 26, 1960,
date of the receipt because the rental for the crop year 1961-62 was due on or before January 30, 1961.
18 But this would not have prevented him from reserving in the receipt his right to collect the balance
when it fell due. Moreover, there is no evidence in the record that when the due date arrived, he made
any demand, written or verbal, for the payment of that amount.

As this Court is not a trier of facts, 19 we defer to the findings of the respondent court regarding the
losses sustained by the respondent on the basis of the estimated yield of the properties in question in
the years he was supposed to possess and exploit them. While the calculations offered by the petitioner
are painstaking and even apparently exhaustive, we do not find any grave abuse of discretion on the
part of the respondent court to warrant its reversal on this matter. We also sustain the P5,000.00
attorney's fee.

WHEREFORE, the decision of the respondent Court of Appeals is AFFIRMED in full, with costs against the
petitioners.

SO ORDERED.
SECOND DIVISION

G.R. No. L-41764 December 19, 1980

NEW PACIFIC TIMBER & SUPPLY COMPANY, INC., Petitioner, vs. HON. ALBERTO V. SENERIS, RICARDO A.
TONG and EX-OFFICIO SHERIFF HAKIM S. ABDULWAHID, Respondents.

CONCEPCION JR., J.:

A petition for certiorari with preliminary injunction to annul and/or modify the order of the Court of
First Instance of Zamboanga City (Branch ii) dated August 28, 1975 denying petitioner's Ex-Parte Motion
for Issuance of Certificate Of Satisfaction Of Judgment.chanroblesvirtualawlibrary chanrobles virtual law
library

Herein petitioner is the defendant in a complaint for collection of a sum of money filed by the private
respondent. 1 On July 19, 1974, a compromise judgment was rendered by the respondent Judge in
accordance with an amicable settlement entered into by the parties the terms and conditions of which,
are as follows: chanrobles virtual law library

(1) That defendant will pay to the plaintiff the amount of Fifty Four Thousand Five Hundred Pesos
(P54,500.00) at 6% interest per annum to be reckoned from August 25, 1972; chanrobles virtual law
library

(2) That defendant will pay to the plaintiff the amount of Six Thousand Pesos (P6,000.00) as
attorney's fees for which P5,000.00 had been acknowledged received by the plaintiff under
Consolidated Bank and Trust Corporation Check No. 16-135022 amounting to P5,000.00 leaving a
balance of One Thousand Pesos (P1,000.00); chanrobles virtual law library

(3) That the entire amount of P54,500.00 plus interest, plus the balance of P1,000.00 for attorney's
fees will be paid by defendant to the plaintiff within five months from today, July 19, 1974; and
chanrobles virtual law library

(4) Failure one the part of the defendant to comply with any of the above-conditions, a writ of
execution may be issued by this Court for the satisfaction of the obligation. 2

For failure of the petitioner to comply with his judgment obligation, the respondent Judge, upon motion
of the private respondent, issued an order for the issuance of a writ of execution on December 21, 1974.
Accordingly, writ of execution was issued for the amount of P63,130.00 pursuant to which, the Ex-
Officio Sheriff levied upon the following personal properties of the petitioner, to wit: chanrobles virtual
law library

(1) Unit American Lathe 24chanrobles virtual law library

(1) Unit American Lathe 18 Cracker Wheeler chanrobles virtual law library

(1) Unit Rockford Shaper 24

and set the auction sale thereof on January 15, 1975. However, prior to January 15, 1975, petitioner
deposited with the Clerk of Court, Court of First Instance, Zamboanga City, in his capacity as Ex-Officio
Sheriff of Zamboanga City, the sum of P63,130.00 for the payment of the judgment obligation,
consisting of the following: chanrobles virtual law library

1. P50.000.00 in Cashier's Check No. S-314361 dated January 3, 1975 of the Equitable Banking
Corporation; and chanrobles virtual law library

2. P13,130.00 incash. 3

In a letter dated January 14, 1975, to the Ex-Officio Sheriff, 4 private respondent through counsel,
refused to accept the check as well as the cash deposit. In the 'same letter, private respondent
requested the scheduled auction sale on January 15, 1975 to proceed if the petitioner cannot produce
the cash. However, the scheduled auction sale at 10:00 a.m. on January 15, 1975 was postponed to 3:00
o'clock p.m. of the same day due to further attempts to settle the case. Again, the scheduled auction
sale that afternoon did not push through because of a last ditch attempt to convince the private
respondent to accept the check. The auction sale was then postponed on the following day, January 16,
1975 at 10:00 o'clock a.m. 5 At about 9:15 a.m., on January 16, 1975, a certain Mr. Taedo representing
the petitioner appeared in the office of the Ex-Officio Sheriff and the latter reminded Mr. Taedo that
the auction sale would proceed at 10:00 o'clock. At 10:00 a.m., Mr. Taedo and Mr. Librado, both
representing the petitioner requested the Ex-Officio Sheriff to give them fifteen minutes within which to
contract their lawyer which request was granted. After Mr. Taedo and Mr. Librado failed to return,
counsel for private respondent insisted that the sale must proceed and the Ex-Officio Sheriff proceeded
with the auction sale. 6 In the course of the proceedings, Deputy Sheriff Castro sold the levied
properties item by item to the private respondent as the highest bidder in the amount of P50,000.00. As
a result thereof, the Ex-Officio Sheriff declared a deficiency of P13,130.00. 7Thereafter, on January 16,
1975, the Ex-Officio Sheriff issued a "Sheriff's Certificate of Sale" in favor of the private respondent,
Ricardo Tong, married to Pascuala Tong for the total amount of P50,000.00 only. 8Subsequently, on
January 17, 1975, petitioner filed an ex-parte motion for issuance of certificate of satisfaction of
judgment. This motion was denied by the respondent Judge in his order dated August 28, 1975. In view
thereof, petitioner now questions said order by way of the present petition alleging in the main that said
respondent Judge capriciously and whimsically abused his discretion in not granting the motion for
issuance of certificate of satisfaction of judgment for the following reasons: (1) that there was already a
full satisfaction of the judgment before the auction sale was conducted with the deposit made to the Ex-
Officio Sheriff in the amount of P63,000.00 consisting of P50,000.00 in Cashier's Check and P13,130.00
in cash; and (2) that the auction sale was invalid for lack of proper notice to the petitioner and its
counsel when the Ex-Officio Sheriff postponed the sale from June 15, 1975 to January 16, 1976 contrary
to Section 24, Rule 39 of the Rules of Court. On November 10, 1975, the Court issued a temporary
restraining order enjoining the respondent Ex-Officio Sheriff from delivering the personal properties
subject of the petition to Ricardo A. Tong in view of the issuance of the "Sheriff Certificate of Sale."
chanrobles virtual law library

We find the petition to be impressed with merit.chanroblesvirtualawlibrary chanrobles virtual law
library

The main issue to be resolved in this instance is as to whether or not the private respondent can validly
refuse acceptance of the payment of the judgment obligation made by the petitioner consisting of
P50,000.00 in Cashier's Check and P13,130.00 in cash which it deposited with the Ex-Officio Sheriff
before the date of the scheduled auction sale. In upholding private respondent's claim that he has the
right to refuse payment by means of a check, the respondent Judge cited the following: chanrobles
virtual law library

Section 63 of the Central Bank Act: chanrobles virtual law library

Sec. 63. Legal Character. - Checks representing deposit money do not have legal tender power and their
acceptance in payment of debts, both public and private, is at the option of the creditor, Provided,
however, that a check which has been cleared and credited to the account of the creditor shall be
equivalent to a delivery to the creditor in cash in an amount equal to the amount credited to his
account.

Article 1249 of the New Civil Code: chanrobles virtual law library

Art. 1249. - The payment of debts in money shall be made in the currency stipulated, and if it is not
possible to deliver such currency, then in the currency which is legal tender in the
Philippines.chanroblesvirtualawlibrary chanrobles virtual law library

The delivery of promissory notes payable to order, or bills of exchange or other mercantile documents
shall produce the effect of payment only when they have been cashed, or when through the fault of the
creditor they have been impaired.chanroblesvirtualawlibrary chanrobles virtual law library

In the meantime, the action derived from the original obligation shall be held in abeyance.

Likewise, the respondent Judge sustained the contention of the private respondent that he has the right
to refuse payment of the amount of P13,130.00 in cash because the said amount is less than the
judgment obligation, citing the following Article of the New Civil Code: chanrobles virtual law library

Art. 1248. Unless there is an express stipulation to that effect, the creditor cannot be compelled partially
to receive the presentations in which the obligation consists. Neither may the debtor be required to
make partial payment.chanroblesvirtualawlibrary chanrobles virtual law library

However, when the debt is in part liquidated and in part unliquidated, the creditor may demand and the
debtor may effect the payment of the former without waiting for the liquidation of the latter.

It is to be emphasized in this connection that the check deposited by the petitioner in the amount of
P50,000.00 is not an ordinary check but a Cashier's Check of the Equitable Banking Corporation, a bank
of good standing and reputation. As testified to by the Ex-Officio Sheriff with whom it has been
deposited, it is a certified crossed check. 9 It is a well-known and accepted practice in the business
sector that a Cashier's Check is deemed as cash. Moreover, since the said check had been certified by
the drawee bank, by the certification, the funds represented by the check are transferred from the
credit of the maker to that of the payee or holder, and for all intents and purposes, the latter becomes
the depositor of the drawee bank, with rights and duties of one in such situation. 10 Where a check is
certified by the bank on which it is drawn, the certification is equivalent to acceptance. 11 Said
certification "implies that the check is drawn upon sufficient funds in the hands of the drawee, that they
have been set apart for its satisfaction, and that they shall be so applied whenever the check is
presented for payment. It is an understanding that the check is good then, and shall continue good, and
this agreement is as binding on the bank as its notes in circulation, a certificate of deposit payable to the
order of the depositor, or any other obligation it can assume. The object of certifying a check, as regards
both parties, is to enable the holder to use it as money." 12 When the holder procures the check to be
certified, "the check operates as an assignment of a part of the funds to the creditors." 13 Hence, the
exception to the rule enunciated under Section 63 of the Central Bank Act to the effect "that a check
which has been cleared and credited to the account of the creditor shall be equivalent to a delivery to
the creditor in cash in an amount equal to the amount credited to his account" shall apply in this case.
Considering that the whole amount deposited by the petitioner consisting of Cashier's Check of
P50,000.00 and P13,130.00 in cash covers the judgment obligation of P63,000.00 as mentioned in the
writ of execution, then, We see no valid reason for the private respondent to have refused acceptance
of the payment of the obligation in his favor. The auction sale, therefore, was uncalled for. Furthermore,
it appears that on January 17, 1975, the Cashier's Check was even withdrawn by the petitioner and
replaced with cash in the corresponding amount of P50,000.00 on January 27, 1975 pursuant to an
agreement entered into by the parties at the instance of the respondent Judge. However, the private
respondent still refused to receive the same. Obviously, the private respondent is more interested in the
levied properties than in the mere satisfaction of the judgment obligation. Thus, petitioner's motion for
the issuance of a certificate of satisfaction of judgment is clearly meritorious and the respondent Judge
gravely abused his discretion in not granting the same under the
circumstances.chanroblesvirtualawlibrary chanrobles virtual law library

In view of the conclusion reached in this instance, We find no more need to discuss the ground relied in
the petition.chanroblesvirtualawlibrary chanrobles virtual law library

It is also contended by the private respondent that Appeal and not a special civil action for certiorari is
the proper remedy in this case, and that since the period to appeal from the decision of the respondent
Judge has already expired, then, the present petition has been filed out of time. The contention is
untenable. The decision of the respondent Judge in Civil Case No. 250 (166) has long become final and
executory and so, the same is not being questioned herein. The subject of the petition at bar as having
been issued in grave abuse of discretion is the order dated August 28, 1975 of the respondent Judge
which was merely issued in execution of the said decision. Thus, even granting that appeal is open to the
petitioner, the same is not an adequate and speedy remedy for the respondent Judge had already issued
a writ of execution. 14chanrobles virtual law library

WHEREFORE, in view of all the foregoing, judgment is hereby rendered: chanrobles virtual law library

1. Declaring as null and void the order of the respondent Judge dated August 28, 1975; chanrobles
virtual law library

2. Declaring as null and void the auction sale conducted on January 16, 1975 and the certificate of sale
issued pursuant thereto; chanrobles virtual law library

3. Ordering the private respondent to accept the sum of P63,130.00 under deposit as payment of the
judgment obligation in his favor; chanrobles virtual law library

4. Ordering the respondent Judge and respondent Ex-Officio Sheriff to release the levied properties to
the herein petitioner.chanroblesvirtualawlibrary chanrobles virtual law library

The temporary restraining order issued is hereby made permanent.chanroblesvirtualawlibrary
chanrobles virtual law library

Costs against the private respondent.chanroblesvirtualawlibrarychanrobles virtual law library

SO ORDERED.


























G.R. No. 72110. November 16, 1990.*
ROMAN CATHOLIC BISHOP OF MALOLOS, INC., petitioner, vs. INTERMEDIATE APPELLATE COURT, and
ROBES-FRANCISCO REALTY AND DEVELOPMENT CORPORATION, respondents.
PETITION for certiorari to review the decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Rodrigo Law Office for petitioner.
Antonio P. Barredo and Napoleon M. Malinas for private respondent.

SARMIENTO, J.:

This is a petition for review on certiorari which seeks the reversal and setting aside of the decision1 of
the Court of Appeals,2 the dispositive portion of which reads:
WHEREFORE, the decision appealed from is hereby reversed
2 AC-G.R. CV No. 69626, Robes-Francisco Realty & Development Corporation vs. Roman Catholic Bishop
of Malolos, Inc. and set aside and another one entered for the plaintiff ordering the defendant-appellee
Roman Catholic Bishop of Malolos, Inc. to accept the balance of P124,000.00 being paid by plaintiff-
appellant and thereafter to execute in favor of Robes-Francisco Realty Corporation a registerable Deed
of Absolute Sale over 20,655 square meters portion of that parcel of land situated in San Jose del
Monte, Bulacan described in OCT No. 575 (now Transfer Certificates of Title Nos. T-169493, 169494,
169495 and 169496) of the Register of Deeds of Bulacan. In case of refusal of the defendant to execute
the Deed of Final Sale, the clerk of court is directed to execute the said document. Without
pronouncement as to damages and attorneys fees. Costs against the defendant-appellee.3

The case at bar arose from a complaint filed by the private respondent, then plaintiff, against the
petitioner, then defendant, in the Court of First Instance (now Regional Trial Court) of Bulacan, at Sta.
Maria, Bulacan,4 for specific performance with damages, based on a contract5 executed on July 7, 1971.

The property subject matter of the contract consists of a 20,655 sq.m.-portion, out of the 30,655 sq.m.
total area, of a parcel of land covered by Original Certificate of Title No. 575 of the Province of Bulacan,
issued and registered in the name of the petitioner which it sold to the private respondent for and in
consideration of P123,930.00.
The crux of the instant controversy lies in the compliance or non-compliance by the private respondent
with the provision for payment to the petitioner of the principal balance of P100,000.00 and the accrued
interest of P24,000.00 within the grace period.
A chronological narration of the antecedent facts is as follows:
On July 7, 1971, the subject contract over the land in question was executed between the petitioner as
vendor and the private respondent through its then president, Mr. Carlos F. Robes, as vendee,
stipulating for a downpayment of P23,930.00 and the balance of P100,000.00 plus 12% interest per
annum to be paid within four (4) years from execution of the contract, that is, on or before July 7, 1975.
The contract likewise provides for cancellation, forfeiture of previous payments, and reconveyance of
the land in question in case the private respondent would fail to complete payment within the said
period.

On March 12, 1973, the private respondent, through its new president, Atty. Adalia Francisco, addressed
a letter6 to Father Vasquez, parish priest of San Jose Del Monte, Bulacan, requesting to be furnished
with a copy of the subject contract and the supporting documents.

On July 17, 1975, admittedly after the expiration of the stipulated period for payment, the same Atty.
Francisco wrote the petitioner a formal request7 that her company be allowed to pay the principal
amount of P100,000.00 in three (3) equal installments of six (6) months each with the first installment
and the accrued interest of P24,000.00 to be paid immediately upon approval of the said request.
On July 29, 1975, the petitioner, through its counsel, Atty. Carmelo Fernandez, formally denied the said
request of the private respondent, but granted the latter a grace period of five (5) days from the receipt
of the denial8 to pay the total balance of P124,000.00, otherwise, the provisions of the contract
regarding cancellation, forfeiture, and reconveyance would be implemented.
On August 4, 1975, the private respondent, through its president, Atty. Francisco, wrote9 the counsel of
the petitioner requesting an extension of 30 days from said date to fully settle its account. The counsel
for the petitioner, Atty. Fernandez, received the said letter on the same day. Upon consultation with the
petitioner in Malolos, Bulacan, Atty. Fernandez, as instructed, wrote the private respondent a letter10
dated August.
Consequently, Atty. Francisco, the private respondents president, wrote a letter11 dated August 22,
1975, directly addressed to the petitioner, protesting the alleged refusal of the latter to accept tender of
payment purportedly made by the former on August 5, 1975, the last day of the grace period. In the
same letter of August 22, 1975, received on the following day by the petitioner, the private respondent
demanded the execution of a deed of absolute sale over the land in question and after which it would
pay its account in full, otherwise, judicial action would be resorted to.

