Republic of the Philippines Sometime in March 1975, a joint checking account ("and" account) with Lim in the

SUPREME COURT amount of P120,000.00 was opened by Mariano Velasco with funds withdrawn from
Manila the account of Eastern and/or Lim. Various amounts were later deposited or
withdrawn from the joint account of Velasco and Lim. The money therein was
FIRST DIVISION placed in the money market.

Velasco died on 7 April 1977. At the time of his death, the outstanding balance of
the account stood at P662,522.87. On 5 May 1977, by virtue of an Indemnity
Undertaking executed by Lim for himself and as President and General Manager of
G.R. No. 104612 May 10, 1994 Eastern, 2 one-half of this amount was provisionally released and transferred to one
of the bank accounts of Eastern with CBTC. 3
BANK OF THE PHILIPPINE ISLANDS (successor-in- interest of
COMMERCIAL AND TRUST CO.), petitioner,  Thereafter, on 18 August 1978, Eastern obtained a loan of P73,000.00 from CBTC
vs. as "Additional Working Capital," evidenced by the "Disclosure Statement on
HON. COURT OF APPEALS, EASTERN PLYWOOD CORP. and BENIGNO Loan/Credit Transaction" (Disclosure Statement) signed by CBTC through its
D. LIM, respondents. branch manager, Ceferino Jimenez, and Eastern, through Lim, as its President and
General Manager. 4The loan was payable on demand with interest at 14% per
Leonen, Ramirez & Associates for petitioner. annum.

Constante A. Ancheta for private respondents.
DAVIDE, JR., J.:
The petitioner urges us to review and set aside the amended Decision 1 of 6 March
1992 of respondent Court of Appeals in CA- G.R. CV No. 25739 which modified
the Decision of 15 November 1990 of Branch 19 of the Regional Trial Court (RTC)
of Manila in Civil Case No. 87-42967, entitled Bank of the Philippine Islands
(successor-in-interest of Commercial Bank and Trust Company) versus Eastern
Plywood Corporation and Benigno D. Lim. The Court of Appeals had affirmed the
dismissal of the complaint but had granted the defendants' counterclaim for
P331,261.44 which represents the outstanding balance of their account with the
plaintiff.
As culled from the records and the pleadings of the parties, the following facts were
duly established:
Private respondents Eastern Plywood Corporation (Eastern) and
Benigno D. Lim (Lim), an officer and stockholder of Eastern, held at least one joint
bank account ("and/or" account) with the Commercial Bank and Trust Co. (CBTC),
the predecessor-in-interest of petitioner Bank of the Philippine Islands (BPI).
For this loan, Eastern issued on the same day a negotiable promissory note for
P73,000.00 payable on demand to the order of CBTC with interest at 14% per
annum. 5 The note was signed by Lim both in his own capacity and as President and
General Manager of Eastern. No reference to any security for the loan appears on
the note. In the Disclosure Statement, the box with the printed word
"UNSECURED" was marked with "X" — meaning unsecured, while the line with
the words "this loan is wholly/partly secured by" is followed by the typewritten
words "Hold-Out on a 1:1 on C/A No. 2310-001-42," which refers to the joint
account of Velasco and Lim with a balance of P331,261.44.
In addition, Eastern and Lim, and CBTC signed another document entitled "Holdout
Agreement," also dated 18 August 1978, 6 wherein it was stated that "as security for
the Loan [Lim and Eastern] have offered [CBTC] and the latter accepts a holdout on
said [Current Account No. 2310-011-42 in the joint names of Lim and Velasco] to
the full extent of their alleged interests therein as these may appear as a result of
final and definitive judicial action or a settlement between and among the contesting
parties thereto." 7 Paragraph 02 of the Agreement provides as follows:
Eastply [Eastern] and Mr. Lim hereby confer upon Comtrust
[CBTC], when and if their alleged interests in the Account
Balance shall have been established with finality, ample and
sufficient power as shall be necessary to retain said Account
Balance and enable Comtrust to apply the Account Balance for
 the purpose of liquidating the Loan in respect of principal and/or
accrued interest.
And paragraph 05 thereof reads:
The acceptance of this holdout shall not impair the right of
Comtrust to declare the loan payable on demand at any time, nor
shall the existence hereof and the non-resolution of the dispute
between the contending parties in respect of entitlement to the
Account Balance, preclude Comtrust from instituting an action
for recovery against Eastply and/or Mr. Lim in the event the
Loan is declared due and payable and Eastply and/or Mr. Lim
shall default in payment of all obligations and liabilities
thereunder.
In the meantime, a case for the settlement of Velasco's estate was filed with Branch
152 of the RTC of Pasig, entitled "In re Intestate Estate of Mariano Velasco," and
docketed as Sp. Proc. No. 8959. In the said case, the whole balance of P331,261.44
in the aforesaid joint account of Velasco and Lim was being claimed as part of
Velasco's estate. On 9 September 1986, the intestate court granted the urgent motion
of the heirs of Velasco to withdraw the deposit under the joint account of Lim and
Velasco and authorized the heirs to divide among themselves the amount
withdrawn. 8
Sometime in 1980, CBTC was merged with BPI. 9 On 2 December 1987, BPI filed
with the RTC of Manila a complaint against Lim and Eastern demanding payment of
the promissory note for P73,000.00. The complaint was docketed as Civil Case No.
87- 42967 and was raffled to Branch 19 of the said court, then presided over by
Judge Wenceslao M. Polo. Defendants Lim and Eastern, in turn, filed a counterclaim
against BPI for the return of the balance in the disputed account subject of the
Holdout Agreement and the interests thereon after deducting the amount due on the
promissory note.
After due proceedings, the trial court rendered its decision on
15 November 1990 dismissing the complaint because BPI failed to make out its
case. Furthermore, it ruled that "the promissory note in question is subject to the
'hold-out' agreement," 10 and that based on this agreement, "it was the duty of
plaintiff Bank [BPI] to debit the account of the defendants under the promissory
note to set off the loan even though the same has no fixed maturity." 11 As to the
defendants' counterclaim, the trial court, recognizing the fact that the entire amount
in question had been withdrawn by Velasco's heirs pursuant to the order of the
intestate court in Sp. Proc. No. 8959, denied it because the "said claim cannot be
awarded without disturbing the resolution" of the intestate court. 12
Both parties appealed from the said decision to the Court of Appeals. Their appeal
was docketed as CA-G.R. CV No. 25739.
On 23 January 1991, the Court of Appeals rendered a decision affirming the
decision of the trial court. It, however, failed to rule on the defendants' (private
respondents') partial appeal from the trial court's denial of their counterclaim. Upon
their motion for reconsideration, the Court of Appeals promulgated on 6 March
1992 an Amended Decision 13 wherein it ruled that the settlement of Velasco's estate
had nothing to do with the claim of the defendants for the return of the balance of
their account with CBTC/BPI as they were not privy to that case, and that the
defendants, as depositors of CBTC/BPI, are the latter's creditors; hence, CBTC/BPI
should have protected the defendants' interest in Sp. Proc. No. 8959 when the said
account was claimed by Velasco's estate. It then ordered BPI "to pay defendants the
amount of P331,261.44 representing the outstanding balance in the bank account of
defendants." 14
On 22 April 1992, BPI filed the instant petition alleging therein that the Holdout
Agreement in question was subject to a suspensive condition stated therein, viz., that
the "P331,261.44 shall become a security for respondent Lim's promissory note only
if respondents' Lim and Eastern Plywood Corporation's interests to that amount are
established as a result of a final and definitive judicial action or a settlement between
and among the contesting parties thereto." 15 Hence, BPI asserts, the Court of
Appeals erred in affirming the trial court's decision dismissing the complaint on the
ground that it was the duty of CBTC to debit the account of the defendants to set off
the amount of P73,000.00 covered by the promissory note.
Private respondents Eastern and Lim dispute the "suspensive condition" argument of
the petitioner. They interpret the findings of both the trial and appellate courts that
the money deposited in the joint account of Velasco and Lim came from Eastern and
Lim's own account as a finding that the money deposited in the joint account of Lim
and Velasco "rightfully belong[ed] to Eastern Plywood Corporation and/or Benigno
Lim." And because the latter are the rightful owners of the money in question, the
suspensive condition does not find any application in this case and the bank had the
duty to set off this deposit with the loan. They add that the ruling of the lower court
that they own the disputed amount is the final and definitive judicial action required
by the Holdout Agreement; hence, the petitioner can only hold the amount of
P73,000.00 representing the security required for the note and must return the rest. 16
The petitioner filed a Reply to the aforesaid Comment. The private respondents filed
a Rejoinder thereto.
We gave due course to the petition and required the parties to submit simultaneously
their memoranda.
The key issues in this case are whether BPI can demand payment of the loan of
P73,000.00 despite the existence of the Holdout Agreement and whether BPI is still
liable to the private respondents on the account subject of the Holdout Agreement
after its withdrawal by the heirs of Velasco.
The collection suit of BPI is based on the promissory note for P73,000.00. On its
face, the note is an unconditional promise to pay the said amount, and as stated by
the respondent Court of Appeals, "[t]here is no question that the promissory note is a
negotiable instrument." 17 It further correctly ruled that BPI was not a holder in due
course because the note was not indorsed to BPI by the payee, CBTC. Only a
negotiation by indorsement could have operated as a valid transfer to make BPI a
holder in due course. It acquired the note from CBTC by the contract of merger or
sale between the two banks. BPI, therefore, took the note subject to the Holdout
Agreement.
We disagree, however, with the Court of Appeals in its interpretation of the Holdout
Agreement. It is clear from paragraph 02 thereof that CBTC, or BPI as its successor-
in-interest, had every right to demand that Eastern and Lim settle their liability under
the promissory note. It cannot be compelled to retain and apply the deposit in Lim
and Velasco's joint account to the payment of the note. What the agreement
conferred on CBTC was a power, not a duty. Generally, a bank is under no duty or
obligation to make the application. 18 To apply the deposit to the payment of a loan
is a privilege, a right of set-off which the bank has the option to exercise. 19
Also, paragraph 05 of the Holdout Agreement itself states that notwithstanding the
agreement, CBTC was not in any way precluded from demanding payment from
Eastern and from instituting an action to recover payment of the loan. What it
provides is an alternative, not an exclusive, method of enforcing its claim on the
note. When it demanded payment of the debt directly from Eastern and Lim, BPI
had opted not to exercise its right to apply part of the deposit subject of the Holdout
Agreement to the payment of the promissory note for P73,000.00. Its suit for the
enforcement of the note was then in order and it was error for the trial court to
dismiss it on the theory that it was set off by an equivalent portion in C/A No. 2310-
001-42 which BPI should have debited. The Court of Appeals also erred in affirming
such dismissal.
The "suspensive condition" theory of the petitioner is, therefore, untenable.
The Court of Appeals correctly decided on the counterclaim. The counterclaim of
Eastern and Lim for the return of the P331,261.44 20 was equivalent to a demand that
they be allowed to withdraw their deposit with the bank. Article 1980 of the Civil
Code expressly provides that "[f]ixed, savings, and current deposits of money in
banks and similar institutions shall be governed by the provisions concerning simple
loan." In Serrano vs. Central Bank of the Philippines, 21 we held that bank deposits
are in the nature of irregular deposits; they are really loans because they earn
interest. The relationship then between a depositor and a bank is one of creditor and
debtor. The deposit under the questioned account was an ordinary bank deposit;
hence, it was payable on demand of the depositor. 22
The account was proved and established to belong to Eastern even if it was
deposited in the names of Lim and Velasco. As the real creditor of the bank, Eastern
has the right to withdraw it or to demand payment thereof. BPI cannot be relieved of
its duty to pay Eastern simply because it already allowed the heirs of Velasco to
withdraw the whole balance of the account. The petitioner should not have allowed
such withdrawal because it had admitted in the Holdout Agreement the questioned
ownership of the money deposited in the account. As early as 12 May 1979, CBTC
was notified by the Corporate Secretary of Eastern that the deposit in the joint
account of Velasco and Lim was being claimed by them and that one-half was being
claimed by the heirs of Velasco.23
Moreover, the order of the court in Sp. Proc. No. 8959 merely authorized the heirs
of Velasco to withdraw the account. BPI was not specifically ordered to release the
account to the said heirs; hence, it was under no judicial compulsion to do so. The
authorization given to the heirs of Velasco cannot be construed as a final
determination or adjudication that the account belonged to Velasco. We have ruled
that when the ownership of a particular property is disputed, the determination by a
probate court of whether that property is included in the estate of a deceased is
merely provisional in character and cannot be the subject of execution. 24
Because the ownership of the deposit remained undetermined, BPI, as the debtor
with respect thereto, had no right to pay to persons other than those in whose favor
the obligation was constituted or whose right or authority to receive payment is
indisputable. The payment of the money deposited with BPI that will extinguish its
obligation to the creditor-depositor is payment to the person of the creditor or to one
authorized by him or by the law to receive it. 25 Payment made by the debtor to the
wrong party does not extinguish the obligation as to the creditor who is without fault
or negligence, even if the debtor acted in utmost good faith and by mistake as to the
person of the creditor, or through error induced by fraud of a third person.  26 The
payment then by BPI to the heirs of Velasco, even if done in good faith, did not
extinguish its obligation to the true depositor, Eastern.
In the light of the above findings, the dismissal of the petitioner's complaint is
reversed and set aside. The award on the counterclaim is sustained subject to a
modification of the interest.
WHEREFORE, the instant petition is partly GRANTED. The challenged amended
decision in CA-G.R. CV No. 25735 is hereby MODIFIED. As modified:

(1) Private respondents are ordered to pay the petitioner the

promissory note for P73,000.00 with interest at:

(a) 14% per annum on the principal,

computed from
18 August 1978 until payment;

(b) 12% per annum on the interest which

had accrued up to the date of the filing of the
complaint, computed from that date until
payment pursuant to Article 2212 of the
Civil Code.

(2) The award of P331,264.44 in favor of the private

respondents shall bear interest at the rate of 12%per
annum computed from the filing of the counterclaim.

No pronouncement as to costs.

SO ORDERED.
 demands, SMC filed an action for collection of a sum of money against them before
the RTC of Makati, Branch 138.
The defendant-spouses denied any liability, claiming that they had already
paid the plaintiff in full on four separate occasions. To substantiate this claim, the
defendants presented four (4) Temporary Charge Sales (TCS) Liquidation Receipts,
as follows:

April 19, 1983 Receipt No. 27331 for P8,000[5]

April 22, 1983 Receipt No. 27318 for P9,000[6]
April 27, 1983 Receipt No. 27339 for P4,500[7]
April 30, 1983 Receipt No. 27346 for P3,410[8]

Defendant Francisco Culaba testified that he made the foregoing payments to

SECOND DIVISION an SMC supervisor who came in an SMC van. He was then showed a list of
customers accountabilities which included his account. The defendant, in good faith,
then paid to the said supervisor, and he was, in turn, issued genuine SMC liquidation
[G.R. No. 125862. April 15, 2004]
receipts.
FRANCISCO CULABA and DEMETRIA CULABA, doing business under the For its part, SMC submitted a publishers affidavit [9] to prove that the entire
name and style Culaba Store, petitioners, vs. COURT OF APPEALS and SAN booklet of TCSL Receipts bearing Nos. 27301-27350 were reported lost by it, and
MIGUEL CORPORATION, respondents. that it caused the publication of the notice of loss in the July 9, 1983 issue of the
Daily Express, as follows:

DECISION
NOTICE OF LOSS
CALLEJO, SR., J.:
OUR CUSTOMERS ARE HEREBY INFORMED THAT TEMPORARY
This is a petition for review under Rule 45 of the Revised Rules of Civil CHARGE SALES LIQUIDATION RECEIPTS WITH SERIAL NOS. 27301-27350
Procedure of the Decision[1] of the Court of Appeals in CA-G.R. CV No. 19836 HAVE BEEN LOST.
affirming in toto the Decision[2] of the Regional Trial Court of Makati, Branch 138, ANY TRANSACTION, THEREFORE, ENTERED INTO WITH THE USE OF
in Civil Case No. 1033 for collection of sum of money, and the Resolution [3] denying THE ABOVE RECEIPTS WILL NOT BE HONORED.
the motion for reconsideration of the said decision.
SAN MIGUEL CORPORATION
BEER DIVISION
Makati Beer Region[10]
The Undisputed Facts

