G.R. No. 42108 December 29, 1989 OSCAR D. RAMOS and LUZ AGUDO, petitioners, vs. HON.

COUR O! A""#ALS, AD#LA$DA RAMOS and LAZARO #. M#N#S#S, respodents. Godofredo V. Magbiray for petitioners. Joselito Lim for private respondents. R#GALADO, J.: The instant petition for review on certiorari impugns the decision of the Court 1 of Appeals dated October 7, 1975, which affirmed in toto the decision of the Court of irst !nstance of Tarlac in Civil Case "o. #1$%, entitled &Adelaida 'amos, et al. vs. Oscar (. 'amos, et al.,& holding that the contracts between the parties are not ventas con pacto de retro but are e)uitable mortgages. *ometime in +anuar, 1959, private respondent Adelaida 'amos borrowed from her brother, petitioner Oscar (. 'amos, the amounts of - 5,...... and - 9,...... in connection with her business transaction with one lor 'amiro, red "aboa and Att,. 'uperto *arandi involving the recover, of a parcel of land in Tene/eros, 0alabon. The said amount was used to finance the trip to 1awaii of 'amiro, "aboa and Att,. *arandi. As securit, for said loan, private respondent Adelaida 'amos e2ecuted in favor of petitioners two 345 deeds of conditional sale dated 0a, 47, 1959 and August 6., 1959, of her rights, shares, interests and participation respectivel, over 7ot "o. #.66 covered b, Original Certificate of Title "o. 5145 registered in the name of their parents, 2 8alente 'amos and 0argarita (enoga, now deceased9 and 7ot "o. #441 covered b, Transfer Certificate of Title "o. 1.7%% then registered in the % names of *ocorro 'amos, +osefina 'amos and Adelaida 'amos, said properties being of the Cadastral *urve, of -ani)ui, Tarlac. :pon the failure of said private respondent as vendor a retro to e2ercise her right of repurchase within the redemption period, aforenamed petitioner filed a petition for consolidation and approval of the conditional sale of 7ot "o. #.66 in *pecial -roceedings "o. 517#, entitled &!ntestate ;state of the late 4 0argarita (enoga,& and a petition for approval of the pacto de retro sale of 7ot "o. #441 in the former Court of irst !nstance of Tarlac acting as a & cadastral court. On +anuar, 44, 19$., the said probate court issued an order with the following disposition< =1;'; O';, the deed of CO"(!T!O"A7 *A7; e2ecuted on 0a, 47, 1959, b, Adelaida 'amos in favor of spouses Oscar (. 'amos and 7u> Agudo, conve,ing to the latter b, wa, of pacto de retro sale whatever rights

and interests the former ma, have in 7ot "o. #.66 of the Cadastral *urve, of -ani)ui, which deed of conditional sale is ?nown as (ocument "o. 1#, -age 4$, @oo? 8!, *eries of 1959, of the notarial register of "otar, -ublic +ose -. ' *ibal, is hereb, approved. The cadastral Court also issued a similar order dated April 1%, 19$., the dispositive portion of which reads< =1;'; O';, b, wa, of granting the petition, the Court orders the consolidation of ownership and dominion in petitionersAspouses Oscar (. 'amos and 7u> Agudo over the rights, shares and interests of Adelaida 'amos in 7ot "o. #441 of the Cadastral *urve, of -ani)ui, Tarlac, which the latter sold to the former under a pacto de retro sale e2ecuted in a public instrument ?nown as (ocument "o. 44, -age 4%, @oo? "o. 8!. *eries of 1959, of the "otarial 'egistr, of "otar, -ublic +ose -. *ibal but which she ( failed to repurchase within the period specified in said (ocument. -rivate respondents had been and remained in possession of these properties until sometime in 19$# when petitioner too? possession thereof. On ebruar, 4%, 19$%, private respondent filed Civil Case "o. #1$% with the then Court of irst !nstance of Tarlac for declaration of nullit, of orders, reformation of instrument, recover, of possession with preliminar, in/unction and damages. The complaint therein alleged that the deeds of conditional sale, dated 0a, 47, 1959 and August 6., 1959, are mere mortgages and were vitiated b, misrepresentation, fraud and undue influence and that the orders dated +anuar, 44, 19$. and April 1%, 19$., respectivel, issued b, the probate and cadastral courts, were null and void for lac? of /urisdiction. -etitioners, in their answer to the complaint, specificall, den, the allegations of fraud and misrepresentation and interposed as defense the fact that the )uestioned conditional sales of 0a, 47, 1959 and August 6., 1959 were voluntaril, e2ecuted b, private respondent Adelaida 'amos and trul, e2pressed the intention of the parties9 that the action, if an,, has long prescribed9 that the )uestioned orders of +anuar, 44, 19$. and April 1%, 19$., approving the consolidation of ownership of the lands in )uestion in favor of petitioner were within the /urisdiction of the lower court, in its capacit, as a probate court insofar as 7ot "o. #.66 is concerned, and acting as a cadastral court with respect to 7ot "o. #4419 and that said lands sub/ect of the conditional sales were in custodia legis in connection with the settlement of the properties of the late 0argarita (enoga, the predecessor in interest of both petitioners and private respondents. On +anuar, 7, 197., the court below issued a preAtrial order to the effect that petitioners admit the genuineness and due e2ecution of the promissor, notes mar?ed as ;2hibits & & and & A1 & and that the principal triable issue is whether or not the documents purporting to be deeds of conditional sale, mar?ed as ;2hibits &@&, &@A1& and &B& were in fact intended to be e)uitable

8 mortgages. !n its order dated ebruar, 17, 1971, the trial court also declared< &@oth parties agreed and manifested in open court the principal obligation in the transaction reflected in ;2hibits C@C and C@AlC and CBC is one of loan. The parties differ, however, on the nature of the securit, described 9 therein. On 0a, 17, 1971, the court a )uo rendered a decision the decretal part of which reads< =1;'; O';, /udgment is hereb, rendered< 15 (en,ing defendantsC motion to dismiss of ebruar, 46, 197.9 45 (eclaring ;2hibits C@C, C@A!C and CBC as loan transaction secured b, real estate mortgages9 65 Annulling and setting aside ;2hibits C(C, C(AlC, C!C, C!AlC and C!A4C9 #5 Ordering plaintiffs, /ointl, and severall, to pa, 3within ninet, D9.E da,s from receipt of a cop, of this /udgment5 defendants the sum of - 5,...... specified in ;2hibit C@C, with interest thereon at the legal rate from "ovember 4%, 1959 until full pa,ment together with the sum of - 9,6.%... specified in ;2hibit CBC with interest thereon at the legal rate from (ecember 1, 1959 until full pa,ment, and in default of such pa,ment, let the properties mortgaged under ;2hibits C@C, C@A1C and CBC be sold to reali>e the mortgage debt and costs9 and 55 (ismissing defendantsC counterAclaim. =ith costs against defendants. 10

lac? of /urisdiction. #. The 1on. Court of Appeals erred in not appl,ing the applicable provisions of law on the prescription of action and in not dismissing the complaint filed in 12 the lower court. =e find the petition devoid of merit. Article 1$.4 of the Civil Code provides< The contract shall be presumed to be an e)uitable mortgage, in an, of the following cases< 315 =hen the price of a sale with right to repurchase is unusuall, inade)uate9 345 =hen the vendor remains in possession as lessee or otherwise9 365 =hen upon or after the e2piration of the right to repurchase another instrument e2tending the period of redemption or granting a new period is e2ecuted9 3#5 =hen the purchaser retains for himself a part of the purchase price9 355 =hen the vendor binds himself to pa, the ta2es on the thing sold9 3$5 !n an, other case where it ma, be fairl, inferred that the real intention of the parties is that the transaction shall secure the pa,ment of a debt or the performance of an, other obligation. !n an, of the foregoing cases, an, mone,, fruits or other benefit to be received b, the vendee as rent or otherwise shall be considered as interest which shall be sub/ect to the usur, laws. The Court of Appeals, in holding that the two 345 deeds purporting to be pacto de retro sale contracts are e)uitable mortgages, relied on the following factual findings of the trial court, to wit< *everal undisputed circumstances persuade this Court 3that5 the )uestioned deeds should be construed as e)uitable mortgages as contemplated in Article 1$.4 of the Civil Code, namel,< 315 plaintiff vendor remained in possession until 19$# of the properties she allegedl, sold in 1959 to defendants9 345 the sums representing the alleged purchase price were actuall, advanced to plaintiff b, wa, of loans, as e2pressl, admitted b, the parties at the hearing of ebruar, 17, 1971, reflected in an Order of the same date< and 365 the properties allegedl, purchased b, defendant Oscar 'amos and his wife have never been declared for ta2ation purposes in their names. 1% ;2hibits F, FA1, 7 and 7A1. ;ven if we indulge the petitioners in their contention that the, are /ustified in not ta?ing possession of the lots considering that what were allegedl, sold to them were onl, the rights, shares, interests and participation of private respondent Adelaida 'amos in the said lots which were under administration,

On +une 1#, 1971, petitioners appealed said decision to the Court of Appeals which, on October 7, 19759 affirmed in all respects the /udgment of the trial court. -etitionersC motion for reconsideration of said decision was denied on 11 "ovember 47, 1975. On +anuar, %, 197$, petitioners filed the petition at bar anchored on the following assignments of errors< 1. The 1on. Court of Appeals erred in not appl,ing the correct provisions of law interpreting the conditional sales dated 0a, 47, 1959 and August 6., 1959, ;2hibits C@C and CBC as e)uitable mortgages. 4. That as a conse)uence of its ruling that the conditional sales, ;2hibits C@C and CBC, are e)uitable mortgages, the 1on. Court of Appeals erred in ordering the reformation of the same. 6. The 1onorable Court of Appeals erred in holding that the order dated +anuar, 44, 19$., ;2hibit C or 4, and the order dated April 1%, 19$., ;2hibit 1 or $, issued b, the probate court in *p. -roc. "o. 517# and b, the cadastral court in B.7.'.O. 'ec. "o. 695, respectivel,, are null and void for

14

however, such fact will not /ustif, a reversal of the conclusion reached b, respondent court that the purported deeds of sale con pacto de retro are e)uitable mortgages. *uch a conclusion is buttressed b, the other circumstances catalogued b, respondent court especiall, the undisputed fact that the two deeds were e2ecuted b, reason of the loan e2tended b, petitioner Oscar 'amos to private respondent Adelaida 'amos and that the purchase price stated therein was the amount of the loan itself. The aboveAstated circumstances are more than sufficient to show that the true intention of the parties is that the transaction shall secure the pa,ment of said debt and, therefore, shall be presumed to be an e)uitable mortgage under -aragraph $ of Article 1$.4 hereinbefore )uoted. *ettled is the rule that to create the presumption enunciated b, Article 1$.4, the e2istence of 1& one circumstance is enough. The said article e2pressl, provides therefor &in an, of the following cases,& hence the e2istence of an, of the circumstances enumerated therein, not a concurrence nor an overwhelming number of such circumstances, suffices to give rise to the presumption that the contract with the right of repurchase is an e)uitable mortgage. As aptl, stated b, the Court of Appeals< Thus, it ma, be fairl, inferred that the real intention of the parties is that the transactions in )uestion were entered into to secure the pa,ment of the loan and not to sell the propert, 3Article 1$.4, Civil Code5. :nder Article 1$.6 of the Civil Code it is provided that Cin case of doubt, a contract purporting to be a sale with right to repurchase shall be construed as an e)uitable mortgageC in this case, we have no doubt that the transaction between the parties is that of a loan secured b, said properties b, wa, of mortgage. 1ence, we find that ;2hibits @ and B do not reflect the true and real intention of the parties and 1' should accordingl, be reformed and construed as e)uitable mortgages. ;)uall, puerile is the other contention of petitioners that respondent court erred in not appl,ing the e2clusionar, parol evidence rule in ascertaining the true intendment of the contracting parties. The present case falls s)uarel, under one of the e2ceptions to said rule as provided in then *ection 7 of 'ule 16., thus< 222 222 222 3a5 =here a mista?e or imperfection of the writing or its failure to e2press the true intent and agreement of the parties, or the validit, of the agreement is 1( put in issue b, the pleadings9 222 222 222 0oreover, it is a well entrenched principle in the interpretation of contracts that if the terms thereof are clear and leave no doubt as to the intention of the contracting parties the literal meaning of the stipulation shall control but when the words appear to be contrar, to the evident intention of the parties, the

latter shall prevail over the former.

18

The admission of parol testimon, to prove that a deed, absolute in form, was in fact given and accepted as a mortgage does not violate the rule against the admission of oral evidence to var, or contradict the terms of a written 19 instrument. *ales with a right to repurchase, as defined b, the Civil Code, are not favored. =e will not construe instruments to be sales with a right to repurchase, with the stringent and onerous effects which follow, unless the terms of the document and the surrounding circumstances re)uire it. =henever, under the terms of the writing, an, other construction can fairl, and reasonabl, be made, such construction will be adopted and the contract will be construed as a mere loan unless the court can see that, if enforced 20 according to its terms, it is not an unconscionable one. On the faces thereof, the contracts purport to be sales with pacto de retro9 however, since the same were actuall, e2ecuted in consideration of the aforesaid loans said contracts are indubitabl, e)uitable mortgages. The rule is firml, settled that whenever it is clearl, shown that a deed of sale with pacto de retro, regular on its face, is given as securit, for a loan, it must be 21 regarded as an e)uitable mortgage. =ith respect to the orders dated +anuar, 44, 19$. and April 1%, 19$., issued b, the Court below acting as a probate court and cadastral court, respectivel,, the same could not preclude the institution of the case now under review. A reading of the order of the probate court will show that it is merel, an approval of the deed of conditional sale dated 0a, 47, 1959 e2ecuted b, petitioner Adelaida 'amos in favor of petitioners. There is nothing in said order providing for the consolidation of ownership over the lots allegedl, sold to petitioners nor was the issue of the validit, of said contract discussed or resolved therein. &To give approval& means in its essential and most obvious meaning, to confirm, ratif,, sanction or consent to some act or thing done b, 22 another. The approval of the probate court of the conditional sale is not a conclusive determination of the intrinsic or e2trinsic validit, of the contract but a mere recognition of the right of private respondent Adelaida 'amos as an heir, to dispose of her rights and interests over her inheritance even before 2% 24 partition. As held in Duran, et al., vs. Duran the approval b, the settlement court of the assignment pendente lite, made b, one heir in favor of the other during the course of the settlement proceedings, is not deemed final until the estate is closed and said order can still be vacated, hence the assigning heir remains an interested person in the proceeding even after said approval. 0oreover, the probate /urisdiction of the former court of first instance or the present regional trial court relates onl, to matters having to do with the

settlement of the estate and probate of wills of deceased persons, and the appointment and removal of administrators, e2ecutors, guardians and trustees. *ub/ect to settled e2ceptions not present in this case, the law does not e2tend the /urisdiction of a probate court to the determination of )uestions of ownership that arise during the proceeding. The parties concerned ma, choose to bring a separate action as a matter of convenience 2& in the preparation or presentation of evidence. Obviousl,, the approval b, the probate court of the conditional sale was without pre/udice to the filing of the proper action for consolidation of ownership andGor reformation of instrument in the proper court within the statutor, period of prescription. The same /urisdictional flaw obtains in the order of consolidation issued b, the cadastral court. The court of first instance or the regional trial court, acting as cadastral court, acts with limited competence. !t has no /urisdiction to ta?e cogni>ance of an action for consolidation of ownership, much less to issue an order to that effect, such action must have been filed in the former court of first instance, now in the regional trial court, in the e2ercise of its general /urisdiction. That remed,, and the procedure therefor, is now governed b, 'ule $# of the 'ules of Court as a special civil action cogni>able b, the regional trial court in the e2ercise of original general /urisdiction. Antecedent thereto, Article 1$.7 of the Civil Code provided for consolidation as follows< !n case of real propert,, the consolidation of ownership in the vendee b, virtue of the failure of the vendor to compl, with the provisions of article 1$1$ shall not be recorded in the 'egistr, of -ropert, without a /udicial order, after the vendor has been dul, heard. 2' 1ence in Crisologo, et al. vs. Centeno, et al., we ruled that said Article 1$.7 contemplates a contentious proceeding wherein the vendor a retro must be named respondent in the caption and title of the petition for consolidation of ownership and dul, summoned and heard. An order granting the vendeeCs petition for consolidation of ownership, without the vendor a retro being named as respondent, summoned and heard, is a patent nullit, for want of /urisdiction of the court over the person of the latter. The )uestioned order of consolidation issued b, the cadastral court, being void for lac? of /urisdiction, is in contemplation of law nonAe2istent and ma, be wholl, disregarded. *uch /udgment ma, be assailed an, time, either directl, or collaterall,, b, means of a separate action or b, resisting such 2( /udgment in an, action or proceeding whenever it is invo?ed. !t is not necessar, to ta?e an, step to vacate or avoid a void /udgment9 it ma, simpl, 28 be ignored. On the issue of prescription, in addition to what has been said, the present case, having been filed on ebruar, 4%, 19$., appro2imatel, seven 375 ,ears

from the e2ecution of the )uestioned deeds, was seasonabl, instituted. The prescriptive period for actions based upon a written contract and for reformation is ten 31.5 ,ears under Article 11## of the Civil Code. *uch right 29 to reformation is e2pressl, recogni>ed in Article 16$5 of the same code. Article 1$.4 of the Civil Code is designed primaril, to curtail the evils brought about b, contracts of sale with right of repurchase, such as the circumvention %0 of the laws against usur, and pactum commissorium. !n the present case before us, to rule otherwise would contravene the legislative intent to accord the vendor a retro ma2imum safeguards for the protection of his legal rights under the true agreement of the parties. The /udicial e2perience in cases of this nature and the rationale for the remedial legislation are worth reiterating, considering that such nefarious practices still persist< !t must be admitted that there are some cases where the parties reall, intend a sale with right to repurchase. Although such cases are rare, still the freedom of contract must be maintained and respected. Therefore, the contract under consideration is preserved, but with ade)uate safeguards and restrictions. One of the gravest problems that must be solved is that raised b, the contract of sale with right of repurchase or pacto de retro. The evils arising from this contract have festered li?e a sore on the bod, politic. ... 222 222 222 !t is a matter of common ?nowledge that in practicall, all of the soAcalled contracts of sale with right of repurchase, the real intention of the parties is that the pretended purchaseAprice is mone, loaned, and in order to secure the pa,ment of the loan a contract purporting to be a sale with pacto de retro is drawn up. !t is thus that the provisions contained in articles 1%59 and 1%5% of the present Civil Code which respectivel, prohibit the creditor from appropriating the things given in pledge or mortgage and ordering that said things be sold or alienated when the principal obligation becomes due, are circumvented. urthermore, it is wellA?nown that the practice in these soAcalled contracts of sale with pacto de retro is to draw up another contract purporting to be a lease of the propert, to the supposed vendor, who pa,s in mone, or in crops a soAcalled rent. !t is, however, no secret to an,one that this simulated rent is in truth and in fact interest on the mone, loaned. !n man, instances, the interest is usurious. Thus, the usur, law is also circumvented. !t is high time these transgressions of the law were stopped. !t is believed b, the Commission that the plan submitted for the solution of the problem will meet with the approval of an enlightened public opinion, and in general, of ever,one moved b, a sense of /ustice. (uring the deliberations of the Commission the )uestion arose as to whether

the contract of purchase with pacto de retro should be abolished and forbidden. On first impression, this should be done, but there is ever, reason to fear that in such a case the usurious mone,Alenders would demand of the borrowers that, although the real agreement is one of loan secured with a mortgage, the instrument to be signed should purport to be an absolute sale of the propert, involved. *hould this happen, the problem would become aggravated. 0oreover, it must be admitted that there are some cases where the parties reall, intend a sale with right to repurchase. Although such cases are rare, still the freedom of contract must be maintained and respected. Therefore, the contract under consideration is preserved in the -ro/ect of %1 Civil Code, but with ade)uate safeguards and restrictions. =1;'; O';, the instant petition is hereb, (;"!;( and the assailed decision of the Court of Appeals is hereb, A !'0;(. *O O'(;';(. G.R. No). L*9% and L*94 A+r,- 2&, 194' LUC$A GOM#Z, # AL., plaintiffsAappellees, vs. .G !A , # AL., defendantsAappellants. Monteza and Manikan for appellants. uenaventura !vangelista for appellees. "ARAS, J./ !n these two cases, one against (ee Cho, -io 7ee, lessee of house "o. 9.7 @enavides, 0anila 3B.'. "o. 7A965, and the other against "g at, lessee of house "o. 9.9 @enavides, 0anila 3B.'. "o. 7A9#5, the e/ectment of the defendants is pra,ed for b, the plaintiffs on the alleged ground that &in view of defendantsC breach of the contract of lease, the nonApa,ment of the aforesaid monthl, rentals, the same has been terminated b, the plaintiffs.& (efendantsC answer is that their failure to pa, the rentals from ebruar,, 19#5, up to the date of the complaint, was due not onl, to plaintiffsC demand for increased rentals but to the fact that the latter had stopped sending their collector. The Court of irst !nstance of 0anila, upon appeal from the municipal court and after a /oint trial de novo, rendered /udgment in favor of the plaintiffs, from which the defendants have appealed. AppellantsC defense is meritorious. !t is hard to believe that the, would either desire or afford to lose their leaseholds at a time 3in and after ebruar,, 19#55 when there was alread, an acute house shortage in 0anila, and much less b, defaulting in the pa,ment of what, b, plaintiffsC own admission, the, had regularl, paid since 19#1 until +anuar,, 19#5. !t is more probable that the appellants hesitated and refused to pa,, in view of plaintiffsC demand or an amount greater than the agreed rental, namel,< from (ee Cho, -io 7ee, -5. instead of -64, and from "g at, -%. instead of -67. As a matter of fact, the Court of irst !nstance ordered appellant "g at to pa, monthl, the sum of

-67 from ebruar,, 19#5, notwithstanding plaintiffsC claim that the stipulated rental was -55. AppellantsC default, therefore, is not one which can serve as a ground for dispossessing them under article 15$9 of the Civil Code. 3@elmonte vs. 0arin, p. 19%, ante, or under 'ule 74, of the 'ules of Court.5 !t ma, also be remar?ed that appellantsC alleged default cannot give wa, to their e/ectment, since it is attributable in part to plaintiffsC omission or neglect to collect. 30analac vs. Barcia, p. 41$, ante.5 There being no agreement between the parties herein, the place of the pa,ment of the rent is the domicile of the lessees. 3Articles 157# and 1171, Civil Code.5 !ndeed, plaintiffsC admission that &sometimes we sent a collector but most of the time the, did not pa, to the collector,& tends to support appellantsC theor, that it was at least plaintiffsC practice to call for the rents. -laintiffsC inabilit, to send their collector is easil, e2plained b, the fact that in ebruar,, 19#5, and thereabouts, conditions in 0anila were ver, far from being normal and orderl, and that the plaintiffs might still have been in places of evacuation, the latter possibilit, being somewhat confirmed b, the circumstance that the appellants had to pa, the rentals for (ecember, 19##, and +anuar,, 19#5, b, postal mone, order, a facilit, which was not ,et available in ebruar,, 19#5. !n answer to plaintiffsC further allegation that appellant "g at, without their consent, had admitted subtenants in his leasehold, it is sufficient to state that in the absence of e2press prohibition in the lease contract, the lessee ma, sublet the whole or an, part of the thing leased. 3Article 155., Civil Code.5 "either can appellantsC e/ectment be based on the termination b, the plaintiffs of the lease contracts, inasmuch as the alleged termination is premised on the specific ground that the appellants had defaulted in the pa,ment of the agreed rentals, which we have alread, overruled. At an, rate, there is nothing in plaintiffsC evidence which suggests that the, are invo?ing another cause for /udiciall, dispossessing the appellants independentl, of the alleged nonApa,ment of rents. The /udgment appealed from is hereb, reversed, and the complaints dismissed, with costs against the plaintiffs. -laintiffs, however, are allowed to withdraw all deposits made b, the defendants as pa,ment of rents overdue. *o ordered. Moran, C.J., Jaranilla, "eria, #ablo and riones, JJ., concur. G.R. No. L*18411 December 1(, 19'' MAGDAL#NA #S A #S, $NC., plaintiffAappellee, vs. AN ON$O A. RODR$GU#Z and H#RM$N$A C. RODR$GU#Z, defendantsA appellants. $o%as and &armiento for plaintiff'appelle. &omero, aclig and &avello for defendants'appellants. R#GALA, J.:

Appeal from the decision of the Court of irst !nstance of 0anila ordering the defendantsAappellants to pa, /ointl, and severall, to the plaintiffAappellee the sum of -$55.%9, plus legal interest thereon from date of the /udicial demand, the sum of -1..... as attorne,Cs fees, and to pa, the costs. The appellants bought from the appellee a parcel of land in Hue>on Cit, ?nown as 7ot 7AFA4AB, -sdA4$196. !n view of an unpaid balance of -5,...... on account of the purchase price of the lot, the appellants e2ecuted on +anuar, #, 1957, the following promissor, note representing the said account<

balance of the purchase price of a parcel of land ?nown as 7ot 7AFA4AB, -sdA 4$196, with an area of 4191 s)uare meters, Hue>on Cit,, covered b, Transfer Certificate of Title "o. 16 3$9#75, Hue>on Cit,, within a period of si2t, 3$.5 da,s from +anuar, 7, 19579 That the *uret, shall be notified in writing within Ten 31.5 da,s from moment of default otherwise, this underta?ing is automaticall, null and void.

On +une 4., 195%, when the obligation of the appellants became due and demandable, the 7u>on *uret, Co., !nc. paid to the appellee the sum of -5,....... *ubse)uentl,, the appellee demanded from the appellants the pa,ment of -$55.%9 corresponding to the alleged accumulated interests on -'O0!**O'I "OT; the principal of -5,....... (ue to the refusal of the appellants to pa, the said interest, the appellee started this suit in the 0unicipal Court of 0anila to enforce the collection thereof. The said court, on ebruar, 5, 1959, rendered -5,...... /udgment in favor of the appellee and against the appellants, ordering the latter to pa, /ointl, and severall, the appellee the sum of -$55.%9 with interest thereon at the legal rate from "ovember 1., 195%, the date of the 0anila, +anuar, #, 1957 filing of the complaint, until the whole amount is full, paid. "ot satisfied with that /udgment, appellants appealed to the Court of irst !nstance of 0anila, where the case was submitted for decision on the pleadings. The Court of =e, the *pouses A"TO"!O A. 'O('!B:;J and 1;'0!"!A C. 'O('!B:;J, /ointl, and irst !nstance of 0anila rendered the /udgment stated at the outset of this severall, promise to pa, the 0agdalena ;states, !nc., or order, at its offices in the Cit, of decision. 0anila, without an, demand the sum of !8; T1O:*A"( -;*O* 3-5,......5, -hilippine On from appeal directl, to this Court, the following errors are assigned< currenc,, with interest at the rate of "ine -er Cent 9K per annum, within si2t, 3$.5 da,s +anuar, 7, 1957. The sum of -5,...... represents the balance of the purchase price!.of thelower court erred in concluding as a fact from the pleadings that the The parcel of land ?nown as 7ot 7AFA4AB, -sd. 4$196, containing an area of 4,191 s)uareplaintiffAappellee meters, demanded, and the 7u>on *uret, Co., !nc. refused, the Hue>on Cit,. pa,ment of interest in the amount of -$55.%9, and in not finding and declaring that said plaintiffAappellee waived or condoned the said interests. 3*gd.5 Antonio A. 'odrigue> 3 T 5 A"TO"!O A. 'O('!B:;J 3*gd.5 1erminia C. 'odrigue> 3 T 5 1;'0!"!A C. 'O('!B:;J *igned in the -resence of< 3*gd.5 !77;B!@7; 3*gd.5 !77;B!@7; !!. The lower court erred in not finding and declaring that the obligation of the defendantsAappellants in favor of the plaintiffAappellee was totall, e2tinguished b, pa,ment andGor condonation. !!!. The lower court erred in not finding and declaring that the promissor, note e2ecuted b, the defendantsAappellants in favor of the plaintiffAappellee was, insofar as the said document provided for the pa,ment of interests, novated when the plaintiffAappellee un)ualifiedl, accepted the suret, bond which merel, guaranteed pa,ment of the principal in the sum of -5,....... Appellants claim that the pleadings do not show that there was demand made b, the appellee for the pa,ment of accrued interest and what could be deduced therefrom was merel, that the appellee demanded from the 7u>on *uret, Co., !nc., in the capacit, of the latter as suret,, the pa,ment of the obligation of the appellants, and said appellee accepted un)ualifiedl, the amount of -5,...... as performance b, the obligor andGor obligors of the obligation in its favor. !t is further claimed that the un)ualified acceptance of pa,ment made b, the 7u>on *uret, Co., !nc. of -5,...... or onl, the amount of the principal obligation and without e2ercising its 3appelleeCs5 right

On the same date, the appellants and the 7u>on *uret, Co., !nc. e2ecuted a bond in favor of the appellee, the underta?ing thereof being embodied therein as follows< . . . compl, with the obligation to pa, the amount of -5,...... representing

to appl, a portion of -$55.%9 thereof to the pa,ment of the alleged interest due despite its presumed ?nowledge of its right to do so, the appellee showed that it waived or condoned the interests due, because Articles 1465 and 1456 of the Civil Code provide< A'T. 1465. =hen the obligee accepts the performance, ?nowing its incompleteness or irregularit,, and without e2pressing an, protest or ob/ection, the obligation is deemed full, complied with. A'T. 1456. !f the debt produces interest, pa,ment of the principal shall not be deemed to have been made until the interests have been recovered. =e do not agree with the contention of the appellants. !t is ver, clear in the promissor, note that the principal obligation is the balance of the purchase price of the parcel of land ?nown as 7ot 7AFA4AB, -sdA4$196, which is the sum of -5,......, and in the suret, bond, the 7u>on *uret, Co., !nc. undertoo? &to pay t(e amount of #),***.** representing balance of t(e purc(ase price of a parcel of land kno+n as Lot ,'-'.'G, #sd'./012 , . . . .& The appellee did not protest nor ob/ect when it accepted the pa,ment of -5,...... because it ?new that that was the complete amount underta?en b, the suret, as appearing in the contract. The liabilit, of a suret, is not 1 e2tended, b, implication, be,ond the terms of his contract. !t is for the same reason that the appellee cannot appl, a part of the -5,...... as pa,ment for the accrued interest. Appellants are rel,ing on Article 1456 of the Civil Code, but the rules contained in Articles 1454 to 145# of the Civil Code appl, to a person owing several debts of the same ?ind of a single creditor. The, cannot be made applicable to a person whose obligation as a mere suret, is both contingent and singular9 his liabilit, is confined to such obligation, and he is entitled to have all pa,ments made applied e2clusivel, to said 4 application and to no other. @esides, Article 1456 of the Civil Code is merel, 6 director,, and not mandator,. !nasmuch as the appellee cannot protest for nonApa,ment of the interest when it accepted the amount of -5,...... from the 7u>on *uret, Co., !nc., nor appl, a part of that amount as pa,ment for the interest, we cannot now sa, that there was a waiver or condonation on the interest due. !t is claimed that there was a novation andGor modification of the obligation of the appellants in favor of the appellee because the appellee accepted without reservation the subse)uent agreement set forth in the suret, bond despite its failure to provide that it also guaranteed pa,ment of accruing interest. The rule is settled that novation b, presumption has never been favored. To be sustained, it needs to be established that the old and new contracts are incompatible in all points, or that the will to novate appears b, e2press # agreement of the parties or in acts of similar import. An obligation to pa, a sum of mone, is not novated, in a new instrument

wherein the old is ratified, b, changing onl, the terms of pa,ment and adding 5 other obligations not incompatible with the old one, or wherein the old $ contract is merel, supplemented b, the new one. The mere fact that the creditor receives a guarant, or accepts pa,ments from a third person who has agreed to assume the obligation, when there is no agreement that the first debtor shall be released from responsibilit, does not constitute a novation, and the creditor can still enforce the obligation against the original debtor. 3*traight v. 1as?el, #9 -hil. $1#9 -acific Commercial Co. v. *otto, 6# -hil. 4679 ;state of 0ota v. *erra, #7 -hil. #$#9 (uLgo v. 7opena , supra 5. !n the instant case, the suret, bond is not a new and separate contract but an accessor, of the promissor, note. =1;'; O';, the /udgment appealed from should be, as it is hereb,, affirmed, with costs against the appellants. Concepcion, C.J., $eyes, J. .L., arrera, Dizon, Makalintal, engzon, J.#., 3aldivar, &anc(ez and Castro, JJ., concur. G.R. No. 8219% !ebr0ar1 ', 1991 CARM#N 2ASCON $2A3$A, NOR2#R O $2A3$A, 3R., AURORA . 4$ O, petitioners, vs. HONORA2L# COUR O! A""#ALS and A$L##N GO, respondents. &alonga, 4ndres, 5ernandez 6 4llado for petitioners. 7estor ". 8furung for private respondents. "ARAS, J.:p This is a petition for review on certiorari see?ing to reverse and set aside< 315 1 the (ecember 4, 19%7 (ecision of the respondent Court of Appeals 2 nullif,ing and setting aside the +une 4$, 19%7 Order of the 'egional Trial Court of -asig, @ranch 15#, which denied the notice of appeal from the Order of August 15, 19%$ 3granting the issuance of a certificate of redemption59 and 345 the ebruar, 19, 19%% resolution den,ing the motion for reconsideration of said decision. The facts of the case are as follows< The /udgment of the 'egional Trial Court of -asig, @ranch 15#, in a mone, claim, Civil Case "o. 5.615, has become final and e2ecutor,. The plaintiff therein, ;den Tan, obtained a satisfaction of /udgment against herein petitioners, spouses Carmen @ascon Tiba/ia and "orberto Tiba/ia, +r. b, selling, through the -rovincial *heriff of 'i>al, twent,Aone parcels of land in -arana)ue, 0etro 0anila, owned b, the defendants in the sum of -45.,.......

