CASE SHORT FACTS PETITIONER RESPONDENT ISSUE RULING

Equitable PCI -On October 7, 2001, respondents Ng Sheung -Asserted that -Promissory WON there NO. Extraordinary inflation exists when there is an
v. Ngor, Ken Appliance Division, Inc. and respondents notes are was an unusual decrease in the purchasing power of currency
Ng Sheung Benjamin E. Go filed an action for annulment knowingly invalid because extraordinary and such decrease could not be reasonably foreseen or
Ngor and/or reformation of documents and accepted all the documents deflation. was manifestly beyond the contemplation of the parties
contracts against petitioner Equitable PCI Bank terms and were contracts at the time of the obligation. Extraordinary deflation
and its employees, Aimee Yu and Bejan Lionel conditions of adhesion RTC: Upheld involves an inverse situation.
Apas, in the RTC, claiming that Equitable contained in the the validity of BASIS: ARTICLE 1250
induced them to avail of its peso and dollar promissory Note: the Promissory For extraordinary inflation (or deflation) to affect an
credit facilities by offering low interest rates so notes. In fact, A contract of Notes but obligation, the following requisites must be proven:
they accepted Equitable's proposal and signed they adhesion is a invalidated the 1. that there was an official declaration of
the bank's pre-printed promissory notes on continuously contract escalation extraordinary inflation or deflation from the Bangko
various dates beginning 1996. They, however, availed of and whereby almost clause Sentral ng Pilipinas (BSP);
were unaware that the documents contained benefited from all of its contained 2. that the obligation was contractual in nature;and
identical escalation clauses granting Equitable Equitable's credit provisions are therein 3. that the parties expressly agreed to consider the
authority to increase interest rates without facilities for five drafted by one because it effects of the extraordinary inflation or deflation.
their consent. years. party. The violated the
participation of principle of -Despite the devaluation of the peso, the BSP never
- the other party mutuality of declared a situation of extraordinary inflation. Although
is limited to contracts. the obligation in this instance arose out of a contract, the
affixing his -Declared the parties did not agree to recognize the effects of
signature or his existence of extraordinary inflation (or deflation). No mention that
adhesion to the extraordinary there was a such stipulation either in the promissory
contract. deflation, note or loan agreement. Payment should be accdg. to
ordered use of date of maturity.
1996 rate plus
damages.
Almeda v. -On May 1997, respondent Bathala Marketing -Advised - VAT may not WON there NO.
Bathala Industries, Inc., as lessee, represented by its respondent that be imposed as was an Extraordinary inflation exists when there is a decrease or
Marketing president Ramon H. Garcia, renewed its the former shall the rentals extraordinary increase in the purchasing power of the Philippine
Contract of Lease with Ponciano L. Almeda assess and collect fixed in the deflation or currency which is unusual or beyond the common
(Ponciano), as lessor, husband of petitioner Value Added Tax contract of inflation. fluctuation in the value of said currency, and such
Eufemia and father of petitioner Romel (VAT) on its lease were increase or decrease could not have been reasonably
Almeda. Under the said contract, Ponciano monthly rentals. supposed to foreseen or was manifestly beyond the contemplation of
agreed to lease a portion of the Almeda include the VAT the parties at the time of the establishment of the
Compound, located at 2208 Pasong Tamo - Monthly rental therein, obligation.
Street, Makati City, consisting of 7,348.25 should be considering
square meters, for a monthly rental of increased by 73% that their The factual circumstances obtaining in the present case
P1,107,348.69, for a term of four (4) years pursuant to contract was do not make out a case of extraordinary inflation or
from May 1, 1997 unless sooner terminated as condition No. 7 executed on devaluation as would justify the application of Article
provided in the contract. Pertinent provisions of the contract May 1, 1997 1250 of the Civil Code. We would like to stress that the
are: and Article 1250 when the VAT erosion of the value of the Philippine peso in the past
6th: It is expressly understood by the parties of the Civil Code law had long three or four decades, starting in the mid-sixties, is
hereto that the rental rate stipulated is based been in effect. characteristic of most currencies. And while the Court
on the present rate of assessment on the may take judicial notice of the decline in the purchasing
property. - There was no power of the Philippine currency in that span of time,
7th: In case an extraordinary inflation or extraordinary such downward trend of the peso cannot be considered
devaluation of Philippine Currency should inflation to as the extraordinary phenomenon contemplated by
supervene, the value of Philippine peso at the warrant the Article 1250 of the Civil Code. Furthermore, absent an
time of the establishment of the obligation application of official pronouncement or declaration by competent
shall be the basis of payment. Article 1250 in authorities of the existence of extraordinary inflation
light of the during a given period, the effects of extraordinary
During the effectivity of the contract, Ponciano pronouncement inflation are not to be applied.
died. of this Court in
various cases. OTHER ISSUE:
Petitioners are estopped from shifting to respondent the
burden of paying the VAT.