The spouses Francisco and Demetria Culaba were the owners and proprietors The Trial Courts Ruling
of the Culaba Store and were engaged in the sale and distribution of San Miguel
Corporations (SMC) beer products. SMC sold beer products on credit to the Culaba
spouses in the amount of P28,650.00, as evidenced by Temporary Credit Invoice After trial on the merits, the trial court rendered judgment in favor of SMC,
No. 42943.[4] Thereafter, the Culaba spouses made a partial payment of P3,740.00, and held the Culaba spouses liable on the balance of its obligation, thus:
leaving an unpaid balance of P24,910.00. As they failed to pay despite repeated
Wherefore, judgment is hereby rendered in favor of the plaintiff, as follows:
1. Ordering defendants to pay the amount of P24,910.00 plus legal interest of 6%
per annum from April 12, 1983 until the whole amount is fully paid;
2. Ordering defendants to pay 20% of the amount due to plaintiff as and for
attorneys fees plus costs.
SO ORDERED.[11]
According to the trial court, it was unusual that defendant Francisco Culaba
forgot the name of the collector to whom he made the payments and that he did not
require the said collector to print his name on the receipts. The court also noted that
although they were part of a single booklet, the TCS Liquidation Receipts submitted
by the defendants did not appear to have been issued in their natural sequence.
Furthermore, they were part of the lost booklet receipts, which the public was duly
warned of through the Notice of Loss the plaintiff caused to be published in a daily
newspaper. This confirmed the plaintiffs claim that the receipts presented by the
defendants were spurious ones.
The Case on Appeal
On appeal, the appellants interposed the following assignment of errors:
I
THE TRIAL COURT ERRED IN FINDING THAT THE RECEIPTS PRESENTED
BY DEFENDANTS EVIDENCING HIS PAYMENTS TO PLAINTIFF SAN
MIGUEL CORPORATION, ARE SPURIOUS.
II
THE TRIAL COURT ERRED IN CONCLUDING THAT PLAINTIFF-APPELLEE
HAS SUFFICIENTLY PROVED ITS CAUSE OF ACTION AGAINST THE
DEFENDANTS.
III
THE TRIAL COURT ERRED IN ORDERING DEFENDANTS TO PAY 20% OF
THE AMOUNT DUE TO PLAINTIFF AS ATTORNEYS FEES.[12]
The appellants asserted that while the trial courts observations were true, it
was the usual business practice in previous transactions between them and
SMC. The SMC previously honored receipts not bearing the salesmans name.
According to appellant Francisco Culaba, he even lost some of the receipts, but did
not encounter any problems.
According to appellant Francisco, he could not be faulted for paying the SMC
collector who came in a van and was in uniform, and that any regular customer
would, without any apprehension, transact with such an SMC
employee. Furthermore, the respective receipts issued to him at the time he paid on
the four occasions mentioned had not yet then been declared lost. Thus, the
subsequent publication in a daily newspaper declaring the booklets lost did not
affect the validity and legality of the payments made. Accordingly, by its actuations,
the SMC was estopped from questioning the legality of the payments and had no
cause of action against the appellants.
Anent the issue of attorneys fees, the order of the trial court for payment
thereof is without basis. According to the appellant, the provision for attorneys fees
is a contingent fee, already provided for in the SMCs contract with the law firm. To
further order them to pay 20% of the amount due as attorneys fees is double
payment, tantamount to undue enrichment and therefore improper. [13]
The appellee, for its part, contended that the primary issue in the case at bar
revolved around the basic and fundamental principles of agency. [14] It was incumbent
upon the defendants-appellants to exercise ordinary prudence and reasonable
diligence to verify and identify the extent of the alleged agents authority. It was their
burden to establish the true identity of the assumed agent, and this could not be
established by mere representation, rumor or general reputation. As they utterly
failed in this regard, the appellants must suffer the consequences.
The Court of Appeals affirmed the decision of the trial court, thus:
In the face of the somewhat tenuous evidence presented by the appellants, we cannot
fault the lower court for giving more weight to appellees testimonial and
documentary evidence, all of which establish with some degree of preponderance
the existence of the account sued upon.
ALL CONSIDERED, we cannot find any justification to reject the factual findings
of the lower court to which we must accord respect, for which reason, the judgment
appealed from is hereby AFFIRMEDin all respects.
SO ORDERED.[15]
 Hence, the instant petition.
The petitioners pose the following issues for the Courts resolution:
I. WHETHER OR NOT THE RESPONDENT HAD PROVEN BY
PREPONDERANT EVIDENCE THAT IT HAD PROPERLY AND TIMELY
NOTIFIED PETITIONER OF LOST BOOKLET OF RECEIPTS
II. WHETHER OR NOT RESPONDENT HAD PROVEN BY PREPONDERANT
EVIDENCE THAT PETITIONER WAS REMISS IN THE PAYMENT OF HIS
ACCOUNTS TO ITS AGENT.[16]
According to the petitioners, receiving receipts from the private respondents
agents instead of its salesmen was a usual occurrence, as they had been operating the
store since 1979. Thus, on four occasions in April 1983, when an agent of the
respondent came to the store wearing an SMC uniform and driving an SMC van,
petitioner Francisco Culaba, without question, paid his accounts. He received the
receipts without fear, as they were similar to what he used to receive before.
Furthermore, the petitioners assert that, common experience will attest that unless
the attention of the customers is called for, they would not take note of the serial
number of the receipts.
The petitioners contend that the private respondent advertised its warning to
the public only after the damage was done, or on July 9, 1993. Its belated notice
showed its glaring lack of interest or concern for its customers welfare, and, in sum,
its negligence.
Anent the second issue, petitioner Francisco Culaba avers that the agent to
whom the accounts were paid had all the physical and material attributes or
indications of a representative of the private respondent, leaving no doubt that he
was duly authorized by the latter. Petitioner Francisco Culabas testimony that he
does not necessarily check the contents of the receipts issued to him except for the
amount indicated if [the] same accurately reflects his actual payment is a common
attitude of customers. He could, thus, not be faulted for paying the private
respondents agent on four occasions. Petitioner Francisco Culaba asserts that he
made the payment in good faith, to an agent who issued SMC receipts which
appeared to be genuine. Thus, according to the petitioners, they had duly paid their
obligation in accordance with Articles 1240 and 1242 of the New Civil Code.
The private respondent, for its part, avers that the burden of proving payment
is with the debtor, in consonance with the express provision of Article 1233 of the
New Civil Code. The petitioners miserably failed to prove the self-serving allegation
that they already paid their liability to the private respondent. Furthermore, under
normal circumstances, an obligor would not just pay a substantial amount to
someone whom he saw for the first time, without even asking for the latters name.
The Ruling of the Court
The petition is dismissed.
The petitioners question the findings of the Court of Appeals as to whether the
payment of the petitioners obligation to the private respondent was properly made,
thus, extinguishing the same. This is clearly a factual issue, and beyond the purview
of the Court to delve into. This is in consonance with the well-settled rule that
findings of fact of the trial court, especially when affirmed by the Court of Appeals,
are accorded the highest degree of respect, and generally will not be disturbed on
appeal. Such findings are binding and conclusive on the Court. [17]Furthermore, it is
not the Courts function under Rule 45 of the Rules of Court, as amended, to review,
examine and evaluate or weigh the probative value of the evidence presented. [18]
To reiterate, the issue being raised by the petitioners does not involve a
question of law, but a question of fact, not cognizable by this Court in a petition for
review under Rule 45. The jurisdiction of the Court in such a case is limited to
reviewing only errors of law, unless the factual findings being assailed are not
supported by evidence on record or the impugned judgment is based on a
misapprehension of facts.[19]
A careful study of the records of the case reveal that the appellate court
affirmed the trial courts factual findings as follows:
First. Receipts Nos. 27331, 27318, 27339 and 27346 were included in the
private respondents lost booklet, which loss was duly advertised in a newspaper of
general circulation; thus, the private respondent could not have officially issued
them to the petitioners to cover the alleged payments on the dates appearing thereon.
Second. There was something amiss in the way the receipts were issued to the
petitioners, as one receipt bearing a higher serial number was issued ahead of
another receipt bearing a lower serial number, supposedly covering a later payment.
The petitioners failed to explain the apparent mix-up in these receipts, and no
attempt was made in this regard.
Third. The fact that the salesmans name was invariably left blank in the four
receipts and that the petitioners could not even remember the name of the supposed
impostor who received the said payments strongly argue against the veracity of the
petitioners claim.
We find no cogent reason to reverse the said findings.
The dismissal of the petition is inevitable even upon close perusal of the
merits of the case.
 Payment is a mode of extinguishing an obligation. [20] Article 1240 of the Civil
Code provides that payment shall be made to the person in whose favor the
obligation has been constituted, or his successor-in-interest, or any person
authorized to receive it.[21] In this case, the payments were purportedly made to a
supervisor of the private respondent, who was clad in an SMC uniform and drove an
SMC van. He appeared to be authorized to accept payments as he showed a list of
customers accountabilities and even issued SMC liquidation receipts which looked
genuine. Unfortunately for petitioner Francisco Culaba, he did not ascertain the
identity and authority of the said supervisor, nor did he ask to be shown any
identification to prove that the latter was, indeed, an SMC supervisor. The
petitioners relied solely on the mans representation that he was collecting payments
for SMC. Thus, the payments the petitioners claimed they made were not the
payments that discharged their obligation to the private respondent.
The basis of agency is representation. [22] A person dealing with an agent is put
upon inquiry and must discover upon his peril the authority of the agent. [23] In the
instant case, the petitioners loss could have been avoided if they had simply
exercised due diligence in ascertaining the identity of the person to whom they
allegedly made the payments. The fact that they were parting with valuable
consideration should have made them more circumspect in handling their business
transactions. Persons dealing with an assumed agent are bound at their peril to
ascertain not only the fact of agency but also the nature and extent of authority, and
in case either is controverted, the burden of proof is upon them to establish it. [24] The
petitioners in this case failed to discharge this burden, considering that the private
respondent vehemently denied that the payments were accepted by it and were made
to its authorized representative.
Negligence is the omission to do something which a reasonable man, guided
by those considerations which ordinarily regulate the conduct of human affairs,
would do, or the doing of something, which a prudent and reasonable man would not
do.[25] In the case at bar, the most prudent thing the petitioners should have done was
to ascertain the identity and authority of the person who collected their payments.
Failing this, the petitioners cannot claim that they acted in good faith when they
made such payments. Their claim therefor is negated by their negligence, and they
are bound by its consequences. Being negligent in this regard, the petitioners cannot
seek relief on the basis of a supposed agency.[26]
WHEREFORE, the instant petition is hereby DENIED. The assailed
Decision dated April 16, 1996, and the Resolution dated July 19, 1996 of the Court
of Appeals are AFFIRMED. Costs against the petitioners.
SO ORDERED.
 THE INTERMEDIATE APPELLATE COURT and ASIA PACIFIC
AIRWAYS, INC., respondents.

BIDIN, J.:

This is a petition for certiorari seeking the annulment of the decision dated August

27,1985 of the then Intermediate Appellate Court in CA-G.R. No. 02684, which
reversed the judgment of the trial court and ordered petitioner to return the amount
of P510, 550.63 to private respondent plus interest at the legal rate of 14% per
annum.