!n an auction sale held on April 14, 19%5, herein private respondent Aileen Bo ac)uired the parcels of land as the highest bidder for the amount of -66.,5...... A certificate of sale was issued and registered with the 'egister of (eeds of -asa, on April 15, 19%5. On April 4, 19%$, herein petitioner Aurora 8ito, sister of petitioner "orberto Tiba/ia, +r., claiming to be a coAowner of the properties sold, offered to redeem the same in her own capacit, as well as in her capacit, as representative of her coApetitioner. The Cler? of Court and !%'officio *heriff of 'i>al, allowed the redemption and she paid the sum of -6$9,99#.4. and a percentage fee in the sum of -6,751.9. as shown b, Official 'eceipt "os. 1#%#954 and 1#%%657 both dated April 4, 19%$ 3$ollo, p. 695 and in the name of "orberto Tiba/ia, et al. 3;2hibits &1& and &4&5. On April 1#, 19%$, upon learning of the offer to redeem b, petitioner Aurora 8ito, private respondent Aileen Bo filed a &0anifestation and 0otion& opposing the offer to redeem on the ground that she was not the /udgment debtor or among those authori>ed to effect redemption under 'ule 69 of the 'ules of Court, and further, the tender was not addressed to the proper part, specified under the 'ules, which is the purchaser. !n an e%'parte motion, received b, the Court on April 1%, 19%$, Aileen Bo pra,ed for the issuance of a final deed of sale as the 14 months redemption period had alread, e2pired and no valid redemption had been made b, the /udgment debtors. Aurora 8ito filed an opposition thereto, maintaining that she is a coAowner of the properties sub/ect matter of the action9 that she offered to redeem the same in her own capacit, as well as in her capacit, as representative of her coApetitioners9 and that she is )ualified to e2ercise the right of redemption as provided for in *ection 49, 'ule 69 of the 'ules of Court and under Article 1$4. of the Civil Code. At the hearing of the incidents on April 4#, 19%$, Aurora 8ito informed the court that she was authori>ed b, her coApetitioners to redeem, as per special power of attorne, allegedl, e2ecuted in "ew Ior? on April 1$, 19%$, 2ero2 cop, of which was submitted to the court on 0a, 4, 19%$. On the other hand, it is the position of private respondent Aileen Bo that the 6$. da,s from the registration of the certificate of sale with the 'egister of (eeds on April 15, 19%5 had e2pired on April 1., 19%$. The 'egional Trial Court of 'i>al, in its order of August 15, 19%$ found the redemption valid M Considering that Aurora 8ito is e2ercising the right of redemption in her own right as a coAowner as well as attorne,AinAfact of "orberto Tiba/ia, the Court finds the redemption in accordance with law, hence, the 0anifestation and 0otion filed b, Aileen Bo is hereb, denied and the ;2AOfficio -rovincial *heriff of this Court is ordered to issue the corresponding certificate of redemption. Aileen Bo filed a motion for reconsideration but the same was denied b, the

court in an Order dated April 15, 19%7 3$ollo, pp. #1A#45. On 0a, 1%, 19%7, private respondent Aileen Bo 3as the auction vendee5 filed a "otice of Appeal from the aboveAmentioned orders of the 'egional Trial Court 3$ollo, p. #65. The 'egional Trial Court of -asig, in an order dated +une 4$, 19%7, denied said notice of appeal, on the grounds that< 315 the /udgment has long become final and e2ecutor,9 and 345 the auctionAvendee is not a part, to the case. Alleging grave abuse of discretion amounting to lac? of /urisdiction on the part of the 'TC presiding /udge, private respondent Aileen Bo elevated the case to the Court of Appeals on Certiorari and Mandamus with pra,er for preliminar, in/unction, for the purpose of 3a5 annuling the order of the 'TC of -asig, @ranch 15#, dated +une 4$, 19%7, which denied due course to her appeal and 3b5 compelling the -residing +udge of the 'TC to reinstate the appeal interposed b, her from the order of August 15, 19%$ and from the order of the same court issued on April 15, 19%7. !n an order dated (ecember 4, 19%7 3$ollo, pp. 47A655, respondent Court of Appeals found the order den,ing the notice of appeal arbitrar, and whimsical, fraught with abuse of discretion and granted the -etition for =rit of Certiorari. -etitioner Aurora 8itoCs motion for reconsideration of said decision was denied 3Court of Appeals, $ollo, pp. $1A$75. 1ence, this petition, which b, Court 'esolution has been given due course. -etitioner raises two issues, to wit< ! !* -'!8AT; ';*-O"(;"T A!7;;" BO ;"T!T7;( TO A--;A7 !" C!8!7 CA*; "O. 5.615, ';B!O"A7 T'!A7 CO:'T O '!JA7, @'A"C1 1#5 A T;' *A!( CO:'T O:"( T1AT T1; +:(B0;"T !" *A!( CA*; 1A* 7O"B @;CO0; !"A7 A"( ;N;C:TO'I A"( T1AT *A!( ';*-O"(;"T A!7;;" BO =A* ";8;' A -A'TI TO *A!( CA*;O !! =A* T1;'; A 8A7!( ';(;0-T!O" 0A(; O" T1; -'O-;'T!;* *O7( AT -:@7!C A:CT!O" @I T1; -;T!T!O";'* =1O =;'; T1; +:(B0;"T (;@TO'* !" C!8!7 CA*; "O. 5.615 PP T1; ';(;0-T!O" @;!"B 0A(; @I -;T!T!O";' A:'O'A 8!TO =1O =A* O:"( A"( ;*TA@7!*1;( TO @; T1; COAO=";' O T1; -'O-;'T!;* A"( T1; ATTO'";IA!"A ACT O COA-;T!T!O";'* *-O:*;* "O'@;'TO A"( CA'0;" T!@A+!AO The main issue in this case is whether or not the redemption should be given due course. The answer is in the affirmative.

rom the records of this case, it will be gathered that respondent Aileen Bo, as the highest bidder in the public auction sale of April 14, 19%5, ac)uired the 41 parcels of land for the amount of -66.,5...... The certificate of sale was issued and registered with the 'egistr, of (eeds of -asa, on April 15, 19%5. Accordingl,, the e2pir, date of the redemption period was on April 15, 19%$ 3pursuant to *ection 6., 'ule 69 of the 'ules of Court5. On April 4, 19%$, herein petitioner Aurora Tiba/ia 8ito, sister of petitioner "orberto Tiba/ia, +r., claiming to be a coAowner pro'indiviso over oneAhalf 31G45 share of the sold properties, offered to redeem the same in her own capacit, as well as in her capacit, as representative of her coApetitioners. The Cler? of Court and !%' 9fficio *heriff of 'i>al allowed the redemption and she paid the sum of -6$9,99#.4. and a percentage fee in the sum of -6,751.9. and was issued Official 'eceipt "os. 1#%#954 and 1#%%657, both dated April 4, 19%$ 3 $ollo, p. 615 and in the name of "orberto Tiba/ia, et al. 38bid., p. 415. "evertheless, private respondent Bo, on April 1#, 19%$, in a 0anifestation and 0otion, opposed the offer to redeem on the ground that 8ito was not the /udgment debtor. The records show that the redemption amount was paid on April 4, 19%$, % prior to the e2piration date of the redemption on April 1., 19%$ and that the redemption was made for the /udgment debtors as evidenced b, the receipts issued in the name of "orberto Tiba/ia, et al. Conversel,, it was not shown that "orberto Tiba/ia, et al. opposed 8itoCs claim to be a coAowner of the )uestioned propert, or her capacit, as representative of said owners PP the /udgment debtors. :n)uestionabl,, such redemption is allowed under *ec. 49, 'ule 69 of the 'ules of Court. 0indful that the polic, of the law is to aid rather than to defeat the right of redemption 3Tioseco v. Court of Appeals, 1#6 *C'A 7.5, 71. D19%$E9 citing the case of +avellana v. 0irasol and "uLe>, #. -hil. 7$15, the ends of /ustice would be better served to give due course to the redemption. -';0!*;* CO"*!(;';(, the (ecember 4, 19%7 decision of the Court of Appeals is hereb, *;T A*!(;, and the August 15, 19%$ order of the 'egional Trial Court of -asig, @ranch 15#, is ';!"*TAT;(. *O O'(;';(. Melencio'5errera, #adilla, &armiento and $egalado, JJ., concur. 3OS#!$NA A5AG, R$CARDO GAL$C$A, #R#S$ A GAL$C$A, #4#L5N GAL$C$A, 3UAN GAL$C$A, 3R. and RODR$GO GAL$C$A, petitioners, vs. COUR O! A""#ALS and AL2R$G$DO L#54A, respondents. "acundo :. autista for petitioners. Jesus :. Garcia for private respondent.

M#LO, J.: The deed of conve,ance e2ecuted on 0a, 4%, 1975 b, +uan Balicia, *r., prior to his demise in 1979, and Celerina 7abuguin, in favor of Albrigido 7e,va involving the undivided oneAhalf portion of a piece of land situated at -oblacion, Buimba, "ueva ;ci/a for the sum of -5.,...... under the following terms< 1. The sum of -;*O*< T1';; T1O:*A"( 3-6,......5 is 1;';@I ac?nowledged to have been paid upon the e2ecution of this agreement9 4. The sum of -;*O*< T;" T1O:*A"( 3-1.,......5 shall be paid within ten 31.5 da,s from and after the e2ecution of this agreement9 6. The sum of -;*O*< T;" T1O:*A"( 3-1.,......5 represents the 8;"(O'*C indebtedness with the -hilippine 8eterans @an? which is hereb, assumed b, the 8;"(;;9 and #. The balance of -;*O*< T=;"TI *;8;" T1O:*A"( 3-47,.......5 shall be paid within one 315 ,ear from and after the e2ecution of this instrument. 3p. 56, $ollo5 is the sub/ect matter of the present litigation between the heirs of +uan Balicia, *r. who assert breach of the conditions as against private respondentCs claim anchored on full pa,ment and compliance with the stipulations thereof. The court of origin which tried the suit for specific performance filed b, private respondent on account of the herein petitionersC reluctance to abide b, the covenant, ruled in favor of the vendee 3p. $#, $ollo5 while respondent court practicall, agreed with the trial court e2cept as to the amount to be paid to petitioners and the refund to private respondent are concerned 3p. #$, $ollo5. There is no dispute that the sum of -6,...... listed as first installment was received b, +uan Balicia, *r. According to petitioners, of the -1.,...... to be paid within ten da,s from e2ecution of the instrument, onl, -9,7.7... was tendered to, and received b,, them on numerous occasions from 0a, 49, 1975, up to "ovember 6, 1979. Concerning private respondentCs assumption of the vendorsC obligation to the -hilippine 8eterans @an?, the vendee paid onl, the sum of -$,94$.#1 while the difference the indebtedness came from Celerina 7abuguin 3p. 76, $ollo5. 0oreover, petitioners asserted that not a single centavo of the -47,...... representing the remaining balance was paid to them. @ecause of the apprehension that the heirs of +uan Balicia, *r. are disavowing the contract in?ed b, their predecessor, private respondent filed the complaint for specific performance. !n addressing the issue of whether the conditions of the instrument were performed b, herein private respondent as vendee, the 1onorable

Bodofredo 'illora>a, -residing +udge of @ranch 61 of the 'egional Trial Court, Third +udicial 'egion stationed at Buimba, "ueva ;ci/a, decided to uphold private respondentCs theor, on the basis of constructive fulfillment under Article 11%$ and estoppel through acceptance of piecemeal pa,ments in line with Article 1465 of the Civil Code. Anent the -1.,...... specified as second installment, the lower court counted against the vendors the candid statement of +osefina Ta,ag who sat on the witness stand and made the admission that the chec? issued as pa,ment thereof was nonetheless paid on a staggered basis when the chec? was dishonored 3T*", *eptember 1, 19%6, pp. 6A#9 p. 6, (ecision9 p. $$, $ollo5. 'egarding the third condition, the trial court noted that plaintiff below paid more than -$,...... to the -hilippine 8eterans @an? but Celerina Labuguin, the sister and coAvendor of +uan Balicia, *r. paid -6,77%.77 which circumstance was construed to be a plo, under Article 11%$ of the Civil Code that &prematurel, prevented plaintiff from pa,ing the installment full,& and &for the purpose of withdrawing the title to the lot&. The acceptance b, petitioners of the various pa,ments even be,ond the periods agreed upon, was perceived b, the lower court as tantamount to faithful performance of the obligation pursuant to Article 1465 of the Civil Code. urthermore, the trial court noted that private respondent consigned -1%,54...., an amount sufficient to offset the remaining balance, leaving the sum of -1,615... to be credited to private respondent. On *eptember 14, 19%#, /udgment was rendered< 1. Ordering the defendants M heirs of +uan Balicia, to e2ecute the (eed of *ale of their undivided O"; 1A7 31G45 portion of 7ot "o. 116., Buimba Cadastre, covered b, TCT "o. "TA14.5$6, in favor of plaintiff Albrigido 7e,va, with an e)ual frontage facing the national road upon finalit, of /udgment9 that, in their default, the Cler? of Court !!, is hereb, ordered to e2ecute the deed of conve,ance in line with the provisions of *ection 1., 'ule 69 of the 'ules of Court9 4. Ordering the defendants, heirs of +uan Balicia, /ointl, and severall, to pa, attorne,Cs fees of -$,...... and the further sum of -6,...... for actual and compensator, damages9 6. Ordering Celerina 7abuguin and the other defendants herein to surrender to the Court the ownerCs duplicate of TCT "o. "TA14.5$6, province of "ueva ;ci/a, for the use of plaintiff in registering the portion, sub/ect matter of the instant suit9 #. Ordering the withdrawal of the amount of -1%,54.... now consigned with the Court, and the amount of -17,4.#.75 be delivered to the heirs of +uan Balicia as pa,ment of the balance of the sale of the lot in )uestion, the defendants herein after deducting the amount of attorne,Cs fees and damages awarded to the plaintiff hereof and the deliver, to the plaintiff of the further sum of -1,615.45 e2cess or over pa,ment and, defendants to pa, the

cost of the suit. 3p. $9, $ollo5 and following the appeal interposed with respondent court, +ustice (a,rit with whom +ustices -urisima and Aldecoa, +r. concurred, modified the fourth paragraph of the decretal portion to read< #. Ordering the withdrawal of the amount of -1%,5..... now consigned with the Court, and that the amount of -1$,%7..54 be delivered to the heirs of +uan Balicia, *r. as pa,ment to the unpaid balance of the sale, including the reimbursement of the amount paid to -hilippine 8eterans @an?, minus the amount of attorne,Cs fees and damages awarded in favor of plaintiff. The e2cess of -1,$#9.#% will be returned to plaintiff. The costs against defendants. 3p. 51, $ollo5 As to how the foregoing directive was arrived at, the appellate court declared< =ith respect to the fourth condition stipulated in the contract, the period indicated therein is deemed modified b, the parties when the heirs of +uan Balicia, *r. accepted pa,ments without ob/ection up to "ovember 6, 1979. On the basis of receipts presented b, appellee commencing from August %, 1975 up to "ovember 6, 1979, a total amount of -16,9.%.45 has been paid, thereb, leaving a balance of -16,.91.75. *aid unpaid balance plus the amount reimbursable to appellant in the amount of -6,77%.77 will leave an unpaid total of -1$,%7..54. *ince appellee consigned in court the sum of -1%,5....., he is entitled to get the e2cess of -1,$49.#%. Thus, when the heirs of +uan Balicia, *r. 3obligees5 accepted the performance, ?nowing its incompleteness or irregularit, and without e2pressing an, protest or ob/ection, the obligation is deemed full, complied with 3Article 1465, Civil Code5. 3p. 5., $ollo5 -etitioners are of the impression that the decision appealed from, which agreed with the conclusions of the trial court, is vulnerable to attac? via the recourse before :s on the principal supposition that the full consideration of the agreement to sell was not paid b, private respondent and, therefore, the contract must be rescinded. The suggestion of petitioners that the covenant must be cancelled in the light of private respondentCs soAcalled breach seems to overloo? petitionersC demeanor who, instead of immediatel, filing the case precisel, to rescind the instrument because of nonAcompliance, allowed private respondent to effect numerous pa,ments posterior to the grace periods provided in the contract. This apath, of petitioners who even permitted private respondent to ta?e the initiative in filing the suit for specific performance against them, is a?in to waiver or abandonment of the right to rescind normall, conferred b, Article 1191 of the Civil Code. As aptl, observed b, +ustice Butierre>, +r. in 4ngeles vs. Calasanz 3165 *C'A 646 D19%5E9 # #aras, Civil Code of the -hilippines Annotated, Twelfth ;d. D19%9E, p. 4.6< . . . =e agree with the plaintiffsAappellees that when the defendantsA appellants, instead of availing of their alleged right to rescind, have accepted

and received dela,ed pa,ments of installments, though the plaintiffsA appellees have been in arrears be,ond the grace period mentioned in paragraph $ of the contract, the defendantsAappellants have waived, and are now estopped from e2ercising their alleged right of rescission . . . !n Development ank of t(e #(ilippines vs. &arandi 35 CA' 3455 %119 %17A %1%9 cited in # #adilla, Civil Code Annotated, *eventh ;d. D19%7E, pp. 414A 4165 a similar opinion was e2pressed to the effect that< !n a perfected contract of sale of land under an agreed schedule of pa,ments, while the parties ma, mutuall, oblige each other to compel the specific performance of the monthl, amorti>ation plan, and upon failure of the bu,er to ma?e the pa,ment, the seller has the right to as? for a rescission of the contract under Art. 1191 of the Civil Code, this shall be deemed waived b, acceptance of posterior pa,ments. @oth the trial and appellate courts were, therefore, correct in sustaining the claim of private respondent anchored on estoppel or waiver b, acceptance of dela,ed pa,ments under Article 1465 of the Civil Code in that< =hen the obligee accepts the performance, ?nowing its incompleteness or irregularit,, and without e2pressing an, protest or ob/ection, the obligation is deemed full, complied with. considering that the heirs of +uan Balicia, *r. accommodated private respondent b, accepting the latterCs dela,ed pa,ments not onl, be,ond the grace periods but also during the pendenc, of the case for specific performance 3p. 47, 0emorandum for petitioners9 p. 1$$, $ollo5. !ndeed, the right to rescind is not absolute and will not be granted where there has been substantial compliance b, partial pa,ments 3# Caguioa, Comments and Cases on Civil 7aw, irst ;d. D19$%E p. 1645. @, and large, petitionersC actuation is susceptible of but one construction M that the, are now estopped from reneging from their commitment on account of acceptance of benefits arising from overdue accounts of private respondent. "ow, as to the issue of whether pa,ments had in fact been made, there is no doubt that the second installment was actuall, paid to the heirs of +uan Balicia, *r. due to +osefina Ta,agCs admission in ;udicio that the sum of -1.,...... was full, li)uidated. !t is thus erroneous for petitioners to suppose that &the evidence in the records do not support this conclusion& 3p. 1%, 0emorandum for -etitioners9 p. 157, $ollo5. A contrario, when the court of origin, as well as the appellate court, emphasi>ed the fran? representation along this line of +osefina Ta,ag before the trial court 3T*", *eptember l, 19%6, pp. 6A#9 p. 5, (ecision in CAAB.'. C8 "o. 16669, p. 5., $ollo9 p. 6, (ecision in Civil Case "o. $%1AB, p. $$, $ollo5, petitioners chose to remain completel, mute even at this stage despite the opportunit, accorded to them, for clarification. Conse)uentl,, the pre/udicial aftermath of +osefina Ta,agCs spontaneous reaction ma, no longer be obliterated on the basis of estoppel 34rticle 0<20, Civil Code9 &ection <, $ule 0.1= &ection .>a?, $ule 020,

'evised 'ules on ;vidence5. !nsofar as the third item of the contract is concerned, it ma, be recalled that respondent court applied Article 11%$ of the Civil Code on constructive fulfillment which petitioners claim should not have been appreciated because the, are the obligees while the proviso in point spea?s of the obligor. @ut, petitioners must concede that in a reciprocal obligation li?e a contract of purchase, 3Ang vs. Court of Appeals, 17. *C'A 4%$ D19%9E9 # #aras, supra, at p. 4.15, both parties are mutuall, obligors and also obligees 3# #adilla, supra, at p. 1975, and any of the contracting parties ma,, upon nonAfulfillment b, the other priv, of his part of the prestation, rescind the contract or see? fulfillment 34rticle 0010, Civil Code5. !n short, it is puerile for petitioners to sa, that the, are the onl, obligees under the contract since the, are also bound as obligors to respect the stipulation in permitting private respondent to assume the loan with the -hilippine 8eterans @an? which petitioners impeded when the, paid the balance of said loan. As vendors, the, are supposed to e2ecute the final deed of sale upon full pa,ment of the balance as determined hereafter. 7astl,, petitioners argue that there was no valid tender of pa,ment nor consignation of the sum of -1%,54.... which the, ac?nowledge to have been deposited in court on +anuar, 44, 19%1 five ,ears after the amount of -47,...... had to be paid 3p. 46, 0emorandum for -etitioners9 p. 1$4, $ollo5. Again this suggestion ignores the fact that consignation alone produced the effect of pa,ment in the case at bar because it was established below that two or more heirs of +uan Balicia, *r. claimed the same right to collect 34rticle 0.)/, 3#5, Civil Code9 pp. #A5, (ecision in Civil Case "o. $%1A B9 pp. $7A$%, $ollo5. 0oreover, petitioners did not bother to refute the evidence on hand that, aside from the -1%,54.... 3not -1%,5..... as computed b, respondent court5 which was consigned, private respondent also paid the sum of -16,9.%.45 3;2hibits & & to &CC&9 p. 5., $ollo5. These two figures representing private respondentCs pa,ment of the fourth condition amount to -64,#4%.45, less the -6,77%.77 paid b, petitioners to the ban?, will lead us to the sum of -4%,$#9.#% or a refund of -1,$#9.#% to private respondent as overpa,ment of the -47,...... balance. =1;'; O';, the petition is hereb, (!*0!**;( and the decision appealed from is hereb, A !'0;( with the slight modification of -aragraph # of the dispositive thereof which is thus amended to read< #. ordering the withdrawal of the sum of -1%,54.... consigned with the 'egional Trial Court, and that the amount of -1$,%7..54 be delivered b, private respondent with legal rate of interest until full, paid to the heirs of +uan Balicia, *r. as balance of the sale including reimbursement of the sum paid to the -hilippine 8eterans @an?, minus the attorne,Cs fees and damages awarded in favor of private respondent. The e2cess of -1,$#9.#% shall be returned to private respondent also with legal interest until full, paid b, petitioners. =ith costs against petitioners.

*O O'(;';(. CR#S#NC$O, MAG$N, 3UAN$ O, SOCRA #S, and $M#LDA, a-- )0rnamed 4#L#Z, #etitioners, 6. HON. C#LSO A4#L$NO, "re),d,n7 30d7e, C!$ Ceb0 2ranc8 9$$$, ALD$NG AC#D#RA, !A2$ANA ALL$SON, RA!A#L AL:U$SALAS, 4$C OR AL!A!ARA, !OR UNA O 2ARGA5O, NA $4$DAD 2A3AR$AS, #L$S#O 2#LARMA, MAURA 2#LARMA, 4$DAL 2US AMAN #, MARC$AL 2URGOS, MA9$MO CA2AHUG, !LORO COROCO O, H$LAR$O GA4$OLA, ROS$ A GARC$A, L#O"OLDO L$N#S, MAGDAL#NA #SORO, RAMON #3ANO, "LAC$DA #3ANO, 3UAN$ A 4#RGARA, and AM2ROS$O 4$LLAC#S, $espondents. #. ". Gabr,e-, 3r., ;or #etitioners. "edro L. A-b,no ;or #rivate $espondents.

;ven if the case were to be decided as an e/ectment case, the insistence of respondents that the, are lessees and, therefore, under the protective mantle of -residential (ecree "o. 4. loses ground when =e consider the finding of fact that respondents had not been pa,ing an, consideration for the occupanc, of their respective premises. *aid -residential (ecree "o. 4. suspended e/ectment when the lease is for an indefinite period. !t did not suspend e/ectment on other grounds li?e lac? of pa,ment of the rental stipulated. 6. !(.9 !(.9 !(.9 !(.9 ';0;(I O 7;**;;* =1;" O=";'* O 7OT A!7 TO CO77;CT O' '; :*; TO ACC;-T ';"TA7*. M The failure of the owners to collect, or their refusal to accept the rentals are not valid defenses. Article 145$ of the Civil Code provides that &if the creditor to whom tender of pa,ment has been made refuses without /ust cause to accept it, the debtor shall be released from responsibilit, b, the consignation of the thing or sum due.&cralaw virtua1aw librar, #. !(.9 !(.9 !(.9 ";;( O O=";'G7;**O' TO ';-O**;** -'O-;'TI O' 1!* O=" :*; O' O' T1; :*; O A"I 0;0@;' O 1!* A0!7I A* A ';*!(;"T!A7 :"!T, A B'O:"( T1;'; O'9 CA*; AT @A'. M The petitionersQ need of the premises for their own use or for the use of an, member of his famil, as a residential unit entitles them to the possession of the lots in )uestion. @atas -ambansa @lg. 45, which too? effect on April 1., 1979, provides as additional ground for /udicial e/ectment the need of the ownerGlessor to repossess his propert, for his own use or for the use of an, member of his famil, as a residential unit, such owner or immediate member not being the owner of an, other available residential unit.

S5LLA2US

1. C!8!7 7A=9 -'O-;'TI9 ACC!O" -:@7!C!A"A9 "AT:'; T1;';O A* (! ;';"T!AT;( 'O0 O'C!@7; ;"T'I A"( :"7A= :7 (;TA!";'9 CA*; AT @A'. M =hether or not respondent +udge acted with grave abuse of discretion must be resolved in the affirmative. !t should be recalled that this is a case of accion publiciana, the purpose of which is being to establish who have a better right to possess. 3@ernabe, ;t. Al. v. +udge (a,rit, ;t Al., B.'. "o. 5%699, Oct. 47, 19%65. There is no allegation of forcible entr, in the complaint. "either is it a case of unlawful detainer because the preponderance of evidence shows that the occupanc, of private respondents on the lot in )uestion is due to the tolerance of the owners thereof and against the latterQs will. -rivate respondents admit that the, have no written contract of lease with the petitioners not with petitionersQ predecessor in interest. Onl, 0arcial @urgos alleged that he had an oral agreement with 'odrigo 8ele>, all others surprisingl, failed to testif, that the, had such an oral agreement of lease. The, li?ewise admit that their houses were constructed without building permits. !n the true sense of the word, respondents are s)uatters. As such, their possession is b, tolerance. 3-angilinan v. Aguilar, #6 *C'A 16$5. Although respondents had been pa,ing nominal rentals ranging from -#... to -14... per month for some time, the, did not thereb, ac)uire the legal status of tenants. *)uatting is unlawful and no amount of ac)uiescence converts it into a lawful act. !llegal constructions constitute public nuisance per se. The, pose problems of health and sanitation. 3Cf. Cit, of 0anila v. Barcia, ;t Al., 19 *C'A #165. 4. !(.9 7;A*;9 ;+;CT0;"T :"(;' -';*!(;"T!A7 (;C';; "O. 4.9 "O"-AI0;"T O ';"TA7, A B'O:"( T1;'; O'9 CA*; AT @A'. M

D#C$S$ON

GU#RR#RO, J./

This is a petition for certiorari filed b, Cresencio, 0agin, +uanito, *ocrates and !melda, all surnamed 8ele>, see?ing the reversal, for grave abuse of discretion, the decision dated 0a, 44, 197% of the Court of irst !nstance of Cebu, @ranch N!!! dismissing their complaint for recover, of possession of five parcels of land pursuant to -residential (ecree "o. 4.. The evidence shows that the five parcels of land all located at Fatipunan *treet, Cebu Cit,, then assessed at -17,...... and ?nown as 7ots 5611AAA 4AA, 5611AAA4A@, 5611AAA4AC, 5611AAA4A( and 5611AAA4A , were formerl, owned b, 'odrigo 8ele>, the father of petitioners. !n an e2tra/udicial partition, the said lots were ad/udicated to petitioners herein on +une 1$, 197.. As

earl, as 197., petitioners made a demand to vacate upon respondents who as?ed an e2tension of one ,ear but thereafter, respondents changed their minds and refused to vacate. Around the end of 1976, petitioners again advised respondents that the, needed the premises for their own use and ordered them to vacate the premises b, removing their dwelling units from the lots. :pon their refusal, petitioners filed an e/ectment case before the Cit, Court of Cebu, which case was doc?eted as Civil Case "o. 'A17.11. On motion of respondents, the Cit, Court dismissed the case without pre/udice in an Order dated August 6, 197# on the ground that there e2ists no cause of action, following the suspension of /udicial e/ectment b, -residential (ecree "o. 4.. On +ul, 6, 197$, petitioners made again an e2tra/udicial demand in a letter which re)uired respondents to vacate the premises within 15 da,s at the same time threatening them with prosecution under -residential (ecree "o. 774 for the crime of s)uatting. On August 5, 197$, petitioners filed the complaint for recover, of possession of the aforesaid five parcels of land alleging that e2cept for 0agin 8ele>, the, have no other lot of their own and are living on other personsQ premises9 that respondents are not onl, occup,ing the premises but also accepting boarders andGor using the same for commercial purposes and that several demands have been made to give wa, to the needs of petitioners and their respective families but respondents maliciousl,, abusivel, and defiantl, refused to accede to petitionersQ lawful demands.chanrobles.com < virtual law librar, !n their answer, respondents admitted the ownership of the land b, petitioners. @ut in their special and affirmative defenses, the, alleged that the, have been occup,ing portions of the lots b, virtue of oral agreements of lease for an indefinite period, pa,ing monthl, rentals for their respective portions ranging from -#... to -14...9 that the present action is barred b, res /udicata and or prior /udgment and that the present action, if at all there is an, cause of action, is essentiall, one for unlawful detainer since the last demand to vacate was made less than a ,ear ago. ;ight of the twent, respondents testified that the, are the original occupants of the lots while two of them, *egundo 0acatol and 1ilario Baviola, claimed to have bought their houses from third persons with the understanding that the, should pa, rentals to the landowner, 'odrigo 8ele>. The, also testified that the, have been pa,ing rentals for their respective portions ranging from -#... to -14.... !n support of their claim of pa,ment of rentals, at least si2 of them presented one or two receipts dated 1976 or earlier 3;2hibits 4, 4AA to 4A!5 and claimed that other receipts were lost. @ut all respondents admitted not having paid rentals since 1976, some reasoning out that nobod, collected and others claiming that abiola 8ele> Barganera, 'odrigo 8ele>Q daughter, refused to accept their rentals. At least one of them, 1ilario Baviola, produced what he claimed as a building permit but the same turned out to be a mere application.chanrobles virtual lawlibrar,

After the case was submitted for decision, the trial court ruled</gc<chanrobles.com.ph &!t appearing that the defendants are lessees of the portions of the land in )uestion wherein their respective dwelling units are erected, personal use b, the plaintiffs andGor then families of the said land, cannot be a valid ground for /udicial e/ectment of the former, pursuant to -residential (ecree "o. 4., issued b, the -resident on 0arch 15, 1977.& 3sic, should be October 14, 19745. 3(ecision of the C !, p. 59 'ollo, p. 6.5. On the ground that respondent +udge of the Court of irst !nstance of Cebu acted with grave abuse of discretion in the e2ercise of his /udicial functions b, holding that private respondents are lessees and, therefore, privileged to continue sta,ing on the lots in )uestion pursuant to -residential (ecree "o. 4., the plaintiffs below brought this instant petition for certiorari. -etitioners contend that the preponderance of evidence shows that the occupanc, of private respondents on the lots in )uestion is due to the tolerance of the owners thereof and against the latterQs will. Conceding that respondents are lessees, petitioners claim that -residential (ecree "o. 4. does not mean that 315 the, are freed from pa,ing rentals for the lots in )uestion9 345 the, can use the lots for commercial purposes9 and 365 the, can refuse to adduce evidence M specificall, referring to the twelve respondents who did not testif, on their behalf. !n answer to the argument of respondents that the, are willing to pa, rentals if petitioners send collectors, petitioners cite Article 145$ of the Civil Code where mere willingness to pa, is not pa,ment, thus</gc<chanrobles.com.ph &Art. 145$. !f the creditor to whom tender of pa,ment has been made refuses without /ust cause to accept it, the debtor shall be released from responsibilit, b, the consignation of the thing or sum due.&cralaw virtua1aw librar, -etitioners also claim that the, had presented evidence that some respondents, particularl, "atividad @a/aras, 0aura @elarma and -lacida Te/ano, are using the premises not onl, as residences but also stores while Alding Acedera is using her residence as a boarding house, thereb, removing said respondents from the protective mantle of -residential (ecree "o. 4.. inall,, petitioners invo?e the e)ual protection rights guaranteed b, the Constitution contending that respondent +udgeQs undue application of -residential (ecree "o. 4. in spite of the undisputed fact that petitioners have no other lot of their own and are renting other peopleQs properties,

e2cept 0agin 8ele> 3who nevertheless wants to recover his propert, for the use of one of his children who is married5, constitutes a denial of said constitutional provision.chanrobles law librar, < red =hether or not respondent +udge acted with grave abuse of discretion must be resolved in the affirmative. !t should be recalled that this is a case of accion publiciana, the purpose of which is being to establish who have a better right to possess. 3@ernabe, ;t. Al. v. +udge (a,rit, ;t Al., B.'. "o. 5%699, Oct. 47, 19%65. There is no allegation of forcible entr, in the complaint. "either is it a case of unlawful detainer because the preponderance of evidence shows that the occupanc, of private respondents on the lot in )uestion is due to the tolerance of the owners thereof and against the latterQs will. -rivate respondents admit that the, have no written contract of lease with the petitioners not with petitionersQ predecessor in interest. Onl, 0arcial @urgos alleged that he had an oral agreement with 'odrigo 8ele>, all others surprisingl, failed to testif, that the, had such an oral agreement of lease. The, li?ewise admit that their houses were constructed without building permits. !n the true sense of the word, respondents are s)uatters. As such, their possession is b, tolerance. 3-angilinan v. Aguilar, #6 *C'A 16$5. Although respondents had been pa,ing nominal rentals ranging from -#... to -14... per month for some time, the, did not thereb, ac)uire the legal status of tenants. *)uatting is unlawful and no amount of ac)uiescence converts it into a lawful act. !llegal constructions constitute public nuisance per se. The, pose problems of health and sanitation. 3Cf. Cit, of 0anila v. Barcia, ;t Al., 19 *C'A #165. ;ven if the case were to be decided as an e/ectment case, the insistence of respondents that the, are lessees and, therefore, under the protective mantle of -residential (ecree "o. 4. loses ground when =e consider the finding of fact that respondents had not been pa,ing an, consideration for the occupanc, of their respective premises. *aid -residential (ecree "o. 4. suspended e/ectment when the lease is for an indefinite period. !t did not suspend e/ectment on other grounds li?e lac? of pa,ment of the rental stipulated.chanrobles virtual lawlibrar, The failure of the owners to collect, or their refusal to accept the rentals are not valid defenses. Article 145$ of the Civil Code provides that &if the creditor to whom tender of pa,ment has been made refuses without /ust cause to accept it, the debtor shall be released from responsibilit, b, the consignation of the thing or sum due.&cralaw virtua1aw librar, !ndependentl, of the foregoing, the petitionersQ need of the premises for their own use or for the use of an, member of his famil, as a residential unit entitles them to the possession of the lots in )uestion. @atas -ambansa @lg. 45, which too? effect on April 1., 1979, provides as additional ground for /udicial e/ectment the need of the ownerGlessor to repossess his propert, for

his own use or for the use of an, member of his famil, as a residential unit, such owner or immediate member not being the owner of an, other available residential unit.chanrobles.com.ph < virtual law librar, ;ven before the effectivit, of @atas -ambansa @lg. 45, -residential (ecree "o. 4. had been held to be not without e2ception. !n Ongchengco v. Cit, Court of Jamboanga, 95 *C'A 616, this Court ruled that &e2treme necessit, for personal use of the propert, entitles the owner to e2emption from the operation of -( 4. which suspends the provision of Article 1$76 of the Civil Code on /udicial e/ectment.& The case of @etts v. 0atias, 97 *C'A #69, reaffirmed that &-residential (ecree "o. 4. does not sanction the deprivation of a lessor of residential propert, in e2treme need of the leased premises for his own use of his right to terminate the lease and recover possession of his propert,.& Then, in *inclair v. Court of Appeals, 115 *C'A 61%, this Court held that &a strict and rigid compliance with -residential (ecree "o. 4. is not in order, for an e2emption from its provisions is warranted for humanitarian reasons.& Again, in Tan To? 7ee v. C ! of Faloocan Cit,, 141 *C'A #6%, this Court said that &petitionersQ reliance on the provision of -residential (ecree "o. 4. is not well ta?en. !t could not have been the intention of the said decree to deprive the owner of the rightful use of her home, more so, when petitioners reneged on their promise to loo? for another house in the mista?en belief that -( 4. gave them a preferential right over that of the owner. To den, the owner of the use and possession of her propert, would be tantamount to depriving her of her constitutional right to abode.& !n 'antael v. Court of Appeals, ;t Al., 97 *C'A #56, this Court upheld the right of the lessor to /udiciall, e/ect the lessee on the ground not onl, that &e2piration of period of written lease contract is manifestl, present& but also because @atas -ambansa @lg. 45 which superseded -.(. 4. &buttresses the right of respondent 7lave to /udiciall, e/ect petitioner 'antael from the leased premises.& !n *antos v. Court of Appeals and -araguas, B.'. "o. 7A#5.71, 0a, 6., 19%6, this Court held that &the retroactive application of @atas -ambansa @lg. 45 to pending e/ectment cases is alread, a settled matter and ma, no longer be )uestioned. 3Ale/andro 0elchor, +r., etc. v. 1on. +ose 7. 0or/a, etc., ;t Al., B.'. "o. 7A6545$, 0arch 17, 19%69 Butierre> v. Cantada, 9. *C'A 19 Ongchengco v. Cit, Court of Jamboanga, 95 *C'A 6169 @etts v. 0atias, 97 *C'A #695. !t was also held therein that &the right of the private respondents over the propert, which the, own in order to use the same as their residence, not being owners of an, other dwelling place, ma, not be denied. *uch right is e2pressl, recogni>ed b, @atas -ambansa @lg. 45. ;lemental sense of /ustice and fairness dictates that it must be so.& chanrobles.com.ph < virtual law librar, =1;'; O';, the petition for certiorari is granted. The decision of the defunct Court of irst !nstance of Cebu, @ranch N!!!, dismissing the complaint of petitioners, is hereb, ';8;'*;( and *;T A*!(;. A new /udgment is hereb, entered in favor of petitioners, ordering respondents to vacate the

premises in )uestion and to remove their respective constructions andGor improvements therefrom within si2t, 3$.5 da,s from notice. *O O'(;';(. DOLOR#S L$GA5A D# M#SA, petitioner, vs. H# COUR O! A""#ALS, OSSA HOUS#, $NC. AND D#4#LO"M#N 2AN< O! H# "H$L$""$N#S, respondents. "UR$S$MA, J.: At bar is a -etition for 'eview on Certiorari under 'ule #5 of the 'evised 1 2 'ules of Court )uestioning the (ecision of the Court of Appeals dated 0arch 61, 1994 in CAAB.'. "os. 191#5 and 191#$, which modified the decision of @ranch 16% of the 'egional Trial Court of 0a?ati in Civil Case "os. #1.59 and #46%1. The antecedent facts are as follows< -etitioner (olores 7iga,a de 0esa owns several parcels of land in 0a?ati, % -asa, Cit,, Cavite, and Beneral *antos Cit, which were mortgaged to the (evelopment @an? of the -hilippines 3(@-5 as securit, for a loan she obtained from the ban?. ailing to pa, her mortgage debt, all her mortgaged properties were foreclosed and sold at public auction held on different da,s. On April 6., 1977, the 0a?ar propert, was sold and the corresponding certificate of sale inscribed on 0arch 1., 197%. On August 45, 1977, the "aic, Cavite propert, was sold and the certificate of sale registered on the same da,. On August 6., 1977, the two 345 parcels of land in 0a?ati were sold at public auction and the certificate of sale was inscribed on "ovember 45, 1977. And on +anuar, 14, 197%, the three 365 parcels of land in -asa, Cit, were also sold and the certificate of sale was recorded on the same date. !n all the said auction sales, (@- was the winning bidder. !n a letter dated 0a, 49, 197%, petitioner de 0esa re)uested (@- that she be allowed to repurchase her foreclosed properties. 0@+p(i0.nAt On October 46, 197%, 0rs. de 0esa, under a &(eed of *ale with Assumption 4 of 0ortgage,& sold the foreclosed properties to private respondent O**A under the condition that the latter was to assume the pa,ment of the mortgage debt b, the repurchase of all properties mortgaged on installment basis, with an initial pa,ment of -9.,...... representing 4.K of the total obligation. On October 46, 197%, private respondent O**A remitted to (@- the initial pa,ment of -9.,......, in addition to the amount of -1.,...... previousl, paid to the petitioner. On ebruar, 44, 1979, (@- granted petitionerCs re)uest to repurchase the foreclosed properties such that in 0arch 1979 a &(eed of Conditional *ale&

was e2ecuted under which (@- agreed to sell the said properties to the petitioner for the sum of -6$6,#.%.4., -9.,...... of which was to be paid as initial pa,ment and the balance in seven 375 ,ears on a )uarterl, amorti>ation plan, with a first )uarterl, installment of -15,#75.17. -rivate respondent O**A paid (@- the first to eight )uarterl, installments from April 11, 1979 to 0a, %, 1991, in the total amount of -167,595.61, which installment pa,ments were applied to petitionerCs obligation with (@pursuant to the (eed of Conditional *ale. On 0arch 11, 19%1, petitioner de 0esa notified private respondent O**A that she was rescinding the (eed of *ale with Assumption of 0ortgage she e2ecuted in favor of the latter on the ground that O**A failed to compl, with the terms and conditions of their agreement, particularl, the pa,ment of installments to the (evelopment @an? of the -hilippines, the discharge and cancellation of the mortgage on the propert, listed in item !8 of the first whereas clause, and the pa,ment of the balance of more or less -#5,...... to petitioner, representing the difference between the purchase price of sub/ect properties and the actual obligation to the (@-. On April 11, 19%1, O**A offered to pa, the amount of -6#,6$6,.%, which is the difference between the purchase price of -5..,...... and the mortgage obligation to (@- of -#55,$6$.94, after deducting the downpa,ment of -1.,...... stipulated in said (eed of *ale with Assumption of 0ortgage, but the petitioner refused to accept such pa,ment. *o, on April 4%, 19%1, O**A brought a Complaint for Consignation against the petitioner, doc?eted as Civil Case "o. #1.59 before the then Court of irst !nstance of 'i>al, @ranch N8, and at the same time, deposited the amount of -6#,6$6..% with said court. On August 5, 19%1, (@- refused to accept the 9th )uarterl, installment paid b, O**A, prompting the latter to file against (@- and the petitioner, on August 11, 19%1, Civil Case "o. #46%1 for specific performance and consignation, with the then Court of irst !nstance of -asig, 'i>al, depositing in said case the amount of -15,%4#.94. On October 41, 19%1, upon petitioner de 0esaCs motion, Civil Case "os. #1.59 and #46%1 were consolidated before the then Court of irst !nstance of 'i>al, @ranch N8, 0a?ati, 0etro 0anila, now 'egional Trial Court of 0a?ati Cit,, @rach CNNN8!!! 316%5. !n an Order dated +ul, 46, 19%4, the lower court allowed O**A to deposit with the Court a Buo b, wa, of consignation, all future )uarterl, installments without need of formal tenders of pa,ment and service of notices of consignation. Correspondingl, and over the period of time stipulated, O**A deposited with the lower court the 1.th to the 4.th installments in the aggregate amount of -174,5$4.11. After trial, the lower court came out with a (ecision for the private respondent O**A, holding thus<