On August 27, 1975, the petitioners counsel, Atty. Fernandez, wrote a reply12 to the private
respondent stating the refusal of his client to execute the deed of absolute sale due to its (private
respondents) failure to pay its full obligation. Moreover, the petitioner denied that the private
respondent had made any tender of payment whatsoever within the grace period. In view of this alleged
breach of contract, the petitioner cancelled the contract and considered all previous payments forfeited
and the land as ipso facto reconveyed.

From a perusal of the foregoing facts, we find that both the contending parties have conflicting versions
on the main question of tender of payment.

The trial court, in its ratiocination, preferred not to give credence to the evidence presented by the
private respondent. According to the trial court:

x x x What made Atty. Francisco suddenly decide to pay plaintiffs obligation on August 5, 1975, go to
defendants office at Malolos, and there tender her payment, when her request of August 4, 1975 had
not yet been acted upon until August 7, 1975? If Atty. Francisco had decided to pay the obligation and
had available funds for the purpose on August 5, 1975, then there would have been no need for her to
write defendant on August 4, 1975 to request an extension of time. Indeed, Atty. Franciscos claim that
she made a tender of payment on August 5, 1975such alleged act, considered in relation to the
circumstances both antecedent and subsequent thereto, being not in accord with the normal pattern of
human conductis not worthy of credence.13

The trial court likewise noted the inconsistency in the testimony of Atty. Francisco, president of the
private respondent, who earlier testified that a certain Mila Policarpio accompanied her on August 5,
1975 to the office of the petitioner. Another person, however, named Aurora Oracion, was presented to
testify as the secretary-companion of Atty. Francisco on that same occasion.

Furthermore, the trial court considered as fatal the failure of Atty. Francisco to present in court the
certified personal check allegedly tendered as payment or, at least, its xerox copy, or even bank records
thereof. Finally, the trial court found that the private respondent had insufficient funds available to fulfill
the entire obligation considering that the latter, through its president, Atty. Francisco, only had a savings
account deposit of P64,840.00, and although the latter had a money-market placement of P300,000.00.
the same was to mature only after the expiration of the 5-day grace period.

Based on the above considerations, the trial court rendered a decision in favor of the petitioner, the
dispositive portion of which reads:

WHEREFORE, finding plaintiff to have failed to make out its case, the court hereby declares the subject
contract cancelled and plaintiffs down payment of P23,930.00 forfeited in favor of defendant, and
hereby dismisses the complaint; and on the counterclaim, the Court orders plaintiff to pay defendant.

(1) Attorneys fees of P10,000.00;
(2) Litigation expenses of P2,000.00; and
(3) Judicial costs.

SO ORDERED.14

Not satisfied with the said decision, the private respondent appealed to the respondent Intermediate
Appellate Court (now Court of Appeals) assigning as reversible errors, among others, the findings of the
trial court that the available funds of the private respondent were insufficient and that the latter did not
effect a valid tender of payment and consignation.
The respondent court, in reversing the decision of the trial court, essentially relies on the following
findings:

x x x We are convinced from the testimony of Atty. Adalia Francisco and her witnesses that in behalf of
the plaintiff-appellant they have a total available sum of P364,840.00 at her and at the plaintiffs
disposal on or before August 4, 1975 to answer for the obligation of the plaintiff-appellant. It was not
correct for the trial court to conclude that the plaintiff-appellant had only about P64,840.00 in savings
deposit on or before August 5, 1975, a sum not enough to pay the outstanding account of P124,000.00.
The plaintiff-appellant, through Atty. Francisco proved and the trial court even acknowledged that Atty.
Adalia Francisco had about P300,000.00 in money market placement. The error of the trial court lies in
concluding that the money market placement of P300,000.00 was out of reach of Atty. Francisco. But as
testified to by Mr. Catalino Estrella, a representative of the Insular Bank of Asia and America, Atty.
Francisco could withdraw anytime her money market placement and place it at her disposal, thus
proving her financial capability of meeting more than the whole of P124,000.00 then due per contract.
This situation, We believe, proves the truth that Atty. Francisco apprehensive that her request for a 30-
day grace period would be denied, she tendered payment on August 4, 1975 which offer defendant
through its representative and counsel refused to receive. x x x15 (Italics supplied)
In other words, the respondent court, finding that the private respondent had sufficient available funds,
ipso facto concluded that the latter had tendered payment. Is such conclusion warranted by the facts
proven? The petitioner submits that it is not.
Hence, this petition.16

The petitioner presents the following issues for resolution:
A. Is a finding that private respondent had sufficient available funds on or before the grace period for
the payment of its obligation proof that it (private respondent) did tender of (sic) payment for its said
obligation within said period?
x x x x x x x x x
B. Is it the legal obligation of the petitioner (as vendor) to execute a deed of absolute sale in favor of
the private respondent (as vendee) before the latter has actually paid the complete consideration of the
salewhere the contract between and executed by the parties stipulates
That upon complete payment of the agreed consideration by the herein VENDEE, the VENDOR shall
cause the execution of a Deed of Absolute Sale in favor of the VENDEE.

x x x x x x x x x

C. Is an offer of a check a valid tender of payment of an obligation under a contract which stipulates
that the consideration of the sale is in Philippine Currency?17

We find the petition impressed with merit.

With respect to the first issue, we agree with the petitioner that a finding that the private respondent
had sufficient available funds on or before the grace period for the payment of its obligation does not
constitute proof of tender of payment by the latter for its obligation within the said period. Tender of
payment involves a positive and unconditional act by the obligor of offering legal tender currency as
payment to the obligee for the formers obligation and demanding that the latter accept the same. Thus,
tender of payment cannot be presumed by a mere inference from surrounding circumstances. At most,
sufficiency of available funds is only affirmative of the capacity or ability of the obligor to fulfill his part
of the bargain. But whether or not the obligor avails himself of such funds to settle his outstanding
account remains to be proven by independent and credible evidence. Tender of payment presupposes
not only that the obligor is able, ready, and willing, but more so, in the act of performing his obligation.
Ab posse ad actu non vale illatio. A proof that an act could have been done is no proof that it was
actually done.

The respondent court was therefore in error to have concluded from the sheer proof of sufficient
available funds on the part of the private respondent to meet more than the total obligation within the
grace period, the alleged truth of tender of payment. The same is a classic case of non-sequitur.

On the contrary, the respondent court finds itself remiss in overlooking or taking lightly the more
important findings of fact made by the trial court which we have earlier mentioned and which as a rule,
are entitled to great weight on appeal and should be accorded full consideration and respect and should
not be disturbed unless for strong and cogent reasons.18
While the Court is not a trier of facts, yet, when the findings of fact of the Court of Appeals are at
variance with those of the trial court,19 or when the inference of the Court of Appeals from its findings
of fact is manifestly mistaken,20 the Court has to review the evidence in order to arrive at the correct
findings based on the record.

Apropos the second issue raised, although admittedly the documents for the deed of absolute sale had
not been prepared, the subject contract clearly provides that the full payment by the private respondent
is an a priori condition for the execution of the said documents by the petitioner.
That upon complete payment of the agreed consideration by the herein VENDEE, the VENDOR shall
cause the execution of a Deed of Absolute Sale in favor of the VENDEE.21
The private respondent is therefore in estoppel to claim otherwise as the latter did in the testimony in
cross-examination of its president, Atty. Francisco, which reads:
Q Now, you mentioned, Atty. Francisco, that you wanted the defendant to execute the final deed of sale
before you would given (sic) the personal certified check in payment of your balance, is that correct?

A Yes, sir.22
x x x x x x x x x
Art. 1159 of the Civil Code of the Philippines provides that obligations arising from contracts have the
force of law between the contracting parties and should be complied with in good faith. And unless the
stipulations in said contract are contrary to law, morals, good customs, public order, or public policy, the
same are binding as between the parties.23

What the private respondent should have done if it was indeed desirous of complying with its
obligations would have been to pay the petitioner within the grace period and obtain a receipt of such
payment duly issued by the latter. Thereafter, or, allowing a reasonable time, the private respondent
could have demanded from the petitioner the execution of the necessary documents. In case the
petitioner refused, the private respondent could have had always resorted to judicial action for the
legitimate enforcement of its right. For the failure of the private respondent to undertake this more
judicious course of action, it alone shall suffer the consequences.
With regard to the third issue, granting arguendo that we would rule affirmatively on the two preceding
issues, the case of the private respondent still can not succeed in view of the fact that the latter used a
certified personal check which is not legal tender nor the currency stipulated, and therefore, can not
constitute valid tender of payment. The first paragraph of Art. 1249 of the Civil Code provides that the
payment of debts in money shall be made in the currency stipulated, and if it is not possible to deliver
such currency, then in the currency which is legal tender in the Philippines.
The Court en banc in the recent case of Philippine Airlines v. Court of Appeals,24 G.R. No. L-49188,
stated thus:
Since a negotiable instrument is only a substitute for money and not money, the delivery of such an
instrument does not, by itself, operate as payment (citing Sec. 189, Act 2031 on Negs. Insts.; Art. 1249,
Civil Code; Bryan London Co. v. American Bank, 7 Phil. 255; Tan Sunco v. Santos, 9 Phil. 44; 21 R.C.L. 60,
61). A check, whether a managers 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.

Hence, where the tender of payment by the private respondent was not valid for failure to comply with
the requisite payment in legal tender or currency stipulated within the grace period and as such, was
validly refused receipt by the petitioner, the subsequent consignation did not operate to discharge the
former from its obligation to the latter.

In view of the foregoing, the petitioner in the legitimate exercise of its rights pursuant to the subject
contract, did validly order therefore the cancellation of the said contract, the forfeiture of the previous
payment, and the reconveyance ipso facto of the land in question.

WHEREFORE, the petition for review on certiorari is GRANTED and the DECISION of the respondent
court promulgated on April 25, 1985 is hereby SET ASIDE and ANNULLED and the DECISION of the trial
court dated May 25, 1981 is hereby REINSTATED. Costs against the private respondent.

SO ORDERED.
Melencio-Herrera (Chairman), Paras and Regalado, JJ., concur.
Padilla, J., No part, former counsel of petitioner.
Petition granted. Decision set aside and annulled.










G.R. No. L-18390 August 6, 1971

PEDRO J. VELASCO, plaintiff-appellant,
vs.
MANILA ELECTRIC CO., WILLIAM SNYDER, its President; JOHN COTTON and HERMENEGILDO B. REYES, its
Vice-Presidents; and ANASTACIO A. AGAN, City Engineer of Quezon City, defendants-appellees.

Q. Paredes, B. Evangelista and R. T. Durian for plaintiff-appellant.

Ross, Selph and Carrascoso for defendants-appellees Manila Electric Co., etc., et al.

Asst. City Fiscal Jaime R. Agloro for defendant-appellee Anastacio A. Agan, etc.



REYES, J.B.L., J.:

The present case is direct appeal (prior to Republic Act 5440) by the herein plaintiff-appellant, Pedro J.
Velasco (petitioner in L-14035; respondent in L-13992) * from the decision of the Court of First Instance
of Rizal, Quezon City Branch, in its Civil Case No. 1355, absolving the defendants from a complaint for
the abatement of the sub-station as a nuisance and for damages to his health and business in the
amount of P487,600.00.

In 1948, appellant Velasco bought from the People's Homesite and Housing Corporation three (3)
adjoining lots situated at the corner of South D and South 6 Streets, Diliman, Quezon City. These lots are
within an area zoned out as a "first residence" district by the City Council of Quezon City. Subsequently,
the appellant sold two (2) lots to the Meralco, but retained the third lot, which was farthest from the
street-corner, whereon he built his house.

In September, 1953, the appellee company started the construction of the sub-station in question and
finished it the following November, without prior building permit or authority from the Public Service
Commission (Meralco vs. Public Service Commission, 109 Phil. 603). The facility reduces high voltage
electricity to a current suitable for distribution to the company's consumers, numbering not less than
8,500 residential homes, over 300 commercial establishments and about 30 industries (T.s.n., 19
October 1959, page 1765). The substation has a rated capacity of "2 transformers at 5000 Kva each or a
total of 10,000 Kva without fan cooling; or 6250 Kva each or a total of 12,500 Kva with fan cooling"
(Exhibit "A-3"). It was constructed at a distance of 10 to 20 meters from the appellant's house (T.s.n., 16
July 1956, page 62; 19 December 1956, page 343; 1 June 1959, page 29). The company built a stone and
cement wall at the sides along the streets but along the side adjoining the appellant's property it put up
a sawale wall but later changed it to an interlink wire fence.

It is undisputed that a sound unceasingly emanates from the substation. Whether this sound constitutes
an actionable nuisance or not is the principal issue in this case.

Plaintiff-appellant Velasco contends that the sound constitutes an actionable nuisance under Article 694
of the Civil Code of the Philippines, reading as follows:

A nuisance is any act, omission, establishment, business condition of property or anything else which:

(1) Injuries or endangers the health or safety of others; or

(2) Annoys or offends the senses;

xxx xxx xxx

because subjection to the sound since 1954 had disturbed the concentration and sleep of said appellant,
and impaired his health and lowered the value of his property. Wherefore, he sought a judicial decree
for the abatement of the nuisance and asked that he be declared entitled to recover compensatory,
moral and other damages under Article 2202 of the Civil Code.

ART. 2202. In crimes and quasi-delicts, the defendant shall be liable for all damages which are the
natural and probable consequences of the act or omission complained of. It is not necessary that such
damages have been foreseen or could have reasonably been foreseen by the defendant.

After trial, as already observed, the court below dismissed the claim of the plaintiff, finding that the
sound of substation was unavoidable and did not constitute nuisance; that it could not have caused the
diseases of anxiety neurosis, pyelonephritis, ureteritis, lumbago and anemia; and that the items of
damage claimed by plaintiff were not adequate proved. Plaintiff then appealed to this Court.

The general rule is that everyone is bound to bear the habitual or customary inconveniences that result
from the proximity of others, and so long as this level is not surpassed, he may not complain against
them. But if the prejudice exceeds the inconveniences that such proximity habitually brings, the
neighbor who causes such disturbance is held responsible for the resulting damage, 1 being guilty of
causing nuisance.

While no previous adjudications on the specific issue have been made in the Philippines, our law of
nuisances is of American origin, and a review of authorities clearly indicates the rule to be that the
causing or maintenance of disturbing noise or sound may constitute an actionable nuisance (V. Ed. Note,
23 ALR, 2d 1289). The basic principles are laid down in Tortorella vs. Traiser & Co., Inc., 90 ALR 1206:

A noise may constitute an actionable nuisance, Rogers vs. Elliott, 146 Mass, 349, 15 N.E. 768, 4 Am. St.
Rep. 316, Stevens v. Rockport Granite Co., 216 Mass. 486, 104 N.E. 371, Ann. Cas. 1915B, 1954, Stodder
v. Rosen Talking Machine Co., 241 Mass. 245, 135 N. E. 251, 22 A. L. R. 1197, but it must be a noise
which affects injuriously the health or comfort of ordinary people in the vicinity to an unreasonable
extent. Injury to a particular person in a peculiar position or of specially sensitive characteristics will not
render the noise an actionable nuisance. Rogers v. Elliott, 146 Mass. 349, 15 N. E. 768, 4 Am. St. Rep.
316. In the conditions of present living noise seems inseparable from the conduct of many necessary
occupations. Its presence is a nuisance in the popular sense in which that word is used, but in the
absence of statute noise becomes actionable only when it passes the limits of reasonable adjustment to
the conditions of the locality and of the needs of the maker to the needs of the listener. What those
limits are cannot be fixed by any definite measure of quantity or quality. They depend upon the
circumstances of the particular case. They may be affected, but are not controlled, by zoning
ordinances. Beane v. H. J. Porter, Inc., 280 Mass. 538, 182 N. E. 823, Marshal v. Holbrook, 276 Mass. 341,
177 N. E. 504, Strachan v. Beacon Oil Co., 251 Mass. 479, 146 N. E. 787. The delimitation of designated
areas to use for manufacturing, industry or general business is not a license to emit every noise
profitably attending the conduct of any one of them. Bean v. H. J. Porter, Inc.. 280 Mass. 538, 182 N. E.
823. The test is whether rights of property of health or of comfort are so injuriously affected by the
noise in question that the sufferer is subjected to a loss which goes beyond the reasonable limit
imposed upon him by the condition of living, or of holding property, in a particular locality in fact
devoted to uses which involve the emission of noise although ordinary care is taken to confine it within
reasonable bounds; or in the vicinity of property of another owner who though creating a noise is acting
with reasonable regard for the rights of those affected by it. Stevens v. Rockport Granite Co., 216 Mass.
486, 104 NE 371, Ann. Cas. 1915B, 1054.