The facts of the case are as follows:

On January 12, 1978, private respondent Asia Pacific Airways Inc., entered into an
agreement with petitioner Caltex (Philippines) Inc., whereby petitioner agreed to
supply private respondent's aviation fuel requirements for two (2) years, covering
the period from January 1, 1978 until December 31, 1979. Pursuant thereto,
petitioner supplied private respondent's fuel supply requirements. As of June 30,
1980, private respondents had an outstanding obligation to petitioner in the total
amount of P4,072,682.13, representing the unpaid price of the fuel supplied. To
settle this outstanding obligation, private respondent executed a Deed of Assignment
dated July 31, 1980, wherein it assigned to petitioner its receivables or refunds of
Special Fund Import Payments from National Treasury of the Philippines to be
applied as payment of the amount of P4,072,682.13 which private respondent owed
to petitioner. On February 12, 1981, pursuant to the Deed of Assignment, Treasury
Warrant No. B04708613 in the amount of P5,475,294.00 representing the refund to
Republic of the Philippines respondent of Special Fund Import Payment on its fuel purchases was issued by the
SUPREME COURT National Treasury in favor of the petitioner. Four days later, on February 16, 1981,
Manila private respondent, having learned that the amount remitted to petitioner exceeded
the amount covered by the Deed of Assignment, wrote a letter to petitioner,
requesting a refund in the amount of P900,000.00 plus in favor of private
THIRD DIVISION respondent. The latter, believing that it was entitled to a larger amount by way of
refund, wrote a petitioner anew, demanding the refund of the remaining amount. In
response thereto, petitioner informed private respondent that the amount not
returned (P510,550.63) represented interest and service charges at the rate of
G.R. No. 72703 November 13, 1992 18% per annum on the unpaid and overdue account of respondent from June 1,
1980 to July 31, 1981.
CALTEX (PHILIPPINES), INC., petitioner, 
vs. Thus, on September 13, 1982, private respondent filed a complaint against petitioner
in the Regional Trial Court of Manila, to collect the sum of P510,550.63.00.
Petitioner (defendant in the trial court) filed its answer, reiterating that the amount
not returned represented interest and service charges on the unpaid and overdue
account at the rate of 18% per annum. It was further alleged that the collection of
said interest and service charges is sanctioned by law, and is in accordance with the
terms and conditions of the sale of petroleum products to respondent, which was
made with the conformity of said private respondent who had accepted the validity
of said interest and service charges.
On November 7, 1983, the trial court rendered its decision dismissing the complaint,
as well as the counterclaim filed by defendant therein.
Private respondent (plaintiff) appealed to the Intermediate Appellate Court (IAC).
On August 27, 1985, a decision was rendered by the said appellate court reversing
the decision of the trial court, and ordering petitioner to return the amount of
P510,550.63 to private respondent.
Counsel for petitioner received a copy of the appellate court's decision on September
6, 1985. On September 20, 1985 or 14 days after receipt of the aforesaid decision, an
Urgent Motion for extension of five days within which to file a motion for
reconsideration was filed by petitioner. On September 26, 1985, the Motion for
Reconsideration was filed. The following day, petitioner filed a motion to set the
motion for reconsideration for hearing.
In a Resolution dated October 24, 1985, the appellate court denied the aforesaid
three motions. The first motion praying for an extension of five days within which to
file a motion for reconsideration was denied by the appellate court citing the new
ruling of the Supreme Court in Habaluyas Enterprises Inc. vs. Japzon (138 SCRA 46
[1985]) as authority. The appellate court, following said ruling, held that the 15-day
period for filing a motion for reconsideration cannot be extended. Thus, the motion
for reconsideration filed on September 26, 1985 was stricken from the record,
having been filed beyond the non-extensible 15-day reglementary period. The third
motion was likewise denied for being moot and academic.
On November 4, 1985, the prevailing party (respondent herein) filed Urgent Motion
for Entry of Judgment. Two days latter, or on November 6, 1985, the petitioner filed
a Motion for Reconsideration of the Resolution dated October 24, 1985.
The appellate court in a Resolution dated November 12, 1985 granted the motion for
entry of judgment filed by private respondent. It directed the entry of judgment and
ordered the remand of the records of the case to the court of origin for execution.
On November 14, 1985, petitioner, without waiting for the resolution of the
appellate court in the urgent motion for reconsideration it filed on November 6,
1985, filed the instant petition to annul and set aside the resolution of the appellate
court dated October 24, 1985 which denied the Motion for Reconsideration of its
decision dated August 27, 1985.
In a motion dated November 21, 1985, petitioner prayed of the issuance of
temporary restraining order to enjoin the appellate court from remanding the records
of the case for execution of the judgment. The petitioner also filed a Supplement to
Petition for Certiorari, dated November 21, 1985.
In a Resolution dated November 27, 1985, this Court, acting on the petition,
required private respondent to file its Comment; granted the prayer of the petitioner
in his urgent motion, and a temporary restraining order was issued enjoining the
appellate court from remanding the records of the case for execution of judgment.
Private respondent filed its COMMENT dated December 14, 1985.
In a Resolution dated January 27, 1986, the Court resolved to give due course to the
petition, and required the parties to submit their memoranda. In compliance with the
said Resolution, the parties filed their respective memoranda.
On August 15, 1986, petitioner filed a Motion to Remand Records to the Court of
Appeals in view of the resolution of this Court dated May 30, 1986 in the Habaluyas
case which considered and set aside its decision dated August 5, 1985 by giving it
prospective application beginning one month after the promulgation of the said
resolution. This motion was opposed by private respondent. On September 22, 1986,
petitioner filed its Reply to Opposition to which private respondent filed its
rejoinder. In a Resolution dated December 3, 1986, the motion to remand records
was denied.
Petitioner's Brief raised six (6) assignment of errors, to wit:
I.
THE IAC ERRED IN APPLYING THE NEW POLICY OF
NOT GRANTING ANY EXTENSION OF TIME TO FILE
MOTION FOR RECONSIDERATION.
II.
THE IAC ERRED IN RULING THAT THE OBLIGATION OF
RESPONDENT WAS LIMITED TO P4,072,682.13
NOTWITHSTANDING THAT FACT THAT THE DEED OF
ASSIGNMENT (THE CONTRACT SUED UPON) ITSELF
EXPRESSLY AND REPEATEDLY SPEAKS OF
RESPONDENT'S OBLIGATION AS "THE AMOUNT OF
P4,072,682.13 AS JUNE 30, 1980 PLUS APPLICABLE
INTEREST CHARGES ON OVERDUE ACCOUNT AND
OTHER AVTURBO FUEL LIFTING AND DELIVERIES
THAT ASSIGNOR MAY FROM TIME TO TIME RECEIVE
FROM ASSIGNEE."
III.
THE IAC ERRED IN RULING THAT THE DEED OF
ASSIGNMENT SATISFIES THE REQUISITES OF DATION
IN PAYMENT (WHICH HAS THE EFFECT OF IMMEDIATE
EXTINGUISHMENT OF THE OBLIGATION) DESPITE THE
FACT THAT SAID DEED OF ASSIGNMENT (1) COVERS
FUTURE OBLIGATION FOR "APPLICABLE INTEREST
CHARGES ON OVER DUE ACCOUNT AND OTHER
AVTURBO FUEL LIFTING THE DELIVERIES THAT
ASSIGNOR MAY FROM TIME TO TIME RECEIVE FROM
ASSIGNEES" AND (2) INCLUDES AN EXPRESS
RESERVATION BY ASSIGNEE TO DEMAND FULL
PAYMENT OF THE OBLIGATIONS OF THE ASSIGNOR
"IN CASE OF UNREASONABLE DELAY OR NON-
RECEIPT OF ASSIGNEE OF THE AFOREMENTIONED
FUNDS AND/OR REFUND OF SPECIAL FUND IMPORT
PAYMENT FROM THE GOVERNMENT DUE TO ANY
CAUSE OR REASON WHATSOEVER.
IV.
THE IAC ERRED IN FAILING TO TAKE INTO ACCOUNT
THE CONTEMPORANEOUS AND SUBSEQUENT ACTS OF
THE PARTIES WHICH ALSO CLEARLY SHOW THAT
THEY DID NOT INTEND THE DEED OF ASSIGNMENT TO
HAVE EFFECT OF DATION IN PAYMENT.
V.
IF THE DEED OF ASSIGNMENT HAD THE EFFECT OF A
DATION IN PAYMENT, THEN THE IAC ERRED IN NOT
RULING THAT PETITIONER HAS A RIGHT TO RETAIN
THE ENTIRE CREDIT ASSIGNED TO IT IN LIEU OF
PAYMENT OF RESPONDENT'S OBLIGATION INSTEAD
OF BEING REQUIRED TO RETURN PORTION OF THE
CREDIT WHICH IS CLAIMED TO BE IN EXCESS OF
RESPONDENT'S OBLIGATION.
VI.
ASSUMING THAT PETITIONER IS LIABLE TO MAKE A
RETURN OF A PORTION OF THE CREDIT ASSIGNED,
THE IAC ERRED IN AWARDING "INTEREST AT THE
LEGAL RATE OF 14% PER ANNUM FROM THE FILING
OF THE LEGAL OF THE COMPLAINT."
We find merit in the instant petition.
The two vital issues presented to the Court for resolution are, as follows:
1. Whether or not the Urgent Motion for Extension of Time to File a Motion for
Reconsideration filed by petitioner on September 20, 1985, as well as the Motion for
Reconsideration filed on September 26, 1985 (within the period of extension prayed
for), may be validly granted; and
2. Whether or not the Deed of Assignment entered into by the parties herein on July
31, 1980 constituted dacion en pago, as ruled by the appellate court, such that the
obligation is totally extinguished, hence after said date, no interest and service
charges could anymore be imposed on private respondent, so that petitioner was not
legally authorized to deduct the amount of P510,550.63 as interest and service
charges on the unpaid and overdue accounts of private respondent.
Anent the first issue, we rule in the affirmative.
We held in the case of Habaluyas Enterprises, Inc., et. al. vs. Japson et. al. (138
SCRA 46 [1985], promulgated August 5, 1985), that the "15-day period for
appealing or for filing a motion for reconsideration cannot be extended".
Subsequently, the Court, acting on respondent's motion for reconsideration in the
same entitled case (142 SCRA 208 [1986]), restated and clarified the rule on this
point for the guidance of the Bench and Bar by giving the rule prospective
application in its resolution dated May 30, 1986;
 After considering the able arguments of counsels for petitioners
and respondents, the Court resolved that the interest of justice
would be better served if the ruling in the original decision were
applied prospectively from the time herein stated. The reason is
that it would be unfair to deprive parties of the right to appeal
simply because they availed themselves of a procedure which
was not expressly prohibited or allowed by the law or the Rules.
On the otherhand, a motion for new trial or reconsideration is
not a pre-requisite to an appeal, a petition for review or a
petition for review on certiorari, and since the purpose of the
amendments above referred to is to expedite the final disposition
of cases, a strict but prospective application of the said ruling is
in order. Hence, for the guidance of the Bench and Bar, the
Court restates and clarifies the rules on this point, as follows.
1.) Beginning one month after the promulgation of this
Resolution, the rule shall be strictly enforced that no motion for
extension of time to file a motion for new trial or
reconsideration may be filed with the Metropolitan or Municipal
Trial Courts, the Regional Trial Courts, and the Intermediate
Appellate Court. Such a motion may be filed only in cases
pending with the Supreme Court as the court of last resort,
which may in its sound discretion either grant or deny the
extension requested.
In Singh vs. IAC, (148 SCRA 277 [1987]), this Court applying the aforesaid ruling
in the Habaluyas case, held.
In other words, there is one month grace period from the
promulgation on May 30, 1986, of the Court's Resolution in the
clarificatory Habaluyas case, or up to June 30, 1986, within
which the rule barring extensions of time to file motions for
reconsideration is, as yet, not strictly enforceable (Bayaca vs.
IAC, G.R. No. 78424, September 15, 1986).
Since petitioners herein filed their Motion for Extension on
August 6, 1985, it was still within the grace period, which
expired on June 30, 1986, and may still be allowed.
Similarly, when petitioner herein filed its Motion for Extension of time to file
motion for reconsideration on September 20, 1985, the said motion was filed within
the one-month grace period, which expired on June 30, 1986, and may still be
allowed. Consequently, the Motion for Reconsideration filed by petitioner on
September 26, 1985, was also filed on time.
With respect to the second issue, We rule that the Deed of Assignment executed by
the parties on July 31, 1980 is not a dation in payment and did not totally extinguish
respondent's obligation as stated therein.
The then Intermediate Appellate Court ruled that the three (3) requisites dacion en
pago * are all present in the instant case, and concluded that the Deed of
Assignment of July 31, 1980 (Annex "C" of Partial Stipulation of Facts) constitutes
a dacion in payment provided for in Article 1245 ** of the Civil Code which has the
effect of extinguishing the obligation, thus supporting the claim of private
respondent for the return of the amount retained by petitioner.
This Court, speaking of the concept of dation in payment, in the case of Lopez vs.
Court of Appeals (114 SCRA 671, 685 [1982]), among others, stated:
The dation in payment extinguishes the obligation to the extent
of the value of the thing delivered, either as agreed upon by the
parties or as may be proved, unless the parties by agreement,
express or implied, or by their silence, consider the thing as
equivalent to the obligation, in which case the obligation is
totally extinguished. (8 Manresa 324; 3 Valverde 174 fn.)
From the above, it is clear that a dation in payment does not necessarily mean total
extinguishment of the obligation. The obligation is totally extinguished only when
the parties, by agreement, express or implied, or by their silence, consider the thing
as equivalent to the obligation.
In the instant case, the then Intermediate Appellate Court failed to take into account
the following express recitals of the Deed of Assignment —
That Whereas, ASSIGNOR has an outstanding obligation with
ASSIGNEE in the amount of P4,072,682.13 as of June 30, 1980,
plus any applicable interest on overdue account. (p. 2, Deed of
Assignment)
Now therefore in consideration of the foregoing premises,
ASSIGNOR by virtue of these presents, does hereby irrevocably
assign and transfer unto ASSIGNEE any and all funds and/or
Refund of Special Fund Payments, including all its rights and
benefits accruing out of the same, that ASSIGNOR might be
 entitled to, by virtue of and pursuant to the decision in BOE
Case No. 80-123, in payment of ASSIGNOR's outstanding
obligation plus any applicable interest charges on overdue
account and other avturbo fuel lifting and deliveries that
ASSIGNOR may from time to time receive from the ASSIGNEE,
and ASSIGNEE does hereby accepts such assignment in its
favor. (p. 2, Deed of Assignment) (Emphasis supplied)
Hence, it could easily be seen that the Deed of Assignment speaks of three (3)
obligations — (1) the outstanding obligation of P4,072,682.13 as of June 30, 1980;
(2) the applicable interest charges on overdue accounts; and (3) the other avturbo
fuel lifting and deliveries that assignor (private respondent) may from time to time
receive from assignee (Petitioner). As aptly argued by petitioner, if it were the
intention of the parties to limit or fix respondent's obligation to P4,072.682.13; they
should have so stated and there would have been no need for them to qualify the
statement of said amount with the clause "as of June 30, 1980 plus any applicable
interest charges on overdue account" and the clause "and other avturbo fuel lifting
and deliveries that ASSIGNOR may from time to time receive from the
ASSIGNEE". The terms of the Deed of Assignment being clear, the literal meaning
of its stipulations should control (Art. 1370, Civil Code). In the construction of an
instrument where there are several provisions or particulars, such a construction is, if
possible, to be adopted as will give effect to all (Rule 130, Sec. 9, Rules of Court).
In order to judge the intention of the contracting parties, their contemporaneous and
subsequent acts shall be principally considered (Art. 1253, Civil Code). The
foregoing subsequent acts of the parties clearly show that they did not intend the
Deed of Assignment to have the effect of totally extinguishing the obligations of
private respondent without payment of the applicable interest charges on the
overdue account.
Finally, the payment of applicable interest charges on overdue account, separate
from the principal obligation of P4,072.682.13 was expressly stipulated in the Deed
of Assignment. The law provides that "if the debt produces interest, payment of the
principal shall not be deemed to have been made until the interests have been
covered." (Art. 1253, Civil Code).
WHEREFORE, the decision of the then Intermediate Appellate Court dated August
27, 1985 is hereby SET ASIDE, and the November 7, 1983 decision of the trial
court is REINSTATED.
SO ORDERED.