=1;'; O'; premises considered, /udgment is hereb, rendered 3a5 declaring the consignation made b, plaintiff as proper and valid and ordering defendants (olores 7iga,a de 0esa and (evelopment @an? of the -hilippines to withdraw and receive said pa,ments due them which plaintiff has consigned with the Court9 3b5 Ordering defendant (evelopment @an? of the -hilippines to furnish plaintiff with a statement of pa,ments and balance, if an,, still due from defendant de 0esa after appl,ing all pa,ments alread, received, including the amounts placed under consignation9 3c5 :pon pa,ment b, the plaintiff of the balance if an,, still due on the properties, defendant (evelopment @an? of the -hilippines shall e2ecute a (eed of Absolute *ale in favor of the plaintiff over the properties sub/ect matter of the (eed of Absolute *ale with Assumption of 0ortgage e2ecuted b, and between plaintiff and defendant de 0esa9 3d5 Ordering plaintiff to pa, defendant de 0esa the difference, if an,, between the agreed purchase price of -5..,...... and the pa,ments made to the defendant (evelopment @an? of the -hilippines, less the -1.,...,.. down pa,ment alread, paid and the -6#,6$6..% consigned with the Court9 and 3e5 Ordering defendant de 0esa to pa, plaintiff the sum of -1.,...... as attorne,s fees. *O O'(;';(. &

of O**A over the properties sub/ect of the (eed of *ale with assumption of 0ortgage9 and 3g5 ordering de 0esa to pa, O**A the sum of -1.,...... as and for attorne,Cs fees. "o pronouncement as to costs. *O O'(;';(. '

On 0a, 5, 1994, petitioner interposed a motion for reconsideration of the aforesaid decision, theori>ing that< ! T1!* CO:'T ;'';( =1;" !T 1;7( T1AT =1AT =A* *O7( :"(;' T1; &(;;( O *A7; =!T1 A**:0-T!O" O 0O'TBAB;& =;'; T1; -'O-;'T!;* 7!*T;( T1;';!" A"( "OT 0;';7I T1; '!B1T O ';(;0-T!O" (;*-!T; T1; T;*T!0O"!;* O @OT1 CO"T'ACT!"B -A'T!;* T1AT =1AT *O7( A"( @O:B1T =A* 0;';7I T1; '!B1T O ';(;0-T!O". !! T1!* CO:'T ;'';( !" 1O7(!"B T1AT (; 0;*AC* ';H:;*T TO ';-:'C1A*; T1; O';C7O*;( -'O-;'T!;* 'O0 (@';(O:"(;( TO T1; @;"; !T O O**A 1O:*;, !"C. !!! T1!* CO:'T ;'';( !" 1O7(!"B (; 0;*A !" ;*TO--;7. !8 T1!* CO:'T ;'';( !" ':7!"B T1AT T1; 0A"(ATO'I ';H:!';0;"T* O T1; C!8!7 CO(; O" CO"*!B"AT!O" CA" @; ( =A!8;( @I T1; T'!A7 CO:'T. =ith the denial of her aforestated motion for reconsideration, petitioner found her wa, to this Court via the present petition, raising the issues< 3i5 =hether or not the re)uirements of Articles 145$ to 14$1 can be &rela2ed& or &substantiall, complied with&. 3ii5 =hether or not the Court can supplant its own reading of an ambiguous contract for the actual intention of the contracting parties as testified to in open court and under oath. 3iii5 =hether or not petitioner de 0esa can be held in estoppel for the acts of the (@-. Art. 167. of the "ew Civil Code, reads< Art. 167.. !f the terms of a contract are clear and leave no doubt upon the

The petitioner appealed to the Court of Appeals which handed down on 0arch 61, 1994, its decision modif,ing the challenged decision, as follows< =1;'; O';, the decision appealed from is hereb, 0O(! !;(< 3a5 declaring the consignation made b, O**A as proper and valid as far as de 0esa is concerned, and ordering de 0esa to receive the said amount consigned with the court and pa, (@- with the said amount9 3b5 ordering (@- to furnish de 0esa with a statement of pa,ments and the balance, if an,, still due from de 0esa after appl,ing all pa,ments alread, received, including the amounts paid under consignation9 3c5 ordering de 0esa to furnish O**A with a cop, of the statement of pa,ments described in the preceding paragraph, and the balance appearing therein, if an,, shall be paid b, O**A for the account of de 0esa9 3d5 ordering (@- to e2ecute a (eed of Absolute *ale in favor of de 0esa over the properties sub/ect of the (eed of Conditional *ale9 3e5 ordering Ossa to pa, de 0esa the difference, if an,, between the agreed purchase price of -5..,...... and the pa,ments made to (@-, less the -1.,...... down pa,ment and the -6#,6$6..% consigned with the court9 3f5 ordering de 0esa thereafter, to e2ecute a (eed of Absolute *ale in favor

intention of the contracting parties, the literal meaning of its stipulation shall control. 222 222 222 =hen the words of a contract are plain and readil, understood, there is no room for construction. As the agreement of the parties are reduced to writing, such agreement is considered as containing all its terms and there can be, between the parties and their successorsAinAinterest, no evidence of the 8 terms of the written agreement other than the contents of the writing. !n the case under consideration, the terms of the &(eed of *ale with Assumption of 0ortgage (ebt& are clear and leave no doubt as to what were sold thereunder. !t provided as follows< =1;';A*, the 8;"(O' has agreed to sell to the 8;"(;; 3plaintiff Ossa 1ouse, !nc.5, and the 8;"(;; has agreed to purchase form the 8;"(O', all the properties described in !tems !, !!, and !!!, of the irst =hereas Clause, for the price and under the terms hereinafter contained9 "O=, T1;'; O';, for and in consideration of the premises and the sum of T;" T1O:*A"( -;*O* 3-1.,......5, the receipt whereof is hereb, ac?nowledged, and the assumption b, the 8;"(;; of the total mortgage obligation of the 8;"(O' has sold, transferred, and conve,ed, and b, these presents does sell, transfer and conve,, unto the said 8;"(;;, its administrators and assigns, free from all liens and encumbrances e2cept as noted herein, the parcels of land hereinabove described in !tems !, !!, and !!!, together with all the buildings and improvements thereon9 The 8;"(;; does hereb, assume the pa,ment of the mortgage obligations b, repurchase of all the properties mortgaged on installment, with an initial pa,ment of -9.,...... representing pa,ment 4.K of the total obligation9 and conse)uentl,, the within sale is sub/ect to the mortgage in favor of the (evelopment @an? of the -hilippines9 "owhere is it provided in the afore)uoted provisions, as the petitioner insists, that what she sold to respondent O**A was merel, the right to redeem the mortgaged properties and not the foreclosed properties themselves. On the contrar,, the ver, words of the contract reveal that the sub/ect of the sale were &all the properties described in items !, !!, !!! of the irst =hereas Clause.& !ndeed, the contract under scrutin, is so e2plicit and unambiguous that it does not /ustif, an, attempt to read into it an, supposed intention of the parties, as the said contract is to be understood literall,, /ust as the, appear on its 9 face. -etitioner capitali>es on the following prefator, clause of the contract, to wit<

=1;';A*, the 8;"(O' 3defendant (e 0esa5 is the registered owner with a preferential right of redemption of the following mortgaged properties with the (evelopment @an? of the -hilippines, more particularl, described as follows< 1owever, not the slightest indication can be gleaned from the above)uoted provision that the sub/ect of the &(eed of *ale with Assumption of 0ortgage& was petitionerCs right of redemption. The said provision merel, spea?s of the preferential right of the latter to redeem the real properties involved. urthermore, the court discerns no inconsistenc, between the contractCs recognition of the preferential right of petitioner to redeem the mortgaged properties, and the sale of the said properties to respondent O**A. -etitioner can validl, redeem sub/ect properties and still recogni>e the sale thereof to the respondent corporation because nothing therein is contrar, to law, morals, good customs, public order or public polic,. @esides, it is a wellA settled doctrine that in the construction of an instrument where there are several provisions, or particulars, such a construction is, if possible, to be 10 adopted as will give effect to all. Thus, the recognition of both the preferential right of the petitioner to redeem the mortgaged properties and the sale of the same properties to respondent O**A is in order, as it would harmoni>e and give effect to all the provisions of the &(eed of *ale with Assumption of 0ortgage& under controvers,. As aptl, ruled b, the respondent court, the grant b, (@- of petitionerCs re)uest to repurchase the mortgaged properties redounded to the benefit of respondent O**A, the sale of the said properties having been previousl, agreed upon b, the petitioner and respondent O**A. 0@+p(i0.nAt -etitioner contends that she is not estopped from )uestioning (@-Cs application to her account of O**ACs initial pa,ment of -9.,...... as well as the first to eight )uarterl, installments. !t bears stressing, however, that the remittance of the said pa,ment was made in implementation of the provisions of their contract. The belated claim of the petitioner, which was not given credence b, the trial court, that she ob/ected to the application b, (@- to her account of all the remittances of O**A is tainted with bad faith as this is an attempt to renegade against her contract with respondent O**A. @esides, the issue of whether or not petitioner ob/ected is a )uestion of fact that has alread, been settled b, the trial court which best performs the matter of 11 assigning values to the testimon, of witnesses, and whose findings are 12 accorded great weight especiall, when affirmed b, the Court of Appeals , as in the case at bar. -etitioner ne2t argues that there was no notice to her regarding O**ACs consignation of the amounts corresponding to the 14th up to the 4.th )uarterl, installments. The records, however, show that several tenders of pa,ment were consistentl, turned down b, the petitioner, so much so that the

respondent O**A found it pointless to ?eep on ma?ing formal tenders of pa,ment and serving notices of consignation to petitioner. 0oreover, in a motion dated 0a, 7, 19%7, O**A pra,ed before the lower court that it be allowed to deposit b, wa, of consignation all the )uarterl, installments, without ma?ing formal tenders of pa,ment and serving notice of consignation, which pra,er was granted b, the trial court in the Order dated +ul, 6, 19%4. The motion and the subse)uent court order served on the petitioner in the consignation proceedings sufficientl, served as notice to petitioner of O**ACs willingness to pa, the )uarterl, installments and the consignation of such pa,ments with the court. or reasons of e)uit,, the procedural re)uirements of consignation are deemed substantiall, complied 1% with in the present case. -etitioner also insists that there was no valid tender of pa,ment because the amount tendered was -6#,6$6..%, not -51,4#6.4$, and assuming e% gratia argumenti that it was the correct amount, the tender thereof was still not valid, the same having been made b, chec?. This claim, however, does not accord with the records on hand. Thus, the Court of Appeals ratiocinated< The &(eed of *ale with Assumption of 0ortgage&, was for a consideration of -5..,......, from which shall be deducted de 0esasCs outstanding obligation, with the (@- pegged as of 0a, 1., 197%, b, the parties themselves, at -#55,$6$,94. This amount of -#55,$6$.94 owing (@-, is what O**A agreed to assume. =hat remained to be paid de 0esa was -##,$6$..%, but O**A made an advance pa,ment of -1.,......, hence the remaining amount pa,able to de 0esa is -6#,6$6..%, which O**A tendered 14 in cash 3;2hibits &N&, &@@& and &CC&5. !t is thus be,ond cavil that the respondent O**A tendered the correct amount, the tender of which was in cash and not b, chec?, as theori>ed b, petitioner. -remises studiedl, considered, the Court is of the ineluctable conclusion, and so holds, that the Court of Appeals erred not in affirming the decision of the trial court of origin. =1;'; O';, the petition is (;"!;( and the assailed (ecision of the Court of Appeals in CAAB.'. "os. 191#5 and 1915$ dated 0arch 61, 1994 A !'0;(. "o pronouncement as to costs. *O O'(;';(. 14$1 "#SAN# AN$MAS MONGAO, =o,ned b1 8er 80)band 2#NHUR MONGAO, -etitioners, vs. "R5C# "RO"#R $#S COR"ORA $ON, 'espondent.

(;C!*!O" $NGA, J./ @efore the Court is a petition for review on certiorari under 'ule #5 of the 'ules of Civil -rocedure assailing the Decision1 of the Court of Appeals in CAAB.'. C8 "o. 54756, which reversed the trial courtQs /udgment on the pleadings and remanded the case thereto for trial on the merits, and the $esolution4 den,ing petitionersQ motion for reconsideration. The instant petition originated from a complaint for rescission and damages filed on ebruar, 1#, 1995 b, petitioners, *pouses -esane Animas 0ongao 3hereafter referred to as petitioner 0ongao5 and @enhur 0ongao, against respondent -r,ce -roperties Corporation before the 'egional Trial Court 3'TC5 in Beneral *antos Cit,.6 The complaint alleged that petitioner 0ongao and respondent corporation e2ecuted a Memorandum of 4greement# on (ecember 4., 1996, wherein the former agreed to sell to the latter for the total price of ive 0illion Twent,A;ight Thousand ;ight 1undred -esos 3-5,.4%,%.....5 a parcel of land in -olomolo?, *outh Cotabato covered b, Transfer Certificate of Title 3TCT5 "o. TA441%$5 registered in the name of petitioner 0ongao onl,. !n accordance with the terms and conditions of the Memorandum of 4greement, respondent corporation allegedl, paid petitioners the sum of ive 1undred ift, Thousand -esos 3-55.,......5 as earnest mone, considered as part of the purchase price. The complaint further alleged that after considerable dela,, respondent corporation offered to pa, the balance of the purchase price b, issuing a chec? pa,able to petitioner 0ongao and her mother, "ellie Animas, which the former re/ected. Allegedl,, respondent corporation continuousl, refused to heed petitionersQ written and oral demands to pa, the balance solel, to petitioner 0ongao. The complaint also denied that petitioner 0ongao e2ecuted a Deed of 4bsolute &ale dated "ovember 15, 199# in favor of respondent corporation, the registration of which caused the cancellation of TCT "o. TA441%$ in the name of petitioner 0ongao and the issuance of TCT "o. TA$49##. !n addition to petitionersQ pra,er for the rescission of the Memorandum of 4greement and the Deed of 4bsolute &ale and the forfeiture of the earnest mone, paid b, respondent corporation, the complaint also as?ed for the award of moral and e2emplar, damages and attorne,Qs fees. 'espondent corporation filed an answer and refuted petitionersQ allegations with a narration of the factual antecedents leading to the perfection of the contract of sale.$ !t claimed that sometime in 1996, a certain -edro Animas !8 approached *onito ". 0ole, an officer of respondent corporation, and negotiated the sale of properties belonging to the Animas famil, which were on the verge of being foreclosed b, the ban?. 'espondent corporation further claimed that the sub/ect propert, was one of the two parcels of land it

selected for purchase. *aid propert, covered b, TCT "o. TA441%$ allegedl, belonged to petitioner 0ongaoQs parents but was registered in petitioner 0ongaoQs name as a trustee thereof. 'espondent corporation averred that the true agreement between respondent corporation and the Animas famil, was for the former to purchase the two parcels of land belonging to the late -edro Animas, father of petitioner 0ongao. !t admitted the e2ecution of the Memorandum of 4greement but )ualified that respondent corporation did not pa, the earnest mone, directl, and solel, to petitioner 0ongao. *aid earnest mone, was allegedl, part of the amount directl, paid b, respondent corporation to the (evelopment @an? of the -hilippines in order to redeem certain properties of the Animas famil, which were foreclosed and sold at a public auction. 'espondent corporation averred that petitioner 0ongao and -edro Animas, +r., the registered owners of the sub/ect properties, e2ecuted simultaneousl, the corresponding Deed of &ale and Memorandum of 4greement after respondent corporationQs representative delivered the chec?s to the ban? as pa,ment for redemption of the properties. Controvers, arose after respondent corporation had allegedl, manifested its intent to complete pa,ments but petitioner 0ongao demanded that pa,ment be made to her alone to the e2clusion of the rest of the Animas famil,. 'espondent corporation admitted issuing a chec? in the amount of Three 0illion Three 1undred ift,A*even -esos and ;ight,A*even Centavos 3-6,656,657.%#5 pa,able to the order of petitioner 0ongao and her mother, "ellie Animas, which was however refused b, petitioner 0ongao. The answer also admitted that due to the demands of both petitioner 0ongao and the Animas famil,, respondent corporation was constrained to deposit the pa,ment with the Cler? of Court of the 'TC of (avao Cit,. @, wa, of a compulsor, counterclaim, respondent corporation pra,ed that petitioners be ad/udged liable for attorne,Qs fees for their hast, and un/ustified institution of the case. -etitioners moved for /udgment on the pleadings on the ground that the answer admitted the material allegations of the complaint and, therefore, failed to tender an issue.7 !n particular, the answer allegedl, admitted the e2istence of the contract of sale and respondent corporationQs refusal to satisf, the unpaid balance of the purchase price despite demand. -etitioners contended that respondent corporation cannot avoid rescission b, raising the defense that it contracted with the Animas famil, and not solel, with petitioner 0ongao. -etitioners belied respondent corporationQs claim for consignation b, attaching a letter from the Office of the Cler? of Court of the 'TC of (avao Cit, to the effect that the court could not act on petitionersQ motion to den, consignation because the deposit was transmitted through a mere letter, hence, the case was not raffled to a particular branch of the court.%

'espondent corporation opposed petitionersQ motion for /udgment on the pleadings, arguing that two material allegations in the complaint, namel,< that petitioner 0ongao did not e2ecute the Deed of &ale and that petitioner 0ongao was the owner of the sub/ect propert,, were disputed in the answer.9 The trial court granted petitionersQ motion for /udgment on the pleadings and considered the case submitted for decision. The trial court rendered a Decision1. on "ovember 16, 1995. The dispositive portion thereof reads< =1;'; O';, premises considered, the 0emorandum of Agreement dated 4. (ecember 1996, as well as the (eed of Absolute *ale entered into between plaintiff -esane Animas 0ongao and defendant -r,ce -roperties Corporation dated "ovember 15, 199#, are hereb, declared rescinded. As a conse)uence thereof, -r,ce -roperties Corporation is directed to e2ecute a (eed of 'econve,ance of the propert, covered b, TCT "o. TA$49## in favor of -esane Animas and to pa, attorne,Qs fees in the amount of -5.,...... as well as costs of suit, b, wa, of damages. On the other hand plaintiff -esane Animas 0ongao is li?ewise directed to return to the defendant -r,ce -roperties Corporation, what she had received b, virtue of the contract in the amount of -1,$75,##4.1$, a portion of which ma, be compensated to the damages herein awarded pursuant to Article 147% of the "ew Civil Code. *O O'(;';(.11 =ith the adverse decision, respondent corporation elevated the case to the Court of Appeals, which reversed the trial courtQs Decision and remanded the case for trial on the merits through its Decision promulgated on 0arch 44, 4..1.14 On the main issue of whether or not /udgment on the pleadings was proper, the Court of Appeals ruled in the negative, finding that there were actual issues raised in the answer re)uiring the presentation and assessment of evidence. The appellate court opined that aside from the amount of damages claimed b, both parties, the following were also put in issue< 315 the genuineness of the Deed of &ale purportedl, e2ecuted b, petitioner 0ongao, and 345 the nature of petitioner 0ongaoQs title to the sub/ect propert,. The Court of Appeals also ruled against the trial courtQs interference with the consignation case pending before the 'TC of (avao Cit, but did not find petitioners guilt, of forumAshopping in filing the action for rescission despite the pendenc, of the consignation case with the 'TC of (avao Cit,. -etitioners moved for the reconsideration of the Court of AppealsQ Decision but the same was denied in a $esolution dated "ovember 45, 4..4. 1ence, this petition for review, raising the following issues< A. =1;T1;' O' "OT T1; 0;'; (;-O*!T O A C1;CF R -AIA@7; TO T=O -;'*O"*, O"; O =1O0 !* A T1!'( -A'TI A"(GO' A

*T'A"B;' TO T1; T'A"*ACT!O", A"( T1; ';7;A*; O =1!C1 !* *:@+;CT TO C;'TA!" CO"(!T!O"*R CO"*T!T:T;* CO"*!B"AT!O". @. =1;T1;' O' "OT +:(B0;"T O" T1; -7;A(!"B* !* -'O-;' !" T1!* CA*;.16 The main issue for this CourtQs resolution is the propriet, of the trial courtQs /udgment on the pleadings on the ground that respondent corporationQs allegation did not tender an issue. +udgment on the pleadings is governed b, *ection 1, 'ule 6# of the 1997 'ules of Civil -rocedure, essentiall, a restatement of *ection 1, 'ule 19 of the 19$# 'ules of Court then applicable to the proceedings before the trial court. *ection 1, 'ule 19 of the 'ules of Court provides that where an answer &fails to tender an issue, or otherwise admits the material allegations of the adverse part,Cs pleading, the court ma,, on motion of that part,, direct /udgment on such pleading.& The answer would fail to tender an issue, of course, if it does not compl, with the re)uirements for a specific denial set out in *ection 1.1# 3or *ection %515 of 'ule %9 and it would admit the material allegations of the adverse part,Cs pleadings not onl, where it e2pressl, confesses the truthfulness thereof but also if it omits to deal with them at all.1$ "ow, if an answer does in fact specificall, den, the material averments of the complaint in the manner indicated b, said *ection 1. of 'ule %, andGor asserts affirmative defenses 3allegations of new matter which, while admitting the material allegations of the complaint e2pressl, or impliedl,, would nevertheless prevent or bar recover, b, the plaintiff5 in accordance with *ections #17 and 51% of 'ule $, a /udgment on the pleadings would naturall, not be proper.19 Thus, there is /oinder of issues when the answer ma?es a specific denial of the material allegations in the complaint or asserts affirmative defenses which would bar recover, b, the plaintiff. =here there is proper /oinder of issues, the trial court is barred from rendering /udgment based onl, on the pleadings filed b, the parties and must conduct proceedings for the reception of evidence. On the other hand, an answer fails to tender an issue where the allegations admit the allegations in support of the plaintiffQs cause of action or fail to address them at all. !n either case, there is no genuine issue and /udgment on the pleadings is proper. -etitionersQ action for rescission is mainl, based on the alleged breach b, respondent corporation of its contractual obligation under the Memorandum of 4greement when respondent refused to effect pa,ment of the purchase price solel, to petitioner 0ongao. The complaint pertinentl, alleged the following< #. -laintiff -esane Animas 0ongao is the registered owner in fee simple of a

parcel of land more particularl, described as< . . . . 5. !n a 0emorandum of Agreement dated 4. (ecember 1996 and entered in the "otarial 'egister of Att,. 'osalio C. CariLo, as (ocument "o. 75, -age "o. 15, @oo? "o. !!, *eries of 19969 plaintiff -esane Animas 0ongao agreed to sell the aforesaid parcel of land to defendant 3cop, of the 0emorandum of Agreement is attached as Anne2 @59 $. As earnest mone,, defendant paid to plaintiff -esane Animas 0ongao, and in her sole name, the amount of -55.,......9 . . . .4. On the other hand, nothing from the allegations in respondent corporationQs answer ma?es out a proper /oinder of issues. -etitionersQ cause of action for rescission is founded mainl, on a perfected contract of sale allegedl, entered into between petitioners and respondent corporation as embodied in the Memorandum of 4greement attached to the complaint. "irst, the allegations in respondent corporationQs answer do not ma?e out a specific denial that a contract of sale was perfected between the parties. &econd, respondent corporation does not contest the due e2ecution andGor genuineness of said Memorandum of 4greement. !n fact, paragraph 1 of the answer categoricall, admits paragraph 5 of the complaint, thus< 1. -aragraphs 1, 4, 6, and 5 of the Complaint are admitted. 41 -aragraph 5 of the complaint referred to above states< 5. !n a 0emorandum of Agreement dated 4. (ecember 1996 and entered in the "otarial 'egister of Att,. 'osalio C. CariLo, as (ocument "o. 75, -age "o. 15, @oo? "o. !!, *eries of 19969 plaintiff -esane Animas 0ongao agreed to sell the aforesaid parcel of land to defendant 3cop, of the 0emorandum of Agreement is attached as Anne2 @5944 As to how respondent corporation allegedl, breached its contractual obligation under the Memorandum of 4greement is illustrated b, the following averments in the complaint< 7. *ubse)uent to the e2ecution of the 0emorandum of Agreement, defendant corporation after considerable dela, offered to pa, the balance of the purchase price net of still undetermined and undisclosed deductions, this time in the name of both plaintiff -esane Animas 0ongao and that of her mother9 %. -laintiff -esane Animas 0ongao /ustifiabl, refused to accept pa,ment under the conditions unilaterall, imposed b, defendant corporation9 9. *everal demands, both written and oral, were conve,ed b, plaintiffs to defendant corporation to pa, the balance immediatel,, directl, and solel, to plaintiff -esane Animas 0ongao, but defendant corporation, in patent breach

of its contractual obligation, refused946 The answer denied the afore)uoted allegations and asserted that there was an earlier understanding between the parties, the substance of which was not clearl, e2pressed in the following averments< #. -aragraph 7 of the Complaint is denied, the truth of the matter being those stated in the *pecial and Affirmative (efenses in this Answer. 5. -aragraph % of the Complaint is denied, the truth of the matter being that plaintiffQs refusal to accept pa,ment was not /ustified and was contrar, to the earlier understanding and agreement of the parties. $. -aragraph 9 of the Complaint is admitted, e2cept for the allegation that defendant was in &patent breach of its contractual obligation, the truth of the matter being that defendantQs refusal was in accordance with its contractual obligation.4# 'espondent corporation offered the affirmative defense that the separate demands of petitioner 0ongao and the Animas famil, compelled it to issue the chec? pa,able to both petitioner 0ongao and her mother, to wit< 1$. That in so far as -edro Animas, +r., was concerned, he did not ob/ect to pa,ment being made to his brother andGor mother, but with respect to plaintiff -esane Animas 0ongao, it was then that the controvers, began since plaintiff now demanded that pa,ment be given to her alone to the e2clusion of the rest of the Animas famil,. 17. That in order to pla, safe, defendant issued the chec? in the amount of -6,656,657.%#, pa,able to the order of plaintiff &-esane Animas 0ongao& and the surviving matriarch of the Animas amil, in the person of &"ellie vda. de Animas&. -laintiff resented this arrangement and refused to accept pa,ment unless the chec? was made out to her alone. 1%. That since defendant was now receiving demands from plaintiff and the rest of the Animas amil, 3through "ellie vda. de Animas5, defendant became confused on which was the proper part, to receive pa,ment and, on +anuar, 1%, 1995, the amount of -6,656,657.%# was deposited b, the defendant b, wa, consignment with the Cler? of Court of the 'egional Court, 11th +udicial 'egion.45 ;ffectivel,, the afore)uoted averments impl, an admission b, respondent corporation that it effected pa,ment contrar, to the e2press terms of the contract of sale. "owhere in the terms of the Memorandum of 4greement does it state that the pa,ment of the purchase price be tendered to an, person other than petitioner 0ongao. The averment virtuall, admits petitionersQ allegation that respondent corporation committed a breach of its contractual obligation to petitioners and supports their cause of action for rescission. !ndeed, the drawing of the chec? pa,able to the order of petitioner 0ongao and "ellie 8da. de Animas would deprive petitioner 0ongao of the

e2clusive benefit of the pa,ment, thereb, sharpl, deviating from the terms of the contract of sale. As earlier stated, an answer ma, allege affirmative defenses which ma, stri?e down the plaintiffQs cause of action. An affirmative defense is one which is not a denial of an essential ingredient in the plaintiffQs cause of action, but one which, if established, will be a good defenseMi.e. an &avoidance& of the claim.4$ Affirmative defenses include fraud, statute of limitations, release pa,ment, illegalit,, statute of frauds, estoppel, former recover,, discharge in ban?ruptc,, and an, other matter b, wa, of confession and avoidance. =hen the answer asserts affirmative defenses, there is proper /oinder of issues which must be ventilated in a fullAblown trial on the merits and cannot be resolved b, a mere /udgment on the pleadings. Allegations presented in the answer as affirmative defenses are not automaticall, characteri>ed as such. @efore an allegation )ualifies as an affirmative defense, it must be of such nature as to bar the plaintiff from claiming on his cause of action. or eas, reference, respondent corporationQs affirmative defenses shall be laid out in full< *-;C!A7 A"( A !'0AT!8; (; ;"*;* 9. That, sometime in the latter half of 1996, defendantQs officer, *onito ". 0ole, was approached b, a real estate bro?er who introduced -edro Animas !8 who disclosed that his famil, 3referring to his mother, brothers and sisters5 was on the verge of permanentl, losing to the @an? all of their famil, properties. The Animas famil, desperatel, needed to sell some of the properties so that the rest could be saved. Thus, *.". 0ole, as representative of the defendant, and -edro Animas !8, as representative of the Animas amil,, discussed and negotiated on what properties would be purchased and the terms of the purchase. 1.. That defendant was shown a s?etch plan of what was referred to therein as the &A"!0A* *:@(!8!*!O"& situated at 0atinao, -olomolo?, *outh Cotabato and its corresponding &(evelopment -ermit& "o. .1%65 issued on +anuar, 1., 19%5, covering TCT "os. TA441%$ and TA441%%, for a residential subdivision in the name of applicantGowner &-;('O A"!0A*&, the late father of the Complainant -esane Animas 0ongao. @ecause of their potential as residential subdivision, these ver, same two 345 parcels of land at 0atinao were the ones defendant chose to purchase. 11. That, sometime in (ecember, 1996, the defendant, through *.". 0ole went to Beneral *antos Cit,, bringing with him the two 345 chec?s necessar, to pa, the @an? in order to redeem the Animas famil, lands from the @an?, the written agreements outlining the terms of the purchase b, defendant of the lands, and the deeds of absolute sale for the lands that defendant intended to purchase. 14. That upon deliver, of the chec?s to the @an?, plaintiff 3and her husband5, as well as -edro Animas, +r. 3the registered owner of the other land

purchased b, the defendant5 signed the necessar, memoranda of agreement, as well as the deeds of conve,ances 3deeds of absolute sale5. 16. That, in the meantime, a "otice of 7is -endens was annotated in TCT "o. TA441%$ regarding Civil Case "o. 5195 & O'< -A'T!T!O"& then pending . . . and entitled &-;('O A"!0A* 8!, -laintiff, versus ";77!; A"!0A*, @A7(O0;'O A"!0A*, ;(:A'(O A"!0A*, -;('O A"!0A*, +'., -;('O A"!0A* !8, -;('O A"!0A* 8, 0A'!8!C A"!0A*, 0A'!";7 A"!0A* 7!0 and -;*A"; A"!0A*, (efendants& and, on 0a, 46, 199#, /udgment was rendered approving the Compromise Agreement, wherein &the defendants will give plaintiff the amount of O"; 1:"(';( T1O:*A"( 3-1..,......5 -;*O* upon the sale of their 0atinao properties in favor of -'IC; !"C.& 1#. That in the middle of "ovember, 1995 the lands sub/ect of the purchase b, the defendant were finall, issued clearances for transfer of title in favor and in the name of the defendant. 15. That in earl, (ecember, 1995, plaintiff -esane Animas 0ongao and the rest of the Animas amil, were advised that defendant was read, to complete pa,ments in accordance with their 0emorandum of Agreement. 1$. That in so far as -edro Animas, +r., was concerned, he did not ob/ect to pa,ment being made to his brother andGor mother, but with respect to plaintiff -esane Animas 0ongao, it was then that the controvers, began since plaintiff now demanded that pa,ment be given to her alone to the e2clusion of the rest of the Animas amil,. 17. That in order to pla, safe, defendant issued the chec? in the amount of -6,656,657.%#, pa,able to the order of plaintiff &-esane Animas 0ongao& and the surviving matriarch of the Animas amil, in the person of &"ellie vda. de Animas&. -laintiff resented this arrangement and refused to accept pa,ment unless the chec? was made out to her alone. 1%. That since defendant was now receiving demands from plaintiff and the rest of the Animas amil, 3through "ellie vda. de Animas5, defendant became confused on which was the proper part, to receive pa,ment and, on +anuar, 1%, 1995, the amount of -6,656,657.%# was deposited b, the defendant b, wa, consignment with the Cler? of Court of the 'egional Court, 11th +udicial 'egion. 19. The defendant is still read, and willing to cause the release of said consignment amount 3less consignment fees of the court5 to whomsoever that the Court ma, ad/udge to be the proper part, entitled to the amount. 4.. That since the start of the negotiations for the purchase of the lands, it was made clear to the defendant that the properties were part of the estate of the deceased +udge -edro Animas and his surviving wife "ellie vda. de Animas and that the registered owners 3the children5 were merel, holding the same in trust for the estate and "ellie vda. de Animas.