- Petitioners reliance on the sixth condition of the
contract is, likewise, unavailing. This provision clearly
states that respondent can only be held liable for new
taxes imposed after the effectivity of the contract of
lease, that is, after May 1997, and only if they pertain to
the lot and the building where the leased premises are
located. Considering that RA 7716 took effect in 1994,
the VAT cannot be considered as a new tax in May 1997,
as to fall within the coverage of the sixth stipulation.
Premiere Dev. On August 29, 1999 and respondent Central -Applied the Central Surety’s WON Premiere NO.
Bank v. Central Surety & Insurance Company obtained 2 loans payment made counsel waived its The debtor’s right to apply payment is not mandatory. This
Surety from Premier: by Central Surety wrote Premier right of is clear from use of the word “may” rather than the word
1st Loan: Bank and application of shall.
-Industrial loan of P6M w/ 17% interest per RTC dismissed demanded for payments on
annum (payable monthly in arrears) and the the complaint & application of the loans of Article 1252 gives the right to the debtor to choose which
principal payable on due date and a penalty of ruled that the the check Central Surety. of the several obligations to apply a particular payment
24% per annum based on the unpaid stipulation in the payments to the that he tenders to the creditor. But likewise granted in
amortization/installment or the entire unpaid PN granting P6M loan (PN the same provisions is the right of the creditor to apply
balance of loan. This is evidenced in a Premiere sole 714-Y) and such payment in case the debtor fails to direct its
Promissory Note No. 714-Y (PN 714-Y). discretion in the their P2.6M application.
MATURITY DATE: August 14, 2000 application of loan
SECURITY: Deed of Assignment of Pledge payment (PN 717-X) and Verily, the debtor’s right to apply payment can be waived
covering Central Surety’s Membership Fee was valid. It also asked for the and even be granted to the creditor if the debtor so
Cert No. 217 covering its share in the in Wack ruled that the release of the agrees.
Wack Golf and Country Club. application of the pledge.
Premiere The records show the Premiere Bank and Central
LIABILITY: Constancio T. Castaneda and payment to the
bank refused to Surety entered into several contracts of loan, securities by
Engracio T. Castaneda, president and vice loan of Casent
accede to the way of pledges, and suretyship agreements. In at least two
president of Central Surety solidary. Realty and the
demand and PNs (1) PN 714-Y (P6M) and PN 376-X (P40.49M), Central
Personal loan
insisted that it Surety expressly agreed to grant Premiere Bank the
2nd Loan: is void & must be
had authority to apply any and all of its payments.
Commercial loan in the amount of annulled.
P40,498,000 under PN 376-X. the sole
discretion on The demand made by Premiere cannot be equated with a
MATURITY DATE: October 10, 2001. CA reversed and waiver of right to demand payment of all matured
application of
SECURITY: Real Estate Mortgage over set aside the obligations. Premiere did not waive its right to apply
payments.
Condominium Certificate Title No. 8804, court’s ruling and payment of P6M loan when it specifically demanded its
Makati City. held that the payment. It is an elementary rule that the existence of
LIABILITY: Transacted by Constancio T. August 22 letter waiver must be positively demonstrated, must not be only
Castaneda and Engracio T. Castaneda, as demanding for voluntary but also made knowingly and intelligently, mere
president and vice president on behalf of the payment of silence should not be construed surrender thereof.
Central Surety. the P6M loan
operates as a
August 22, 2000, Premiere demanded payment waiver on its
of the P6M loan (5 days or else wack wack stock soledetermination
transferred) of application of
payments.
September 20, 2000, Central Surety issued
P6M check but Premier returned it. NOTE: Court did
not discuss 2.6M
In a letter dated September 28, 2000, Premier personal loan bc
demanded not only the payment of the P6M they are not
loan but also of the P40.498M loan. oblig. of central.
Espina v. CA Mario S. Espina is the registered owner of a -filed ejectment -the provisional WON the NO.