Likewise, the then Intermediate Appellate Court failed to take into consideration the
subsequent acts of the parties which clearly show that they did not intend the Deed
of Assignment to totally extinguish the obligation — (1) After the execution of the
Deed of Assignment on July 31, 1980, petitioner continued to charge respondent
with interest on its overdue account up to January 31, 1981 (Annexes "H", "I", "J"
and "K" of the Partial Stipulation of Facts). This was pursuant to the Deed of
Assignment which provides for respondent's obligation for "applicable interest
charges on overdue account." The charges for interest were made every month and
not once did respondent question or take exception to the interest; and (2) In its
letter of February 16, 1981 (Annex "J", Partial Stipulation of Facts), respondent
addressed the following request to petitioner;

Moreover, we would also like to request for a consideration in

the following

1. Interest charges be limited up to December 31, 1980 only; and

2. Reduction of 2% of 18% interest rate p.a.

We are hoping for your usual kind consideration on this matter.

 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 100290 June 4, 1993

NORBERTO TIBAJIA, JR. and CARMEN TIBAJIA, petitioners, 

vs.
THE HONORABLE COURT OF APPEALS and EDEN TAN, respondents.

PADILLA, J.:

Petitioners, spouses Norberto Tibajia, Jr. and Carmen Tibajia, are before this Court
assailing the decision * of respondent appellate court dated 24 April 1991 in CA-
G.R. SP No. 24164 denying their petition for certiorari prohibition, and injunction
which sought to annul the order of Judge Eutropio Migriño of the Regional Trial
Court, Branch 151, Pasig, Metro Manila in Civil Case No. 54863 entitled "Eden Tan
vs. Sps. Norberto and Carmen Tibajia."

Stated briefly, the relevant facts are as follows:

Case No. 54863 was a suit for collection of a sum of money filed by Eden Tan
against the Tibajia spouses. A writ of attachment was issued by the trial court on 17
August 1987 and on 17 September 1987, the Deputy Sheriff filed a return stating
that a deposit made by the Tibajia spouses in the Regional Trial Court of Kalookan
City in the amount of Four Hundred Forty Two Thousand Seven Hundred and Fifty
Pesos (P442,750.00) in another case, had been garnished by him. On 10 March
1988, the Regional Trial Court, Branch 151 of Pasig, Metro Manila rendered its
decision in Civil Case No. 54863 in favor of the plaintiff Eden Tan, ordering the
Tibajia spouses to pay her an amount in excess of Three Hundred Thousand Pesos
(P300,000.00). On appeal, the Court of Appeals modified the decision by reducing
the award of moral and exemplary damages. The decision having become final,
Eden Tan filed the corresponding motion for execution and thereafter, the garnished
funds which by then were on deposit with the cashier of the Regional Trial Court of
Pasig, Metro Manila, were levied upon.
On 14 December 1990, the Tibajia spouses delivered to Deputy Sheriff Eduardo
Bolima the total money judgment in the following form:
Cashier's Check P262,750.00
Cash 135,733.70
————
Total P398,483.70
Private respondent, Eden Tan, refused to accept the payment made by the Tibajia
spouses and instead insisted that the garnished funds deposited with the cashier of
the Regional Trial Court of Pasig, Metro Manila be withdrawn to satisfy the
judgment obligation. On 15 January 1991, defendant spouses (petitioners) filed a
motion to lift the writ of execution on the ground that the judgment debt had already
been paid. On 29 January 1991, the motion was denied by the trial court on the
ground that payment in cashier's check is not payment in legal tender and that
payment was made by a third party other than the defendant. A motion for
reconsideration was denied on 8 February 1991. Thereafter, the spouses Tibajia filed
a petition for certiorari, prohibition and injunction in the Court of Appeals. The
appellate court dismissed the petition on 24 April 1991 holding that payment by
cashier's check is not payment in legal tender as required by Republic Act No. 529.
The motion for reconsideration was denied on 27 May 1991.
In this petition for review, the Tibajia spouses raise the following issues:
I WHETHER OR NOT THE BPI CASHIER'S CHECK NO.
014021 IN THE AMOUNT OF P262,750.00 TENDERED BY
PETITIONERS FOR PAYMENT OF THE JUDGMENT
DEBT, IS "LEGAL TENDER".
II WHETHER OR NOT THE PRIVATE RESPONDENT MAY
VALIDLY REFUSE THE TENDER OF PAYMENT PARTLY
IN CHECK AND PARTLY IN CASH MADE BY
PETITIONERS, THRU AURORA VITO AND COUNSEL,
FOR THE SATISFACTION OF THE MONETARY
OBLIGATION OF PETITIONERS-SPOUSES.1
The only issue to be resolved in this case is whether or not payment by means of
check (even by cashier's check) is considered payment in legal tender as required by
the Civil Code, Republic Act No. 529, and the Central Bank Act.
It is contended by the petitioners that the check, which was a cashier's check of the
Bank of the Philippine Islands, undoubtedly a bank of good standing and reputation,
and which was a crossed check marked "For Payee's Account Only" and payable to
private respondent Eden Tan, is considered legal tender, payment with which
operates to discharge their monetary obligation. 2 Petitioners, to support their
contention, cite the case of New Pacific Timber and Supply Co., Inc. v.
Señeris3 where this Court held through Mr. Justice Hermogenes Concepcion, Jr. that
"It is a well-known and accepted practice in the business sector that a cashier's check
is deemed as cash".
The provisions of law applicable to the case at bar are the following:
a. Article 1249 of the Civil Code which provides:
Art. 1249. The payment of debts in money shall be made in the
currency stipulated, and if it is not possible to deliver such
currency, then in the currency which is legal tender in the
Philippines.
The delivery of promissory notes payable to order, or bills of
exchange or other mercantile documents shall produce the effect
of payment only when they have been cashed, or when through
the fault of the creditor they have been impaired.
In the meantime, the action derived from the original obligation
shall be held in abeyance.;
b. Section 1 of Republic Act No. 529, as amended, which provides:
Sec. 1. Every provision contained in, or made with respect to,
any obligation which purports to give the obligee the right to
require payment in gold or in any particular kind of coin or
currency other than Philippine currency or in an amount of
money of the Philippines measured thereby, shall be as it is
hereby declared against public policy null and void, and of no
effect, and no such provision shall be contained in, or made with
respect to, any obligation thereafter incurred. Every obligation
heretofore and hereafter incurred, whether or not any such
 provision as to payment is contained therein or made with
respect thereto, shall be discharged upon payment in any coin or
currency which at the time of payment is legal tender for public
and private debts.
c. Section 63 of Republic Act No. 265, as amended (Central Bank Act) which
provides:
Sec. 63. Legal character — Checks representing deposit money
do not have legal tender power and their acceptance in the
payment of debts, both public and private, is at the option of the
creditor: Provided, however, that a check which has been
cleared and credited to the account of the creditor shall be
equivalent to a delivery to the creditor of cash in an amount
equal to the amount credited to his account.
From the aforequoted provisions of law, it is clear that this petition must fail.
In the recent cases of Philippine Airlines, Inc. vs. Court of Appeals 4 and Roman
Catholic Bishop of Malolos, Inc. vs. Intermediate Appellate Court,5 this Court held
that —
A check, whether a manager's check or ordinary check, is not
legal tender, and an offer of a check in payment of a debt is not a
valid tender of payment and may be refused receipt by the
obligee or creditor.
The ruling in these two (2) cases merely applies the statutory provisions which lay
down the rule that a check is not legal tender and that a creditor may validly refuse
payment by check, whether it be a manager's, cashier's or personal check.
Petitioners erroneously rely on one of the dissenting opinions in the Philippine
Airlines case6 to support their cause. The dissenting opinion however does not in
any way support the contention that a check is legal tender but, on the contrary,
states that "If the PAL checks in question had not been encashed by Sheriff Reyes,
there would be no payment by PAL and, consequently, no discharge or satisfaction
of its judgment obligation."7 Moreover, the circumstances in the Philippine
Airlines case are quite different from those in the case at bar for in that case the
checks issued by the judgment debtor were made payable to the sheriff, Emilio Z.
Reyes, who encashed the checks but failed to deliver the proceeds of said
encashment to the judgment creditor.
In the more recent case of Fortunado vs. Court of Appeals,8 this Court stressed that,
"We are not, by this decision, sanctioning the use of a check for the payment of
obligations over the objection of the creditor."
WHEREFORE, the petition is DENIED. The appealed decision is hereby
AFFIRMED, with costs against the petitioners.
SO ORDERED.
FIRST DIVISION
[G.R. No. 105188. January 23, 1998]
MYRON C. PAPA, Administrator of the Testate Estate of Angela M.
Butte, petitioner, vs. A. U. VALENCIA and CO. INC., FELIX PEARROYO,
SPS. ARSENIO B. REYES & AMANDA SANTOS, and DELFIN
JAO, respondents.
DECISION
KAPUNAN, J.:
In this petition for review on certiorari under Rule 45 of the Rules of Court,
petitioner Myron C. Papa seeks to reverse and set aside 1) the Decision dated 27
January 1992 of the Court of Appeals which affirmed with modification the decision
of the trial court; and, 2) the Resolution dated 22 April 1992 of the same court,
which denied petitioners motion for reconsideration of the above decision.
The antecedent facts of this case are as follows:
Sometime in June 1982, herein private respondents A.U. Valencia and Co.,
Inc. (hereinafter referred to as respondent Valencia, for brevity) and Felix Pearroyo
(hereinafter called respondent Pearroyo), filed with the Regional Trial Court of
Pasig, Branch 151, a complaint for specific performance against herein petitioner
Myron C. Papa, in his capacity as administrator of the Testate Estate of one Angela
M. Butte.
 The complaint alleged that on 15 June 1973, petitioner Myron C. Papa, acting
as attorney-in-fact of Angela M. Butte, sold to respondent Pearroyo, through
respondent Valencia, a parcel of land, consisting of 286.60 square meters, located at
corner Retiro and Cadiz Streets, La Loma, Quezon City, and covered by Transfer
Certificate of Title No. 28993 of the Register of Deeds of Quezon City; that prior to
the alleged sale, the said property, together with several other parcels of land
likewise owned by Angela M. Butte, had been mortgaged by her to the Associated
Banking Corporation (now Associated Citizens Bank); that after the alleged sale, but
before the title to the subject property had been released, Angela M. Butte passed
away; that despite representations made by herein respondents to the bank to release
the title to the property sold to respondent Pearroyo, the bank refused to release it
unless and until all the mortgaged properties of the late Angela M. Butte were also
redeemed; that in order to protect his rights and interests over the property,
respondent Pearroyo caused the annotation on the title of an adverse claim as
evidenced by Entry No. P.E. - 6118/T-28993, inscribed on 18 January 1977.
The complaint further alleged that it was only upon the release of the title to
the property, sometime in April 1977, that respondents Valencia and Pearroyo
discovered that the mortgage rights of the bank had been assigned to one Tomas L.
Parpana (now deceased), as special administrator of the Estate of Ramon Papa, Jr.,
on 12 April 1977; that since then, herein petitioner had been collecting monthly
rentals in the amount of P800.00 from the tenants of the property, knowing that said
property had already been sold to private respondents on 15 June 1973; that despite
repeated demands from said respondents, petitioner refused and failed to deliver the
title to the property. Thereupon, respondents Valencia and Pearroyo filed a
complaint for specific performance, praying that petitioner be ordered to deliver to
respondent Pearroyo the title to the subject property (TCT 28993); to turn over to the
latter the sum of P72,000.00 as accrued rentals as of April 1982, and the monthly
rental of P800.00 until the property is delivered to respondent Pearroyo; to pay
respondents the sum of P20,000.00 as attorneys fees; and to pay the costs of the suit.
In his Answer, petitioner admitted that the lot had been mortgaged to the
Associated Banking Corporation (now Associated Citizens Bank). He contended,
however, that the complaint did not state a cause of action; that the real property in
interest was the Testate Estate of Angela M. Butte, which should have been joined
as a party defendant; that the case amounted to a claim against the Estate of Angela
M. Butte and should have been filed in Special Proceedings No. A-17910 before the
Probate Court in Quezon City; and that, if as alleged in the complaint, the property
had been assigned to Tomas L. Parpana, as special administrator of the Estate of
Ramon Papa, Jr., said estate should be impleaded. Petitioner, likewise, claimed that
he could not recall in detail the transaction which allegedly occurred in 1973; that he
did not have TCT No. 28993 in his possession; that he could not be held personally
liable as he signed the deed merely as attorney-in-fact of said Angela M.
Butte. Finally, petitioner asseverated that as a result of the filing of the case, he was
compelled to hire the services of counsel for a fee of P20,000.00, for which
respondents should be held liable.
Upon his motion, herein private respondent Delfin Jao was allowed to
intervene in the case. Making common cause with respondents Valencia and
Pearroyo, respondent Jao alleged that the subject lot which had been sold to
respondent Pearroyo through respondent Valencia was in turn sold to him on 20
August 1973 for the sum of P71,500.00, upon his paying earnest money in the
amount of P5,000.00. He, therefore, prayed that judgment be rendered in favor of
respondents Valencia and Pearroyo; and, that after the delivery of the title to said
respondents, the latter in turn be ordered to execute in his favor the appropriate deed
of conveyance covering the property in question and to turn over to him the rentals
which aforesaid respondents sought to collect from petitioner Myron C. Papa.
Respondent Jao, likewise, averred that as a result of petitioners refusal to
deliver the title to the property to respondents Valencia and Pearroyo, who in turn
failed to deliver the said title to him, he suffered mental anguish and serious anxiety
for which he sought payment of moral damages; and, additionally, the payment of
attorneys fees and costs.