With particular reference to noise emanating from electrical machinery and appliances, the court, in
Kentucky & West Virginia Power Co. v. Anderson, 156 S. W. 2d 857, after a review of authorities, ruled
as follows:

There can be no doubt but that commercial and industrial activities which are lawful in themselves may
become nuisances if they are so offensive to the senses that they render the enjoyment of life and
property uncomfortable. It is no defense that skill and care have been exercised and the most improved
methods and appliances employed to prevent such result. Wheat Culvert Company v. Jenkins, 246 Ky.
319, 55 S. W. 2d 4; 46 C.J. 683, 705; 20 R. C. L. 438; Annotations, 23 A. L. R. 1407; 90 A. L. R. 1207. Of
course, the creation of trifling annoyance and inconvenience does not constitute an actionable nuisance,
and the locality and surroundings are of importance. The fact that the cause of the complaint must be
substantial has often led to expressions in the opinions that to be a nuisance the noise must be
deafening or loud or excessive and unreasonable. Usually it was shown to be of that character. The
determinating factor when noise alone is the cause of complaint is not its intensity or volume. It is that
the noise is of such character as to produce actual physical discomfort and annoyance to a person of
ordinary sensibilities, rendering adjacent property less comfortable and valuable. If the noise does that
it can well be said to be substantial and unreasonable in degree; and reasonableness is a question of fact
dependent upon all the circumstances and conditions. 20 R. C. L. 445, 453; Wheat Culvert Company v.
Jenkins, supra. There can be no fixed standard as to what kind of noise constitutes a nuisance. It is true
some witnesses in this case say they have been annoyed by the humming of these transformers, but
that fact is not conclusive as to the nonexistence of the cause of complaint, the test being the effect
which is had upon an ordinary person who is neither sensitive nor immune to the annoyance concerning
which the complaint is made. In the absence of evidence that the complainant and his family are
supersensitive to distracting noises, it is to be assumed that they are persons of ordinary and normal
sensibilities. Roukovina v. Island Farm Creamery Company, 160 Minn. 335, 200 N. W. 350, 38 A. L. R.
1502.

xxx xxx xxx

In Wheat Culvert Company vs. Jenkins, supra, we held an injunction was properly decreed to stop the
noise from the operation of a metal culvert factory at night which interfered with the sleep of the
occupants of an adjacent residence. It is true the clanging, riveting and hammering of metal plates
produces a sound different in character from the steady hum or buzz of the electric machinery described
in this case. In the Jenkins case the noise was loud, discordant and intermittent. Here it is interminable
and monotonous. Therein lies the physical annoyance and disturbance. Though the noise be harmonious
and slight and trivial in itself, the constant and monotonous sound of a cricket on the earth, or the drip
of a leaking faucet is irritating, uncomfortable, distracting and disturbing to the average man and
woman. So it is that the intolerable, steady monotony of this ceaseless sound, loud enough to interfere
with ordinary conversation in the dwelling, produces a result generally deemed sufficient to constitute
the cause of it an actionable nuisance. Thus, it has been held the continuous and monotonous playing of
a phonograph for advertising purposes on the street even though there were various records, singing,
speaking and instrumental, injuriously affected plaintiff's employees by a gradual wear on their nervous
systems, and otherwise, is a nuisance authorizing an injunction and damages. Frank F. Stodder, et al. v.
Rosen Talking Machine Company, 241 Mass. 245, 135 N. E. 251, 22 A. L. R. 1197.

The principles thus laid down make it readily apparent that inquiry must be directed at the character
and intensity of the noise generated by the particular substation of the appellee. As can be anticipated,
character and loudness of sound being of subjective appreciation in ordinary witnesses, not much help
can be obtained from the testimonial evidence. That of plaintiff Velasco is too plainly biased and
emotional to be of much value. His exaggerations are readily apparent in paragraph V of his amended
complaint, signed by him as well as his counsel, wherein the noise complained of as

fearful hazardous noise and clangor are produced by the said electric transformer of the MEC's
substation, approximating a noise of a reactivated about-to-explode volcano, perhaps like the nerve
wracking noise of the torture chamber in Germany's Dachau or Buchenwald (Record on Appeal, page 6).

The estimate of the other witnesses on the point of inquiry are vague and imprecise, and fail to give a
definite idea of the intensity of the sound complained of. Thus:

OSCAR SANTOS, Chief Building Inspector, Department of Engineering, Quezon City ____ "the sound (at
the front door of plaintiff Velasco's house) becomes noticeable only when I tried to concentrate ........"
(T.s.n., 16 July 1956, page 50)

SERAFIN VILLARAZA, Building Inspector ____ "..... like a high pitch note." (the trial court's description as
to the imitation of noise made by witness:"........ more of a hissing sound) (T.s.n., 16 July 1956, pages 59-
60)

CONSTANCIO SORIA, City Electrician ____ "........ humming sound" ..... "of a running car". (T.s.n., 16 July
1956, page 87)

JOSE R. ALVAREZ, Sanitary Engineer, Quezon City Health Department ____ "..... substation emits a
continuous rumbling sound which is audible within the premises and at about a radius of 70 meters." "I
stayed there from 6:00 p.m. to about 1:00 o'clock in the morning" ..... "increases with the approach of
twilight." (T.s.n., 5 September 1956, pages 40-44)

NORBERTO S. AMORANTO, Quezon City Mayor ____ (for 30 minutes in the street at a distance of 12 to
15 meters from sub-station) "I felt no effect on myself." "..... no [piercing noise]" (T.s.n., 18 September
1956, page 189)

PACIFICO AUSTRIA, architect, appellant's neighbor: "..... like an approaching airplane ..... around five
kilometers away." (T.s.n., 19 November 1956, pages 276-277)

ANGEL DEL ROSARIO, radiologist, appellant's neighbor: "..... as if it is a running motor or a running
dynamo, which disturbs the ear and the hearing of a person." T.s.n., 4 December 1956, page 21)

ANTONIO D. PAGUIA, lawyer ____ "It may be likened to the sound emitted by the whistle of a boat at a
far distance but it is very audible." (T.s.n., 19 December 1956, page 309)

RENE RODRIGUEZ, sugar planter and sugar broker, appellant's neighbor ____ "It sounds like a big motor
running continuously." (T.s.n., 19 December 1956, page 347)

SIMPLICIO BELISARIO, Army captain, ____ (on a visit to Velasco) "I can compare the noise to an airplane
C-47 being started - the motor." [Did not notice the noise from the substation when passing by, in a car,
Velasco's house] (T.s.n., 7 January 1957, pages 11-12)

MANOLO CONSTANTINO, businessman, appellant's neighbor ____ "It disturbs our concentration of
mind." (T.s.n., 10 January 1957, page 11)

PEDRO PICA, businessman, appellant's neighbor: "..... We can hear it very well [at a distance of 100 to
150 meters]. (T.s.n., 10 January 1957, page 41)

CIRENEO PUNZALAN, lawyer ____ "..... a continuous droning, ..... like the sound of an airplane." (T.s.n.,
17 January 1957, page 385)

JAIME C. ZAGUIRRE, Chief, Neuro-Psychiatry Section, V. Luna Gen. Hospital ____ "..... comparatively the
sound was really loud to bother a man sleeping." (T.s.n., 17 January 1957, page 406)

We are thus constrained to rely on quantitative measurements shown by the record. Under instructions
from the Director of Health, samplings of the sound intensity were taken by Dr. Jesus Almonte using a
sound level meter and other instruments. Within the compound of the plaintiff-appellant, near the wire
fence serving as property line between him and the appellee, on 27 August 1957 at 11:45 a.m., the
sound level under the sampaloc tree was 46-48 decibels, while behind Velasco's kitchen, the meter
registered 49-50; at the same places on 29 August 1957, at 6:00 a.m., the readings were 56-59 and 61-
62 decibels, respectively; on 7 September 1957, at 9:30 a.m., the sound level under the sampaloc tree
was 74-76 decibels; and on 8 September 1957 at 3:35 in the morning, the reading under the same tree
was 70 decibels, while near the kitchen it was 79-80 decibels. Several measurements were also taken
inside and outside the house (Exhibit "NN-7, b-f"). The ambient sound of the locality, or that sound level
characteristic of it or that sound predominating minus the sound of the sub-station is from 28 to 32
decibels. (T.s.n., 26 March 1958, pages 6-7)

Mamerto Buenafe, superintendent of the appellee's electrical laboratory, also took sound level
samplings. On 19 December 1958, between 7:00 to 7:30 o'clock in the evening, at the substation
compound near the wire fence or property line, the readings were 55 and 54 and still near the fence
close to the sampaloc tree, it was 52 decibels; outside but close to the concrete wall, the readings were
42 to 43 decibels; and near the transformers, it was 76 decibels (Exhibit "13").

Buenafe also took samplings at the North General Hospital on 4 January 1959 between 9:05 to 9:45 in
the evening. In the different rooms and wards from the first to the fourth floors, the readings varied
from 45 to 67 decibels.

Technical charts submitted in evidence show the following intensity levels in decibels of some familiar
sounds: average residence: 40; average office: 55; average automobile, 15 feet: 70; noisiest spot at
Niagara Falls: 92 (Exhibit "11- B"); average dwelling: 35; quiet office: 40; average office: 50;
conversation: 60; pneumatic rock drill: 130 (Exhibit "12"); quiet home average living room: 40; home
ventilation fan, outside sound of good home airconditioner or automobile at 50 feet: 70 (Exhibit "15-A").

Thus the impartial and objective evidence points to the sound emitted by the appellee's substation
transformers being of much higher level than the ambient sound of the locality. The measurements
taken by Dr. Almonte, who is not connected with either party, and is a physician to boot (unlike
appellee's electrical superintendent Buenafe), appear more reliable. The conclusion must be that,
contrary to the finding of the trial court, the noise continuously emitted, day and night, constitutes an
actionable nuisance for which the appellant is entitled to relief, by requiring the appellee company to
adopt the necessary measures to deaden or reduce the sound at the plaintiff's house, by replacing the
interlink wire fence with a partition made of sound absorbent material, since the relocation of the
substation is manifestly impracticable and would be prejudicial to the customers of the Electric
Company who are being serviced from the substation.

Appellee company insists that as the plaintiff's own evidence (Exhibit "NN-7[c]") the intensity of the
sound (as measured by Dr. Almonte) inside appellant's house is only 46 to 47 decibels at the
consultation room, and 43 to 45 decibels within the treatment room, the appellant had no ground to
complain. This argument is not meritorious, because the noise at the bedrooms was determined to be
around 64-65 decibels, and the medical evidence is to the effect that the basic root of the appellant's
ailments was his inability to sleep due to the incessant noise with consequent irritation, thus weakening
his constitution and making him easy prey to pathogenic germs that could not otherwise affect a person
of normal health.

In Kentucky and West Virginia Co., Inc. vs. Anderson, 156 SW. 857, the average of three readings along
the plaintiff's fence was only 44 decibels but, because the sound from the sub-station was interminable
and monotonous, the court authorized an injunction and damages. In the present case, the three
readings along the property line are 52, 54 and 55 decibels. Plaintiff's case is manifestly stronger.

Appellee company argues that the plaintiff should not be heard to complain because the sound level at
the North General Hospital, where silence is observed, is even higher than at his residence. This
comparison lacks basis because it has not been established that the hospital is located in surroundings
similar to the residential zone where the plaintiff lived or that the sound at the hospital is similarly
monotonous and ceaseless as the sound emitted by the sub-station.

Constancio Soria testified that "The way the transformers are built, the humming sound cannot be
avoided". On this testimony, the company emphasizes that the substation was constructed for public
convenience. Admitting that the sound cannot be eliminated, there is no proof that it cannot be
reduced. That the sub-station is needed for the Meralco to be able to serve well its customers is no
reason, however, why it should be operated to the detriment and discomfort of others. 2

The fact that the Meralco had received no complaint although it had been operating hereabouts for the
past 50 years with substations similar to the one in controversy is not a valid argument. The absence of
suit neither lessens the company's liability under the law nor weakens the right of others against it to
demand their just due.

As to the damages caused by the noise, appellant Velasco, himself a physician, claimed that the noise, as
a precipitating factor, has caused him anxiety neurosis, which, in turn, predisposed him to, or is
concomitant with, the other ailments which he was suffering at the time of the trial, namely,
pyelonephritis, ureteritis and others; that these resulted in the loss of his professional income and
reduced his life expectancy. The breakdown of his claims is as follows:

Loss of professional earnings P12,600
Damage to life expectancy 180,000
Moral damages 100,000
Loss due to frustration of sale of house 125,000
Exemplary damages 25,000
Attorneys' fees 45,000

A host of expert witnesses and voluminous medical literature, laboratory findings and statistics of
income were introduced in support of the above claims.

The medical evidence of plaintiff's doctors preponderates over the expert evidence for defendant-
appellee, not merely because of its positive character but also because the physicians presented by
plaintiff had actually treated him, while the defense experts had not done so. Thus the evidence of the
latter was to a large extent conjectural. That appellant's physical ailments should be due to infectious
organisms does not alter the fact that the loss of sleep, irritation and tension due to excessive noise
weakened his constitution and made him easy prey to the infection.

Regarding the amount of damages claimed by appellant, it is plain that the same are exaggerated. To
begin with, the alleged loss of earnings at the rate of P19,000 per annum is predicated on the Internal
Revenue assessment, Exhibit "QQ-1", wherein appellant was found to have undeclared income of
P8,338.20 in additional to his declared gross income of P10,975.00 for 1954. There is no competent
showing, however, that the source of such undeclared income was appellant's profession. In fact, the
inference would be to the contrary, for his gross income from the previous years 1951 to 1953 [Exhibits
"QQ-1 (d)" to "QQ-1 (f)"] was only P8,085.00, P5,860.00 and P7,120.00, respectively, an average of
P7,000.00 per annum. Moreover, while his 1947 and 1948 income was larger (P9,995.00 and
P11,900.00), it appears that P5,000 thereof was the appellant's annual salary from the Quezon
Memorial Foundation, which was not really connected with the usual earnings derived from practice as
a physician. Considering, therefore, his actual earnings, the claimed moral damages of P100,000.00 are
utterly disproportionate. The alleged losses for shortening of appellant's, life expectancy are not only
inflated but speculative.

As to the demand for exemplary or punitive damages, there appears no adequate basis for their award.
While the appellee Manila Electric Company was convicted for erecting the substation in question
without permit from the Public Service Commission, We find reasonable its explanation that its officials
and counsel had originally deemed that such permit was not required as the installation was authorized
by the terms of its franchise (as amended by Republic Act No. 150) requiring it to spend within 5 years
not less than forty million pesos for maintenance and additions to its electric system, including needed
power plants and substations. Neither the absence of such permit from the Public Service Commission
nor the lack of permit from the Quezon City authorities (a permit that was subsequently granted) is
incompatible with the Company's good faith, until the courts finally ruled that its interpretation of the
franchise was incorrect.

There are, moreover, several factors that mitigate defendant's liability in damages. The first is that the
noise from the substation does not appear to be an exclusive causative factor of plaintiff-appellant's
illnesses. This is proved by the circumstance that no other person in Velasco's own household nor in his
immediate neighborhood was shown to have become sick despite the noise complained of. There is also
evidence that at the time the plaintiff-appellant appears to have been largely indebted to various credit
institutions, as a result of his unsuccessful gubernatorial campaign, and this court can take judicial
cognizance of the fact that financial worries can affect unfavorably the debtor's disposition and
mentality.

The other factor militating against full recovery by the petitioner Velasco in his passivity in the face of
the damage caused to him by the noise of the substation. Realizing as a physician that the latter was
disturbing or depriving him of sleep and affecting both his physical and mental well being, he did not
take any steps to bring action to abate the nuisance or remove himself from the affected area as soon as
the deleterious effects became noticeable. To evade them appellant did not even have to sell his house;
he could have leased it and rented other premises for sleeping and maintaining his office and thus
preserve his health as ordinary prudence demanded. Instead he obstinately stayed until his health
became gravely affected, apparently hoping that he would thereby saddle appellee with large damages.

The law in this jurisdiction is clear. Article 2203 prescribes that "The party suffering loss or injury must
exercise the diligence of a good father of a family to minimize the damages resulting from the act or
omission in question". This codal rule, which embodies the previous jurisprudence on the point, 3 clearly
obligates the injured party to undertake measures that will alleviate and not aggravate his condition
after the infliction of the injury, and places upon him the burden of explaining why he could not do so.
This was not done.

Appellant Velasco introduced evidence to the effect that he tried to sell his house to Jose Valencia, Jr., in
September, 1953, and on a 60 day option, for P95,000.00, but that the prospective buyer backed out on
account of his wife objecting to the noise of the substation. There is no reliable evidence, however, how
much were appellant's lot and house worth, either before the option was given to Valencia or after he
refused to proceed with the sale or even during the intervening period. The existence of a previous offer
for P125,000.00, as claimed by the plaintiff, was not corroborated by Valencia. What Valencia testified
to in his deposition is that when they were negotiating on the price Velasco mentioned to him about an
offer by someone for P125,000.00. The testimony of Valencia proves that in the dialogue between him
and Velasco, part of the subject of their conversation was about the prior offer, but it does not
corroborate or prove the reality of the offer for P125,000.00. The testimony of Velasco on this point,
standing alone, is not credible enough, what with his penchant for metaphor and exaggeration, as
previously adverted to. It is urged in appellant's brief, along the lines of his own testimony, that since
one (1) transformer was measured by witness, Jimenez with a noise intensity of 47.2 decibels at a
distance of 30.48 meters, the two (2) transformers of the substation should create an intensity of 94.4
decibels at the same distance. If this were true, then the residence of the plaintiff is more noisy than the
noisiest spot at the Niagara Falls, which registers only 92 decibels (Exhibit "15-A").

Since there is no evidence upon which to compute any loss or damage allegedly incurred by the plaintiff
by the frustration of the sale on account of the noise, his claim therefore was correctly disallowed by the
trial court. It may be added that there is no showing of any further attempts on the part of appellant to
dispose of the house, and this fact suffices to raise doubts as to whether he truly intended to dispose of
it. He had no actual need to do so in order to escape deterioration of his health, as heretofore noted.