41. That no factual nor legal ground e2ists to support plaintiffs claim for rescission of contract. 44. That the complaint states no cause of action against the defendant. 46. That this suit actuall, involves conflicting claims among members of the same famil,.47 !n essence, respondent corporation /ustifies its refusal to tender pa,ment of the purchase price solel, to petitioner 0ongao b, alleging that the latter was a mere trustee and not the beneficial owner of the propert, sub/ect of the sale and therefore not the proper part, to receive pa,ment. *uch defense cannot prevent petitioners from see?ing the rescission of the contract of sale. The e2press terms of the Memorandum of 4greement, the genuineness and due e2ecution of which are not denied, clearl, show that the contract of sale was e2ecuted onl, between petitioner 0ongao and respondent corporation. =here there is an apparent repudiation of the trust b, petitioner 0ongao, such claim or defense ma, properl, be raised onl, b, the parties for whose benefit the trust was created. 'espondent corporation cannot assert said defense in order to resist petitionersQ claim for rescission where it has been sufficientl, shown b, the allegations of the complaint and answer that respondent corporation has breached its contractual obligation to petitioners. There being no material allegation in the answer to resist petitionersQ claim, the trial court correctl, rendered /udgment based on the pleadings submitted b, the parties. The Court of Appeals enumerated certain factual controversies, which it believed can onl, be resolved after presentation of evidence, and these are< 315 whether or not petitioner 0ongao e2ecuted the Deed of 4bsolute &ale in favor of respondent corporation, and 345 whether or not petitioner 0ongao is the sole owner of the sub/ect propert,. The Court finds that the determination of these factual )uestions is immaterial to the resolution of the main issue of whether or not there is a valid cause for rescission in light of respondentQs implied admissions of certain allegations and the wea?ness of the affirmative defenses in the answer. At the ris? of being repetitious, respondent corporationQs answer admitted that there was a perfected contract of sale between respondent and petitioner 0ongao and that respondent corporation refused to tender pa,ment of the purchase price solel, to petitioner 0ongao. These admissions clearl, ma?e out a case for rescission of contract. On the peripheral issue of whether or not there was proper consignation of the purchase price with the 'TC of (avao Cit,, the Court adopts the trial courtQs finding that respondent corporation did not follow the procedure re)uired b, law, to wit< On the second issue, the mere consignment or deposit of the chec? to the Cler? of Court without observing the mandator, provisions of Articles 145$ to

1457 of the "ew Civil Code, does not produce the effect of pa,ment in order that the obligor or the defendant herein shall be released from the obligation, hence, no pa,ment of the unpaid balance of -6,566,657.%# has actuall, been made. !n fact it was noted b, the Court that the deposit is even conditional, i.e. it should not be released without a court order. 4% The records reveal that respondent corporation did not file an, formal complaint for consignation but merel, deposited the chec? with the Cler? of Court. A formal complaint must be commenced with the trial court to provide the proper venue for the determination if there is a valid tender of pa,ment. *trictl, spea?ing, without the institution of an action for tender of pa,ment and consignation, the trial court cannot rule on whether or not respondent was /ustified in not effecting pa,ment solel, to petitioner 0ongao. >H#R#!OR#, the instant petition for review is B'A"T;(. The Decision of the Court of Appeals in CAAB.'. C8 "o. 54756 is ';8;'*;( and *;T A*!(; and the Decision of the 'egional Trial Court, @ranch 65, Beneral *antos Cit, in Civil Case "o. 55#5 is hereb, ';!"*AT;(. Costs against respondent. *O O'(;';(. G.R. No. 1'9&01 30ne 8, 200( 2.#. SAN D$#GO, $NC., petitioner, vs. ROSAR$O . ALZUL, respondent. (;C!*!O" 4#LASCO, 3R., J.: 8e Ca)e This -etition for 'eview on Certiorari1 under 'ule #5 )uestions the ebruar, 1%, 4..5 (ecision4 of the Court of Appeals 3CA5 in CAAB.'. *- "o. %16#1, which granted respondent Al>ul the right to pa, the balance of the purchase price within five 355 da,s from receipt of the CA (ecision despite the lapse of the original period given to said part, through the final 'esolution of this Court in an earlier case. The CA ruling reversed the *eptember 1%, 4..6 'esolution6 and (ecember 4, 4..6 Order# of the Office of the -resident 3O-5 in O.-. Case "o. .1A1A.97, which upheld the dismissal of respondent Al>ulQs complaint for consignation and specific performance before the 1ousing and 7and :se 'egulator, @oard 317:'@5 in 17:'@ Case "o. ';0AAA99.97A.1$7. 7i?ewise challenged is the August 61, 4..5 CA 'esolution5 re/ecting petitionerQs 0otion for 'econsideration. 8e !ac?) The facts culled b, the CA are as follows<

On ebruar, 1., 1975, DrespondentE 'osario T. Al>ul purchased from DpetitionerE @.;. *an (iego, !nc. four 3#5 subdivision lots with an aggregate area of 1,475 s)uare meters located at Aurora *ubdivision, 0a,silo, 0alabon. These lots, which are now sub/ect of this petition, were bought through installment under Contract to *ell "o. %$7 at One 1undred -esos 3S1.....5 per s)uare meter, with a downpa,ment DsicE of Twelve Thousand *even 1undred ift, -esos 3S14,75....5, and monthl, installments of One Thousand Two 1undred ort,A"ine -esos 3S1,4#9.5.5. The interest agreed upon was 14 percent 314K5 per annum until full, paid, thus, the total purchase price was Two 1undred Thirt, *even Thousand *i2 1undred *i2t, -esos 3S467,$$....5. D'espondentE too? immediate possession of the sub/ect propert,, setting up a perimeter fence and constructing a house thereon. On +ul, 45, 1977, DrespondentE signed a &Conditional (eed of Assignment and Transfer of 'ights& which assigned to a certain =ilson -. Iu her rights under the Contract to *ell. D-etitionerE was notified of the e2ecution of such deed. 7ater on, the Contract to *ell in DrespondentQsE name was cancelled, and DpetitionerE issued a new one in favor of Iu although it was also denominated as &Contract to *ell "o. %$7&. On +ul, #, 1979, DrespondentE informed DpetitionerE about IuQs failure and refusal to pa, the amounts due under the conditional deed. *he also manifested that she would be the one to pa, the installments due to respondent on account of IuQs default. On August 45, 19%., DrespondentE commenced an action for rescission of the conditional deed of assignment against Iu before the 'egional Trial Court of Caloocan Cit,. *ubse)uentl,, on *eptember 6., 19%5, DrespondentE caused the annotation of notices of lis pendens on the titles covering the sub/ect lots. The trial court ruled in DrespondentQsE favor in the rescission case. The decision was even affirmed b, this DappellateE Court. Iu brought his cause before the *upreme Court in a -etition for 'eview, but this was li?ewise denied. On ebruar, 17, 19%9, DpetitionerE notified DrespondentE that Contract to *ell "o. %$7 was declared rescinded and cancelled. On April 4%, 19%9, the sub/ect lots were sold to spouses Carlos and *andra 8entura who were allegedl, surprised to find the annotation of lis pendens in their ownerQs duplicate title. On 0a, %, 199., the 8entura spouses filed an action for Huieting of Title with -ra,er for Cancellation of Annotation and (amages before the 'egional Trial Court of 0alabon. The trial court ruled in favor of the 8entura spouses. On appeal before this DappellateE Court, however, the decision was reversed on "ovember 47, 1994, as follows< &=1;'; O';, the appealed decision is hereb, ';8;'*;( and *;T

A*!(;, and the complaint therein is ordered dismissed. Transfer Certificates of Title "os. "A1944, "A1946, "A194#, and "A1945, all of the 'egister of (eeds of 0etro 0anila, (istrict !!!, 0alabon @ranch, in the names of plaintiffsAappellees Carlos ". 8entura and *andra 7. 8entura are hereb, declared null and void, and the titles of ownership reinstated in the name of @.;. *an (iego, !nc. with the corresponding notices of lis pendens therein annotated in favor of defendantAappellant until such time that ownership of the sub/ect parcels of land is transferred to herein defendantAappellant 'osario Al>ul. Costs against plaintiffAappellees. *O O'(;';(.& :pon filing of an appeal to the *upreme Court doc?eted as B' "o. 1.9.7%, the above decision was affirmed on (ecember 4$, 1995. A motion for reconsideration was filed, but this was denied b, the 1ighest Tribunal on ebruar, 5, 199$. On +une 17, 199$, a resolution was issued b, the *upreme Court, ordering, as follows< &=e, however, agree with the observation made b, movants that no time limit was set b, the respondent Court of Appeals in its assailed (ecision for the private respondent herein, 'osario Al>ul, to pa, @.;. *an (iego, !nc. the original owner of the properties in litigation. To rectif, such oversight, private respondent 'osario T. Al>ul is hereb, given a nonAe2tendible period of thirt, 36.5 da,s from entr, of /udgment, within which to ma?e full pa,ment for the properties in )uestion. 222& 3;mphasis supplied.5 On +ul, 14, 199$, an ;ntr, of +udgment was issued. !n an attempt to compl, with the *upreme CourtQs directive, herein DrespondentE tried to serve pa,ment upon DpetitionerE on August 49, 199$, August 6., 199$ and *eptember 4%, 199$. On all these dates, however, DpetitionerE allegedl, refused to accept pa,ment from DrespondentE. On "ovember 11, 199$, DrespondentE filed a 0anifestation in B' "o. 1.9.7% informing the *upreme Court that DpetitionerE, on three 365 occasions, refused to accept DherE pa,ment of the balance in the amount of S1%7,6%..... On +anuar, 49, 1997, a 'esolution was issued b, the *upreme Court referring the case to the court of origin for appropriate action, on account of DrespondentQsE manifestation. On October 41, 1997, DrespondentQsE counsel wrote a letter to DpetitionerE citing the latterQs refusal to accept her pa,ment on several occasions. !t was also mentioned therein that due to its refusal, DrespondentE would /ust consign the balance due to DpetitionerE before the proper /udicial authorit,. On +anuar, 1#, 199%, a repl, was sent b, DpetitionerE through a certain lora *an (iego. D'espondentQsE re)uest was re/ected on account of the following< 1. =e have long legall, rescinded the sale in her favor in view of her failure to pa, the monthl, amorti>ation as per contract.

4. *he sold her rights to 0r. =ilson Iu who failed to pa, his monthl, amorti>ations, too. 6. =e are not and have never been a part of the case ,ou are alluding to hence we cannot be bound b, the same. #. The propert, in )uestion is now under process to be reconve,ed to us as ordered b, the court b, virtue of a compromised 3sic5 agreement entered into in Civil Case "o. 4$55 0" of the 0alabon 'TC @ranch entitled *pouses Carlos 8entura and *andra 8entura vs. @.;. *an (iego, !nc. 222 Thin?ing that an action for consignation alone would not be sufficient to allow for the e2ecution of a final /udgment in her favor, DrespondentE decided to file an action for consignation and specific performance against DpetitionerE before the 1ousing and 7and :se 'egulator, @oard on 0arch 14, 199%. The complaint, doc?eted as ';0A.6149%A1..69, pra,ed that a5 DrespondentE be considered to have full, paid the total purchase price of the sub/ect properties9 b5 TCT "os. "A1555#5 to #% which were declared void in CA B' "o. 7A1.9.7% be cancelled9 c5 new certificates of title over the sub/ect properties be issued in the name of DrespondentE9 and d5 DpetitionerE be ordered to reimburse DrespondentE the sum of ift, Thousand -esos 3S5.,......5 as attorne,Qs fees and litigation e2penses. On +ul, 14, 1999, a decision was rendered b, the 17:'@ through 1ousing and 7and :se Arbiter (unstan T. *an 8icente. !t was held, thus< &The purported &consignation& in this case is thus of no moment, inasmuch as the amount allegedl, due was not even deposited or placed at the disposal of this Office b, the complainant. !n an, event, we agree with DpetitionerE that even if the complainant had actuall, made the consignation of the amount, such consignation is still ineffective and void for having been done long after the e2piration of the nonA e2tendible period set forth in the 17 +une 199$ *upreme Court 'esolution that e2pired on 4. *eptember 199$. =1;'; O';, -remises Considered, a /udgment is hereb, rendered (!*0!**!"B the complaint. Cost against complainant. !T 3sic5 *O O'(;';(.& Aggrieved b, the above decision, DrespondentE filed a -etition for 'eview before the 17:'@Qs irst (ivision. On 0arch 17, 4..., a decision was rendered dismissing the petition for lac? of merit, and affirming the decision dated +ul, 14, 1999. D'espondentE filed a 0otion for 'econsideration, but this was denied on +ul, 61, 4..1. D'espondentE then filed an appeal to the Office of the -resident. This was, however, dismissed on +une 4, 4..6 for having been filed out of time. Again, DrespondentE moved for its reconsideration. On *eptember 1%, 4..6, the Office of the -resident gave due course to DrespondentQsE motion, and

resolved the motion according to its merits. The single )uestion resolved was whether or not DrespondentQsE offer of consignation was correctl, denied b, the 17:'@. *aid office ruled in the affirmative, and =e )uote< & rom the foregoing, it is evident that there was no valid consignation of the balance of the purchase price. The 6.Ada, nonAe2tendible period set forth in the 17 +une 199$ resolution had alread, e2pired on 4. *eptember 199$. The 17:'@ is therefore /ustified in refusing the consignation, otherwise it would be accused of e2tending the period be,ond that provided b, the *upreme Court. A valid consignation is effected when there is an actual consignation of the amount due within the prescribed period 3*t. (ominic Corporation vs. !ntermediate Appellate Court, 16% *C'A 4#45. 2 2 2 =1;'; O';, premises considered, the appeal is hereb, (!*0!**;( for lac? of merit. 2 2 2& D'espondentE filed a 0otion for 'econsideration DofE the above 'esolution, but this was denied with finalit, on (ecember 4, 4..6. $ 8e R0-,n7 o; ?8e Co0r? o; A++ea-) 'espondent Al>ul brought before the CA a petition for certiorari doc?eted as CAAB.'. *- "o. $7$67, ascribing grave abuse of discretion to the O- in dismissing her appeal in O.-. Case "o. .1A1A.97 and affirming the 0arch 17, 4... (ecision7 and +ul, 61, 4..1 'esolution% of the 17:'@ irst (ivision in 17:'@ Case "o. ';0AAA99.9.7A.1$7. On ebruar, 1%, 4..5, the CA rendered its assailed (ecision reversing the *eptember 1%, 4..6 'esolution and (ecember 4, 4..6 Order of the O-, the fallo of which reads< =1;'; O';, in the higher interest of /ustice, the assailed (ecision, 'esolution and Order dated 0arch 17, 4..., *eptember 1%, 4..6 and (ecember 4, 4..6, respectivel,, are hereb, R#4#RS#D and S# AS$D#. Accordingl,, Drespondent Al>ulE is hereb, ordered to pa, Dpetitioner @.;. *an (iego, !nc.E the balance due for the sale of the sub/ect four parcels of land within five 355 da,s from receipt of this decision. D-etitioner @.;. *an (iego, !nc.E, on the other hand, is ordered to accept such pa,ment from Drespondent Al>ulE, after which, the corresponding (eed of *ale must be issued. *O O'(;';(.9 The CA agreed with the 17:'@ that no valid consignation was made b, respondent but found that /ustice would be better served b, allowing respondent Al>ul to effect the consignation, albeit belatedl,. !t cited the respondentQs right over the disputed lots as confirmed b, this Court in B.'. "o. 1.9.7%, which, if ta?en awa, on account of the dela, in completing the pa,ment, would amount to a grave in/ustice. 0oreover, the CA pointed out that respondentQs counsel concededl, lac?ed

the vigilance and competence in defending his clientQs right when he failed to consign the balance on time9 nonetheless, such ma, be disregarded in the interest of /ustice. !t considered the failure of respondentQs counsel to avail of the remed, of consignation as a procedural lapse, citing the principle that where a rigid application of the rules will result in a manifest failure or miscarriage of /ustice, technicalities can be ignored. A cop, of the ebruar, 1%, 4..5 CA (ecision was received b, respondent Al>ul through her counsel on ebruar, 4#, 4..5. On 0arch #, 4..5, respondent filed a Compliance and 0otion for ;2tension of Time to Compl, with the (ecision of the DCAE1. pra,ing that she be given an e2tension of ten 31.5 da,s or from 0arch 4 to 11, 4..5 to compl, with the CA (ecision. On the other hand, on 0arch %, 4..5, petitioner filed its 0otion for 'econsideration with Opposition to -etitionerQs &0otion for ;2tension of Time to Compl, with the (ecision of the DCAE.& 11 Through its assailed August 61, 4..5 'esolution, the CA denied petitionerQs 0otion for 'econsideration, and finding that respondent dul, e2erted efforts to compl, with its (ecision and a valid consignation was made b, respondent, it granted the re)uested 1.Ada, e2tension of time to compl, with the ebruar, 1%, 4..5 (ecision and her motion for consignation. The fallo of said 'esolution reads< !" 8!;= O T1; O';BO!"B, the motion for e2tension to compl, with the (ecision is hereb, B'A"T;(, the motion for reconsideration is (;"!;( and the motion for consignation is B'A"T;(. D-etitionerE @.;. *an (iego, !nc. is hereb, ordered to receive the pa,ment of DrespondentE 'osario T. Al>ul and to issue, in her favor, the corresponding (eed of *ale. 14 8e $))0e) 1ence, before us is the instant petition with the following issues< 1. =hether or not the Court of Appeals, in issuing the assailed 1% ebruar, 4..5 (ecision and 61 August 4..5 'esolution in CAAB.'. *- "o. %16#1, has decided )uestions of law in a wa, not in accord with law and with the applicable decisions of the 1onorable Court9 4. =hether or not the Court of Appeals committed patent grave abuse of discretion andGor acted without or in e2cess of /urisdiction in granting respondent Al>ulQs subse)uent motion for e2tension of time to compl, with the 1% ebruar, 4..5 decision and motion for consignation9 and 6. =hether or not the 1% ebruar, 4..5 (ecision and 61 August 4..5 'esolution of the Court of Appeals in CAAB.'. *- "o. %16#1 ought to be annulled and set aside, for being contrar, to law and /urisprudence. 16 8e Co0r?@) R0-,n7

On the procedural issue, petitioner @.;. *an (iego, !nc. assails the sufficienc, of respondent Al>ulQs CA petition as the latter, in violation of the rules, allegedl, lac?ed the essential and relevant pleadings filed with the 17:'@ and the O-. *ection $ of 'ule #6, 1997 'ules of Civil -rocedure pertinentl, provides< *;C. $. Contents of the petition.MThe petition for review shall 2 2 2 3c5 be accompanied b, a clearl, legible duplicate original or a certified true cop, of the award, /udgment, final order or resolution appealed from, together with cer?,;,ed ?r0e co+,e) o; )0c8 ma?er,a- +or?,on) o; ?8e record re;erred ?o ?8ere,n and o?8er )0++or?,n7 +a+er)9 2 2 2 3;mphasis supplied.5 The above proviso e2plicitl, re)uires the following to be appended to a petition< 15 clearl, legible duplicate original or a certified true cop, of the award, /udgment, final order, or resolution appealed from9 45 certified true copies of such material portions of the record referred to in the petition9 and 65 other supporting papers. Obviousl,, the main reason for the prescribed attachments is to facilitate the review and evaluation of the petition b, ma?ing readil, available to the CA all the orders, resolutions, decisions, pleadings, transcripts, documents, and pieces of evidence that are material and relevant to the issues presented in the petition without rel,ing on the case records of the lower court. The rule is the reviewing court can determine the merits of the petition solel, on the basis of the submissions b, the parties1# without the use of the records of the court a )uo. !t is a fact that it ta?es several months before the records are elevated to the higher court, thus the resulting dela, in the review of the petition. The attachment of all essential and necessar, papers and documents is mandator,9 otherwise, the petition can be re/ected outright under *ec. 7 of 'ule #6 of the 'ules of Court, which provides< ;ffect of failure to compl, with re)uirements.MThe failure of the petitioner to compl, with an, of the foregoing re)uirements regarding the pa,ment of the doc?et and other lawful fees, the deposit for costs, proof of service of the petition, and the contents of and the documents which should accompan, the petition shall be sufficient ground for the dismissal thereof. To prevent premature dismissals, the re)uirements under *ec. $ on the contents of the petition have to be elucidated. irst, there can be no )uestion that onl, the award, /udgment, or final order or resolution issued b, the lower court or agenc, and appealed from has to be certified as true. The second set of attachments refers to the &certified true copies of such material portions of the record referred to therein.& 0aterial is defined as &important9 more or less necessar,9 having influence or effect9 going to the merits9 having to do with matter, as distinguished from

form.&15 Thus, material portions of the records are those parts of the records that are relevant and directl, bear on the issues and arguments raised and discussed in the petition. The, ma, include an, of the pleadings that are sub/ect of an, issue, documentar, evidence, transcripts of testimonial evidence, and parts of the records pertinent and relevant to the grounds supporting the petition. The attachment of the material portions is sub/ect to the )ualification that these are referred to or cited in the petition. Thus, onl, the material parts specified in the petition have to be appended and that would be sufficient compliance with the rule as to form. !t would be prudent however for the petitioner to attach all parts of the records which are relevant, necessar,, or important in whatever wa, to be able to reach the resolution of the issues of the petition. The availabilit, of such documents to the ponente and members of a (ivision can easil, provide the substance and support to the merits of the grounds put forward b, the petitioner. 0oreover, the processing time for the review and resolution of the petition is greatl, abbreviated, thereb, obviating intolerable dela,s. 7astl,, it has to be e2plained whether the material portions of the records have to be certified as true b, the cler? of court or hisGher dul, authori>ed representative as provided in *ec. $ of 'ule #6. !f strictl, re)uired, the rule to re)uire attachment of certified true copies of the material portions will surel, ma?e the preparation of the petition more tedious, cumbersome, and e2pensive. !t should therefore be construed that merel, clear and legible copies of the material portions will suffice. The rules on the different modes of appeal from the lower courts or )uasiA/udicial agencies to the CA reveal that it is onl, 'ule #6 that specificall, states that the material portions to be appended to the petition should be certified true copies. 'ule #1 of course does not re)uire attachment of the pertinent records since the entire records are elevated to the CA. 'ule #4 on petition for review from the trial court in aid of its appellate /urisdiction to the CA spea?s of plain copies of the material portions of the record as would support the allegations of the petition. 1$ ;ven 'ule #5 on appeal b, certiorari from the CA to this Court simpl, spea?s of material portions of the records without indicating that these should be certified true copies. 'ule #$ on original cases to this Court onl, re)uires plain copies of the material portions of the records. inall,, 'ule $5 on special civil actions re)uires onl, copies of relevant and pertinent pleadings and documents. rom the foregoing premises, the inescapable conclusion is that onl, plain and clear copies of the material portions of the records are re)uired under *ec. 6 of 'ule #6. This finding is buttressed b, our ruling in Cada,ona v. CA, where it was held that onl, /udgments or final orders of the lower courts are needed to be certified true copies or duplicate originals. 17 There is no plausible reason wh, a different treatment or stricter re)uirement should be applied to petitions under 'ule #6.

The last re)uirement is the attachment of &other supporting papers.& Again, it is onl, in 'ule #6 that we encounter the re)uirement of anne2ing &supporting papers& to the petition. This can be interpreted to mean other documents, pictures, and pieces of evidence not forming parts of the records of the lower court or agenc, that can bolster and shore up the petition. =hile not so specified in *ec. 6 of 'ule #6, it is inarguable that said papers must also be relevant and material to the petition9 otherwise, the attachments would be mere surplusages and devoid of use and value. -etitioner claims respondentQs petition in CAAB.'. *- "o. %16#1 failed to attach material documents of the records of the 17:'@ and the O-. The, cr, foul that none of the pleadings filed with the 17:'@ and the O- found their wa, into the CA petition. !t pra,s that the CA petition should have been dismissed under *ec. 7 of 'ule #6 due to the lac? of needed attachments. -etitionerQs postulation must fail. *ec. 7 of 'ule #6 does not prescribe outright re/ection of the petition if it is not accompanied b, the re)uired documents but simpl, gives the discretion to the CA to determine whether such breach constitutes a &sufficient ground& for dismissal. Apparentl,, petitioner was not able to convince the CA that the alleged missing attachments deprived said court of the full opportunit, and facilit, in e2amining and resolving the petition. !t has not been satisfactoril, shown that the pleadings filed b, petitioner with the )uasiA/udicial agencies have material bearing or importance to the CA petition. *uch pleadings could have been attached to the comment of respondent and hence, no pre/udice would be suffered. Thus, the CA did not e2ercise its discretion in an arbitrar, or oppressive manner b, giving due course to the petition. !n addition, it was noted in CusiA1ernande> v. (ia> that the CA 'evised !nternal 'ules provide certain fle2ibilit, in the submission of additional documents< =hen a petition does not have the complete anne2es or the re)uired number of copies, the Chief of the +udicial 'ecords (ivision shall re)uire the petitioner to complete the anne2es or file the necessar, number of copies of the petition before doc?eting the case. -leadings improperl, filed in court shall be returned to the sender b, the Chief of the +udicial 'ecords (ivision.1% !n 'osa Iap -aras, et al. v. +udge !smael O. @aldado, et al., the Court preferred the determination of cases on the merits over technicalit, or procedural imperfections so that the ends of /ustice would be served better, thus< At the same time, the 'ules of Court encourage a reading of the procedural re)uirements in a manner that will help secure and not defeat /ustice. Thus< *ection $. Construction.MThese 'ules shall be liberall, construed in order to promote their ob/ective of securing a /ust, speed, and ine2pensive

disposition of ever, action and proceeding. As e2pressed in Alberto vs. Court of Appeals, &3w5hat should guide /udicial action is the principle that a part,Alitigant is to be given the fullest opportunit, to establish the merits of his complaint or defense rather than for him to lose life, libert,, honor or propert, on technicalities. 2 2 2 3T5he rules of procedure should be viewed as mere tools designed to facilitate the attainment of /ustice. Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote substantial /ustice, must alwa,s be eschewed.&19 "ow we will address the main issueMwhether respondent Al>ul is still entitled to consignation despite the lapse of the period provided b, the Court in B.'. "o. 1.9.7% entitled Iu v. Court of Appeals. -etitioner stresses the fact that respondent Al>ul did not compl, with this CourtQs +une 17, 199$ 'esolution4. which gave a nonAe2tendible period of thirt, 36.5 da,s from entr, of /udgment within which to ma?e full pa,ment for the sub/ect properties. The entr, of /udgment shows that the (ecember 4$, 1995 'esolution41 in B.'. "o. 1.9.7% became final and e2ecutor, on +ul, 4, 199$. 'espondent Al>ul received through counsel a cop, of the entr, of /udgment on August 41, 199$. Thus, respondent had until *eptember 4., 199$ within which to ma?e the full pa,ment. After three 365 unsuccessful tenders of pa,ment, respondent Al>ul made no consignation of the amount to the court of origin. !t was onl, on 0arch 14, 199% or about a ,ear and a half later that respondent offered to consign said amount in an action for consignment before the 17:'@. 'el,ing on the case of *t. (ominic Corporation v. !ntermediate Appellate Court, 44 petitioner strongl, asserts that upon its refusal to accept the tendered pa,ment, respondent ought to have consigned it with the court of origin also within the 6.Ada, period or within a reasonable time thereafter. 'espondent failed to do this as she waited for a ,ear and a half before instituting the instant action for specific performance and consignment before the 17:'@. 0oreover, petitioner argues that respondentQs dela, of a ,ear and a half to pursue full pa,ment must be regarded as a waiver on her part to claim whatever residual remedies she might still have for the enforcement of the +une 17, 199$ 'esolution in B.'. "o. 1.9.7%. -etitioner further contends that even if the action before the 17:'@ was made on time, that is, within the 6.Ada, period, still it is fatall, defective as respondent did not deposit an, amount with the 17:'@ which violated the rules for consignment which re)uire actual deposit of the amount allegedl, due with the proper /udicial authorit,. -remised upon these considerations, petitioner faults the appellate court for its grant of respondentQs petition for review which nullified the denial b, the

17:'@ Arbiter, 17:'@ irst (ivision, and the O- of respondentQs action. On the other hand, respondent contends that the +une 17, 199$ 'esolution of this Court should not be construed against her inabilit, to effect pa,ment due to the obstinate and un/ust refusal b, petitionerMa supervening circumstance be,ond her control. 'espondent underscores that within the 6.Ada, period, she repeatedl, attempted to effect the pa,ment to no avail. 0oreover, the much dela,ed response of petitioner embodied in its +anuar, 1#, 199% letter46 confirming its refusal was based on untenable, baseless, and contrived grounds. 0oreover, she argues that the (ecember 4$, 1995 'esolution in B.'. "o. 1.9.7% granting her proprietar, rights over the sub/ect lots has long become final and e2ecutor,. Anent the issue of laches and estoppel, respondent strongl, contends that such do not appl, in the instant case as incontrovertible circumstances show that she has relentlessl, pursued the protection and enforcement of her rights over the disputed lots for over a )uarter of a centur,. After a careful stud, of the factual milieu, applicable laws, and /urisprudence, we find the petition meritorious. 'espondent Al>ul was accorded legal rights over sub/ect properties !n B.'. "o. 1.9.7%, finding no reversible error on the part of the CA, we denied =ilson -. IuQs petition and affirmed the appellate courtQs ruling that as between =ilson -. Iu, the 8entura spouses, petitioner @.;. *an (iego, !nc., and respondent Al>ul, respondent has inchoate proprietar, rights over the disputed lots. =e upheld the CA ruling declaring as &null and void& the titles issued in the name of the 8entura spouses and reinstating them in the name of @.;. *an (iego, !nc., with the corresponding notices of lis pendens annotated on them in favor of respondent until such time that ownership of the sub/ect parcels of land is transferred to respondent 'osario Al>ul. !t is thus clear that we accorded respondent Al>ul e2pectant rights over the disputed lots, but such is conditioned on the pa,ment of the balance of the purchase price. 1aving been conceded such rights, respondent had the obligation to pa, the remaining balance to vest absolute title and rights of ownership in his name over the sub/ect properties. !n our +une 17, 199$ 'esolution, we clearl, specified thirt, 36.5 da,s from entr, of /udgment for respondent to promptl, effect the full pa,ment of the balance of the purchase price for the sub/ect properties, thus< =e however agree with the observation made b, movants that no time limit was set b, the respondent Court of Appeals in its assailed (ecision for the private respondent herein, 'osario Al>ul, to pa, @.;. *an (iego, !nc., the original owner of the properties in litigation. To rectif, such oversight, private respondent 'osario T. Al>ul is hereb, given a nonAe2tendible period of thirt,

36.5 da,s from entr, of /udgment, within which to ma?e full pa,ment for the properties in )uestion.4# 3;mphasis supplied.5 The nonAcompliance with our +une 17, 199$ 'esolution is fatal to respondent Al>ulQs action for consignation and specific performance :nfortunatel,, respondent failed to effect such full pa,ment of the balance of the purchase price for the sub/ect properties. "o consignation within the 6.Ada, period or at a reasonable time thereafter !t is clear as da, that respondent did not attempt nor pursue consignation within the 6.Ada, period given to her in accordance with the prescribed legal procedure. *he received a cop, of the entr, of /udgment on August 41, 199$ and had 6. da,s or until *eptember 4., 199$ to pa, the balance of the purchase price to petitioner. *he made a tender of pa,ment on August 49, 199$, August 6., 199$, and *eptember 4%, 199$, all of which were refused b, petitioner possibl, because the latter is of the view that it is not bound b, the "ovember 47, 1994 (ecision in CAAB.'. C8 "o. 66$19 nor the (ecember 4$, 1995 'esolution in B.'. "o. 1.9.7%, and the fact that respondent has forfeited her rights to the lots because of her failure to pa, the monthl, amorti>ations. !t must be borne in mind however that a mere tender of pa,ment is not enough to e2tinguish an obligation. !n 0eat -ac?ing Corporation of the -hilippines v. *andiganba,an, we distinguished consignation from tender of pa,ment and reiterated the rule that both must be validl, done in order to effect the e2tinguishment of the obligation, thus< Consignation is the act of depositing the thing due with the court or /udicial authorities whenever the creditor cannot accept or refuses to accept pa,ment, and it generall, re)uires a prior tender of pa,ment. !t should be distinguished from tender of pa,ment. Tender is the antecedent of consignation, that is, an act preparator, to the consignation, which is the principal, and from which are derived the immediate conse)uences which the debtor desires or see?s to obtain. Tender of pa,ment ma, be e2tra/udicial, while consignation is necessaril, /udicial, and the priorit, of the first is the attempt to ma?e a private settlement before proceeding to the solemnities of consignation. Tender and consignation, where validl, made, produces the effect of pa,ment and e2tinguishes the obligation.45 3;mphasis supplied.5 There is no dispute that a valid tender of pa,ment had been made b, respondent. Absent however a valid consignation, mere tender will not suffice to e2tinguish her obligation and consummate the ac)uisition of the sub/ect properties. !n *t. (ominic Corporation involving the pa,ment of the installment balance for the purchase of a lot similar to the case at bar, where a period has been /udiciall, directed to effect the pa,ment, the Court held that a valid

consignation is made when the amount is consigned with the court within the re)uired period or within a reasonable time thereafter. =e ruled as follows< irst of all, the decision of the then Court of Appeals which was promulgated on October 41, 19%1, is )uite clear when it ordered the pa,ment of the balance of the purchase price for the disputed lot within $. da,s &from receipt hereof& meaning from the receipt of the decision b, the respondents. !t is an admitted fact that the respondents received a cop, of the decision on October 6., 19%1. 1ence, the, had up to (ecember 49, 19%1 to ma?e the pa,ment. :pon refusal b, the petitioner to receive such pa,ment, the proper procedure was for the respondent to consign the same with the court also within the $.Ada, period or within a reasonable time thereafter. 4$ 3;mphasis supplied.5 The records also reveal that respondent failed to effect consignation within a reasonable time after the 6.Ada, period which e2pired on *eptember 4., 199$. !nstead of consigning the amount with the court of origin, respondent filed her "ovember 11, 199$ 0anifestation informing this Court of petitionerQs un/ust refusal of the tender of pa,ment. =e acted favorabl, to it b, issuing our +anuar, 4%, 1997 'esolution which ordered, thus< Considering the manifestation, dated "ovember 11, 199$, filed b, counsel for private respondent 'osario T. Al>ul, stating that private respondent tendered to @.;. *an (iego, !nc. the pa,ment of the sum of -1%7,6%.... representing the balance of the purchase price of the properties which are the sub/ect of this litigation, but @.;. *an (iego, !nc., refused to accept the same, the Court resolved to '; ;' the case to the court of origin, for appropriate action.47 'espondent still failed to ta?e the cue b, her inaction to consign the amount with the court of origin. :ndoubtedl,, pursuing the action for consignation on 0arch 14, 199% or over a ,ear after the Court issued its +anuar, 4%, 1997 'esolution is wa, be,ond a &reasonable time thereafter.& !ndeed, we have accorded respondent, through said 'esolution, all the opportunit, to pursue consignation with the court of origin and ,et, respondent failed to ma?e a valid consignation. This is alread, ine2cusable neglect on the part of respondent. "o valid consignation made =e agree with petitionerQs assertion that even granting arguendo that the instant case for consignation was instituted within the 6.Ada, period or within a reasonable time thereafter, it would still not accord respondent relief as no valid consignation was made. Certainl,, the records show that there was no valid consignation made b, respondent before the 17:'@ as she did not deposit the amount with the )uasiA/udicial bod, as re)uired b, law and the rules. -ertinentl,, the first paragraph of Article 145% of the Civil Code provides that