For his part, petitioner, as administrator of the Testate Estate of Angela M.
Butte, filed a third-party complaint against herein private respondents,
spouses Arsenio B. Reyes and Amanda Santos (respondent Reyes spouses, for
short). He averred, among others, that the late Angela M. Butte was the owner of the
subject property; that due to non-payment of real estate tax said property was sold at
public auction by the City Treasurer of Quezon City to the respondent Reyes
spouses on 21 January 1980 for the sum of P14,000.00; that the one-year period of
redemption had expired; that respondents Valencia and Pearroyo had sued petitioner
Papa as administrator of the estate of Angela M. Butte, for the delivery of the title to
the property; that the same aforenamed respondents had acknowledged that the price
paid by them was insufficient, and that they were willing to add a reasonable amount
or a minimum of P55,000.00 to the price upon delivery of the property, considering
that the same was estimated to be worth P143,000.00; that petitioner was willing to
reimburse respondent Reyes spouses whatever amount they might have paid for
taxes and other charges, since the subject property was still registered in the name of
the late Angela M. Butte; that it was inequitable to allow respondent Reyes spouses
to acquire property estimated to be worth P143,000.00, for a measly sum
of P14,000.00. Petitioner prayed that judgment be rendered cancelling the tax sale to
respondent Reyes spouses; restoring the subject property to him upon payment by
him to said respondent Reyes spouses of the amount of P14,000.00, plus legal
interest; and, ordering respondents Valencia and Pearroyo to pay him at
least P55,000.00 plus everything they might have to pay the Reyes spouses in
recovering the property.
Respondent Reyes spouses in their Answer raised the defense of prescription
of petitioners right to redeem the property.
 At the trial, only respondent Pearroyo testified. All the other parties only
submitted documentary proof.
On 29 June 1987, the trial court rendered a decision, the dispositive portion of
which reads:
WHEREUPON, judgment is hereby rendered as follows:
1) Allowing defendant to redeem from third-party defendants and ordering the latter
to allow the former to redeem the property in question, by paying the sum
of P14,000.00 plus legal interest of 12% thereon from January 21, 1980;
2) Ordering defendant to execute a Deed of Absolute Sale in favor of plaintiff Felix
Pearroyo covering the property in question and to deliver peaceful possession and
enjoyment of the said property to the said plaintiff, free from any liens and
encumbrances;
Should this not be possible, for any reason not attributable to defendant, said
defendant is ordered to pay to plaintiff Felix Pearroyo the sum of P45,000.00 plus
legal interest of 12% from June 15, 1973;
3) Ordering plaintiff Felix Pearroyo to execute and deliver to intervenor a deed of
absolute sale over the same property, upon the latters payment to the former of the
balance of the purchase price of P71,500.00;
Should this not be possible, plaintiff Felix Pearroyo is ordered to pay intervenor the
sum of P5,000.00 plus legal interest of 12% from August 23, 1973; and
4) Ordering defendant to pay plaintiffs the amount of P5,000.00 for and as attorneys
fees and litigation expenses.
SO ORDERED.[1]
Petitioner appealed the aforesaid decision of the trial court to the Court of
Appeals, alleging among others that the sale was never consummated as he did not
encash the check (in the amount of P40,000.00) given by respondents Valencia and
Pearroyo in payment of the full purchase price of the subject lot. He maintained that
what said respondents had actually paid was only the amount of P5,000.00 (in cash)
as earnest money.
Respondent Reyes spouses, likewise, appealed the above decision. However,
their appeal was dismissed because of failure to file their appellants brief.
On 27 January 1992, the Court of Appeals rendered a decision, affirming with
modification the trial courts decision, thus:
WHEREFORE, the second paragraph of the dispositive portion of the appealed
decision is MODIFIED, by ordering the defendant-appellant to deliver to plaintiff-
appellees the owners duplicate of TCT No. 28993 of Angela M. Butte and the
peaceful possession and enjoyment of the lot in question or, if the owners duplicate
certificate cannot be produced, to authorize the Register of Deeds to cancel it and
issue a certificate of title in the name of Felix Pearroyo. In all other respects, the
decision appealed from is AFFIRMED. Costs against defendant-appellant Myron C.
Papa.
SO ORDERED.[2]
In affirming the trial courts decision, respondent court held that contrary to
petitioners claim that he did not encash the aforesaid check, and therefore, the sale
was not consummated, there was no evidence at all that petitioner did not, in fact,
encash said check. On the other hand, respondent Pearroyo testified in court that
petitioner Papa had received the amount of P45,000.00 and issued receipts
therefor. According to respondent court, the presumption is that the check was
encashed, especially since the payment by check was not denied by defendant-
appellant (herein petitioner) who, in his Answer, merely alleged that he can no
longer recall the transaction which is supposed to have happened 10 years ago. [3]
On petitioners claim that he cannot be held personally liable as he had acted
merely as attorney-in-fact of the owner, Angela M. Butte, respondent court held that
such contention is without merit. This action was not brought against him in his
personal capacity, but in his capacity as the administrator of the Testate Estate of
Angela M. Butte.[4]
On petitioners contention that the estate of Angela M. Butte should have been
joined in the action as the real party in interest, respondent court held that pursuant
to Rule 3, Section 3 of the Rules of Court, the estate of Angela M. Butte does not
have to be joined in the action. Likewise, the estate of Ramon Papa, Jr., is not an
indispensable party under Rule 3, Section 7 of the same Rules. For the fact is that
Ramon Papa, Jr., or his estate, was not a party to the Deed of Absolute Sale, and it is
basic law that contracts bind only those who are parties thereto. [5]
Respondent court observed that the conditions under which the mortgage
rights of the bank were assigned are not clear. In any case, any obligation which the
estate of Angela M. Butte might have to the estate of Ramon Papa, Jr. is strictly
between them. Respondents Valencia and Pearroyo are not bound by any such
obligation.
 Petitioner filed a motion for reconsideration of the above decision, which
motion was denied by respondent Court of Appeals.
Hence, this petition wherein petitioner raises the following issues:
I. THE CONCLUSION OR FINDING OF THE COURT OF APPEALS
THAT THE SALE IN QUESTION WAS CONSUMMATED IS
GROUNDED ON SPECULATION OR CONJECTURE, AND IS
CONTRARY TO THE APPLICABLE LEGAL PRINCIPLE.
II. THE COURT OF APPEALS, IN MODIFYING THE DECISION OF
THE TRIAL COURT, ERRED BECAUSE IT, IN EFFECT, CANCELLED
OR NULLIFIED AN ASSIGNMENT OF THE SUBJECT PROPERTY IN
FAVOR OF THE ESTATE OF RAMON PAPA, JR. WHICH IS NOT A
PARTY IN THIS CASE.
III. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT
THE ESTATE OF ANGELA M. BUTTE AND THE ESTATE OF RAMON
PAPA, JR. ARE INDISPENSABLE PARTIES IN THIS CASE.[6]
Petitioner argues that respondent Court of Appeals erred in concluding that the
alleged sale of the subject property had been consummated. He contends that such a
conclusion is based on the erroneous presumption that the check (in the amount
of P40,000.00) had been cashed, citing Art. 1249 of the Civil Code, which provides,
in part, that payment by checks shall produce the effect of payment only when they
have been cashed or when through the fault of the creditor they have been impaired.
[7]
 Petitioner insists that he never cashed said check; and, such being the case, its
delivery never produced the effect of payment. Petitioner, while admitting that he
had issued receipts for the payments, asserts that said receipts, particularly the
receipt of PCIB Check No. 761025 in the amount of P40,000.00, do not prove
payment. He avers that there must be a showing that said check had been
encashed. If, according to petitioner, the check had been encashed, respondent
Pearroyo should have presented PCIB Check No. 761025 duly stamped received by
the payee, or at least its microfilm copy.
Petitioner finally avers that, in fact, the consideration for the sale was still in
the hands of respondents Valencia and Pearroyo, as evidenced by a letter addressed
to him in which saidrespondents wrote, in part:
x x x. Please be informed that I had been authorized by Dr. Ramon Papa, Jr., heir of
Mrs. Angela M. Butte to pay you the aforementioned amount of P75,000.00 for the
release and cancellation of subject propertys mortgage. The money is with me and if
it is alright with you, I would like to tender the payment as soon as possible. x x x. [8]
We find no merit in petitioners arguments.
It is an undisputed fact that respondents Valencia and Pearroyo had given
petitioner Myron C. Papa the amounts of Five Thousand Pesos (P5,000.00) in cash
on 24 May 1973, and Forty Thousand Pesos (P40,000.00) in check on 15 June 1973,
in payment of the purchase price of the subject lot. Petitioner himself admits having
received said amounts,[9] and having issued receipts therefor.[10] Petitioners
assertion that he never encashed the aforesaid check is not subtantiated and is at
odds with his statement in his answer that he can no longer recall the transaction
which is supposed to have happened 10 years ago. After more than ten (10) years
from the payment in part by cash and in part by check, the presumption is that the
check had been encashed. As already stated, he even waived the presentation of oral
evidence.
Granting that petitioner had never encashed the check, his failure to do so for
more than ten (10) years undoubtedly resulted in the impairment of the check
through his unreasonable and unexplained delay.
While it is true that the delivery of a check produces the effect of payment
only when it is cashed, pursuant to Art. 1249 of the Civil Code, the rule is otherwise
if the debtor is prejudiced by the creditors unreasonable delay in presentment. The
acceptance of a check implies an undertaking of due diligence in presenting it for
payment, and if he from whom it is received sustains loss by want of such diligence,
it will be held to operate as actual payment of the debt or obligation for which it was
given.[11] It has, likewise, been held that if no presentment is made at all, the drawer
cannot be held liable irrespective of loss or injury [12] unless presentment is otherwise
excused. This is in harmony with Article 1249 of the Civil Code under which
payment by way of check or other negotiable instrument is conditioned on its being
cashed, except when through the fault of the creditor, the instrument is impaired.
The payee of a check would be a creditor under this provision and if its non-
payment is caused by his negligence, payment will be deemed effected and the
obligation for which the check was given as conditional payment will be discharged.
[13]
Considering that respondents Valencia and Pearroyo had fulfilled their part of
the contract of sale by delivering the payment of the purchase price,
said respondents, therefore, had the right to compel petitioner to deliver to them the
owners duplicate of TCT No. 28993 of Angela M. Butte and the peaceful possession
and enjoyment of the lot in question.
With regard to the alleged assignment of mortgage rights, respondent Court of
Appeals has found that the conditions under which said mortgage rights of the bank
were assigned are not clear. Indeed, a perusal of the original records of the case
would show that there is nothing there that could shed light on the transactions
leading to the said assignment of rights; nor is there any evidence on record of the
conditions under which said mortgage rights were assigned. What is certain is that
despite the said assignment of mortgage rights, the title to the subject property has
remained in the name of the late Angela M. Butte. [14] This much is admitted by
petitioner himself in his answer to respondents complaint as well as in the third-
party complaint that petitioner filed against respondent-spouses Arsenio B. Reyes
and Amanda Santos.[15] Assuming arquendo that the mortgage rights of the
Associated Citizens Bank had been assigned to the estate of Ramon Papa, Jr., and
granting that the assigned mortgage rights validly exist and constitute a lien on the
property, the estate may file the appropriate action toenforce such lien. The cause of
action for specific performance which respondents Valencia and Pearroyo have
against petitioner is different from the cause of action which the estate of Ramon
Papa, Jr. may have to enforce whatever rights or liens it has on the property by
reason of its being an alleged assignee of the banks rights of mortgage.
Finally, the estate of Angela M. Butte is not an indispensable party. Under
Section 3 of Rule 3 of the Rules of Court, an executor or administrator may sue or
be sued without joining the party for whose benefit the action is presented or
defended, thus:

Sec. 3. Representative parties. - A trustee of an express trust, a guardian, executor or

administrator, or a party authorized by statute, may sue or be sued without joining
the party for whose benefit the action is presented or defended; but the court may, at
any stage of the proceedings, order such beneficiary to be made a party. An agent
acting in his own name and for the benefit of an undisclosed principal may sue or be
sued without joining the principal except when the contract involves things
belonging to the principal.[16]

Neither is the estate of Ramon Papa, Jr. an indispensable party without whom,
no final determination of the action can be had. Whatever prior and subsisting
mortgage rights the estate of Ramon Papa, Jr. has over the property may still be
enforced regardless of the change in ownership thereof.
WHEREFORE, the petition for review is hereby DENIED and the Decision
of the Court of Appeals, dated 27 January 1992 is AFFIRMED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-43446 May 3, 1988

 FILIPINO PIPE AND FOUNDRY CORPORATION, plaintiff-appellant,  On May 3, 1971, the defendant filed a motion to dismiss the complaint on the
vs.
NATIONAL WATERWORKS AND SEWERAGE AUTHORITY, defendant-
appellee.
GRIÑO-AQUINO, J.:
The plaintiff Filipino Pipe and Foundry Corporation (hereinafter referred to as
"FPFC" for brevity) appealed the dismissal of its complaint against defendant
National Waterworks and Sewerage Authority (NAWASA) by the Court of First
Instance of Manila on September 5, 1973. The appeal was originally brought to the
Court of Appeals. However, finding that the principal purpose of the action was to
secure a judicial declaration that there exists 'extraordinary inflation' within the
meaning of Article 1250 of the New Civil Code to warrant the application of that
provision, the Court of Appeals, pursuant to Section 3, Rule 50 of the Rules of
Court, certified the case to this Court for proper disposition.
On June 12,1961, the NAWASA entered into a contract with the plaintiff FPFC for
the latter to supply it with 4" and 6" diameter centrifugally cast iron pressure pipes
worth P270,187.50 to be used in the construction of the Anonoy Waterworks in
Masbate and the Barrio San Andres-Villareal Waterworks in Samar. Defendant
NAWASA paid in installments on various dates, a total of One Hundred Thirty-Four
Thousand and Six Hundred Eighty Pesos (P134,680.00) leaving a balance of One
Hundred Thirty-Five Thousand, Five Hundred Seven Pesos and Fifty centavos
(P135,507.50) excluding interest. Having completed the delivery of the pipes, the
plaintiff demanded payment from the defendant of the unpaid balance of the price
with interest in accordance with the terms of their contract. When the NAWASA
failed to pay the balance of its account, the plaintiff filed a collection suit on March
16, 1967 which was docketed as Civil Case No. 66784 in the Court of First Instance
of Manila.
On November 23, 1967, the trial court rendered judgment in Civil Case No. 66784
ordering the defendant to pay the unpaid balance of P135,507.50 in NAWASA
negotiable bonds, redeemable after ten years from their issuance with interest at 6%
per annum, P40,944.73 as interest up to March 15, 1966 and the interest accruing
thereafter to the issuance of the bonds at 6% per annum and the costs. Defendant,
however, failed to satisfy the decision. It did not deliver the bonds to the judgment
creditor. On February 18, 1971, the plaintiff FPFC filed another complaint which
was docketed as Civil Case No. 82296, seeking an adjustment of the unpaid balance
in accordance with the value of the Philippine peso when the decision in Civil Case
No. 66784 was rendered on November 23, 1967.
ground that it is barred by the 1967 decision in Civil Case No. 66784.
The trial court, in its order dated May 26, 1971, denied the motion to dismiss on the
ground that the bar by prior judgment did not apply to the case because the causes of
action in the two cases are different: the first action being for collection of the
defendant's indebtedness for the pipes, while the second case is for adjustment of the
value of said judgment due to alleged supervening extraordinary inflation of the
Philippine peso which has reduced the value of the bonds paid to the plaintiff.
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..
The court suggested to the parties during the trial that they present expert testimony
to help it in deciding whether the economic conditions then, and still prevailing,
would justify the application of Article 1250 of the Civil Code. The plaintiff
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.
The trial court pointed out, however, than this is a worldwide occurence, but hardly
proof that the inflation is extraordinary in the sense contemplated by Article 1250 of
the Civil Code, which was adopted by the Code Commission to provide "a just
solution" to the "uncertainty and confusion as a result of Malabanan contracts
entered into or payments made during the last war." (Report of the Code
Commission, 132-133.)
Noting that the situation situation during the Japanese Occupation "cannot that the
be compared with the economic conditions today," the a. Malabanan trial court, on
September 5, 1973, rendered judgment dismissing the complaint.
The only issue before Us whether, on the basis of the continously spiralling price
index indisputably shown by the plaintiff, there exists an extraordinary inflation of
the currency justifying an adjustment of defendant appellee's unpaid judgment
obligation the plaintiff-appellant.
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 decrease or increase could not have
reasonably foreseen or was manifestly beyond contemplation the the parties at the
time of the establishment of the obligation. (Tolentino Commentaries and
Jurisprudence on the Civil Code Vol. IV, p. 284.)

An example of extraordinary inflation is the following description of what happened

to the Deutschmark in 1920:

More recently, in the 1920's Germany experienced a case of

hyperinflation. In early 1921, the value of the German mark was
4.2 to the U.S. dollar. By May of the same year, it had stumbled
to 62 to the U.S. dollar. And as prices went up rapidly, so that by
October 1923, it had reached 4.2 trillion to the U.S. dollar!
(Bernardo M. Villegas & Victor R. Abola, Economics, An
Introduction [Third Edition]).

As reported, "prices were going up every week, then every day, then every hour.
Women were paid several times a day so that they could rush out and exchange their
money for something of value before what little purchasing power was left dissolved
in their hands. Some workers tried to beat the constantly rising prices by throwing
their money out of the windows to their waiting wives, who would rush to upload
the nearly worthless paper. A postage stamp cost millions of marks and a loaf of
bread, billions." (Sidney Rutberg, "The Money Balloon" New York: Simon and
Schuster, 1975, p. 19, cited in "Economics, An Introduction" by Villegas & Abola,
3rd Ed.)

While appellant's voluminous records and statistics proved that there has been a
decline in the purchasing power of the Philippine peso, this downward fall of the
currency cannot be considered "extraordinary." It is simply a universal trend that has
not spared our country.

WHEREFORE, finding no reversible error in the appealed decision of the trial court,
We affirm it in toto. No costs.

SO ORDERED.