Condominium Unit No. 403 in Antipolo case deed of sale provisional The contention cannot be sustained.
that was deed of sale Respondent originally occupied the condo unit in
November 29, 1991, Mario S. Espina, private subsequently novated the question in 1987 as lessee. While he occupied as lessee,
respondent as seller, and Rene G. Diaz, the executed by the existing Espina agreed to sell the condo unit to respondent by
petitioner as buyer, executed a Provisional parties novated contract of installment.
Deed of Sale, whereby the former sold to the the original lease and that It did not novate the existing lease contract. The novation
latter the condo unit for the amount of P100k existing there was no must be proved since its existence is not presumed. Thus,
to be paid upon the execution of the contract contract of cause of action a deed of cession of the right to repurchase a piece of
and the balance to be paid through PCI Bank lease. for land, does not supersede a contract of lease over the
postdated checks. ejectment same property.
- petitioner's against Diaz.
Diaz informed Espina that his checking account subsequent After the initial downpayment, respondent’s checks in
with PCI Bank has been closed and a new acceptance of payment of six installments all bounced and were
checking account w/ the same drawee bank is such payment dishonored upon presentment because the bank account
opened for practical purposes. effectively was closed. Thus, the provisional deed of sale was
withdrew the terminated by a notarial notice of
January 25, 1992, Diaz thru Socorro Diaz, his cancellation of cancellation.
wife, paid Espina P200,000.00 acknowledged the provisional
by him as partial payment for the condo unit sale. Nonetheless, respondent Diaz continued to occupy
subject of this controversy. premises and pay back his rentals. Failing do so,
respondent’s possession became unlawful and his
July 26, 1992, Espina sent Diaz a "Notice of eviction was proper. Hence, on February 24, 1993,
Cancellation" of the Provisional Deed of Sale petitioner filed with the MTC, Rizal for an action for
unlawful detainer against Diaz.
Despite the Notice from Espina, the he
accepted payment from Diaz per Metrobank On the contention that Espina’s acceptance of payment
Check No. 395694 dated and encashed on constitutes withdrawal of cancellation:
October 28, 1992 in the amount of P - The court does not agree. Unless the application of
100,000.00 (p. 64, Rollo). payment is expressly indicated, the payment shall be
On February 24, 1993, Espina filed a complaint applied to the obligation most onerous to the debtor.
for Unlawful Detainer against Diaz.
In this case, the unpaid rentals constituted the more
MTC: ordered Diaz to vacate the unit and to onerous obligation of the respondent to petitioner. As
pay the total arrears the payment did not fully settle the unpaid rentals,
as rentals, he vacates the premises; to pay the petitioner's cause of action for ejectment survives. Thus,
amount of P300 the Court of Appeals erred in ruling that the payment
per appearance, and costs of suit. was "additional payment" for the purchase of the
CA: reversed the decision and dismissed the property.
complaint for unlawful detainer with costs
against petitioner Espina. MR was SC: revives RTC decision
denied.
Tan v. China Petitioner Lorenze Realty and Development Argued that they Not WON Lorenze NO.
Bank Corporation (Lorenze Realty) is a domestic are no longer exintguished by Realty’s Application of Payment
corporation duly authorized by Philippine laws liable for the the foreclosure obligation was A debtor, in making a voluntary payment, may at the time
to engage in real estate business. It is deficiency because Article fully settled of the payment direct an application to whatever account
represented in this action by petitioners Joel obligation 1253 when the he chooses, unless he has waived that right.
Tan and Eric Tan as substitutes for their because the applies payment real properties
deceased parents, Spouses Juan Chuy Tan and proceeds of the of interests, constituted as In the event that the debtor failed to exercise the right to
Mary Tan (Spouses Tan). sale are enough penalties and securities for elect, the creditor may choose to which among the debts
to expenses of the the loan were the payment is applied as in the case at bar.
Respondent China Banking Corporation (China cover the sale, sold at
Bank), on the other hand, is a universal principal amount yielding the the public It is noteworthy that after the sale of the foreclosed
banking corporation duly authorized by of the loan which balance of auction for properties at the public auction, Lorenze Realty failed to
Bangko Sentral ng Pilipinas (BSP) to engage in is just P71.05M P29.25M. P85,000,000.00 manifest its preference among which of the obligations
banking business. that
which among the obligations that were all due the
On several occasions in 1997, Lorenze Realty proceeds of the sale should be applied. Its silence is
obtained from China Bank various amounts of construed as acquiescence to China Bank’s application of
loans and credit accommodations totaling the payment to the interest and penalties and the
P71,050,000.00. remainder to the principal which is sanctioned by Article
1253 of the Civil Code.