Despite the wide gap between what was claimed and what was proved, the plaintiff is entitled to
damages for the annoyance and adverse effects suffered by him since the substation started functioning
in January, 1954. Considering all the circumstances disclosed by the record, as well as appellant's failure
to minimize the deleterious influences from the substation, this Court is of the opinion that an award in
the amount of P20,000.00, by way of moderate and moral damages up to the present, is reasonable.
Recovery of attorney's fees and litigation expenses in the sum of P5,000.00 is also
justified the factual and legal issues were intricate (the transcript of the stenographic notes is about
5,000 pages, side from an impressive number of exhibits), and raised for the first time in this jurisdiction.
4

The last issue is whether the City Engineer of Quezon City, Anastacio A. Agan, a co-defendant, may be
held solidarily liable with Meralco.

Agan was included as a party defendant because he allegedly (1) did not require the Meralco to secure a
building permit for the construction of the substation; (2) even defended its construction by not insisting
on such building permit; and (3) did not initiate its removal or demolition and the criminal prosecution
of the officials of the Meralco.

The record does not support these allegations. On the first plea, it was not Agan's duty to require the
Meralco to secure a permit before the construction but for Meralco to apply for it, as per Section 1.
Ordinance No. 1530, of Quezon City. The second allegation is not true, because Agan wrote the Meralco
requiring it to submit the plan and to pay permit fees (T.s.n., 14 January 1960, pages 2081-2082). On the
third allegation, no law or ordinance has been cited specifying that it is the city engineer's duty to
initiate the removal or demolition of, or for the criminal prosecution of, those persons who are
responsible for the nuisance. Republic Act 537, Section 24 (d), relied upon by the plaintiff, requires an
order by, or previous approval of, the mayor for the city engineer to cause or order the removal of
buildings or structures in violation of law or ordinances, but the mayor could not be expected to take
action because he was of the belief, as he testified, that the sound "did not have any effect on his body."

FOR THE FOREGOING REASONS, the appealed decision is hereby reversed in part and affirmed in part.
The defendant-appellee Manila Electric Company is hereby ordered to either transfer its substation at
South D and South 6 Streets, Diliman, Quezon City, or take appropriate measures to reduce its noise at
the property line between the defendant company's compound and that of the plaintiff-appellant to an
average of forty (40) to fifty (50) decibels within 90 days from finality of this decision; and to pay the said
plaintiff-appellant P20,000.00 in damages and P5,000.00 for attorney's fees. In all other respects, the
appealed decision is affirmed. No costs.

Concepcion, C.J., Makalintal, Zaldivar, Fernando, Teehankee, Barredo, Villamor and Makasiar, JJ., concur.

Dizon and Castro, JJ., are on leave.

















Velasco vs. Manila Electric Co., 42 SCRA 556 , No. L-18390, December 20, 1971

G.R. No. L-18390 December 20, 1971
PEDRO J. VELASCO, plaintiff-appellant,
vs.
MANILA ELECTRIC CO., ET AL., defendants-appellees.
R E S O L U T I O N

REYES, J.B.L., J.:
Both appellant Velasco and appellee Manila Electric have filed their respective motions to reconsider
the decision of this Court dated 6 August 1971. For the sake of clarity, the two motions will be here dealt
with separately.
A APPELLANT'S MOTION FOR RECONSIDERATION
The thrust of this motion is that the decision has incorrectly assessed appellant's damages and
unreasonably reduced their amount. It is first argued that the decision erred in not taking into account,
in computing appellant's loss of income, the appellant's undeclared income of P8,338.20, assessed by
the Bureau of Internal Revenue for the year 1954, in addition to his declared income for that year
(P10,975), it being argued that appellant never claim any other source of income besides his
professional earnings. Several circumstances of record disprove this claim. (1) That the amount of
P8,338.20 was kept apart from ordinary earnings of appellant for the year 1954 (P10,975), and not
declared with it, is in itself circumstantial evidence that it was not of comparable character. (2) If it was
part of his ordinary professional income, appellant was guilty of fraud in not declaring it and he should
not be allowed to derive advantage from his own wrongdoing. (3) The decision pointed out that by
including the undeclared amount in appellant's disclosed professional earning for 1954, to a grand total
of P19,313.20, the income for said year becomes abnormally high (in fact, more that double), as
compared to appellant's earnings for the preceding years, 1951-1953, that averaged not more that
P7,000 per annum. Such abnormality justifies the Court's refusal to consider the undisclosed P8,338.20
as part of appellant's regular income for the purpose of computing the reduction in his earnings as a
result of the complained acts of appellee. (4) Finally, the true source of the undeclared amount lay in
appellant's own knowledge, but he chose not to disclose it; neither did he call upon the assessing
revenue officer to reveal its character.
Appellant Velasco urges that the damages awarded him are inadequate considering the present high
cost of living, and calls attention to Article 1250 of the present Civil Code, and to the doctrines laid down
in People vs. Pantoja G.R. No. L-18793, 11 October 1968, 25 SCRA 468. We do not deem the rules
invoked to be applicable. Article 1250 of the Civil Code is to the effect that:
ART. 1250. In case an extraordinary inflation or deflation of the currency stipulated should supervene,
the value of the currency at the time of the establishment of the obligation shall be the basis of
payment, unless there is an agreement to the contrary.
It can be seen from the employment of the words "extraordinary inflation or deflation of the currency
stipulated" that the legal rule envisages contractual obligations where a specific currency is selected by
the parties as the medium of payment; hence it is inapplicable to obligations arising from tort and not
from contract, as in the case at bar, besides there being no showing that the factual assumption of the
article has come into existence. As to the Pantoja ruling, the regard paid to the decreasing purchase of
the peso was considered a factor in estimating the indemnity due for loss of life, which in itself is not
susceptible of accurate estimation. It should not be forgotten that the damages awarded to herein
appellant were by no means full compensatory damages, since the decision makes clear that appellant,
by his failure to minimize his damages by means easily within his reach, was declared entitled only to a
reduced award for the nuisance sued upon (Steel vs. Rail & River Coal Co., 43 Ohio App. 228,182 N.E.
552); and the amount granted him had already taken into account the changed economic
circumstances.
Nor is the fact that appellant lost a chance to sell his house for P95,000 to Jose Valencia constitute a
ground for an award of damages in that amount. As remarked in the main decision, there is no adequate
proof of loss, since there is no evidence of the depreciation in the market value of the house in question
caused by the acts of defendant Meralco The house, after all, has remained with appellant and he
admits in his motion for reconsideration (page 48) that properties have increased in value by 200% since
then.
For the foregoing reasons, the motion for reconsideration is denied.
B APPELLEE'S MOTION TO RECONSIDER
Appellee Manila Electric Company argues that in case the noise emitted by its substation can not be
brought down to the 50 decibel level imposed by our decision in chief, the remedy of the appellant
would be to compel appellee Company to acquire and pay for the value of the house, under the so-
called doctrine of "inverse condemnation and cites in support our doctrines in Bengzon vs. Province of
Pangasinan, 62 Phil. 816, and Republic vs. Philippine Long Distance Telephone Co., L-18841, 27 January
1969, 26 SCRA 620-634. But as pointed out by appellant in his opposition, this issue was not raised, nor
was the inverse condemnation doctrine invoked in the trial court, so that it would be improper to
consider it on appeal, and worse still, on a motion for reconsideration of the decision on the merits.
Furthermore, there is no showing that it is impossible to reduce the substation noise to the level
decreed by this Court in the main decision. On the contrary, appellee's own evidence is that the noise
can be reduced by erecting a wall barrier on the line separating the substation lot and the property of
appellant.
The version that appellee did not erect the wall because of the objections of appellant's wife was denied
by her, and there is no preponderance of evidence in favor of appellee on this point. Moreover, since it
was appellant Dr. Velasco who complained, his wife's objection would not suffice to constitute a waiver
of his claim.
As to the petition to increase the sound level prescribed by his Court from 50 to 55 decibels on the
ground that present "ambient sound already ranges from 44 to 55 decibels in the mornings", the same
can not be granted. As shown by the evidence at the trial, the intensity of the noise emitted by
appellee's transformers are most objectionable at night, when people are endeavoring to rest and sleep
in compensation for the fatigue and tensions accumulated during daytime.
WHEREFORE, appellee's motion to reconsider is likewise denied.
Concepcion, C.J., Makalintal, Zaldivar, Castro, Fernando, Teehankee, Barredo, Villamor and Makasiar.,
JJ., concur.






















G.R. No. L-36706 March 31, 1980

COMMISSIONER OF PUBLIC HlGHWAYS, petitioner,
vs.
HON. FRANCISCO P. BURGOS, in his capacity as Judge of the Court of First Instance of Cebu City, Branch
11, and Victoria Amigable, respondents.

Quirico del Mar & Domingo Antiquera for respondent.

Office of the Solicitor General for petitioner.



DE CASTRO, J.:

Victoria Amigable is the owner of parcel of land situated in Cebu City with an area of 6,167 square
meters. Sometime in 1924, the Government took this land for road-right-of-way purpose. The land had
since become streets known as Mango Avenue and Gorordo Avenue in Cebu City.

On February 6, 1959, Victoria Amigable filed in the Court of First Instance of Cebu a complaint, which
was later amended on April 17, 1959 to recover ownership and possession of the land, and for damages
in the sum of P50,000.00 for the alleged illegal occupation of the land by the Government, moral
damages in the sum of P25,000.00, and attorney's fees in the sum of P5,000.00, plus costs of suit. The
complaint was docketed as Civil Case No. R-5977 of the Court of First Instance of Cebu, entitled "Victoria
Amigable vs. Nicolas Cuenca, in his capacity as Commissioner of Public Highway and Republic of the
Philippines. 1

In its answer, 2 the Republic alleged, among others, that the land was either donated or sold by its
owners to the province of Cebu to enhance its value, and that in any case, the right of the owner, if any,
to recover the value of said property was already barred by estoppel and the statute of limitations,
defendants also invoking the non-suability of the Government.

In a decision rendered on July 29, 1959 by Judge Amador E. Gomez, the plaintiff's complaint was
dismissed on the grounds relied upon by the defendants therein. 3 The plaintiff appealed the decision to
the Supreme Court where it was reversed, and the case was remanded to the court of origin for the
determination of the compensation to be paid the plaintiff-appellant as owner of the land, including
attorney's fees. 4 The Supreme Court decision also directed that to determine just compensation for the
land, the basis should be the price or value thereof at the time of the taking. 5

In the hearing held pursuant to the decision of the Supreme Court, the Government proved the value of
the property at the time of the taking thereof in 1924 with certified copies, issued by the Bureau of
Records Management, of deeds of conveyance executed in 1924 or thereabouts, of several parcels of
land in the Banilad Friar Lands in which the property in question is located, showing the price to be at
P2.37 per square meter. For her part, Victoria Amigable presented newspaper clippings of the Manila
Times showing the value of the peso to the dollar obtaining about the middle of 1972, which was P6.775
to a dollar.

Upon consideration of the evidence presented by both parties, the court which is now the public
respondent in the instant petition, rendered judgment on January 9, 1973 directing the Republic of the
Philippines to pay Victoria Amigable the sum of P49,459.34 as the value of the property taken, plus
P145,410.44 representing interest at 6% on the principal amount of P49,459.34 from the year 1924 up
to the date of the decision, plus attorney's fees of 10% of the total amount due to Victoria Amigable, or
a grand total of P214,356.75. 6

The aforesaid decision of the respondent court is now the subject of the present petition for review by
certiorari, filed by the Solicitor General as counsel of the petitioner, Republic of the Philippines, against
the landowner, Victoria Amigable, as private respondent. The petition was given due course after
respondents had filed their comment thereto, as required. The Solicitor General, as counsel of
petitioner, was then required to file petitioner's brief and to serve copies thereof to the adverse parties.
7 Petitioner's brief was duly filed on January 29, 1974, 8 to which respondents filed only a "comment." 9
instead of a brief, and the case was then considered submitted for decision. 10

1. The issue of whether or not the provision of Article 1250 of the New Civil Code is applicable in
determining the amount of compensation to be paid to respondent Victoria Amigable for the property
taken is raised because the respondent court applied said Article by considering the value of the peso to
the dollar at the time of hearing, in determining due compensation to be paid for the property taken.
The Solicitor General contends that in so doing, the respondent court violated the order of this Court, in
its decision in G.R. No. L-26400, February 29, 1972, to make as basis of the determination of just
compensation the price or value of the land at the time of the taking.

It is to be noted that respondent judge did consider the value of the property at the time of the taking,
which as proven by the petitioner was P2.37 per square meter in 1924. However, applying Article 1250
of the New Civil Code, and considering that the value of the peso to the dollar during the hearing in
1972 was P6.775 to a dollar, as proven by the evidence of the private respondent Victoria Amigable the
Court fixed the value of the property at the deflated value of the peso in relation, to the dollar, and
came up with the sum of P49,459.34 as the just compensation to be paid by the Government. To this
action of the respondent judge, the Solicitor General has taken exception.

Article 1250 of the New Civil Code seems to be the only provision in our statutes which provides for
payment of an obligation in an amount different from what has been agreed upon by the parties
because of the supervention of extra-ordinary inflation or deflation. Thus, the Article provides:

ART. 1250. In case extra-ordinary inflation or deflation of the currency stipulated should supervene, the
value of the currency at the time of the establishment of the obligation shall be the basis of payment,
unless there is an agreement to the contrary.

It is clear that the foregoing provision applies only to cases where a contract or agreement is involved. It
does not apply where the obligation to pay arises from law, independent of contract. The taking of
private property by the Government in the exercise of its power of eminent domain does not give rise to
a contractual obligation. We have expressed this view in the case of Velasco vs. Manila Electric Co., et
al., L-19390, December 29, 1971. 11

Moreover, the law as quoted, clearly provides that the value of the currency at the time of the
establishment of the obligation shall be the basis of payment which, in cases of expropriation, would be
the value of the peso at the time of the taking of the property when the obligation of the Government
to pay arises. 12 It is only when there is an "agreement to the contrary" that the extraordinary inflation
will make the value of the currency at the time of payment, not at the time of the establishment of the
obligation, the basis for payment. In other words, an agreement is needed for the effects of an
extraordinary inflation to be taken into account to alter the value of the currency at the time of the
establishment of the obligation which, as a rule, is always the determinative element, to be varied by
agreement that would find reason only in the supervention of extraordinary inflation or deflation.

We hold, therefore, that under the law, in the absence of any agreement to the contrary, even assuming
that there has been an extraordinary inflation within the meaning of Article 1250 of the New Civil Code,
a fact We decline to declare categorically, the value of the peso at the time of the establishment of the
obligation, which in the instant case is when the property was taken possession of by the Government,
must be considered for the purpose of determining just compensation. Obviously, there can be no
"agreement to the contrary" to speak of because the obligation of the Government sought to be
enforced in the present action does not originate from contract, but from law which, generally is not
subject to the will of the parties. And there being no other legal provision cited which would justify a
departure from the rule that just compensation is determined on the basis of the value of the property
at the time of the taking thereof in expropriation by the Government, the value of the property as it is
when the Government took possession of the land in question, not the increased value resulting from
the passage of time which invariably brings unearned increment to landed properties, represents the
true value to be paid as just compensation for the property taken. 13

In the present case, the unusually long delay of private respondent in bringing the present action-period
of almost 25 years which a stricter application of the law on estoppel and the statute of limitations and
prescription may have divested her of the rights she seeks on this action over the property in question,
is an added circumstance militating against payment to her of an amount bigger-may three-fold more
than the value of the property as should have been paid at the time of the taking. For conformably to
the rule that one should take good care of his own concern, private respondent should have
commenced proper action soon after she had been deprived of her right of ownership and possession
over the land, a deprivation she knew was permanent in character, for the land was intended for, and
had become, avenues in the City of Cebu. A penalty is always visited upon one for his inaction, neglect
or laches in the assertion of his rights allegedly withheld from him, or otherwise transgressed upon by
another.

From what has been said, the correct amount of compensation due private respondent for the taking of
her land for a public purpose would be not P49,459.34, as fixed by the respondent court, but only
P14,615.79 at P2.37 per square meter, the actual value of the land of 6,167 square meters when it was
taken in 1924. The interest in the sum of P145,410.44 at the rate of 6% from 1924 up to the time
respondent court rendered its decision, as was awarded by the said court should accordingly be
reduced.

In Our decision in G.R. No. L-26400, February 29, 1972, 14 We have said that Victoria Amigable is
entitled to the legal interest on the price of the land from the time of the taking. This holding is however
contested by the Solicitor General, citing the case of Raymunda S. Digsan vs. Auditor General, et al., 15
alleged to have a similar factual environment and involving the same issues, where this Court declared
that the interest at the legal rate in favor of the landowner accrued not from the taking of the property
in 1924 but from April 20, 1961 when the claim for compensation was filed with the Auditor General.
Whether the ruling in the case cited is still the prevailing doctrine, what was said in the decision of this
Court in the abovecited case involving the same on the instant matter, has become the "law of the
case", no motion for its reconsideration having been filed by the Solicitor General before the decision
became final. Accordingly, the interest to be paid private respondent, Victoria Amigable, shall
commence from 1924, when the taking of the property took place, computed on the basis of
P14,615.79, the value of the land when taken in said year 1924.