&DcEonsignation shall be made b, depositing the things due at the disposal of /udicial authorit,, before whom the tender of pa,ment shall be proved, in a proper case, and the announcement of the consignation in other cases 3emphasis supplied5.& !t is true enough that respondent tendered pa,ment to petitioner three 365 times through a *olidban? 0anagerQs Chec? "o. 11#$ in the amount of -h1%7,6%.4% on August 49 and 6., 199$ and *eptember 4%, 199$. !t is true li?ewise that petitioner refused to accept it but not without good reasons. -etitioner was not impleaded as a part, b, the 8entura spouses in the 0alabon Cit, 'TC case for )uieting of title against =ilson Iu nor in the appealed case to the CA nor in B.'. "o. 1.9.7%. -etitioner is of the view that there was no /urisdiction ac)uired over its person and hence, it is not bound b, the final /udgment and +une 17, 199$ 'esolution in B.'. "o. 1.9.7%. *econdl,, petitioner believed that respondent Al>ul has lost her rights over the sub/ect lot b, the rescission of the sale in her favor due to the latterQs failure to pa, the installments and also as a result of her transfereeQs failure to pa, the agreed amorti>ations. And even in the face of the refusal b, petitioner to accept tender of pa,ment, respondent is not left without a remed,. !t is basic that consignation is an available remed,, and respondent, with the aid of her counsel, could have easil, availed of such course of action sanctioned under the Civil Code. Considering the tenor of our +une 17, 199$ 'esolution, respondent ought to have consigned the amount with the court of origin within the nonAe2tendible period of 6. da,s that was accorded her or within a reasonable time thereafter. As cited earlier, consignation is the act of depositing the thing due with the court or /udicial authorities whenever the creditor cannot accept or refuses to accept pa,ment and it generall, re)uires a prior tender of pa,ment. 49 !t is of no moment if the refusal to accept pa,ment be reasonable or not. !ndeed, consignation is the remed, for an un/ust refusal to accept pa,ment. The first paragraph of Art. 145$ of the Civil Code precisel, provides that &DiEf the creditor to whom tender of pa,ment has been made re;0)e) A,?8o0? =0)? ca0)e ?o acce+? ,?, the deb?or )8a-- be re-ea)ed ;rom re)+on),b,-,?1 b1 ?8e con),7na?,on o; ?8e ?8,n7 or )0m d0e 3emphasis supplied5.& The proper and valid consignation of the amount due with the court of origin, which shall /udiciall, pronounce the validit, of the consignation and declare the debtor to be released from hisGher responsibilit,, shall e2tinguish the corresponding obligation. 0oreover, in order that consignation ma, be effective, the debtor must show that< 315 there was a debt due9 345 the consignation of the obligation had been made because the creditor to whom tender of pa,ment was made refused to accept it, or because sGhe was absent or incapacitated, or because several persons claimed to be entitled to receive the amount due or because the title

to the obligation had been lost9 365 previous notice of the consignation had been given to the person interested in the performance of the obligation9 3#5 the amount due was placed at the disposal of the court9 and 355 after the consignation had been made, the person interested was notified of the action.6. 'espondent did not compl, with the provisions of law particularl, with the fourth and fifth re)uirements specified above for a valid consignation. !n her complaint for consignation and specific performance, respondent onl, pra,ed that she be allowed to ma?e the consignation without placing or depositing the amount due at the disposal of the court of origin. 8eril,, respondent made no valid consignation. The rights of petitioner and respondent over the 1,475 s)uare meter lot sub/ect of this petition will be determined b, the significance and effects of the (ecember 4$, 1995 'esolution rendered in B.'. "o. 1.9.7% entitled Iu v. Court of Appeals.61 The sub/ect matter of B.'. "o. 1.9.7% is the "ovember 47, 1994 (ecision rendered in CAAB.'. C8 "o. 66$19 entitled Carlos ". 8entura and *andra 7. 8entura v. 'osario T. Al>ul, et al., the fallo of which reads< =1;'; O';, the appealed decision is hereb, ';8;'*;( A"( *;T A*!(;, and the complaint therein is ordered dismissed. Transfer Certificates of Title "os. "A1944, "A1946, "A194#, and "A1945, all of the 'egister of (eeds of 0etro 0anila, (istrict !!!, 0alabon @ranch, in the names of plaintiffsAappellees Carlos ". 8entura and *andra 7. 8entura are hereb, declared null and void, and the titles of ownership reinstated in the name of @.;. *an (iego, !nc., with the corresponding notices of lis pendens therein annotated in favor of defendantAappellant until such time that ownership of the sub/ect parcels of land is transferred to herein defendantAappellant 'osario Al>ul. Costs against plaintiffAappellees. *O O'(;';(.64 On (ecember 4$, 1995, this Court issued the 'esolution in B.'. "o. 1.9.7% wherein it found no reversible error in the actions of the CA in its afore)uoted disposition in CAAB.'. C8 "o. 66$19, and resolved to den, the petition for lac? of merit. On ebruar, 5, 199$, this Court denied with finalit, the 0otion for 'econsideration filed b, petitioner =ilson Iu. 1owever, on +une 17, 199$, this Court, in resolving the 0otion for 'econsideration of private respondents *pouses Carlos and *andra 8entura, granted respondent Al>ul &a nonAe2tendible period of thirt, 36.5 da,s from entr, of /udgment, within which to ma?e full pa,ment for the properties in )uestion.&66 The )uestion isMcan the Court, the CA, or the 0alabon Cit, 'TC order petitioner @.;. *an (iego, !nc. to accept the tender of pa,ment made b,

respondent Al>ulO (efinitel,, the, cannot. The reason is that petitioner was not impleaded as a part, in the 0alabon Cit, 'TC civil case, CAAB.'. C8 "o. 66$19, nor in B.'. "o. 1.9.7% and hence is not under the /urisdiction of said courts. =hat were determined and decided in the CA (ecision in CAAB.'. C8 "o. 66$19 were the annulment of the titles of spouses Carlos and *andra 8entura, the reinstatement of said titles to the name of petitioner, and the declaration that the ownership of the lots sub/ect of said titles will be transferred to respondent. There is no directive to respondent granting her the right to pa, the balance of the price to petitioner and, more importantl,, there is no order for petitioner to accept the pa,ment. The dispositive or fallo of the decision is what actuall, constitutes the /udgment or resolution of the court that can be the sub/ect of e2ecution. =here there is a conflict between the dispositive portion of the decision and its bod,, the dispositive portion controls irrespective of what appears in the bod, of the decision. 6# *uch being the case, petitioner is not dut, bound to accept an, tender of pa,ment from respondent precisel, because such di?tat is absent in the fallo of the CA (ecision which was affirmed b, this Court in its (ecember 4$, 1995 'esolution in B.'. "o. 1.9.7%. The lacuna in the CA (ecision was sought to be corrected in its +une 17, 199$ 'esolution in B.'. "o. 1.9.7% where respondent was given &a nonA e2tendible period of thirt, 36.5 da,s from entr, of /udgment, within which to ma?e full pa,ment for the properties in )uestion.& -ursuant to this 'esolution, what was established was the right of respondent to pa, the balance of the purchase price within 6. da,s. Again, the )uer, isMcan this Court, the CA, or the trial court compel petitioner to accept the tender of pa,ment from respondentO The answer is no. The reason is obvious as /urisdiction was never ac)uired over the person of petitioner. The action for )uieting of title is characteri>ed as )uasi in rem. !n 'ealt, *ales ;nterprise, !nc. v. !ntermediate Appellate Court, it was held that< *uits to )uiet title are not technicall, suits in rem, nor are the,, strictl, spea?ing, in personam, but being against the person in respect of the res, these proceedings are characteri>ed as )uasi in rem. 30c(aniel v. 0c;lv,, 1.% *o. %4. D194$E.5 The /udgment in such proceedings is conclusive onl, between the parties. 3;mphasis supplied.565 "ot being impleaded as a necessar, or indispensable part,, petitioner is not bound b, the dispositions in the CA (ecision in CAAB.'. C8 "o. 66$19 and the 'esolutions of this Court in B.'. "o. 1.9.7%. 0oreover, there is no e2plicit and clear directive for petitioner to accept the pa,ment of the balance of the price. !t is for this reason that respondent cannot as? for a writ of e2ecution from the trial court where the complaint was originall, instituted as said court has

no /urisdiction over the person of petitioner. ;ven if a writ is issued, it should conform to the /udgment, and the fallo of the CA (ecision does not impose the dut, or obligation on the part of petitioner to accept the pa,ment from respondent. !t is the settled doctrine that a writ of e2ecution must conform to the /udgment and if it is different from or e2ceeds the terms of the /udgment, then it is a nullit,.6$ !n addition, *ec. 1., 'ule 69 provides the procedure for e2ecution of /udgments for specific acts, thus< *ec. 1.. ;2ecution of /udgments for specific act.M3a5 Conve,ance, deliver, of deeds, or other specific acts9 vesting title.M!f a /udgment directs a part, to e2ecute a conve,ance of land or personal propert,, or to deliver deeds or other documents, or to perform an, other specific act in connection therewith, and the part, fails to compl, within the time specified, the court ma, direct the act to be done at the cost of the disobedient part, b, some other person appointed b, the court and the act when so done shall have li?e effect as if done b, the part,. !f real or personal propert, is situated within the -hilippines, the court in lieu of directing a conve,ance thereof ma, b, an order divest the title of an, part, and vest it in others, which shall have the force and effect of a conve,ance e2ecuted in due form of law. The rule mentions the directive to a &part,.& !t is therefore essential that the person tas?ed to perform the specific act is impleaded as a part, to the case. Otherwise, the /udgment cannot be e2ecuted. !n the case at bar, petitioner should have been impleaded as a part, so as to compel it to accept pa,ment and e2ecute the deed of sale over the disputed lots in favor of respondent. As petitioner was not impleaded as a part,, then the CA (ecision in CAAB.'. C8 "o. 66$19 as affirmed in B.'. "o. 1.9.7% cannot be enforced against it. The cause of action available to respondent is to file an action for consignation against petitioner which she did b, registering a complaint for consignation before the 17:'@ on 0arch 14, 199%. :nfortunatel,, it was filed wa, be,ond the 6.Ada, period which lapsed on *eptember 4., 199$ or immediatel, thereafter. @ecause of the failure of respondent to effect pa,ment to petitioner within the 6.Ada, period or soon thereafter, her rights to bu, the disputed lots have been forfeited, lost, and e2tinguished. !n *t. (ominic Corporation, which is substantiall, similar to the case at bar, we e2plained the procedure when a part, is directed to pa, the balance of the purchase price based on a court decision, thus< irst of all, the decision of the then Court of Appeals which was promulgated on October 41, 19%1, is )uite clear when it ordered the pa,ment of the balance of the purchase price for the disputed lot within $. da,s &from receipt hereof,& meaning from the receipt of the decision b, the respondents. !t is an admitted fact that the respondents received a cop, of the decision on October 6., 19%1. 1ence, the, had up to (ecember 49, 19%1 to ma?e the pa,ment. :pon refusal b, the petitioner to receive such pa,ment, the proper

procedure was for the respondent to consign the same with the court also within the $.Ada, period or within a reasonable time thereafter. The fact that efforts were made b, the petitioner to reach an agreement with the respondents after the promulgation of the decision did not in an,wa, affect the finalit, of the /udgment. This was clearl, emphasi>ed in the order of the appellate court on 0a, $, 19%4. *econdl,, even if we rec?on the $.Ada, period from the date of the finalit, of the decision as interpreted b, the appellate court, such finalit, should be counted from 0arch 5, 19%4, which was the date the decision became final as indicated in the entr, of /udgment and not from August 4$, 19%4 which is the date the entr, was made. The date of a finalit, of a decision is entirel, distinct from the date of its entr, and the dela, in the latter does not affect the effectivit, of the former as such is counted from the e2piration of the period to appeal.67 2 2 2 !n the aforecited case, the lot owner was made a part, to the case and the /udgment of the court was for the plaintiff to pa, to the lot owner the balance of the purchase price within $. da,s from receipt of the (ecision. ;ven assuming arguendo that petitioner @.;. *an (iego, !nc., though not a part, in the complaint for )uieting of title, can be compelled to receive the purchase price, still, the refusal to receive the mone, re)uires respondent Al>ul to follow the procedure in *t. (ominic Corporation and consign the mone, with the court of origin. 1aving failed in this respect, respondentQs rights to the propert, have been forfeited as a result of nonApa,ment within the prescribed time frame. The CA relied on /ustice and e)uit, in granting an additional period of five 355 da,s from receipt of the ebruar, 1%, 4..5 (ecision in CAAB.'. *- "o. %16#1 to pa, the balance due for the sale of the four lots. 6% =hile we commiserate with the plight of respondent, the CA ruling will not prevail over the established a2iom that e)uit, is applied onl, in the absence of and never against statutor, law or /udicial rules of procedure.69 or all its conceded merits, e)uit, is available onl, in the absence of law and not as its replacement.#. ;)uit, as an e2ceptional e2tenuating circumstance does not favor, nor ma, it be used to reward, the indolent. This Court will not allow a part,, in guise of e)uit,, to benefit from respondentQs own negligence. #1 !n the light of the foregoing considerations, we find that the grant of respondentQs petition in CAAB.'. *- "o. %16#1 and the recognition of the belated consignation of the amount find no support nor basis in law, rule, or /urisprudence. The CAQs holding that the nonAconsignation of the amount due is merel, a procedural lapse on the part of respondentQs counsel is misplaced and is contrar, to settled /urisprudence. -lainl,, respondentQs rights over the sub/ect propert, are now lost and forfeited. 1aving resolved the core issue on the validit, of the consignation, the Court

sees no further need to discuss the remaining issues raised in the petition. -etitioner to reimburse pa,ments 1owever, respondent had made pa,ments over the sub/ect properties based on her agreement with petitioner. *o as not to enrich itself at the e2pense of respondent, petitioner is obliged to reimburse respondent whatever amount was paid b, her in form of monthl, amorti>ations. On the other hand, if respondent is in possession of the sub/ect properties, she and all persons claiming under her should surrender the possession to petitioner. =1;'; O';, the petition is B'A"T;(, the ebruar, 1%, 4..5 (ecision and August 61, 4..5 'esolution of the CA are ';8;'*;( and *;T A*!(;, and the *eptember 1%, 4..6 'esolution and (ecember 4, 4..6 Order of the O- are hereb, ';!"*TAT;(. -etitioner is O'(;';( to reimburse respondent whatever amount the latter has paid for the sub/ect properties per the Contract to *ell "o. %$7. -etitioner is (;C7A';( to be the true and legal owner of 7ots "os. 5, $, 7, and %, @loc? 1%, Aurora *ubdivision, 0a,silo, 0alabon Cit,. The 'egister of (eeds of 0anila, (istrict !!!, 0alabon Cit, @ranch is O'(;';( to cancel Transfer Certificates of Title "os. "A 1944, "A1946, "A194#, and "A1945 in the names of spouses Carlos ". 8entura and *andra 7. 8entura and register the same in the name of petitioner. The lis pendens in favor of respondent annotated on the Transfer Certificates of Title over the sub/ect properties is hereb, 7! T;(, and the 'egister of (eeds for 0etro 0anila, (istrict !!! is (!';CT;( to CA"C;7 said lis pendens. 'espondent and all persons claiming under her are O'(;';( to vacate the sub/ect properties and surrender them to petitioner within si2t, 3$.5 da,s from finalit, of this /udgment. "o pronouncement as to costs. *O O'(;';(. SU2HASH C. "ASR$CHA and 3OS#"H$N# A. "ASR$CHA, -etitioners, vs. DON LU$S D$SON R#AL 5, $NC., 'espondent. (;C!*!O" NACHURA, J.: This is a petition for review on certiorari under 'ule #5 of the 'ules of Court see?ing the reversal of the (ecision1 of the Court of Appeals 3CA5 dated 0a, 4$, 199% and its 'esolution4 dated (ecember 1., 199% in CAAB.'. *- "o. 67769 dismissing the petition filed b, petitioners +osephine and *ubhash -asricha. The facts of the case, as culled from the records, are as follows< 'espondent (on 7uis (ison 'ealt,, !nc. and petitioners e2ecuted two Contracts of 7ease6 whereb, the former, as lessor, agreed to lease to the latter :nits 44, 4#, 64, 66, 6#, 65, 6$, 67 and 6% of the *an 7uis @uilding,

located at 1..$ 0.I. Orosa cor. T.0. Falaw *treets, ;rmita, 0anila. -etitioners, in turn, agreed to pa, monthl, rentals, as follows< or 'ooms 64G65< rom 0arch 1, 1991 to August 61, 1991 P -5,......G-1.,...... rom *eptember 1, 1991 to ebruar, 49, 1994 P -5,5.....G-11,...... rom 0arch 1, 1994 to ebruar, 4%, 1996 P -$,.5....G-14,1..... rom 0arch 1, 1996 to ebruar, 4%, 199# P -$,$55...G-16,61.... rom 0arch 1, 199# to ebruar, 4%, 1995 P -7,64..5.G-1#,$#1... rom 0arch 1, 1995 to ebruar, 4%, 199$ P -%,.54.55G-1$,1.5.1. rom 0arch 1, 199$ to ebruar, 49, 1997 P -%,%57.%1G-17,715.$1 rom 0arch 1, 1997 to ebruar, 4%, 199% P -9,7#6.59G-19,#%7.17 rom 0arch 1, 199% to ebruar, 4%, 1999 P -1.,717.95G-41,#65.%9 rom 0arch 1, 1999 to ebruar, 4%, 4... P -11,7%9.75G-46,579.#%# or 'ooms 44 and 4#< ;ffective +ul, 1, 1994 P -1.,...... with an increment of 1.K ever, two ,ears.5 or 'ooms 66 and 6#< ;ffective April 1, 1994 P -5,...... with an increment of 1.K ever, two ,ears.$ or 'ooms 6$, 67 and 6%< ;ffective when tenants vacate said premises P -1.,...... with an increment of 1.K ever, two ,ears.7 -etitioners were, li?ewise, re)uired to pa, for the cost of electric consumption, water bills and the use of telephone cables. % The lease of 'ooms 6$, 67 and 6% did not materiali>e leaving onl, 'ooms 44, 4#, 64, 66, 6# and 65 as sub/ects of the lease contracts. 9 =hile the contracts were in effect, petitioners dealt with rancis -acheco 3-acheco5, then Beneral 0anager of private respondent. Thereafter, -acheco was replaced b, 'oswinda @autista 30s. @autista5.1. -etitioners religiousl, paid the monthl, rentals until 0a, 1994.11 After that, however, despite repeated demands, petitioners continuousl, refused to pa, the stipulated rent. Conse)uentl,, respondent was constrained to refer the matter to its law,er who, in turn, made a final demand on petitioners for the pa,ment of the

accrued rentals amounting to -91$,5%5.5%.14 @ecause petitioners still refused to compl,, a complaint for e/ectment was filed b, private respondent through its representative, 0s. @autista, before the 0etropolitan Trial Court 30eTC5 of 0anila.16 The case was raffled to @ranch N!N and was doc?eted as Civil Case "o. 1#6.5%AC8. -etitioners admitted their failure to pa, the stipulated rent for the leased premises starting +ul, until "ovember 1994, but claimed that such refusal was /ustified because of the internal s)uabble in respondent compan, as to the person authori>ed to receive pa,ment.1# To further /ustif, their nonA pa,ment of rent, petitioners alleged that the, were prevented from using the units 3rooms5 sub/ect matter of the lease contract, e2cept 'oom 65. -etitioners eventuall, paid their monthl, rent for (ecember 1994 in the amount of -6.,......, and claimed that respondent waived its right to collect the rents for the months of +ul, to "ovember 1994 since petitioners were prevented from using 'ooms 44, 4#, 64, 66, and 6#. 15 1owever, the, again withheld pa,ment of rents starting +anuar, 1996 because of respondentQs refusal to turn over 'ooms 6$, 67 and 6%.1$ To show good faith and willingness to pa, the rents, petitioners alleged that the, prepared the chec? vouchers for their monthl, rentals from +anuar, 1996 to +anuar, 199#. 17 -etitioners further averred in their Amended Answer 1% that the complaint for e/ectment was prematurel, filed, as the controvers, was not referred to the baranga, for conciliation. or failure of the parties to reach an amicable settlement, the preAtrial conference was terminated. Thereafter, the, submitted their respective position papers. On "ovember 4#, 199#, the 0eTC rendered a (ecision dismissing the complaint for e/ectment.19 !t considered petitionersQ nonApa,ment of rentals as un/ustified. The court held that mere willingness to pa, the rent did not amount to pa,ment of the obligation9 petitioners should have deposited their pa,ment in the name of respondent compan,. On the matter of possession of the sub/ect premises, the court did not give credence to petitionersQ claim that private respondent failed to turn over possession of the premises. The court, however, dismissed the complaint because of 0s. @autistaQs alleged lac? of authorit, to sue on behalf of the corporation. (eciding the case on appeal, the 'egional Trial Court 3'TC5 of 0anila, @ranch 1, in Civil Case "o. 9#A74515, reversed and set aside the 0eTC (ecision in this wise< =1;'; O';, the appealed decision is hereb, reversed and set aside and another one is rendered ordering defendantsAappellees and all persons claiming rights under them, as follows<

315 to vacate the leased premised 3sic5 and restore possession thereof to plaintiffAappellant9 345 to pa, plaintiffAappellant the sum of -9$7,915.%. representing the accrued rents in arrears as of "ovember 1996, and the rents on the leased premises for the succeeding months in the amounts stated in paragraph 5 of the complaint until full, paid9 and 365 to pa, an additional sum e)uivalent to 45K of the rent accounts as and for attorne,Qs fees plus the costs of this suit. *O O'(;';(.4. The court adopted the 0eTCQs finding on petitionersQ un/ustified refusal to pa, the rent, which is a valid ground for e/ectment. !t, however, faulted the 0eTC in dismissing the case on the ground of lac? of capacit, to sue. !nstead, it upheld 0s. @autistaQs authorit, to represent respondent notwithstanding the absence of a board resolution to that effect, since her authorit, was implied from her power as a general managerGtreasurer of the compan,.41 Aggrieved, petitioners elevated the matter to the Court of Appeals in a petition for review on certiorari.44 On 0arch 1%, 199%, petitioners filed an Omnibus 0otion46 to cite 0s. @autista for contempt9 to stri?e down the 0eTC and 'TC (ecisions as legal nullities9 and to conduct hearings and ocular inspections or delegate the reception of evidence. =ithout resolving the aforesaid motion, on 0a, 4$, 199%, the CA affirmed 4# the 'TC (ecision but deleted the award of attorne,Qs fees.45 -etitioners moved for the reconsideration of the aforesaid decision. 4$ Thereafter, the, filed several motions as?ing the 1onorable +ustice 'uben T. 'e,es to inhibit from further proceeding with the case allegedl, because of his close association with 0s. @autistaQs uncleAinAlaw. 47 !n a 'esolution4% dated (ecember 1., 199%, the CA denied the motions for lac? of merit. The appellate court considered said motions as repetitive of their previous arguments, irrelevant and obviousl, dilator,. 49 As to the motion for inhibition of the 1onorable +ustice 'e,es, the same was denied, as the appellate court /ustice stressed that the decision and the resolution were not affected b, e2traneous matters.6. 7astl,, the appellate court granted respondentQs motion for e2ecution and directed the 'TC to issue a new writ of e2ecution of its decision, with the e2ception of the award of attorne,Qs fees which the CA deleted.61 -etitioners now come before this Court in this petition for review on certiorari

raising the following issues< !. =hether this e/ectment suit should be dismissed and whether petitioners are entitled to damages for the unauthori>ed and malicious filing b, 'osario 3sic5 @autista of this e/ectment case, it being clear that D'oswindaE P whether as general manager or b, virtue of her subse)uent designation b, the @oard of (irectors as the corporationQs attorne,AinAfact P had no legal capacit, to institute the e/ectment suit, independentl, of whether (irector -acanaQs Order setting aside the *;C revocation Order is a mere scrap of paper. !!. =hether the 'TCQs and the 1onorable Court of AppealsQ failure and refusal to resolve the most fundamental factual issues in the instant e/ectment case render said decisions void on their face b, reason of the complete abdication b, the 'TC and the 1onorable +ustice 'uben 'e,es of their constitutional dut, not onl, to clearl, and distinctl, state the facts and the law on which a decision is based but also to resolve the decisive factual issues in an, given case. !!!. =hether the 315 failure and refusal of 1onorable +ustice 'uben 'e,es to inhibit himself, despite his admission P b, reason of his silence P of petitionersQ accusation that the said +ustice en/o,ed a T7,...... scholarship grant courtes, of the uncleAinAlaw of respondent &corporationQs& purported general manager and 345, worse, his act of ruling against the petitioners and in favor of the respondent &corporation& constitute an unconstitutional deprivation of petitionersQ propert, without due process of law. 64 !n addition to 0s. @autistaQs lac? of capacit, to sue, petitioners insist that respondent compan, has no standing to sue as a /uridical person in view of the suspension and eventual revocation of its certificate of registration. 66 The, li?ewise )uestion the factual findings of the court on the bases of their e/ectment from the sub/ect premises. *pecificall,, the, fault the appellate court for not finding that< 15 their nonApa,ment of rentals was /ustified9 45 the, were deprived of possession of all the units sub/ect of the lease contract e2cept 'oom 659 and 65 respondent violated the terms of the contract b, its continued refusal to turn over possession of 'ooms 6$, 67 and 6%. -etitioners further pra,ed that a Temporar, 'estraining Order 3T'O5 be issued en/oining the CA from enforcing its 'esolution directing the issuance of a =rit of ;2ecution. Thus, in a 'esolution6# dated +anuar, 1%, 1999, this Court directed the parties to maintain the status )uo effective immediatel, until further orders. The petition lac?s merit. =e uphold the capacit, of respondent compan, to institute the e/ectment

case. Although the *ecurities and ;2change Commission 3*;C5 suspended and eventuall, revo?ed respondentQs certificate of registration on ebruar, 1$, 1995, records show that it instituted the action for e/ectment on (ecember 15, 1996. Accordingl,, when the case was commenced, its registration was not ,et revo?ed.65 @esides, as correctl, held b, the appellate court, the *;C later set aside its earlier orders of suspension and revocation of respondentQs certificate, rendering the issue moot and academic.6$ =e li?ewise affirm 0s. @autistaQs capacit, to sue on behalf of the compan, despite lac? of proof of authorit, to so represent it. A corporation has no powers e2cept those e2pressl, conferred on it b, the Corporation Code and those that are implied from or are incidental to its e2istence. !n turn, a corporation e2ercises said powers through its board of directors andGor its dul, authori>ed officers and agents. -h,sical acts, li?e the signing of documents, can be performed onl, b, natural persons dul, authori>ed for the purpose b, corporate b,Alaws or b, a specific act of the board of directors. 67 Thus, an, person suing on behalf of the corporation should present proof of such authorit,. Although 0s. @autista initiall, failed to show that she had the capacit, to sign the verification and institute the e/ectment case on behalf of the compan,, when confronted with such )uestion, she immediatel, presented the *ecretar,Qs Certificate6% confirming her authorit, to represent the compan,. There is ample /urisprudence holding that subse)uent and substantial compliance ma, call for the rela2ation of the rules of procedure in the interest of /ustice.69 !n "ovelt, -hils., !nc. v. Court of Appeals,#. the Court faulted the appellate court for dismissing a petition solel, on petitionerQs failure to timel, submit proof of authorit, to sue on behalf of the corporation. !n -fi>er, !nc. v. Balan,#1 we upheld the sufficienc, of a petition verified b, an emplo,ment specialist despite the total absence of a board resolution authori>ing her to act for and on behalf of the corporation. 7astl,, in China @an?ing Corporation v. 0ondragon !nternational -hilippines, !nc, #4 we rela2ed the rules of procedure because the corporation ratified the managerQs status as an authori>ed signator,. !n all of the above cases, we brushed aside technicalities in the interest of /ustice. This is not to sa, that we disregard the re)uirement of prior authorit, to act in the name of a corporation. The rela2ation of the rules applies onl, to highl, meritorious cases, and when there is substantial compliance. =hile it is true that rules of procedure are intended to promote rather than frustrate the ends of /ustice, and while the swift unclogging of court doc?ets is a laudable ob/ective, we should not insist on strict adherence to the rules at the e2pense of substantial /ustice.#6 Technical and procedural rules are intended to help secure, not suppress, the cause of /ustice9 and a deviation from the rigid enforcement of

the rules ma, be allowed to attain that prime ob/ective, for, after all, the dispensation of /ustice is the core reason for the e2istence of courts. ## As to the denial of the motion to inhibit +ustice 'e,es, we find the same to be in order. irst, the motion to inhibit came after the appellate court rendered the assailed decision, that is, after +ustice 'e,es had alread, rendered his opinion on the merits of the case. !t is settled that a motion to inhibit shall be denied if filed after a member of the court had alread, given an opinion on the merits of the case, the rationale being that &a litigant cannot be permitted to speculate on the action of the court 2 2 2 3onl, to5 raise an ob/ection of this sort after the decision has been rendered.&#5 *econd, it is settled that mere suspicion that a /udge is partial to one of the parties is not enough9 there should be evidence to substantiate the suspicion. @ias and pre/udice cannot be presumed, especiall, when weighed against a /udgeQs sacred pledge under his oath of office to administer /ustice without regard for an, person and to do right e)uall, to the poor and the rich. There must be a showing of bias and pre/udice stemming from an e2tra/udicial source, resulting in an opinion on the merits based on something other than what the /udge learned from his participation in the case.#$ =e would li?e to reiterate, at this point, the polic, of the Court not to tolerate acts of litigants who, for /ust about an, conceivable reason, see? to dis)ualif, a /udge 3or /ustice5 for their own purpose, under a plea of bias, hostilit,, pre/udice or pre/udgment. #7 =e now come to the more substantive issue of whether or not the petitioners ma, be validl, e/ected from the leased premises. :nlawful detainer cases are summar, in nature. !n such cases, the elements to be proved and resolved are the fact of lease and the e2piration or violation of its terms.#% *pecificall,, the essential re)uisites of unlawful detainer are< 15 the fact of lease b, virtue of a contract, e2press or implied9 45 the e2piration or termination of the possessorQs right to hold possession9 65 withholding b, the lessee of possession of the land or building after the e2piration or termination of the right to possess9 #5 letter of demand upon lessee to pa, the rental or compl, with the terms of the lease and vacate the premises9 and 55 the filing of the action within one ,ear from the date of the last demand received b, the defendant.#9 !t is undisputed that petitioners and respondent entered into two separate contracts of lease involving nine 395 rooms of the *an 7uis @uilding. 'ecords, li?ewise, show that respondent repeatedl, demanded that petitioners vacate the premises, but the latter refused to heed the demand9 thus, the, remained in possession of the premises. The onl, contentious issue is whether there was indeed a violation of the terms of the contract< on the part of petitioners, whether the, failed to pa, the stipulated rent without /ustifiable cause9 while on the part of respondent, whether it prevented petitioners from occup,ing the leased premises e2cept 'oom 65.

This issue involves )uestions of fact, the resolution of which re)uires the evaluation of the evidence presented. The 0eTC, the 'TC and the CA all found that petitioners failed to perform their obligation to pa, the stipulated rent. !t is settled doctrine that in a civil case, the conclusions of fact of the trial court, especiall, when affirmed b, the Court of Appeals, are final and conclusive, and cannot be reviewed on appeal b, the *upreme Court. 5. Albeit the rule admits of e2ceptions, not one of them obtains in this case. 51 To settle this issue once and for all, we deem it proper to assess the arra, of factual findings supporting the courtQs conclusion. The evidence of petitionersQ nonApa,ment of the stipulated rent is overwhelming. -etitioners, however, claim that such nonApa,ment is /ustified b, the following< 15 the refusal of respondent to allow petitioners to use the leased properties, e2cept room 659 45 respondentQs refusal to turn over 'ooms 6$, 67 and 6%9 and 65 respondentQs refusal to accept pa,ment tendered b, petitioners. -etitionersQ /ustifications are belied b, the evidence on record. As correctl, held b, the CA, petitionersQ communications to respondent prior to the filing of the complaint never mentioned their alleged inabilit, to use the rooms. 54 =hat the, pointed out in their letters is that the, did not ?now to whom pa,ment should be made, whether to 0s. @autista or to -acheco. 56 !n their +ul, 4$ and October 6., 1996 letters, petitioners onl, )uestioned the method of computing their electric billings without, however, raising a complaint about their failure to use the rooms.5# Although petitioners stated in their (ecember 6., 1996 letter that respondent failed to fulfill its part of the contract,55 nowhere did the, specificall, refer to their inabilit, to use the leased rooms. @esides, at that time, the, were alread, in default on their rentals for more than a ,ear. !f it were true that the, were allowed to use onl, one of the nine 395 rooms sub/ect of the contract of lease, and considering that the rooms were intended for a business purpose, we cannot understand wh, the, did not specificall, assert their right. !f we believe petitionersQ contention that the, had been prevented from using the rooms for more than a ,ear before the complaint for e/ectment was filed, the, should have demanded specific performance from the lessor and commenced an action in court. =ith the e2ecution of the contract, petitioners were alread, in a position to e2ercise their right to the use and en/o,ment of the propert, according to the terms of the lease contract.5$ As borne out b, the records, the fact is that respondent turned over to petitioners the ?e,s to the leased premises and petitioners, in fact, renovated the rooms. Thus, the, were placed in possession of the premises and the, had the right to the use and en/o,ment of the same. The,, li?ewise, had the right to resist an, act of intrusion into their peaceful possession of the propert,, even as against the lessor itself. Iet, the, did not

lift a finger to protect their right if, indeed, there was a violation of the contract b, the lessor. =hat was, instead, clearl, established b, the evidence was petitionersQ nonA pa,ment of rentals because ostensibl, the, did not ?now to whom pa,ment should be made. 1owever, this did not /ustif, their failure to pa,, because if such were the case, the, were not without an, remed,. The, should have availed of the provisions of the Civil Code of the -hilippines on the consignation of pa,ment and of the 'ules of Court on interpleader. Article 145$ of the Civil Code provides< Article 145$. !f the creditor to whom tender of pa,ment has been made refuses without /ust cause to accept it, the debtor shall be released from responsibilit, b, the consignation of the thing or sum due. Consignation alone shall produce the same effect in the following cases< 2222 3#5 =hen two or more persons claim the same right to collect9 2 2 2 2. Consignation shall be made b, depositing the things due at the disposal of a /udicial authorit,, before whom the tender of pa,ment shall be proved in a proper case, and the announcement of the consignation in other cases. 57 !n the instant case, consignation alone would have produced the effect of pa,ment of the rentals. The rationale for consignation is to avoid the performance of an obligation becoming more onerous to the debtor b, reason of causes not imputable to him.5% -etitioners claim that the, made a written tender of pa,ment and actuall, prepared vouchers for their monthl, rentals. @ut that was insufficient to constitute a valid tender of pa,ment. ;ven assuming that it was valid tender, still, it would not constitute pa,ment for want of consignation of the amount. =ellAsettled is the rule that tender of pa,ment must be accompanied b, consignation in order that the effects of pa,ment ma, be produced.59 0oreover, *ection 1, 'ule $4 of the 'ules of Court provides< *ection 1. =hen interpleader proper. P =henever conflicting claims upon the same sub/ect matter are or ma, be made against a person who claims no interest whatever in the sub/ect matter, or an interest which in whole or in part is not disputed b, the claimants, he ma, bring an action against the conflicting claimants to compel them to interplead and litigate their several claims among themselves. Otherwise stated, an action for interpleader is proper when the lessee does not ?now to whom pa,ment of rentals should be made due to conflicting claims on the propert, 3or on the right to collect5.$. The remed, is afforded

not to protect a person against double liabilit, but to protect him against double ve2ation in respect of one liabilit,. $1 "otabl,, instead of availing of the above remedies, petitioners opted to refrain from ma?ing pa,ments. "either can petitioners validl, invo?e the nonAdeliver, of 'ooms 6$, 67 and 6% as a /ustification for nonApa,ment of rentals. Although the two contracts embraced the lease of nine 395 rooms, the terms of the contracts A with their particular reference to specific rooms and the monthl, rental for each A easil, raise the inference that the parties intended the lease of each room separate from that of the others.lavvp(il There is nothing in the contract which would lead to the conclusion that the lease of one or more rooms was to be made dependent upon the lease of all the nine 395 rooms. Accordingl,, the use of each room b, the lessee gave rise to the corresponding obligation to pa, the monthl, rental for the same. "otabl,, respondent demanded pa,ment of rentals onl, for the rooms actuall, delivered to, and used b,, petitioners. !t ma, also be mentioned that the contract specificall, provides that the lease of 'ooms 6$, 67 and 6% was to ta?e effect onl, when the tenants thereof would vacate the premises. Absent a clear showing that the previous tenants had vacated the premises, respondent had no obligation to deliver possession of the sub/ect rooms to petitioners. Thus, petitioners cannot use the nonAdeliver, of 'ooms 6$, 67 and 6% as an e2cuse for their failure to pa, the rentals due on the other rooms the, occupied.0avvp(il !n light of the foregoing dis)uisition, respondent has ever, right to e2ercise his right to e/ect the erring lessees. The partiesQ contracts of lease contain identical provisions, to wit< !n case of default b, the 7;**;; in the pa,ment of rental on the fifth 35th5 da, of each month, the amount owing shall as penalt, bear interest at the rate of O:' percent 3#K5 per month, to be paid, without pre/udice to the right of the 7;**O' to terminate his contract, enter the premises, andGor e/ect the 7;**;; as hereinafter set forth9$4 0oreover, Article 1$76$6 of the Civil Code gives the lessor the right to /udiciall, e/ect the lessees in case of nonApa,ment of the monthl, rentals. A contract of lease is a consensual, bilateral, onerous and commutative contract b, which the owner temporaril, grants the use of his propert, to another, who underta?es to pa, the rent therefor. $# or failure to pa, the rent, petitioners have no right to remain in the leased premises. =1;'; O';, premises considered, the petition is (;"!;( and the *tatus Huo Order dated +anuar, 1%, 1999 is hereb, 7! T;(. The (ecision of the Court of Appeals dated 0a, 4$, 199% and its 'esolution dated (ecember 1., 199% in CAAB.'. *- "o. 67769 are A !'0;(. *O O'(;';(.