It is expressly stipulated in the Promissory
Their assumption that the obligation was fully satisfied by
Notes that Lorenze Realty agreed to pay the
the sale of the securities does not hold any water. The
additional amount of 1/10 of 1% per day of the
amount of their entire liability should be computed on the
total amount of obligation due as penalty to
basis of the rate of interest as imposed by CA minus the
be computed from the day that the default
proceeds of the sale.
was incurred up to the time that the loan
obligations are fully paid. The debtor also
undertook pay an additional 10% of the total
amount due including interests, surcharges
and penalties as attorney's fees.

RTC: ruled in favor of China bank declaring

defendants jointly and severally liable for the
amount representing the deficiency
judgment.

CA: affirmed reducing the penalty from 24% to

12% per annum as well as attorney’s fees from
5% to 2%.
Marquez v. On December 16, 1991, Nunelon R. Marquez He insists that his Daily payments WON the YES.
Elisan Credit obtained a loan (first loan) from Elisan Credit daily payments were properly respondent Article 1176 falls under Chapter I (Nature and Effect of
Corporation for P53K payable in 180 days. The should be credited against acted lawfully Obligations) and Article 1253 falls under Subsection I
petitioner signed a promissory note deemed to have the interest and when it (Application of Payments). The structuring of these
which that it is payable in weekly installments been credited not against the credited the provisions, properly considered, means
and subject to 26% annual interest. In case of against the principal. daily payments that Article 1176 should be treated as a general
non-payment, the petitioner agreed to pay principal as the against the presumption subject to the more specific presumption
10% monthly penalty based on the total official receipts interest under Article 1235.
amount unpaid and another 25% of such issued by the RTC affirmed instead of the
amount for attorney’s fees, exclusive of costs respondent were the ruling of the principal? The first is relevant on question pertaining effects and
and judicial and extrajudicial expenses. silent with respect MTC, but upon nature of obligations in general, while Article 1253 is
SECURITY: Chattel mortgage over a motor to the payment of MR it reversed specifically
vehicle. interests and itself, stating the pertinent on questions involving application of payments
penalties invoking application of and extinguishing obligations.
Petitioner obtained another loan (2nd) from the Article 1176 Article 1253 and
respondent for P55K evidenced by a PN and a (receipt of the that the chattel The presumption under Article 1176 does not resolve the
cash voucher on June 15, 1992 w/ same terms principal give rise mortgage was question of whether the amount received by the creditor
& conditions as the first promissory note. When to the revived. is a payment for principal or interest. Under this article
it matured, the petitioner had only paid presumption of the amount received by the creditor is payment for the
P29,960 leaving an unpaid balance of payment of CA affirmed the
principal, but a doubt arises on whether or not the interest
P25,040. Due to liquidity problems, the interest) ruling with
is waived because the creditor accepts the payment for the
petitioner asked the respondent if he could pay and of Article modification
principal without reservation with respect to the interest.
in daily installments. It was granted. 1235 (qualified stating that the
Article 1176 resolves this doubt by presuming that the
acceptance of daily
creditor waives the payment of interest because he accepts
As of September 1994, or 21 months after the irregular of payments
payment for the principal without any reservation.
second loan’s maturity, the petitioner had paid incomplete covered the
P56,440. Despite the receipt of the amount, obligation). He payment of
On the other, the presumption under Article 1253, resolves
Elisan Credit filed for judicial foreclosure of denies having interests and
doubts involving payment of interest-bearing debts. The
chattel mortgage for failing to pay such stipulated upon not for the
doubt pertains to the application of payment; the
amount. Alleging the failure to pay the 10% and consented to principal. It
uncertainty is which did the creditor receive. Article 1253
monthly penalty and 25% attorney’s the interest, reduced
resolves this doubt by providing a hierarchy, first be
fees. A writ of replevin was issued. penalty and monthly penalty
applied to the interest; then payment shall then be applied
payment of from 10% to
to the principal only after the interest has been fully paid.
MTC found for the petitioner and held that the attorney’s fees 2%.
second loan was fully exintguished. It held that and receiving any
Since the doubt in the case pertains to the application of
when an obligee accepts the performance or demand letter.
the daily payment, Article 1253 shall apply. Only when
payment of an obligation, knowing its there is waiver of interest shall Article 1176 apply.
incompleteness or irregularity and without The court rules that the respondent properly credited the
expressing anyprotest or objection, it is fully daily
complied with. The MTC noted the acceptance payments to the interest and not to the principal because:
of the daily payments made by 1. The debt produces interest
the petitioner without protests making the 2. A portion of the second loan remain
claim to be without legal basis. 3. No waiver of interest.
