CF SHARP & CO., INC. V. NORTHWEST AIRLINES, INC.
Unable to
381 SCRA 314
FACTS:
Petitioner was authorized to sell tickets of Northwest Airlines-
Japan, but failed to remit the proceeds. This prompted NWA
to file suit against petitioner in Tokyo and judgment was
rendered in its favor. Thereafter, the RTC issued a writ of
execution for foreign court’s decision. The petitioner filed for
certiorari, asserting it has already made partial payments. The
CA lowered the amount to be paid and included in its decision
that the amount may be paid in local currency at rate prevailing at
time of payment.
HELD:
Under RA 529, stipulations on the satisfaction of obligations
in foreign currency are void. Payments of monetary obligations,
subject to certain exceptions, shall be discharged in the currency
which is the legal tender of the Philippines. But since the law doesn't
provide for the rate of exchange for the payment of foreign
currency obligations incurred after its enactment,
jurisprudence held that the exchange rate should be the
prevailing rate at time of payment. This law has been amended,
allowing payments for obligations to be made in currency other
than Philippine currency but then again, it failed to state what
the exchange rate that should be used. This being the case the
jurisprudence regarding the use of the exchange rate at time of
payment shall be used.
CF Sharp vs Northwest Airlines, 381SCRA314Facts: On May 9,
1974, CF Sharp was authorized to sell tickets of Northwest Airlines-
Japan by entering an International Passenger Sales Agency
Agreement, however, CF Sharp failed to remit the proceeds of
the ticket sales. This prompted Northwest Airlines to file a
collection suit against the CF Sharp before the Tokyo
District Court. Judgment w a s r e n d e r e d i n i t s
favor, ordering CF Sharp to pay Northwest
A i r l i n e s i n c l u d i n g damages for the delay.
execute the decision in Japan, the respondent filed
acase to enforce said judgment with the RTC. Thereafter, t
he RTC issued a writ of execution for foreign court’s
decision. The petitioner filed for certiorari, asserting it has already
made partial payments. The CA lowered the amount to be paid and
included in its decision that the amount may be paid in local
currency at rate prevailing at time of
payment. partly affirmed by the Supreme Court. CF Sharp was then
ordered to pay Northwest sothat the RTC issued a writ of execution
of decision ruling that Sharp is to pay Northwest t h e s u m o f
83,158,195 yen at the exchange rate prevailing on
t h e d a t e o f t h e f o r e i g n judgment plus 6% per annum until
fully paid, 6% damages and 6% interest. An appeal, the Court of
Appeals reduced the interest and it ruled that the basis of the
conversion of Petitioner’s liability in its peso equivalent
should be the prevailing rate at the time
of payment and not the rate on the date of the foreign judgment.
Issue: Whether or not the basis for the payment of the
amount due is the value of the currency at the time of the
establishment of the obligation.
Ruling: NO, the rule that the value of currency at the time
of the establishment of the obligation shall be the basis of
payment finds application only when there is an
official pronouncement or declaration of the existence of
an extraordinary inflation or deflation. Hence, petitioners contention
that Article 1250 of the Civil Code which provides that
“inc a s e o f a n e x t r a o r d i n a r y i n f l a t i o n o r d e f l a t
i o n o f t h e c u r r e n c y s t i p u l a t e d s h o u l d supervene,
the value of the currency at the time of establishment of
the obligation shall be the basis of payment, unless there is an
agreement to the contrary” shall apply in this case is untenable.
This being the case the jurisprudence regarding the use of the exchan
ge rate at time of payment shall be used.
PILAR PAGSIBIGAN, petitioner, vs. COURT OF APPEALS and
PLANTERS DEVELOPMENT BANK, respondents.
G.R. No. 90169, April 7, 1993.
CAMPOS, JR., J:
On November 3, 1976, Petitioner Pilar Pagsigiban obtained a loan
from Respondent Planters Development Bank ("Bank") for
P4,500.00, secured by a mortgage over a parcel of land.
The Promissory Note for the said loan stipulated for the first
payment to be made on May 3, 1977 and payments every six months
thereafter at P1,018.14 with 19% interest for unpaid amortizations. It
also contained an acceleration clause.
Initial payment was made in July 6, 1977, followed by several
payments in the total amount of P11,900.00. However, only four of
these payments were applied to the loan, while the rest were
"temporarily lodged to accounts payable since the account was
already past due".
In 1984, the property was foreclosed extrajudicially upon Petition by
the bank for failure to pay an outstanding balance of P29,554.81.
This resulted in the property being sold to the bank for P8,163.00,
and later claimed a deficiency of P21,391.81.
Petitioner filed an action for annulment of sale by Petitioner, which
the lower court granted. However, it was overturned by CA.
1st Issue: W/N the auction sale is valid.
Ruling: No.
The respondent bank had the right to foreclose the mortgage upon
the first default of petitioner on May 3, 1977, but it did not. When it
received payment of petitioner on July 6, 1977, the respondent bank
had clearly waived its right under the acceleration clause since
instead of claiming penalty charges on the entire amount of
P4,500.00, it only computed the penalty based on the defaulted
amortization payment which is P1,018.14.
Further, for more than four years, the bank made petitioner believe
that it was applying her payment on the loan and interest. It is now
bound by estoppel to apply the payments to petitioner's debt and
from foreclosing the property.
Accordingly, the legality of the foreclosure cannot be sustained
because of substantial performance on the part of petitioner (Article
1234. If the obligation has been substantially performed in good
faith, the obligor may recover as though there had been a strict and
complete fulfillment, less damages suffered by the obligee.) and
acceptance of payment by the bank (Article 1235: when the creditor
accepts performance, knowing its incompleteness and irregularity
without protest or objection, the obligation is deemed complied
with.).
2nd Issue: W/N Petitioner is entitled to recover damages.
Ruling: Yes.
Moral damages are warranted for the mental anguish, sleepless
nights and serious anxiety that the bank's acts have caused petitioner.
The bank succeeded in taking advantage of the ignorance of
petitioner by lodging the bulk of petitioner's payment to account
payable based on the flimsy reason that she had been in default, and
then considering the entire debt pursuant to an acceleration clause as
earning interest and penalty charges at an exorbitant rate of 19%
each from the date of first default up to the date of foreclosure, thus
bringing the obligation to an astronomical amount of P29,554.81
instead of just P11,000.00.
Exemplary damages are also proper, to serve as a deterrent for the
bank from repeating similar acts and to set an example and
correction for the public good.
BPI VS CA