14$4 G.R. No. 124922 30ne 22, 1998 3$MM5 CO, do,n7 b0),ne)) 0nder ?8e name B )?1-e DRAGON M# AL MANU!AC UR$NG, petitioner, vs. COUR O! A""#ALS and 2ROAD>A5 MO OR SAL#S COR"ORA $ON, respondents. MAR $N#Z, J.: 1 On +ul, 1%, 199., petitioner entrusted his "issan pic?Aup car 19%% model to private respondent M which is engaged in the sale, distribution and repair of motor vehicles M for the following /ob repair services and suppl, of parts< M @leed in/ection pump and all no>>les9 M Ad/ust valve tappet9 M Change oil and filter9 M Open up and service four wheel bra?es, clean and ad/ust9 M 7ubricate accelerator lin?ages9 M 'eplace aircon belt9 and M 'eplace batter, 2

3T5he cost of the "issan -ic?Aup four 3#5 door when the plaintiff purchased it from the defendent is -664,5..... e2cluding accessories which were installed in the vehicle b, the plaintiff consisting of four 3#5 brand new tires, magwheels, stereo spea?er, amplifier which amount all to -4.,....... !t is agreed that the vehicle was lost on +ul, 4#, 199. &appro2imatel, two 345 ,ears and five 355 months from the date of the purchase.& !t was agreed that the plaintiff paid the defendant the cost of service and repairs as earl, as +ul, 41, 199. in the amount of -1,697... which amount was received and dul, receipted b, the defendant compan,. !t was also agreed that the present value of a brand new vehicle of the same t,pe at this time is -#45,...... 4 without accessories. The, li?ewise agreed that the sole issue for trial was who between the parties shall bear the loss of the vehicle which necessitates the resolution of & whether private respondent was indeed negligent. After trial, the court a Buo found private respondent guilt, of dela, in the performance of its obligation and held it liable to petitioner for the value of the lost vehicle and ' its accessories plus interest and attorne,Cs fees. On appeal, the Court of Appeals 3CA5 reversed the ruling of the lower court and ordered the dismissal ( of petitionerCs damage suit. The CA ruled that< 315 the trial court was limited to resolving the issue of negligence as agreed during preAtrial9 hence it cannot pass on the issue of dela,9 and 345 the vehicle was lost due to a fortuitous event. !n a petition for review to this Court, the principal )uer, raised is whether a repair shop can be held liable for the loss of a customerCs vehicle while the same is in its custod, for repair or other /ob servicesO The Court resolves the )uer, in favor of the customer. irst, on the technical aspect involved. Contrar, to the CAC s pronouncement, the rule that the determination of issues at a preAtrial conference bars the consideration of other issues on appeal, e2cept those that ma, involve privilege or 8 impeaching matter, is inapplicable to this case. The )uestion of dela,, though not specificall, mentioned as an issue at the preAtrial ma, be tac?led b, the court considering that it is necessaril, intertwined and intimatel, connected with the principal issue agreed upon b, the parties, i.e., who will bear the loss and whether there was negligence. -etitionerCs imputation of negligence to private respondent is premised on dela, which is the ver, basis of the formerCs complaint. Thus, it was unavoidable for the court to resolve the case, particularl, the )uestion of negligence without considering whether private respondent was guilt, of dela, in the performance of its obligation. On the merits. !t is a not defense for a repair shop of motor vehicles to escape liabilit, simpl, because the damage or loss of a thing lawfull, placed in its possession was due to carnapping. Carnapping per se cannot be

-rivate respondent undertoo? to return the vehicle on +ul, 41, 199. full, serviced and supplied in accordance with the /ob contract. After petitioner % paid in full the repair bill in the amount of -1,697... private respondent issued to him a gate pass for the release of the vehicle on said date. @ut came +ul, 41, 199., the latter could not release the vehicle as its batter, was wea? and was not ,et replaced. 7eft with no option, petitioner himself bought a new batter, nearb, and delivered it to private respondent for installation on the same da,. 1owever, the batter, was not installed and the deliver, of the car was rescheduled to +ul, 4#, 199. or three 365 da,s later. =hen petitioner sought to reclaim his car in the afternoon of +ul, 4#, 199., he was told that it was carnapped earlier that morning while being roadAtested b, private respondentCs emplo,ee along -edro Bil and -ere> *treets in -aco, 0anila. -rivate respondent said that the incident was reported to the police. 1aving failed to recover his car and its accessories or the value thereof, petitioner filed a suit for damages against private respondent anchoring his claim on the latterCs alleged negligence. or its part, private respondent contended that it has no liabilit, because the car was lost as result of a fortuitous event M the carnapping. (uring preAtrial, the parties agreed that<

considered as a fortuitous event. The fact that a thing was unlawfull, and forcefull, ta?en from anotherCs rightful possession, as in cases of carnapping, does not automaticall, give rise to a fortuitous event. To be considered as such, carnapping entails more than the mere forceful ta?ing of anotherCs propert,. !t must be proved and established that the event was an act of Bod or was done solel, b, third parties and that neither the claimant nor the 9 person alleged to be negligent has an, participation. !n accordance with the 'ules of evidence, the burden of proving that the loss was due to a 10 fortuitous event rests on him who invo?es it M which in this case is the private respondent. 1owever, other than the police report of the alleged carnapping incident, no other evidence was presented b, private respondent to the effect that the incident was not due to its fault. A police report of an alleged crime, to which onl, private respondent is priv,, does not suffice to establish the carnapping. "either does it prove that there was no fault on the part of private respondent notwithstanding the partiesC agreement at the preA trial that the car was carnapped. Carnapping does not foreclose the pissibilit, of fault or negligence on the part of private respondent. ;ven assuming arguendo that carnapping was dul, established as a fortuitous event, still private respondent cannot escape liabilit,. Article 11$5 11 of the "ew Civil Code ma?es an obligor who is guilt, of dela, responsible even for a fortuitous event until he has effected the deliver,. !n this case, private respondent was alread, in dela, as it was supposed to deliver petitionerCs car three 365 da,s before it was lost. -etitionerCs agreement to the rescheduled deliver, does not defeat his claim as private respondent had alread, breached its obligation. 0oreover, such accession cannot be construed as waiver of petitionerCs right to hold private respondent liable because the car was unusable and thus, petitioner had no option but to leave it. Assuming further that there was no dela,, still wor?ing against private respondent is the legal presumption under Article 14$5 that its possession of 12 the thing at the time it was lost was due to its fault. This presumption is reasonable since he who has the custod, and care of the thing can easil, e2plain the circumstances of the loss. The vehicle owner has no dut, to show that the repair shop was at fault. All that petitioner needs to prove, as claimant, is the simple fact that private respondent was in possession of the vehicle at the time it was lost. !n this case, private respondentCs possession at the time of the loss is undisputed. Conse)uentl,, the burden shifts to the possessor who needs to present controverting evidence sufficient enough to overcome that presumption. 0oreover, the e2empting circumstances M earth)ua?e, flood, storm or other natural calamit, M when the presumption 1% of fault is not applicable do not concur in this case. Accordingl,, having failed to rebut the presumption and since the case does not fall under the e2ceptions, private respondent is answerable for the loss.

!t must li?ewise be emphasi>ed that pursuant to Articles 117# and 14$4 of the "ew Civil Code, liabilit, attaches even if the loss was due to a fortuitous 14 event if &the nature of the obligation re)uires the assumption of ris?&. Carnapping is a normal business ris? for those engaged in the repair of motor vehicles. or /ust as the owner is e2posed to that ris? so is the repair shop since the car was entrusted to it. That is wh,, repair shops are re)uired 1& to first register with the (epartment of Trade and !ndustr, 3(T!5 and to secure an insurance polic, for the &shop covering the propert, entrusted b, its customer for repair, service or maintenance& as a preAre)uisite for such 1' registrationGaccreditation. 8iolation of this statutor, dut, constitutes 1( negligence per se. 1aving ta?en custod, of the vehicle private respondent is obliged not onl, to repair the vehicle but must also provide the customer with some form of securit, for his propert, over which he loses immediate control. An owner who cannot e2ercise the seven 375 ;uses or attributes of ownership M the right to possess, to use and en/o,, to abuse or consume, to accessories, to dispose or alienate, to recover or vindicate and to the fruits M 18 is a crippled owner. ailure of the repair shop to provide securit, to a motor vehicle owner would leave the latter at the merc, of the former. 0oreover, on the assumption that private respondentCs repair business is dul, registered, it presupposes that its shop is covered b, insurance from which it ma, recover the loss. !f private respondent can recover from its insurer, then it would be un/ustl, enriched if it will not compensate petitioner to whom no fault can be attributed. Otherwise, if the shop is not registered, then the presumption of negligence applies. One last thing. =ith respect to the value of the lost vehicle and its accessories for which the repair shop is liable, it should be based on the fair mar?et value that the propert, would command at the time it was entrusted to it or such other value as agreed upon b, the parties subse)uent to the loss. *uch recoverable value is fair and reasonable considering that the value of the vehicle depreciates. This value ma, be recovered without pre/udice to such other damages that a claimant is entitled under applicable laws. =1;'; O';, premises considered, the decision of the Court Appeals is ';8;'*;( and *;T A*!(; and the decision of the court a Buo is ';!"*TAT;(. *O O'(;';(. G.R. No. 10(9'8 Oc?ober %0, 199' #L$AS S. C$"R$ANO andCor #.S. C$"R$ANO #N #R"R$S#S, petitioner, vs. H# COUR O! A""#ALS and MACL$N #L#C RON$CS, $NC., respondents.

M#NDOZA, J.:p This is a petition for review of the decision of the Court of Appeals in CAA 2 B.'. C8 "o. 6$.#5 which affirmed in toto the decision of @ranch 5% of the Hue>on Cit, 'egional Trial Court, ordering the petitioner to pa, -454,155... to private respondent for the loss of the latterCs vehicle while undergoing rustproofing and -1.,...... in attorne,Cs fees. The facts of the case are as follows< -etitioner ;lias *. Cipriano is the owner of ;.*. Cipriano ;nterprises, which is engaged in the rustproofing of vehicles, under the st,le 0obil?ote. On April 6., 1991, private respondent 0aclin ;lectronics, !nc., through an emplo,ee, brought a 199. model Fia -ride -eopleCs car to petitionerCs shop for rustproofing. The car had been purchased the ,ear before the !ntegrated Auto *ales, !nc. for -454,155.... % The vehicle was received in the shop under +ob Order "o. 1465%1, which showed the date it was received for rustproofing as well its condition at the time. "either the time of acceptance nor the hour of release, however, was specified. According to the petitioner, the car was brought to his shop at 1. oCcloc? in the morning of April 6., 1991 and was read, for release later that afternoon, as it too? onl, si2 hours to complete the process of rustproofing. !n the afternoon of 0a, 1, 1991, fire bro?e out at the 7ambat restaurant, which petitioner also owned, ad/oining his 0obil?ote rustproofing shop. The fire destro,ed both the shop and the restaurant, including private respondentCs Fia -ride. The car had been ?ept inside the building, allegedl, to protect it from theft. -etitioner claimed that despite efforts to save the vehicle, there was simpl, not enough time to get it out of the building, unli?e three other cars which had been saved because the, were par?ed near the 4 entrance of the garage. On 0a, %, 1991, private respondent sent a letter to petitioner, demanding reimbursement for the value of the Fia -ride. !n repl,, petitioner denied liabilit, on the ground that the fire was a fortuitous event. This prompted private respondent to bring this suit for the value of its vehicle and for damages against petitioner. -rivate respondent alleged that its vehicle was lost due to the negligence and imprudence of the petitioner, citing petitionerCs failure to register his business with the (epartment of Trade and !ndustr, under -.(. "o. 1574 and to insure it as re)uired in the rules implementing the & (ecree. !n his Answer, petitioner invo?ed Art. 117# of the Civil Code and denied liabilit, for the loss which he alleged was due to fortuitous event. 1e later testified that he emplo,ed an electrician who regularl, inspected the lighting 1

in his restaurant and rustproofing shop. !n addition, he claimed he had installed fireAfighting devices and that the fire was an accident entirel, independent of his will and devoid of an, negligence on his part. 1e further averred that private respondentCs car was read, for release as earl, as afternoon of April 6., 1991 and that it was private respondentCs dela, in claiming it that was the cause of the loss. -etitioner e2plained that rustproofing involved spra,ing asphaltAli?e materials underneath a motor vehicle so that rust will not corrode its bod, and that the materials and chemicals used for this purpose are not inflammable. Therefore, he could not be made to assume the ris? of loss due to fire. 1e also claimed that he was not re)uired to register his business with the (epartment of Trade and !ndustr,, because he was not covered b, -.(. "o. 1574. On the other hand, private respondent argued that petitioner was liable for the loss of the car even if it was caused b, a fortuitous event. !t contended that the nature of petitionerCs business re)uired him to assume the ris? because under -.(. "o. 1574, petitioner was re)uired to insure his propert, as well as those of his customers. The trial court sustained the private respondentCs contention that the &failure of defendant to compl, with -.(. "o. 1574 is in effect a manifest act of negligence which renders defendants Dpetitioner hereinE liable for the loss of ' the car even if the same was caused b, fire,& even as it ruled that the business of rustproofing is &definitel, covered& -.(. "o. 1574. *ince petitioner did not register his business and insure it, he must bear the cost of loss of his customers. As alread, noted, the court ordered petitioner to pa, private respondent -454,155... with interest at $K per annum from the filing of the case and attorne,Cs fees in the amount of -1.,....... On Appeal, the decision was affirmed. The Court of Appeals ruled that the provisions of the Civil Code relied upon b, the petitioner are not applicable to this case, and that the law applicable to the case is -.(. "o. 1574, the purpose of which is to protect customers who entrust their properties to service and repair enterprises. The Court of Appeals held that b, virtue of the provisions of -.(. "o. 1574 and its implementing rules and regulations which re)uire fire insurance coverage prior to accreditation, owners of service and repair enterprises assume the ris? of loss of their customerCs propert,. The appellate court stated< (efendantAappellant was operating the business of rustproofing of cars and other motor vehicles illegall, at the time of the fire in )uestion9 i.e., without the necessar, accreditation and license from the (epartment of Trade and !ndustr,, and it is for this reason that it did not carr, at least a fire insurance coverage to protect the vehicles entrusted to it b, its customers. Therefore, it must bear the conse)uences of such illegal operation, including the ris? of losses or in/uries to the vehicles of its customers brought about b,

unforeseen or fortuitous events li?e the fire that gutted its shop and completel, burned appelleeCs car while said vehicle was in its ( possession. The Court of Appeals also affirmed the award of attorne,Cs fees, ruling that although the lower court did not e2pressl, and specificall, state the reason for the award, the basis therefor could be inferred from the finding that petitioner un/ustl, refused to pa, private respondentCs valid and demandable claim. *aid the appellate court< *uch wanton, rec?less, and illegal operation of appellantCs business resulted in appelleeCs lac? of protection from the fire that gutted appellantCs shop and which completel, burned its car while in appellantCs possession for rustproofing. Iet appellant adamantl, and stubbornl, refused to pa, appellee the value of its lost car. !t was, therefore, correctl, ordered b, the court a Buo to pa, appellee reasonable attorne,Cs fees as it had un/ustl, and unreasonabl, refused to satisf, the latterCs plainl, valid, /ust, and demandable claim, compelling said appellee to file this action to protect its 8 interests 3Art. 44.%, pars. 345 and 355, "ew Civil Code5. 1ence, this appeal. -etitioner contends that the fire which destro,ed private respondentCs car was a fortuitous event for which he cannot be held responsible. !n support of his argument, he cites the following provisions of the Civil Code< Art. 117#. ;2cept in cases e2pressl, specified b, the law, or when it is otherwise declared b, stipulation, or when the nature of the obligation re)uires the assumption of ris?, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable. Art. 14$4. An obligation which consists in the deliver, of a determinate thing shall be e2tinguished if it should be lost or destro,ed without the fault of the debtor, and before he has incurred in dela,. =hen b, law or stipulation, the obligor is liable even for fortuitous events, the loss of the thing does not e2tinguish the obligation, and he shall be responsible for damages. The same rule applies when the nature of the obligation re)uires the assumption of ris?. The contention is without merit. The issue in this case is whether petitioner was re)uired to insure his business and the vehicles received b, him in the course of his business and, if so, whether his failure to do so constituted negligence, rendering him liable for loss due to the ris? re)uired to be insured against. =e hold that both )uestions must be answered in the affirmative. =e have alread, held that violation of a statutor, dut, is negligence per se. 9 !n ".". Cruz and Co., 8nc. v. Court of 4ppeals, we held the owner of a furniture shop liable for the destruction of the plaintiffCs house in a fire which

started in his establishment in view of his failure to compl, with an ordinance 10 which re)uired the construction of a firewall. !n :eague v. "ernandez, we stated that where the ver, in/ur, which was intended to be prevented b, the ordinance has happened, nonAcompliance with the ordinance was not onl, an act of negligence, but also the pro2imate cause of the death. !ndeed, the e2istence of a contract between petitioner and private respondent does not bar a finding of negligence under the principles of 11 BuasiAdelict, as we recentl, held in "abre v. Court of 4ppeals. -etitionerCs negligence is the source of his obligation. 1e is not being held liable for breach of his contractual obligation due to negligence but for his negligence in not compl,ing with a dut, imposed on him b, law. !t is therefore immaterial that the loss occasioned to private respondent was due to a fortuitous event, since it was petitionerCs negligence in not insuring against the ris? which was the pro2imate cause of the loss. Thus, -.(. "o. 1574, U1 re)uires service and repair enterprises for motor vehicles, li?e that petitionerCs, to register with (epartment of Trade and !ndustr,. As condition for such registration or accreditation, 0inistr, Order "o. 64 re)uires covered enterprises to secure insurance coverage. 'ule !!! of 12 this Order provides in pertinent parts< U1 M $!CD8$!M!7:& "9$ 4CC$!D8:4:897 15 ;nterprises appl,ing for original accreditation shall submit the following< 1.1 7ist of machineriesGe)uipmentGtools in useful condition9 1.4 7ist of certified engineersGaccredited technicians mechanics with their personal data9 1.6 Copy of 8nsurance #olicy of t(e s(op covering t(e property entrusted by its customer for repair, service or maintenance toget(er +it( a copy of t(e official receipt covering t(e full payment of premium< 1.# Cop, of @ond referred to under *ection 7, 'ule !!! of this 'ules and 'egulations9 1.5 =ritten service warrant, in the form prescribed b, the @ureau9 1.$ Certificate issued b, the *ecurities and ;2change Commission and Articles of !ncorporation or -artnership in case of corporation or partnership9 1.7 *uch other additional documents which the (irector ma, re)uire from time to time. U% M 87&D$47C! #9L8CE The insurance polic, of the following ris?s li?e theft, pilferage, fire, flood and loss should cover e2clusivel, the machines, motor ve(icles, heav, e)uipment, engines, electronics, electrical airconditioners, refrigerators,

office machines and data processing e)uipment, medical and dental e)uipment, ot(er consumer mec(anical and industrial eBuipment stored for repair andFor service in t(e premises of t(e applicant . There is thus a statutor, dut, imposed on petitioner and it is for his failure to compl, with this dut, that he was guilt, or negligence rendering him liable for damages to private respondent. =hile the fire in this case ma, be considered 1% a fortuitous event, this circumstance cannot e2empt petitioner from liabilit, for loss. =e thin?, however, that the Court of Appeals erred in sustaining the award of attorne,Cs fees b, the lower court. !t is now settled that the reasons or grounds for an award of attorne,Cs fees must be set forth in the decision of 14 the court. The, cannot be left to inference as the appellate court held in this case. The reason for this is that it is not sound polic, to penali>e the right to litigate. An award of attorne,Cs fees, being an e2ception to this polic, and 1& limited to the grounds enumerated in the law, must be full, /ustified in the decision. !t can not simpl, be inserted as an item of recoverable damages in the /udgment of the court. *ince in this case there is no /ustification for the award of attorne,Cs fees in the decision of the trial court, it was error for the Court of Appeals to sustain such award. =1;'; O';, the decision, dated "ovember 1%, 1994, of the Court of Appeals is A !'0;(, with the modification that the award of attorne,Cs fees is (;7;T;(. *O O'(;';(. 14$6 G.R. No. 10(9'8 Oc?ober %0, 199' #L$AS S. C$"R$ANO andCor #.S. C$"R$ANO #N #R"R$S#S, petitioner, vs. H# COUR O! A""#ALS and MACL$N #L#C RON$CS, $NC., respondents. M#NDOZA, J.:p This is a petition for review of the decision of the Court of Appeals in CAA 2 B.'. C8 "o. 6$.#5 which affirmed in toto the decision of @ranch 5% of the Hue>on Cit, 'egional Trial Court, ordering the petitioner to pa, -454,155... to private respondent for the loss of the latterCs vehicle while undergoing rustproofing and -1.,...... in attorne,Cs fees. The facts of the case are as follows< 1

-etitioner ;lias *. Cipriano is the owner of ;.*. Cipriano ;nterprises, which is engaged in the rustproofing of vehicles, under the st,le 0obil?ote. On April 6., 1991, private respondent 0aclin ;lectronics, !nc., through an emplo,ee, brought a 199. model Fia -ride -eopleCs car to petitionerCs shop for rustproofing. The car had been purchased the ,ear before the !ntegrated Auto *ales, !nc. for -454,155.... % The vehicle was received in the shop under +ob Order "o. 1465%1, which showed the date it was received for rustproofing as well its condition at the time. "either the time of acceptance nor the hour of release, however, was specified. According to the petitioner, the car was brought to his shop at 1. oCcloc? in the morning of April 6., 1991 and was read, for release later that afternoon, as it too? onl, si2 hours to complete the process of rustproofing. !n the afternoon of 0a, 1, 1991, fire bro?e out at the 7ambat restaurant, which petitioner also owned, ad/oining his 0obil?ote rustproofing shop. The fire destro,ed both the shop and the restaurant, including private respondentCs Fia -ride. The car had been ?ept inside the building, allegedl, to protect it from theft. -etitioner claimed that despite efforts to save the vehicle, there was simpl, not enough time to get it out of the building, unli?e three other cars which had been saved because the, were par?ed near the 4 entrance of the garage. On 0a, %, 1991, private respondent sent a letter to petitioner, demanding reimbursement for the value of the Fia -ride. !n repl,, petitioner denied liabilit, on the ground that the fire was a fortuitous event. This prompted private respondent to bring this suit for the value of its vehicle and for damages against petitioner. -rivate respondent alleged that its vehicle was lost due to the negligence and imprudence of the petitioner, citing petitionerCs failure to register his business with the (epartment of Trade and !ndustr, under -.(. "o. 1574 and to insure it as re)uired in the rules implementing the & (ecree. !n his Answer, petitioner invo?ed Art. 117# of the Civil Code and denied liabilit, for the loss which he alleged was due to fortuitous event. 1e later testified that he emplo,ed an electrician who regularl, inspected the lighting in his restaurant and rustproofing shop. !n addition, he claimed he had installed fireAfighting devices and that the fire was an accident entirel, independent of his will and devoid of an, negligence on his part. 1e further averred that private respondentCs car was read, for release as earl, as afternoon of April 6., 1991 and that it was private respondentCs dela, in claiming it that was the cause of the loss. -etitioner e2plained that rustproofing involved spra,ing asphaltAli?e materials underneath a motor vehicle so that rust will not corrode its bod, and that the materials and chemicals used for this purpose are not inflammable. Therefore, he could not be made to assume the ris? of loss due to fire. 1e

also claimed that he was not re)uired to register his business with the (epartment of Trade and !ndustr,, because he was not covered b, -.(. "o. 1574. On the other hand, private respondent argued that petitioner was liable for the loss of the car even if it was caused b, a fortuitous event. !t contended that the nature of petitionerCs business re)uired him to assume the ris? because under -.(. "o. 1574, petitioner was re)uired to insure his propert, as well as those of his customers. The trial court sustained the private respondentCs contention that the &failure of defendant to compl, with -.(. "o. 1574 is in effect a manifest act of negligence which renders defendants Dpetitioner hereinE liable for the loss of ' the car even if the same was caused b, fire,& even as it ruled that the business of rustproofing is &definitel, covered& -.(. "o. 1574. *ince petitioner did not register his business and insure it, he must bear the cost of loss of his customers. As alread, noted, the court ordered petitioner to pa, private respondent -454,155... with interest at $K per annum from the filing of the case and attorne,Cs fees in the amount of -1.,....... On Appeal, the decision was affirmed. The Court of Appeals ruled that the provisions of the Civil Code relied upon b, the petitioner are not applicable to this case, and that the law applicable to the case is -.(. "o. 1574, the purpose of which is to protect customers who entrust their properties to service and repair enterprises. The Court of Appeals held that b, virtue of the provisions of -.(. "o. 1574 and its implementing rules and regulations which re)uire fire insurance coverage prior to accreditation, owners of service and repair enterprises assume the ris? of loss of their customerCs propert,. The appellate court stated< (efendantAappellant was operating the business of rustproofing of cars and other motor vehicles illegall, at the time of the fire in )uestion9 i.e., without the necessar, accreditation and license from the (epartment of Trade and !ndustr,, and it is for this reason that it did not carr, at least a fire insurance coverage to protect the vehicles entrusted to it b, its customers. Therefore, it must bear the conse)uences of such illegal operation, including the ris? of losses or in/uries to the vehicles of its customers brought about b, unforeseen or fortuitous events li?e the fire that gutted its shop and completel, burned appelleeCs car while said vehicle was in its ( possession. The Court of Appeals also affirmed the award of attorne,Cs fees, ruling that although the lower court did not e2pressl, and specificall, state the reason for the award, the basis therefor could be inferred from the finding that petitioner un/ustl, refused to pa, private respondentCs valid and demandable claim. *aid the appellate court< *uch wanton, rec?less, and illegal operation of appellantCs business resulted

in appelleeCs lac? of protection from the fire that gutted appellantCs shop and which completel, burned its car while in appellantCs possession for rustproofing. Iet appellant adamantl, and stubbornl, refused to pa, appellee the value of its lost car. !t was, therefore, correctl, ordered b, the court a Buo to pa, appellee reasonable attorne,Cs fees as it had un/ustl, and unreasonabl, refused to satisf, the latterCs plainl, valid, /ust, and demandable claim, compelling said appellee to file this action to protect its 8 interests 3Art. 44.%, pars. 345 and 355, "ew Civil Code5. 1ence, this appeal. -etitioner contends that the fire which destro,ed private respondentCs car was a fortuitous event for which he cannot be held responsible. !n support of his argument, he cites the following provisions of the Civil Code< Art. 117#. ;2cept in cases e2pressl, specified b, the law, or when it is otherwise declared b, stipulation, or when the nature of the obligation re)uires the assumption of ris?, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable. Art. 14$4. An obligation which consists in the deliver, of a determinate thing shall be e2tinguished if it should be lost or destro,ed without the fault of the debtor, and before he has incurred in dela,. =hen b, law or stipulation, the obligor is liable even for fortuitous events, the loss of the thing does not e2tinguish the obligation, and he shall be responsible for damages. The same rule applies when the nature of the obligation re)uires the assumption of ris?. The contention is without merit. The issue in this case is whether petitioner was re)uired to insure his business and the vehicles received b, him in the course of his business and, if so, whether his failure to do so constituted negligence, rendering him liable for loss due to the ris? re)uired to be insured against. =e hold that both )uestions must be answered in the affirmative. =e have alread, held that violation of a statutor, dut, is negligence per se. 9 !n ".". Cruz and Co., 8nc. v. Court of 4ppeals, we held the owner of a furniture shop liable for the destruction of the plaintiffCs house in a fire which started in his establishment in view of his failure to compl, with an ordinance 10 which re)uired the construction of a firewall. !n :eague v. "ernandez, we stated that where the ver, in/ur, which was intended to be prevented b, the ordinance has happened, nonAcompliance with the ordinance was not onl, an act of negligence, but also the pro2imate cause of the death. !ndeed, the e2istence of a contract between petitioner and private respondent does not bar a finding of negligence under the principles of 11 BuasiAdelict, as we recentl, held in "abre v. Court of 4ppeals. -etitionerCs negligence is the source of his obligation. 1e is not being held liable for

breach of his contractual obligation due to negligence but for his negligence in not compl,ing with a dut, imposed on him b, law. !t is therefore immaterial that the loss occasioned to private respondent was due to a fortuitous event, since it was petitionerCs negligence in not insuring against the ris? which was the pro2imate cause of the loss. Thus, -.(. "o. 1574, U1 re)uires service and repair enterprises for motor vehicles, li?e that petitionerCs, to register with (epartment of Trade and !ndustr,. As condition for such registration or accreditation, 0inistr, Order "o. 64 re)uires covered enterprises to secure insurance coverage. 'ule !!! of 12 this Order provides in pertinent parts< U1 M $!CD8$!M!7:& "9$ 4CC$!D8:4:897 15 ;nterprises appl,ing for original accreditation shall submit the following< 1.1 7ist of machineriesGe)uipmentGtools in useful condition9 1.4 7ist of certified engineersGaccredited technicians mechanics with their personal data9 1.6 Copy of 8nsurance #olicy of t(e s(op covering t(e property entrusted by its customer for repair, service or maintenance toget(er +it( a copy of t(e official receipt covering t(e full payment of premium< 1.# Cop, of @ond referred to under *ection 7, 'ule !!! of this 'ules and 'egulations9 1.5 =ritten service warrant, in the form prescribed b, the @ureau9 1.$ Certificate issued b, the *ecurities and ;2change Commission and Articles of !ncorporation or -artnership in case of corporation or partnership9 1.7 *uch other additional documents which the (irector ma, re)uire from time to time. U% M 87&D$47C! #9L8CE The insurance polic, of the following ris?s li?e theft, pilferage, fire, flood and loss should cover e2clusivel, the machines, motor ve(icles, heav, e)uipment, engines, electronics, electrical airconditioners, refrigerators, office machines and data processing e)uipment, medical and dental e)uipment, ot(er consumer mec(anical and industrial eBuipment stored for repair andFor service in t(e premises of t(e applicant . There is thus a statutor, dut, imposed on petitioner and it is for his failure to compl, with this dut, that he was guilt, or negligence rendering him liable for damages to private respondent. =hile the fire in this case ma, be considered 1% a fortuitous event, this circumstance cannot e2empt petitioner from liabilit, for loss. =e thin?, however, that the Court of Appeals erred in sustaining the award of

attorne,Cs fees b, the lower court. !t is now settled that the reasons or grounds for an award of attorne,Cs fees must be set forth in the decision of 14 the court. The, cannot be left to inference as the appellate court held in this case. The reason for this is that it is not sound polic, to penali>e the right to litigate. An award of attorne,Cs fees, being an e2ception to this polic, and 1& limited to the grounds enumerated in the law, must be full, /ustified in the decision. !t can not simpl, be inserted as an item of recoverable damages in the /udgment of the court. *ince in this case there is no /ustification for the award of attorne,Cs fees in the decision of the trial court, it was error for the Court of Appeals to sustain such award. =1;'; O';, the decision, dated "ovember 1%, 1994, of the Court of Appeals is A !'0;(, with the modification that the award of attorne,Cs fees is (;7;T;(. *O O'(;';(. G.R. No. L*20240 December %1, 19'& R#"U2L$C O! H# "H$L$""$N#S, plaintiffAappellee, vs. 3OS# GR$3ALDO, defendantAappellant. 9ffice of t(e &olicitor General for plaintiff'appellee. 8sabelo #. &amson for defendant'appellant. ZALD$4AR, J.: !n the ,ear 19#6 appellant +ose Bri/aldo obtained five loans from the branch office of the @an? of Taiwan, 7td. in @acolod Cit,, in the total sum of -1,4%1.97 with interest at the rate of $K per annum, compounded )uarterl,. These loans are evidenced b, five promissor, notes e2ecuted b, the appellant in favor of the @an? of Taiwan, 7td., as follows< On +une 1, 19#6, -$.....9 on +une 6, 19#6, -159.119 on +une 1%, 19#6, -44.%$9 on August 9, 19#6,-6.....9 on August 16, 19#6, -4....., all notes without due dates, but because the loans were due one ,ear after the, were incurred. To secure the pa,ment of the loans the appellant e2ecuted a chattel mortgage on the standing crops on his land, 7ot "o. 1#9# ?nown as 1acienda Campugas in 1inigiran, "egros Occidental. @, virtue of 8esting Order "o. -A#, dated +anuar, 41, 19#$, and under the authorit, provided for in the Trading with the ;nem, Act, as amended, the assets in the -hilippines of the @an? of Taiwan, 7td. were vested in the Bovernment of the :nited *tates. -ursuant to the -hilippine -ropert, Act of 19#$ of the :nited *tates, these assets, including the loans in )uestion, were subse)uentl, transferred to the 'epublic of the -hilippines b, the Bovernment of the :nited *tates under Transfer Agreement dated +ul, 4., 195#. These assets were among the properties that were placed under the administration of the @oard of 7i)uidators created under ;2ecutive Order "o.

674, dated "ovember 4#, 195., and in accordance with 'epublic Acts "os. % and #77 and other pertinent laws. On *eptember 49, 195# the appellee, 'epublic of the -hilippines, represented b, the Chairman of the @oard of 7i)uidators, made a written e2tra/udicial demand upon the appellant for the pa,ment of the account in )uestion. The record shows that the appellant had actuall, received the written demand for pa,ment, but he failed to pa,. The aggregate amount due as principal of the five loans in )uestion, computed under the @allant,ne scale of values as of the time that the loans were incurred in 19#6, was -%%9.$#9 and the interest due thereon at the rate of $K per annum compounded )uarterl,, computed as of (ecember 61, 1959 was -4,677.46. On +anuar, 17, 19$1 the appellee filed a complaint in the +ustice of the -eace Court of 1inigaran, "egros Occidental, to collect from the appellant the unpaid account in )uestion. The +ustice of the -eace Of 1inigaran, after hearing, dismissed the case on the ground that the action had prescribed. The appellee appealed to the Court of irst !nstance of "egros Occidental and on 0arch 4$, 19$4 the court a Buo rendered a decision ordering the appellant to pa, the appellee the sum of -4,677.46 as of (ecember 61, 1959, plus interest at the rate of $K per annum compounded )uarterl, from the date of the filing of the complaint until full pa,ment was made. The appellant was also ordered to pa, the sum e)uivalent to 1.K of the amount due as attorne,Cs fees and costs. The appellant appealed directl, to this Court. (uring the pendenc, of this appeal the appellant +ose Bri/aldo died. :pon motion b, the *olicitor Beneral this Court, in a resolution of 0a, 16, 19$6, re)uired 0anuel 7agtapon, +acinto 7agtapon, 'uben 7agtapon and Anita 7. Aguilar, who are the legal heirs of +ose Bri/aldo to appear and be substituted as appellants in accordance with *ection 17 of 'ule 6 of the 'ules of Court. !n the present appeal the appellant contends< 315 that the appellee has no cause of action against the appellant9 345 that if the appellee has a cause of action at all, that action had prescribed9 and 365 that the lower court erred in ordering the appellant to pa, the amount of -4,677.46. !n discussing the first point of contention, the appellant maintains that the appellee has no privit, of contract with the appellant. !t is claimed that the transaction between the Taiwan @an?, 7td. and the appellant, so that the appellee, 'epublic of the -hilippines, could not legall, bring action against the appellant for the enforcement of the obligation involved in said transaction. This contention has no merit. !t is true that the @an? of Taiwan, 7td. was the original creditor and the transaction between the appellant and the @an? of Taiwan was a private contract of loan. 1owever, pursuant to the Trading with the ;nem, Act, as amended, and ;2ecutive Order "o. 9.95 of the :nited *tates9 and under 8esting Order "o. -A#, dated +anuar, 41, 19#$,

the properties of the @an? of Taiwan, 7td., an entit, which was declared to be under the /urisdiction of the enem, countr, 3+apan5, were vested in the :nited *tates Bovernment and the 'epublic of the -hilippines, the assets of the @an? of Taiwan, 7td. were transferred to and vested in the 'epublic of the -hilippines. The successive transfer of the rights over the loans in )uestion from the @an? of Taiwan, 7td. to the :nited *tates Bovernment, and from the :nited *tates Bovernment to the government of the 'epublic of the -hilippines, made the 'epublic of the -hilippines the successor of the rights, title and interest in said loans, thereb, creating a privit, of contract between the appellee and the appellant. !n defining the word &priv,& this Court, in a case, said< The word &priv,& denotes the idea of succession ... hence an assignee of a credit, and one subrogated to it, etc. will be privies9 in short, he who b, succession is placed in the position of one of those who contracted the /udicial relation and e2ecuted the private document and appears to be substituting him in the personal rights and obligation is a priv, 3Alpurto vs. -ere>, 6% -hil. 7%5, 79.5. The :nited *tates of America acting as a belligerent sovereign power sei>ed the assets of the @an? of Taiwan, 7td. which belonged to an enem, countr,. The confiscation of the assets of the @an? of Taiwan, 7td. being an involuntar, act of war, and sanctioned b, international law, the :nited *tates succeeded to the rights and interests of said @an? of Taiwan, 7td. over the assets of said ban?. As successor in interest in, and transferee of, the propert, rights of the :nited *tates of America over the loans in )uestion, the 'epublic of the -hilippines had thereb, become a priv, to the original contracts of loan between the @an? of Taiwan, 7td. and the appellant. !t follows, therefore, that the 'epublic of the -hilippines has a legal right to bring the present action against the appellant +ose Bri/aldo. The appellant li?ewise maintains, in support of his contention that the appellee has no cause of action, that because the loans were secured b, a chattel mortgage on the standing crops on a land owned b, him and these crops were lost or destro,ed through enem, action his obligation to pa, the loans was thereb, e2tinguished. This argument is untenable. The terms of the promissor, notes and the chattel mortgage that the appellant e2ecuted in favor of the @an? of Taiwan, 7td. do not support the claim of appellant. The obligation of the appellant under the five promissor, notes was not to deliver a determinate thing namel,, the crops to be harvested from his land, or the value of the crops that would be harvested from his land. 'ather, his obligation was to pa, a generic thing M the amount of mone, representing the total sum of the five loans, with interest. The transaction between the appellant and the @an? of Taiwan, 7td. was a series of five contracts of simple loan of sums of mone,. &@, a contract of 3simple5 loan, one of the parties delivers to another ... mone, or other consumable thing upon the condition that the same amount of the same ?ind and )ualit, shall be paid.& 3Article 1966, Civil Code5 The obligation of the appellant under the five

promissor, notes evidencing the loans in )uestions is to pa, the value thereof9 that is, to deliver a sum of mone, M a clear case of an obligation to deliver, a generic thing. Article 14$6 of the Civil Code provides< !n an obligation to deliver a generic thing, the loss or destruction of an,thing of the same ?ind does not e2tinguish the obligation. The chattel mortgage on the crops growing on appellantCs land simpl, stood as a securit, for the fulfillment of appellantCs obligation covered b, the five promissor, notes, and the loss of the crops did not e2tinguish his obligation to pa,, because the account could still be paid from other sources aside from the mortgaged crops. !n his second point of contention, the appellant maintains that the action of the appellee had prescribed. The appellant points out that the loans became due on +une 1, 19##9 and when the complaint was filed on +anuar, 17,19$1 a period of more than 1$ ,ears had alread, elapsed M far be,ond the period of ten ,ears when an action based on a written contract should be brought to court. This contention of the appellant has no merit. irstl,, it should be considered that the complaint in the present case was brought b, the 'epublic of the -hilippines not as a nominal part, but in the e2ercise of its sovereign functions, to protect the interests of the *tate over a public propert,. :nder paragraph # of Article 11.% of the Civil Code prescription, both ac)uisitive and e2tinctive, does not run against the *tate. This Court has held that the statute of limitations does not run against the right of action of the Bovernment of the -hilippines 3Bovernment of the -hilippine !slands vs. 0onte de -iedad, etc., 65 -hil. 76%A7515.*econdl,, the running of the period of prescription of the action to collect the loan from the appellant was interrupted b, the moratorium laws 3;2ecutive Orders "o. 45, dated "ovember 1%, 19##9 ;2ecutive Order "o. 64. dated 0arch 1., 19#59 and 'epublic Act "o. 6#4, approved on +ul, 4$, 19#%5. The loan in )uestion, as evidenced b, the five promissor, notes, were incurred in the ,ear 19#6, or during the period of +apanese occupation of the -hilippines. This case is s)uarel, covered b, ;2ecutive Order "o. 45, which became effective on "ovember 1%, 19##, providing for the suspension of pa,ments of debts incurred after (ecember 61, 19#1. The period of prescription was, therefore, suspended beginning "ovember 1%, 19##. This Court, in the case of $utter vs. !steban 37A67.%, 0a, 1%, 1956, 96 -hil. $%5, declared on 0a, 1%, 1956 that the 0oratorium 7aws, '.A. "o. 6#4 and ;2ecutive Orders "os. 45 and 64, are unconstitutional9 but in that case this Court ruled that the moratorium laws had suspended the prescriptive period until 0a, 1%, 1956. This ruling was categoricall, reiterated in the decision in the case of Manila Motors vs. "lores, 7A969$, August 1$, 195$. !t follows, therefore, that the prescriptive period in the case now before :* was suspended from "ovember 1%,19##, when ;2ecutive Orders "os. 45 and 64 were declared unconstitutional b, this Court. Computed accordingl,, the prescriptive period was suspended for