Far East Bank August 1973, Diaz and Company got a loan When FEBTC - 1. Efficacy of FIRST ISSUE: Tender of Payment
and Trust v. from former Pacific Banking Corporation in the purchased from the alleged In general, a check does not constitute legal tender, and
Diaz Realty amount of P720,000 with interest of 12% per Pacific for tender of that a creditor may validly refuse it. It must be emphasized,
annum increased 20%. The loan was secured P1.828M, that payment made however, that this dictum does not prevent a creditor from
by real estate mortgage over two parcels of despite such by the accepting a check as payment. In other words, the creditor
land owned by Diaz Realty in Davao. purchase, Pacific respondent has the option and the discretion of refusing or accepting
Davao Branch, 2. The effect it. In this case was informed that the obligation summed
In 1981, Allied Banking Corporation rented an continued to of the transfer up to P1,447,142.03. On November 14, 1988, petitioner
office space in the building construction on the collect interests RTC ordered to petitioner received from Interbank Check No. 81399841 dated
mortgaged properties, with conformity of the and penalty computation of of November 13, 1988, bearing the amount of P1,450,000.
mortgagee Pacific, the parties agreed that the charges on the interest and add respondent’s FEBTC bank did not refuse respondent’s check.
monthly rentals shall be paid directly to the loan. to the principal account with
mortgagee for the lessor’s account, either to It was therefore and compared Pacific SECOND ISSUE: The Nature of Respondent’s Account
partly or fully pay off the aforesaid not FEBTC which with thedeposit, 3. Interest rate It was an assignment of credit. Petitioner’s acquisition of
mortgage indebtedness. collected the and if the applicable Diaz’s credit did not involve any changes in the original
interest rates P1.45M check 4. Status of agreement. neither did it vary the rights and the
Sometime in December 1986, appellant FEBTC mentioned in the was not enough, the real estate obligations of the parties. Thus, no novation by
purchased the credit of Diaz & Company in complaint, and then plaintiff mortgage. conventional subrogation could have taken place. There is
favor of PaBC, but it was not until March 23, that it sought to shall pay the no need for debtor’s consent to assign credit.
1988 that Diaz was informed about it. Cashier negotiate deficiency. MR
Ramon Lim told him that as of such date, his with the plaintiffs, modified THIRD ISSUE: Applicable Interest Rate
loan was P1,447,142.03; that he (Diaz) asked and the FEBTC including the However, because there was a valid tender of payment
the defendant to make accounting of the has no money market made on November 14, 1988, the accrual of interest based
monthly rental payments made by Allied knowledge of the and principals. on the stipulated rate should stop on that date. Thus,
Bank; that on December 14, 1988, Diaz rates CA sustained respondent should pay petitioner-bank its principal
tendered to FEBTC the amount of P1,450,000.00 of interest RTC finding that obligation in the amount of P1,067,000 plus accrued
through an Interbank check, in order to prevent imposed and there was a interest thereon at 20% per annum until November 14,
the imposition of additional interests, penalties collected prior to valid tender of 1988, less interest payments paid to Pacific.
and surcharges on its loan; that FEBTC did not the purchase of payment in the
accept it as payment; that instead, Diaz was the sum of P1.45M, FOURTH ISSUE: Status of Mortgage Contract
asked to deposit the amount with the credit of Pacific. made by Diaz The Real Estate Mortgage executed between respondent
defendant’s Davao City Branch Office, allegedly Realty, Inc. in and Pacific to secure the former’s principal obligation, as
pending the approval of Central Bank Liquidator favor of FEBTC. well as the provision in the Contract of Lease between
Renan Santos; respondent and Allied Bank with regard to the application
of rent payment to the former’s indebtedness, should
It was changed into a money market placement, subsist until full and final settlement of such obligation
but even after it matured there was still no news pursuant to the guidelines set forth in this Decision.
on the acceptance of such as a tender of Thereafter, the parties are free to negotiate a renewal of
payment. Prompting him to file the case in RTC. either or both contracts, or to end any and all of their
contractual relations.
Petition is denied, CA decision affirmed. Respondent
Diaz Realty is ordered to pay FEBTC its principal loan
obligation in the amount of P1,067,000 with interest.
