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#14 PACULDO v CA o For the first 5 yrs of the contract beginning Dec.

27, 1990,
GR NO. 123855 petitioner would pay monthly rental of P450k payable within the
NOV. 20, 2000 first 5 days of each month at respondent’s office, with a 2%
By: GUZMAN penalty for every month of late payment.
Topic: EXTINGUISHMENT OF OBLIGATIONS; APPLICATION OF PAYMENT  Petitioner also leased 11 other properties from respondent and purchased
Petitioners: NEREO J PACULDO 8 units of heavy equipment and vehicles in the amount of P1.02m.
Respondents: COURT OF APPEALS AND BONIFACIO C. REGALADO  Upon petitioner’s failure to pay P361,895.5 in rental for the month of May
Ponente: PARDO, J 1992, and the monthly rental of P450k for the months of June and July
1992.
o On July 6, 1992, respondent sent a demand letter to petitioner
RECIT-READY/SUMMARY: After judgment was rendered ordering the petitioner
to vacate the leased wet market building and to pay back rentals, he paid the demanding payment of the back rentals and if no payment was
made within 15 days from receipt of the letter, it will cancel the
amount of P11,478,121.85 for security deposit and rentals but the respondent,
without petitioner's consent, applied portions of the payment to his other lease contract. Then another demand letter on July 17, 1992.
obligations with the respondent. The petitioner filed a petition for review with  Without the knowledge of the petitioner, respondent mortgaged the land
the CA but the CA dismissed the petition finding that petitioner impliedly subject of the lease contract, including the improvements.
consented to respondent's application of payment to heavy equipment brought  MTC: rendered a decision in favor of respondent.
by petitioner from respondent. Petitioner submits that his silence is not consent o (1) Ordering the petitioner to vacate the leased land.
but is in fact a rejection. Ruling in petitioner's favor, the Supreme Court held: that o (2) to pay the sum of P527,119.28 for the unpaid monthly
at the time petitioner made the payments, he made it clear to respondent that rentals.
they were to be applied to his rental obligation on the wet market property; that o (3) To pay the sum of P450k a month plus 2%.
there was no clear assent by petitioner to the change in the manner of application o (4) To pay the Atty’s fee, sum of P5m.
of payment; and that even if petitioner did not declare to which of his debts the o (5) To pay the costs of suit.
payment is to be applied, the application made by respondent to pay the  RTC: Affirmed the decision of MTC.
purchase price of equipment that was not yet due and demandable is contrary to o Issued a writ of execution, ordering the petitioner to vacate the
the provisions of the law. subject premises voluntarily.
 CA: Dismissed the petition for lack of merit. Paculdo impliedly consented
DOCTRINE: The right to specify which among his various obligations to the same to Regalado’s application of payment to his other obligations.
creditor is to be satisfied first rests with the debtor, as provided by law. Under the o Petitioner alleged that he paid P11,478,121.85 as security
law, if the debtor did not declare at the time he made the payment to which of his deposit & rentals on the wet market building.
debts with the creditor the payment is to be applied, the law provided the guideline— o Portions of the amount paid was applied by Regalado w/o his
no payment is to be made to a debt that is not yet due and the payment has to be consent, to his other obligations. Vouchers & receipts indicated
applied first to the debt most onerous to the debtor. that the

FACTS ISSUE
 The case is a petition for certiorari, seeking to set aside the decision of the  WON Paculdo was truly in arrears in the payment of rentals on the subject
CA, which affirmed the RTC ordering the ejectment of petitioner from the property at the time of the filing of the complaint for ejectment.
property.
 On Dec. 27, 1990, petitioner and respondent entered into a contract to HELD/RATIO
lease over a 16,478 sqm parcel of land with a we market building.  NO. PETITION GRANTED. CA DECISION REVERSED AND SET ASIDE.
o Contract was for 25 yrs, commencing on Jan. 1, 1991 and ending o Based on MTC & RTC findings, Paculdo paid a total of
on Dec. 31, 2015. P10,949,447.18 to Regalado as of July 2, 1992. And if this will be
applied solely to the rentals on the Fairview wet market, there
would even be an excess payment of P1,049,447.18. (see p.139
for computation)
o Paculdo goes back to the July 15, 1991 letter. He emphasized
that applying the payment to the purchased equipment was
crucial because it was equivalent to 2 mos rental & was the basis
for the ejectment case. He further claims that his silence/lack of
protest did not mean consent; rather, it was a rejection.
o CC Art. 1252 & 1254: Debtor has the rt to specify w/c among his
various obligations to the same creditor is to be satisfied at the
time of making the payment. If the debtor did not exercise this
rt, law provides that no payment is to be made to a debt that is
not yet due (CC Art. 1252) and payment has to be applied first to
the debt most onerous to the debtor (CC Art. 1254).
 Paculdo made it clear that payments were to be
applied to his rental obligations on the wet market
property.
 Regalado claims that Paculdo assented to the
application as inferred from his silence.
 A big chunk of the amount paid went into the
satisfaction of an obligation w/c was not yet due &
demandable (payment of heavy equipment).
Application was contrary to law.
 Paculdo’s silence was not tantamount to consent.
Consent must be clear & definite. There was no
meeting of the minds. Though there was an offer by
Regalado, there was no acceptance by Paculdo. Even if
Paculdo did not exercise his rt to choose the obligation
to be satisfied first & such rt was transferred to
Regalado, latter’s choice is still subject to former’s
consent.
 Lease over the Fairview property is the most onerous
among all the obligations of petitioner to respondent.
It’s a going-concern (?) and investments on the
improvements were made amounting to P35M.
Paculdo was bound to lose more if lease would be
rescinded than if the contract of sale of heavy
equipment would not proceed.