% ,ears and $ months. @, the appellantCs own admission, the cause of action on the five promissor, notes in )uestion arose on +une 1, 19##. The complaint in the present case was filed on +anuar, 17, 19$1, or after a period of 1$ ,ears, $ months and 1$ da,s when the cause of action arose. !f the prescriptive period was not interrupted b, the moratorium laws, the action would have prescribed alread,9 but, as =e have stated, the prescriptive period was suspended b, the moratorium laws for a period of % ,ears and $ months. !f we deduct the period of suspension 3% ,ears and $ months5 from the period that elapsed from the time the cause of action arose to the time when the complaint was filed 31$ ,ears, $ months and 1$ da,s5 there remains a period of % ,ears and 1$ da,s. !n other words, the prescriptive period ran for onl, % ,ears and 1$ da,s. There still remained a period of one ,ear, 11 months and 1# da,s of the prescriptive period when the complaint was filed. !n his third point of contention the appellant maintains that the lower court erred in ordering him to pa, the amount of -4,677.46. !t is claimed b, the appellant that it was error on the part of the lower court to appl, the @allant,ne *cale of values in evaluating the +apanese war notes as of +une 19#6 when the loans were incurred, because what should be done is to evaluate the loans on the basis of the @allant,ne *cale as of the time the loans became due, and that was in +une 19##. This contention of the appellant is also without merit. The decision of the court a )uo ordered the appellant to pa, the sum of -4,677.46 as of (ecember 61, 1959, plus interest rate of $K per annum compounded )uarterl, from the date of the filing of the complaint. The sum total of the five loans obtained b, the appellant from the @an? of Taiwan, 7td. was -1,4%1.97 in +apanese war notes. Computed under the @allant,ne *cale of values as of +une 19#6, this sum of -1,4%1.97 in +apanese war notes in +une 19#6 is e)uivalent to -%%9.$# in genuine -hilippine currenc, which was considered the aggregate amount due as principal of the five loans, and the amount of -4,677.46 as of (ecember 61, 1959 was arrived at after computing the interest on the principal sum of -%%9.$# compounded )uarterl, from the time the obligations were incurred in 19#6. !t is the stand of the appellee that the @allant,ne scale of values should be applied as of the time the obligation was incurred, and that was in +une 19#6. This stand of the appellee was upheld b, the lower court9 and the decision of the lower court is supported b, the ruling of this Court in the case of 5ilado vs. De la Costa 3B.'. "o. 7A15., April 6., 19#99 #$ O.B. 5#745, which states< ... Contracts stipulating for pa,ments presumabl, in +apanese war notes ma, be enforced in our Courts after the liberation to the e2tent of the /ust obligation of the contracting parties and, as said notes have become worthless, in order that /ustice ma, be done and the part, entitled to be paid can recover their actual value in -hilippine Currenc,, +(at t(e debtor or defendant bank s(ould return or pay is t(e value of t(e Japanese military

notes in relation to t(e peso in #(ilippine Currency obtaining on t(e date +(en and at t(e place +(ere t(e obligation +as incurred unless t(e parties (ad agreed ot(er+ise. ... . 3italics supplied5 !" 8!;= O T1; O';BO!"B, the decision appealed from is affirmed, with costs against the appellant. !nasmuch as the appellant +ose Bri/aldo died during the pendenc, of this appeal, his estate must answer in the e2ecution of the /udgment in the present case. 12(0 G.R. No. 104(2' !ebr0ar1 11, 1999 4$C OR 5AM B 5#< SUN L#N , do,n7 b0),ne)) 0nder ?8e name and )?1-e o; "8,-,++,ne "r,n?,n7 >orD)E petitioners, vs. H# COUR O! A""#ALS and MAN"H$L $N4#S M#N COR"ORA $ON, respondents. M#NDOZA, J.: 1 This is a petition for review of the decision of the Court of Appeals affirming in toto the decision of the 'egional Trial Court of 0anila 3@ranch 1#95, ordering petitioners to pa, private respondent the amount of -4$$,1#$.%% plus interest, service charge, penalt, fees, and attorne,Cs fees and the costs, otherwise the chattel mortgage given to secure pa,ment of the loan would be foreclosed. The following are the facts< On 0a, 1.,1979, the parties in this case entered into a 7oan Agreement with Assumption of *olidar, 7iabilit, whereb, petitioners were given a loan of -5..,...... b, private respondent. The contract provided for the pa,ment of 14K annual interest, 4K monthl, penalt,, 1 1G4K monthl, service charge, 2 and 1.K attorne,Cs fees. (enominated the first !ndustrial Buarantee and 7oan und 3!B7 5, the loan was secured b, a chattel mortgage on the % printing machiner, in petitionersC establishment. -etitioners subse)uentl, obtained a second !B7 loan of -6..,...... evidenced b, two promissor, notes, dated +ul, 6, 19%1 and *eptember 6., 4 19%1. or this purpose, a new loan agreement was entered into b, the parties containing identical provisions as the first one, e2cept as to the annual interest which was increased to 1#K and the service charge which was reduced to 1K per annum. The deed of chattel mortgage was amended

correspondingl,.

&

@, April 4, 19%5, petitioners had paid their first loan of -5..,....... On "ovember #, 19%5, private respondent was placed under receivership b, the Central @an? and 'icardo 7irio and Cristina (esta/o were appointed as receiver and inAhouse e2aminer, respectivel,. On 0a, 17, 19%$, petitioners made a partial pa,ment of -5.,...... on the second loan. The, later wrote private respondent a letter, dated +une 1%, 19%$, proposing to settle their obligation. On +ul, 4, 19%$, private respondent, through its counsel, replied with a counterAoffer, namel,, that it would reduce the penalt, charges up to -1#.,......, provided petitioners ' can pa, their obligation on or before +ul, 6., 19%$. As of +ul, 61, 19%$, petitionersC total liabilit, to private respondent was ( -747,..1.65, bro?en down as follows< -rincipal M -495,#$9.#7 !nterest M 1$5,6%5... -enalties M 45#,%4..55 *ervice Charges M 11,64$.66 MMMMM TOTA7 -747,..1.65 On this date, petitioners paid -#1.,%5#.#7 b, means of a -ilipinas @an? 8 chec?, receipt of which was ac?nowledged b, (esta/o. The corresponding voucher for the chec? bears the following notation< &full pa,ment of !B7 9 7OA".& The amount of -#1.,%5#.#7 was the sum of the principal 3-495,#$9.#75 and the interest9 3-1$5,6%5...5 less the partial pa,ment of -5.,....... The private respondent sent two demand letters to petitioners, dated *eptember #, 19%$ and *eptember 45, 19%$, see?ing pa,ment of the balance of -4$$,1#$.%%. As petitioners did not respond, private respondent filed this case in the 'egional Trial Court of 0etro 0anila for the collection of -4$$,1#$.%% plus interests, penalties, and service charges or, in the alternative, for the foreclosure of the mortgaged machineries. !n their Answer, petitioners claimed that the, had full, paid their obligation to private respondent. The, contended that some time after receiving private respondentCs letter of +ul, 45, 19%$ 3concerning the conditional offer to reduce their penalt, charges5, petitioner 8ictor Iam and his wife, ;lena Iam, met with Carlos *obrepeLas, president of respondent corporation, during which the latter agreed to waive the penalties and service charges, provided petitioners paid the principal and interest, computed as of +ul, 61, 19%$, less

the earlier pa,ment of -5.,....... This is the reason wh, according to them the, onl, paid -#1.,%5#.#7. -etitioners added that this fact of full pa,ment is reflected in the voucher accompan,ing the -ilipinas @an? chec? the, issued, which bore the notation &full pa,ment of !B7 loan.& On April 6., 199., the lower court rendered a decision, the dispositive portion of which reads< =1;'; O';, in view of the foregoing, the defendants 8ictor Iam and Ie? *un 7ent are hereb, ordered to pa, /ointl, and severall,, the principal loan. balance of -4$$,1#$.%% as of *eptember #, 19%$ plus interest at 1#K per annum, service charge at 1K per annum and penalt, fees at 4K per month and to pa, plaintiff attorne,Cs fees e)uivalent to 1.K of the amount to be recovered, and to pa, the costs of suit, failing in which, the chattel mortgage instituted on the printing machineries and e)uipment described in the (eed of Chattel 0ortgage dated 0a, 1., 1979, as amended, is hereb, declared foreclosed and the sub/ect thereof sold in accordance with law to satisf, the /udgment herein rendered. *O O'(;';(. 10

at bar, it is undisputed than the alleged agreement to condone -4$$,19$.%% 14 of the second !B7 loan was not reduced in writing. "onetheless, petitioners insist that the voucher covering the -ilipinas @an? chec? for -#1.,%5#.#7, containing the notation that the amount is in &full pa,ment of !B7 loan,& constitutes documentar, evidence of such oral agreement. This contention is without merit. The notation in &full pa,ment of !B7 loan& merel, states petitionersC intention in ma?ing the pa,ment, but in no wa, does it bind private respondent. !t would have been a different matter if the notation appeared in a receipt issued b, respondent corporation, through its receiver, because then it would be an admission against interest. !ndeed, if private respondent reall, condoned the amount in )uestion, petitioners should have as?ed for a certificate of full pa,ment from respondent corporation, as the, did in the case of their first !B7 loan of 1& -5..,....... -etitioners, however, contend that the Central @an? e2aminer assigned to respondent corporation, Cristina (esta/o, signed the voucher in )uestion. (esta/o claimed that, when she signed the voucher, she failed to notice the statement that the amount of -#1.,%5#.#7 was being given in &full pa,ment of !B7 7oan.& *he said she merel, too? note of the amount and the chec? 1' number indicated therein. !n an, event, (esta/o, b, countersigning the voucher, did no more than ac?nowledge receipt of the pa,ment. *he cannot be held to have ascented thereb, to the pa,ment in full of petitionersC indebtedness to private respondent. !t was obvious she had no authorit, to condone an, indebtedness, her &issuing official receipts, preparing chec? 1( vouchers and documentation.& 0oreover, it is to be noted that the alleged agreement to condone the amount in )uestion was supposedl, entered into b, the parties sometime in +ul, 19%$, that is, after respondent corporation had been placed under receivership on "ovember #, 19%5. As held in Villanueva v. Court of 4ppeals 18 &the appointment of a receiver operates to suspend the authorit, of a DcorporationE and of its directors and officers over its propert, and effects, 19 such authorit, being reposed in the receiver<& Thus, *obrepeLas had no authorit, to condone the debt. !ndeed, 0rs. Iam herself testified that when she and her husband sought the release of the chattel mortgage over their propert,, the, were told that onl, the Central @an? would authori>e the same &because Dthe C@E the receiver.& 20 Considering this, petitioners cannot feign ignorance and plead good faith. The second assignment of error pertains to the petitionersC allegation that the, did not receive the two letters of demand sent b, private respondent on *eptember # and *eptember 45, 19%$. @oth the lower court and the Court of

On appeal, the Court of Appeals affirmed the decision of the trial court in toto. 1ence, this petition. -etitioners reiterate the same assignment of errors 11 made b, them before the Court of Appeals, to wit< "8$&: 4&&8G7!D !$$9$ T1AT T1; 7O=;' CO:'T B'!;8O:*7I ;'';( !" A!7!"B TO B!8; C';(;"C; TO T1; (OC:0;"TA'I A* =;77 A* T;*T!0O"!A7 ;8!(;"C; O T1; -;T!T!O";'* ';7AT!8; TO T1; -AI0;"T TO T1; ';*-O"(;"T O T1; A((!T!O"A7 7OA" :"(;' T1; A0;"(0;"T O (;;( O C1ATT;7 0O'TBAB;< 3;N1!@!T F, ';*-O"(;"T5 A"( A* ABA!"*T T1; T;*T!0O"I O ';*-O"(;"TC* =!T";**, C'!*T!"A 7. (;*TA+O. &!C97D 4&&8G7!D !$$9$ T1AT T1; CO:'T @;7O= ;'';( !" "OT TOTA77I (!*';BA'(!"B ;N1!@!T* ; A"( O T1; ';*-O"(;"T*. The )uestion in whether petitioners are liable for the pa,ment of the penalties and service charges on their loan which, as of +ul, 61, 19%$, amounted to -4$$94#$.%%. The answer is in the affirmative. Art. 147., par. 4 of the Civil Code provides 12 that e2press condonation must compl, with the forms of donation. Art. 7#%, par. 6 provides that the donation and acceptance of a movable, the value of which e2ceeds -5,...,.., must be made in writing, otherwise the same shall be void. !n this connection, under Art. #17, par. 1, obligations, actuall, referring to credits, -% are considered movable propert,. !n the case

Appeals found otherwise. =e have no reason to disturb this factual finding. !t is settled that findings of fact of trial courts, adopted and confirmed b, the Court of Appeals, are final and conclusive and, as a rule, will not be reviewed 21 on appeal. =1;'; O';, the decision of the Court of Appeals is A *O O'(;';(. G.R. No. 11(8(8 No6ember 1%, 199' MAN$LA !ASH$ONS, $NC., petitioner, vs. NA $ONAL LA2OR R#LA $ONS COMM$SS$ON, NON$ O ZAMORA and NAG<A<A$SANG MANGGAGA>A NG MAN$LA !ASH$ONS, $NC., respondents. 2#LLOS$LLO, J.: On 15 0arch 1996 respondent "ag?a?aisang 0anggagawa ng 0anila ashions, !nc., through its president, respondent "onito Jamora, filed a complaint before the 7abor Arbiter on behalf of its one hundred and fift, 315.5 members who were regular emplo,ees of petitioner 0anila ashions, !nc. The complaint charged petitioner with nonAcompliance, with =age Order "o "C'A.4 and .4AA mandating a -14A increase in wages effective % +anuar, 1991. As a result, complainantsC basic pa,, 16th month pa,, service incentive leave pa,, legal holida, pa,, night shift differential and overtime pa, were all underpaid. -etitioner countered that the failure to compl, with the pertinent =age Order was brought about b, the tremendous losses suffered b, it which were aggravated when the wor?ers staged a stri?e on account of the nonA ad/ustment of their basic pa,. To forestall continuous suspensionGclosure of business operations, which petitioner did for three 365 months, the stri?ers sent a notice that the, were willing to condone the implementation of the increase. The condonation was distinctl, stated in *ec. 6, Art. 8!!!, of the Collective @argaining Agreement 3C@A5 dated # ebruar, 1994, which was voluntaril, entered into b, the parties and represents a reasonable settlement M *ec. 6. The :nion reali>es the compan,Cs closeness to insolvenc, and, as such, s,mpathi>es with the compan,Cs financial condition. Therefore, the :nion has agreed, as it hereb, agrees, to condone the implementation of =age Order "o. "C'A.4 and .4AA. The complainants admitted the e2istence of the aforementioned provision in the C@A9 however the, denied the validit, thereof inasmuch as it was not reached after due consultation with the members. !'0;(.

The 7abor Arbiter sustained the claim that the sub/ect provision of the C@A was void but based its conclusion on a different ground M . . . =hile it is true that both union officersGmembers and 3petitioner5 signed the agreement, however, the same is not enforceable since said agreement is null and void, it being contrar, to law. !t is onl, the Tripartite =age -roductivit, @oard of 3the5 (epartment of 7abor and ;mplo,ment 3(O7;5 that could approve e2emption 3of5 an establishment from coverage of 3a5 1 =age Order . . . Thus on 6. +une 1996 petitioner was ad/udged liable to each of the complainants for underpa,ment of salar,, 16th month pa,, vacation leave pa, and legal holida, pa, in the total amount of -9..,.14.... All other claims 2 were dismissed for lac? of merit. @oth parties were unsatisfied with the decision, prompting them to see? relief from respondent "ational 7abor 'elations Commission 3"7'C5. The basis of petitionerCs appeal was that the ruling was not in accordance with the facts and the law. On the part of the private respondents, the, assailed the computation of the award erroneous. 'espondent "7'C was not persuaded b, petitioner. On the other hand, the appeal of private respondents was no longer considered as it was filed be,ond the reglementar, period. Thus on 61 0a, 199# the disputed decision % was affirmed. =as the condonation of the implementation of =age Order "o. "C'A.4 and .4AA contained in *ec. 6, Art. 8!!!, of the C@A validO -etitioner maintains that the condonation is valid. !n support thereof, it invo?es cases decided b, this Court appl,ing the rule that if the agreement was voluntaril, entered into and represents a reasonable settlement it is binding on the parties and ma, not be disowned simpl, because of a change 4 of mind. Branting the C@A provision is indeed void, petitioner offers the alternative argument that the computation of the award was erroneous and arbitrar,. =e sustain the decision of the 7abor Arbiter as affirmed b, respondent "7'C that the condonation appearing in *ec. 6, Art. 8!!!, of the C@A did not e2empt petitioner from compliance with =age Order "o. "C'A.4 and .4AA.. A Collective @argaining Agreement refers to the negotiated contract between a legitimate labor organi>ation and the emplo,er concerning wages, hours of wor? and all other terms and conditions of emplo,ment in a bargaining unit, including mandator, provisions for grievances and arbitration & machineries. As in all other contracts, the parties in a C@A ma, establish such stipulations, clauses, terms and conditions as the, ma, deem convenient provided the, are not contrar, to law, morals, good customs,

' public order or public polic,. *ection 6, Art. 8!!!, of the C@A is a void provision because b, agreeing to condone the implementation of the =age Order the parties thereb, contravened its mandate on wage increase of -14... effective % +anuar, 1991. Also, as stated b, the 7abor Arbiter, it is onl, the Tripartite =age -roductivit, @oard of the (O7; that could approve e2emption of an establishment from coverage of a =age Order. !f petitioner is a financiall, distressed compan, then it should have applied for a wage e2emption so that it could meet its labor costs without endangering its viabilit, or its ver, e2istence upon which both management ( and labor depend for a living. The Office of the *olicitor Beneral emphasi>es the point that parties to a C 4 may not by t(emselves, set a +age lo+er t(an t(e minimum +age. :o do so +ould render nugatory t(e purpose of a +age e%emption, not to mention t(e possibility t(at employees 8 may be un+ittingly put in a position to accept a lo+er +age . The cases that petitioner relies on are simpl, inapplicable because, unli?e the present case which involves a stipulation in the C@A in contravention of law, the, are concerned with compromise settlements as a means to end labor disputes recogni>ed b, Art. 447 of the 7abor Code and considered not 9 against public polic, b, doctrinal rules established b, this Court. As regards the alternative argument of petitioner that the computation of the award was erroneous and arbitrar,, it must be re/ected outright as it was apparentl, never brought to the attention of respondent "7'C. Conse)uentl,, it cannot be raised for the first time before this Court since that 10 would be offensive to the basic rule of fair pla,, /ustice and due process. 0oreover, the original end e2clusive /urisdiction of this Court to review a decision of respondent "7'C in a petition for certiorari under 'ule $5 does not normall, include an in)uir, into the correctness of its evaluation of the evidence but confined merel, to issues of /urisdiction or grave abuse of 11 discretion. =1;'; O';, the petition is (!*0!**;(. The order of respondent "ational 7abor 'elations Commission which affirmed the decision of the 7abor Arbiter awarding the total amount of -9..,.14... to the complainants is li?ewise A !'0;(. *O O'(;';(. 12(1 G.R. No. 1091(2 A070)? 19, 1994

RANS*"AC$!$C $NDUS R$AL SU""L$#S, $NC., petitioner, vs. 8e COUR O! A""#ALS and ASSOC$A #D 2AN<, respondents. Gancayco La+ 9ffices for petitioners. Jose 4. &oluta, Jr. 6 4ssociates for private respondent. 2$D$N, J.: !n this petition for review on certiorari, petitioner TransA-acific !ndustrial *upplies, !nc. see?s the reversal of the decision of respondent court, the decretal portion of which reads< =1;'; O';, the decision of +une 11, 1991 is *;T A*!(; and ":77! !;(9 the complaint is dismissed, and on the counterclaim, Transpacific is ordered to pa, Associated attorne,Cs fees of -15,....... Costs against Transpacific. *O O'(;';(. 3'ollo, p. #75 *ometime in 1979, petitioner applied for and was granted several financial accommodations amounting to -1,6..,...... b, respondent Associated @an?. The loans were evidenced and secured b, four 3#5 promissor, notes, a real estate mortgage covering three parcels of land and a chattel mortgage over petitionerCs stoc? and inventories. :nable to settle its obligation in full, petitioner re)uested for, and was granted b, respondent ban?, a restructuring of the remaining indebtedness which then amounted to -1,.57,5....., as all the previous pa,ments made were applied to penalties and interests. To secure the reAstructured loan of -1,416,#....., three new promissor, notes were e2ecuted b, TransA-acific as follows< 315 -romissor, "ote "o. T7A9.77A%4 for the amount of -1,.5.,...... denominated as wor?ing capital9 345 -romissor, "ote "o. T7A9.7%A%4 for the amount of -141,1$$... denominated as restructured interest9 365 -romissor, "ote "o. T7A9.79A%4 for the amount of -#4,46#... denominated similarl, as restructured interest 3'ollo. pp. 116A1155. The mortgaged parcels of land were substituted b, another mortgage covering two other parcels of land and a chattel mortgage on petitionerCs stoc? inventor,. The released parcels of land were then sold and the proceeds amounting to -1,6%$,$1#.4., according to petitioner, were turned over to the ban? and applied to TransA-acificCs restructured loan. *ubse)uentl,, respondent ban? returned the duplicate original copies of the three promissor, notes to TransA-acific with the word &-A!(& stamped thereon. (espite the return of the notes, or on (ecember 14, 19%5, Associated @an?

demanded from TransA-acific pa,ment of the amount of -#94,1..... representing accrued interest on -" "o. T7A9.77A%4. According to the ban?, the promissor, notes were erroneousl, released. !nitiall,, TransA-acific e2pressed its willingness to pa, the amount demanded b, respondent ban?. 7ater, it had a change of heart and instead initiated an action before the 'egional Trial Court of 0a?ati, @r. 1#$, for specific performance and damages. There it pra,ed that the mortgage over the two parcels of land be released and its stoc? inventor, be lifted and that its obligation to the ban? be declared as having been full, paid. After trial, the court a Buo rendered /udgment in favor of TransA-acific, to wit< =1;'; O';, premises considered and upon a clear preponderance of evidence in support of the stated causes of action, the Court finds for the plaintiffs and against defendant, and 3a5 declares plaintiffCs obligations to defendant to have been alread, full, paid9 3b5 orders defendant to e2ecute and deliver to plaintiffs a release on the i *eptember 11, 19%1 mortgage over TCT 35.%5%5 *A1..%$ and TCT 35.%595 *A1.9.%7, and ii (ecember 4., 19%6 chattel mortgage, within fifteen 3155 da,s from the finalit, hereof9 3c5 orders defendant to pa, plaintiffs 'omeo +avier and 'omana @ataclanA +avier the sum of -5.,...... as and for moral damages9 and 3d5 orders defendant to pa, plaintiffs the sum of -6.,...... as attorne,Cs fees, plus e2penses of the suit. (efendantCs counterclaims are dismissed for lac? of merit. =ith costs against defendant. *O O'(;';(. 3'ollo, p. 1.15 'espondent ban? elevated the case to the appellate court which, as aforesaid, reversed the decision of the trial court. !n this appeal, petitioner raises four errors allegedl, committed b, the respondent court, namel,< ! ';*-O"(;"T A--;77AT; CO:'T ;'';( !" 1O7(!"B T1AT T1; ACC':;( !"T;';*T !" T1; A0O:"T O #94,1..... 1A* "OT @;;" -A!( =1;" A'T!C7; 117$ O T1; C!8!7 CO(; -'O8!(;* T1AT *:C1 C7A!0 O' !"T;';*T :-O" ';C;!-T O -AI0;"T O T1; -'!"C!-A7 0:*T @; ';*;'8;( OT1;'=!*; !T !* (;;0;( -A!(. !! ';*-O"(;"T A--;77AT; CO:'T ;'';( !" 1O7(!"B T1AT =!T1 T1; (;7!8;'I O T1; (OC:0;"T* ;8!(;"C!"B T1; -'!"C!-A7 O@7!BAT!O", T1; A"C!77A'I O@7!BAT!O" O -AI!"B !"T;';*T =A*

"OT ';"O:"C;( CO"T'A'I TO T1; -'O8!*!O"* O A'T. 1476 O T1; C!8!7 CO(; A"( T1; :"(!*-:T;( ;8!(;"C; O" ';CO'(. !!! ';*-O"(;"T A--;77AT; CO:'T ;'';( !" "OT 1O7(!"B T1AT -;T!T!O";' 1A* :77I -A!( !T* O@7!BAT!O" CO" O'0A@7I =!T1 A'T!C7; 146# O T1; C!8!7 CO(;. !8 ';*-O"(;"T A--;77AT; CO:'T ;'';( !" A=A'(!"B ATTO'";IC* ;;* !" A8O' O A**OC!AT;( @A"F 3'ollo, p. 155. The first three assigned errors will be treated /ointl, since their resolution border on the common issue, i.e., whether or not petitioner has indeed paid in full its obligation to respondent ban?. Appl,ing the legal presumption provided b, Art. 1471 of the Civil Code, the trial court ruled that petitioner has full, discharged its obligation b, virtue of its possession of the documents 3stamped &-A!(&5 evidencing its indebtedness. 'espondent court disagreed and held, among others, that the documents found in possession of TransA-acific are mere duplicates and cannot be the basis of petitionerCs claim that its obligation has been full, paid. Accordingl,, since the promissor, notes submitted b, petitioner were duplicates and not the originals, the deliver, thereof b, respondent ban? to the petitioner does not merit the application of Article 1471 31st par.5 of the Civil Code which reads< Art. 1471. The deliver, of a private document evidencing a credit, made voluntaril, b, the creditor to the debtor, implies the renunciation of the action which the former had against the latter. 'espondent court is of the view that the above provision must be construed to mean the original cop, of the document evidencing the credit and not its duplicate, thus< . . . D=Ehen the law spea?s of the deliver, of the private document evidencing a credit, it must be construed as referring to the original. !n this case, appellees 3TransA-acific5 presented, not the originals but the duplicates of the three promissor, notes.& 3'ollo, p. #45 The above pronouncement of respondent court is manifestl, groundless. !t is undisputed that the documents presented were duplicate originals and are therefore admissible as evidence. urther, it must be noted that respondent ban? itself did not bother to challenge the authenticit, of the duplicate copies submitted b, petitioner. !n -eople vs. Tan, 31.5 -hil. 14#4 D1959E5, we said< =hen carbon sheets are inserted between two or more sheets of writing paper so that the writing of a contract upon the outside sheet, including the signature of the part, to be charged thereb,, produces a facsimile upon the sheets beneath, such signature being thus reproduced b, the same stro?e of

pen which made the surface or e2posed impression, all of the sheets so written on are regarded as duplicate originals and either of them ma, be introduced in evidence as such without accounting for the nonproduction of the others. A duplicate cop, of the original ma, be admitted in evidence when the original is in the possession of the part, against whom the evidence is offered, and the latter fails to produce it after reasonable notice 3*ec. 4DbE, 'ule 16.5, as in the case of respondent ban?. This notwithstanding, we find no reversible error committed b, the respondent court in disposing of the appealed decision. As gleaned from the decision of the court a Buo, /udgment was rendered in favor of petitioner on the basis of presumptions, to wit< The surrender and return to plaintiffs of the promissor, notes evidencing the consolidated obligation as restructured, produces a legal presumption that Associated had thereb, renounced its actionable claim against plaintiffs 3Art. 1471, "CC5. The presumption is fortified b, a showing that said promissor, notes all bear the stamp &-A!(&, and has not been otherwise overcome. :pon a clear perception that AssociatedCs record ?eeping has been less than e2emplar, . . ., a proffer of ban? copies of the promissor, notes without the &-A!(& stamps thereon does not impress the Court as sufficient to overcome presumed remission of the obligation vis'a'vis the return of said promissor, notes. !ndeed, applicable law is supportive of a finding that in interest bearing obligationsAas is the case here, pa,ment of principal 3sic5 shall not be deemed to have been made until the interests have been covered 3Art. 1456, "CC5. Conversel,, competent showing that the principal has been paid, militates against postured entitlement to unpaid interests. !n fine. the Court is satisfied that plaintiffs must be found to have settled their obligations in full. As corollar,, a finding is accordingl, compelled that plaintiffs 3sic5 accessor, obligations under the real estate mortgage over two 345 substituted lots as well as the chattel mortgage, have been e2tinguished b, the renunciation of the principal debt 3Art. 1476, "CC5, following the timeAhonored a2iom that the accessor, follows the principal. There is, therefore, compelling warrant 3sic5 to find in favor of plaintiffs insofar as specific performance for the release of the mortgages on the substituted lots and chattel is concerned. 3'ollo, p. 1..5 premised b,< 'ecords show that AssociatedCs *alvador 0. 0esina is on record as having testified that all three 365 (ecember %, 199. promissor, notes for the consolidated principal obligation, interest and penalties had been full, paid 3T*", +ul, 1%, 199., p. 1%5. !t is, moreover, admitted that said promissor, notes were accordingl, returned to 'omeo +avier. 3!bid.5

The above dis)uisition finds no factual support, however, per review of the records. The presumption created b, the Art. 1471 of the Civil Code is not conclusive but merel, prima facie. !f there be no evidence to the contrar,, the presumption stands. Conversel,, the presumption loses its legal efficac, in the face of proof or evidence to the contrar,. !n the case before us, we find sufficient /ustification to overthrow the presumption of pa,ment generated b, the deliver, of the documents evidencing petitioners indebtedness. !t ma, not be amiss to add that Article 1471 of the Civil Code raises a presumption, not of pa,ment, but of the renunciation of the credit where more convincing evidence would be re)uired than what normall, would be called for to prove pa,ment. The rationale for allowing the presumption of renunciation in the deliver, of a private instrument is that, unli?e that of a public instrument, there could be /ust one cop, of the evidence of credit. =here several originals are made out of a private document, the intendment of the law would thus be to refer to the deliver, onl, of the original original rather than to the original duplicate of which the debtor would normall, retain a cop,. !t would thus be absurd if Article 1471 were to be applied differentl,. =hile it has been consistentl, held that findings of facts are not reviewable b, this Court, this rule does not find application where both the trial and the appellate courts differ thereon 3Asia @rewer,, !nc. v. CA, 44# *C'A #67 D1996E5. -etitioner maintains that the findings of the trial court should be sustained because of its advantage in observing the demeanor of the witnesses while testif,ing 3citing Crisostomo v. Court of Appeals, 197 *C'A %665 more so where it is supported b, the records 3'oman Catholic @ishop of 0alolos v. Court of Appeals, 194 *C'A 1$95. This case, however, does not concern itself with the demeanor of witnesses. As for the records, there is actuall, none submitted b, petitioner to prove that the contested amount, i.e., the interest, has been paid in full. !n civil cases, the part, that alleges a fact has the burden of proving it 3!mperial 8ictor, *hipping Agenc, v. "7'C 4.. *C'A 17% D1991E5. -etitioner could have easil, adduced the receipts corresponding to the amounts paid inclusive of the interest to prove that it has full, discharged its obligation but it did not. There is li?ewise nothing on the records relied upon b, the trial court to support its claim, b, empirical evidence, that the amount corresponding to the interest has indeed been paid. The trial court totall, relied on a disputable presumption that the obligation of petitioner as regards interest has been full, li)uidated b, the respondentCs act of delivering the instrument evidencing the principal obligation. 'ebuttable as the, are, the court a Buo chose to ignore an earlier testimon, of 0r. 0esina anent the outstanding balance pertaining to interest, as follows< Court< H "otwithstanding, let us go now specificall, to promissor, note "o. 9.77A%4

in the amount of consolidated principal of -1,.5.,....... (oes the Court get it correctl, that this consolidated balance has been full, paidO A Ies, the principal, ,es, sir. H ull, settledO A ull, settled, but the interest of that promissor, note has not been paid, Iour 1onor. H !n other words, ,ou are sa,ing, full, settled but not trul, full, settledO A The interest was not paid. H "ot full, settledO A The interest was not paid, but the principal obligation was removed from our boo?s, Iour 1onor. H And ,ou returned the promissor, noteO A =e returned the promissor, note. 3T*", +ul, 1%, 199., p. 445 That petitioner has not full, li)uidated its financial obligation to the Associated @an? finds more than ample confirmation and selfAdefeating posture in its letter dated (ecember 1$, 19%5, addressed to respondent ban?, viz.< . . . that because of the prevailing unhealth, economic conditions, the business is unable to generate sufficient resources for debt servicing. undamentall, on account of this, +e propose t(at you permit us to fully liBuidate t(e remaining obligations to you of #<1.,0** t(roug( a payment in kind >dacion en pago? arrangement by +ay of t(e eBuipments >sic? and spare parts under c(attel mortgage to you to the e2tent of their latest appraised values.& 3'ollo, pp. 156A15#9 ;mphasis supplied5 ollowed b, its August 4., 19%$ letter which reads< =e have had a series of communications with ,our ban? regarding our proposal for the eventual settlement of our remaining obligations . . . As ,ou ma, be able to glean from these letters and from ,our credit files, +e (ave al+ays been conscious of our obligation to you which had not been faithfull, serviced on account of unfortunate business reverses. "otwithstanding these however, total pa,ments thus far remitted to ,ou alread, e2ceede 3sic5 the original principal amount of our obligation. ut because of interest and ot(er c(arges, +e find ourselves still obligated to you by #<1.,0**.**. . . . . . . =e continue to find ourselves in a ver, fluid 3sic5 situation in as much as the overall outloo? of the industr, has not substantiall, improved. -rincipall, for this reason, +e (ad proposed to settle our remaining obligations to you by +ay of dacion en pago of t(e eBuipments >sic? and spare parts mortgaged

to you to >t(e? e%tent of t(eir applicable loan values . 3'ollo, p. 1559 ;mphasis supplied5 -etitioner claims that the above offer of settlement or compromise is not an admission that an,thing is due and is inadmissible against the part, ma?ing the offer 3*ec. 4#, 'ule 16., 'ules of Court5. :nfortunatel,, this is not an ironAclad rule. To determine the admissibilit, or nonAadmissibilit, of an offer to compromise, the circumstances of the case and the intent of the part, ma?ing the offer should be considered. Thus, if a part, denies the e2istence of a debt but offers to pa, the same for the purpose of bu,ing peace and avoiding litigation, the offer of settlement is inadmissible. !f in the course thereof, the part, ma?ing the offer admits the e2istence of an indebtedness combined with a proposal to settle the claim amicabl,, then, the admission is admissible to prove such indebtedness 30oran, Comments on the 'ules of Court, 8ol. 5, p. 466 D19%. ed.59 rancisco, 'ules of Court, 8ol. 8!!, p. 645 D1976 ed.E citing 0c"iel v. 1olbroo?, 14 -ac. 3:*5 %#, 9 7.ed. 1..95. !ndeed, an offer of settlement is an effective admission of a borrowerCs loan balance 37.0. 1andicraft 0anufacturing Corp. v. Court of Appeals, 1%$ *C'A $#. D199.E5. ;2actl,, this is what petitioner did in the case before us for review. inall,, respondent court is faulted in awarding attorne,Cs fees in favor of Associated @an?. True, attorne,Cs fees ma, be awarded in a case of clearl, unfounded civil action 3Art. 44.% D#E, CC5. 1owever, petitioner claims that it was compelled to file the suit for damages in the honest belief that it has full, discharged its obligations in favor of respondent ban? and therefore not unfounded. =e believe otherwise. As petitioner would rather vehementl, den,, undisputed is the fact of its admission regarding the unpaid balance of -#94,1..... representing interests. !t cannot also be denied that petitioner opted to sue for specific performance and damages after consultation with a law,er 3'ollo, p. 995 who advised that not even the claim for interests could be recovered9 hence, petitionerCs attempt to see? refuge under Art. 1471 3CC5. As previousl, discussed, the presumption generated b, Art. 1471 is not conclusive and was successfull, rebutted b, private respondent. :nder the circumstances, i.e., outright and honest letters of admission vis'a'vis counselAinduced recalcitrance, there could hardl, be honest belief. !n this regard, we )uote with approval respondent courtCs observation< The countervailing evidence against the claim of full pa,ment emanated from Transpacific itself. !t cannot profess ignorance of the e2istence of the two letters, ;2hs. 6 V #, or of the import of what the, contain. "otwithstanding the letters, Transpacific opted to file suit and insist3ed5 that its liabilities had alread, been paid. There was thus an illAadvised attempt on the part of Transpacific to capitali>e on the deliver, of the duplicates of the promissor, notes, in complete disregard of what its own records show. !n the circumstances, Art. 44.% 3#5 and 3115 /ustif, the award