Benjamin Napiza maintains an account with the Bank of the

Philippine Islands (BPI). In 1987, Napiza was approached by Henry
Chan and the latter gave him a $2,500 Continental Bank Manager’s
check. Chan asked if Napiza can deposit the check to his (Napiza’s
BPI account) by way of accommodation and for the purpose of
clearing the said check. Napiza agreed and so he deposited the check
on September 3, 1987. Napiza then delivered a signed blank
withdrawal slip to Chan with the condition that the $2,500.00 may
only be withdrawn if the check cleared. For some reason, the
withdrawal slip ended up in the hands of one Ruben Gayon who
went to BPI and successfully withdrew the $2,500.00. At the time of
the withdrawal, the check was not yet cleared. Then days later, BPI
was notified by the drawee bank named in the check that the check is
actually a counterfeit.

ISSUE: Whether or not Napiza may be held liable to refund the

amount of the check.
HELD: No. The Supreme Court ruled that ordinarily, Napiza would
have been liable because he is an accommodation indorser. But due
to the attendant circumstances, Napiza is discharged from liability.
The withdrawal slip indicates as well as the rules promulgated by
BPI that withdrawal from the bank should be accompanied by the
presentment of the account holder’s (Napiza’s) savings bankbook.
This was not done so in the case at bar because Gayon was able to
withdraw without it. Further, BPI allowed the withdrawal even
before the check cleared. BPI already credited the $2,500.00 to
Napiza’s account even without the drawee bank clearing the check.
This is contrary to common banking practices and because of such
negligence and lack of diligence, BPI, as the collecting bank, shall
suffer the loss.
 Barons Marketing Corp vs Court of Appeals and Phelp Dodge Phils · The court ruled in favor of Phelps Dodge with the exemplary
Inc [G. R. No. 126486. February 9, 1998] 286 SCRA 96 Case Digest damages of P10,000 and recovery of P3,108,000
· Both parties appealed. Phelps Dodge claimed that court should
have awarded the sum of P3,802,478.20. It also said that the amount
Concept: awarded was a result of a typographical error.
Article 1248. Unless there is an express stipulation to that · Barons Mktg claimed that Phelps Dodge’s claim for damages is a
effect, the creditor cannot be compelled partially to receive the result of “creditor’s abuse” and it also claimed that Phelps Dodge
prestation in which the obligation consists. Neither may the failed to prove its cause of action against it.
debtor be required to make partial payments. · CoA ruled in favor of Phelps Dodge with the correct amount but
However, when the debt is in part liquidated and in only with the 5% for the Atty’s fee. No costs.
part unliquidated, the creditor may demand and the debtor · Barons Mktg then alleged that the Coa erred its decision
may effect the payment of the former without waiting for the
liquidation of the latter. Issue: W/ON private respondent is guilty of abuse of right
Facts:
· August 31, 1973. Phelps Dodge appointed Barons Marketing as Held: No. a creditor cannot be considered in delay if he refuses to
one of its dealers of electrical wires and cables effective Sept. 1, accept partial performance because, unless otherwise provided by
1973. Defendant was given 60 days credit for its purchases of Phelps law or stipulated by the parties, a creditor cannot be compelled to
Dodge’s electrical products accept
· Barons Marketing purchased, on credit, from Phelps Dodge’s partial performance; however, if good faith necessitates acceptance
electrical wires and cable in the total amount of P4,102,483.30. This or if the creditor abuses his right in not accepting, the creditor will
was then sold to MERALCO, Baron Mktg being the accredited incur in delay if he does not accept such partial performance.
supplier of the electrical requirements of MERALCO.
· Under the sales invoices issued by Phelps Dodge to Barons Mktg
for the subject purchases, it is stipulated that interest at 12% on the
amount of atty’s fees and collection. Baron’s Mktg paid P300,000
out of its total purchases leaving an unpaid account of
P3,802,478.20. Phelps Dodge wrote Barons Mktg demanding
payment of its outstanding obligations due Phelps Dodge. Baron
Mktg responded by requesting if it could pay its outstanding account
in monthly installments of P500,000 plus 1%interest per month until
full payment, this request was rejected and Phelps Dodge demanded
full payment
· Phelps Dodge then filed a complaint before the Pasig Trial Court
for the recovery of P3,802,478.20 and it also prayed to be awarded
with attorney’s fee at the rate of 25% of the amount demanded,
exemplary damages in the amount of P100,000, the expenses of
litigation and the costs of suit.