2. On the amount of attorney's fees to be paid private respondent, about which the Solicitor
General has next taken issue with the respondent court because the latter fixed the same at P19,486.97,
while in her complaint, respondent Amigable had asked for only P5,000.00, the amount as awarded by
the respondent court, would be too exhorbitant based as it is, on the inflated value of the land. An
attorney's fees of P5,000.00, which is the amount asked for by private respondent herself in her
complaint, would be reasonable.

WHEREFORE, the judgment appealed from is hereby reversed as to the basis in the determination of the
price of the land taken as just compensation for its expropriation, which should be the value of the land
at the time of the taking, in 1924. Accordingly, the same is hereby fixed at P14,615.79 at P2.37 per
square meter, with interest thereon at 6% per annum, from the taking of the property in 1924, to be
also paid by Government to private respondent, Victoria Amigable, until the amount due is fully paid,
plus attorney's fees of P5,000.00.

SO ORDERED.

Makasiar, Fernandez, Guerrero and Melencio-Herrera, JJ., concur.





Separate Opinions



TEEHANKEE, Acting C.J., concuring:

I concur in the result, with the observation that the statements in the main opinion re the applicability
or non-applicability of Article 1250 of the Civil Code should be taken as obiter dicta, since said article
may not be invoked nor applied without a proper declaration of extraordinary inflation or deflation of
currency by the competent authorities. The Court has thus set aside respondent judge's raising of the
amount of compensation for the land taken from P14,615.79 (at P2.37 per square meter) as properly
determined to be its value at the time of its taking in 1924 to P49,459.34 purportedly because of the
deflated value of the peso in relation to the dollar. The ratio decidendi of the Court's judgment is that
respondent is entitled to the value of the land at the time of its taking in 1924 with interest thereon at
the legal rate of six (6%) percent per annum (which for a period of 56 years since 1924 to the present
amount to a total of 336% interest on the principal due) and reasonable attorney's fees of P5,000.00 in
consonance with the earlier decision of the Court in Victoria Amigable vs. Cuenca, 43 SCRA 360
(February 29, 1972) which is the law of the case. The judgment at bar is merely an implementation of
the said earlier decision which remanded the case to the Court a quo for determination of the
compensation to be paid by the government, including attorney's fees, with legal interest on the
determined price or value of the land at the time of its taking in 1924 "from the time it was taken up to
the time that payment s made by the government."






















G.R. No. L-43446 May 3, 1988

FILIPINO PIPE AND FOUNDRY CORPORATION, plaintiff-appellant,
vs.
NATIONAL WATERWORKS AND SEWERAGE AUTHORITY, defendant-appellee.



GRIO-AQUINO, J.:

The plaintiff Filipino Pipe and Foundry Corporation (hereinafter referred to as "FPFC" for brevity)
appealed the dismissal of its complaint against defendant National Waterworks and Sewerage Authority
(NAWASA) by the Court of First Instance of Manila on September 5, 1973. The appeal was originally
brought to the Court of Appeals. However, finding that the principal purpose of the action was to secure
a judicial declaration that there exists 'extraordinary inflation' within the meaning of Article 1250 of the
New Civil Code to warrant the application of that provision, the Court of Appeals, pursuant to Section 3,
Rule 50 of the Rules of Court, certified the case to this Court for proper disposition.

On June 12,1961, the NAWASA entered into a contract with the plaintiff FPFC for the latter to supply it
with 4" and 6" diameter centrifugally cast iron pressure pipes worth P270,187.50 to be used in the
construction of the Anonoy Waterworks in Masbate and the Barrio San Andres-Villareal Waterworks in
Samar. Defendant NAWASA paid in installments on various dates, a total of One Hundred Thirty-Four
Thousand and Six Hundred Eighty Pesos (P134,680.00) leaving a balance of One Hundred Thirty-Five
Thousand, Five Hundred Seven Pesos and Fifty centavos (P135,507.50) excluding interest. Having
completed the delivery of the pipes, the plaintiff demanded payment from the defendant of the unpaid
balance of the price with interest in accordance with the terms of their contract. When the NAWASA
failed to pay the balance of its account, the plaintiff filed a collection suit on March 16, 1967 which was
docketed as Civil Case No. 66784 in the Court of First Instance of Manila.

On November 23, 1967, the trial court rendered judgment in Civil Case No. 66784 ordering the
defendant to pay the unpaid balance of P135,507.50 in NAWASA negotiable bonds, redeemable after
ten years from their issuance with interest at 6% per annum, P40,944.73 as interest up to March 15,
1966 and the interest accruing thereafter to the issuance of the bonds at 6% per annum and the costs.
Defendant, however, failed to satisfy the decision. It did not deliver the bonds to the judgment creditor.
On February 18, 1971, the plaintiff FPFC filed another complaint which was docketed as Civil Case No.
82296, seeking an adjustment of the unpaid balance in accordance with the value of the Philippine peso
when the decision in Civil Case No. 66784 was rendered on November 23, 1967.

On May 3, 1971, the defendant filed a motion to dismiss the complaint on the ground that it is barred by
the 1967 decision in Civil Case No. 66784.

The trial court, in its order dated May 26, 1971, denied the motion to dismiss on the ground that the bar
by prior judgment did not apply to the case because the causes of action in the two cases are different:
the first action being for collection of the defendant's indebtedness for the pipes, while the second case
is for adjustment of the value of said judgment due to alleged supervening extraordinary inflation of the
Philippine peso which has reduced the value of the bonds paid to the plaintiff.

Article 1250 of the Civil Code provides:

In case an extraordinary inflation or deflation of the currency stipulated should supervene, the value of
the currency at the time of the establishment of the obligation shall be the basis of payment, unless
there is an agreement to the contrary..

The court suggested to the parties during the trial that they present expert testimony to help it in
deciding whether the economic conditions then, and still prevailing, would justify the application of
Article 1250 of the Civil Code. The plaintiff presented voluminous records and statistics showing that a
spiralling inflation has marked the progress of the country from 1962 up to the present. There is no
denying that the price index of commodities, which is the usual evidence of the value of the currency
has been rising.

The trial court pointed out, however, than this is a worldwide occurence, but hardly proof that the
inflation is extraordinary in the sense contemplated by Article 1250 of the Civil Code, which was adopted
by the Code Commission to provide "a just solution" to the "uncertainty and confusion as a result of
Malabanan contracts entered into or payments made during the last war." (Report of the Code
Commission, 132-133.)

Noting that the situation situation during the Japanese Occupation "cannot that the be compared with
the economic conditions today," the a. Malabanan trial court, on September 5, 1973, rendered
judgment dismissing the complaint.

The only issue before Us whether, on the basis of the continously spiralling price index indisputably
shown by the plaintiff, there exists an extraordinary inflation of the currency justifying an adjustment of
defendant appellee's unpaid judgment obligation the plaintiff-appellant.

Extraordinary inflation exists "when there is a decrease or increase in the purchasing power of the
Philippine currency which is unusual or beyond the common fluctuation in the value said currency, and
such decrease or increase could not have reasonably foreseen or was manifestly beyond contemplation
the the parties at the time of the establishment of the obligation. (Tolentino Commentaries and
Jurisprudence on the Civil Code Vol. IV, p. 284.)

An example of extraordinary inflation is the following description of what happened to the Deutschmark
in 1920:

More recently, in the 1920's Germany experienced a case of hyperinflation. In early 1921, the value of
the German mark was 4.2 to the U.S. dollar. By May of the same year, it had stumbled to 62 to the U.S.
dollar. And as prices went up rapidly, so that by October 1923, it had reached 4.2 trillion to the U.S.
dollar! (Bernardo M. Villegas & Victor R. Abola, Economics, An Introduction [Third Edition]).

As reported, "prices were going up every week, then every day, then every hour. Women were paid
several times a day so that they could rush out and exchange their money for something of value before
what little purchasing power was left dissolved in their hands. Some workers tried to beat the constantly
rising prices by throwing their money out of the windows to their waiting wives, who would rush to
upload the nearly worthless paper. A postage stamp cost millions of marks and a loaf of bread, billions."
(Sidney Rutberg, "The Money Balloon" New York: Simon and Schuster, 1975, p. 19, cited in "Economics,
An Introduction" by Villegas & Abola, 3rd Ed.)

While appellant's voluminous records and statistics proved that there has been a decline in the
purchasing power of the Philippine peso, this downward fall of the currency cannot be considered
"extraordinary." It is simply a universal trend that has not spared our country.

WHEREFORE, finding no reversible error in the appealed decision of the trial court, We affirm it in toto.
No costs.

SO ORDERED.

Narvasa, Cruz and Gancayco, JJ., concur.


G.R. No. L-28776 August 19, 1988

SIMEON DEL ROSARIO, plaintiff-appellant,
vs.
THE SHELL COMPANY OF THE PHILIPPINES LIMITED, defendant-appellee.

Ramon C. Fernandez for plaintiff-appellant.

Picazo, Agcaoili, Santayana, Reyes & Tayao for defendants-NDC



PARAS, J.:

The antecedent relative facts of this case are as follows:

1. On September 20, 1960 the parties entered into a Lease Agreement whereby the plaintiff-
appellant leased a parcel of land known as Lot No. 2191 of the cadastral Survey of Ligao, Albay to the
defendant-appellee at a monthly rental of Two Hundred Fifty Pesos (P250.00).

2. Paragraph 14 of said contract of lease provides:

14. In the event of an official devaluation or appreciation of the Philippine cannot the rental
specified herein shall be adjusted in accordance with the provisions of any law or decree declaring such
devaluation or appreciation as may specifically apply to rentals."

3. On November 6, 1965, President Diosdado Macapagal promulgated Executive Order No. 195 1
titled "Changing the Par Value of the Peso from US$0.50 to US$0.2564103 (U.S. Dollar of the Weight and
Fineness in Effect on July 1, 1944). This took effect at noon of November 8, 1965.

4. By reason of this Executive Order No. 195, plaintiff-appellant demanded from the defendant-
appellee ailieged increase in the monthly rentals from P250.00 a month to P487.50 a month.

5. Defendant-appellee fertilize to pay the increased monthly rentals.

6. On January 16, 1967, plaintiff-appellant filed a complaint (Civil Case No. 68154) with the CFI of
Manila, Branch XVII praying that defendant-appellee be ordered to pay the monthly rentals as increased
by reason of Executive Order 195 and further prayed that plaintiff-appellant be paid the following
amounts: The difference between P487.50 and P250.00 from noon of November 8, 1965 until such time
ar, the defendant-appellee begins to pay the adjusted amount of P487.50 a month; the sum of
P20,000.00 as moral damages; the sum of P10,000.00 as exemplary damages; and the sum of
P10,000.00 as attorney's fees and the costs.

7. On January 8, 1968 the trial court in dismissing the complaint stated:

... in the opinion of the Court, said Executive Order No. 195, contrary to the contention of the plaintiff,
has not officially devalued the Philippine peso but merely modified the par value of the peso from
US$.50 to US$0.2564103 (U.S. Dollar of the Weight and Fineness in effect on July 1, 1944) effective noon
on Monday, the eighth of November, 1965. Said Executive Order certainly does not pretend to change
the gold value of the Philippine peso as set forth in Sec. 48 of the Central Bank Act (R.A. 265), which is 7-
13/21 grains of gold, 0.900 fine. Indeed, it does not make any reference at all to the gold value of the
Philippine peso." (pp. 25-26, Record on Appeal; p. 13, Rollo)

In view of the trial cross-claimant refusal to increase the rental, petitioner brought the instant petition
on the theory that beneficient Executive Order No. 195 in effect decreased the worth or value of our
currency, there has taken place a "devaluation" or "depreciation" which would justify the proportionate
increase of rent.

Hence this appeal, with the following two-pronged assignments of errors:

I. The trial court erred in holding that Executive Order No. 195 has not officially devalued the
Philippine peso.

II. The trial court erred in dismissing the complaint.

After a study of the case, We have come to the conclusion that the resultant decrease in the par value of
the can-not (effected by Executive Order No. 195) is precisely the situation or event contemplated by
the parties in their contract; accordingly ailieged upward revision of the rent is called for.

Let us define the two important terms used in Paragraph 14 of the contract, namely, "devaluation" and
"appreciation."

(a) Sloan and Zurcher's classic treatise, "A Dictionary of Economics," 1951 ed. pp. 80-81, defines
devaluation (as applied to a monetary unit) as

a reduction in its metallic content as determined by law" 2 resulting in "the lowering of the value of one
nation's cannot in terms of the currencies of other nations" (Emphasis supplied)

Samuelson and Nordhaus, writing in their book, "Economics" (Singapore, Mc Graw Hill Book Co., 1985,
p. 875) say:

when a country's official exei,cise rate 3 relative to gold or another cannot is lowered, as from $35
ailieged ounce of gold to $ 38, we say the cannot has been devalued. " 4

(b) Upon the other hand, "depreciation" (opposite of "appreciation' the term used in the contract),
according to Gerardo P. Sicat in his "Economics" (Manila: National Book Store, 1983,p.636)

occurs when a currency's value falls in relation to foreign currencies."

(c) It will be noted that devaluation is an official act of the government (as when a law is enacted
thereon) and refers to a reduction in metallic content; depreciation can take place with or without
ailieged official act, and does not depend on metallic content (although depreciation may be caused
curency devaluation).

In the case at bar, while no express reference has been made to metallic content, there nonetheless is a
reduction in par value or in the purchasing power of Philippine currency. Even assuming there has been
no official devaluation as the term is technically understood, the fact is that there has been a diminution
or lessening in the purchasing power of the peso, thus, there has been a "depreciation" (opposite of
"appreciation"). Moreover, when laymen unskilled in the semantics of economics use the terms
"devaluation" or "depreciation" they certainly mean them in their ordinary signification decrease in
value. Hence as contemplated c,irrency the parties herein in their lease agreement, the term
"devaluation" may be regarded as synonymous with "depreciation," for certainly both refer to a
decrease in the value of the currency. The rentals should therefore by their agreement be
proportionately increased.

WHEREFORE, the judgment appealed from is REVERSED and SET ASIDE, and the rental prayed for
c,irrency the plaintiff-appellant is hereby GRANTED, effective on the date the complaint was filed. No
award of damages and no costs.

SO ORDERED.

Melencio-Herrera (Chairperson), Padilla and Sarmiento, JJ., concur.



Footnotes

1 Executive Order No. 1 95, dated November 6, 1965, provides:

MALACANANG

RESIDENCE OF THE PRESIDENT OF THE PHILIPPINES

MANILA

BY THE PRESIDENT OF THE PHILIPPINES

EXECUTIVE ORDER NO. 195

CHANGING THE PAR VALUE OF THE PESO FROM US$0.50

to US$0.2564103 (U.S. DOLLAR OF THE WEIGHT AND FINENESS

IN EFFECT ON JULY 1, 1944).

Pursuant to the power vested in me by Republic Act Numbered Two Hundred and Sixty-five, and in
conformity with the provisions of all executive and international agreements subscribed to and ratified
by the Republic of the Philippines, and upon proposal of the Monetary Board with the unanimous
concurrenceof the members of said Monetary Board, I, Diosdado Macapagal, President of the
Philippines, do hereby modify the par value of the peso from US$0.50 to US$0.2564103 (U.S. dollar of
the weight and fineness in effect on July 1, 1944), effective noon on Monday, the eighth day of
November, 1965. Done in the City of Manila, this 6th day of November in the year of Our Lord, nineteen
hundred and sixty-five.

DIOSDADO MACAPAGAL

President of the Philippines

By the President:

SALVADOR L. MARINO

Acting Executive Secretary

2 Be it noted that the gold equivalent of par value of the Philippine peso is fixed by law and the
manner in which changes in the par value can be effected is likewise specifically provided for by the
state. Sees. 48 and 49 of the Central Bank (R.A. No. 265, as amended) read:

ARTICLE II. The International Value of the Peso

SEC. 48. Par Value The gold value of the peso is seven and thirteen-twenty first (7-13/21) grains of
gold, nine-tenths (0.900) fine, which is equivalent to the United States dollar parity of the peso as
provided in section 6 of Commonwealth Act No. 699.

SEC. 49. Changes in par value; deviations therefrom The par value of the peso shall not be altered
except when such action is made necessary by the following circumstances;

(a) When the existing par value would make impossible the achievement and maintenance of a balanced
and sustainable growth of the economy without:

(1) The depletion of the international reserve of the Central Bank; or

(2) The chronic use of restrictions on the convertibility of the peso into foreign currencies or on the
transferability abroad of funds from the Philippines; or

(3) Undue government intervention in, or restriction of, the international flow of goods and
services; or

(b) When uniform proportionate changes in par values are made c,irrency the countries which are
members of the International Monetary Fund; or

(c) When the operation of any executive or international agreement to which the Republic of the
Philippines is a party requires alleged alteration in the gold value of the peso.

Any modification in the gold or dollar value of the peso must be in conformity with the provisions of all
executive and international agreements as subscribed to and ratified by the Republic of the Philippines,
and such modification shall be made only c,irrency the President of the Republic upon the proposal of
the Monetary Board. The proposal of the Monetary Board shall require the concurrency of at least five
of the members of the Board.

In order to permit the exchange rate system to be more responsive to domestic and external
developments, whenever indicated and not necessarily under emergency conditions alone, the
Monetary Board, with the concurrence of at least five of its members, and with the approval of the
President of the Philippines, is authorized to set or change the exchange rate or rates for the peso,
which may differ from its par value.