of attorne,Cs fees. The sum of -15,...... is fair and e)uitable. 3'ollo, pp. #$A#75 =1;'; O';, the petition is (;"!;( for lac? of merit. Costs against petitioner. *O O'(;';(. 147% G.R. No. L*'('49 30ne 28, 1988 #NGRAC$O !RANC$A, petitioner, vs. $N #RM#D$A # A""#LLA # COUR and HO !#RNAND#Z, respondents. GU $#RR#Z, 3R., J.: The petitioner invo?es legal and e)uitable grounds to reverse the )uestioned decision of the !ntermediate Appellate Court, to set aside the auction sale of his propert, which too? place on (ecember 5, 1977, and to allow him to recover a 4.6 s)uare meter lot which was, sold at public auction to 1o ernande> and ordered titled in the latterCs name. The antecedent facts are as follows< ;ngracio rancia is the registered owner of a residential lot and a twoAstor, house built upon it situated at @arrio *an !sidro, now (istrict of *ta. Clara, -asa, Cit,, 0etro 0anila. The lot, with an area of about 64% s)uare meters, is described and covered b, Transfer Certificate of Title "o. #769 3677955 of the 'egistr, of (eeds of -asa, Cit,. On October 15, 1977, a 145 s)uare meter portion of ranciaCs propert, was e2propriated b, the 'epublic of the -hilippines for the sum of -#,11$... representing the estimated amount e)uivalent to the assessed value of the aforesaid portion. *ince 19$6 up to 1977 inclusive, rancia failed to pa, his real estate ta2es. Thus, on (ecember 5, 1977, his propert, was sold at public auction b, the Cit, Treasurer of -asa, Cit, pursuant to *ection 76 of -residential (ecree "o. #$# ?nown as the 'eal -ropert, Ta2 Code in order to satisf, a ta2 delin)uenc, of -4,#...... 1o ernande> was the highest bidder for the propert,. rancia was not present during the auction sale since he was in !ligan Cit, at that time helping his uncle ship bananas. On 0arch 6, 1979, rancia received a notice of hearing of 7'C Case "o. 1596A- &!n re< -etition for ;ntr, of "ew Certificate of Title& filed b, 1o ernande>, see?ing the cancellation of TCT "o. #769 3677955 and the issuance in his name of a new certificate of title. :pon verification through his

law,er, rancia discovered that a inal @ill of *ale had been issued in favor of 1o ernande> b, the Cit, Treasurer on (ecember 11, 197%. The auction sale and the final bill of sale were both annotated at the bac? of TCT "o. #769 3677955 b, the 'egister of (eeds. On 0arch 4., 1979, rancia filed a complaint to annul the auction sale. 1e later amended his complaint on +anuar, 4#, 19%.. On April 46, 19%1, the lower court rendered a decision, the dispositive portion of which reads< =1;'; O';, in view of the foregoing, /udgment is hereb, rendered dismissing the amended complaint and ordering< 3a5 The 'egister of (eeds of -asa, Cit, to issue a new Transfer Certificate of Title in favor of the defendant 1o ernande> over the parcel of land including the improvements thereon, sub/ect to whatever encumbrances appearing at the bac? of TCT "o. #769 3677955 and ordering the same TCT "o. #769 3677955 cancelled. 3b5 The plaintiff to pa, defendant 1o ernande> the sum of -1,...... as attorne,Cs fees. 3p. 6., 'ecord on Appeal5 The !ntermediate Appellate Court affirmed the decision of the lower court in toto. 1ence, this petition for review. rancia prefaced his arguments with the following assignments of grave errors of law< ! ';*-O"(;"T !"T;'0;(!AT; A--;77AT; CO:'T CO00!TT;( A B'A8; ;''O' O 7A= !" "OT 1O7(!"B -;T!T!O";'C* O@7!BAT!O" TO -AI -4,#..... O' *:--O*;( TAN (;7!"H:;"CI =A* *;TAO @I T1; A0O:"T O -#,11$... =1!C1 T1; BO8;'"0;"T !* !"(;@T;( TO T1; O'0;'. !! ';*-O"(;"T !"T;'0;(!AT; A--;77AT; CO:'T CO00!TT;( A B'A8; A"( *;'!O:* ;''O' !" "OT 1O7(!"B T1AT -;T!T!O";' =A* "OT -'O-;'7I A"( (:7I "OT! !;( T1AT A" A:CT!O" *A7; O 1!* -'O-;'TI =A* TO TAF; -7AC; O" (;C;0@;' 5, 1977 TO *AT!* I A" A77;B;( TAN (;7!"H:;"CI O -4,#...... !!! ';*-O"(;"T !"T;'0;(!AT; A--;77AT; CO:'T :'T1;' CO00!TT;( A *;'!O:* ;''O' A"( B'A8; A@:*; O (!*C';T!O" !" "OT 1O7(!"B T1AT T1; -'!C; O -4,#..... -A!( @I ';*-O"T(;"T 1O ;'"A"(;J =A* B'O**7I !"A(;H:AT; A* TO

*1OCF O";C* CO"*C!;"C; A0O:"T!"B TO 'A:( A"( A (;-'!8AT!O" O -'O-;'TI =!T1O:T (:; -'OC;** O 7A=, A"( CO"*;H:;"T7I, T1; A:CT!O" *A7; 0A(; T1;';O !* 8O!(. 3pp. 1., 17, 4.A41, 'ollo5 =e gave due course to the petition for a more thorough in)uir, into the petitionerCs allegations that his propert, was sold at public auction without notice to him and that the price paid for the propert, was shoc?ingl, inade)uate, amounting to fraud and deprivation without due process of law. A careful review of the case, however, discloses that 0r. rancia brought the problems raised in his petition upon himself. =hile we commiserate with him at the loss of his propert,, the law and the facts militate against the grant of his petition. =e are constrained to dismiss it. rancia contends that his ta2 delin)uenc, of -4,#..... has been e2tinguished b, legal compensation. 1e claims that the government owed him -#,11$... when a portion of his land was e2propriated on October 15, 1977. 1ence, his ta2 obligation had been setAoff b, operation of law as of October 15, 1977. There is no legal basis for the contention. @, legal compensation, obligations of persons, who in their own right are reciprocall, debtors and creditors of each other, are e2tinguished 3Art. 147%, Civil Code5. The circumstances of the case do not satisf, the re)uirements provided b, Article 1479, to wit< 315 that each one of the obligors be bound principall, and that he be at the same time a principal creditor of the other9 222 222 222 365 that the two debts be due. 222 222 222 This principal contention of the petitioner has no merit. =e have consistentl, ruled that there can be no offAsetting of ta2es against the claims that the ta2pa,er ma, have against the government. A person cannot refuse to pa, a ta2 on the ground that the government owes him an amount e)ual to or greater than the ta2 being collected. The collection of a ta2 cannot await the results of a lawsuit against the government. !n the case of $epublic v. Mambulao Lumber Co. 3# *C'A $445, this Court ruled that !nternal 'evenue Ta2es can not be the sub/ect of setAoff or compensation. =e stated that< A claim for ta2es is not such a debt, demand, contract or /udgment as is allowed to be setAoff under the statutes of setAoff, which are construed uniforml,, in the light of public polic,, to e2clude the remed, in an action or an, indebtedness of the state or municipalit, to one who is liable to the state or municipalit, for ta2es. "either are the, a proper sub/ect of recoupment since the, do not arise out of the contract or transaction sued on. ... 3%.

C.+.*., 767#5. &The general rule based on grounds of public polic, is wellA settled that no setAoff admissible against demands for ta2es levied for general or local governmental purposes. The reason on which the general rule is based, is that ta2es are not in the nature of contracts between the part, and part, but grow out of dut, to, and are the positive acts of the government to the ma?ing and enforcing of which, the personal consent of individual ta2pa,ers is not re)uired. ...& =e stated that a ta2pa,er cannot refuse to pa, his ta2 when called upon b, the collector because he has a claim against the governmental bod, not included in the ta2 lev,. This rule was reiterated in the case of Corders v. Gonda 31% *C'A 6615 where we stated that< &... internal revenue ta2es can not be the sub/ect of compensation< 'eason< government and ta2pa,er are not mutuall, creditors and debtors of each otherC under Article 147% of the Civil Code and a &claim for ta2es is not such a debt, demand, contract or /udgment as is allowed to be setAoff.& There are other factors which compel us to rule against the petitioner. The ta2 was due to the cit, government while the e2propriation was effected b, the national government. 0oreover, the amount of -#,11$... paid b, the national government for the 145 s)uare meter portion of his lot was deposited with the -hilippine "ational @an? long before the sale at public auction of his remaining propert,. "otice of the deposit dated *eptember 4%, 1977 was received b, the petitioner on *eptember 6., 1977. The petitioner admitted in his testimon, that he ?new about the -#,11$... deposited with the ban? but he did not withdraw it. !t would have been an eas, matter to withdraw -4,#..... from the deposit so that he could pa, the ta2 obligation thus aborting the sale at public auction. -etitioner had one ,ear within which to redeem his propert, although, as well be shown later, he claimed that he poc?eted the notice of the auction sale without reading it. -etitioner contends that &the auction sale in )uestion was made without compl,ing with the mandator, provisions of the statute governing ta2 sale. "o evidence, oral or otherwise, was presented that the procedure outlined b, law on sales of propert, for ta2 delin)uenc, was followed. ... &ince defendant 5o "ernandez (as t(e affirmative of t(is issue, t(e burden of proof t(erefore rests upon (im to s(o+ t(at plaintiff +as duly and properly notified ... .3-etition for 'eview, 'ollo p. 1%9 emphasis supplied5 =e agree with the petitionerCs claim that 1o ernande>, the purchaser at the auction sale, has the burden of proof to show that there was compliance with all the prescribed re)uisites for a ta2 sale. The case of Valencia v. Jimenez 311 -hil. #945 laid down the doctrine that< 222 222 222

... D(Eue process of law to be followed in ta2 proceedings must be established b, proof and the general rule is t(at t(e purc(aser of a ta% title is bound to take upon (imself t(e burden of s(o+ing t(e regularity of all proceedings leading up to t(e sale. 3emphasis supplied5 There is no presumption of the regularit, of an, administrative action which results in depriving a ta2pa,er of his propert, through a ta2 sale. 3Camo v. 'iosa @o,co, 49 -hil. #6759 (enoga v. !nsular Bovernment, 19 -hil. 4$15. This is actuall, an e2ception to the rule that administrative proceedings are presumed to be regular. @ut even if the burden of proof lies with the purchaser to show that all legal prere)uisites have been complied with, the petitioner can not, however, den, that he did receive the notice for the auction sale. The records sustain the lower courtCs finding that< DTEhe plaintiff claimed that it was illegal and irregular. 1e insisted that he was not properl, notified of the auction sale. *urprisingl,, however, he admitted in his testimon, that he received the letter dated "ovember 41, 1977 3;2hibit &!&5 as shown b, his signature 3;2hibit &!AA&5 thereof. 1e claimed further that he was not present on (ecember 5, 1977 the date of the auction sale because he went to !ligan Cit,. As long as there was substantial compliance with the re)uirements of the notice, the validit, of the auction sale can not be assailed ... . =e )uote the following testimon, of the petitioner on crossAe2amination, to wit< H. 0, )uestion to ,ou is this letter mar?ed as ;2hibit ! for 1o ernande> notified ,ou that the propert, in )uestion shall be sold at public auction to the highest bidder on (ecember 5, 1977 pursuant to *ec. 7# of -( #$#. =ill ,ou tell the Court whether ,ou received the original of this letterO A. ! /ust signed it because ! was not able to read the same. !t was /ust sent b, mail carrier. H. *o ,ou admit that ,ou received the original of ;2hibit ! and ,ou signed upon receipt thereof but ,ou did not read the contents of itO A. Ies, sir, as ! was in a hurr,. H. After ,ou received that original where did ,ou place itO A. ! placed it in the usual place where ! place m, mails. -etitioner, therefore, was notified about the auction sale. !t was negligence on his part when he ignored such notice. @, his ver, own admission that he received the notice, his now coming to court assailing the validit, of the auction sale loses its force. -etitionerCs third assignment of grave error li?ewise lac?s merit. As a general rule, gross inade)uac, of price is not material 3(e 7eon v. *alvador, 6$

*C'A 5$79 -once de 7eon v. 'ehabilitation inance Corporation, 6$ *C'A 4%99 Tolentino v. Agcaoili, 91 -hil. 917 :nrep.5. *ee also arrozo Vda. de Gordon v. Court of 4ppeals 31.9 *C'A 6%%5 we held that &alleged gross inade)uac, of price is not material when the law gives the owner the right to redeem as when a sale is made at public auction, upon the theor, that the lesser the price, the easier it is for the owner to effect redemption.& !n VelasBuez v. Coronel 35 *C'A 9%55, this Court held< ... D'Eespondent treasurer now claims that the prices for which the lands were sold are unconscionable considering the wide divergence between their assessed values and the amounts for which the, had been actuall, sold. 1owever, while in ordinar, sales for reasons of e)uit, a transaction ma, be invalidated on the ground of inade)uac, of price, or when such inade)uac, shoc?s oneCs conscience as to /ustif, the courts to interfere, such does not follow when the law gives to the owner the right to redeem, as when a sale is made at public auction, upon the theor, that the lesser the price the easier it is for the owner to effect the redemption. And so it was aptl, said< &=hen there is the right to redeem, inade)uac, of price should not be material, because the /udgment debtor ma, reac)uire the propert, or also sell his right to redeem and thus recover the loss he claims to have suffered b, reason of the price obtained at the auction sale.& The reason behind the above rulings is well enunciated in the case of 5ilton et. u%. v. De Long, et al. 31%% =ash. 1$4, $1 -. 4d, 149.5< !f mere inade)uac, of price is held to be a valid ob/ection to a sale for ta2es, the collection of ta2es in this manner would be greatl, embarrassed, if not rendered altogether impracticable. !n @lac? on Ta2 Titles 34nd ;d.5 46%, the correct rule is stated as follows< &where land is sold for ta2es, the inade)uac, of the price given is not a valid ob/ection to the sale.& This rule arises from necessit,, for, if a fair price for the land were essential to the sale, it would be useless to offer the propert,. !ndeed, it is notorious that the prices habituall, paid b, purchasers at ta2 sales are grossl, out of proportion to the value of the land. 3'othchild @ros. v. 'ollinger, 64 =ash. 6.7, 76 -. 6$7, 6$95. !n this case now before us, we can aptl, use the language of McGuire, et al. v. ean, et al. 34$7 -. 5555< 7i?e most cases of this character there is here a certain element of hardship from which we would be glad to relieve, but do so would unsettle longA established rules and lead to uncertaint, and difficult, in the collection of ta2es which are the life blood of the state. =e are convinced that the present rules are /ust, and that the, bring hardship onl, to those who have invited it b, their own neglect. =e are inclined to believe the petitionerCs claim that the value of the lot has greatl, appreciated in value. -recisel, because of the widening of @uendia Avenue in -asa, Cit,, which necessitated the e2propriation of ad/oining areas, real estate values have gone up in the area. 1owever, the price

)uoted b, the petitioner for a 4.6 s)uare meter lot appears )uite e2aggerated. At an, rate, the foregoing reasons which answer the petitionerCs claims lead us to den, the petition. And finall,, even if we are inclined to give relief to the petitioner on e)uitable grounds, there are no strong considerations of substantial /ustice in his favor. 0r. rancia failed to pa, his ta2es for 1# ,ears from 19$6 up to the date of the auction sale. 1e claims to have poc?eted the notice of sale without reading it which, if true, is still an act of ine2plicable negligence. 1e did not withdraw from the e2propriation pa,ment deposited with the -hilippine "ational @an? an amount sufficient to pa, for the bac? ta2es. The petitioner did not pa, attention to another notice sent b, the Cit, Treasurer on "ovember 6, 197%, during the period of redemption, regarding his ta2 delin)uenc,. There is furthermore no showing of bad faith or collusion in the purchase of the propert, b, 0r. ernande>. The petitioner has no standing to invo?e e)uit, in his attempt to regain the propert, b, belatedl, as?ing for the annulment of the sale. =1;'; O';, !" 8!;= O T1; O';BO!"B, the petition for review is (!*0!**;(. The decision of the respondent court is affirmed. *O O'(;';(. "ernan >C(airman?, "eliciano, idin and Cortes, JJ., concur. G.R. No. L*'9&'0 30ne %0, 1988 H# $N #RNA $ONAL COR"ORA # 2AN< $NC., petitioner, vs. H# $MM#D$A # A""#LLA # COUR , HON. ZO$LO AGU$NALDO, a) +re),d,n7 30d7e o; ?8e Re7,ona- r,a- Co0r? o; MaDa?,, 2ranc8 14%, NA $4$DAD M. !A3ARDO, and S$L4$NO R. "AS RANA, a) De+0?1 and S+ec,a- S8er,;;, respondents. "ARAS, J.: This is a petition for review on certiorari of the (ecision of the Court of Appeals dated October 61, 19%# in ACAB.'. *- "o. .4914 entitled &T1; !"T;'"AT!O"A7 CO'-O'AT; @A"F, !"C. v. 1on. JO!7O AB:!"A7(O, et al.,& dismissing petitionerCs petition for certiorari against the 'egional Trial Court of 0a?ati 3@ranch 1#65 for lac? of merit, and of its 'esolution dated +anuar, 7, 19%5, den,ing petitionerCs motion for reconsideration of the aforementioned (ecision. -etitioner also pra,s that upon filing of the petition, a restraining order be issued e%'parte, en/oining respondents or an, person acting in their behalf, from enforcing or in an, manner implementing the Order of the respondent trial court dated ebruar, 16 and 0arch 9, 19%#, and +anuar, 1. and +anuar, 11, 19%5.

The facts of this case, as found b, the trial court and subse)uentl, adopted b, the Court of Appeals, are as follows< !n the earl, part of 19%., private respondent secured from petitionerCs predecessorsAinAinterest, the then !nvestment and :nderwriting Corp. of the -hilippines and Atrium Capital Corp., a loan in the amount of -5.,...,....... To secure this loan, private respondent mortgaged her real properties in Huiapo, 0anila and in *an 'afael, @ulacan, which she claimed have a total mar?et value of -11.,...,....... Of this loan, onl, the amount of -4.,...,...... was approved for release. The same amount was applied to pa, her other obligations to petitioner, ban? charges and fees. Thus, private respondentCs claim that she did not receive an,thing from the approved loan. On *eptember 11, 19%., private respondent made a mone, mar?et placement with AT'!:0 in the amount of -1,.#$,456.77 at 17K interest per annum for a period of 64 da,s or until October 16, 19%., its maturit, date. 0eanwhile, private respondent allegedl, failed to pa, her mortgaged indebtedness to the ban? so that the latter refused to pa, the proceeds of the mone, mar?et placement on maturit, but applied the amount instead to the deficienc, in the proceeds of the auction sale of the mortgaged properties. =ith Atrium being the onl, bidder, said properties were sold in its favor for onl, -4.,...,....... -etitioner claims that after deducting this amount, private respondent is still indebted in the amount of -$.%1 million. On "ovember 17, 19%4, private respondent filed a complaint with the trial court against petitioner for annulment of the sheriffCs sale of the mortgaged properties, for the release to her of the balance of her loan from petitioner in the amount of -6.,...,...,.., and for recover, of -1,.$4,.$6.%6 representing the proceeds of her mone, mar?et investment and for damages. *he alleges in her complaint, which was subse)uentl, amended, that the mortgage is not ,et due and demandable and accordingl, the foreclosure was illegal9 that per her loan agreement with petitioner she is entitled to the release to her of the balance of the loan in the amount of -6.,...,......9 that petitioner refused to pa, her the proceeds of her mone, mar?et placement notwithstanding the fact that it has long become due and pa,able9 and that she suffered damages as a conse)uence of petitionerCs illegal acts. !n its answer, petitioner denies private respondentCs allegations and asserts among others, that it has the right to appl, or set off private respondentCs mone, mar?et claim of -1,.$4,.$6.%6. -etitioner thus interposes counterclaims for the recover, of -5,7$6,7#1.46, representing the balance of its deficienc, claim after deducting the proceeds of the mone, mar?et placement, and for damages. The trial court subse)uentl, dismissed private respondentCs cause of action concerning the annulment of the foreclosure sale, for lac? of /urisdiction, but left the other causes of action to be resolved after trial. -rivate respondent

then filed separate complaints in 0anila and in @ulacan for annulment of the foreclosure sale of the properties in 0anila and in @ulacan, respectivel,. On (ecember 15, 19%6, private respondent filed a motion to order petitioner to release in her favor the sum of -1,.$4,.$6.%6, representing the proceeds of the mone, mar?et placement, at the time when she had alread, given her direct testimon, on the merits of the case and was being crossAe2amined b, counsel. On (ecember 4#, 19%6, petitioner filed an opposition thereto, claiming that the proceeds of the mone, mar?et investment had alread, been applied to partl, satisf, its deficienc, claim, and that to grant the motion would be to render /udgment in her favor without trial and ma?e the proceedings moot and academic. 1owever, at the hearing on ebruar, 9, 19%#, counsel for petitioner and private respondent /ointl, manifested that the, were submitting for resolution said motion as well as the opposition thereto on the basis of the pleadings and of the evidence which private respondent had alread, presented. On ebruar, 16, 19%#, respondent /udge issued an order granting the motion, as follows< !" 8!;= O T1; O';BO!"B, the defendant !nternational Corporate @an? is hereb, ordered to deliver to the plaintiff "atividad 0. -a/ardo the amount of -1,.$4,.$6.%6 covered b, the repurchase agreement with *erial "o. AOIA 1#%44 3;2hibit &AC5, this amount represented the principal of -1,.#$,456.77 which the plaintiff held including its interest as of October 16, 19%., conditioned upon the plaintiff filing a bond amount to -1,.$4,.$6.%6 to answer for all damages which the said defendant ban? ma, suffer in the event that the Court should finall, decide that the plaintiff was not entitled to the said amount. -etitioner filed a motion for reconsideration to the aforesaid order, asserting among other things that said motion is not verified, and therefore a mere scrap of paper. -rivate respondent however manifested that since she testified in open court and was crossAe2amined b, counsel for petitioner on the motion for release of the proceeds of the mone, mar?et placement, the defect had alread, been cured. On 0arch 9, 19%#, the respondent /udge issued an order den,ing petitionerCs motion for reconsideration. 3CA (ecision, 'ollo, pp. 1.9A1115. On 0arch 16, 19%#, petitioner filed a special civil action for certiorari and prohibition with preliminar, in/unction with the Court of Appeals, 3a5 for the setting aside and annulment of the Orders dated ebruar, 16, 19%# and 0arch 9,19%#, issued b, the respondent trial court, and 3b5 for an order commanding or directing the respondent trial /udge to desist from enforcing andGor implementing andGor e2ecuting the aforesaid Orders. The temporar, restraining order pra,ed for was issued b, respondent Court of Appeals on 0arch 44, 19%#. 3-lease see CA (ecision, 'ollo, p. 11#, last paragraph5. !n a decision rendered on October 61, 19%# 3'ollo, pp. 1.9A1#5, the Court of

Appeals dismissed said petition findingM3a5 that while the 0otion for the release of the proceeds of the mone, mar?et investment in favor of private respondent was not verified b, her, that defect was cured when she testified under oath to substantiate her allegations therein< 3b5 that, petitioner cannot validl, claim it was denied due process for the reason that it was given ample time to be heard, as it was in fact heard when it filed an Opposition to the motion and a motion for reconsideration9 3c5 that the circumstances of this case prevent legal compensation from ta?ing place because the )uestion of whether private respondent is indebted to petitioner in the amount of $.%1 million representing the deficienc, balance after the foreclosure of the mortgage e2ecuted to secure the loan e2tended to her, is vigorousl, disputed9 3d5 that the release of the proceeds of the mone, mar?et investment for private respondent will not ma?e the causes of action of the case pending before the trial court moot and academic nor will it cause irreparable damage to petitioner, private respondent having filed her bond in the amount of -1,.$4,.$6.%6 to answer for all damages which the former ma, suffer in the event that the court should finall, decide that private respondent is not entitled to the return of said amount 3CA (ecision, 'ello, pp. 114A11#5. The dispositive portion of the aforementioned (ecision reads< ... =e hold that the respondent court cannot be successfull, charged with grave abuse of discretion amounting to lac? of /urisdiction when it issued its Orders of ebruar, 16, 19%# and 0arch 9, 19%#, based as the, are on a correct appreciation of the import of the partiesC evidence and the applicable law. !" 8!;= =1;';O , the petition is dismissed for lac? of merit and the temporar, restraining order issued b, this Court on 0arch 44, 19%# is lifted. 38bid., p. 11#5. -etitioner moved for the reconsideration of the above decision 3Anne2 &*&, 'ollo, pp. 11$A14#5, but for the reason that the same failed to raise an, issue that had not been considered and passed upon b, the respondent Court of Appeals, it was denied in a 'esolution dated +anuar, 7, 19%5 3CA 'esolution, 'ollo, p. 14$5. 1aving been affirmed b, the Court of Appeals, the trial court issued a =rit of ;2ecution to implement its Order of ebruar, 16, 19%# 3Anne2 &@@&, 'ollo, p. 1%%5 and b, virtue thereof, a lev, was made on petitionerCs personal propert, consisting of 4. motor vehicles 3Anne2 &:&, 'ollo, p. 1475. On +anuar, 9, 19%5, herein private respondent 3then plaintiff5 filed in the trial court an e%'parte motion pra,ing that the four branches of the petitioner such as< @aclaran @ranch, -arana)ue, 0etro 0anila9 Ila,a @ranch, (ivisoria, 0etro 0anila9 Cubao @ranch, Hue>on Cit, and @inondo @ranch, *ta. Cru>, 0anila, be ordered to pa, the amount of -45.,...... each, and the main office of the petitioner ban? at -aseo de 'o2as, 0a?ati, 0etro 0anila, be

ordered to pa, the amount of -$4,.$6.%6 in order to answer for the claim of private respondent amounting to -1,.$4,.$6.%6. Thereupon, on +anuar, 1., 19%5, the trial court issued an Order 3Anne2 &8&, 'ollo, p. 1495 granting the aboveAmentioned pra,ers. Acting on the e%'parte motion b, the plaintiff 3now private respondent5, the trial court, on +anuar, 11, 19%#, ordered the -resident of defendant !nternational Corporate @an? 3now petitioner5 and all its emplo,ees and officials concemed to deliver to the sheriff the 4. motor vehicles levied b, virtue of the =rit of ;2ecution dated (ecember 14, 19%# 3Anne2 &=&, 'ollo, p. 1615. The petitioner having failed to compl, with the aboveAcited Order, the respondent trial court issued two 345 more Orders< the +anuar, 1$, 19%5 3Anne2 &CC,& 'ollo, p. 19.5 and +anuar, 41, 19%5 Orders 3Anne2 &((&, 'ollo, p. 1915, directing several emplo,ees mentioned therein to show cause wil, the, should not be cited in contempt. 1ence, this petition for review on certiorari with pra,er for a restraining order and for a writ of preliminar, in/unction. Three da,s after this petition was filed, or specificall, on +anuar, 1%, 19%5, petitioner filed an urgent motion reiterating its pra,er for the issuance of an e%'parte restraining order 3'ollo, p. 1645. *imultaneous with the filing of the present petition, petitioner, as defendant, filed with the trial court an e%'parte motion to suspend the implementation of an, and all orders and writs issued pursuant to Civil Case "o. %%# 3Anne2 &A&, 'ollo, p. 1655. This CourtCs resolution dated +anuar, 41, 19%5, without giving due course to the petition, resolved 3a5 to re)uire the respondents to comment< 3b5 to issue, effective immediatel, and until further orders from this Court, a Temporar, 'estraining Order en/oining the respondents from enforcing or in an, manner implementing the )uestioned Orders dated ebruar, 16, 19%#, 0arch 9, 19%#, +anuar, 1., 19%5 and +anuar, 11 and 1$, 19%5, issued in Civil Case "o. %%#. The corresponding writ was issued on the same da, 3'ollo, pp. 169A1#.5. As re)uired, the Comment of private respondent was filed on +anuar, 4%, 19%5 3'ollo, pp. 1#1A 15.5. Thereafter, petitioner moved for leave to file a supplemental petition on the ground that after it had filed this present petition, petitioner discovered that the bond filed with, and approved b,, the respondent lower court showed numerous material erasures, alterations andGor additions 3'ollo, p. 1515, which the issuing insurance compan, certified as having been done without its authorit, or consent 3Anne2 &J&, 'ollo, p. 17%5. The *upplemental -etition was actuall, filed on ebruar, 1, 19%5 3'ollo, pp.

15#A1715. !t pointed out the erasures, alterations andGor additions in the bond as follows< a. below &Civil Case "o. %%#& after the words, &-laintiffCs @ond,& the phrase & or 7ev,ing of Attachment& was erased or deleted9 b. in lines 4 and 6 after the word &order,& the phrase &approving plaintiffCs motion dated (ec. 15, 19%6, was inserted or added9 c. in line 6, the phrases &Of attachment& and &ordered that a writ of attachment issueC were erased or deleted9 d also in line 6 after the words &the court has& the phrase &approved the 0otion was li?ewise inserted or added9 e. in line 9, the phrase &and of the lev,ing of said attachment& was also erased or deleted9 f. in line 16, the word &attachment& was li?ewise erased or deleted9 g. also in line 16 after the deletion of word &attachment& the phrase &release of the -1,.$4,.$6.%6 to the plaintiff was similarl, inserted or added.& -etitioner contended therein that in view of the foregoing facts, the genuineness, due e2ecution and authenticit, as well as the validit, and enforceabilit, of the bond 3'ello, p. 17#5 is now placed in issue and conse)uentl,, the bond ma, successfull, be repudiated as falsified and, therefore, without an, force and effect and the bonding compan, ma, thereb, insist that it has been released from an, habilit, thereunder. Also, petitioner pointed as error the respondent trial courtCs motu proprio transferring Civil Case "o. %%# to the 0anila @ranch of the same Court arguing that improper venue, as a ground for, and unless raised in, a 0otion to (ismiss, ma, be waived b, the parties and the court ma, not preAempt the right of the parties to agree between or among themselves as to the venue of their choice in litigating their /usticiable controvers, 3*upplemental -etition, 'ollo, p. 1$.5. On being re)uired to comment thereon, 3'ollo, p. 1945 private respondent countered 3'ollo, pp. 196A19%5 that bond forms are read,Aprepared forms and the bonding compan, used the form for &7ev,ing of Attachment& because the compan, has no read,Aprepared form for the ?ind of bond called for or re)uired in Civil Case %%#. =hatever deletions or additions appear on the bond were made b, the Afisco !nsurance Corporation itself for the purpose of accomplishing what was re)uired or intended. "onetheless, on 0a, 7, 19%5, private respondent filed &-laintiffs @ond& in the respondent trial court in the amount of -1,.$4,.$6.%6 a 2ero2 cop, of which was furnished this Court 3'ollo, p. 4195, and noted in the CourtCs 'esolution dated 0a, 49,19%5 3'ollo, p. 4455. On 0arch 11, 19%5, petitioner was re)uired to file a Consolidated 'epl,

3'ollo, p. 1995 which was filed on April 1., 19%5 3'ollo, p. 4.15. Thereafter, a 'e/oinder 3'ollo, p. 46%5 was filed b, private respondent on *eptember 1%, 19%5 after Att,. Advincula, counsel for private respondents was re)uired b, this Court to show cause wh, he should not be disciplinaril, dealt with or held in contempt for his failure to compl, on time 3'ollo, p. 44$5 and on August 19, 19%5 said law,er was finall, admonished 3'ollo, p. 4495 for his failure to promptl, apprise the Court of his alleged nonAreceipt of cop, of petitionerCs repl,, which alleged nonAreceipt was vehementl, denied b, petitioner in its Counter 0anifestation 3'ollo, p. 46.5 filed on August 5, 19%5. inall,, on October 7, 19%5, this petition was given due course and both parties were re)uired to submit simultaneous memoranda 3'ollo, p. 4#95 but before the same were filed, petitioner moved for leave to file surAre/oinder 3'ollo, p. 45.5, the surAre/oinder was filed on October 1#,19%5 3'ollo, pp. 454A45#5. -etitionerCs memorandum was filed on (ecember 4%, 19%5 3'ollo, pp. 4$#A 4945 while that of private respondent was submitted on +anuar, 1., 19%$ 3'ollo, pp. 495A6.#5. -etitioner again moved for leave to file a 'epl, 0emorandum 3'ollo, p. 6.75 which, despite permission from this Court, was not filed and on August 44, 19%$, private respondent pra,ed for earl, resolution of the petition 3'ollo, p. 6115. !n a resolution dated October 16, 19%$ 3'ollo, p. 61#5 this case was transferred to the *econd (ivision of this Court, the same being assigned to a member of that (ivision. The crucial issue to be resolved in this case is whether or not there can be legal compensation in the case at bar. -etitioner contends that after foreclosing the mortgage, there is still due from private respondent as deficienc, the amount of -$.%1 million against which it has the right to appl, or set off private respondentCs mone, mar?et claim of -1,.$4,.$6.%6. The argument is without merit. As correctl, pointed out b, the respondent Court of Appeals M Compensation shall ta?e place when two persons, in their own right, are creditors and debtors of each other. 3Art. 147%, Civil Code5. &=hen all the re)uisites mentioned in Art. 1479 of the Civil Code are present, compensation ta?es effect b, operation of law, even without the consent or ?nowledge of the debtors.& 3Art. 149., Civil Code5. Article 1479 of the Civil Code re)uires among others, that in order that legal compensation shall ta?e place, &the two debts be due& and &the, be li)uidated and demandable.& Compensation is not proper where the claim of the person asserting the setA off against the other is not clear nor li)uidated9 compensation cannot e2tend

to unli)uidated, disputed claim arising from breach of contract. 3CompaLia Beneral de Tabacos vs. rench and :nson, 69 -hil. 6#9 7oren>o V 0artine> vs. 1errero, 17 -hil. 495. There can be no doubt that petitioner is indebted to private respondent in the amount of -1,.$4,.$6.%6 representing the proceeds of her mone, mar?et investment. This is admitted. @ut whether private respondent is indebted to petitioner in the amount of -$.%1 million representing the deficienc, balance after the foreclosure of the mortgage e2ecuted to secure the loan e2tended to her, is vigorousl, disputed. This circumstance prevents legal compensation from ta?ing place. 3CA (ecision, 'ollo, pp. 114A1165. !t must be noted that Civil Case "o. %6A19717 is still pending consideration at the 'TC 0anila, for annulment of *heriffs sale on e2traA/udicial foreclosure of private respondentCs propert, from which the alleged deficienc, arose. 3Anne2 &AA&, 'ollo, pp. 1%1A1%95. Therefore, the validit, of the e2tra/udicial foreclosure sale and petitionerCs claim for deficienc, are still in )uestion, so much so that it is evident, that the re)uirement of Article 1479 that the debts must be li)uidated and demandable has not ,et been met. or this reason, legal compensation cannot ta?e place under Article 149. of the Civil Code. -etitioner now assails the motion of the plaintiff 3now private respondent5 filed in the trial court for the release of the proceeds of the mone, mar?et investment, arguing that it is deficient in form, the same being unverified 3petitionerCs 0emorandum, 'ollo, p. 4$$5. On this score, it has been held that &as en/oined b, the 'ules of Court and the controlling /urisprudence, a liberal construction of the rules and the pleadings is the controlling principle to effect substantial /ustice.& 30aturan v. Araula, 111 *C'A $15 D19%4E5. inall,, the filing of insufficient or defective bond does not dissolve absolutel, and unconditionall, the in/unction issued. =hatever defect the bond possessed was cured when private respondent filed another bond in the trial court. -';0!*;* CO"*!(;';(, the )uestioned (ecision and 'esolution of the respondent Court of Appeals are hereb, A !'0;(. *O O'(;';(