MARIA LACHICA VS.

GREGORIO ARANETA

47 OG 5699 August 19, 1949

FACTS:

Gregorio Araneta, Inc. (through President Jose Araneta) offered for sale a parcel
of land with the improvements thereon. This property was bought by Investment
Corporation through Maria Lachica, the wife of the Esteban Sadang who was
sales agent of defendant corporation.

The terms of the contract stated that the price was P20,000, of which P8,000 was
to be paid in cash and the balance of P12,000 in installments of –

P 1,000 on or before December 31, 1943

P 1,000 on or before December 31, 1944

P 10,000 on or before December 31, 1945.

What the parties signed was a contract of exact content as stated, which
however omitted the words “or before.” Thus, it would appear that the payment of
the installments would be “on” and not “on or before” the dates as specified.

The contract further added that “this same property will be mortgaged to us to
guarantee the unpaid balance, and the same will bear an interest of 8 percent
per annum; said interest to be paid monthly in advance.”

The terms were complied with, together with some resolved differences, until on
Sept. 5, 1944, plaintiff Sadang went to see Araneta to pay the entire balance,
including the interest thereon and ask for the cancellation of the mortgage, but
Araneta refused to accept the tender of payment. Araneta gave as his reason for
his non-acceptance that such payment was not in accordance with the terms of
the deed of sale with mortgage.

Plaintiff, through counsel, deposited the sum (balance) supposed to be paid to

Araneta with the CFI of Manila by way of consignation, and at the same time
presented the complaint.

The defendant alleges that payment should be on the date specified, not before;
the plaintiffs claim that such payment may be made on or before the date
specified.
ISSUE:

Should Araneta be compelled to accept the payment?

RULING:

Yes. The contract does not prohibit if it is done before (p.5706, no. 2). A term is
fixed and “it is presumed to have been established for the benefit of the creditor
as sell as that of the debtor, unless from its tenor or from other circumstances it
should appear that the terms as established for the benefit of one or the
other.” (Art. 1127, now 1196 Civil Code). And the contract specifically provides
that “these periods of payment have been agreed for the benefit of the vendor
and the vendee.” Such mutual benefit has been interpreted to consist of the time
granted a debtor to find means to comply with his obligation, and the fruits, such
as interest, accruing to the creditor.

From the SC decision in Villaseñor vs. Javellana, the only impediment to a debtor
making payment before the term fixed, is the denial to the creditor of the benefits,
such as interests, accruing to the later by reason of the fixed term. This, coupled
with the fact that the contract did not prohibit payment before the fixed date,
justifies the conclusion that under the terms signed, plaintiffs could do so. To hold
otherwise, would be virtually compelling an obligor to assume an obligation later
when he offers to, and could very well, discharge it earlier. The law should not be
interpreted as to compel a debtor to remain so, when he is in a position to
release himself.

Further, the acceleration clause in the contract signed by the parties state that “in
the event of defaults in payment of any amount due, either for capital or interest,
the whole balance shall automatically become due and payable, and the vendor
shall have the right to foreclose the mortgage in its entirety.” While the clause is
standard one contained in most mortgage deeds where the mortgage loan is
payable in several installments, still we cannot escape the conclusion, derived
from the clause itself, that payments may be made by the vendee before the
dates stated in the contract .

PONCE DE LEON VS SYJUCO

90 PHIL. 311
FACTS :

The appellee, Philippine National Bank, was the owner of two parcels of
land in Negros Occidental. On March 9, 1936 the Bank executed a contract to
sell the said properties to Jose Ponce de Leon for the total price of P26,300.

Subsequently, Ponce de Leon obtained a loan from Santiago Syjuco, Inc

in the amount of P200,000 in Japanese Military Notes, payable within one (1)
year from May 5, 1948. It was also provided that the Ponce de Leon could not
pay, and Syjuco could not demand, the payment of said note except within the
aforementioned period. To secure the payment of said obligation, Ponce de Leon
mortgaged the parcels of land which he agreed to purchase from the Bank. Using
the loan, Ponce de Leon was able to pay the Bank and a deed of absolute sale
was executed in his name.