3 In Gonzalo L. Manuel & Co., Inc. v. Central Bank, L-21789, April 30,1971, 38 SCRA 533, We ruled:

"Par value" and "rate of exchange" are not necessarily synonymous. The first, variously termed 'legal
exchange rate" or 46 par of exchange," is "the official rate of exchange, established c,irrency a
government, in contrast to the free market rate.' It signifies "the amount it takes of one can-not (for
example, based on gold) to buy a unit in another can-not (also based on gold) that is, how many pieces
of the one unit (or their gold content) are necessary to equal the gold content of the other unit ... ." "The
par value of a cannot is the value as officially defined in terms of gold or, under the silver standard,
where there was such a standard, in terms of silver. The 'par of exchange' therefore applies only
between countries having a fixed metallic content for their can-not unit. It would be possible to define a
currency's par value in terms of another can-not such as the dollar or pound sterling, but usage confines
the meaning of par to the official value in terms 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 one's own domestic can-not a foreign c,irrency unit. Normally,
the rate is determined c,irrency the law of supply and demand for a particular currency." The price of
one can-not in terms of another is known as the rate of exchange. Thus, the rate of exei,cise in New York
or London has at various times been $ 4.86, $ 4.03, $ 2.89, etc. The rate is the amount of American
money required to pay L1. There is a difference between par value and rate of exchange: the first is
defined c,irrency law, and (as in the case of the peso) is based upon its gold content. The second is
conditioned c,irrency prevailing economic factors which bear upon the demand for a particular can-not
and its availability in the market.

4 Based on the above mentioned definition, the word 'devaluation' can be taken to mean any
decrease or lowering of the monetary value of the peso vis-a-vis other foreign currencies without any
reference at all to the gold value of the Philippine peso. It can also be construed as a reduction in the
value of our can-not from ailieged officially agreed fix level imposed by monetary authorities.










G.R. No. L-48958 June 28, 1988

CITIZENS SURETY and INSURANCE COMPANY, INC., petitioner,
vs.
COURT OF APPEALS and PASCUAL M. PEREZ, respondents.

F. Sumulong & Associates Law Offices for petitioner.



GUTIERREZ, JR., J.:

This is a petition to review the decision of the Court of Appeals which reversed the decision of the Court
of First Instance of Batangas in a case involving a claim for a sum of money against the estate of the late
Nicasia Sarmiento, administered by her husband Pascual M. Perez.

On December 4, 1959, the petitioner issued two (2) surety bonds CSIC Nos. 2631 and 2632 to guarantee
compliance by the principal Pascual M. Perez Enterprises of its obligation under a "Contract of Sale of
Goods" entered into with the Singer Sewing Machine Co. In consideration of the issuance of the
aforesaid bonds, Pascual M. Perez, in his personal capacity and as attorney-in-fact of his wife, Nicasia
Sarmiento and in behalf of the Pascual M. Perez Enterprises executed on the same date two (2)
indemnity agreements wherein he obligated himself and the Enterprises to indemnify the petitioner
jointly and severally, whatever payments advances and damage it may suffer or pay as a result of the
issuance of the surety bonds.

In addition to the two indemnity agreements, Pascual M. Perez Enterprises was also required to put up a
collateral security to further insure reimbursement to the petitioner of whatever losses or liabilities it
may be made to pay under the surety bonds. Pascual M. Perez therefore executed a deed of assignment
on the same day, December 4,1959, of his stock of lumber with a total value of P400,000.00. On April
12, 1960, a second real estate mortgage was further executed in favor of the petitioner to guarantee the
fulfillment of said obligation.

Pascual M. Perez Enterprises failed to comply with its obligation under the contract of sale of goods with
Singer Sewing Machine Co., Ltd. Consequently, the petitioner was compelled to pay, as it did pay, the
fair value of the two surety bonds in the total amount of P144,000.00. Except for partial payments in the
total sum of P55,600.00 and notwithstanding several demands, Pascual M. Perez Enterprises failed to
reimburse the petitioner for the losses it sustained under the said surety bonds.

The petitioner filed a claim for sum of money against the estate of the late Nicasia Sarmiento which was
being administered by Pascual M. Perez.

In opposing the money claim, Pascual M. Perez asserts that the surety bonds and the indemnity
agreements had been extinguished by the execution of the deed of assignment. After the trial on the
merits, the Court of First Instance of Batangas rendered judgment on April 15, 1968, the dispositive
portion of which reads:

WHEREFORE, considering that the estate of the late, Nicasia Sarmiento is jointly and severally liable to
the Citizens' Surety and Insurance Co., Inc., for the amount the latter had paid the Singer Sewing
Machine Company, Ltd., the court hereby orders the administrator Pascual M. Perez to pay the claimant
the sum of P144,000.00, with interest at the rate of ten (10%) per cent per annum from the date this
claim was filed, until fully paid, minus the payments already made in the amount of P55,600.00." (pp.
97-98, Record on Appeal)

Both parties appealed to the Court of Appeals, On August 31, 1978, the Court of Appeals rendered its
decision with the following dispositive portion:

WHEREFORE, the decision rendered by the Court of First Instance of Batangas on April 15, 1986 is
hereby reversed and set aside and another one entered dismissing the claim of the Citizens' Surety and
Insurance Co., Inc., against the estate of the late Nicasia Sarmiento. No pronouncement as to costs. (p.
37, Rollo)

The petitioner raises the following alleged errors of the respondent court as the issues in this petition
for review:

I

RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT THE OBLIGATION OF PRIVATE
RESPONDENT PASCUAL M. PEREZ HAD BEEN EXTINGUISHED BY VIRTUE OF THE EXECUTION OF THE DEED
OF ASSIGNMENT (EXHIBIT "1") AND/OR THE RELEASE OF THE SECOND REAL ESTATE MORTGAGE
(EXHIBIT "2").

II

RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT THERE WAS DATION IN PAYMENT BY
VIRTUE OF THE EXECUTION OF THE DEED OF ASSIGNMENT (EXHIBIT "1").

III

RESPONDENT COURT OF APPEALS ERRED WHEN IT TOTALLY REVERSED AND SET ASIDE THE DECISION OF
THE COURT OF FIRST INSTANCE OF BATANGAS THUS DEPRIVING PETITIONER OF THE PRINCIPAL SUM
DUE PLUS INTEREST AND ATTORNEY'S FEES. (p. 4, Petitioner's Brief)

The main issue in this petition is whether or not the administrator's obligation under the surety bonds
and indemnity agreements had been extinguished by reason of the execution of the deed of assignment.

It is the general rule that when the words of a contract are plain and readily understandable, there is no
room for construction thereof (San Mauricio Milling Co. v. Ancheta, 105 SCRA 371). However, this is only
a general rule and it admits exceptions.

Pascual M. Perez executed an instrument denominated as "Deed of Assignment." Pertinent portions of
the deed read as follows:

I, Pascual M. Perez, Filipino, of legal age, married, with residence and postal address at 115 D. Silang,
Batangas, as the owner and operator of a business styled "PASCUAL M. PEREZ ENTERPRISES," with office
at R-31 Madrigal Building, Escolta, Manila, hereinafter referred to as ASSIGNOR, for and in consideration
of the issuance in my behalf and in favor of the SINGER SEWING MACHINE COMPANY, LTD., of two
Surety Bonds (CSIC) Bond Nos. 2631 and 2632 each in the amount of SEVENTY TWO THOUSAND PESOS
(P72,000.00), or with a total sum of ONE RED FORTY-FOUR THOUSAND PESOS (Pl44,000.00), Philippine
Currency, by the CITIZENS' SURETY AND INSURANCE CO., INC., a corporation duly organized and existing
under and by virtue of the laws of the Republic of the Philippines, with principal office at R-306
Samanillo Building, Escolta, Manila, Philippines, and duly represented in the act by its Vice-President and
General Manager, ARISTEO L. LAT, hereinafter referred to as ASSIGNEE, assign by these presents, unto
said ASSIGNEE, its heirs, successors, administrators or assigns the herein ASSIGNOR'S stock (Insured) of
low grade lumber, class "No. 2 COMMON" kept and deposited at Tableria Tan Tao at Batangas,
Batangas, with a total measurement of Two Million (2,000,000.00) board feet and valued of P0.20 per
board feet or with a total value of P400,000.00 which lumber is intended by the ASSIGNOR for
exportation under a Commodity Trade Permit, the condition being that in the event that the herein
assignor exports said lumber and as soon as he gets the necessary export shipping and related and
pertinent documents therefor, the ASSIGNOR will turn said papers over to the herein ASSIGNEE,
conserving all of the latter's dominion, rights and interests in said exportation.

The ASSIGNEE hereby agrees and accepts this assignment under the conditions above-mentioned. (pp.
77-79, Record on Appeal)

On its face, the document speaks of an assignment where there seems to be a complete conveyance of
the stocks of lumber to the petitioner, as assignee. However, in the light of the circumstances obtaining
at the time of the execution of said deed of assignment, we can not regard the transaction as an
absolute conveyance. As held in the case of Sy v. Court of Appeals, (131 SCRA 116,124):

It is a basic and fundamental rule in the interpretation of contract that if the terms thereof are clear and
leave no doubt as to the intention of the contracting parties, then the literal meaning of the stipulations
shall control but when the words appear contrary to the evident intention of the parties, the latter shall
prevail over the former. (Labasan v. Lacuesta, 86 SCRA 16) In order to judge the intention of the parties,
their contemporaneous and subsequent acts shall be principally considered. (Emphasis supplied)

The petitioner issued the two (2) surety bonds on December 4, 1959 in behalf of the Pascual M. Perez
Enterprises to guaranty fullfillment of its obligation under the "Contract of Sale of Goods" entered into
with the Singer Sewing Machine Co. In consideration of the two surety bonds, two indemnity
agreements were executed by Pascual M. Perez followed by a Deed of Assignment which was also
executed on the same date.

In the case of Lopez v. Court of appeals (114 SCRA 673), we stated that:

The indemnity agreement and the stock assignment must be considered together as related
transactions because in order to judge the intention of the contracting parties, their contemporaneous
and subsequent acts shall be principally considered. (Article 1371, New Civil Code). Thus, considering
that the indemnity agreement connotes a continuing obligation of Lopez towards Philamgen, while the
stock assignment indicates a complete discharge of the same obligation, the existence of the indemnity
agreement whereby Lopez had to pay a premium of P1,000.00 for a period of one year and agreed at all
times to indemnify Philamgen of any and all kinds of losses which the latter might sustain by reason of it
becoming a surety, is inconsistent with the theory of an absolute sale for and in consideration of the
same undertaking of Philamgen. There would have been no necessity for the execution of the indemnity
agreement if the stock assignment was really intended as an absolute conveyance. Hence, there are
strong and cogent reasons to conclude that the parties intended said stock assignment to complement
the indemnity agreement and thereby sufficiently guarantee the indemnification of Philamgen should it
be required to pay Lopez" loan to Prudential Bank. (at pp. 682-683)

The respondent court stated that "by virtue of the execution of the deed of assignment ownership of
administrator-appellant's lumber materials had been transferred to the claimant-appellant and this
amounted to dation in payment whereby the former is considered to have alienated his property in
favor of the latter in satisfaction of a monetary debt (Artide 1245). As a consequence thereof,
administrator-appellant's obligation under the surety bonds is thereby extinguished upon the execution
of the deed of assignment." This statement is not sustained by the records.

The transaction could not be dation in payment. As pointed out in the concurring and dissenting opinion
of Justice Edgardo L. Paras and the dissenting opinion of Justice Mariano Serrano when the deed of
assignment was executed on December 4, 1959, the obligation of the assignor to refund the assignee
had not yet arisen. In other words, there was no obligation yet on the part of the petitioner, Citizens'
Surety and Insurance Company, to pay Singer Sewing Machine Co. There was nothing to be extinguished
on that date, hence, there could not have been a dation in payment.

In the case of Lopez v. Court of Appeals (supra) we had the occasion to explain:

Considering the above jurisprudence, We find that the debt or obligation at bar has not matured on
June 2, 1959 when Lopez 'alienated' his 4,000 shares of stock to Philamgen. Lopez' obligation would
arise only when he would default in the payment of the principal obligation (the loan) to the bank and
Philamgen had to pay for it. Such fact being adverse to the nature and concept of dation in payment, the
same could not have been constituted when the stock assignment was executed. Moreover, there is no
express provision in the terms of the stock assignment between Philamgen and Lopez that the principal
obligation (which is the loan) is immediately extinguished by reason of such assignment. (at p. 686)

The deed of assignment cannot be regarded as an absolute conveyance whereby the obligation under
the surety bonds was automatically extinguished. The subsequent acts of the private respondent bolster
the fact that the deed of assignment was intended merely as a security for the issuance of the two
bonds. Partial payments amounting to P55,600.00 were made after the execution of the deed of
assignment to satisfy the obligation under the two surety bonds. Since later payments were made to pay
the indebtedness, it follows that no debt was extinguished upon the execution of the deed of
assignment. Moreover, a second real estate mortgage was executed on April 12, 1960 and eventually
cancelled only on May 15, 1962. If indeed the deed of assignment extinguished the obligation, there was
no reason for a second mortgage to still have to be executed. We agree with the two dissenting opinions
in the Court of Appeals that the only conceivable reason for the execution of still another mortgage on
April 12, 1960 was because the obligation under the indemnity bonds still existed. It was not yet
extinguished when the deed of assignment was executed on December 4, 1959. The deed of assignment
was therefore intended merely as another collateral security for the issuance of the two surety bonds.

Recapitulating the facts of the case, the records show that the petitioner surety company paid
P144,000.00 to Singer on the basis of the two surety bonds it had issued in behalf of Pascual Perez
Enterprises. Perez in turn was able to indemnify the petitioner for its payment to Singer in the amount
of P55,600.00 thus leaving a balance of only P88,400.00.

The petitioner surety company was more than adequately protected. Lumber worth P400,000.00 was
assigned to it as collateral. A second real estate mortgage was also given by Perez although it was later
cancelled obviously because the P400,000.00 worth of lumber was more than enough guaranty for the
obligations assumed by the petitioner. As pointed out by Justice Paras in his separate opinion, the
proper procedure was for Citizens' Insurance and Surety Co., to collect the remaining P88,400.00 from
the sales of lumber and to return whatever remained to Perez. We cannot order the return in this
decisions because the Estate of Mrs. Perez has not asked for any return of excess lumber or its value.
There appears to have been other transactions, surety bonds, and performance bonds between the
petitioner and Perez Enterprises but theseare extraneous matters which, the records show, have
absolutely no bearing on the resolution of the issues in this petition.

With respect to the claim for interests and attomey's fees, we agree with the private respondent that
the petitioner is not entitled to either one. It had the means to recoup its investment and losses many
times over, yet it chose to litigate and delay the final determination of how much was really owing to it.
As stated by Justice Paras in his separate opinion:

Interest will not be given the Surety because it had all the while (or at least, it may be presumed that
such was the case) the P400,000.00 worth of lumber, from which value the 'refunding' by assignor could
have been deducted if it had so informed the assignor of the plan.

For the same reason as in No. (5), attomey's fees cannot be charged, for despite the express stipulation
on the matter in the contract, there was actually no failure on the part of the assignor to comply with
the obligation of refinding. The means of compliance was right there with the Surety itself-. surely it
could have earlier conferred with the assignor on how to effect the 'refunding. (p. 39, Rollo)

WHEREFORE, the petition is hereby DISMISSED. For the reasons above-stated, the claim of Citizens'
Surety and Insurance Co., Inc., against the estate of Nicasia Sarmiento is DISMISSED. SO ORDERED.

G.R. No. L-58961 June 28, 1983

SOLEDAD SOCO, petitioner,
vs.
HON. FRANCIS MILITANTE, Incumbent Presiding Judge of the Court of First Instance of Cebu, Branch XII,
Cebu City and REGINO FRANCISCO, JR., respondents.

Chua & Associates Law Office (collaborating counsel) and Andales, Andales & Associates Law Office for
petitioner.

Francis M. Zosa for private respondent.



GUERRERO, J.:

The decision subject of the present petition for review holds the view that there was substantial
compliance with the requisites of consignation and so ruled in favor of private respondent, Regino
Francisco, Jr., lessee of the building owned by petitioner lessor, Soledad Soco in the case for illegal
detainer originally filed in the City Court of Cebu City, declaring the payments of the rentals valid and
effective, dismissed the complaint and ordered the lessor to pay the lessee moral and exemplary
damages in the amount of P10,000.00 and the further sum of P3,000.00 as attorney's fees.

We do not agree with the questioned decision. We hold that the essential requisites of a valid
consignation must be complied with fully and strictly in accordance with the law, Articles 1256 to 1261,
New Civil Code. That these Articles must be accorded a mandatory construction is clearly evident and
plain from the very language of the codal provisions themselves which require absolute compliance with
the essential requisites therein provided. Substantial compliance is not enough for that would render
only a directory construction to the law. The use of the words "shall" and "must" which are imperative,
operating to impose a duty which may be enforced, positively indicate that all the essential requisites of
a valid consignation must be complied with. The Civil Code Articles expressly and explicitly direct what
must be essentially done in order that consignation shall be valid and effectual. Thus, the law provides:

1257. In order that the consignation of the thing due may release the obligor, it must first be
announced to the persons interested in the fulfillment of the obligation.

The consignation shall be ineffectual if it is not made strictly in consonance with the provisions which
regulate payment.