Pabugais v. Pursuant to an Agreement and Undertaking Pabugais’ Respondent’s 1. Was there a The following are requisites for valid consignation:
Sahijwani dated December 3, 1993, petitioner Teddy G. Contention counsel, on the valid 1. There was a debt due;
Pabugais in consideration of P15,487,500 He contends that other hand, consignation? 2. The consignation of the obligation had been made
agreed to sell to Dave P. Sahijwani a lot he can withdraw admitted that 2. Can because the creditor to whom tender of payment was
containing 1,239 sq.m. located at North Forbes the amount his petitioner made refused to accept it, or because he was absent or
Park, Makati. deposited office received withdraw the incapacitated, several persons claim to be entitled to the
with the trial petitioner’s amount amount; title of the obligation is lost.
Respondent paid petitioner the amount of court as a matter letter dated consigned as a 3. Previous notice of the consignation had been given to
P600,000.00 as option/reservation fee and the of right because August 5, 1994, matter of, the person interested in the performance of the obligation;
balance of P14,887,500.00 to be paid within 60 at the time he but claimed right? 4. The amount due was placed at the disposal of the court
days from the execution of the contract, moved for the that no check 5. After the consignation has been made, the person
simultaneous with delivery of the owner’s withdrawal was appended interested was notified thereof.
duplicate Transfer Certificate of Title in thereof, the CA thereto. And
respondent’s name, the Deed of Absolute has yet to rule on that hat While it is true that in general, a manager’s check is not
Sale; the Certificate of Non-Tax Delinquency on the there was no legal tender, the creditor has the option of refusing or
real estate taxes and Clearance on Payment of consignation’s valid tender of accepting it. Payment in check by the debtor may be
Association Dues. validity. payment acceptable as valid, if no prompt objection to said
• Failure of payment – forfeiture of P600K because no payment is made. Consequently, petitioner’s tender of
• Failure of delivery – return 600K and 18% check was payment in the form of manager’s check
interest. tendered and is valid.
the
Petitioner failed to deliver the required computation of The manager’s check in the amount of P672,900.00
documents. He returned the amount of P600K the amount to (representing the P600,000.00 option/reservation fee plus
by way of FEBTC Check but was however, be tendered 18% interest per annum computed from December 3, 1993
dishonored. Petitioner claimed that he twice was insufficient. to August 3, 1994) which was tendered but refused by
tendered to respondent, through his counsel, respondent, and thereafter consigned with the court,
the amount of P672,900.00 in the form of FEBTC was enough to satisfy the obligation. There being a valid
Manager’s Check dated August 3, 1994, but tender of payment in an amount sufficient to extinguish
said counsel refused to accept the same. the obligation, the consignation is valid.

RTC declaring the consignation invalid for Amount Can No Longer be Withdrawn
failure to prove The amount consigned with the trial court can no longer
that petitioner tendered payment to be withdrawn by petitioner because respondent’s prayer
respondent and the in his answer that the amount consigned be awarded
latter refused to receive the same. The to him is equivalent to an acceptance of the consignation,
manager’s check which has the effect of extinguishing petitioner’s
allegedly offered by petitioner was not legal obligation. Petitioner failed to manifest his intention to
tender, hence, comply with the “Agreement and Undertaking” by
there was no valid tender of payment. Appealed delivering the necessary
to CA. documents and the lot subject of the sale to respondent in
Upon petitioner’s counsel substitution, exchange for the amount deposited. Withdrawal of the
petitioner executed a money consigned would enrich petitioner and unjustly
prejudice respondent.
“Deed of Assignment” assigning in favor of Atty.
De Guzman,
Jr., part of the P672,900.00 consigned with
the trial court as partial payment of the latter’s
attorney’s fees. Petitioner then filed for motion
to withdraw consigned money, but was
intervened by Atty. De Guzman, Jr.
CA declaration the consignation as valid. It
held that the validity of the consignation had
the effect of extinguishing
VIOLATION OF ARTICLE 1491 FORBIDDING LAWYERS: The
withdrawal of
the amount deposited in order to pay attorney’s fees to
petitioner’s counsel, Atty. De Guzman, Jr., violates Article
1491 of the Civil Code which forbids lawyers from
acquiring by assignment, property and rights which are the
object of any litigation in which they may take part by
virtue of their profession.
That petitioner knowingly and voluntarily assigned the
subject amount to his counsel did not remove their
agreement within the ambit of the prohibitory provisions.
HELD: The petition is denied and the decision of the CA
declaring consignation proper of the amount of P672,900
be valid and the obligation is extinguished is affirmed, no
costs whatsoever.