December 01, 2010
NEW PACIFIC TIMBER & SUPPLY CO. INC. VS. SENERIS
10 SCRA 686
FACTS: Petitioner, New Pacific Timber & Supply Co. Inc. was the
defendant in a complaint for collection of money filed by private
respondent, Ricardo A. Tong. In this complaint, respondent Judge
rendered a compromise judgment based on the amicable settlement
entered by the parties wherein petitioner will pay to private
respondent P54,500.00 at 6% interest per annum and P6,000.00 as
attorney’s fee of which P5,000.00 has been paid. Upon failure of the
petitioner to pay the judgment obligation, a writ of execution worth
P63,130.00 was issued levied on the personal properties of the
petitioner. Before the date of the auction sale, petitioner deposited
with the Clerk of Court in his capacity as the Ex-Officio Sheriff
P50,000.00 in Cashier’s Check of the Equitable Banking Corporation
and P13,130.00 in cash for a total of
P63,130.00. Private respondent refused to accept the check and the
cash and requested for the auction sale to proceed. The properties
were sold for P50,000.00 to the highest bidder with a deficiency of
P13,130.00. Petitioner subsequently filed an ex-parte motion for
issuance of certificate of satisfaction of judgment which was denied
by the respondent Judge. Hence this present petition, alleging that
the respondent Judge capriciously and whimsically abused his
discretion in not granting the requested motion for the reason that the
judgment obligation was fully satisfied before the auction sale with
the deposit made by the petitioner to the Ex-Officio Sheriff. In
upholding the refusal of the private respondent
to accept the check, the respondent Judge cited Article 1249 of the
New Civil Code which provides that payments of debts shall be
made in the currency which is the legal tender of the Philippines and
Section 63 of the Central Bank Act which provides that checks
representing deposit money do not have legal tender power. In
sustaining the contention of the private respondent to refuse the
acceptance of the cash, the respondent Judge cited Article 1248 of
the New Civil Code which provides that creditor cannot be
compelled to accept partial payment unless there is an express credited to his account. The Cashier’s Check and the cash are valid

stipulation to the contrary. payment of the obligation of the petitioner. The private respondent

has no valid reason to refuse the acceptance of the check and cash as

ISSUE: Can the check be considered a valid payment of the full payment of the obligation

judgment obligation?