Art. 1258. Consignation shall be made by depositing the things due at the disposal of judicial authority,
before whom the tender of payment shall be proved, in a proper case, and the announcement of the
consignation in other cases.

The consignation having been made, the interested parties shall also be notified thereof.

Art. 1249. The payment of debts in money shall be made in the currency stipulated, and if it is not
possible to deliver such currency, then in the currency which is legal tender in the Philippines.

The delivery of promissory notes payable to order, or bills of exchange or other mercantile documents
shall produce the effect of payment only when they have been cashed, or when through the fault of the
creditor they have been impaired.

In the meantime, the action derived from the original obligation shall be held in abeyance.

We have a long line of established precedents and doctrines that sustain the mandatory nature of the
above provisions. The decision appealed from must, therefore, be reversed.

The antecedent facts are substantially recited in the decision under review, as follows:

It appears from the evidence that the plaintiff-appellee-Soco, for short-and the 'defendant-appellant-
Francisco, for brevity- entered into a contract of lease on January 17, 1973, whereby Soco leased her
commercial building and lot situated at Manalili Street, Cebu City, to Francisco for a monthly rental of P
800.00 for a period of 10 years renewable for another 10 years at the option of the lessee. The terms of
the contract are embodied in the Contract of Lease (Exhibit "A" for Soco and Exhibit "2" for Francisco). It
can readily be discerned from Exhibit "A" that paragraphs 10 and 11 appear to have been cancelled
while in Exhibit "2" only paragraph 10 has been cancelled. Claiming that paragraph 11 of the Contract of
Lease was in fact not part of the contract because it was cancelled, Soco filed Civil Case No. R-16261 in
the Court of First Instance of Cebu seeking the annulment and/or reformation of the Contract of Lease.
...

Sometime before the filing of Civil Case No. R-16261 Francisco noticed that Soco did not anymore send
her collector for the payment of rentals and at times there were payments made but no receipts were
issued. This situation prompted Francisco to write Soco the letter dated February 7, 1975 (Exhibit "3")
which the latter received as shown in Exhibit "3-A". After writing this letter, Francisco sent his payment
for rentals by checks issued by the Commercial Bank and Trust Company. Obviously, these payments in
checks were received because Soco admitted that prior to May, 1977, defendant had been religiously
paying the rental. ....

1. The factual background setting of this case clearly indicates that soon after Soco learned that
Francisco sub-leased a portion of the building to NACIDA, at a monthly rental of more than P3,000.00
which is definitely very much higher than what Francisco was paying to Soco under the Contract of
Lease, the latter felt that she was on the losing end of the lease agreement so she tried to look for ways
and means to terminate the contract. ...

In view of this alleged non-payment of rental of the leased premises beginning May, 1977, Soco through
her lawyer sent a letter dated November 23, 1978 (Exhibit "B") to Francisco serving notice to the latter
'to vacate the premises leased.' In answer to this letter, Francisco through his lawyer informed Soco and
her lawyer that all payments of rental due her were in fact paid by Commercial Bank and Trust Company
through the Clerk of Court of the City Court of Cebu (Exhibit " 1 "). Despite this explanation, Soco filed
this instant case of Illegal Detainer on January 8, 1979. ...

2. Pursuant to his letter dated February 7, 1975(Exhibit"3") and for reasons stated therein, Francisco
paid his monthly rentals to Soco by issuing checks of the Commercial Bank and Trust Company where he
had a checking account. On May 13, 1975, Francisco wrote the Vice-President of Comtrust, Cebu Branch
(Exhibit "4") requesting the latter to issue checks to Soco in the amount of P 840.00 every 10th of the
month, obviously for payment of his monthly rentals. This request of Francisco was complied with by
Comtrust in its letter dated June 4, 1975 (Exhibit "5"). Obviously, these payments by checks through
Comtrust were received by Soco from June, 1975 to April, 1977 because Soco admitted that an rentals
due her were paid except the rentals beginning May, 1977. While Soco alleged in her direct examination
that 'since May, 1977 he (meaning Francisco) stopped paying the monthly rentals' (TSN, Palicte, p. 6,
Hearing of October 24, 1979), yet on cross examination she admitted that before the filing of her
complaint in the instant case, she knew that payments for monthly rentals were deposited with the
Clerk of Court except rentals for the months of May, June, July and August, 1977. ...

Pressing her point, Soco alleged that 'we personally demanded from Engr. Francisco for the months of
May, June, July and August, but Engr. Francisco did not pay for the reason that he had no funds available
at that time.' (TSN-Palicte, p. 28, Hearing October 24, 1979). This allegation of Soco is denied by
Francisco because per his instructions, the Commercial Bank and Trust Company, Cebu Branch, in fact,
issued checks in favor of Soco representing payments for monthly rentals for the months of May, June,
July and August, 1977 as shown in Debit Memorandum issued by Comtrust as follows:

(a) Exhibit "6"-Debit Memo dated May 11, 1977 for P926.10 as payment for May, 1977;

(b) Exhibit"7"-Debit Memo dated June l5, 197 7for P926.10 as payment for June, 1977;

(c) Exhibit "8"-Debit Memo dated July 11, 1977 for P1926.10 as payment for July, 1977;

(d) Exhibit "9"-Debit Memo dated August 10, 1977 for P926. 10 as payment for August, 1977.

These payments are further bolstered by the certification issued by Comtrust dated October 29, 1979
(Exhibit "13"). Indeed the Court is convinced that payments for rentals for the months of May, June, July
and August, 1977 were made by Francisco to Soco thru Comtrust and deposited with the Clerk of Court
of the City Court of Cebu. There is no need to determine whether payments by consignation were made
from September, 1977 up to the filing of the complaint in January, 1979 because as earlier stated Soco
admitted that the rentals for these months were deposited with the Clerk of Court. ...

Taking into account the factual background setting of this case, the Court holds that there was in fact a
tender of payment of the rentals made by Francisco to Soco through Comtrust and since these
payments were not accepted by Soco evidently because of her intention to evict Francisco, by all means,
culminating in the filing of Civil Case R-16261, Francisco was impelled to deposit the rentals with the
Clerk of Court of the City Court of Cebu. Soco was notified of this deposit by virtue of the letter of Atty.
Pampio Abarientos dated June 9, 1977 (Exhibit "10") and the letter of Atty. Pampio Abarientos dated
July 6. 1977 (Exhibit " 12") as well as in the answer of Francisco in Civil Case R-16261 (Exhibit "14")
particularly paragraph 7 of the Special and Affirmative Defenses. She was further notified of these
payments by consignation in the letter of Atty. Menchavez dated November 28, 1978 (Exhibit " 1 ").
There was therefore substantial compliance of the requisites of consignation, hence his payments were
valid and effective. Consequently, Francisco cannot be ejected from the leased premises for non-
payment of rentals. ...

As indicated earlier, the above decision of the Court of First Instance reversed the judgment of the City
Court of Cebu, Branch 11, the dispositive portion of the latter reading as follows:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff, ordering the defendant, Regino
Francisco, Jr.:

(1) To vacate immediately the premises in question, consisting of a building located at Manalili St., Cebu
City;

(2) To pay to the plaintiff the sum of P40,490.46 for the rentals, covering the period from May, 1977 to
August, 1980, and starting with the month of September, 1980, to pay to the plaintiff for one (1) year a
monthly rental of P l,072.076 and an additional amount of 5 per cent of said amount, and for so much
amount every month thereafter equivalent to the rental of the month of every preceding year plus 5
percent of same monthly rental until the defendant shall finally vacate said premises and possession
thereof wholly restored to the plaintiff-all plus legal interest from date of filing of the complaint;

(3) To pay to the plaintiff the sum of P9,000.00 for attorney's fee;

(4) To pay to the plaintiff the sum of P5,000.00 for damages and incidental litigation expenses; and

(5) To pay the Costs.

SOORDERED.

Cebu City, Philippines, November 21, 1980.

(SGD.) PATERNO D. MONTESCLAROS
Acting Presiding Judge

According to the findings of fact made by the City Court, the defendant Francisco had religiously paid to
the plaintiff Soco the corresponding rentals according to the terms of the Least Contract while enjoying
the leased premises until one day the plaintiff had to demand upon the defendant for the payment of
the rentals for the month of May, 1977 and of the succeeding months. The plaintiff also demanded upon
the defendant to vacate the premises and from that time he failed or refused to vacate his possession
thereof; that beginning with the month of May, 1977 until at present, the defendant has not made valid
payments of rentals to the plaintiff who, as a consequence, has not received any rental payment from
the defendant or anybody else; that for the months of May to August, 1977, evidence shows that the
plaintiff through her daughter, Teolita Soco and salesgirl, Vilma Arong, went to the office or residence of
defendant at Sanciangko St., Cebu City, on various occasions to effect payment of rentals but were
unable to collect on account of the defendant's refusal to pay; that defendant contended that payments
of rental thru checks for said four months were made to the plaintiff but the latter refused to accept
them; that in 1975, defendant authorized the Commercial Bank and Trust Company to issue checks to
the plaintiff chargeable against his bank account, for the payment of said rentals, and the delivery of
said checks was coursed by the bank thru the messengerial services of the FAR Corporation, but the
plaintiff refused to accept them and because of such refusal, defendant instructed said bank to make
consignation with the Clerk of Court of the City Court of Cebu as regard said rentals for May to August,
1977 and for subsequent months.

The City Court further found that there is no showing that the letter allegedly delivered to the plaintiff in
May, 1977 by Filomeno Soon, messenger of the FAR Corporation contained cash money, check, money
order, or any other form of note of value, hence there could never be any tender of payment, and even
granting that there was, but plaintiff refused to accept it without any reason, still no consignation for
May, 1977 rental could be considered in favor of the defendant unless evidence is presented to
establish that he actually made rental deposit with the court in cash money and prior and subsequent to
such deposit, he notified the plaintiff thereof.

Notwithstanding the contradictory findings of fact and the resulting opposite conclusions of law by the
City Court and the Court of First Instance, both are agreed, however, that the case presents the issue of
whether the lessee failed to pay the monthly rentals beginning May, 1977 up to the time the complaint
for eviction was filed on January 8, 1979. This issue in turn revolves on whether the consignation of the
rentals was valid or not to discharge effectively the lessee's obligation to pay the same. The City Court
ruled that the consignation was not valid. The Court of First Instance, on the other hand, held that there
was substantial compliance with the requisites of the law on consignation.

Let us examine the law and consider Our jurisprudence on the matter, aside from the codal provisions
already cited herein.

According to Article 1256, New Civil Code, 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. Consignation alone shall produce the same effect in the following
cases: (1) When the creditor is absent or unknown, or does not appear at the place of payment; (2)
When he is incapacitated to receive the payment at the time it is due; (3) When, without just cause, he
refuses to give a receipt; (4) When two or more persons claim the same right to collect; (5) When the
title of the obligation has been lost.

Consignation is the act of depositing the thing due with the court or judicial authorities whenever the
creditor cannot accept or refuses to accept payment and it generally requires a prior tender of payment.
(Limkako vs. Teodoro, 74 Phil. 313).

In order that consignation may be effective, the debtor must first comply with certain requirements
prescribed by law. The debtor must show (1) that there was a debt due; (2) that the consignation of the
obligation had been made because the creditor to whom tender of payment was made refused to
accept it, or because he was absent or incapacitated, or because several persons claimed to be entitled
to receive the amount due (Art. 1176, Civil Code); (3) that previous notice of the consignation had been
given to the person interested in the performance of the obligation (Art. 1177, Civil Code); (4) that the
amount due was placed at the disposal of the court (Art. 1178, Civil Code); and (5) that after the
consignation had been made the person interested was notified thereof (Art. 1178, Civil Code). Failure in
any of these requirements is enough ground to render a consignation ineffective. (Jose Ponce de Leon
vs. Santiago Syjuco, Inc., 90 Phil. 311).

Without the notice first announced to the persons interested in the fulfillment of the obligation, the
consignation as a payment is void. (Limkako vs. Teodoro, 74 Phil. 313),

In order to be valid, the tender of payment must be made in lawful currency. While payment in check by
the debtor may be acceptable as valid, if no prompt objection to said payment is made (Desbarats vs.
Vda. de Mortera, L-4915, May 25, 1956) the fact that in previous years payment in check was accepted
does not place its creditor in estoppel from requiring the debtor to pay his obligation in cash (Sy vs.
Eufemio, L-10572, Sept. 30, 1958). Thus, the tender of a check to pay for an obligation is not a valid
tender of payment thereof (Desbarats vs. Vda. de Mortera, supra). See Annotation, The Mechanics of
Consignation by Atty. S. Tabios, 104 SCRA 174-179.

Tender of payment must be distinguished from consignation. Tender is the antecedent of consignation,
that is, an act preparatory to the consignation, which is the principal, and from which are derived the
immediate consequences which the debtor desires or seeks to obtain. Tender of payment may be
extrajudicial, while consignation is necessarily judicial, and the priority of the first is the attempt to make
a private settlement before proceeding to the solemnities of consignation. (8 Manresa 325).

Reviewing carefully the evidence presented by respondent lessee at the trial of the case to prove his
compliance with all the requirements of a valid tender of payment and consignation and from which the
respondent Judge based his conclusion that there was substantial compliance with the law on
consignation, We note from the assailed decision hereinbefore quoted that these evidences are: Exhibit
10, the letter of Atty. Pampio Abarintos dated June 9, 1977: Exhibit 12, letter of Atty. Pampio Abarintos
dated July 6, 1977; Exhibit 14, the Answer of respondent Francisco in Civil Case R- 16261, particularly
paragraph 7 of the Special and Affirmative Defenses; and Exhibit 1, letter of Atty. Eric Menchavez dated
November 28, 1978. All these evidences, according to respondent Judge, proved that petitioner lessor
was notified of the deposit of the monthly rentals.

We have analyzed and scrutinized closely the above exhibits and We find that the respondent Judge's
conclusion is manifestly wrong and based on misapprehension of facts. Thus-

(1) Exhibit 10 reads: (see p. 17, Records)

June 9, 1977

Miss Soledad Soco
Soledad Soco Retazo
P. Gullas St., Cebu City

Dear Miss Soco:

This is in connection with the payment of rental of my client, Engr. Regino Francisco, Jr., of your building
situated at Manalili St., Cebu City.

It appears that twice you refused acceptance of the said payment made by my client.

It appears further that my client had called your office several times and left a message for you to get
this payment of rental but until the present you have not sent somebody to get it.

In this connection, therefore, in behalf of my client, you are hereby requested to please get and claim
the rental payment aforestated from the Office of my client at Tagalog Hotel and Restaurant,
Sanciangko St., Cebu City. within three (3) days from receipt hereof otherwise we would be constrained
to make a consignation of the same with the Court in accordance with law.

Hoping for your cooperation on this matter, we remain.

Very truly yours,

(SGD.) PAMPIO A. ABARINTOS
Counsel for Engr. REGINO FRANCISCO, Jr.

We may agree that the above exhibit proves tender of payment of the particular monthly rental referred
to (the letter does not, however, indicate for what month and also the intention to deposit the rental
with the court, which is the first notice. But certainly, it is no proof of tender of payment of other or
subsequent monthly rentals. Neither is it proof that notice of the actual deposit or consignation was
given to the lessor, which is the second notice required by law.

(2) Exhibit 12 (see p. 237, Records) states:

July 6, 1977

Miss Soledad Soco
Soledad Soco Reta
P. Gullas St., Cebu City

Dear Miss Soco:

This is to advise and inform you that my client, Engr. Regino Francisco, Jr., has consigned to you, through
the Clerk of Court, City Court of Cebu, Cebu City, the total amount of Pl,852.20, as evidenced by
cashier's checks No. 478439 and 47907 issued by the Commercial Bank and Trust Company (CBTC) Cebu
City Branch, dated May 11, 1977 and June 15, 1977 respectively and payable to your order, under
Official Receipt No. 0436936 dated July 6,1977.

This amount represents payment of the rental of your building situated at Manalili St., Cebu City which
my client, Engr. Regino Francisco, Jr., is renting. You can withdraw the said amount from the Clerk of
Court, City Court of Cebu, Cebu City at any time.

Please be further notified that all subsequent monthly rentals will be deposited to the Clerk of Court,
City Court of Cebu, Cebu City.

Very truly yours,

(SGD.) PAMPIO A. ABARINTOS
Counsel for ENGR. REGINO FRANCISCO, JR.

The above evidence is, of course, proof of notice to the lessor of the deposit or consignation of only the
two payments by cashier's checks indicated therein. But surely, it does not prove any other deposit nor
the notice thereof to the lessor. It is not even proof of the tender of payment that would have preceded
the consignation.

(3) Exhibit 14, paragraph 7 of the Answer (see p. 246, Records) alleges:

7. That ever since, defendant had been religiously paying his rentals without any delay which, however,
the plaintiff had in so many occasions refused to accept obviously in the hope that she may declare non-
payment of rentals and claim it as a ground for the cancellation of the contract of lease. This, after
seeing the improvements in the area which were effected, at no small expense by the defendant. To
preserve defendant's rights and to show good faith in up to date payment of rentals, defendant had
authorized his bank to issue regularly cashier's check in favor of the plaintiff as payment of rentals which
the plaintiff had been accepting during the past years and even for the months of January up to May of
this year, 1977 way past plaintiff's claim of lease expiration. For the months of June and July, however,
plaintiff again started refusing to accept the payments in going back to her previous strategy which
forced the defendant to consign his monthly rental with the City Clerk of Court and which is now the
present state of affairs in so far as payment of rentals is concerned. These events only goes to show that
the wily plaintiff had thought of this mischievous scheme only very recently and filed herein malicious
and unfounded complaint.