Ponce de Leon further obtained an additional loan from Syjuco. On

several occasions in October, 1944, Ponce de Leon tendered to Syjuco the
amount of P254,880 in Japanese military notes in full payment of his
indebtedness which was refused by Syjuco which Ponce de Leon deposited with
the Clerk of Court of the CFI. He then filed a petition with the CFI for the
reconstitution of transfer of the certificates of the lot in the name of the Bank
which was granted by the court. Syjuco filed a second amended answer to Ponce
de Leon's complaint claiming that Ponce de Leon, by reconstituting the titles in
the name of the Bank, by causing the Register of Deeds to have the said titles
transferred in his name, and by subsequently mortgaging the said properties to
the Bank as a guaranty for his overdraft account, had violated the conditions of
the morgage which Ponce de Leon has executed in its favor during the Japanese
occupation. Syjuco prayed that the mortgage executed by Ponce de Leon in
favor of the Bank be declared null and void.

On June 24, 1949, the lower court rendered a decision absolving Syjuco
from Ponce de Leon's complaint and condemning Ponce de Leon to pay Syjuco
the total amount of P23,130 with interest at the legal rate from May 6, 1949, until
fully paid

ISSUE :

Is the consignation made by the plaintiff valid in the light of the law and
the stipulations agreed upon in the two promissory notes signed by the plaintiff?

RULING :
 No. In order that consignation may be effective, the debtor must first
comply with certain requirements prescribed by law. The debtor must show (1)
that there was a debt due; (2) that the consignation of the obligation had been
made bacause the creditor to whom tender of payment was made refused to
accept it, or because he was absent for incapacitated, or because several
persons claimed to be entitled to receive the amount due (Art. 1176); (3) that
previous notice of the consignation have been given to the person interested in
the performance of the obligation (Art. 1177); (4) that the amount due was placed
at the disposal of the court (Art 1178); and (5) that after the consignation had
been made the person interested was notified thereof (Art. 1178). In the instant
case, while it is admitted a debt existed, that the consignation was made
because of the refusal of the creditor to accept it, and the filing of the complaint
to compel its acceptance on the part of the creditor can be considered sufficient
notice of the consignation to the creditor, nevertheless, it appears that at least
two of the above requirements have not been complied with. Thus, it appears
that plaintiff, before making the consignation with the clerk of the court, failed to
give previous notice thereof to the person interested in the performance of the
obligation. It also appears that the obligation was not yet due and demandable
when the money was consigned, because, as already stated, by the very express
provisions of the document evidencing the same, the obligation was to be paid
within one year after May 5, 1948, and the consignation was made before this
period matured. The failure of these two requirements is enough ground to
render the consignation ineffective. And it cannot be contended that plaintiff is
justified in accelerating the payment of the obligation because he was willing to
pay the interests due up to the date of its maturity, because, under the law, in a
monetary obligation contracted with a period, the presumption is that the same is
deemed constituted in favor of both the creditor and the debtor unless from its
tenor or from other circumstances it appears that the period has been
established for the benefit of either one of them (Art. 1127). Here no such
exception or circumstance exists.

It may be argued that the creditor has nothing to lose but everything to gain by
the acceleration of payment of the obligation because the debtor has offered to
pay all the interests up to the date it would become due, but this argument loses
force if we consider that the payment of interests is not the only reason why a
creditor cannot be forced to accept payment contrary to the stipulation. There are
other reasons why this cannot be done. One of them is that the creditor may
want to keep his money invested safely instead of having it in his hands. Another
reason is that the creditor by fixing a period protects himself against sudden
decline in the purchasing power of the currency loaned specially at a time when
there are many factors that influence the fluctuation of the currency. And all
available authorities on the matter are agreed that, unless the creditor consents,
the debtor has no right to accelerate the time of payment even if the premature
tender "included an offer to pay principal and interest in full."