RULING: Yes. It is to be emphasized that it is a well-known and

accepted practice in the business sector that a Cashier’s Check is

deemed cash. Moreover, since the check has been certified by the

drawee bank, this certification implies that the check is sufficiently

funded in the drawee bank and the funds will be applied whenever

the check is presented for payment. The object of certifying a check

is to enable the holder to use it as money. When the holder procures

the check to be certified, it operates as an assignment of a part of the

funds to the creditors. Hence, the exception provided in Section 63 of

the Central Bank Act which states that checks which have been

cleared and credited to the account of the creditor shall be equivalent

to a delivery to the creditor in cash the amount equal to that which is

 FILIPINO PIPE vs. NAWASA decrease or increase could not have reasonably foreseen or was
G.R. No. L-43446 May 3, 1988 manifestly beyond contemplation the the parties at the time of the
establishment of the obligation. (Tolentino Commentaries and
FACTS Jurisprudence on the Civil Code Vol. IV, p. 284.)
 NAWASA entered into a contract with the plaintiff FPFC for the  While appellant's voluminous records and statistics proved that there
latter to supply iron pressure pipes worth P270,187.50 to be used in has been a decline in the purchasing power of the Philippine peso,
the construction of the Anonoy Waterworks in Masbate and the this downward fall of the currency cannot be considered
Barrio San Andres-Villareal Waterworks in Samar. "extraordinary." It is simply a universal trend that has not spared our
 NAWASA paid in installments on various dates, a total of country.
P134,680.00 leaving a balance of P135,507.50 excluding interest.
 FPFC demanded payment from NAWASA of the unpaid balance of
the price with interest in accordance with the terms of their contract
 NAWASA failed to pay, plaintiff filed a collection suit
 RTC rendered judgment orderedNAWASA to pay the unpaid
balance in NAWASA negotiable bonds
 NAWASA did not deliver the bonds to the judgment creditor
 FPFC filed another complaint seeking an adjustment of the unpaid
balance in accordance with the value of the Philippine peso
 FPFC presented voluminous records and statistics showing that a
spiralling inflation has marked the progress of the country from 1962
up to the present. There is no denying that the price index of
commodities, which is the usual evidence of the value of the
currency has been rising.
ISSUE
W/N there exists an extraordinary inflation of the currency justifying
an adjustment of NAWASA's unpaid judgment obligation to FPFC.

RULING
Article 1250 of the Civil Code provides:
In case an extraordinary inflation or deflation of the currency
stipulated should supervene, the value of the currency at the time of
the establishment of the obligation shall be the basis of payment,
unless there is an agreement to the contrary..
 Extraordinary inflation exists "when there is a decrease or increase in
the purchasing power of the Philippine currency which is unusual or
beyond the common fluctuation in the value said currency, and such
VELASCO VS. MANILA ELECTRIC CO., ET. AL. - AUGUST ISSUES: Whether or not the substation constituted a public nuisance.
6, 1971 (G.R. NO. L-18390) Whether or not Velasco had the right to claim for damages.
FACTS: Pedro J. Velasco, the appellant, complained that
HELD: The court held that the substation constituted a public
MERALCO, the appellee company, created a nuisance, as defined in
nuisance in form of noise, of which they made reference and
Art. 694 of the Civil Code of the Philippines, in form of noise from
consideration with cases in the U.S. regarding what level of noise
their substation which was in the same street, next to Velasco’s
would constitute as public nuisance as defined in Art. 694 of the
property/residence, which the appellant also uses for his Medical
Civil Code of the Philippines. The court also contended that the
Practice as a physician. The claim cannot be proven solely by
damage claims by the plaintiff-appellant was exaggerated, taking
testimony however, as the testimonies given by the locals do not
into consideration that 1) the appellant did not make all the possible
corroborate with each other, or were subjective. To get a more
measures, for example to perhaps lease the property to others, 2) as
accurate proof, under instructions from the Director of Health, Dr.
for his health, it was observed that only Velasco, among the other
Jesus Almonte, noted as an impartial party, used a sound level meter
locals seem to have the ailments as he listed, and therefore lowered it
and other instruments within the compound of the plaintiff-appellant
to a more justifiable amount of 20,000 pesos in damages and 5,000
to get a reading on the decibels or sound meter. It was observed that
pesos in attorney’s fees, payable by the appellee. They also ordered
the readings range from 46-80 decibels, depending on the time and
that the appellee should take measures in lowering the noise within
place. The appellee company also took sound level samplings, with
90 days.
Mamerto Buenafe conducting the reading within and near the
vicinity of the substation, whose readings range from 42-76 decibels.
The readings were compared to Technical charts, which listed the
decibels of areas from an average home: 40, to the noisiest spot of
Niagara Falls: 92. Thus, the readings from the impartial party
appeared more reliable. The court concluded that the evidence
pointed the noise levels to be of actionable nuisance, and that the
appellant is entitled to relief, as there was a possibility that it had
effect on the appellant’s health. Appellee company contended that
the appellant should not have a ground to complain because of: 1)
the intensity inside Velasco’s house was on 46 to 47 decibels; 2) the
sound level at the North General Hospital, where silence was
observed, was higher that his residence and did not take action; 3)
MERALCO had received no complaint in its 50 years of operations
until the case.