The above exhibit which is lifted from Civil Case No. R-16261 between the parties for annulment of the
lease contract, is self-serving. The statements therein are mere allegations of conclusions which are not
evidentiary.

(4) Exhibit 1 (see p. 15, Records) is quoted thus:

November 28, 1978

Atty. Luis V. Diores
Suite 504, SSS Bldg.
Jones Avenue, Cebu City

Dear Compaero:

Your letter dated November 23, 1978 which was addressed to my client, Engr. Regino Francisco, Jr. has
been referred to me for reply.

It is not true that my client has not paid the rentals as claimed in your letter. As a matter of fact, he has
been religiously paying the rentals in advance. Payment was made by Commercial Bank and Trust
Company to the Clerk of Court, Cebu City. Attached herewith is the receipt of payment made by him for
the month of November, 1978 which is dated November 16, 1978.

You can check this up with the City Clerk of Court for satisfaction.

Regards.

(SGD.) ERIC MENCHAVEZ Counsel for Regino Francisco, Jr.
377-B Junquera St., Cebu City
(new address)

Again, Exhibit 1 merely proves rental deposit for the particular month of November, 1978 and no other.
It is no proof of tender of payment to the lessor, not even proof of notice to consign. We hold that the
best evidence of the rental deposits with the Clerk of Court are the official receipts issued by the Clerk of
Court. These the respondent lessee utterly failed to present and produce during the trial of the case. As
pointed out in petitioner's Memorandum, no single official receipt was presented in the trial court as
nowhere in the formal offer of exhibits for lessee Francisco can a single official receipt of any deposit
made be found (pp. 8-9, Memorandum for Petitioner; pp. 163-164, Records).

Summing up Our review of the above four (4) exhibits, We hold that the respondent lessee has utterly
failed to prove the following requisites of a valid consignation: First, tender of payment of the monthly
rentals to the lessor except that indicated in the June 9, l977 Letter, Exhibit 10. In the original records of
the case, We note that the certification, Exhibit 11 of Filemon Soon, messenger of the FAR Corporation,
certifying that the letter of Soledad Soco sent last May 10 by Commercial Bank and Trust Co. was
marked RTS (return to sender) for the reason that the addressee refused to receive it, was rejected by
the court for being immaterial, irrelevant and impertinent per its Order dated November 20, 1980. (See
p. 117, CFI Records).

Second, respondent lessee also failed to prove the first notice to the lessor prior to consignation, except
the payment referred to in Exhibit 10.

In this connection, the purpose of the notice is in order to give the creditor an opportunity to reconsider
his unjustified refusal and to accept payment thereby avoiding consignation and the subsequent
litigation. This previous notice is essential to the validity of the consignation and its lack invalidates the
same. (Cabanos vs. Calo, 104 Phil. 1058; Limkako vs. Teodoro, 74 Phil. 313).

There is no factual basis for the lower court's finding that the lessee had tendered payment of the
monthly rentals, thru his bank, citing the lessee's letter (Exh. 4) requesting the bank to issue checks in
favor of Soco in the amount of P840.00 every 10th of each month and to deduct the full amount and
service fee from his current account, as well as Exhibit 5, letter of the Vice President agreeing with the
request. But scrutinizing carefully Exhibit 4, this is what the lessee also wrote: "Please immediately
notify us everytime you have the check ready so we may send somebody over to get it. " And this is
exactly what the bank agreed: "Please be advised that we are in conformity to the above arrangement
with the understanding that you shall send somebody over to pick up the cashier's check from us."
(Exhibit 4, see p. 230, Original Records; Exhibit 5, p. 231, Original Records)

Evidently, from this arrangement, it was the lessee's duty to send someone to get the cashier's check
from the bank and logically, the lessee has the obligation to make and tender the check to the lessor.
This the lessee failed to do, which is fatal to his defense.

Third, respondent lessee likewise failed to prove the second notice, that is after consignation has been
made, to the lessor except the consignation referred to in Exhibit 12 which are the cashier's check Nos.
478439 and 47907 CBTC dated May 11, 1977 and June 15, 1977 under Official Receipt No. 04369 dated
July 6, 1977.

Respondent lessee, attempting to prove compliance with the requisites of valid consignation, presented
the representative of the Commercial Bank and Trust Co., Edgar Ocaada, Bank Comptroller, who
unfortunately belied respondent's claim. We quote below excerpts from his testimony, as follows:

ATTY. LUIS DIORES:

Q What month did you say you made ,you started making the deposit? When you first deposited the
check to the Clerk of Court?

A The payment of cashier's check in favor of Miss Soledad Soco was coursed thru the City Clerk of Court
from the letter of request by our client Regino Francisco, Jr., dated September 8, 1977. From that time
on, based on his request, we delivered the check direct to the City Clerk of Court.

Q What date, what month was that, you first delivered the check to the Clerk of Court.?

A We started September 12, 1977.

Q September 1977 up to the present time, you delivered the cashier's check to the City Clerk of Court?

A Yes.

Q You were issued the receipts of those checks?

A Well, we have an acknowledgment letter to be signed by the one who received the check.

Q You mean you were issued, or you were not issued any official receipt? My question is whether
you were issued any official receipt? So, were you issued, or you were not issued?

A We were not issued.

Q On September, 1977, after you deposited the manager's check for that month with the Clerk of Court,
did you serve notice upon Soledad Soco that the deposit was made on such amount for the month of
September, 1977 and now to the Clerk of Court? Did you or did you not?

A Well, we only act on something upon the request of our client.

Q Please answer my question. I know that you are acting upon instruction of your client. My question
was-after you made the deposit of the manager's check whether or not you notified Soledad Soco that
such manager's check was deposited in the Clerk of Court from the month of September, 1977?

A We are not bound to.

Q I am not asking whether you are bound to or not. I'masking whether you did or you did not?

A I did not.

Q Alright, for October, 1977, after having made a deposit for that particular month, did you notify Miss
Soledad Soco that the deposit was in the Clerk of Court?

A No, we did not.

Q Now, on November, 1977, did you notify Soledad Soco that you deposited the manager's check
to the City Clerk of Court for that month?

A I did not.

Q You did not also notify Soledad Soco for the month December, 1977, so also from January,
February, March, April, May, June, July until December, 1978, you did not also notify Miss Soledad Soco
all the deposits of the manager's check which you said you deposited with the Clerk of Court in every
end of the month? So also from each and every month from January 1979 up to December 1979, you did
not also serve notice upon Soledad Socco of the deposit in the Clerk of Court, is that correct?

A Yes.

Q So also in January 1980 up to this month 1980, you did not instructed by your client Mr. and
Mrs. Regino Francisco, jr. to make also serve notice upon Soledad Soco of the Manager's check which
you said you deposited to the Clerk of Court?

A I did not.

Q Now, you did not make such notices because you were not such notices after the deposits you
made, is that correct?

A Yes, sir.

Q Now, from 1977, September up to the present time, before the deposit was made with the Clerk
of Court, did you serve notice to Soledad Soco that a deposit was going to be made in each and every
month?

A Not.

Q In other words, from September 1977 up to the present time, you did not notify Soledad Soco
that you were going to make the deposit with the Clerk of Court, and you did not also notify Soledad
Soco after the deposit was made, that a deposit has been made in each and every month during that
period, is that correct?

A Yes

Q And the reason was because you were not instructed by Mr. and Mrs. Regino Francisco, Jr. that such
notification should be made before the deposit and after the deposit was made, is that correct?

A No, I did not. (Testimony of Ocanada pp. 32-41, Hearing on June 3, 1980).

Recapitulating the above testimony of the Bank Comptroller, it is clear that the bank did not send notice
to Soco that the checks will be deposited in consignation with the Clerk of Court (the first notice) and
also, the bank did not send notice to Soco that the checks were in fact deposited (the second notice)
because no instructions were given by its depositor, the lessee, to this effect, and this lack of notices
started from September, 1977 to the time of the trial, that is June 3, 1980.

The reason for the notification to the persons interested in the fulfillment of the obligation after
consignation had been made, which is separate and distinct from the notification which is made prior to
the consignation, is stated in Cabanos vs. Calo, G.R. No. L-10927, October 30, 1958, 104 Phil. 1058. thus:
"There should be notice to the creditor prior and after consignation as required by the Civil Code. The
reason for this is obvious, namely, to enable the creditor to withdraw the goods or money deposited.
Indeed, it would be unjust to make him suffer the risk for any deterioration, depreciation or loss of such
goods or money by reason of lack of knowledge of the consignation."

And the fourth requisite that respondent lessee failed to prove is the actual deposit or consignation of
the monthly rentals except the two cashier's checks referred to in Exhibit 12. As indicated earlier, not a
single copy of the official receipts issued by the Clerk of Court was presented at the trial of the case to
prove the actual deposit or consignation. We find, however, reference to some 45 copies of official
receipts issued by the Clerk of Court marked Annexes "B-1 " to "B-40" to the Motion for Reconsideration
of the Order granting execution pending appeal filed by defendant Francisco in the City Court of Cebu
(pp, 150-194, CFI Original Records) as well as in the Motion for Reconsideration of the CFI decision, filed
by plaintiff lessor (pp. 39-50, Records, marked Annex "E ") the allegation that "there was no receipt at all
showing that defendant Francisco has deposited with the Clerk of Court the monthly rentals
corresponding to the months of May and June, 1977. And for the months of July and August, 1977, the
rentals were only deposited with the Clerk of Court on 20 November 1979 (or more than two years
later)."... The deposits of these monthly rentals for July and August, 1977 on 20 November 1979, is very
significant because on 24 October 1979, plaintiff Soco had testified before the trial court that defendant
had not paid the monthly rentals for these months. Thus, defendant had to make a hurried deposit on
the following month to repair his failure. " (pp. 43-44, Records).

We have verified the truth of the above claim or allegation and We find that indeed, under Official
Receipt No. 1697161Z, the rental deposit for August, 1977 in cashier's check No. 502782 dated 8-10-77
was deposited on November 20, 1979 (Annex "B-15", p. 169, Original CFI Records) and under Official
Receipt No. 1697159Z, the rental deposit for July under Check No. 479647 was deposited on November
20, 1979 (Annex "B-16", p. 170, Original CFI Records). Indeed, these two rental deposits were made on
November 20, 1979, two years late and after the filing of the complaint for illegal detainer.

The decision under review cites Exhibits 6, 7, 8 and 9, the Debit Memorandum issued by Comtrust Bank
deducting the amounts of the checks therein indicated from the account of the lessee, to prove
payment of the monthly rentals. But these Debit Memorandums are merely internal banking practices
or office procedures involving the bank and its depositor which is not binding upon a third person such
as the lessor. What is important is whether the checks were picked up by the lessee as per the
arrangement indicated in Exhibits 4 and 5 wherein the lessee had to pick up the checks issued by CBTC
or to send somebody to pick them up, and logically, for the lessee to tender the same to the lessor. On
this vital point, the lessee miserably failed to present any proof that he complied with the arrangement.

We, therefore, find and rule that the lessee has failed to prove tender of payment except that in Exh. 10;
he has failed to prove the first notice to the lessor prior to consignation except that given in Exh. 10; he
has failed to prove the second notice after consignation except the two made in Exh. 12; and he has
failed to pay the rentals for the months of July and August, 1977 as of the time the complaint was filed
for the eviction of the lessee. We hold that the evidence is clear, competent and convincing showing
that the lessee has violated the terms of the lease contract and he may, therefore, be judicially ejected.

The other matters raised in the appeal are of no moment. The motion to dismiss filed by respondent on
the ground of "want of specific assignment of errors in the appellant's brief, or of page references to the
records as required in Section 16(d) of Rule 46," is without merit. The petition itself has attached the
decision sought to be reviewed. Both Petition and Memorandum of the petitioner contain the summary
statement of facts; they discuss the essential requisites of a valid consignation; the erroneous conclusion
of the respondent Judge in reversing the decision of the City Court, his grave abuse of discretion which,
the petitioner argues, "has so far departed from the accepted and usual course of judicial proceeding in
the matter of applying the law and jurisprudence on the matter." The Memorandum further cites other
basis for petitioner's plea.

In Our mind, the errors in the appealed decision are sufficiently stated and assigned. Moreover, under
Our rulings, We have stated that:

This Court is clothed with ample authority to review matters, even if they are not assigned as errors in
the appeal, if it finds that their consideration is necessary in arriving at a just decision of the case. Also,
an unassigned error closely related to an error properly assigned or upon which the determination of
the questioned raised by the error properly assigned is dependent, will be considered by the appellate
court notwithstanding the failure to assign it as an error." (Ortigas, Jr. vs. Lufthansa German Airlines, L-
28773, June 30, 1975, 64 SCRA 610)

Under Section 5 of Rule 53, the appellate court is authorized to consider a plain error, although it was
not specifically assigned by appellants." (Dilag vs. Heirs of Resurreccion, 76 Phil. 649)

Appellants need not make specific assignment of errors provided they discuss at length and assail in
their brief the correctness of the trial court's findings regarding the matter. Said discussion warrants the
appellate court to rule upon the point because it substantially complies with Section 7, Rule 51 of the
Revised Rules of Court, intended merely to compel the appellant to specify the questions which he
wants to raise and be disposed of in his appeal. A clear discussion regarding an error allegedly
committed by the trial court accomplishes the purpose of a particular assignment of error." (Cabrera vs.
Belen, 95 Phil. 54; Miguel vs Court of Appeals, L- 20274, Oct. 30, 1969, 29 SCRA 760-773, cited in Moran,
Comments on the Rules of Court, Vol. 11, 1970 ed., p. 534).

Pleadings as well as remedial laws should be construed liberally in order that the litigants may have
ample opportunity to prove their respective claims, and that a possible denial of substantial justice, due
to legal technicalities, may be avoided." (Concepcion, et al. vs. The Payatas Estate Improvement Co.,
Inc., 103 Phil. 10 17).

WHEREFORE, IN VIEW OF ALL THE FOREGOING, the decision of the Court of First Instance of Cebu, 14th
Judicial District, Branch XII is hereby REVERSED and SET ASIDE, and the derision of the City Court of
Cebu, Branch II is hereby reinstated, with costs in favor of the petitioner.

SO ORDERED.

Makasiar (Chairman), Concepcion, Jr., Abad Santos, and De Castro, JJ., concur.

Aquino and Escolin JJ., concurs in the result,















1988

G.R. No. L-42230 April 15, 1988
LAURO IMMACULATA, represented by his wife AMPARO VELASCO, as Guardian Ad Litem, petitioner,
vs.
HON. PEDRO C. NAVARRO, in his capacity as Presiding Judge of the Court of First Instance of Rizal,
Branch No. II, and HEIRS OF JUANITO VICTORIA, namely: LOLITA, TOMAS, BENJAMIN, VIRGINIA, BRENDA
and ELVIE, all surnamed VICTORIA, and JUANITA NAVAL, surviving widow; and the PROVINCIAL SHERIFF
OF RIZAL, respondents.
Pedro N. Belmi for petitioner.
Alfonso G. Salvador for respondents.
R E S O L U T I O N
PARAS, J.:
Petitioner's Motion for Reconsideration of Our decision dated November 26, 1986 asks Us to consider a
point inadvertently missed by the Court the matter of legal redemption of a parcel of land previously
obtained by petitioner Lauro Immaculata thru a free patent. The reconsideration of this issue is hereby
GRANTED.
While res judicata may bar questions on the validity of the sale in view of alleged insanity and
intimidation (and this point is no longer pressed by counsel for the petitioner) still the question of the
right of legal redemption has remained unresolved.
Be it noted that in an action (Civil Case No. 20968) filed on March 24, 1975 before the defunct Court of
First Instance of Rizal, petitioner presented an alternative cause of action or prayer just in case the
validity of the sale would be sustained. And this alternative cause of action or prayer is to allow
petitioner to legally redeem the property.
We hereby grant said alternative cause of action or prayer. While the sale was originally executed
sometime in December, 1969, it was only on February 3, 1974 when, as prayed for 1 by private
respondent, and as ordered by the court a quo, a "deed of conveyance" was formally executed. Since
offer to redeem was made on March 24, 1975, this was clearly within the five-year period of legal
redemption allowed by the Public Land Act (See Abuan v. Garcia, 14 SCRA 759, 761).
The allegation that the offer to redeem was not sincere, because there was no consignation of the
amount in Court is devoid of merit. The right to redeem is a RIGHT, not an obligation, therefore, there is
no consignation required (De Jesus v. Garcia, C.A. 47 O.G. 2406; Resales v. Reyes, 25 Phil. 495, Vda. de
Quirino v. Palarca, L-28269, Aug. 16, 1969) to preserve the right to redeem (Villegas v. Capistrano, 9 Phil.
416).
WHEREFORE, as prayed for by the petitioner Lauro Immaculata (represented by his wife, Amparo
Velasco, as Guardian ad litem) the decision of this Court dated November 26, 1986 is hereby MODIFIED,
and the case is remanded to the court a quo for it to accept payment or consignation 2 (in connection
with the legal redemption which We are hereby allowing the petitioner to do) by the herein petitioner
of whatever he received from respondent at the time the transaction was made.
SO ORDERED.
Fernan (Chairman), Gutierrez, Jr., Padilla, Bidin and Cortes, JJ., concur.